Show Hide image Economy 16 February 2017 How can Labour refit itself for the modern world? The events of 2016 were hammer blows for the left. But I still believe we can survive and thrive. Here's how. By Wes Streeting Sign UpGet the New Statesman’s Morning Call email. Sign-up I was born in 1983. I have realised in the last year or two that I have taken for granted the onward march of social progress that I have seen throughout my life. In part because of my own journey from a council estate in East London to a seat in the House of Commons, and in part because my adolescence took place during an economic boom and the advent of new technology, I had assumed that over time we would all become better off and, as the white wristbands told us, we would ‘Make Poverty History’. In part, because of where I grew up: in a multicultural community in a global city. I’ve seen great advances in areas like race relations, disability rights and the role of women in our society. As the Labour government changed the law on LGBT equality they also changed hearts and minds and changed my life as a result. As a teenager struggling to reconcile my Christian faith and sexuality I finally began to feel comfortable in my own skin. Martin Luther King famously said “the arc of the moral universe is long but it bends towards justice” and I have always believed that to be true. But the last couple of years have shaken that conviction and I worry for the future of Britain. In this piece, I want to try and make sense of what is happening to our country and offer some suggestions about what needs to be done. This is a time of unprecedented peace and global prosperity, yet also great anxiety and social upheaval. The benefits of globalisation and economic growth are being unevenly distributed and people are acutely aware of their own relative disadvantage. Across Europe and the United States of America, people are sending a clear message to their leaders: that they feel left behind, that they feel unheard and that they feel dislocated in a world that is changing around them. There’s something a little ironic about the emergence of a global movement against globalisation, but it’s not hard to understand what’s driving it. Since the global financial crisis of 2008, the biggest gains have been made by the richest. Since the 60s and 70s communities whose jobs have been reliant on their strengths in traditional manufacturing have been hollowed out through a combination of labour-saving technology and outsourcing elsewhere. And young people across advanced economies face the prospect of growing up to be poorer than their parents. At times of economic upheaval and with pressures on livelihoods, history tells us that people can become fearful and resentful. In the United Kingdom, we saw that resentment writ large during the EU referendum campaign. Resentment towards a political establishment that had let them down over many years. Over broken promises on issues like tuition fees, foreign follies like the war in Iraq and the MPs’ expenses scandal, which confirmed in people’s minds their worst suspicions that politicians are only in it for themselves. Resentment towards the Square Mile, for its role in a financial crisis that left ordinary taxpayers picking up the bill for a mess that wasn’t of their making. Resentment towards immigration, because of a belief that foreign labour was taking jobs, undercutting pay and conditions and placing pressure on over-stretched public services. ‘Vote Leave, Take Control’. ‘Make America Great Again’. ‘Au nom du peuple’! The clarion calls of the political movements capitalising on the anxiety of people in the UK, USA and France. Just this week, Marine Le Pen has declared that “the divide is not between left and right anymore but between patriots and globalists”. She would not be the first fascist in European history to turn an economic crisis into a political opportunity to inspire hatred. But in identifying globalisation as the enemy within her sights she is striking a powerful chord. The tragedy is that the Le Pens and the Trumps of this world, who play on people’s fears and society’s worst prejudices for electoral gain, also champion the very policies that will make their voters’ lives worse. People like me on the centre-left of politics have a fight on our hands. Our job is to appeal to people’s hopes and aspirations by providing real answers to the challenges facing our country. But for too long we’ve been out of office and out of answers. Once again, the Labour Party is learning the hard way that winning elections matters and losing has consequences. Right now we need a government that will deal with the inequality driving people’s fears and insecurities. This country has a lot going for it: the world’s sixth largest economy, 12 of the world’s top 100 universities, and third in the global innovation index. But our country also faces some big economic challenges. We’ve had a decade of near-stagnant wage growth and falling living standards. We are lagging behind our neighbours as far as productivity is concerned, and our consumer spending is driven by credit card debt. Meanwhile, demographic challenges mean a lower tax base, rising social care costs and even greater questions about how we pay for it: the number of pensioners will rise by a third to 17 million in 2041. Whether you voted leave or remain in the referendum I think we can all agree that the decision to leave the European Union presents significant challenges for our economy. We’re leaving the most advanced political and economic alliance in the world. As members of the single market and the customs union, as part of the largest free trade area in the world, we currently have unfettered access to a market of half a billion consumers. Moreover, it facilitates global trade – with more free trade agreements than the USA, China, Canada, Japan, Russia, India or Brazil. Every single sector of our economy will be affected, in some way, by the deal that our Prime Minister does or doesn’t strike as she negotiates our exit from