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The left must think big to win

Whatever happens in May, the only way forward for the centre-left is to raises it sights.

The mood of crisis that accompanied the global financial crash shows no sign of lifting seven years on. On the contrary, talk of a ‘lost decade’ has begun to seem more like a best-case scenario than a jeremiad. This is about much more than economic recovery and squeezed living standards. It is about the loss of purpose and self-confidence affecting societies that no longer feel sure of their capacity to change for the better. 
This sense of loss is reflected in the downbeat atmosphere of the general election campaign and a growing disaffection with conventional politics. If the country’s prospects were as rosy as the Conservatives now claim, they would already be contemplating a sizeable majority. But daily experience leaves voters profoundly sceptical that any of Britain’s deep structural problems have been addressed. Once again growth is driven by consumer debt and asset-price inflation instead of exports, rising real wages and new investment. The benefits, such as they are, have not fed through to the majority. Britain feels like it is stagnating, not recovering. 

This presents the left with its own challenge. In navigating the politics of hard times, it has always been difficult to contend with rising pessimism and the instinct to hunker down. This time many mainstream parties of the centre-left are also struggling to account for their own roles in building an economic system that has failed to deliver the promise of sustainable growth and social progress.  In many parts of continental Europe the established representatives of social democracy are no longer seen as credible agents of change and are losing ground to new populist movements of left and right. The collapse of Pasok in Greece is an extreme example of a wider trend.

In Britain, after thirteen years in power, Labour could list many achievements to its credit from the minimum wage to the reduction in child poverty. But the party could no longer claim either to have tamed global capitalism or ended boom and bust. An early decision was taken to leave the basic structure of the economy untouched and focus on distributing the proceeds of growth to achieve progressive social goals. Unfortunately, the capacities of government were insufficient to curb the widening power imbalances between the employee and employer and between the consumer and the global corporates.

Despite a willingness to promote social justice and a shift to a low carbon economy, public spending alone was unable to compensate for the maladies of an unregulated market. The state assumed expensive new liabilities as business retreated from its responsibilities to pay a living wage, provide workplace pensions and improve the national skills base. Yet even this heroic effort at redistribution failed to stop inequalities from widening and social mobility from collapsing. When a runaway market eventually crashed, the state was forced to pick up the bill for that as well. A crisis of the free market was thus transformed into a story about the folly of big government.

To restore its political fortunes, the mainstream left will have to do more than become better managers and enablers than the Conservatives. The promise of a more enlightened version of the status quo won’t work, either as an electoral strategy or as a programme for national recovery. The country’s problems are too big. Chief among them is the need to deal with the vast structural imbalances that led to the economic crisis and remain completely unresolved after five years of Conservative-led austerity. Creating a path for sustainable, long-term recovery means restoring balance between public and private, industry and finance, exports and imports, wage growth and consumer debt, North and South, the many and the few. Anything less than this would leave Britain treading water until the next crisis strikes.

Since markets are not self-correcting, and since the levers of public finance are much weaker today than they were in the Blair-Brown era, the only realistic route to reform involves grappling with the tough questions about the nature of British capitalism that New Labour shied away from in 1997. How can we reverse the financialisation of our economy? What should be done to make multinational companies and the super rich pay their fare share of tax? How do we replace a business culture based on short-term profit and financial engineering with one geared towards long-term success? What new forms of ownership and participation would help to spread wealth and democratise our economy? How do we restore the link between earnings and growth? What can be done to reduce inequalities between places and between generations?
Calls for radical change are often dismissed as idealistic, but recent experience would suggest that it is those still hoping to achieve better social outcomes within the existing economic settlement that are guilty of wishful thinking. The only practical strategy for change is one that envisages a significant alteration to the balance of wealth and power in society. Inevitably this means confronting the determined resistance of those who have profited most from an economic system that has failed the country. The centre-left needs to be strong enough to deal with the political consequences of standing up to these powerful vested interests because the alternative is one that leaves Britain locked in a cycle of crisis and stagnation. 

