The Kennedy conundrum

On the eve of the Liberal Democrats’ most keenly anticipated conference since they were founded in

On Monday 6 September, a delegation of senior MPs and peers filed into the Foreign and Commonwealth Office on King Charles Street. Hosting the meeting was the Foreign Secretary, William Hague, who had taken time out from his schedule to discuss the coalition government's foreign policy, despite days of rampant speculation about his private life and political judgement. Hague was persuasive. "He was very impressive and in absolute control of his brief," says a peer who was there. What was notable about the occasion was that all the parliamentarians present were Liberal Democrats.

Across Whitehall, similar meetings are being held at which Lib Dem backbenchers are being hugged close by Conservative ministers - especially the Education Secretary, Michael Gove, who has been impressing sceptics with his plans for "free schools", often in one-on-one meetings. The co-chairs of various Lib Dem policy teams have been invited to attend the regular "forward looks" that Tory cabinet ministers hold with departmental colleagues.

These charm offensives reflect the Tory high command's keenness to make the coalition gel for the lifetime of this parliament and, in the words of one senior Lib Dem to whom we spoke, David Cameron's desire to use the smaller party "as a counterweight to the Tory right".

Some coalition outriders want it to go further. Nick Boles, the "modernising" Tory MP for Grantham and Stamford who is a close friend and ally of the Prime Minister, went public on 13 September with a proposal that would bind the two parties in an electoral pact by the end of the year. Boles, a former member of Cameron's "implementation unit" before the general election, said that the coalition partners should give each other a free run in the seats they hold.

Simon Hughes, the Lib Dem deputy leader, was quick to reject the idea, saying that his party would "take on all comers" at the next election, including the Conservatives. But, for some senior Lib Dems, the proposal may seem attractive in the long run, as it would secure the Lib Dems' new-found role as a credible, centrist party of government.

Others on the dormant left of the party, however, see it as a "trap" - a plan to destroy the Lib Dems as an independent political force and subsume them into the Cameron-led Conservative Party. "I would oppose such a move with every fibre of my body," says David Hall-Matthews, a former parliamentary candidate and chair of the influential centre-left pressure group the Social Liberal Forum, founded by Lib Dem members and campaigners.

Gathering storm

According to a recent ComRes poll, the party has lost the support of almost four in ten of the people who voted for it on 6 May, with more than one in five people who backed the Lib Dems at the general election telling pollsters that they would now vote Labour. Overall, the Lib Dems' poll rating has shrunk to 12 per cent, down from 23 per cent at the election.

Meanwhile, even among Lib Dem activists, dissatisfaction is on the rise. A recent survey of nearly 600 party members showed that net support for the coalition fell to 45 per cent in August from 57 per cent in July.

Between 18 and 22 September, the Lib Dems are gathering in Liverpool for the most eagerly awaited conference in the party's 22-year history. More than 7,000 delegates are travelling to the event - far eclipsing the usual attendance of 6,000; the number of journalists attending has leapt by 500 to 1,500. It is the "biggest Lib Dem conference ever", in the words of the Liberal Democrat Voice blog.

As MPs, members and activists gather in Liverpool, there is no sign yet of serious unrest. We are four months in to the coalition and not a single MP wants to break with the Tories. Take Bob Russell, Lib Dem MP for Colchester and a well-known backbench rebel. On 13 September, he "dragged", in his own words, the Chancellor, George Osborne, to the Commons to explain his latest round of benefit cuts, accusing him of being "unethical" and "immature". But Russell now tells us: "The coalition will last the full five years. Of course it will."

Yet, beneath the surface, there is growing uncertainty about the party's electoral future and about what one MP describes as "an identity crisis".
"The mood is a mixture of excitement and growing anxiety," agrees Hall-Matthews. "I wouldn't expect there to be outright hostility towards theleadership but people will be coming to the conference with questions about how we retain our distinctiveness as a party while working in the coalition."

Another senior Liberal Democrat on the left of the party says he is "very uncomfortable with the rhetoric from the party leadership. Nick Clegg seems to think that this is a coalition built on ideological coherence, rather than just two parties working together." He adds: "I do believe in consensus politics, but I don't want to pretend there is ideological coherence with the Tories and it doesn't electorally help us to pretend it does."

Perhaps it is not a pretence. "You have no idea of the extent of the behind-the-scenes bonding that has gone on between Nick and Cameron, as well as Nick and other Tories like Osborne," says a well-connected Lib Dem frontbencher. "They've all been slagging off Labour together like there's no tomorrow."

