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George Osborne’s cunning plan: how the chancellor's austerity narrative has harmed recovery

The Tories claim austerity saved the country from disaster. But Osborne's neoliberal right economics drew on discredited theories - and ultimately scuppered growth.

© Jonathan McHugh

Over their five years in power, the Conservatives have claimed their austerity policy saved the country from disaster. This purported economic competence sits at the heart of their election campaign. It needs critical scrutiny.

The coalition government has given two main reasons why austerity – cutting the Budget deficit – was necessary. The first is that its predecessor Labour government, living “beyond its means”, left the nation with a rising mountain of public debt. The only way to restore fiscal probity was to start austerity as soon as possible.

The second reason was that commitment to austerity was the only way to reassure the bond markets that the British government would not “go the way of Greece”: that is, default on its debts. Both arguments were false but they have never been properly exposed in the media; and for various reasons Labour has not attacked them with the vigour they deserve.

In economic logic, the two reasons are independent of each other. How much a government needs to borrow should be determined by the state of the economy, not by how much debt its predecessor has left it. In a slump, a government should aim to increase its deficit, not reduce it, to compensate for the fall in private-sector spending. This will normally cause the economy to grow faster than the deficit and in turn reduce the deficit, and eventually the national debt, as a share of national income. But to understand this, you need to understand that a slump is defined by the existence of spare capacity: spare because the private sector is unwilling to create the jobs to use it. Instead of borrowing to keep people in idleness, the government should borrow to create jobs. Yet this common sense was seemingly no longer the common understanding.

Linking Labour overspending with the risk of “going the way of Greece” offered the Conservatives an alternative narrative of undoubted persuasive power. Had the Labour government not left so much debt, the Conservatives said, there would have been less need for austerity to reassure bondholders. George Osborne had to be so austere because Gordon Brown had been so profligate.

This message resonated politically. The collapse of the economy in 2008 took place on Labour’s watch. So it was easy to blame Labour for it. Labour felt unable to defend its record; so the Conservative narrative became the accepted one among the punditry. However, it is far from clear that voters bought this story at the time. Labour only narrowly lost the 2010 election; most political analysts believe that Brown’s lacklustre leadership cost the party between 20 and 30 seats. So, defending Labour’s record was not a hopeless task politically. But the Labour opposition soon gave up the attempt to do so, leaving the telling of Labour’s story to the Conservatives.

In the interests of truth, we need to ask two questions. How profligate or extravagant had Labour been? And how real was the threat of a bondholder strike?

The myth of Labour profligacy

The answer to the first question can be divided into two parts: Labour’s economic record before 2008 and its record in the post-crash years 2008 to 2010.

The Labour government had committed itself to Gordon Brown’s famous fiscal rules. In its draft election manifesto of 1996, it promised to “enforce the ‘golden rule’ of public spending – over the economic cycle, we will only borrow to invest and not to fund current expenditure”. This pledge was buttressed by the “sustainable investment rule”: over the cycle, the government would hold net public debt to below 40 per cent of GDP. Significantly, Brown’s tight spending plans of 1997-98 were set against “Conservative mismanagement of the public finances” – which only goes to show that, following a change of government, the incoming government always blames its predecessor for the fiscal mess it inherits.

A detailed, and far from uncritical, analysis of Labour’s fiscal record by Malcolm Sawyer of Leeds University, dating from 2007, found that between 1997-98 and 2005-2006 Brown, as chancellor, “nearly met” his fiscal targets. The current account deficit was close to zero over the period and the national debt stayed under 40 per cent of GDP. Sawyer put this record “close to achievement of the golden rule” partly down to good luck – surpluses generated by the dotcom boom of the late 1990s, reduction in world nominal interest rates – but partly to tricky (“creative”, in the jargon) accounting. The use of the private finance initiative (PFI) to fund the building of schools and hospitals “off budget” lowered the deficit in “real time” at the cost of raising it in the future. Had this investment programme been financed by conventional borrowing, the net debt-to-GDP ratio would have been closer to 50 per cent, rather than the recorded 33.6 per cent.

