Labour's opponents are trying to break the union link - we won't let them

Desperate attempts to present Falkirk as part of a pattern of union abuse are as predictable as they are risible.

Leaders of the Labour Party are never short of people to offer advice. The trick is in knowing which ones to listen to and, more importantly, which ones to trust. And a true test of the leader’s strength is their ability to assess advice from all quarters, coolly form their own opinion, and then pursue their course with courage and conviction. That calm deliberation and resolute strength have been the defining features of Ed Miliband’s campaign to win the Labour leadership, and of his time in the role. So it should come as no surprise that he has acted with sound judgement, and decisively, to deal with what appears to be a corrupted selection in Falkirk. The only surprise is that his opponents in the Tory party and the right-wing press should continue to be wrong-footed by the clarity and consistency of his actions.

Let’s be clear for a moment about what has happened in recent days, as it’s been hard to discern in the fevered and Delphic comment in these pages and elsewhere. It seems to me to be pretty straightforward. The selection procedure for a new Labour candidate to replace Eric Joyce appears to have been compromised by the abuse of a scheme designed to boost the numbers of trade unionists within the wider Labour membership. The party investigated, reported its findings to Ed Miliband, who acted upon them decisively:  suspending the local party and certain individuals; cancelling the ‘Union Join’ scheme, which was apparently subverted; and publicly informing Unite and Len McCluskey that Labour has no time for machine politics or malpractice, in Falkirk or elsewhere. Desperate attempts to present this aberration as the 'tip of an iceberg' or to misrepresent various trade unions’ legitimate and welcome efforts to engage their members in political debate, or to portray Ed as weak or in thrall to the unions are as predictable as they are risible. 

Those are the facts. But unfortunately they don’t suit opponents seeking to undermine Ed Miliband and the Labour Party he leads. On left and right (though the distinction often seems moot), in and out of the shadows, from Lynton Crosby to Dan Hodges, an unholy alliance is, of course, looking to destabilise the Labour movement, and to drive wedges between working people and their representatives in the trade unions and the party. For our opponents the motivation is clear: to defeat Labour in 2015, a task made far simpler by creating rifts and divisions in a movement that has been unified and united under Ed Miliband. And the ultimate prize, of course, is breaking the link between Labour and the trade unions that founded our party.

Such a fracture, however spun as modernising or mature, would weaken our party immeasurably and, more importantly, would weaken the means by which the people of Britain might hold to account the vested interests and corporate power which long ago bought the loyalty of David Cameron’s Conservatives. And that is why the Falkirk selection might have precipitated a crisis for Labour, had Ed not acted so quickly to address the specific incidence of malpractice uncovered there, or were there any evidence that trade unions were exercising undue influence over Labour policy elsewhere.

The uncomfortable truth for Labour’s opponents, however, is that there is no evidence of such malign influence outside the overheated imagination of Daily Mail journalists and Lynton Crosby’s PMQs script. Unite the union – my union, for the record – doesn’t agree with all of Labour’s policy prescriptions for Britain, and nor are all Unite members supporters of our party. Some will vote Tory, others might have once voted for the Lib Dems. And Labour candidates throughout Britain are routinely and properly elected by democratic, One Member, One Vote procedures - run and determined by local members, largely untouched by local or national union influence. Unfortunately, the reality is that local union members are invariably no more involved in or inspired by modern politics than the rest of the public. Indeed, if our unions were to catalyse greater engagement, British politics, on left and right, would be all the richer for it.

But, of course, those deeper issues of how we reignite passion in our politics and faith in our ability to build a more equitable economy doesn’t sell papers or serve Tory propaganda. Better to stick to tired clichés about Labour leaders and the union barons, exhumed from the cuttings archives and the Tebbit playbook circa 1982. Ed Miliband and the Labour leadership will not be deflected by such attacks, nor, as his actions have demonstrated, will he put up with any corruption of the democratic processes of the Labour Party. But neither will we allow any isolated incident to erode the historic strength of our party as part of a wider movement representing working people, or our determination to work alongside our trade union colleagues to defeat this Tory-led coalition and deliver a Britain worthy of its people.

Ed Miliband attends the launch of mental health charity MindFull at BAFTA headquarters earlier today. Photograph: Getty Images.

Owen Smith is a Labour leadership candidate and MP for Pontypridd. 

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The Autumn Statement proved it – we need a real alternative to austerity, now

Theresa May’s Tories have missed their chance to rescue the British economy.

