Miliband's sheet is still blank on public service reform

The Labour leader appears determined to avoid the challenge of fixing state services without spending more money on them.

Even people who are obsessed with politics often find their eyes glazing over when the conversation turns to the detail of public sector reform. That is understandable given the technical complexity of some of the systems under discussion and the tendency for reformers to speak in think tank patois. But I’m sure Ed Miliband has a firm grasp of that rarefied idiom, so he must have other reasons for avoiding the subject.

And avoid it he does. I have seen for myself the glazing-over of the opposition leader’s eyes and averting of the gaze into the middle distance when he is asked how Labour would meet the challenge of fixing state services without spending more money on them. Shadow cabinet ministers who want to have that conversation find it hard to get access to Miliband. Frontbenchers who have tried to push reform onto the agenda were notably overlooked or sidelined in October’s shadow cabinet reshuffle. Labour MPs understood the message clearly enough – the Labour leader will say something about public services when he is good and ready; there are no rewards for trying to accelerate the timetable.

There are a various interpretations of this caution. Miliband’s aides are quick to point out that public sector reform is not a paramount concern among voters. It is a reasonable point. Labour should concentrate on winning support where it is available, not where policy wonks wish it would be. The counter-argument, with which I have now bored even myself through repetition in blogs, columns and private conversations, is that having an imaginative story to tell about public service reform is the way Labour can transmit a message about getting more for less with taxpayers’ money. That is a route to fiscal credibility, which is a paramount concern among many voters. Presenting creative solutions to the challenge of governing in austerity is likely to be a whole lot more persuasive than paper pledges to keep purse-strings tight, which the public discounts as just the kind of thing politicians feel they have to say.

There are senior Labour figures who take that view, including Miliband advisors, but they seem to have difficulty getting the boss to focus on the matter for long. There are various explanations for this is the case.

One view I have heard from the shadow cabinet is that Miliband doesn’t have any experience of working in or shadowing a big spending department. His time in government was spent as a Treasury advisor, a Cabinet Office minister and, finally, as Energy Secretary. In that latter role, he was often focused on climate change, working with people who believed in a cause in which he also believed. He hasn’t experienced first hand the frustration of the minister who has a plan for improving services – or tightening their budgets – and finds that the sector itself and that civil service are blocking change. He has never, for example, been forced to take sides when the interests of patients and doctors collide, or teaching unions and parents.

A parallel factor is Miliband’s reluctance to get into policy debates that risk opening up old factional wounds from the Blair-Brown era. The Labour leader’s allies are fond of dismissing calls for a clear public sector reform agenda as part of "an old 90s frame" – which is code for saying that it is something Blairite ultras obsess about while everyone else on the left has moved on. That is partly fair. The idea that services can be improved by outsourcing key functions to the likes of Serco, Capita and G4S has been pretty well discredited. Likewise, there is mixed evidence at best when it comes to the belief that public sector efficiency and quality are raised when service users (parents and patients) choose between competing providers (schools and hospitals) in quasi-markets.

But there aren’t that many people on the Labour side who seriously advocate an unalloyed choice-and-markets approach to reform. The conversation has, as Miliband’s friends declare, moved on. The problem is that any attempt to question the traditional model of state delivery or to criticise existing services risks being interpreted in some Labour circles as stealthy Blairism, which for its fiercest critics is hardly better than Conservatism.

The fear among some Labour MPs is that they can’t even discuss ways to make the NHS more responsive to patients’ needs or ways to make sure standards in schools keep rising without being accused of back-door privatisation and pandering to a Tory agenda.

The would-be reformers are currently pinning some hope on Jon Cruddas, who is leading Labour’s policy review for Miliband. No-one in the Labour party is ever going to accuse Cruddas of being a slavish devotee of the Cult of Tony, which gives him rare authority in the leader’s office to raise the matter of state reform. Indeed, the one time I have heard Miliband acknowledge the need for the party to have a public sector reform message he referred to the need to match people’s resentment of greedy, self-serving corporations with a need to address their frustrations at the hands of an "unresponsive state". That’s a Cruddas phrase.

The essential division now seems to be between those, like Cruddas, who think the party needs a radical shift in the way Labour talks about the state and between those – chiefly, but not exclusively, allies of Ed Balls – who prefer to contain the debate in the more conventional parameters of how much is being spent in Whitehall and on what.

