It's about issues not personalities. Photo: Getty Images
Show Hide image

The Labour leadership race has been obsessed with personalities. Here's what it really needs

Rather than focussing on the faces at the top, Labour needs to think about what's going on underneath the surface, says Michael Meacher.

So far the Labour leadership contest has been depressingly far too much about personalities and far too little about the fundamental issues the country now faces and how a potential new leader would handle them.   That narrative must start with the economy since that is the central issue that decided the election.

Too many voters were left fearful of entrusting the nation’s finances to Labour which an incessant Tory barrage,  never challenged or refuted, told them had caused the economic collapse in the first place, as though the bankers and the international recession had nothing to do with it.   The truth is that the Blair-Brown governments in their 11 years 1997-2007 never ran a budget deficit higher than 3.3% of GDP (roughly the same level as Germany’s) whilst the Thatcher-Major governments ran up deficits larger than this in 10 out of their 18 years.   Setting the record straight, and getting it understood, is key to enabling the rest of the narrative to be listened to.

The central economic issue for the next 5 years is the continuation of austerity.   That raises two predominant questions.   Is it achieving what it is meant to do – to eliminate the deficit?    Is it still necessary, and if not, what is the alternative?

There are two ways to cut a deficit, either by restricting expenditure or by increasing income.   Osborne chose the former, with limited success.   Alistair Darling, the last Labour chancellor, after two expansionary budgets in 2009-10 reduced the deficit from its peak at £157bn to £118bn by 2011, a cut of nearly £20bn a year.   George Osborne’s austerity budgets reduced it to its current level of £92bn, a cut of just £7bn a year.   Moreover Osborne, despite such a modest pace of reduction after causing so much pain, has now declared he intends to clear the deficit by 2017-8, a cut of some £25bn a year.   That is simply not credible.   He promised in 2010 he would eliminate the deficit by 2015; now he’s saying he will do so by 2018 – he’s achieving form with his fantasy projections.

If then austerity has achieved so little at the cost of so much detriment, is it still necessary?   The much better alternative is the proven approach taken by Darling and also by the US in their recovery from recession using public investment to kickstart the economy into genuinely sustainable growth – not the fragile version we have now – and thus promote real jobs, increase household incomes, raise government tax receipts, and so pay down the deficit much faster.   Investment should be focused on the key current priorities – house-building, infrastructure in energy, transport and IT, and laying the foundations for a low-carbon economy.

It can be paid for by borrowing since with interest rates on the floor at 0.5% a £30bn package of investment would cost only £150m a year and it would cause no alarm in the markets which are desperate for growth at any cost.   Better still, however, it could be funded at no increase in public borrowing at all either by requiring the publicly owned banks to prioritise lending to British industry rather than foreign speculation, or by a further modest tranche of quantitative easing, or by taxing the extremely rich, those with incomes over £3,000 a week, and by a relentless crackdown with new regulations against tax avoidance.

In providing this alternative scenario for sustainable growth, Labour should blow away the myth of a great Tory economic recovery.   It is anything but.   It is the slowest and weakest recovery for a century, wages are still nearly 8% below pre-crash levels, productivity on which future living standards depend is flat, private investment is anaemic, the trade deficit on manufactured goods is the worst in British history, unemployment is still nearly 2 million, and household debt is tipping £2 trillions.   None of that is mentioned by the Tories.   What alone they proclaim is growth and jobs.   Both repay unpacking.  Osborne’s austerity flattened growth through to 2012, but then by easing some of the cuts plus ultra-loose monetary policy he triggered a spurt of growth from the start of 2013 till mid-2014, after which it has sagged badly.   From 0.9% growth in the 3rd quarter of last year it has now fallen two-thirds to 0.3% in the 1st quarter of this year.   More a temporary uptick than a genuine recovery.      As for jobs, the 2 million increase in private sector employment is certainly welcome, but as surveys have repeatedly shown two-thirds of the jobs are self-employment on a pittance income and most of the rest are insecure, low-paid and up to a million on zero hours contracts.   Moreover surveys have found that 11 out of 12 new jobs have been confined to London and the south-east, and half have gone to migrant labour.   Not quite the picture of a rounded, well-paid recovery.