After six wasted years of failed Conservative austerity measures, Philip Hammond had the opportunity last month in the Autumn Statement to change course and put in place the economic policies that would deliver greater prosperity, and make sure it was fairly shared.

Instead, he chose to continue with cuts to public services and in-work benefits while failing to deliver the scale of investment needed to secure future prosperity. The sense of betrayal is palpable.

The headline figures are grim. An analysis by the Institute for Fiscal Studies shows that real wages will not recover their 2008 levels even after 2020. The Tories are overseeing a lost decade in earnings that is, in the words Paul Johnson, the director of the IFS, “dreadful” and unprecedented in modern British history.

Meanwhile, the Treasury’s own analysis shows the cuts falling hardest on the poorest 30 per cent of the population. The Office for Budget Responsibility has reported that it expects a £122bn worsening in the public finances over the next five years. Of this, less than half – £59bn – is due to the Tories’ shambolic handling of Brexit. Most of the rest is thanks to their mishandling of the domestic economy.

 

Time to invest

The Tories may think that those people who are “just about managing” are an electoral demographic, but for Labour they are our friends, neighbours and the people we represent. People in all walks of life needed something better from this government, but the Autumn Statement was a betrayal of the hopes that they tried to raise beforehand.

Because the Tories cut when they should have invested, we now have a fundamentally weak economy that is unprepared for the challenges of Brexit. Low investment has meant that instead of installing new machinery, or building the new infrastructure that would support productive high-wage jobs, we have an economy that is more and more dependent on low-productivity, low-paid work. Every hour worked in the US, Germany or France produces on average a third more than an hour of work here.

Labour has different priorities. We will deliver the necessary investment in infrastructure and research funding, and back it up with an industrial strategy that can sustain well-paid, secure jobs in the industries of the future such as renewables. We will fight for Britain’s continued tariff-free access to the single market. We will reverse the tax giveaways to the mega-rich and the giant companies, instead using the money to make sure the NHS and our education system are properly funded. In 2020 we will introduce a real living wage, expected to be £10 an hour, to make sure every job pays a wage you can actually live on. And we will rebuild and transform our economy so no one and no community is left behind.

 

May’s missing alternative

This week, the Bank of England governor, Mark Carney, gave an important speech in which he hit the proverbial nail on the head. He was completely right to point out that societies need to redistribute the gains from trade and technology, and to educate and empower their citizens. We are going through a lost decade of earnings growth, as Carney highlights, and the crisis of productivity will not be solved without major government investment, backed up by an industrial strategy that can deliver growth.

Labour in government is committed to tackling the challenges of rising inequality, low wage growth, and driving up Britain’s productivity growth. But it is becoming clearer each day since Theresa May became Prime Minister that she, like her predecessor, has no credible solutions to the challenges our economy faces.

 

Crisis in Italy

The Italian people have decisively rejected the changes to their constitution proposed by Prime Minister Matteo Renzi, with nearly 60 per cent voting No. The Italian economy has not grown for close to two decades. A succession of governments has attempted to introduce free-market policies, including slashing pensions and undermining rights at work, but these have had little impact.

Renzi wanted extra powers to push through more free-market reforms, but he has now resigned after encountering opposition from across the Italian political spectrum. The absence of growth has left Italian banks with €360bn of loans that are not being repaid. Usually, these debts would be written off, but Italian banks lack the reserves to be able to absorb the losses. They need outside assistance to survive.

 

Bail in or bail out

The oldest bank in the world, Monte dei Paschi di Siena, needs €5bn before the end of the year if it is to avoid collapse. Renzi had arranged a financing deal but this is now under threat. Under new EU rules, governments are not allowed to bail out banks, like in the 2008 crisis. This is intended to protect taxpayers. Instead, bank investors are supposed to take a loss through a “bail-in”.

Unusually, however, Italian bank investors are not only big financial institutions such as insurance companies, but ordinary households. One-third of all Italian bank bonds are held by households, so a bail-in would hit them hard. And should Italy’s banks fail, the danger is that investors will pull money out of banks across Europe, causing further failures. British banks have been reducing their investments in Italy, but concerned UK regulators have asked recently for details of their exposure.

John McDonnell is the shadow chancellor


John McDonnell is Labour MP for Hayes and Harlington and has been shadow chancellor since September 2015. 

This article first appeared in the 08 December 2016 issue of the New Statesman, Brexit to Trump