This isn’t an argument about fiscal responsibility – the shadow Chancellor is more alert than anyone to the need to show that Labour can be prudent. At issue is a conceptual point about whether the future of public services lies in devolution of power and control over budgets to local level and even, ultimately, to service users themselves. The key Cruddasite ambition (outlined in this lecture from last December) is between services that work at the level of sustaining relationships between provider and citizen and those that deal in impersonal transactions.

The reformers think Labour has an opportunity to launch a consumer-led revolution in public services, thereby renewing the social contract that serves as the left’s mandate to spend public money. The sceptics think that is all abstract wonk-speak that would amount, in practice, to chaos and loss of central control. Time spent at the Treasury teaches politicians to fear devolution of budgeting authority to anyone for fear that they mess it all up and leave the Chancellor to pick up the pieces.

So where does Miliband sit in all of this? As with so many issues, no-one seems entirely sure where his instincts lie. It is clear enough that he doesn’t want to make this stuff the centre-piece of his offer in a general election. The question is whether he will support a reformist agenda enough for it to make its way into a Labour manifesto. One close observer of the opposition leader’s office says that when Miliband has one-on-one meetings with Cruddas he gets very enthusiastic about his ideas and the policy review – that the two men find much in common. But then the fire in Miliband’s eyes is quickly extinguished on contact with the cold reality of managing the different views around the shadow cabinet table and factional prejudices in the party.

It isn’t even clear what the process is for debating ideas that come out of the policy review or turning them into a manifesto. There is a labyrinth of committees and sub-committees but none of these seems to have sufficient authority to say what will make it onto the party’s agenda for government. The shadow cabinet doesn’t make policy. Shadow cabinet ministers don’t always know whom to lobby in Miliband’s office to get their views heard. Reserves of trust between various senior figures in the leader’s office, the shadow treasury team, the election strategy team and the shadow cabinet all seem perilously low. There were hopes in the parliamentary party that, after the reshuffle, the Labour leader would feel more confident in his position – having stamped his personal authority on the front bench – and would allow a culture of open debate to flourish. At least where imagining the future of public services is concerned, there isn't much evidence of that happening.

Ed Miliband speaks at the Labour conference in Brighton earlier this year. Photograph: Getty Images.

Rafael Behr is political columnist at the Guardian and former political editor of the New Statesman

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How Jeremy Corbyn won the Labour leadership election

The revolt against the leader transformed him from an incumbent back into an insurgent. 

On the evening of 12 July, after six hours of talks, Jeremy Corbyn emerged triumphantly from Labour’s headquarters. “I’m on the ballot paper!” he told supporters gathered outside. “We will be campaigning on all the things that matter.”

The contest that Corbyn’s opponents had sought desperately to avoid had begun. Neither a vote of no confidence by 81 per cent of Labour MPs, nor 65 frontbench resignations had persuaded him to stand down. Days of negotiations led by Tom Watson had failed (“For years I’ve been told that I’m a fixer. Well, I tried to fix this and I couldn’t,” Labour’s deputy leader sorrowfully told the parliamentary party). The rebels’ last hope was that the National Executive Committee would force Corbyn to reseek nominations. After being backed by just 40 colleagues in the confidence vote, both sides knew that the leader would struggle to achieve 51 signatures.

But by 18-14, the NEC ruled that Corbyn would be automatically on the ballot (“Watson, Watson, what’s the score?” chanted jubilant aides in the leader’s office). After withstanding a 16-day revolt, Corbyn appeared liberated by the prospect of a summer of campaigning. His confidence prefigured the outcome two months later.

Corbyn did not merely retain the leadership - he won by a greater margin than last time (with 61.8 per cent of the vote to last year's 59.5 per cent) and triumphed among all three sections: party members, affiliated supporters and registered supporters. The rebels had hoped to narrow his mandate and win among at least one group: they did neither. Far from being a curse for Corbyn, the contest proved to be a blessing. 

***

The day before the pivotal NEC meeting, Angela Eagle, who had been preparing to stand for months, launched her leadership bid. The former shadow business secretary was admired by MPs for her experience, tenacity, and economic acumen. Her trade union links and soft left background were further cited in favour of her candidacy.

But after an underwhelming launch, which clashed with Andrea Leadsom’s withdrawal from the Conservative contest (leaving Eagle calling questions from absent journalists), MPs gravitated towards Owen Smith.

