Ed Miliband. Photo: Getty
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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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Brexit is teaching the UK that it needs immigrants

Finally forced to confront the economic consequences of low migration, ministers are abandoning the easy rhetoric of the past.

Why did the UK vote to leave the EU? For conservatives, Brexit was about regaining parliamentary sovereignty. For socialists it was about escaping the single market. For still more it was a chance to punish David Cameron and George Osborne. But supreme among the causes was the desire to reduce immigration.

For years, as the government repeatedly missed its target to limit net migration to "tens of thousands", the EU provided a convenient scapegoat. The free movement of people allegedly made this ambition unachievable (even as non-European migration oustripped that from the continent). When Cameron, the author of the target, was later forced to argue that the price of leaving the EU was nevertheless too great, voters were unsurprisingly unconvinced.

But though the Leave campaign vowed to gain "control" of immigration, it was careful never to set a formal target. As many of its senior figures knew, reducing net migration to "tens of thousands" a year would come at an economic price (immigrants make a net fiscal contribution of £7bn a year). An OBR study found that with zero net migration, public sector debt would rise to 145 per cent of GDP by 2062-63, while with high net migration it would fall to 73 per cent. For the UK, with its poor productivity and sub-par infrastructure, immigration has long been an economic boon. 

When Theresa May became Prime Minister, some cabinet members hoped that she would abolish the net migration target in a "Nixon goes to China" moment. But rather than retreating, the former Home Secretary doubled down. She regards the target as essential on both political and policy grounds (and has rejected pleas to exempt foreign students). But though the same goal endures, Brexit is forcing ministers to reveal a rarely spoken truth: Britain needs immigrants.

Those who boasted during the referendum of their desire to reduce the number of newcomers have been forced to qualify their remarks. On last night's Question Time, Brexit secretary David Davis conceded that immigration woud not invariably fall following Brexit. "I cannot imagine that the policy will be anything other than that which is in the national interest, which means that from time to time we’ll need more, from time to time we’ll need less migrants."

Though Davis insisted that the government would eventually meet its "tens of thousands" target (while sounding rather unconvinced), he added: "The simple truth is that we have to manage this problem. You’ve got industry dependent on migrants. You’ve got social welfare, the national health service. You have to make sure they continue to work."

As my colleague Julia Rampen has charted, Davis's colleagues have inserted similar caveats. Andrea Leadsom, the Environment Secretary, who warned during the referendum that EU immigration could “overwhelm” Britain, has told farmers that she recognises “how important seasonal labour from the EU is to the everyday running of your businesses”. Others, such as the Health Secretary, Jeremy Hunt, the Business Secretary, Greg Clark, and the Communities Secretary, Sajid Javid, have issued similar guarantees to employers. Brexit is fuelling immigration nimbyism: “Fewer migrants, please, but not in my sector.”

The UK’s vote to leave the EU – and May’s decision to pursue a "hard Brexit" – has deprived the government of a convenient alibi for high immigration. Finally forced to confront the economic consequences of low migration, ministers are abandoning the easy rhetoric of the past. Brexit may have been caused by the supposed costs of immigration but it is becoming an education in its benefits.

George Eaton is political editor of the New Statesman.