The United Kingdom has left the EU. We have begun a period of historical change which will shape the country for decades to come. The 2019 general election led to a major class realignment in our national politics. The Conservatives secured an 80-seat majority with a broad coalition that included those on low incomes, the suburban middle class, rural voters and the very wealthy. In contrast Labour’s vote fell across all social classes. Only the 50 constituencies with the highest population of professionals moved toward Labour. It was the culmination of a decades-long disintegration of its working-class vote.
As 2019 came to an end, the Conservatives appeared to have broken free of the interregnum and to be on the path to long-term political domination. Then coronavirus struck. The pandemic exposed the loss of a national political inheritance in which the rich have obligations to the poor, there is reciprocity between government and the governed, and our national institutions defend the powerless from the powerful. The idea of a covenant between parliament and people has deep roots in the history of England and the Union, and has been weakened to the point of destruction.
Labour’s national covenant
Labour joined the war cabinet in 1940, creating an extraordinary coalition of the industrial working class and provincial Conservativism. Britain was in many ways still Victorian. Its imperial and financial heartland was located in London and the south and was dominated by the Conservative Party. Labour had built its political support in the peripheries of imperial and class power, in the Celtic countries, the north and the industrial regions of England. It was a more communitarian Britain of strong local cultures and loyalties, and was animated by a powerful ethos of individual liberty.
The war cabinet symbolised a fragile reciprocity between these two estranged, deeply unequal worlds. Labour’s victory in 1945 consolidated this reciprocity in a programme of national reconstruction that held together the interests of capital and labour. A national covenant provided full employment, social protection, healthcare, education and national security. Business and the unions would cooperate for national renewal. British capitalism would support the national interest.
By the 1960s the British national economy was one of the three great capitalisms of the world, along with the US and Germany. But Britain was experiencing the end of its empire and the stirring of a national identity crisis. To a ruling class seized by the fear of declining British influence, the EEC, which the UK finally joined in 1973, now promised a better prospect for maintaining Britain’s great power status.
By the 1970s Britain’s economic nationalism was struggling to adapt to the shocks of the oil crisis and the collapse of Bretton Woods. Enoch Powell exploited the growing insecurity. His liberal economics and racialised vision of a white ethnic England was the prelude to the destruction of Labour’s national covenant. Powell laid the groundwork for Margaret Thatcher’s 1979 election victory, and he overshadowed national debate about race, immigration and nation for the next 40 years.
[see also: Our search for a national story]
The Thatcher government marked a return to Edwardian laissez-faire. Its first task was to dismantle the organised labour movement. The national economy was integrated into the growing global economy; Britain’s productive base was off-shored. By the 1990s, the industrial regions were dotted with derelict factories, boarded up mills and rusting machinery.
It was also a time of rising living standards and increasing consumer choice. But the Thatcher revolution had not improved economic productivity. The country was living off the sale of public assets built up over generations. Major British companies were sold off to overseas buyers; public assets and services were privatised and outsourced. With the political destruction of the labour interest, government policy combined with the domination of financial capital created a rentier economy. Wealth spiralled upwards.
In 1997 New Labour began to repair the social fabric of the country. It reduced poverty, raised skill levels, invested in public services and introduced a minimum wage. It improved the lives of millions. But more than other OECD countries, Britain had relinquished democratic leverage over national economic development. Despite the good it did, New Labour did not reform an economy that was pulling society apart. Wages were stagnating and secure work was being replaced by precarious, low-skill, low-wage jobs.
At Davos in 2000, Tony Blair spoke of his vision: “The chance in this century to achieve an open world… and an open global society.” New Labour embraced the free movement of goods, capital, services and people, setting in motion a backlash against the party in its own heartlands. When Jeremy Corbyn won the leadership in 2015, his supporters believed New Labour had finally been consigned to the past. But Corbynism proved to be its radical, prodigal offspring. It shared the same liberal progressive politics of an “open global society” and proved to be the political nemesis of the Labour Party.