Third, Labour should be making the case for a major revival in high-tech manufacturing and services since there is no other way to pay our way in the world and reverse an unsustainable trade deficit of over £100bn a year.   The present recovery, such as it is, is far too lopsided in favour of finance against industry and focused too much on the south against dereliction in the north.   It requires a 10-15 year programme of rebalancing the economy and must entail much more reliable funding, far greater emphasis on skill-training and apprenticeships, rebuilding the crucial supply chains broken by the privatisations and sell-offs of the 1980s, safeguarding key strategic sectors and companies from foreign takeovers, and much stronger support for R&D and innovation.   This is the only way back to full employment and rising living standards.   It is also the means to ease immigration pressures through a big increase in building houses, schools and health facilities whilst at the same time lifting the artificial ceiling on access to the UK for tier-one high-tech specialist workers that the CBI is so worried about.

Lastly, as many are now asserting, Labour does need to present the electorate with a programme designed to incentivise aspiration at all levels of society.   But it also needs to be recognised that that this can only become a reality, as opposed to empty rhetoric, if there are radical changes made in today’s dysfunctional structure of opportunity which polarises the low-paid, badly housed, poorly educated and seriously disadvantaged from the well-endowed, well-off, and well-connected.   It equally requires a new relationship between the State and the private sector which stresses, not their ideological antagonism, but their mutual inter-dependence.   Private markets should be enthusiastically supported where they work well, but reformed or replaced where they are clearly failing as currently in housing, energy, rail and banking.

Getty
Show Hide image

Inside a shaken city: "I just want to be anywhere that’s not Manchester”

The morning after the bombing of the Manchester Arena has left the city's residents jumpy.

On Tuesday morning, the streets in Manchester city centre were eerily silent.

The commuter hub of Victoria Station - which backs onto the arena - was closed as police combed the area for clues, and despite Mayor Andy Burnham’s line of "business as usual", it looked like people were staying away.

Manchester Arena is the second largest indoor concert venue in Europe. With a capacity crowd of 18,000, on Monday night the venue was packed with young people from around the country - at least 22 of whom will never come home. At around 10.33pm, a suicide bomber detonated his device near the exit. Among the dead was an eight-year-old girl. Many more victims remain in hospital. 

Those Mancunians who were not alerted by the sirens woke to the news of their city's worst terrorist attack. Still, as the day went on, the city’s hubbub soon returned and, by lunchtime, there were shoppers and workers milling around Exchange Square and the town hall.

Tourists snapped images of the Albert Square building in the sunshine, and some even asked police for photographs like any other day.

But throughout the morning there were rumours and speculation about further incidents - the Arndale Centre was closed for a period after 11.40am while swathes of police descended, shutting off the main city centre thoroughfare of Market Street.

Corporation Street - closed off at Exchange Square - was at the centre of the city’s IRA blast. A postbox which survived the 1996 bombing stood in the foreground while officers stood guard, police tape fluttering around cordoned-off spaces.

It’s true that the streets of Manchester have known horror before, but not like this.

I spoke to students Beth and Melissa who were in the bustling centre when they saw people running from two different directions.

They vanished and ducked into River Island, when an alert came over the tannoy, and a staff member herded them through the back door onto the street.

“There were so many police stood outside the Arndale, it was so frightening,” Melissa told me.

“We thought it will be fine, it’ll be safe after last night. There were police everywhere walking in, and we felt like it would be fine.”

Beth said that they had planned a day of shopping, and weren’t put off by the attack.

“We heard about the arena this morning but we decided to come into the city, we were watching it all these morning, but you can’t let this stop you.”

They remembered the 1996 Arndale bombing, but added: “we were too young to really understand”.

And even now they’re older, they still did not really understand what had happened to the city.

“Theres nowhere to go, where’s safe? I just want to go home,” Melissa said. “I just want to be anywhere that’s not Manchester.”

Manchester has seen this sort of thing before - but so long ago that the stunned city dwellers are at a loss. In a city which feels under siege, no one is quite sure how anyone can keep us safe from an unknown threat

“We saw armed police on the streets - there were loads just then," Melissa said. "I trust them to keep us safe.”

But other observers were less comforted by the sign of firearms.

Ben, who I encountered standing outside an office block on Corporation Street watching the police, was not too forthcoming, except to say “They don’t know what they’re looking for, do they?” as I passed.

The spirit of the city is often invoked, and ahead of a vigil tonight in Albert Square, there will be solidarity and strength from the capital of the North.

But the community values which Mancunians hold dear are shaken to the core by what has happened here.

0800 7318496