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.
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Young voters lost the referendum but they still deserve a future

It's time to stop sneering at "crap towns" and turn them into places young people want to stay. 

What a horror show. A land-slide 75 per cent of young people voted in favour of Europe. The greater numbers of the over 65s met that force with 61 per cent against. Possibly the greatest divide in our country turned out to be not gender, not race, not even party politics, but age. The old and the young faced off about how to run our country, and the young lost. 
 
What have we done to our future? Well, whatever happens now, leadership is required. We can’t afford to have the terms of the debate dictated by Brexiters who looked as shocked at the mess they have made as Stronger-Inners are distraught. We can’t afford to wallow either. Young people across this country today are feeling worried and let down – failed by all of us - because when their future was on the line, we were unable to secure it. We – those who believe we achieve more by our common endeavour - all feel that deep worry, and all share in that shame.

How we should all rue the choice not to allow 16 and 17 year olds to vote. And quickly re-ignite the campaign for votes at 16.

But young people don’t need our worry or our pity or our shame. They need a better chance and we need to give them one. I believe passionately that the future for this country was as a leader in Europe, but that does not mean we give up on our future now. For Labour, the challenge now is to work out how we can build a better future for all our people and communities. The sky has not fallen. The UK is still a rich country.

Beat recession with better housing

Let’s start with housing and development. It is no longer good enough to simply set targets with no possibility of meeting them. The housing crunch has killed off the chance of owning a home for many young people, and left thousands at the mercy of cripplingly expensive rent.  The housing market is broken and we need to build much faster in high growth areas like London and Manchester at the same time investing in restoring low quality housing in our northern towns, in Scotland, Wales and in Northern Ireland. 

In policy terms, we should be asking the Local Government Association, the Infrastructure Commission, and the construction industry itself, to collaborate on a counter-Brexit house building plan with a focus on areas where there is a clear market failure. We could get a champion of industry and construction such as my old Network Rail boss, Sir John Armitt, to be in charge, and lead a national mission to build and rebuild homes.

In the last parliament, Osborne first tried the "tighten our belts" approach to speeding up growth. He failed, and then tried plan B: investment for growth. Now we have the possibility of another recession on the cards and may well need to use investment to stop our economy grinding to a halt. Now - or possibly sooner - would be an excellent time for a national building project like this housing plan.

Stop sneering at "crap towns"

On economic development, it is clear that Labour needs a strategy for giving our northern towns an economic future and linking them up with the modern economy. When cities grow, and towns fall behind, those towns are a breeding ground for frustration. This is not just about cuts, it is about the uneven distribution of the benefits of globalisation. The Brexit vote was centred around areas that justifiably feel they have lost from the last decades. We need to make sure they win from the years ahead.

For far too long, there has been a sneering "crap towns" attitude. These places can offer good housing, community, and a decent life. But the problem there is work. In many of our towns, there is too little to do that can offer a young person a career tomorrow as well as a shift today.

Because, as it happens, the biggest driver of low pay tends to be skill level, not immigration. 

Teach the skills we need

Of course we should stop exploitation of migrant workers who undercut others. Let's tell firms that use exploitative agencies they can't work for the Government. But you can’t raise wages without changing the structure of the labour market. It’s not just about replacing one set of workers with another - you have to raise the level of wages that those workers can command. Because the truth about work in too many places is that most of the jobs available are either those with the low status of care work (though it may be highly-skilled work), or industries with a high volume of low-skilled work such as retail and hospitality. But from there, there’s nothing to move on to. The brain drain to cities has consequences.

Leaving Europe will shut off economic opportunity across the country to many young people.  Frankly, we owe it to them to work like demons to offer them something better closer to home.

We need a social partnership for skills and work. The Confederation of British Industry and the Trades Union Congress working together to deliver an urgent plan for training and career progression in the towns with stagnant labour markets and low skills. We need to find a way to stop the brain drain that sucks the talent out of the places that need it the most, using the experience of programmes like Teach First. When the best people feel they have no reason to return to where they grow up, it is both a sign of a deep problem and also demoralising evidence of decline for those left behind.

And our new metro-mayors must pay as much attention to the towns in their region as well as the city centre. No one left out, no one’s local shops lying empty whilst a city down the road flourishes. And no schools failing, either.

It is undeniable that people voted for change in the referendum. The problem is that the change they voted for will do little to solve the problems they face. Labour’s role is not just to point this out, but to offer a vision of real meaningful change. 

Not easy, perhaps. But one thing is for certain, mouthing platitudes about "hearing concerns"and offering only symbolic gestures has been tested to destruction. People deserve better and we need to offer it to them.

Alison McGovern is the Labour MP for Wirral South

Alison McGovern is Labour MP for Wirral South.