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26 February 2015

Will we ever see a Thatcher of the left? Peter Hain and Will Hutton on Labour’s potential for reform

In new books, both Hain and Hutton recognise Labour as the only vehicle for reform – but what kind will emerge remains to be seen.

By George Eaton

Back to the Future of Socialism
Peter Hain
Policy Press, 304pp, £19.99

How Good We Can Be: Ending the Mercenary Society and Building a Great Country
Will Hutton
Little, Brown, 304pp, £16.99

The financial crisis was a moment of optimism for the left. The form of capitalism that had reigned for three decades was held to have been so discredited that change was inevitable. Just as the postwar consensus evaporated in the 1970s, it was thought that the long wave of neoliberalism would retreat. The ensuing seven years have shown how misguided these hopes were.

After the initial shock to its standing, the market reasserted itself with remarkable ease. Through a supreme act of political conjuring, the right redefined a crisis of banking as one of debt. Ever since, the left has struggled to contest this narrative. Since the abandonment of socialism and the discrediting of “the Third Way”, it has lacked an alternative account of the economy and society. In those few countries where it has taken power, such as France, it has invariably disappointed expectations.

It is against this backdrop that the former Labour cabinet minister Peter Hain and the Observer columnist Will Hutton ask how the left can be regenerated, offering their manifestos for the transformation of Britain’s economy and its governance.

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Both proceed with reference to past tracts. Hain’s book is intended as a sequel to Anthony Crosland’s revered The Future of Socialism (1956), a project that Ed Miliband had aspired to pursue during his sabbatical year at Harvard. Hutton’s marks 20 years since the publication of The State We’re In, his excoriating critique of Thatcherism that was briefly embraced by New Labour. As he notes with regret, the defects that he anatomised then proved even greater than he feared: “I certainly thought the gentlemanly capitalists of British finance short-termist and far too powerful – but believed they had an instinct for self-preservation; I had not reckoned that the whole system could be driven to the point of collapse.”

Hain and Hutton write with respect for New Labour’s achievements: the minimum wage, devolution, the improvement of public services and the large reductions in child and pensioner poverty. Both locate its defining failure in its unwillingness to challenge the economic settlement it inherited. They affirm their faith in the market as an indispensable means of wealth generation but crucially recognise that the question is not whether capitalism should exist but what form it should take. (Hain’s “socialism” is largely a romantic rubric for a social-democratic programme.)

In opposition to David Cameron, who has perpetuated the myth that “big gov­ernment” got us “into this mess”, they contend that only an active state can get us out. The task is now to reshape the economy so that it better serves the twin objectives of prosperity and equality. Both argue for the empowerment of state banks to drive investment, for the imposition of a training levy on companies (to remedy the British disease of low productivity), for employee profit-sharing, for the renewal of trade unions as stakeholders in capitalism, rather than as marginalised opponents – and for the revival of public ownership in the case of natural monopolies such as the railways.

The evidence marshalled for these demands is a salutary reminder of how successive UK governments have arrogantly neglected best practice. As Hain writes, “There is no future for Britain trying to compete at the shoddy end of the quality spectrum, charging rock-bottom prices for copycat products made using clapped-out kit by unskilled labour on poor pay.”

In rejecting the economic assumptions that continue to hold sway among the establishment, they also reject the dominant fiscal assumptions. Both rightly chide Labour for its timidity in rebutting the Conservative assertion that Britain only narrowly avoided bankruptcy in 2008 and that deficit reduction must be prioritised above all else. Hutton notes, “The national debt has been proportionally higher for most of the last 300 years, with the low national debt in the three decades before the First World War and the three decades up to the financial crisis the norm rather than the exception.” The best means of restoring the public finances to health is not austerity but growth through investment. With its long-term debt maturity (an average of 14 years) and ultra-low borrowing costs, Britain is well placed to follow this path. Hain argues for a £60bn two-year programme of investment “focused upon housing, infrastructure, low-carbon investment and education and skills”.

Where growth cannot fill the gap, the priority should be tax rises, in a country where the state continues to levy less than many of its competitors. Hutton calls for “higher taxes on wealth, business and property, from ending the UK’s tax-haven status, broadening the VAT base and taxing polluters”. More radically, Hain proposes all of these as well as a financial transaction tax, the abolition of the upper earnings limit for National Insurance and the extension of stamp duty to football transfer fees. If all of these measures lie starkly to the left of the recent consensus, it is worth noting that, as in the case of the 50p tax rate and the “mansion tax”, they would likely command overwhelming public support.

As well as confronting the UK’s persistent flaws of low investment, extreme inequality and dilapidated infrastructure, Hain and Hutton demand an end to its absurdly centralised state. With the public increasingly alienated from Westminster – most vividly displayed in the vote for Scottish independence – the creation of a federal Britain and large-scale devolution to city regions can no longer be deferred.

It is a programme worthy of any progressive government. The harder task is identifying how it can be effected. Hutton, in common with Hain, recognises Labour as the only vehicle for such reforms. Indeed, no British leader in recent times has better represented their social-democratic aspirations than Ed Miliband. But because of the long-term decline in support for the party, it may struggle to fulfil this role. Any Labour government that takes office after the general election will almost certainly do so without a parliamentary majority, with Ukip, the SNP and the Greens all poised to erode its base further. After the birth of multiparty politics, Britain may never again elect governments capable of emulating the transformations of the past. That the times demand a new Attlee, or a Thatcher of the left, is without doubt. What is not is whether one will yet emerge.

Will Hutton will appear at the Cambridge Literary Festival, in association with the New Statesman, on 17 April

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