The covenant broken
The imperial and industrial structures of the UK which once joined the countries and peoples together and which underpinned the Union have now gone. For the first time in hundreds of years the UK exists outside of a supranational empire. British nationalism, which had sustained unionism and a British identity, has lost its political salience.
Globalisation and government policy have created a dual economy. In the old imperial and financial heartland the financial, professional, corporate and cultural elites have appropriated most of the national wealth and income. And it is here, in a London set apart from the UK, and in the globally connected cities and university towns, that Labour has political dominance.
Outside this core economy, the urban hinterlands, small cities, towns, coastal and rural areas have an economic productivity on a par with the old communist East Germany. In a reversal of traditional class alignments, it is here that the Conservatives made their electoral gains.
The national covenant established by Attlee’s government held the Union and its social classes together in a fragile unity. Often contested, it is now broken. The Conservatives responded to the 2008 financial crash by rewarding the bankers and punishing the poorest with a decade of austerity. After the vote to leave the EU, the political establishment undermined democracy in persistent efforts to overturn the referendum. And then the Covid pandemic disproportionately hit the poorest and most vulnerable. Over the past decade, the whole national edifice of class and cultural power failed to honour its part in the national covenant, let alone repair it.
A new national economy
The country needs to reconstruct a national economy and a new democratic covenant to provide the foundation on which it will establish its place in the world. The nation remains the best political unit for an effective popular democracy, for the management of globalisation and for international cooperation. Shared national traditions provide the language of collective experience, security and a common interest against the forces of the market.
National reconstruction needs to prioritise work, families and local places. It begins with the everyday economy which includes the care of children and elderly people, health, education, housing, utilities, broadband, retail and food production. The labour interest needs to be strengthened with a system of vocational education, workers on boards, trade union representation and new forms of worker solidarity. And the Union will have to be re-founded as a democratic confederation of self-determining peoples and nations, with the constitutional representation of English interests and their constraint in institutional form.
The crucial assets for a national economy are strong local economies and cultures – the whole fabric of local histories, attachments and inherited values that make up a familiar way of life and give meaning and purpose to individuals. It is these meaningful environments of work, family and community that have been undermined by the loss of a national covenant.
[see also: Keir Starmer’s quest to reshape Labour]
Rebalancing geographic power and wealth will require regional banking for investment, reshoring industries and supply chains, and an industrial policy which is built on partnerships between business, government, workers and local communities. An economy that restores a better balance with the natural world recognises that human beings are a part of the living ecosystem and that we have become estranged from it and so are destroying it. We need a plan for the whole environment integrated into local and regional economic development.
The governing liberal consensus of recent decades was built on the political destruction of the labour interest. The subsequent transfer of power, influence and wealth away from working people to the already wealthy lies at the heart of our national crisis. Both major parties failed to recognise the collective feelings of irretrievable loss and humiliation caused by the rapidity and scale of change. Grief and anger belong not just in the so-called “left behind” areas and those coping with poorly paid work, but also among younger generations of the higher educated, middle classes many of whom have lost an idea of the future which gave their lives meaning.
Both Labour and Conservative leaderships inherited parties that are products of the liberal consensus – Whiggish and utilitarian – that is now misaligned with the times. Neither yet has a politics that can bring people and parliament together. The success of the vaccine programme may give the government a second wind, but the Conservatives will not restore a fair balance of power between capital and labour essential for national renewal and a shared prosperity.
Labour, the historic party of economic nationalism and nation-building, once understood that to win it must unite the labour interest with the national interest and tell a compelling national story about a better society for all. Its antagonists were the privileged forces of self-interest and unaccountable power that worked against the common good. To survive and prosper, the party must now renew its political relationship with the country and create a new democratic covenant between government and citizens around national economic reconstruction: restore dignity in work, safeguard families and help them flourish, protect local places, improve their security and help to make them more beautiful.
Jonathan Rutherford is a writer and co-founder of Blue Labour.
[see also: It’s now clear Brexit is an act of self-harm – so why are Labour and the Tories silent?]
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