the European Union. In the best of times, we would want to make sure that our future relationship with the European Union safeguards jobs and trade so that we could build on our economic strengths so that all our citizens could continue to enjoy rising prosperity and living standards. But in times like these, where our economic recovery is fragile and where voters delivered a shock to the political establishment in large part due to the economic pain and misery they are experiencing, it is absolutely essential. But instead, the government has chosen to prioritise concerns about immigration over our national economic interest. I’ve lost count of the number of times I’ve heard calls for a ‘real debate on immigration’. They arrive like the seasons. Some in my party argue that we must take a tougher line on immigration to match the public mood. But a ‘real debate’ requires some argument and, so here is mine: immigration is good for our economy and good for our society. Indeed, it becomes more important with an ageing society and a shrinking working age population. Those who want less immigration must tell us how they intend to pay for public services and pensions and how they plan to grow our economy. Those of us who defend immigration must ensure that British workers receive the skills they need to find work and that we have sensible controls to manage migration. There are a number of things we could do: provide a proper migration impact fund, to make sure that public services and infrastructure can cope with additional people, introduce better migration controls to deliver the global talent our economy actually needs, and seriously look at the options for a regional work permit system. What we should not do is relegate the economy to the second division of concerns. As far as I am concerned, any government that doesn’t make the economy the priority doesn’t deserve the trust of the British people. But particularly at this moment, the absolute priority has got to be the economy – and not just in general terms, but in addressing the economic inequality that is fuelling people’s fears and anxieties. We are at the start of a new industrial revolution that will be like globalisation on steroids. The World Bank estimates that 57 per cent of jobs in OECD nations are susceptible to automation – rising to 69 per cent in India and 77 per cent in China. In the report that paved the way for the modern welfare state, William Beveridge said that “a revolutionary moment in the world’s history is a time for revolutions, not for patching” – it was true then and it remains true today. So just as the Attlee Government built the welfare state from the rubble of the Second World War, so too the Labour Party today should embrace the challenge of reshaping post-Brexit Britain, re-imagining social democracy to meet the big social and economic challenges of this century. Beveridge’s five giants of want, squalor, ignorance, disease and idleness have a modern relevance as we seek to eradicate poverty and reduce inequality, build the housing and infrastructure that our people and our economy need, equip people with education and lifelong skills for the 21st century, address the health and social care crisis and consider the future of work in the age of automation. It’s clear that too many people on the right of politics remain fixated with the idea that government has little role to play in growing our economy and strengthening our society. Just look at the ineptitude of Sajid Javid as Business Secretary, who banned the use of the words ‘industrial strategy’ in the Business department and planned some holiday time in Australia while the fate of British jobs in the steel industry was being sealed in India. And even in my own party there are those who suffer with the strange affliction that sees a private sector providing eight in 10 jobs as a ‘necessary evil’, best summed up in that most lazy of soundbites: “public good, private bad”. As Attlee argued in his speech to the Labour Party conference in 1946: “It is social democracy which can set us free from the tyranny of economic power and preserve us, too, from the dangers of the absolute power of the state”. What might a modern Beveridge report say about today’s world? Because his five giants are still very much alive. WANT Beveridge himself might be surprised by the prevalence of UK poverty seventy years on from his original analysis of ‘want’ in our society. Four million children grow up today living in poverty – an average of 9 children in every classroom of 30. A combination of falling incomes, rising costs and welfare cuts has led the Institute for Fiscal Studies to predict a 50 per cent rise in relative child poverty by 2020. The last time we saw such a sharp rise in child poverty was when I was growing up in the 1980s. But as a constituency MP, I am struck by how different the circumstances of my own upbringing were compared with the children I represent growing up in similar circumstances today. I grew up in a single parent household on a council estate in Stepney in Tower Hamlets, East London. We didn’t have much. When my mum was able to find work, it was often poorly paid, temporary and casual, which made the support network of family living nearby in Wapping, Stepney Green and Bow essential for childcare – and occasionally raiding my Nan’s food cupboards if we were short. The benefits system put food in the fridge, helped with school uniform costs, fed me at school and kept a roof over my head at home. I used to think I was unlucky. Not having the latest trainers or games console. Not being able to invite friends around to play because we were too embarrassed that our home wasn’t as nice as some of the kids from better off families. Going without electricity because the meter had run out, and so had the money. But then I look at the kids growing up with parents in the same circumstances today. They’re not in a council flat with security of tenure, they’re in unaffordable and shabby private rented accommodation. Or temporary bed and breakfast