Like Eagle, Smith hailed from the party’s soft left and had initially served under Corbyn (two prerequisites in the rebels’ eyes). But unlike her, the former shadow and work pensions secretary did not vote for the Iraq war (having entered parliament in 2010) or the 2015 Syria intervention. “It looks like the war party,” a senior Corbynite said of Eagle’s campaign launch with Hilary Benn. Many Labour MPs feared the same. With the left-leaning Lisa Nandy having ruled herself out, only the ambitious Smith met the criteria.

“I’d been in hospital for two days with my brother, who was unwell, in south Wales,” he recalled when I interviewed him.  “I came out having literally been in A&E at Cardiff Heath hospital for 29 hours, looking after him, to have my phone light up with 30, 40, 50 colleagues, MPs and members, ringing up saying ‘there’s going to be a contest, Angela Eagle has thrown her hat into the ring, you should do likewise.’ And at that point, on the Wednesday night, I started ringing people to test opinion and found that there was a huge amount of support for me.”

On 19 July, after Smith won 90 MP/MEP nominations to Eagle’s 72, the latter withdrew in favour of the Welshman. A week after the Conservatives achieved their second female prime minister, Labour’s 116-year record of all-male leaders endured. Though Smith vowed that Eagle would be “at my right hand throughout this contest”, she went on to appear at just one campaign event.

Corbyn’s challenger was embraced by MPs as a “clean skin”, untainted by service during the New Labour years. But Smith’s non-parliamentary past was swiftly - and ruthlessly - exploited by his opponents. His time at the US drugs firm Pfizer was cited as evidence of his closeness to big business. Corbyn’s supporters also seized on interviews given by Smith as a by-election candidate in 2006.

The man pitching to the left was found to have defended Tony Blair (suggesting that they differed only over the Iraq war), supported private sector involvement in the NHS and praised city academies. “I'm not someone, frankly, who gets terribly wound up about some of the ideological nuances,” he told Wales Online. Such lines were rapidly disseminated by Corbyn supporters through social media.

“Getting out early and framing Owen was crucial,” a Corbyn source told me. A Smith aide echoed this assessment: “It helped secure their base, it took a load of people out of contention.”

Throughout the campaign, Smith would struggle to reconcile his past stances with his increasingly left-wing programme: opposing private provision in the NHS, returning academy schools to local authority control, banning zero-hours contracts and imposing a wealth tax of 1 per cent. “It was easy for us to go for the jugular over his background when he portrayed himself as a left candidate,” a Corbyn source said.

Smith insisted that the charge of opportunism was unmerited. “To be honest, my opponents have extrapolated rather a lot in an attempt to brand me as a ‘Blairite wolf in sheep’s clothing,’” he told me in August. “Well, I’m nothing of the sort, I’ve always been a democratic socialist and I always will be.” He added: “I’m someone who’s been surrounded by people who’ve been on the left of the Labour movement all their lives. It should come as no surprise that I’ve come out of that background and I’m pretty red. Because I am.”

But a former shadow cabinet colleague said that Smith did not stand out as “a radical” in meetings. “The only time that I remember him becoming really animated was over further tax-raising powers for Scotland and the implications for Wales.”

As well as Smith’s ambiguous past, Corbyn’s allies believe the breadth of his political coalition hindered him from the start. “He was trying to bring together Blairites, Brownites and every other -ite in between,” a campaign source said. “That was never going to hold, we knew that and from the moment there were splits it was easy to point out.”

Jon Trickett, the shadow business secretary and one of Corbyn’s early supporters, told me: “They tried to pretend that there was no distinction between them and Jeremy on policy grounds, they tried to narrow down the areas of difference to electability. But, frankly, it didn’t seem credible since some of the people behind it were absolutely ideologically opposed to Jeremy. Peter Mandelson and people like that.”

A frequently expressed charge was that Smith’s left-wing pledges would be overturned by Blairite figures if he won. John McGeechan, a 22-year-old postgraduate student who joined Labour after “self-indulgent, self-serving MPs initiated their corridor coup”, told me of Smith: “He’s just another mealy-mouthed careerist who says whatever he thinks is going to get him elected. I don’t believe at all that he means what he says about creating a radical socialist government given that he’s got the backing of Peter Mandelson, Alastair Campbell and Tony Blair, people who’ve disagreed with Corbyn on pretty much all his socialist policies. I don’t believe that he’s going to stand up to these people.”

Whether believable or not, Smith’s programme showed how Corbyn had shifted Labour’s centre of gravity radically leftwards - his original aim in June 2015.