It's a long way from Charles Kennedy's leadership of the party, when the Lib Dems were much closer to Labour. Though a figurehead for the party's left, Kennedy himself is refusing to stoke any revolts. He has denied claims that he would consider defecting to Labour, despite making it clear that he opposed his party's alliance with the Tories. But friends of Kennedy say that he does see a future role for himself in the party, if not as leader for a second time, then, at least, in a very senior role on the Lib Dem front bench.

“When Charles went, our support haemorrhaged," says a leading Lib Dem peer. "It took us years of careful work to get that back. Now we've thrown it all away again. We may have to call on Charles again one day."

Intriguingly, similar sentiments were expressed at a private 80th birthday party for Shirley Williams on 8 September at the Savile Club in London. The gathering served as a reunion of the old Social Democratic Party (SDP). Bill Rodgers, who, along with Williams, was one of the original Gang of Four that broke from Labour to create the SDP, had planned the party. Tom McNally, a minister in the Department of Justice, was the sole representative from the coalition. No cabinet ministers were present, least of all the Deputy PM, Nick Clegg.

At the party, Kennedy gave a characteristically witty speech about Williams before leaving to vote in the Commons. After he left, Williams paid fulsome tribute to the popular former leader and argued that he still had a "big future role" to play in the party. "It was very striking how effusive Shirley was about Charles - and not just about his past record but the role she thought he might play in the coming months," said one of the guests.

The reckoning

A rising star to look out for at the party's conference is the backbencher Tim Farron. The MP for Westmorland and Lonsdale lost out to Simon Hughes for the post of deputy leader but is preparing to challenge for another influential job: that of party president. Lib Dem insiders tell us Farron is the clear favourite - which might worry Clegg: he has been one of the most vocal Lib Dem critics of the coalition, condemning the Conservatives as possessing a "toxic brand" that is being given "cover" by the Lib Dems. He is also supporting a contentious conference motion that calls on Lib Dem ministers to look into the "viability and practicalities of increasing taxation on wealth - including land values".

But the most controversial issue at the conference and beyond is likely to be university tuition fees. Before the election, 55 out of the 57 Lib Dem MPs signed a pledge to vote against any increase in fees. In July, the Business Secretary, Vince Cable, floated the idea of instituting a graduate tax in a speech at South Bank University in London. But the review into higher-education funding, chaired by the former BP chief executive Lord (John) Browne and scheduled to publish its findings on 11 October, is expected to reject a graduate tax and instead propose a rise in fees to around £7,000.

Despite the terse statement in the coalition agreement that "arrangements will be made to enable Liberal Democrat MPs to abstain in any vote" on proposals from Browne with which they disagree, numerous backbenchers - including the former leader Menzies Campbell - have let it be known that they plan to rebel if the party performs a U-turn in government on fees. Insiders suggest the number could easily be a majority of the parliamentary party. "If Browne recommends lifting or raising the cap on fees, I expect there'll be blood on the carpet," says a senior party source.

Meanwhile, MPs and activists alike are beginning to ask searching questions of the party leadership. On what platform, for example, will the Liberal Democrats fight the next election? Hughes has said they will fight "in every seat", but on what basis will they stand against their Conservative allies? Come 2015, will Clegg be able to challenge or confront Cameron in the television debates as he did so forcefully in spring this year?

When we asked a senior Lib Dem frontbencher whether Clegg could "attack" Cameron at the next election, he replied: "Of course not. How could he?"

So, can Clegg carry his anxious party with him through to 2015? On Monday in Liverpool, he may be greeted as a hero by the faithful, still euphoric over the Lib Dems' entry into government, but the real reckoning will come in 2011. Not only will the effect of the coalition's public spending cuts have set in, but the party is preparing for losses at the local elections in May. To compound matters, party members are also having to come to terms with the likelihood that they will lose the "glittering prize" from a referendum on electoral reform.

“I hate this government," a senior Lib Dem peer was overheard to remark recently while walking out of the House of Lords chamber. For now, however, such mutterings are kept quiet. Next year could be very different.

This article first appeared in the 20 September 2010 issue of the New Statesman, Catholicism in crisis

Jeremy Corbyn. Photo: Getty
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Lexit: the EU is a neoliberal project, so let's do something different when we leave it

Brexit affords the British left a historic opportunity for a decisive break with EU market liberalism.