accommodation. Some of them are commuting to school to west London in the morning, because that’s where they came from before they found themselves homeless and placed by their local authority in Redbridge. Their parents do a 2-3 hour round trip, twice a day, because their schooling is their only stability in life and they don’t know where they might move next. They’ve been moved away from family and friends – the vital support network that might help mum or dad to get a job that fits around school hours. They’re using foodbanks, because they don’t have enough money to eat. For me, the state was my security net and my springboard. It meant I didn’t go hungry or homeless and it gave me the education I needed to be where I am today. There is a tragic irony about the welfare debate in our country: the welfare system lacks public confidence, but it also fails the people who need it. Not just the kids like me, but disabled people who can’t work and face the bureaucracy and indignity of regular inquisitions by amateur pen pushers making judgements against the weight of medical evidence from qualified professionals. The pensioners for whom retirement feels more like a prison sentence than a reward for a life of hard work, because they don’t get the care they need to ensure a good quality of life in their final years. Those in work and in poverty: the worst of all worlds – working hard and having nothing to show for it. As my colleague Dan Jarvis recently argued, what is most shocking about this state of failure, is that it costs so much. The Joseph Rowntree Foundation puts the cost of poverty to the public purse at £78bn. I think we need to reimagine the welfare system from first principles. A welfare system that acts as a safety net: preventing destitution and supporting people into work. A welfare system that expects you to work: providing meaningful support to help people to reskill, retrain and find employment – and opportunities to give back to society through community action while job-hunting, building friendships, networks and skills in the process. A welfare system that that works for those who can’t: providing a level of support to disabled people that gives them freedom, dignity and quality of life. A welfare system that recognises contribution: so that if you’ve paid in, you can access greater government support to help with things like mortgage interest payments if you become unemployed. A welfare system that makes work pay: so that the combination of in-work benefits, minimum wages and taxation policy will always prevent families from falling below the poverty line. Tackling poverty isn’t just a social policy. It’s a crime prevention policy, a health policy and an economic policy. DISEASE To tackle disease the original Beveridge Report laid the foundations for the Attlee Government to create the National Health Service. Next year it will be 70 years old. During that time, it has survived under-resourcing and attacks on its universal principles and although the word ‘crisis’ has been used often, to describe today’s NHS as in crisis is something of an understatement: hospitals are struggling to cope with rising A&E admissions and delays to operations, clinics are overwhelmed, with an ageing workforce and insufficient pipeline of new GPs coming on-board and local authority cuts are compounding social care pressures, leading to avoidable hospital admissions, delayed discharges and poor quality of life for disabled and older people. That’s why I support the view of my colleagues in Parliament – Labour’s Liz Kendall, the Lib Dems’ Norman Lamb and the Conservatives’ Dr Dan Poulter – that we need an independent commission on the future of health and social care. Labour created the NHS and now we should seek to build a new cross-party consensus around social care. IGNORANCE Education has a powerful role to play, not just in tackling ‘ignorance’, but in tackling poverty and inequality. In addition, unlocking the talent and potential of every citizen is an economic necessity. In the UK, we must meet that challenge in the context of an ageing society. This year marks the 20th anniversary of Learning Works, the seminal work on widening participation in further education and lifelong learning. Though I remain immensely proud of the educational record of the last Labour government, Helena Kennedy’s observation that “if at first you don’t succeed, you don’t succeed” remains true today. The United Kingdom lags significantly behind our competitors on basic skills like literacy and numeracy. One in five adults in this country do not have the basic literacy skills that we expect of an 11 year old. With more of the population expected to work longer, we need to make sure that they can re-skill and retrain. This is urgent. I meet too many constituents now in their fifties and sixties – able to work, unable to find a job, but unable to retire. A modern Beveridge report would build a further education system that’s simple, easy to understand for learners and employers and joined-up. There needs to be a genuine and sustained commitment to widening participation in higher and degree level apprenticeships – just as the last Labour government led a sustained effort on widening participation in our universities. We can’t rest on our laurels about the future of our school system, either. I’m hesitant to propose more piecemeal curriculum reform. Our schools have had enough. Michael Gove was a big advocate of chaos theory in education policy and it certainly did what it said on the tin. What a modern Beveridge would conclude though, is that a world class education system is about people: high quality leadership and well-trained educators who have freedom to experiment and build professional expertise. The early years of a child’s life remains one of the greatest predictors of their success at the age of 16, which is why greater investment in early years and high quality childcare for the poorest families must be a priority. When we reach the latter stages of education, careers guidance in this