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Will we ever see a Thatcher of the left? Peter Hain and Will Hutton on Labour’s potential for reform

In new books, both Hain and Hutton recognise Labour as the only vehicle for reform – but what kind will emerge remains to be seen.

Back to the Future of Socialism
Peter Hain
Policy Press, 304pp, £19.99

How Good We Can Be: Ending the Mercenary Society and Building a Great Country
Will Hutton
Little, Brown, 304pp, £16.99

The financial crisis was a moment of optimism for the left. The form of capitalism that had reigned for three decades was held to have been so discredited that change was inevitable. Just as the postwar consensus evaporated in the 1970s, it was thought that the long wave of neoliberalism would retreat. The ensuing seven years have shown how misguided these hopes were.

After the initial shock to its standing, the market reasserted itself with remarkable ease. Through a supreme act of political conjuring, the right redefined a crisis of banking as one of debt. Ever since, the left has struggled to contest this narrative. Since the abandonment of socialism and the discrediting of “the Third Way”, it has lacked an alternative account of the economy and society. In those few countries where it has taken power, such as France, it has invariably disappointed expectations.

It is against this backdrop that the former Labour cabinet minister Peter Hain and the Observer columnist Will Hutton ask how the left can be regenerated, offering their manifestos for the transformation of Britain’s economy and its governance.

Both proceed with reference to past tracts. Hain’s book is intended as a sequel to Anthony Crosland’s revered The Future of Socialism (1956), a project that Ed Miliband had aspired to pursue during his sabbatical year at Harvard. Hutton’s marks 20 years since the publication of The State We’re In, his excoriating critique of Thatcherism that was briefly embraced by New Labour. As he notes with regret, the defects that he anatomised then proved even greater than he feared: “I certainly thought the gentlemanly capitalists of British finance short-termist and far too powerful – but believed they had an instinct for self-preservation; I had not reckoned that the whole system could be driven to the point of collapse.”

Hain and Hutton write with respect for New Labour’s achievements: the minimum wage, devolution, the improvement of public services and the large reductions in child and pensioner poverty. Both locate its defining failure in its unwillingness to challenge the economic settlement it inherited. They affirm their faith in the market as an indispensable means of wealth generation but crucially recognise that the question is not whether capitalism should exist but what form it should take. (Hain’s “socialism” is largely a romantic rubric for a social-democratic programme.)

In opposition to David Cameron, who has perpetuated the myth that “big gov­ernment” got us “into this mess”, they contend that only an active state can get us out. The task is now to reshape the economy so that it better serves the twin objectives of prosperity and equality. Both argue for the empowerment of state banks to drive investment, for the imposition of a training levy on companies (to remedy the British disease of low productivity), for employee profit-sharing, for the renewal of trade unions as stakeholders in capitalism, rather than as marginalised opponents – and for the revival of public ownership in the case of natural monopolies such as the railways.

The evidence marshalled for these demands is a salutary reminder of how successive UK governments have arrogantly neglected best practice. As Hain writes, “There is no future for Britain trying to compete at the shoddy end of the quality spectrum, charging rock-bottom prices for copycat products made using clapped-out kit by unskilled labour on poor pay.”

In rejecting the economic assumptions that continue to hold sway among the establishment, they also reject the dominant fiscal assumptions. Both rightly chide Labour for its timidity in rebutting the Conservative assertion that Britain only narrowly avoided bankruptcy in 2008 and that deficit reduction must be prioritised above all else. Hutton notes, “The national debt has been proportionally higher for most of the last 300 years, with the low national debt in the three decades before the First World War and the three decades up to the financial crisis the norm rather than the exception.” The best means of restoring the public finances to health is not austerity but growth through investment. With its long-term debt maturity (an average of 14 years) and ultra-low borrowing costs, Britain is well placed to follow this path. Hain argues for a £60bn two-year programme of investment “focused upon housing, infrastructure, low-carbon investment and education and skills”.

Where growth cannot fill the gap, the priority should be tax rises, in a country where the state continues to levy less than many of its competitors. Hutton calls for “higher taxes on wealth, business and property, from ending the UK’s tax-haven status, broadening the VAT base and taxing polluters”. More radically, Hain proposes all of these as well as a financial transaction tax, the abolition of the upper earnings limit for National Insurance and the extension of stamp duty to football transfer fees. If all of these measures lie starkly to the left of the recent consensus, it is worth noting that, as in the case of the 50p tax rate and the “mansion tax”, they would likely command overwhelming public support.

As well as confronting the UK’s persistent flaws of low investment, extreme inequality and dilapidated infrastructure, Hain and Hutton demand an end to its absurdly centralised state. With the public increasingly alienated from Westminster – most vividly displayed in the vote for Scottish independence – the creation of a federal Britain and large-scale devolution to city regions can no longer be deferred.

