What Jon Cruddas's speech told us about Labour's policy review

The head of Labour's policy review hints that a mass programme of housebuilding will be a priority for the party.

Jon Cruddas's speech to the Resolution Foundation last night on "earning and belonging" was, in common with all of his addresses, thoughtful, intellectually rich and imbued with a rare sense of history. But anyone hoping for specifics from the head of Labour's policy review would have left disappointed. Cruddas described the review as being in its "first phase" and promised that over the next 12 months major pieces of work would be completed on "childhood, the Condition of Britain [Cruddas will deliver an IPPR lecture on this subject next Thursday], a British Investment Bank, infrastructure and voctional education". After the 2013 conference, he added, the review would enter a "second phase" before the policies "distil into a manifesto and pledge cards" after the 2014 conference.

There were, however, several important hints of Labour's priorities. In one of the most memorable passages, Cruddas lamented that while the government spends £1.2bn on housebuilding, it spends twenty times that amount on "rental payments to landlords". Not only was this a good example of how Labour is seeking to reframe the debate around welfare policy (Cruddas referred to "rent payments", rather than housing benefit), it also suggested that one of the party's key pledges will be a mass programme of housebuilding. 

In another intriguing section of the speech, Cruddas spoke of how Labour was exploring new ways of holding "our public institutions" to account and generating "a sense of ownership and responsibility". He cited the BBC, the police, Parliament and the City of London. Tessa Jowell's recent piece for the Telegraph calling for the BBC to be turned into "the country’s biggest mutual, with 26.8 million licence-fee payers as its shareholders", is a good example of the form this could take in practice. 

The line that has attracted the most attention is Cruddas's warning that "simply opposing the cuts without an alternative is no good." (He added: "It fails to offer reasonable hope. The stakes are high because when hope is not reasonable despair becomes real.") 

On one level this is a statement of the obvious. But it also points to a significant divide in Labour between those who believe there is nothing wrong with the economy that a bit of Keynesian stimulus won't fix and those who believe that capitalism needs to be fundamentally remade (Raf has neatly characterised this as a battle between Brown Labour and Blue). Cruddas's words made it clear that he intends to position Labour on the latter half of this divide. 

Jon Cruddas, the MP for Dagenham and Rainham and the head of Labour's policy review. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Getty
Show Hide image

BHS is Theresa May’s big chance to reform capitalism – she’d better take it

Almost everyone is disgusted by the tale of BHS. 

Back in 2013, Theresa May gave a speech that might yet prove significant. In it, she declared: “Believing in free markets doesn’t mean we believe that anything goes.”

Capitalism wasn’t perfect, she continued: 

“Where it’s manifestly failing, where it’s losing public support, where it’s not helping to provide opportunity for all, we have to reform it.”

Three years on and just days into her premiership, May has the chance to be a reformist, thanks to one hell of an example of failing capitalism – BHS. 

The report from the Work and Pensions select committee was damning. Philip Green, the business tycoon, bought BHS and took more out than he put in. In a difficult environment, and without new investment, it began to bleed money. Green’s prize became a liability, and by 2014 he was desperate to get rid of it. He found a willing buyer, Paul Sutton, but the buyer had previously been convicted of fraud. So he sold it to Sutton’s former driver instead, for a quid. Yes, you read that right. He sold it to a crook’s driver for a quid.

This might all sound like a ludicrous but entertaining deal, if it wasn’t for the thousands of hapless BHS workers involved. One year later, the business collapsed, along with their job prospects. Not only that, but Green’s lack of attention to the pension fund meant their dreams of a comfortable retirement were now in jeopardy. 

The report called BHS “the unacceptable face of capitalism”. It concluded: 

"The truth is that a large proportion of those who have got rich or richer off the back of BHS are to blame. Sir Philip Green, Dominic Chappell and their respective directors, advisers and hangers-on are all culpable. 

“The tragedy is that those who have lost out are the ordinary employees and pensioners.”

May appears to agree. Her spokeswoman told journalists the PM would “look carefully” at policies to tackle “corporate irresponsibility”. 

She should take the opportunity.

Attempts to reshape capitalism are almost always blunted in practice. Corporations can make threats of their own. Think of Google’s sweetheart tax deals, banks’ excessive pay. Each time politicians tried to clamp down, there were threats of moving overseas. If the economy weakens in response to Brexit, the power to call the shots should tip more towards these companies. 

But this time, there will be few defenders of the BHS approach.

Firstly, the report's revelations about corporate governance damage many well-known brands, which are tarnished by association. Financial services firms will be just as keen as the public to avoid another BHS. Simon Walker, director general of the Institute of Directors, said that the circumstances of the collapse of BHS were “a blight on the reputation of British business”.

Secondly, the pensions issue will not go away. Neglected by Green until it was too late, the £571m hole in the BHS pension finances is extreme. But Tom McPhail from pensions firm Hargreaves Lansdown has warned there are thousands of other defined benefit schemes struggling with deficits. In the light of BHS, May has an opportunity to take an otherwise dusty issue – protections for workplace pensions - and place it top of the agenda. 

Thirdly, the BHS scandal is wreathed in the kind of opaque company structures loathed by voters on the left and right alike. The report found the Green family used private, offshore companies to direct the flow of money away from BHS, which made it in turn hard to investigate. The report stated: “These arrangements were designed to reduce tax bills. They have also had the effect of reducing levels of corporate transparency.”

BHS may have failed as a company, but its demise has succeeded in uniting the left and right. Trade unionists want more protection for workers; City boys are worried about their reputation; patriots mourn the death of a proud British company. May has a mandate to clean up capitalism - she should seize it.