Leader: It is not “socialism” to say we are facing market failure on a grand scale

By refusing to accept that the market is not working for the majority, the Tories have put themselves at odds with the public.

For decades after the Thatcher revolution of the 1980s, politicians of the left and the right put their faith in a new economic paradigm as the guarantee of prosperity for the majority. Today, after the “Great Contraction” of 2008-2009, they can no longer do so with the same confidence. Economic growth in Britain has returned after three years of stagnation but it is forecast that real wages will not increase until 2015 and will not return to their pre-crash levels until 2023. A broken energy market, in which six companies control 98 per cent of supply, has left 4.5 million people in fuel poverty. Extortionate rents have forced millions to rely on housing benefit. By any measure, this is market failure on a grand scale.

The living standards crisis is a challenge for all political parties but most of all for the Conservatives, the natural defenders of capitalism. After Labour pledged to freeze gas and electricity prices until 2017 and to build 200,000 homes a year by 2020, David Cameron’s party had a chance to offer its own intelligent and imaginative solutions. But at its conference in Manchester, it retreated to its comfort zone. Aided by an ever more partisan right-wing press, speaker after speaker derided Mr Miliband as a “socialist” and a “Marxist”, as if concern at falling wages were comparable to a belief in world revolution.

In doing so, they failed to recognise that when Margaret Thatcher assailed her left-wing opponents in the 1980s, she did so in the confidence that her free-market policies retained popular support. Mr Cameron does not enjoy that luxury. Polls show that roughly two-thirds of voters support a 50p top income-tax rate, a mansion tax, stronger workers’ rights, a living wage and the renationalisation of the railways and the privatised utilities. If Mr Miliband is a socialist, so is much of the public.

The most unintentionally revealing moment of the conference came when George Osborne rebuked the Labour leader for suggesting that “the cost of living was somehow detached from the performance of the economy”. It was a remark that betrayed Mr Osborne’s failure to appreciate that the crisis is not merely cyclical (a problem exacerbated by his strategy of austerity), but structural. It was in 2003, long before the crash, that wages for 11 million earners began to stagnate.

Aside from a pledge to freeze fuel duty until 2015, the Tories had nothing significant to say in Manchester on the question of living standards. The most important announcements were the early introduction of the Help to Buy scheme and Mr Osborne’s commitment to achieve a Budget surplus by the end of the next parliament, both of which risk further depressing incomes. By inflating demand without addressing the fundamental problem of supply, Help to Buy will make housing less affordable, while Mr Osborne’s promise of a balanced Budget is likely to be met by imposing even greater cuts to benefits and services for the poorest. The Chancellor’s ideological fixation with the public finances ignores the greater crisis in voters’ finances.

On the fringes of the party, there is much good thinking. The Conservative campaign group Renewal, which aims to broaden the party’s appeal among northern, working-class and ethnic-minority voters, published a pledge card calling for the building of a million new homes over the course of the next parliament, a significant increase in the minimum wage, a “cost of living test” for all legislation and action against “rip-off companies”. However, there is as yet little sign that the Conservative leadership is prepared to embrace the kind of reformist, centrist agenda that secured Angela Merkel’s re-election in Germany.

The Tories’ error – compounded by the Prime Minister in his conference speech on Wednesday 2 October –has been to mistake the views of the strident right-wing press for those of the majority of the British public and to dismiss sensible calls for a more responsible capitalism as unreconstructed socialism.

George Osborne and Michael Gove listen to speeches at the Conservative conference in Manchester. Photograph: Getty Images.

This article first appeared in the 07 October 2013 issue of the New Statesman, The last days of Nelson Mandela

How Jim Murphy's mistake cost Labour - and helped make Ruth Davidson

Scottish Labour's former leader's great mistake was to run away from Labour's Scottish referendum, not on it.

The strange revival of Conservative Scotland? Another poll from north of the border, this time from the Times and YouGov, shows the Tories experiencing a revival in Scotland, up to 28 per cent of the vote, enough to net seven extra seats from the SNP.

Adding to the Nationalists’ misery, according to the same poll, they would lose East Dunbartonshire to the Liberal Democrats, reducing their strength in the Commons to a still-formidable 47 seats.

It could be worse than the polls suggest, however. In the elections to the Scottish Parliament last year, parties which backed a No vote in the referendum did better in the first-past-the-post seats than the polls would have suggested – thanks to tactical voting by No voters, who backed whichever party had the best chance of beating the SNP.

The strategic insight of Ruth Davidson, the Conservative leader in Scotland, was to to recast her party as the loudest defender of the Union between Scotland and the rest of the United Kingdom. She has absorbed large chunks of that vote from the Liberal Democrats and Labour, but, paradoxically, at the Holyrood elections at least, the “Unionist coalition” she assembled helped those parties even though it cost the vote share.

The big thing to watch is not just where the parties of the Union make gains, but where they successfully form strong second-places against whoever the strongest pro-Union party is.

Davidson’s popularity and eye for a good photo opportunity – which came first is an interesting question – mean that the natural benefactor in most places will likely be the Tories.

But it could have been very different. The first politician to hit successfully upon the “last defender of the Union” routine was Ian Murray, the last Labour MP in Scotland, who squeezed both the  Liberal Democrat and Conservative vote in his seat of Edinburgh South.

His then-leader in Scotland, Jim Murphy, had a different idea. He fought the election in 2015 to the SNP’s left, with the slogan of “Whether you’re Yes, or No, the Tories have got to go”.  There were a couple of problems with that approach, as one  former staffer put it: “Firstly, the SNP weren’t going to put the Tories in, and everyone knew it. Secondly, no-one but us wanted to move on [from the referendum]”.

Then again under different leadership, this time under Kezia Dugdale, Scottish Labour once again fought a campaign explicitly to the left of the SNP, promising to increase taxation to blunt cuts devolved from Westminster, and an agnostic position on the referendum. Dugdale said she’d be open to voting to leave the United Kingdom if Britain left the European Union. Senior Scottish Labour figures flirted with the idea that the party might be neutral in a forthcoming election. Once again, the party tried to move on – but no-one else wanted to move on.

How different things might be if instead of running away from their referendum campaign, Jim Murphy had run towards it in 2015. 

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

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