Second, the Brown Treasury kept redating the “economic cycle” (a fuzzy concept at best) to make its fiscal rules easier to meet. The main effect of this redating was to postpone the achievement of the zero balance on public investment needed to meet the sustainable investment rule. It was for these reasons that in 2005 the OECD noted that Britain’s fiscal policy “required attention”.

By 2007 the Treasury admitted that it was time to slow down the public-sector growth engine. Its Comprehensive Spending Review of February 2007 cut projected public spending from 4 per cent a year to 2.1 per cent a year over the following three years, less than the expected growth of the economy, which was itself expected to be lower than in the previous boom years. This would yield a current account surplus of 0.3 per cent and cap the national debt at 39.8 per cent by 2010-11. However, Brown’s luck finally ran out: instead of slipping gently into a new economic cycle, the economy fell into a deep hole. Economic growth did not slow down – it collapsed.

To summarise: in its first ten years Labour may have fiddled the books a bit, as all governments do, but it had certainly not created a mess. And it had built lots of hospitals and schools. The more honest charge is that New Labour overestimated the revenue flows it would go on receiving from a flaky financial services sector, whose largely unregulated expansion it had encouraged, and whose inherent instability it had ignored. But this is a judgement after the event. Most academic economists ignored the possibility of a financial crash. Nor did the Conservative opposition think the government’s finances were messed up in 2007. In September of that year, the shadow chancellor, George Osborne, confirmed that he would match Brown’s spending plans and that, “under a Conservative government, there will be real increases in spending on public services, year after year”.

The mess, if that is what it was, came in the two big slump years, 2008 and 2009. Owing to the collapse of its revenues and the additional spending on social security, public-sector net borrowing shot up from 2.7 per cent to 10.2 per cent of GDP. The cost  of bailing out banks added to a national debt that ballooned from 43.6 per cent of GDP pre-crash to 76.4 per cent by 2010.

In short, the big holes in the public finances inherited by the coalition when it took office were the result not of misguided splurging, but of the sudden emergence of deep craters in the British and world economy. This is confirmed by a 2011 IMF report, which calculated that of the 37 per cent increase in UK public debt from 2007-2011, 25 per cent was due to loss of revenues, 7 per cent to support of the financial sector and only about 2 per cent to fiscal stimulus. Furthermore, it’s true that the rise in the deficit was somewhat higher than the OECD average, but this was because British governments were more dependent on revenues from the financial services sector.

The Conservative charge of Labour profligacy boils down to the claim that Labour did not start cutting spending immediately it saw its revenues falling. But Conservative spokesmen have never honestly faced up to the question: what would have happened if the government had started cutting its spending with the economy in a tailspin?

Labour did what any sane and civilised government would have done in the circumstances (and which all other governments did): continue to support the economy as best it could to limit the damage caused by the collapse in private spending.

The Greek excuse

Enter the coalition and George Osborne. The British economic collapse bottomed out at the end of 2009 and the economy started growing modestly. Then came the Greek sovereign debt crisis and the switch to austerity. Osborne made the link explicit when he declared in his “emergency” Budget of June 2010 “you can see in Greece an example of a country that didn’t face up to its problems, and that is the fate that I want to avoid”. That austerity was the only way to avoid a British sovereign debt crisis remains the official defence of austerity to this day. As the Treasury minister Paul Deighton told the House of Lords only last month, “the markets would not have allowed us to continue with the scale of deficit we had”.

But Britain was not like Greece or any other country in the eurozone. Locked into a system of nation-state debt issuers without currency-creating powers, Greece and other eurozone debtors faced a dire choice between austerity and default. But with its own currency and its own “lender of last resort” central bank to backstop its bond issues, Britain had an extra margin of freedom (secured, ironically, by the Labour government when it decided not to join the single currency) to conduct a macroeconomic policy suited to the condition of its economy. Fiscal policy was not disabled by the bond markets as in the eurozone; there was no need for “an accelerated plan” to reduce the deficit. What did happen was that Osborne’s alarmist anti-Labour rhetoric talked influential commentators who should have known better into believing that Britain was on the road to deficit-fuelled ruin.

