If Labour is to succeed, it must end its addiction to the state

Having distanced himself from neo-liberalism, Ed Miliband needs to redefine British social democracy as more participative, more socially liberal, and more community-focused.

2014 will usher in a new dynamic in British politics, a time when Labour’s credentials as a potential party of government will be subject to sustained, critical examination. This is the moment when the party has to reveal more about the policy directions it intends to pursue, signalling where its real priorities for Britain lie. And this is the year that will reveal whether Labour has used its time in opposition to think imaginatively about its mistakes – and governing achievements.

It is vital that the party’s policy review is ruthlessly tailored to the challenges and pressures of the post-crisis age, and neither refuses to evade current realities nor reverts to the managerialist populism which characterised New Labour’s final days. It has to address key strategic challenges, signalling its acceptance of the hard choices that policy-making inevitably entails in today’s world.

The first challenge is the sheer scale of the retrenchment that the current administration has been inflicting on the public sector, and its long-term implications. According to the Office for Budget Responsibility (OBR), by 2017-18 government consumption of goods and services will be at its lowest level since the end of the Second World War. A centre-left party will have to learn to govern with far less public money around. It should avoid becoming trapped in a defensive, austerity-lite mindset, salami-slicing departmental budgets without determining the major social priorities it intends to pursue.

Labour needs to make a compelling case for 'switch spending' – allocating resources according to distinctive priorities beyond those favoured by its opponents, while identifying itself as the party that speaks up for the public realm. This means making a case for the social and economic value of public investment in those areas where the market cannot be relied on to deliver - infrastructure, universities, childcare, and social care. In the stringent fiscal circumstances Labour will inherit, identifying national priorities means starting to level with the public about the areas where spending needs to be  tightened , while signalling the kind of tax regime which it believes is required to perpetuate growth and ensure a fairer recovery Saying hardly anything about  these questions, for fear of offering a target to the party’s opponents, is likely to undermine Labour’s chances of securing the kind of electoral coalition which it needs to secure victory in 2015.

The second related challenge concerns the impact upon the UK’s society and economy of the financial crisis, and subsequent recession. Overly stringent austerity has eroded the productive base of the UK economy yet further. The scarring effects of the recession are manifest in the appallingly high numbers of young unemployed and crippling poverty levels among families with 'working poor' parents. Social mobility has ground to a halt while the capacity of middle class parents to horde the advantages of money and human capital accrued across generations are a major obstacle to an inclusive and fair society. A party that seeks to sustain a principled, reforming government needs to prepare the ground for the kinds of measures – mansion and land taxes, a higher minimum wage, an expansion of the pupil premium (right up to university level), and investment in childcare – which are urgently required.

The third strategic challenge that Labour must confront is the implications of the growing crisis facing the future integrity of the United Kingdom. The party is not alone at Westminster in failing to establish a cogent response to the dilemmas posed by a referendum on Scottish independence, the threat posed by the populist nationalism espoused by UKIP, and the UK’s membership of the European Union. Indeed, the fumbling, confused response of the UK parties has fermented a governing crisis at least as potent in its implications as the global financial crash. Were Scotland to vote ‘yes’ to independence in 2014, or  the UK to vote to leave the EU  in 2017, the shocks administered to the British political system would be nothing short of seismic.

If Labour is to become the party that breaks the extraordinary concentration of political and economic power in London - distorting the social and economic balance of England and the rest of the UK - then it must engage with rising resentment about the absence of a political voice and economic levers for many different English communities. A road map is needed for how power will be devolved to cities and counties as a credible answer to the English question, for so long evaded in British politics.

Labour needs to face up to these issues and to give a broad indication of its intentions in the face of them. At present, the temptation is to revert to the well-intentioned redistributivism and Treasury orthodoxy that were a hallmark of the Brown era. Yet the notion that Labour might pursue a fairer society primarily through the long arm of the central state – using familiar tools such as public spending and tax credits – is fraught with danger. Such a notion ignores the problem of legitimacy which that kind of top-down statism now faces in England – the sole remaining territory directly controlled by a Westminster government. An approach that merely ameliorates the dysfunctional and systematic inequality generated by markets and inequitable public service provision is also expensive and wasteful.

A shift of focus towards preventative up-front investment; a new model of social partnership – between government and civil society, and  the dispersal of power to agencies more likely to address the problems faced by different localities – would signal a distinctive approach to tackling some of the major problems facing England, and tackle  Labour’s reputation for excessive managerialism. It is increasingly evident that complex policy challenges – entrenched pockets of social disadvantage and isolation, the looming threat of obesity and lifestyle diseases, the prospect of catastrophic climate change – require a markedly different use of public power, a new model of partnership which is co-ordinated at local level, not the corridors of Whitehall.

The imperative to devolve more economic and political power across England should be reflected in a concerted programme of public service reform relying on the values of voice and locality, as well as choice; a welfare system in which contribution and protection are re-combined; and an explicit focus on SMEs and promoting local entrepreneurship. Only the concerted dispersal of power to individuals, communities and localities will provide the basis for an attack on elite vested interests and class-based inequalities that hold people back.    

Examples of this vision can be glimpsed in the work that local authorities throughout England from Oldham to Southwark are doing – drawing on the resources of communities, sharing front-line services, forging creative partnerships with the charitable sector and business, focusing on well-being and cultivating a  sense of place, while bringing neighbourhoods together to create public assets serving the common good.