country is abysmal. This is not just an economic issue, but a social justice one: so much of our individual success is reliant on good information, advice and guidance. We need to start from scratch and make this a national mission involving an army of employers to give young people better advice about planning their futures and making informed choices. We need to pay more attention to nurturing character and resilience, creativity and critical thinking to turn out young people ready to be good citizens and agile workers. School budget cuts that threaten the performing arts are a risk to this goal. But it’s not just the arts that matter. Mathematics and science become more important in this century, not less, and our current performance isn’t good enough. We need to rethink pedagogical approaches to these subjects, making computing a fourth core science to prepare our new generation of digital natives to be digital creators; and making financial literacy a key part of the curriculum to tackle our country’s lackadaisical approach to personal debt, savings and pensions. SQUALOR In the aftermath of the Second World War, Beveridge’s “squalor” referred to the physical state of the country, and 75 years on we must re-commit to sharing the gains of national wealth across every part of the country. If we’re to improve productivity and increase our citizens’ life chances, then we must improve national infrastructure and housing. As IPPR North’s State of the North report in 2015 identified, the government’s pipeline infrastructure projects in London amounted to some £22 billion – one fifth of all UK spending – with just £14 billion allocated across the whole North of England for an area of some 15 million people – twice the size of Scotland. In transport, £4,300 per commuter is spent in London each year compared to just £710 per commuter in the North generally; down to £580 in the South West and just £480 in the East Midlands. Improving regional productivity demands fairer UK investment in infrastructure to enable economic activity, reduce journey times and include the most isolated and deprived communities. That means supporting the commitment to high speed rail - built by British steel and including Liverpool and the North East as priorities - plus also improving existing inter-city networks especially east-west. Intra-regional train and bus investment must be priorities, too. A regional renaissance must be led from within our towns and cities through a real commitment to devolution rather than by trying to pull levers in Westminster and Whitehall. As a local councillor as well as a Member of Parliament, I know that decisions are made best when they are made closest to the communities they affect. We need a radical redistribution of power across all of England’s regions with a presumption in favour of ceding power and budgets into the hands of local communities. That must include the freedom for local authorities to borrow to invest. This week’s Housing White Paper was another missed opportunity to solve the housing crisis. More tinkering. More warm words about speeding up the planning process, getting tough on developers and helping first time buyers. But this crisis is about simple supply and demand. Local authorities have a better track record of balancing their books than their paymasters in the Treasury. It’s time to set them free to invest in a new generation of decent homes to buy and rent. IDLENESS So a modern Beveridge Report would address the modern manifestations of want, ignorance, squalor and disease. That brings me to ‘idleness’ and its modern manifestation: the huge question mark hanging over the future of work. Voltaire said that “Work saves a man from three great evils: boredom, vice and need”. But what happens in a future where the jobs of men and women are taken by robots? That sounds like something from science fiction, but it is increasingly science fact. The scale of technological development – not just of processes but of artificial intelligence – is running at a pace that we are struggling to keep up with. As I have mentioned, some estimates suggest that up to two thirds of jobs could be at risk from automation in the decades to come. Anxiety about the impact of automation on jobs isn’t a new phenomenon. In 1589 a disappointed William Lee was surprised to learn that Queen Elizabeth I refused to grant a patent for his stocking frame knitting machine because it would, in the words of the Queen, “assuredly bring to them ruin by depriving them of employment, thus making them beggars”. In the 19th century the Luddite Rebellion saw skilled artisan workers across Nottinghamshire, Yorkshire and Lancashire destroy the machines that threatened their livelihood as textile workers. And in the 1930s John Maynard Keynes warned of the phenomenon of technological unemployment. What makes the new industrial revolution – dubbed the Fourth Industrial Revolution – so different from the past is not simply the scale and pace of technological advancement, but also the scope. The development of technology and learning algorithms that can perform tasks previously thought to be quintessentially human, like the driverless car, has generated a lively debate about the possibilities and risks of such developments. We might see output up, prices down, quality and abundance. But as Klaus Schwab of the World Economic Forum, has argued “in addition to being a key economic concern, inequality represents the greatest societal concern associated with the Fourth Industrial Revolution”. There is no doubt that this new industrial revolution and new age of automated capital will have a significant impact on the labour market. As Professor Andrew McAfee of M.I.T. has argued, “we’re going to see more and more things that look like science fiction and fewer and fewer things that look like jobs”. We need to learn from our experience of globalisation. The debate is not about whether we want automation: it’s happening. The question is, will we embrace it, or become victims of it. We’re a nation of