***

On the night Corbyn made the leadership ballot, the rebels still found cause for hope. Unlike in 2015, the NEC imposed a freeze date of six months on voting (excluding 130,000 new members) and increased the registered supporter fee from £3 to £25 (while reducing the sign-up period to two days). “It’s game on!” a senior figure told me. By narrowing the selectorate, Corbyn’s opponents hoped to achieve a path to victory. With fewer registered supporters (84 per cent of whom voted for Corbyn last year), they believed full party members and affiliated trade unionists could carry Smith over the line.

But when 183,000 paid £25 to vote, their expectations were confounded. Far from being “game on”, it looked to many rebels like game over. Once again, Corbyn’s opponents had underestimated the left’s recruiting capacity. Smith’s lack of name recognition and undistinctive pitch meant he could not compete.

Alongside the main contest were increasingly fractious legal battles over voting rights. On 28 July, the high court rejected Labour donor Michael Foster’s challenge to Corbyn’s automatic inclusion on the ballot. Then on 8 August, a judge ruled that the party had wrongly excluded new members from voting, only for the decision to be overturned on appeal.

In the view of Corbyn’s allies, such legal manevoures unwittingly aided him. “They turned Jeremy, who was an incumbent, back into an insurgent,” Trickett told me. “The proponents of the challenge made it seem like he was the underdog being attacked by the establishment.”

Smith, who repeatedly framed himself as the “unity candidate”, struggled to escape the shadow of the “corridor coup”. That many of his supporters had never accepted Corbyn’s leadership rendered him guilty by association.

“The coup had an enormous galvanising effect and an enormous politicising effect,” a Corbyn source told me. “For a great number of people who supported Jeremy last year, there was a feeling, ‘well, we’ve done the work, that’s happened, now over to him.’ What the coup meant for a lot of people was that this isn’t about Jeremy Corbyn, this is a people’s movement, which we all need to lead.” The Corbyn campaign signed up 40,000 volunteers and raised £300,000 in small donations from 19,000 people (with an average donation of £16). Against this activist army, their rivals’ fledgling effort stood no chance.

“At the launch rally, we had 12 simultaneous events going on round the country, livestreamed to each other,” a Corbyn source said. “We had a lot of communication with people who were big in the Sanders campaign. In the UK context, it’s trailblazing.”

On 12 August, after previously equivocating, Smith ruled out returning to the shadow cabinet under Corbyn. “I've lost confidence in you. I will serve Labour on the backbenches,” he declared at a hustings in Gateshead. In the view of Corbyn’s team, it was a fatal error. “He shot apart his whole unity message,” a source said.

Smith, who initially offered Corbyn the post of party president, was rarely booed more than when he lamented Labour’s divisions. As one of the 172 MPs who voted against the leader, he was regarded as part of the problem, rather than the solution. By the end, Smith was reduced to insisting “I wasn’t in favour of there being a challenge” - a statement that appeared absurd to most.

As well as his leftist credentials and unifying abilities, Smith’s other main boast was his competence and articulacy. “HIs USP was that he was this media-savvy guy,” a Corbyn source said. “As a result, he threw himself up for any and every media opportunity and made tons of gaffes. We just made sure people were aware of them.”

The most enduring gaffe came early in the campaign, on 27 July, when he spoke of wanting mto “smash” Theresa May “back on her heels”. Though Smith initially defended his “robust rhetoric” (“you’ll be getting that from me”), by the afternoon his campaign had apologised. What was explained as a “rugby reference” dogged them for weeks. “It played into the hands of how Corbyn wanted to depict us,” a Smith source told me. “It was really hard to shake off.”

More unforced errors followed. Smith suggested getting Isis “round the table”, in anticipation, many believed, of Corbyn agreeing. But the Labour leader baulked at the proposal: “No, they are not going to be round the table”. Corbyn’s communications team, more organised and agile than in 2015, denounced Smith’s remarks as “hasty and ill-considered”. As with “smashed”, the Labour challenger had achieved rare cut-through - but for the wrong reasons.

Smith’s rhetorical looseness became a recurring problem. At a rally on 23 August, he appeared to refer to Corbyn as a “lunatic”. In an interview with the Daily Mirror, he said of meeting his wife: “1,200 boys, three girls and I pulled Liz. So I must have something going on. That must be leadership.”

Earlier in the campaign, Smith’s team denied that the candidate referred to the size of his penis when he quipped of his height: "5ft 6. 29 inches - inside leg!” The guffaws from his supporters suggested otherwise.