 

***

 

So, why did Osborne do it? Historians will debate his motives but I believe that this intensely political Chancellor saw in a manufactured crisis of confidence a once-in-a-lifetime opportunity to cut the size of the state. The view, long held by the neoliberal right, that state spending steals resources from the productive economy, was repackaged for the purposes of austerity as the doctrine that government spending was “crowding out” more efficient private-sector spending and therefore damaging recovery: a restatement of the Treasury view of the 1920s, which Keynes exploded with a common-sense argument – in a slump, increased government spending does not take resources from the private sector: it brings into use resources that are idle.

From his theoretical ragbag, Osborne constructed a consummate political narrative that linked folklore economics (“the government can’t spend money it hasn’t got”) to the politics of blame (“cleaning up the mess left by Labour”) to the politics of fear (“the Greek bogey”) to grand economic strategy (“reducing the deficit is a necessary condition for sustained recovery”).

There is no doubt that, aside from his basic instincts, Osborne received some very bad economic advice. “Unless we deal with debts there will be no growth,” he declared in June 2010. This echoed the briefly fashionable views of two American economists, Carmen Reinhart and Kenneth Rogoff, who claimed that if the ratio of public debt to GDP rose above 90 per cent, growth would go into reverse. Their headline finding was quickly discredited but Osborne said that they were the economists who most influenced him.

Another argument briefly called into use in 2010 was the theory of “expansionary fiscal consolidation”. The theory was that the boost to business confidence given by cutting welfare benefits would more than offset their contractionary effects on demand. Indeed, its main advocate, Alberto Alesina of Bocconi University in Milan, assured European finance ministers at a meeting in Madrid in April 2010 that not only would a “credible policy of fiscal consolidation” boost growth but it would do so quickly.

The failure of the “Alesina effect” to materialise in those European countries that were unwise enough to try out his remedies should have discredited austerity as a recovery policy. For nearly three years following Osborne’s 2010 deficit-cutting Budget, the British economy stagnated. The Chancellor forecast an average GDP growth of 2.7 per cent between 2011 and 2013. Actual growth in the period was 1.3 per cent. Austerity’s supporters blame the stagnation on “headwinds” – the continuing eurozone crisis, higher oil prices – but the Office for Budget Responsibility (OBR), the watchdog that Osborne himself set up to monitor his performance, disagrees. Austerity, it says, reduced GDP growth by 1 per cent in 2010-11 and a further 1 per cent in 2011-12.

Extrapolating these OBR figures puts the cumulative cost of austerity since 2010 at 5 per cent of GDP. Some leading economists, including Simon Wren-Lewis of Oxford University, consider 10-15 per cent a more realistic figure. That means between 5 and 15 per cent of British output has been permanently lost. The lowest estimate, 5 per cent, indicates £100bn, or £1,500 for every citizen. The truth is that austerity stopped the recovery in 2010 and caused the economy and society unnecessary damage.

Growth’s failure to materialise dished the Chancellor’s five-year timetable for cutting borrowing. With government revenues failing to recover, Osborne quietly slowed down the speed of his cuts, eventually declaring that a further £35bn of consolidation would be needed in the next parliament. The Bank of England injected a further £175bn into the economy between October 2011 and July 2012. In 2012, the government started subsidising bank lending for mortgages through its “Help to Buy” scheme. The shaky recovery that the easing of austerity brought about in 2013 made possible the Chancellor’s rhetorical masterstroke: we are growing faster than any country in Europe. This shows austerity works!

 

Labour’s weakness

Conservative rhetoric has left Labour floundering. The Conservatives have been able to take the narrative of the crisis away from Labour and turn their disastrous economic stewardship to political advantage. Their surprising weakness in the polls suggests their story is not entirely believed. This may yet enable Labour to form a minority government. Osborne does not deserve another go. He has done his best and worst.

Could Labour have done better? Its first, and probably decisive failure, was in mounting a convincing defence of its own record. Yet there was much to be proud of and particularly in the crisis years of 2008-2010 – the very years in which, according to the Conservatives, they messed up the public finances. In fact, the Labour government’s decent and principled reluctance to cut public spending in the crisis years was what kept the economy going; to which must be added Gordon Brown’s exceptional leadership in co-ordinating the global recovery effort in 2009. But the chance to establish this as the story of the crisis was missed; and after the electorate had given its verdict in 2010, it could not be resurrected politically.