creators, innovators and performers. Breakthroughs in science and technology have enormous potential to improve quality of life for everyone - and to help us better share and protect our increasingly endangered natural environment. But it will create winners and losers. We’ve got to plan now for the challenges ahead. We need to invest in education and skills to prepare people for the future world of work, put in place social protections for people who lose their jobs and helping them to re-skill and retrain, and support communities affected by the loss of traditional industry, to avoid the intergenerational scarring effect we’ve seen during the decline of traditional manufacturing and heavy industry in mining and steel towns. We have to use our international alliances to prevent a race to the bottom, with new global agreements on employment rights and protections, standards and pay. We have to tackling grotesque pay inequality by publishing pay ratios and putting workers’ representatives on company boards. Most importantly, we need to make sure that Britain is well-placed to reap the benefits of this new industrial revolution by increasing substantially our investment in our science base so that the UK continues to punch above our weight in the world in terms of science and innovation. We need to lead the world on climate change, too. It is one of the greatest threats to the human race. We’ve got to do more than just our bit at reducing emissions. We’ve got to lead the world in green technology and industries, building a circular economy and developing new technology to reduce energy and resource consumption. Paying for all this will require some difficult choices, but I think it’s time we slayed some shibboleths in any event. It is already clear that a shrinking tax base and greater concentration of wealth in capital assets makes the debate about how we tax wealth more pressing. This isn’t just a question of how we fund our public services, it is a basic question of fairness. There are people generating huge amounts of wealth through good luck, rather than hard work: just look at the explosion of house prices, creating a two tier economic model where people will inherit hundreds of thousands – or even millions – without lifting a finger. It is one of the key drivers behind intergenerational inequality. So we should be developing a new model for taxing wealth, not simply income, worrying less about how we tax the dead and more about how we fund the living, and asking those who haven’t earned their money to hand a bit more of it over to help those who have. None of this is particularly easy or popular, which is why it’s so easy for politicians to park issues in the box marked ‘too difficult’. Politics, by its nature, is notoriously short-termist. But if we don’t wrestle with these issues now, we will pay a far greater price later. Which brings me right back to the politics of the referendum and the vote in the House of Commons last week. I know many remain voters would have preferred Labour MPs like me to take to the trenches this week and oppose the triggering article 50 at every twist and turn. But we have to face the facts: a majority of voters in a majority of constituencies voted to leave the EU. I wish it wasn’t so. I put plenty of shoe leather into campaigning for a different result and I still believe we would be stronger, safer and better off inside the EU. But imagine for a moment what would have happened the morning after the House of Commons blocked the result of a referendum in which 33.5 million people had voted. Britain would have been plunged into a constitutional crisis. People would have taken to the streets. Riots would have been a distinct possibility. Theresa May would have been forced to call a general election in which remain or leave would be the only question. And the result would not have been the overturning of the referendum result, it would be a very different Parliament committed to the hardest of hard Brexits. Let me be absolutely clear. I do not doubt the integrity or passion of any of those people ringing MPs pleading with us to vote a different way. But if people think that overturning a vote at the ballot box by a vote in the parliamentary lobbies would reverse the outcome – I am afraid they are kidding themselves. This referendum was lost because of a coalition of voters. Sure, there have always been committed Eurosceptics who wanted out come what may. But the referendum was won thanks to millions of people who simply felt left behind, who felt unheard and who wanted to send a clear message. These are the people at the sharp end of globalisation: the victims of economic inequality and social injustice. And those of us who campaigned in areas where people turned out in their droves to vote leave heard the same phrase repeated again and again in response to our argument that Leaving the EU would make them worse off. They simply replied “things can’t get worse than this”. Sneering at people who voted Leave, or dismissing them as ignorant is part of the problem. Across western democracies we are already seeing the consequences of what happens when people abandon their faith in mainstream politics. These are the conditions in which fear and prejudice and hatred thrive. The only way to change course is to change our country.There is no trick and no shortcut to achieve change. In politics, firstly, you have to earn the right to be heard. For Labour that means showing that we’ve listened and understood why so many people feel that we’ve left them behind for so long. Secondly, you have to earn people’s trust, by showing you’ve got the answers to address their worries and anxieties, their hopes and their aspirations for them and their families. Thirdly, when you’ve gained that trust you have to deliver. It’s not about striking a radical pose, it’s about making a radical change. Not just honouring pledges and listing achievements at party conferences. But by constantly striving to do better and be better. 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