Labour and the Tories face the same dilemma: to break the deadlock, they need a big idea

If they want to avoid another hung parliament, both sides need to take more risks. This isn't a time for small-ball politics.

To win a majority at the next election, both Labour and the Conservatives will need to defy recent history. No governing party has increased its share of the vote since 1974; no opposition has achieved an overall victory at the first attempt for more than 80 years. Faced with these odds, each side is already preparing for another hung parliament.
 
One shadow minister recently told me that he had been encouraged to look for “points of agreement” with the Lib Dems and to consider constitutional reforms that would appeal to the party, citing the example of proportional representation for local elections. In the Tories’ case, David Cameron is privately discussing plans to offer his MPs a vote on a second power-sharing agreement. Impressed by the discipline of Clegg’s backbenchers compared with that of his truculent troops, Cameron wants his party’s hands “dipped in blood”. Hoping for a win but preparing for a draw, it is Antonio Gramsci’s maxim of “pessimism of the intellect, optimism of the will” that is guiding both sides.
 
Yet in an age of voter promiscuity, it remains conceivable that either party could gain a decisive advantage before 2015. The common concern among Labour and Tory MPs is that their leaders are failing to grasp the opportunity to do so. In Ed Miliband’s party, there is increasing anxiety at the disparity between the boldness of his rhetoric and the timidity of his policy proposals. This has led Andy Burnham to break ranks and publicly challenge Miliband to back his plan for an integrated national health and care service. In an earlier and similarly unauthorised intervention, he called for the party to pledge to ban zero-hours contracts.
 
Privately, Miliband’s allies are dismissive of such intemperance. To a degree under-appreciated in Westminster, the Labour leader’s strategy has been shaped by the constitutional novelty of a fixed-term parliament. As one shadow cabinet member put it to me, “We know the date of the next election. There’s no danger of the government cutting and running . . . So we can work backwards. We know when we need our pledge cards by, our manifesto by and our party candidates selected by.” The reasons given for Labour not showing its hand too early are both familiar and persuasive: that the best policies are stolen and the party is lumbered with the worst. In addition, Ed Balls, who is charged with restoring Labour’s economic credibility, is determined to postpone major spending commitments until the state of the public finances is clearer.
 
That the opposition’s MPs know and understand all of this does little to assuage their disquiet. One comparison made with increasing frequency is with Miliband’s erstwhile mentor Gordon Brown, who similarly offered periodic hints of a social-democratic master plan, only for the cupboard to prove bare when he arrived in Downing Street.
 
To this, those close to the Labour leader reply: “Watch this space.” The first phase of the party’s policy review has been completed and the fruits will begin to emerge at this autumn’s conference. Labour has spent the summer charting how the “cost of living” has surged under the coalition, but if the party is to win in 2015 it won’t be enough to convince voters that they’re worse off under the Tories. It will also need to convince them they’d be better off under Labour. The aim of Miliband’s speech will be to bridge this gap, with energy and housing two of the candidates for major policy announcements.
 
Having offered a radical diagnosis of Britain’s problems, the onus is on the Labour leader to provide radical prescriptions. A pledge to build a million affordable homes, to introduce universal childcare for preschool children and to renationalise the railways all fall into this category. At some stage, this will require Miliband to abandon his reticence and make an open case for borrowing to invest. As long as the Tories are able to accuse Labour of wanting to spend more – and with the opposition unwilling or unable to explain why – the party will struggle to shift the terms of debate in its favour.
 
The Conservatives are fond of deriding Labour’s alleged “35 per cent strategy”, under which a coalition of the party’s core supporters and Lib Dem defectors allow it to crawl over the electoral finish line – but few note the irony that the Tory leadership has now adopted its own version of this game plan. Under heavy fire from the Ukip insurgency, the party has retreated to its core territory of welfare, immigration and Europe.
 
While this might be enough to preserve the Tories’ status as the single largest party, it will not win them the majority they crave. To achieve an overall victory, the party needs to expand its appeal considerably among those groups that have shunned it at the past four elections: ethnic minorities, northerners, Scots and LGBT voters. With the exception of equal marriage, few visible efforts have been made to do so. In January of this year, Tory strategists briefed that Cameron was so concerned at how the issue of race was damaging support for the party that he would address it “head-on with a speech in the next two months”. Yet seven months on, nothing has been heard. Instead, the party has further damaged its reputation with ethnic minorities through a series of demagogic stunts on immigration.
 
Where both the Conservatives and Labour agree is that Britain faces greater problems than at any time since 1979. The long-assumed link between a market economy and rising living standards has been severed and the country’s prosperity has been permanently dented by the financial crisis. Yet neither side has so far offered a persuasive account of how it would govern after 2015. Both proceed with caution as if afraid to reveal their true intentions to voters. But if they want big rewards, they will eventually need to take big risks.
David Cameron and Ed Miliband look on during the service to celebrate the 60th anniversary of the Coronation of Queen Elizabeth II at Westminster Abbey in London. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

This article first appeared in the 26 August 2013 issue of the New Statesman, How the dream died

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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.