Once Osborne had put his strategy for recovery into place, it would have required not only exceptional rhetorical skill to have countered it, but economic understanding of a high order. The Greek finance minister, Yanis Varoufakis, a professional economist, has shown how important it is to have at least one political leader who combines rhetorical power with a solid knowledge of macroeconomics. For Varoufakis has the knowledge and confidence to confront the banalities that pass for economic wisdom in the temples of power and finance. Has anyone in these august places, one wonders, heard of the paradox of thrift? But no one in the post-2010 Labour leadership could have done that job except the shadow chancellor, Ed Balls, and his inability or unwillingness to make a decisive attack weakened Labour’s intellectual firepower and in effect let Osborne get away with it. It is pretty scandalous that it is left to the SNP to make the case Labour should have been making.

The opposition to austerity was also weakened by a factor outside Labour’s control, namely the rapid reassertion of macroeconomic orthodoxy in treasuries, central banks, international organisations such as the IMF and much economic journalism, following their brief flirtation with Keynesianism in 2008-2009. Why, after the economies of the world had fallen into a hole, did these people start turning their guns on the governments that had rescued their economies from another Great Depression? That is something historians and political analysts will have to puzzle out.

One baleful consequence of the return to orthodoxy was that the statistical basis for policymaking was consistently slanted in the wrong direction. There was a systematic underestimate of spare capacity in the period 2010-11 and a systematic overoptimism about growth prospects.

Keynes said: “When statistics do not make sense, I find it generally wiser to prefer sense to statistics.” Common sense should have told policymakers that the financial system and economy had been deeply damaged by the crash of 2008 and needed a very strong stimulus from government to avoid years of waste and stagnation. Prudence should now tell policymakers that the promise to cut the welfare state to the bone will not only inflict further economic damage but cause social resentment on a scale not seen since the 1980s.

Little of this common sense of the matter has emerged so far in the general election. The Conservatives have spun their familiar yarn of rescuing Britain from “Labour’s Great Recession”, restoring “confidence” by borrowing less, pledging to start “paying down debt”. Labour has mostly tried to be plus royaliste que le roi: it will “cut the deficit” every year; it will impose a “Budget Responsibility Lock” to stop governments fiddling the accounts. More promisingly, it will set up a “British Investment Bank” but has said nothing about its funding or powers. Perhaps the voters will see through Labour’s disordered head to its humane heart. But with so little to choose between the big parties on the main issue of the day, it is not surprising that the election remains too close to call.

Robert Skidelsky is a cross-bench peer and a leading biographer of J M Keynes. His most recent book is “Britain Since 1900: a Success Story?” (Vintage)

This article first appeared in the 24 April 2015 issue of the New Statesman, What does England want?

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Losing Momentum: how Jeremy Corbyn’s support group ran out of steam

Tom Watson says it is destroying Labour. Its supporters say it is a vital force for change. Our correspondent spent six months following the movement, and asks: what is the truth about Momentum?

1. The Bus

 The bus to the Momentum conference in Liverpool leaves at seven on a Sunday morning in late September from Euston Station, and the whole journey feels like a parody of a neoliberal play about the failings of socialism. We depart an hour late because activists have overslept and we cannot go without them. As we wait we discuss whether Jeremy Corbyn will be re-elected leader of the Labour Party this very day. One man says not; a young, jolly girl with blonde hair cries: “Don’t say that on Jezmas!” She is joking, at least about “Jezmas”.

A man walks up. “Trots?” he says, calmly. He is joking, too; and I wonder if he says it because the idea of Momentum is more exciting to outsiders than the reality, and he knows it; there is an awful pleasure in being misunderstood. Momentum was formed in late 2015 to build on Corbyn’s initial victory in the Labour leadership election, and it is perceived as a ragtag army of placard-waving Trots, newly engaged clicktivists and Corbyn fanatics.

We leave, and learn on the M1 that, in some terrible metaphor, the coach is broken and cannot drive at more than 20mph. So we wait for another coach at a service station slightly beyond Luton. “Sabotage,” says one man. He is joking, too. We get off; another man offers me his vegan bread and we discuss Karl Marx.