We used to have a gaffe counter,” a Corbyn source told me. “I think it got up to 30 by the end.”

Smith’s team, meanwhile, despaired at how the Labour leader’s own missteps failed to dent him. The discovery that Corbyn had in fact secured a seat on a Virgin train, contrary to initial impressions, did little lasting damage. “It’s priced in, the bar is much lower for him,” a Smith source complained.

Incorrect claims, such as Labour being level in the polls before the coup attempt and Corbyn giving 122 speeches during the EU referendum campaign, were believed by many of his supporters. “How do you rebut bullshit?” a Smith aide asked. “If you respond, it becomes a story.”

So frequently had Labour MPs condemned their leader that extraordinary charges were soon forgotten. On 22 August, shadow business minister Chi Onwurah wrote in the New Statesman that Corbyn’s treatment of her and Thangam Debbonaire could constitute “racial discrimination”.

If this had been any of my previous employers in the public and private sectors Jeremy might well have found himself before an industrial tribunal for constructive dismissal, probably with racial discrimination thrown in,” she argued. But within a day, the story had moved on.  

For Smith, fleeting momentum was achieved through significant endorsements. On 10 August, the GMB backed his campaign after becoming the only trade union to ballot its members. The following week, Labour’s most senior elected politician, Sadiq Khan, endorsed Smith. Unlike Andy Burnham, the London mayor believed he could not remain neutral during this profound schism. Smith was subsequently also backed by the Scottish Labour leader, Kezia Dugdale. Neil Kinnock and Ed Miliband trumpeted his cause. Yet such declarations counted for little. “It’s like the Remain campaign and the Archbishop of Canterbury,” one Smith ally told me, suggesting that Labour members, like Leave voters, ”weren’t listening” to such grandees.

But in the view of Corbyn’s team, the rebels profoundly “underestimated” their opponent. “He’s a nice guy but he also has an inner steel and won't flinch from a challenge. The Obi-Wan Kenobi comparison is very accurate when you work up close with him. He’s also extremely intelligent and has a great grasp and retention of detail. It showed in the debates.”

“I have to say, I felt pretty sorry for Owen at several points,” another Corbyn source reflected. “Whatever it was, his ambition or being pushed into it, it didn’t seem like it was the right time for him. He hadn’t worked out what he was about and why that fitted with the times.”

***

Those Labour MPs who long warned that an early challenge to Corbyn would prove futile have been vindicated. “Party members are always loyal to the incumbent,” a senior source astutely noted. In the case of Corbyn, a lifelong campaigner, who many contended was “never given a chance”, this traditional fealty was intensified.

“Most of the people backing and funding him didn’t think Owen was going to win,” a Corbyn source said. “Their aim was, one, to reduce Jeremy’s mandate and, secondly, to map the selectorate.”

Having won a second leadership contest - an unprecedented achievement for the Labour left - the leader’s supporters insist their ambitions do not end here. “We’ve got to think incredibly seriously about how we win a general election in a totally changed landscape,” a Corbyn source told me. “This campaign has been showing how to do it.” But a Smith aide warned that it was a “massive strategic error” to make electability, rather than principle, the defining test of Corbyn. The leader, he suggested, could withstand a general election defeat provided he simply affirmed his values.

Beyond regarding a split as worthless, Labour MPs are divided on how to proceed. Some want another leadership challenge as early as next year. Rather than seeking to narrow the selectorate, they speak of recruiting hundreds of thousands of new members to overpower the left. “There are lots of people out there who want a credible, electable, centre-left proposition and we have not given them enough of a reason to sign up,” a former shadow cabinet minister told me. “Who has an offer and the charisma to be able to bring in new people? That has to be the question the next time round.”

Others believe that backbenchers should follow Thumper’s law: “If you can’t say something nice, don’t say anything at all.”  A senior MP argued that MPs should “just shut up” and “let Jeremy crack on with it.” The imperative, he said, was to avoid MPs “taking the blame for us getting thumped in a snap election”. Some are prepared to move beyond neutrality to outright support by serving under Corbyn.

The Labour left and their most recalcitrant opponents both confront challenges of electability. The former must demonstrate a path to victory despite Corbyn’s subterranean poll ratings. The latter, who boast so often of their superior appeal, must face a remorseless truth. Until they are electable in the party, they will never be electable in the country.

George Eaton is political editor of the New Statesman.