The Brexit vote to leave the European Union has many parents, but "Lexit" – the argument for exiting the EU from the left – remains an orphan. A third of Labour voters backed Leave, but they did so without any significant leadership from the Labour Party. Left-of-centre votes proved decisive in determining the outcome of a referendum that was otherwise framed, shaped, and presented almost exclusively by the right. A proper left discussion of the issues has been, if not entirely absent, then decidedly marginal – part of a more general malaise when it comes to developing left alternatives that has begun to be corrected only recently, under Jeremy Corbyn and John McDonnell.

Ceding Brexit to the right was very nearly the most serious strategic mistake by the British left since the ‘70s. Under successive leaders Labour became so incorporated into the ideology of Europeanism as to preclude any clear-eyed critical analysis of the actually existing EU as a regulatory and trade regime pursuing deep economic integration. The same political journey that carried Labour into its technocratic embrace of the EU also resulted in the abandonment of any form of distinctive economics separate from the orthodoxies of market liberalism.

It’s been astounding to witness so many left-wingers, in meltdown over Brexit, resort to parroting liberal economics. Thus we hear that factor mobility isn’t about labour arbitrage, that public services aren’t under pressure, that we must prioritise foreign direct investment and trade. It’s little wonder Labour became so detached from its base. Such claims do not match the lived experience of ordinary people in regions of the country devastated by deindustrialisation and disinvestment.

Nor should concerns about wage stagnation and bargaining power be met with finger-wagging accusations of racism, as if the manner in which capitalism pits workers against each other hasn’t long been understood. Instead, we should be offering real solutions – including a willingness to rethink capital mobility and trade. This places us in direct conflict with the constitutionalised neoliberalism of the EU.

Only the political savvy of the leadership has enabled Labour to recover from its disastrous positioning post-referendum. Incredibly, what seemed an unbeatable electoral bloc around Theresa May has been deftly prized apart in the course of an extraordinary General Election campaign. To consolidate the political project they have initiated, Corbyn and McDonnell must now follow through with a truly radical economic programme. The place to look for inspiration is precisely the range of instruments and policy options discouraged or outright forbidden by the EU.

A neoliberal project

The fact that right-wing arguments for Leave predominated during the referendum says far more about today’s left than it does about the European Union. There has been a great deal of myth-making concerning the latter –much of it funded, directly or indirectly, by the EU itself.

From its inception, the EU has been a top-down project driven by political and administrative elites, "a protected sphere", in the judgment of the late Peter Mair, "in which policy-making can evade the constraints imposed by representative democracy". To complain about the EU’s "democratic deficit" is to have misunderstood its purpose. The main thrust of European economic policy has been to extend and deepen the market through liberalisation, privatisation, and flexiblisation, subordinating employment and social protection to goals of low inflation, debt reduction, and increased competitiveness.

Prospects for Keynesian reflationary policies, or even for pan-European economic planning – never great – soon gave way to more Hayekian conceptions. Hayek’s original insight, in The Economic Conditions of Interstate Federalism, was that free movement of capital, goods, and labour – a "single market" – among a federation of nations would severely and necessarily restrict the economic policy space available to individual members. Pro-European socialists, whose aim had been to acquire new supranational options for the regulation of capital, found themselves surrendering the tools they already possessed at home. The national road to socialism, or even to social democracy, was closed.

The direction of travel has been singular and unrelenting. To take one example, workers’ rights – a supposed EU strength – are steadily being eroded, as can be seen in landmark judgments by the European Court of Justice (ECJ) in the Viking and Laval cases, among others. In both instances, workers attempting to strike in protest at plans to replace workers from one EU country with lower-wage workers from another, were told their right to strike could not infringe upon the "four freedoms" – free movement of capital, labour, goods, and services – established by the treaties.

More broadly, on trade, financial regulation, state aid, government purchasing, public service delivery, and more, any attempt to create a different kind of economy from inside the EU has largely been forestalled by competition policy or single market regulation.

A new political economy

Given that the UK will soon be escaping the EU, what opportunities might this afford? Three policy directions immediately stand out: public ownership, industrial strategy, and procurement. In each case, EU regulation previously stood in the way of promising left strategies. In each case, the political and economic returns from bold departures from neoliberal orthodoxy after Brexit could be substantial.

While not banned outright by EU law, public ownership is severely discouraged and disadvantaged by it. ECJ interpretation of Article 106 of the Treaty on the Functioning of the European Union (TFEU) has steadily eroded public ownership options. "The ECJ", argues law professor Danny Nicol, "appears to have constructed a one-way street in favour of private-sector provision: nationalised services are prima facie suspect and must be analysed for their necessity". Sure enough, the EU has been a significant driver of privatisation, functioning like a ratchet. It’s much easier for a member state to pursue the liberalisation of sectors than to secure their (re)nationalisation. Article 59 (TFEU) specifically allows the European Council and Parliament to liberalise services. Since the ‘80s, there have been single market programmes in energy, transport, postal services, telecommunications, education, and health.