A new coach arrives and I listen to the others discuss Jeremy Corbyn’s problems. No one talks about his polling, because that is depressing and unnecessary for their purpose – which, here, is dreaming. They talk about Corbyn as addicts talk about a drug. Nothing can touch him, and nothing is ever his fault. “There are problems with the press office,” says one. “Perhaps he needs better PAs?” says another.

One man thinks there will be a non-specific revolution: “I hope it won’t be violent,” he frets. “There have been violent revolutions in the past.” “I stuck it out during Blair and it was worth it,” says another. “They’ve had their go.” “We don’t need them [the Blairites],” says a third. “If new members come in, it will sort itself out,” says a fourth.

I have heard this before. Momentum supporters have told me that Labour does not need floating voters, who are somehow tainted because they dare to float. This seems to me a kind of madness. I do not know how the Labour Party will win a general election in a parliamentary democracy without floating voters; and I don’t think these people do, either.

But this is a coach of believers. Say you are not sure that Corbyn can win a general election and they scowl at you. That you are in total agreement with them is assumed, because this is the solidarity bus; and if you are in total agreement with them they are the sweetest people in the world.

That is why I do not tell them that I am a journalist. I am afraid to, and this fear baffles me. I have gone everywhere as a journalist but with these, my fellow-travellers on the left, I am scared to say it; and that, too, frightens me. MSM, they might call me – mainstream media. What it really means is: collaborator.

The man beside me has been ill. He talks sweetly about the potential renewal of society under Corbyn’s Labour as a metaphor for his own recovery, and this moves him; he has not been involved in politics until now. I like this man very much, until I mention the Jewish Labour MP Luciana Berger and the anti-Semitism she has suffered from Corbyn supporters and others; and he says, simply, that she has been employed by the state of Israel. He says nothing else about her, as if there were nothing else to say.

We listen to the results of the leadership election on the radio; we should be in Liverpool at the Black-E community centre to celebrate, but the solidarity bus is late. Corbyn thanks his supporters. “You’re welcome, Jeremy,” says a woman in the front row, as if he were on the coach. She nods emphatically, and repeats it to the man who isn’t there: “You’re welcome, Jeremy.”

In Liverpool, some of the passengers sleep on the floor at a community centre. The venue has been hired for that purpose: this is Momentum’s commitment to opening up politics to the non-connected, the previously non-engaged, and the outsiders who will attend their conference in a deconsecrated church, even as the official Labour conference convenes a mile away. But never mind that: this is the one that matters, and it is called The World Transformed.

 

2. The Conference

Later that day, outside the Black-E, a man comes up to me. Are you happy, he asks, which is a normal question here. These are, at least partly, the politics of feelings: we must do feelings, because the Tories, apparently, don’t. I say I’m worried about marginal seats, specifically that Jeremy – he is always Jeremy, the use of his Christian name is a symbol of his goodness, his accessibility and his singularity – cannot win them.

“The polls aren’t his fault,” the man says, “it’s [Labour] people briefing the Tories that he is unelectable.” I do not think it’s that simple but it’s easy to feel like an idiot – or a monster – here, where there is such conviction. As if there is something that only you, the unconvinced, have missed: that Jeremy, given the right light, hat or PA, could lead a socialist revolution in a country where 13 million people watched Downton Abbey.

But the man does say something interesting which I hope is true. “This is not about Jeremy, not really,” he says. “It is about what he represents.” He means Momentum can survive without him.

There is a square hall with trade union banners and a shop that sells Poems for Jeremy Corbyn, as well as a Corbyn-themed colouring book. When I am finally outed as a journalist, and made to wear a vast red badge that says PRESS, I attempt to buy one. “That’s all journalists are interested in,” the proprietor says angrily. That is one of our moral stains, apparently: a disproportionate (and sinister) interest in colouring books.

I go to the Black Lives Matter event. A woman talks about the experience of black students in universities and the impact of austerity on the black community. Another woman tells us that her five-year-old son wishes he was white; we listen while she cries. I go to the feminism meeting and change my mind about the legalisation of prostitution after a woman’s testimony about reporting an assault, and then being assaulted again by a police officer because of her legal status. Then I hear a former miner tell a room how the police nearly killed him on a picket line, and then arrested him.

