Shadow health minister Liz Kendall during the party's NHS week in the election campaign. Photograph: Getty Images.
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Five things we learned from Liz Kendall at the Press Gallery

Labour leadership candidate backs the 2 per cent defence spending target and free schools. 

Labour leadership contender Liz Kendall, one of three likely to make the ballot (the others being Andy Burnham and Yvette Cooper), appeared before a Parliamentary Press Gallery lunch this afternoon, feeding the hacks plenty of newslines. Here are the five main ones. 

She backs the 2 per cent defence spending target

The Tories have repeatedly refused to pledge to meet the Nato target of spending 2 per cent of GDP on defence (despite David Cameron urging other member states to do so). But Kendall today declared her support for the commitment. "Under this government we have seen a quiet diminishing of Britain's role in the world, which we did too little to challenge because we were paralysed by the past," the shadow health minister said. "Under my leadership, Labour will no longer stand by while the Prime Minister weakens our country and allows the world to become less secure. That means insisting the UK maintains our basic Nato commitment to continue spending 2 per cent on defence. As leader of the opposition I will hold David Cameron to account for Britain's promise to our allies and I will oppose him if he breaks it." 

But while her stance allows Labour to outflank the Tories in a novel area, it will make it harder for her to achieve fiscal credibility unless she outlines how the expensive pledge would be paid for. 

She supports free schools

Labour went into the election opposing the establishment of free schools in areas with surplus places - a stance that Burnham has promised to maintain. But Kendall declared that she would support institutions of all kinds provided that they were "providing a great education".  

"As leader, I'm not going to waste time obsessing about school structures. If a school is providing a great education, whether it's a local authority, academy or free school, we will back it. What's more, if someone wants to help run their school, they deserve credit, not criticism." 

Kendall's stance is designed to show that Labour is open to public service reform (one of her greatest political passions) and takes a non-ideological approach to education. But it will not help her cause among the trade union members and party activists she will need the support of to win the leadership (the majority of whom are opposed to free schools). 

She would not cut tuition fees and instead focus on early years 

One of Labour's signature election pledges was to reduce university tuition fees from £9,000 to £6,000. But Kendall disowned this policy, instead promising to focus on early years education. 

"When kids in my constituency start school 15 months behind where they should be in terms of their development and 20 months behind in some areas, they play catch-up for the rest of ther lives. They struggle to even get basic GCSEs, let alone have a chance of going to college, university or getting a job. That's why children's early years will be my priority as leader, not cutting university tuition fees."

She expected the Tories to win the most seats 

Asked by NS editor Jason Cowley why she and her shadow cabinet colleagues failed to remove Miliband if they believed his approach was failing, Kendall replied: "You don't know what goes on behind closed doors and the conversations people have. But he was elected leader, he deserved our loyalty and support. He took the decisions and we backed that because that's what happens when you elect a leader, I believe in collective responsibility. 

Kendall did admit, though, that she expected the Tories "to get most seats" at the election, recalling that "When you have so many undecided voters in our key marginals, you know something is fundamentally wrong. Because it's either that our Labour party members aren't canvassing properly, which isn't the case because they're fantastic, it's because people aren't telling you the truth: either they're going Tory or they're going to vote Ukip. I thought they'd get the most seats but I didn't predict the scale of it.

She is open to the Labour leader facing re-election  

Asked by the Spectator's Isabel Hardman whether she supported the next leader submitting themselves to re-election before the next election (as proposed by Labour peer Jan Royall), Kendall made it clear that she was open to the idea. 

"I think the idea that people are asked to make sure that you're up the job that you're doing is an interesting one, actually, those three years or whatever. We have to do it as MPs, I think it's an interesting idea." Asked whether she wouldn't object to a second leadership contest, she replied: "If people think you're not up the job, then yes." 

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Now listen to George discussing the Labour leadership contest on the NS podcast:

 

George Eaton is political editor of the New Statesman.

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BHS is Theresa May’s big chance to reform capitalism – she’d better take it

Almost everyone is disgusted by the tale of BHS. 

Back in 2013, Theresa May gave a speech that might yet prove significant. In it, she declared: “Believing in free markets doesn’t mean we believe that anything goes.”

Capitalism wasn’t perfect, she continued: 

“Where it’s manifestly failing, where it’s losing public support, where it’s not helping to provide opportunity for all, we have to reform it.”

Three years on and just days into her premiership, May has the chance to be a reformist, thanks to one hell of an example of failing capitalism – BHS. 

The report from the Work and Pensions select committee was damning. Philip Green, the business tycoon, bought BHS and took more out than he put in. In a difficult environment, and without new investment, it began to bleed money. Green’s prize became a liability, and by 2014 he was desperate to get rid of it. He found a willing buyer, Paul Sutton, but the buyer had previously been convicted of fraud. So he sold it to Sutton’s former driver instead, for a quid. Yes, you read that right. He sold it to a crook’s driver for a quid.

This might all sound like a ludicrous but entertaining deal, if it wasn’t for the thousands of hapless BHS workers involved. One year later, the business collapsed, along with their job prospects. Not only that, but Green’s lack of attention to the pension fund meant their dreams of a comfortable retirement were now in jeopardy. 

The report called BHS “the unacceptable face of capitalism”. It concluded: 

"The truth is that a large proportion of those who have got rich or richer off the back of BHS are to blame. Sir Philip Green, Dominic Chappell and their respective directors, advisers and hangers-on are all culpable. 

“The tragedy is that those who have lost out are the ordinary employees and pensioners.”

May appears to agree. Her spokeswoman told journalists the PM would “look carefully” at policies to tackle “corporate irresponsibility”. 

She should take the opportunity.

Attempts to reshape capitalism are almost always blunted in practice. Corporations can make threats of their own. Think of Google’s sweetheart tax deals, banks’ excessive pay. Each time politicians tried to clamp down, there were threats of moving overseas. If the economy weakens in response to Brexit, the power to call the shots should tip more towards these companies. 

But this time, there will be few defenders of the BHS approach.

Firstly, the report's revelations about corporate governance damage many well-known brands, which are tarnished by association. Financial services firms will be just as keen as the public to avoid another BHS. Simon Walker, director general of the Institute of Directors, said that the circumstances of the collapse of BHS were “a blight on the reputation of British business”.

Secondly, the pensions issue will not go away. Neglected by Green until it was too late, the £571m hole in the BHS pension finances is extreme. But Tom McPhail from pensions firm Hargreaves Lansdown has warned there are thousands of other defined benefit schemes struggling with deficits. In the light of BHS, May has an opportunity to take an otherwise dusty issue – protections for workplace pensions - and place it top of the agenda. 

Thirdly, the BHS scandal is wreathed in the kind of opaque company structures loathed by voters on the left and right alike. The report found the Green family used private, offshore companies to direct the flow of money away from BHS, which made it in turn hard to investigate. The report stated: “These arrangements were designed to reduce tax bills. They have also had the effect of reducing levels of corporate transparency.”

BHS may have failed as a company, but its demise has succeeded in uniting the left and right. Trade unionists want more protection for workers; City boys are worried about their reputation; patriots mourn the death of a proud British company. May has a mandate to clean up capitalism - she should seize it.