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

Photo: Getty
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Who will win in Manchester Gorton?

Will Labour lose in Manchester Gorton?

The death of Gerald Kaufman will trigger a by-election in his Manchester Gorton seat, which has been Labour-held since 1935.

Coming so soon after the disappointing results in Copeland – where the seat was lost to the Tories – and Stoke – where the party lost vote share – some overly excitable commentators are talking up the possibility of an upset in the Manchester seat.

But Gorton is very different to Stoke-on-Trent and to Copeland. The Labour lead is 56 points, compared to 16.5 points in Stoke-on-Trent and 6.5 points in Copeland. (As I’ve written before and will doubtless write again, it’s much more instructive to talk about vote share rather than vote numbers in British elections. Most of the country tends to vote in the same way even if they vote at different volumes.)

That 47 per cent of the seat's residents come from a non-white background and that the Labour party holds every council seat in the constituency only adds to the party's strong position here. 

But that doesn’t mean that there is no interest to be had in the contest at all. That the seat voted heavily to remain in the European Union – around 65 per cent according to Chris Hanretty’s estimates – will provide a glimmer of hope to the Liberal Democrats that they can finish a strong second, as they did consistently from 1992 to 2010, before slumping to fifth in 2015.

How they do in second place will inform how jittery Labour MPs with smaller majorities and a history of Liberal Democrat activity are about Labour’s embrace of Brexit.

They also have a narrow chance of becoming competitive should Labour’s selection turn acrimonious. The seat has been in special measures since 2004, which means the selection will be run by the party’s national executive committee, though several local candidates are tipped to run, with Afzal Khan,  a local MEP, and Julie Reid, a local councillor, both expected to run for the vacant seats.

It’s highly unlikely but if the selection occurs in a way that irritates the local party or provokes serious local in-fighting, you can just about see how the Liberal Democrats give everyone a surprise. But it’s about as likely as the United States men landing on Mars any time soon – plausible, but far-fetched. 

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