This, to me, a veteran of party conferences, is extraordinary, although it shouldn’t be, and the fact that I am surprised is shameful. Momentum is full of the kinds of ­people you never see at political events: that is, the people politics is for. Women, members of minority communities (but not Zionist Jews, naturally), the disabled: all are treated with exaggerated courtesy, as if the Black-E had established a mirror world of its choosing, where everything outside is inverted.

When Corbyn arrives he does not orate: he ruminates. “We are not going to cascade poverty from generation to generation,” he says. “We are here to transform society and the world.” I applaud his sentiment; I share it. I just wish I could believe he can deliver it outside, in the other world. So I veer ­between hope and fury; between the certainty that they will achieve nothing but an eternal Conservative government, and the ever-nagging truth that makes me stay: what else is there?

There is a rally on Monday night. Momentum members discuss the “purges” of socialist and communist-leaning members from Labour for comments they made on social media, and whether détente is possible. A nurse asks: “How do we know that ‘wipe the slate clean’ means the same for us as it does for them? How on Earth can we trust the likes of Hilary Benn who dresses himself up in the rhetoric of socialism to justify bombing Syria? The plotters who took the olive branch offered by Jeremy to stab him in the back with another chicken coup?” I am not sure where she is going with that gag, or if it is even a gag.

The next man to speak had been at the Labour party conference earlier in the day; he saw Len McCluskey, John McDonnell and Clive Lewis on the platform. “Don’t be pessimistic, folks,” he cries. “On the floor of conference today we owned the party. Progress [the centrist Labour pressure group] are the weirdos now. We own the party!”

A man from Hammersmith and Fulham Momentum is next. “The national committee of Momentum was not elected by conference,” he says. “It’s a committee meeting knocked up behind closed doors by leading people on the left, including our two heroes.” He means Jeremy Corbyn and John McDonnell. This is explicit heresy, and the chair interrupts him: “Stan, Stan . . .” “I’m winding up!” he says. “We need a central committee of Momentum elected by conference,” he says, and sits down.

The following day Corbyn speaks in the hall in front of golden balloons that spell out S-H-E-E-P. It may be another gag, but who can tell, from his face? This is his commitment to not doing politics the recognisable way. He is the man who walks by himself, towards balloons that say S-H-E-E-P. (They are advertising the band that will follow him. They are called, and dressed as, sheep.) The nobility of it, you could say. Or the idiocy. He mocks the mockers of Momentum: is it, he was asked by the mainstream media, full of extremists and entryists? “I’m not controlling any of it,” he says calmly, and in this calmness is all the Twitter-borne aggression that people complain of when they talk about Momentum, for he enables it with his self-satisfied smile. “It’s not my way to try and control the way people do things. I want people to come together.” He laughs, because no one can touch him, and nothing is ever his fault.

I meet many principled people in Liverpool whose testimony convinces me, and I didn’t need convincing, that austerity is a national disaster. I meet only one person who thinks that Momentum should take over the Labour Party. The maddest suggestion I hear is that all media should be state-controlled so that they won’t be rude about a future Corbyn government and any tribute colouring books.

 

3. The HQ

Momentum HQ is in the TSSA transport and travel union building by Euston Station in London. I meet Jon Lansman, Tony Benn’s former fixer and the founder of Momentum, in a basement room in October. Lansman, who read economics at Cambridge, lived on the fringes of Labour for 30 years before volunteering for Corbyn’s campaign for the leadership.

The terms are these: I can ask whatever I want, but afterwards James Schneider, the 29-year-old national organiser (who has since left to work for Corbyn’s press team), will decide what I can and cannot print. ­Momentum HQ wants control of the message; with all the talk of entryism and infighting reported in the mainstream media, the movement needs it.

There is a civil war between Jon Lansman and the Alliance for Workers’ Liberty (AWL) and other far-left factions, which, I am told, “wish to organise in an outdated manner out of step with the majority of Momentum members”. Some of the Momentum leadership believe that the AWL and its allies want to use Momentum to found a new party to the left of Labour. Jill Mountford, then a member of Momentum’s steering committee, has been expelled from Labour for being a member of the AWL. It screams across the blogs and on Facebook; more parody. We don’t talk about that – Schneider calls it “Kremlinology”. It is a problem, yes, but it is not insurmountable. We talk about the future, and the past.

