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19 March 2020

How should Labour respond to the Covid-19 outbreak?

After months on the health frontline or in isolation, the heroes of this battle for Britain must not return to the same economic system.

By Chi Onwurah Chi Onwurah

It is now clear that the coronavirus outbreak is not only the worst public health crisis for a generation, to quote Boris Johnson, it is also a global economic crisis on a scale never before seen, including the financial crash of 2008. In the early days of that crisis, many argued that it was the opportunity for the left to remake capitalism in its own image: for the many, not the few.

We know now that that did not happen – quite the opposite. With the election of the coalition government, austerity became the orthodoxy. Nick Clegg and David Cameron prioritised cutting corporate taxes whilst slashing the benefits of the most vulnerable, placing the burden of austerity on public services and making teachers and nurses accountable for the failings of casino capitalism.

Now the coronavirus is cutting a swathe through the global economy and challenging politicians and policy makers with the question: who will pay this time?

Having been out of power for a decade now, Labour must rise to this challenge, both as an opposition to the government in a time of national emergency and a partner for business in a time of economic restructuring.

In 2008 under Gordon Brown, Labour bailed out the banks and helped saved the global banking system. Yet the Tories successfully defined Labour as the cause of that global crisis. The 2019 election results suggest significant parts of the electorate, at least in the North, blamed us both for austerity and the Brexit shambles. We did the right thing, but we did not capture the narrative.

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Now we need to have a response commensurate with the scale of the challenge which is also a chronicle of change. After months on the health frontline or in isolation, the heroes of this battle for Britain must not return to the same economic system. Equally businesses must not be left to stagger through an economic desert with only the most ruthless making it to post-virus uplands. We need to help businesses meet the challenges of this battle, the green industrial revolution and the regional rebalancing of wealth generation.

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That is a huge task, but it is the scale of the challenge which can mobilise people, businesses and civic society.

The innovation economist Mariana Mazzucato highlights how the economic orthodoxy of a small state taking the back seat whilst business creates wealth has left governments across the world with neither the tools nor the infrastructure to respond effectively and speedily to a crisis of this nature. We need to expand the state’s capacity through a different kind of partnership with the private sector. Public private partnerships were supposed to be a way of the state to put risk onto the private sector, but the financial crisis and the coronavirus both show in different ways that the state cannot outsource risk without significant public harm.

Whilst guaranteeing the income of ordinary people, public money to business should come with public interest strings attached. In the United States, the labour movement is arguing that no company should get help unless its workers have decent sick pay and a voice on the board. Here, some are suggesting any state support should be accompanied by a stake in the company. I don’t think the state should run Virgin Atlantic, but maybe the money the state puts in could be used to enable its employees to run more of it. We should get a public return on a public investment. Hospitality and tourism will not survive a shutdown without support. And they also need to be weaned of their dependence on carbon fuels, low pay and zero-hour contracts. The right package can help achieve that

As part of this, the idea that there is no such thing as morality in business needs to be buried. The coronavirus highlights that without a organised and effective state, companies from Asda to Apple do not have the customers healthy or educated enough to buy and use their products. Business is not an outlier or a passive, insulated, observer of civil society. Businesses owe a debt to society, public services and the framework of civil laws which allow them to make profits: a debt which is not only financial but moral.

We also need to bury something else, and that is the view amongst some on the left that the party is concerned primarily with public services, and that it sees business merely a way to finance them. Millions and millions of people work for businesses or are sole traders, by choice or forced into the “gig economy”. We need to reshape the relationship between Labour, business and the state, and give people the confidence to battle through the next few months – for something both different, and better.