Britain has long been an extreme outlier on privatisation, responsible for 40 per cent of the total assets privatised across the OECD between 1980 and 1996. Today, however, increasing inequality, poverty, environmental degradation and the general sense of an impoverished public sphere are leading to growing calls for renewed public ownership (albeit in new, more democratic forms). Soon to be free of EU constraints, it’s time to explore an expanded and fundamentally reimagined UK public sector.

Next, Britain’s industrial production has been virtually flat since the late 1990s, with a yawning trade deficit in industrial goods. Any serious industrial strategy to address the structural weaknesses of UK manufacturing will rely on "state aid" – the nurturing of a next generation of companies through grants, interest and tax relief, guarantees, government holdings, and the provision of goods and services on a preferential basis.

Article 107 TFEU allows for state aid only if it is compatible with the internal market and does not distort competition, laying out the specific circumstances in which it could be lawful. Whether or not state aid meets these criteria is at the sole discretion of the Commission – and courts in member states are obligated to enforce the commission’s decisions. The Commission has adopted an approach that considers, among other things, the existence of market failure, the effectiveness of other options, and the impact on the market and competition, thereby allowing state aid only in exceptional circumstances.

For many parts of the UK, the challenges of industrial decline remain starkly present – entire communities are thrown on the scrap heap, with all the associated capital and carbon costs and wasted lives. It’s high time the left returned to the possibilities inherent in a proactive industrial strategy. A true community-sustaining industrial strategy would consist of the deliberate direction of capital to sectors, localities, and regions, so as to balance out market trends and prevent communities from falling into decay, while also ensuring the investment in research and development necessary to maintain a highly productive economy. Policy, in this vision, would function to re-deploy infrastructure, production facilities, and workers left unemployed because of a shutdown or increased automation.

In some cases, this might mean assistance to workers or localities to buy up facilities and keep them running under worker or community ownership. In other cases it might involve re-training workers for new skills and re-fitting facilities. A regional approach might help launch new enterprises that would eventually be spun off as worker or local community-owned firms, supporting the development of strong and vibrant network economies, perhaps on the basis of a Green New Deal. All of this will be possible post-Brexit, under a Corbyn government.

Lastly, there is procurement. Under EU law, explicitly linking public procurement to local entities or social needs is difficult. The ECJ has ruled that, even if there is no specific legislation, procurement activity must "comply with the fundamental rules of the Treaty, in particular the principle of non-discrimination on grounds of nationality". This means that all procurement contracts must be open to all bidders across the EU, and public authorities must advertise contracts widely in other EU countries. In 2004, the European Parliament and Council issued two directives establishing the criteria governing such contracts: "lowest price only" and "most economically advantageous tender".

Unleashed from EU constraints, there are major opportunities for targeting large-scale public procurement to rebuild and transform communities, cities, and regions. The vision behind the celebrated Preston Model of community wealth building – inspired by the work of our own organisation, The Democracy Collaborative, in Cleveland, Ohio – leverages public procurement and the stabilising power of place-based anchor institutions (governments, hospitals, universities) to support rooted, participatory, democratic local economies built around multipliers. In this way, public funds can be made to do "double duty"; anchoring jobs and building community wealth, reversing long-term economic decline. This suggests the viability of a very different economic approach and potential for a winning political coalition, building support for a new socialist economics from the ground up.

With the prospect of a Corbyn government now tantalisingly close, it’s imperative that Labour reconciles its policy objectives in the Brexit negotiations with its plans for a radical economic transformation and redistribution of power and wealth. Only by pursuing strategies capable of re-establishing broad control over the national economy can Labour hope to manage the coming period of pain and dislocation following Brexit. Based on new institutions and approaches and the centrality of ownership and control, democracy, and participation, we should be busy assembling the tools and strategies that will allow departure from the EU to open up new political-economic horizons in Britain and bring about the profound transformation the country so desperately wants and needs.

Joe Guinan is executive director of the Next System Project at The Democracy Collaborative. Thomas M. Hanna is research director at The Democracy Collaborative.

This is an extract from a longer essay which appears in the inaugural edition of the IPPR Progressive Review.

 

 

This article first appeared in the 20 September 2010 issue of the New Statesman, Catholicism in crisis

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