So, Lansman. I look at him. The right considers him an evil Bennite wizard to be feared and mocked; the far left, a Stalinist, which seems unfair. It must be exhausting. I see a tired, middle-aged man attending perhaps his fifteenth meeting in a day. His hair is unruly. He wears a T-shirt.

The last Labour government, he says, did one thing and said another: “Wanting a liberal immigration policy while talking tough about refugees and migrants. Having a strong welfare policy and generous tax credits while talking about ‘strivers’ and ‘scroungers’ unfortunately shifted opinion the wrong way.”

It also alienated the party membership: “Their approach was based on ensuring that everyone was on-message with high levels of control.” It was an “authoritarian structure even in the PLP [Parliamentary Labour Party]. Even in the cabinet. It killed off the enthusiasm of the membership. They never published the figures in 2009 because it dropped below 100,000. We’ve now got 600,000.” (The membership has since dropped to roughly 528,000.)

And the strategy? “If you have hundreds of thousands of people having millions of conversations with people in communities and workplaces you can change opinion,” he says. “That’s the great advantage of ­having a mass movement. And if we can change the Labour Party’s attitude to its members and see them as a resource – not a threat or inconvenience.”

That, then, is the strategy: street by street and house by house. “We can’t win on the back of only the poorest and only the most disadvantaged,” he says. “We have to win the votes of skilled workers and plenty of middle-class people, too – but they are all suffering from some aspects of Tory misrule.”

I ask about polling because, at the time, a Times/YouGov poll has Labour on 27 per cent to the Tories’ 41 per cent. He doesn’t mind. “It was,” he says, “always going to be a very hard battle to win the next election. I think everyone across the party will privately admit that.” He doesn’t think that if Yvette Cooper or Andy Burnham were leader they would be polling any better.

Upstairs the office is full of activists. They are young, rational and convincing (although, after the Copeland by-election on 23 February, I will wonder if they are only really convincing themselves). They talk about their membership of 20,000, and 150 local groups, and 600,000 Labour Party members, and the breadth of age and background of the volunteers – from teenagers to people in their eighties. One of them – Ray Madron, 84 – paints his hatred of Tony Blair like a portrait in the air. He has a ­marvellously posh voice. Most of all, they talk about the wounds of austerity. Where, they want to know, is the anger? They are searching for it.

Emma Rees, a national organiser, speaks in the calm, precise tones of the schoolteacher she once was. “A lot of people are sick and tired of the status quo, of politics as usual, and I think trying to do things differently is hard because there isn’t a road map and it’s not clear exactly what you’re supposed to do,” she says. She adds: “It is a coalition of different sorts of people and holding all those people together can sometimes be a challenge.”

Is she alluding to entryism? One activist, who asks not to be named, says: “I don’t want to insult anyone, but if you rounded up all the members of the Socialist Workers Party [SWP] and the Socialist Party and any other ultra-left sect, you could probably fit them in one room. Momentum has 20,000 members.”

The SWP were outside at The World Transformed in Liverpool, I say, like an ambivalent picket line. “Well,” James Schneider says pointedly, “they were outside.”

Momentum, Emma Rees says, “is seeking to help the Labour Party become that transformative party that will get into government but doesn’t fall back on that tried and failed way of winning elections”.

They tell me this repeatedly, and it is true: no one knows what will work. “The people who criticised us don’t have any route to electability, either,” says Joe Todd, who organises events for Momentum. He is a tall, bespectacled man with a kindly, open face.

“They lost two elections before Jeremy Corbyn. It’s obvious we need to do something differently,” he says. “Politics feels distant for most people: it doesn’t seem to offer any hope for real change.

“The left has been timid and negative. More and more people are talking about how we can transform society, and how these transformations link to people’s everyday experience. Build a movement like that,” Todd says, and his eyes swell, “and all the old rules of politics – the centre ground, swing constituencies to a certain extent – are blown out of the water.”