Since 2010, Ed Miliband has demonstrated an impressive capacity to open up ideological territory and go against the conventional political grain. This quality might yet prove to be his winning card. Having distanced himself from the 'neo-liberalism' of the previous era, he needs now to redefine British social democracy as more participative, more socially liberal, and more community-focused. This kind of politics draws upon the non-statist strand of Labour’s heritage, reconnecting with those traditions that have woven decentralising and pluralist ideas with a determined opposition to injustice, alongside an understanding that the public realm means much more than the central state.

Patrick Diamond is vice chair of Policy Network, lecturer in public policy at Queen Mary, University of London, and a former Labour adviser

Michael Kenny is research associate at IPPR and professor of politics at Queen Mary, University of London

Ed Miliband speaks at the Labour conference in Brighton last year. Photograph: Getty Images.
Photo: Getty
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After Richmond Park, Labour MPs are haunted by a familiar ghost

Labour MPs in big cities fear the Liberal Democrats, while in the north, they fear Ukip. 

The Liberal Democrats’ victory in Richmond Park has Conservatives nervous, and rightly so. Not only did Sarah Olney take the votes of soft Conservatives who backed a Remain vote on 23 June, she also benefited from tactical voting from Labour voters.

Although Richmond Park is the fifth most pro-Remain constituency won by a Conservative at the 2015 election, the more significant number – for the Liberal Democrats at least – is 15: that’s the number of Tory-held seats they could win if they reduced the Labour vote by the same amount they managed in Richmond Park.

The Tories have two Brexit headaches, electorally speaking. The first is the direct loss of voters who backed David Cameron in 2015 and a Remain vote in 2016 to the Liberal Democrats. The second is that Brexit appears to have made Liberal Democrat candidates palatable to Labour voters who backed the party as the anti-Conservative option in seats where Labour is generally weak from 1992 to 2010, but stayed at home or voted Labour in 2015.

Although local council by-elections are not as dramatic as parliamentary ones, they offer clues as to how national elections may play out, and it’s worth noting that Richmond Park wasn’t the only place where the Liberal Democrats saw a dramatic surge in the party’s fortunes. They also made a dramatic gain in Chichester, which voted to leave.

(That’s the other factor to remember in the “Leave/Remain” divide. In Liberal-Conservative battlegrounds where the majority of voters opted to leave, the third-placed Labour and Green vote tends to be heavily pro-Remain.)

But it’s not just Conservatives with the Liberal Democrats in second who have cause to be nervous.  Labour MPs outside of England's big cities have long been nervous that Ukip will do to them what the SNP did to their Scottish colleagues in 2015. That Ukip is now in second place in many seats that Labour once considered safe only adds to the sense of unease.

In a lot of seats, the closeness of Ukip is overstated. As one MP, who has the Conservatives in second place observed, “All that’s happened is you used to have five or six no-hopers, and all of that vote has gone to Ukip, so colleagues are nervous”. That’s true, to an extent. But it’s worth noting that the same thing could be said for the Liberal Democrats in Conservative seats in 1992. All they had done was to coagulate most of the “anyone but the Conservative” vote under their banner. In 1997, they took Conservative votes – and with it, picked up 28 formerly Tory seats.

Also nervous are the party’s London MPs, albeit for different reasons. They fear that Remain voters will desert them for the Liberal Democrats. (It’s worth noting that Catherine West, who sits for the most pro-Remain seat in the country, has already told constituents that she will vote against Article 50, as has David Lammy, another North London MP.)

A particular cause for alarm is that most of the party’s high command – Jeremy Corbyn, Emily Thornberry, Diane Abbott, and Keir Starmer – all sit for seats that were heavily pro-Remain. Thornberry, in particular, has the particularly dangerous combination of a seat that voted Remain in June but has flirted with the Liberal Democrats in the past, with the shadow foreign secretary finishing just 484 votes ahead of Bridget Fox, the Liberal Democrat candidate, in 2005.

Are they right to be worried? That the referendum allowed the Liberal Democrats to reconfigure the politics of Richmond Park adds credence to a YouGov poll that showed a pro-Brexit Labour party finishing third behind a pro-second referendum Liberal Democrat party, should Labour go into the next election backing Brexit and the Liberal Democrats opt to oppose it.

The difficulty for Labour is the calculation for the Liberal Democrats is easy. They are an unabashedly pro-European party, from their activists to their MPs, and the 22 per cent of voters who back a referendum re-run are a significantly larger group than the eight per cent of the vote that Nick Clegg’s Liberal Democrats got in 2015.

The calculus is more fraught for Labour. In terms of the straight Conservative battle, their best hope is to put the referendum question to bed and focus on issues which don’t divide their coalition in two, as immigration does. But for separate reasons, neither Ukip nor the Liberal Democrats will be keen to let them.

At every point, the referendum question poses difficulties for Labour. Even when neither Ukip nor the Liberal Democrats take seats from them directly, they can hurt them badly, allowing the Conservatives to come through the middle.

The big problem is that the stance that makes sense in terms of maintaining party unity is to try to run on a ticket of moving past the referendum and focussing on the party’s core issues of social justice, better public services and redistribution.

But the trouble with that approach is that it’s alarmingly similar to the one favoured by Kezia Dugdale and Scottish Labour in 2016, who tried to make the election about public services, not the constitution. They came third, behind a Conservative party that ran on an explicitly pro-Union platform. The possibility of an English sequel should not be ruled out.  

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.