Strategies based on progressive minimalism and policy triangulation are now redundant. Retail politics still has its place, but the targeting of policy commitments at specific groups of voters will only convince if it illustrates a bigger reform project aimed at making Britain work in the interests of the majority. If it is intended to cover the absence of such a project, it will fail. In the absence of anything better, politics will become trapped between an inert centrism that says nothing much can change and a new populism (advanced in different ways by UKIP and the SNP) preaching false solutions based on a retreat behind national borders.
The only way forward for the centre-left is to raise its sights. This will remain true whatever happens on May 7. If a government of the centre-left assumes office, it is likely to do so with a hold on power that is fragile at first. It will only be able to build the momentum and legitimacy needed to strengthen its position by showing that it has the vision and the will to bring about deep and lasting change. If the centre-left loses, it will not restore it fortunes in opposition by becoming more conventional and cautious. Either way, realism will require radicalism.

Paul Hackett is director of the Smith Institute. David Clark is founder and editor of the blog site Shifting Grounds. The two organisations are working together to promote a new agenda for the British centre-left.

 

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Forget planning for no deal. The government isn't really planning for Brexit at all

The British government is simply not in a position to handle life after the EU.

No deal is better than a bad deal? That phrase has essentially vanished from Theresa May’s lips since the loss of her parliamentary majority in June, but it lives on in the minds of her boosters in the commentariat and the most committed parts of the Brexit press. In fact, they have a new meme: criticising the civil service and ministers who backed a Remain vote for “not preparing” for a no deal Brexit.

Leaving without a deal would mean, among other things, dropping out of the Open Skies agreement which allows British aeroplanes to fly to the United States and European Union. It would lead very quickly to food shortages and also mean that radioactive isotopes, used among other things for cancer treatment, wouldn’t be able to cross into the UK anymore. “Planning for no deal” actually means “making a deal”.  (Where the Brexit elite may have a point is that the consequences of no deal are sufficiently disruptive on both sides that the British government shouldn’t  worry too much about the two-year time frame set out in Article 50, as both sides have too big an incentive to always agree to extra time. I don’t think this is likely for political reasons but there is a good economic case for it.)

For the most part, you can’t really plan for no deal. There are however some things the government could prepare for. They could, for instance, start hiring additional staff for customs checks and investing in a bigger IT system to be able to handle the increased volume of work that would need to take place at the British border. It would need to begin issuing compulsory purchases to build new customs posts at ports, particularly along the 300-mile stretch of the Irish border – where Northern Ireland, outside the European Union, would immediately have a hard border with the Republic of Ireland, which would remain inside the bloc. But as Newsnight’s Christopher Cook details, the government is doing none of these things.

Now, in a way, you might say that this is a good decision on the government’s part. Frankly, these measures would only be about as useful as doing your seatbelt up before driving off the Grand Canyon. Buying up land and properties along the Irish border has the potential to cause political headaches that neither the British nor Irish governments need. However, as Cook notes, much of the government’s negotiating strategy seems to be based around convincing the EU27 that the United Kingdom might actually walk away without a deal, so not making even these inadequate plans makes a mockery of their own strategy. 

But the frothing about preparing for “no deal” ignores a far bigger problem: the government isn’t really preparing for any deal, and certainly not the one envisaged in May’s Lancaster House speech, where she set out the terms of Britain’s Brexit negotiations, or in her letter to the EU27 triggering Article 50. Just to reiterate: the government’s proposal is that the United Kingdom will leave both the single market and the customs union. Its regulations will no longer be set or enforced by the European Court of Justice or related bodies.

That means that, when Britain leaves the EU, it will need, at a minimum: to beef up the number of staff, the quality of its computer systems and the amount of physical space given over to customs checks and other assorted border work. It will need to hire its own food and standards inspectors to travel the globe checking the quality of products exported to the United Kingdom. It will need to increase the size of its own regulatory bodies.

The Foreign Office is doing some good and important work on preparing Britain’s re-entry into the World Trade Organisation as a nation with its own set of tariffs. But across the government, the level of preparation is simply not where it should be.

And all that’s assuming that May gets exactly what she wants. It’s not that the government isn’t preparing for no deal, or isn’t preparing for a bad deal. It can’t even be said to be preparing for what it believes is a great deal. 

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