Momentum sends me, with a young volunteer as chaperone, to a rally in Chester in October to watch activists try to muster support for local hospitals. They set up a stall in the centre of the shopping district, with its mad dissonance of coffee shops and medieval houses. From what I can see, people – yet far too few people – listen politely to the speeches about austerity and sign up for more information; but I can hear the hum of internal dissent when an activist, who asks not to be named, tells me he will work for the local Labour MP to be deselected. (The official Momentum line on deselection is, quite rightly, that it is a matter for local parties.)

We will not know what matters – is it effective? – until the general election, because no one knows what will work.

 

4. The Fallout

Now comes the result of the by-election in Copeland in the north-west of England, and the first time since 1982 that a ruling government has taken a seat from the opposition in a by-election. Momentum canvassed enthusiastically (they sent 85 carloads of activists to the constituency) but they failed, and pronounce themselves “devastated”. The whispers – this time of a “soft” coup against Corbyn – begin again.

Rees describes calls for Jeremy Corbyn to resign as “misguided. Labour’s decline long pre-dates Corbyn’s leadership.”

This produces a furious response from Luke Akehurst, a former London Labour ­councillor in Hackney, on labourlist.org. He insists that Labour’s decline has accelerated under Corbyn; that even though Rees says that “Labour has been haemorrhaging votes in election after election in Copeland since 1997”, the majority increased in 2005 and the number of votes rose in 2010, despite an adverse boundary change. “This,” he writes, “was a seat where the Labour vote was remarkably stable at between 16,750 and 19,699 in every general election between 2001 and 2015, then fell off a cliff to 11,601, a third of it going AWOL, last Thursday.”

And he adds that “‘85 carloads of Mom­entum activists’ going to Copeland is just increasing the party’s ability to record whose votes it has lost”.

But still they plan, and believe, even if no one knows what will work; surely there is some antidote to Mayism, if they search every street in the UK? Momentum’s national conference, which was repeatedly postponed, is now definitively scheduled for 25 March. Stan who complained about a democratic deficit within Momentum at The World Transformed got his way. So did Lansman. In January the steering committee voted to dissolve Momentum’s structures and introduce a constitution, after consulting the membership. A new national co-ordinating group has been elected, and met for the first time on 11 March – although, inevitably, a group called Momentum Grassroots held a rival meeting that very day.

I go to the Euston offices for a final briefing. There, two young women – Sophie and Georgie, and that will make those who think in parodies laugh – tell me that, in future, only members of the Labour Party will be allowed to join Momentum, and existing members must join Labour by 1 July. Those expelled from Labour “may be deemed to have resigned from Momentum after 1 July” – but they will have a right to a hearing.

More details of the plan are exposed when, a week later, a recording of Jon Lansman’s speech to a Momentum meeting in Richmond on 1 March is leaked to the Observer. Lansman told the Richmond branch that Momentum members must hold positions within the Labour Party to ensure that Corbyn’s successor – they are now talking about a successor – is to their liking. He also said that, should Len McCluskey be re-elected as general secretary of Unite, the union would formally affiliate to Momentum.

Tom Watson, the deputy leader of the party, was furious when he found out, calling it “a private agreement to fund a political faction that is apparently planning to take control of the Labour Party, as well as organise in the GMB and Unison”.

There was then, I am told, “a short but stormy discussion at the away day at Unison” on Monday 20 March, where the inner circle of John McDonnell, Diane Abbott and Emily Thornberry “laid into” Watson, but Shami Chakrabarti made the peace; I would have liked to see that. Watson then released a bland joint statement with Corbyn which mentioned “a robust and constructive discussion about the challenges and opportunities ahead”.

Jon Lansman, of course, is more interesting. “This is a non-story,” he tells me. “Momentum is encouraging members to get active in the party, to support socialist policies and rule changes that would make Labour a more grass-roots and democratic party, and to campaign for Labour victories. There is nothing scandalous and sinister about that.” On the Labour right, Progress, he notes, does exactly the same thing. “Half a million members could be the key to our success,” he says. “They can take our message to millions. But they want to shape policy, too. I wouldn’t call giving them a greater say ‘taking over the party’” – and this is surely unanswerable – “it’s theirs to start with.”

Correction: This article originally named Luke Akehurst as a Labour councillor. Akehurst stood down in 2014.

This article first appeared in the 23 March 2017 issue of the New Statesman, Trump's permanent revolution