It is a programme worthy of any progressive government. The harder task is identifying how it can be effected. Hutton, in common with Hain, recognises Labour as the only vehicle for such reforms. Indeed, no British leader in recent times has better represented their social-democratic aspirations than Ed Miliband. But because of the long-term decline in support for the party, it may struggle to fulfil this role. Any Labour government that takes office after the general election will almost certainly do so without a parliamentary majority, with Ukip, the SNP and the Greens all poised to erode its base further. After the birth of multiparty politics, Britain may never again elect governments capable of emulating the transformations of the past. That the times demand a new Attlee, or a Thatcher of the left, is without doubt. What is not is whether one will yet emerge.

Will Hutton will appear at the Cambridge Literary Festival, in association with the New Statesman, on 17 April

George Eaton is political editor of the New Statesman.

This article first appeared in the 20 February 2015 issue of the New Statesman, Still hanging

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General election 2017: Why don't voters get more angry about public spending cuts?

In 2012, 61 per cent were concerned about the impact of future cuts. By 2017 this was down to 45 per cent. What happened?

The shape of Jeremy Corbyn and Labour’s pitch to the country is clear. The overarching theme is a “rigged” system, a Bernie Sanders style anti-establishment campaign. 

This started with a clear economic focus, but will build out to public services and state support more generally: first, the switch to under-funded schools, and we’ll soon see the NHS emerge as the primary target. As the shadow Health secretary Jon Ashworth said, Labour believes the public has reached a “tipping point” in their concern about waiting lists and accident and emergency services.

And this focus makes perfect sense for Labour. It just won’t work as well as they might hope.

Why does it make sense? Firstly because there is record pessimism about the future of the NHS. Our poll from March showed that 62 per cent of those surveyed expect the NHS to get worse in the next five years, the highest we’ve measured – and by far the most negative outlook for any public service.

It also makes sense because this is one the very few important issues where Labour has a lead over the Conservatives. In our monthly issues index for February, more than half of voters said it was one of the most important issues facing the country, the highest level since 2002. And it’s always in the top three issues that people say determine their vote.

And Labour still have a lead on the NHS: 36 per cent say they have the best policies of all the parties, with the Conservatives on just 23 per cent.

So why will it not work well for Labour? 

First, Labour’s lead on the issue is nothing like it was, even in the relatively recent past. In 2012, 46 per cent thought Labour were the best party for the NHS, and only 16 per cent thought the Conservatives were. In previous decades, Labour was up above 50 per cent at various points. They’ve lost a lot of ground as the originator and defender of the NHS.

Second, while Corbyn is right to claim that issues like public services have more day-to-day impact on people, our relationship with Europe is uniquely dominant right now. Outside a major political upheaval like Brexit or an economic meltdown, there is no doubt that the NHS would have topped concerns over the winter, as we’ve seen it do many times before. We have a special relationship with the NHS, and when we feel it’s under threat it can trump all other concerns - as in the early 2000s, when more than 70 per cent said it was the key national issue. But instead, Brexit tops the list right, with the EU higher in people’s minds than at any point since we started asking the question in 1974.

In any case, it’s not even clear that a real tipping point has been reached in our health care concerns. While our worry for the future is extremely high, current satisfaction and overall ratings are still high, and not declining that much. This is shown across lots of surveys of individual health services: ratings are slipping, but slowly. And this is brought home by international comparisons – we’re the most worried about the future of our health service out of 23 countries, but we’re also among the most satisfied currently. We’re a country-level example of the “worried well”.

And this leads to a fourth point – expectations of public services seem to be shifting. The narrative of the necessity of spending cuts is so firmly embedded now that expectations of the level of service we can afford as a country may have moved for the long-term.

We asked in 2012 what percentage of planned spending cuts people thought had been made. Of course, this is an impossible question to answer definitively, but it is a useful gauge of how long a road people think we have ahead. Back then, people thought 40 per cent of planned cuts had already happened. Now, five years later, we think it’s still just 37 per cent. The idea of semi-permanent austerity has taken hold.

Of course, this could still provide a key leverage point for Labour, if people think there is a way to avoid this future. But the key point is that the cuts are not biting at a personal level for large proportions of the population, rather they are concentrated among quite a small proportion of people. So, back in 2012, 32 per cent said they had been affected by cuts to public services – by 2017 this had actually declined to 26 per cent. No cumulative, growing resentment at the personal impact of cuts - in fact, the opposite. 

And similarly, back in 2012, 61 per cent were concerned about the impact of future cuts on them and their families. But by 2017 this was down to 45 per cent. 

We are constantly scanning for the “tipping point” that the Labour MP Jon Ashworth has identified. It may come suddenly, and if it comes it seems most likely it will be the NHS that shifts the balance. But there’s no sign yet, and that makes Labour’s message that much more difficult to land. 

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