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2 January 2019

We need a “1945 moment” to deliver prosperity and justice for all in the 21st century

A Beveridge Report for the 21st century.

By Harry Quilter-Pinner

“A revolutionary moment in history is a time for revolutions not for patching”. These are the words of the great 20th century reformer, and founder of the modern welfare state, Sir William Beveridge. Belatedly, progressive political parties seem to be embracing the fact that the financial crisis of 2007-8 was just such a moment – and that there may still be an opportunity to seize it.

More than a decade on, our economy is still not working for the majority in our country; with anaemic economic growth as a result of low productivity and investment; precarious and low wage employment that is exacerbating inequalities; and an unstable and rent-seeking financial system that fuels asset price inflation but fails to support the real economy. No system can maintain itself for long in the presence of such obvious and pervasive flaws.

There is a growing recognition, particularly in the Labour Party, but even in more mainstream political circles, that we need a paradigm shift in the way we think about both the state and the economy. However, the question which has remained unanswered for so long has been what this shift should look like in practice. As the philosopher Antonio Gramsci said, a “crisis consists precisely in the fact that the old is dying and the new cannot be born”.

Fortunately, like solid land emerging from the mist after a long and dangerous voyage, a new manifesto for change is beginning to take shape. What is required, the IPPR argues, is investment-led growth. This would be delivered through active industrial strategy; the suppression of both speculative finance and monopoly power by greater regulation; and more equality, driven by higher taxes on wealth. In other words, a more active state.

Progressive political parties are proving to be increasingly receptive to these ideas. John McDonnell, the shadow chancellor, described the IPPR’s Commission on Economic Justice as a “Beveridge Report for the 21st century”. This description is apt, not only because it rightly recognises the importance of the CEJ’s findings, but also because it will require an effort equivalent to that which followed the original Beveridge Report to implement its recommendations. Put simply, we need a “1945 moment” to deliver prosperity and justice for all in the 21st century.

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But, with Brexit, those of us wanting a bold transformation of our society, face a challenging paradox.

On the one hand Brexit is a sign that people want change. The vote to leave was not just – or even primarily – about the EU. It was a demand for a domestic political project that can close the gap between the lives people expected to lead, and the reality as they now experience it. The scale of this challenge is such that only a radical progressive political project can address such concerns. And the stakes couldn’t be higher. Failure to deliver reform could well unleash further outbreaks of populist anger and push people into the outstretched arms of xenophobic alternatives.

On the other hand, however, Brexit is also inclined to make it infinitely harder to affect lasting change. This is partly because the constitutional wrangle around it leaves such limited political leeway for domestic policy. But, in truth, this lack of headroom is symptomatic of that far greater problem: profound social division. This is the real challenge facing progressives. Because it is these divisions that will make obtaining a sustained mandate for reform – and creating a politics stable enough to deliver on it – almost impossible.

As the only successful paradigm shift in a progressive direction in modern British history, 1945 may seem like the model for a future progressive government. But in truth the lessons are cautionary rather than optimistic. After all, the achievements of the Attlee government were built entirely on the social consensus created by the Second World War. This experience engendered not only an understanding, across the classes, of their shared interests – and therefore the need to spread the benefits of economic growth more fairly – but it also vindicated the means by which this progressive agenda was to be delivered.

As a result, all political parties went into the 1945 election supporting Keynesian demand management, as well as the adoption of the main components of Beveridge. In fact, much of the preparatory work required to deliver on this reform agenda – on education, unemployment insurance, the NHS and full employment – had been prepared by the coalition government of 1940-5. This meant that when the Labour Party took power, after the war, the bulk of its work – both in making the case for and starting to implement radical change – was done.

By contrast, our society today is hopelessly polarised. The divisions in our country – between people in metropolitan and rural areas; between those with education and those without; between the old and the young – were given expression in the Brexit vote. But they have also been exacerbated by it. The referendum split families, friends and neighbours and unleashed violence online and, at times, on our streets. As a result, the circumstances today for progressives could not be more remote from those of the Attlee government in 1945.

Therefore, the brutal truth is, unless a progressive political project can unite a majority in the country behind a bold reform agenda – not just win a majority in parliament – we will fail to transform the country. This is not to argue that delivering change is futile: on the contrary, the state of the country requires that it becomes a reality. But it should serve as a warning to those of who want a more economically and socially just society: that on each and every issue – including on a potential second referendum on Brexit – we must ask, “Will this bring our country together or push it further apart?”

Harry Quilter-Pinner is a senior research fellow at IPPR, the UK’s progressive think tank.