Category Archives: Labour Party

My Manifesto for Labour – Part One, the Economy

In this series of posts, I will lay out the headline vision I think Labour should adopt as its manifesto going forward. It is not a line by line spending strategy (which would be impossible to create from a home office in Wiltshire) but it will explain some fundamental themes the party should adopt to regain support, differentiate itself and gradually become a government in waiting. It is not intended to cover every aspect of every policy area, but instead to give some vital focus to the Labour approach.

Part One – The Economy, Business and Growth

The coalition plan isn’t working. The only rebalancing going on in the economy is the transfer of debt from the public sector into the private. Personal debt is predicted to rise by £566bn over the life of the parliament as the public deficit falls. This transfer will simply squeeze household spending and cause the economy to grind to a halt. Growth is flatlining, making it much harder to bring down the deficit, youth employment is running at 20% (again adding millions to government spending) and inflation is taking chunks out of the monthly income of workers whose pay is frozen. All this why executive pay rose 45% last year. Whatever the coalition may claim, we are clearly not “all in this together”.

Labour must address this. First, the reduction of the deficit must not come at the expense of jobs and personal debt. Growing our way out of the deficit is preferable to attempting to cut our way out of it. It’s a tested, logical and positive way to tackle our budget situation. To this end, Labour should support major infrastructure projects which will help bring us up to the levels of Europe and the US in terms of rail, road and broadband. It should also champion a huge housebuilding drive (more of which in a later post). In addition, the government should be investing in the development and implementation of green energy technologies. This spending, shared with private sector investors (not on a PFI basis), will help create jobs, apprenticeships and skills. These skills will then reside within the economy and can be exported – a genuine rebalancing can begin to take place. Without government support, the only shift towards manufacturing will be dependent on a weak pound and will be not driven by world-class skills and technology we need. The coalition plans for growth are feeble – expecting a corporation tax cut to filter down to more jobs and investment and hoping that low interest rates will encourage lending and investment, while in reality, none of this is happening.

In return for this government investment, industry must accept some fundamental changes to the way it supports its workers. A living wage should be introduced. Instead of providing tax cuts to large corporations, as the government is now doing, these will only be offered to organisations which accept the living wage strategy. The policy will then be rolled out on a mandatory basis. This allows Labour to support the enterprise culture the country needs while protecting workers from an increasingly insecure “flexible labour market”. The living wage will have additional benefits in reducing the need for tax credits, housing benefit and other “top-ups” to subsidise the poor salary levels offered by many employers, thus reducing the benefit bill and helping lower government spending. It is time that businesses took more responsibility for their workforce and relied less on government to keep them properly remunerated.

To better reflect workers contributions to businesses, every public company will be required to have worker representation on its remuneration committee and to adopt pay structures which ensure that if the CEO receives huge pay rises and bonuses, these are mirrored in the pay and bonuses of everyone throughout the business, at the appropriate level, of course. So board executives will only be able to grant themselves huge rises if they also allocate a similar proportion of profits to the people actually bringing in the revenue.

On tax, the burden needs to be shifted away from the poorest, but this means across the board, not simply through income tax. VAT is a regressive tax which hits the poor hardest. The balance of the coalition’s tax plans does not spread the burden equitably – despite its plans on raising income tax thresholds, the overall impact of tax credit and benefit cuts, plus VAT, leaves most families at the lower end worse off. The 50% rate should remain and serious investigation into the best way of implementing a wealth tax should be undertaken. It should be Labour’s stated aim to tax wealth while increasing the incentives for those at the bottom and the middle of society to improve their financial position. It is here that tax cuts should be targeted, instead of at the top 1% of earners. Rather than cutting HMRC staff, Labour should propose significant investment in tackling tax evasion (theft) and implement a thorough review into tax avoidance. These two areas cost the country a huge amount each year, vastly in excess of benefit fraud and should be prioritised as such.

Labour’s message should be clear – Keep the economy moving, keep people in jobs, ensure people are fairly rewarded for the work they do, make the fundamental changes to business practice we need and invest to transform our economy. It is a hopeful message which will restore shattered consumer confidence, motivate businesses to invest, create jobs and bring down the deficit. It will also demonstrate that while Labour supports enterprise and hard work (in fact more emphatically than the coalition), it also recognises that we cannot continue to exacerbate the dividing lines between workers and executives, which drives social disharmony and creates huge resentment.

I will deal more specifically with public sector spending cuts and reform in an upcoming post, as well as housing and education which I touch on here. In the meantime, your comments on this are very welcome.

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The Long-Term Threat from “Govern Now, Think Later” Politics

For a party that’s had thirteen years to plan its next government (or nearer eighty, in the case of the Lib Dems), this Tory-led administration is incredibly short-sighted. It has rushed headlong into a mass of reorganisations and restructurings which look very badly planned and certainly lacking in democratic mandate. Take the School Sports Partnership, a way of allowing schools to co-operate in providing competitive and social sporting activities for their pupils. Scrap it, said Michael Gove, let Heads decide how to run sports. A stream of Tories lined up to praise this new approach – “free the schools!”, they cried in unison. However, people who actually understand school sports made it clear that without properly funded local organisation, school sport was under threat as Heads were forced to prioritise their spending at a time of limited resources. Which to scrap – the sports and games, of those extra computers or even a new teacher? It’s fairly obvious where the axe would fall.

So Gove relents and performs a u-turn which is indicative of this government’s short-sightedness. Hours of discussion about a new approach to school sports and then a hurried about-face. What a waste of time, effort and resources. A little more thought, a bit more planning and this could have been avoided. It’s vital that Labour portray this u-turn for what it is – poor government, hasty management and wasteful ineptitude.

If it was only school sports which suffered from this “govern first, think later” approach, we perhaps could excuse the coalition. They’re new, after all. However, across the board, the Tory government is rushing through decisions without proper consultation and often against the wishes of those impacted most.

In the NHS, a hugely costly reorganisation has the support of only a minority of GPs, who are now being handed £80bn of commissioning budget. The change will cost around £3bn at a time of falling revenue for the Health Service (ignore the “ring-fenced budget” claims – experts say the NHS needs 3% increases p.a. to simply stand still. It’s getting 0.1%). So why do it? The only groups clamouring for an overall like this are the private health companies who are lining up to provide the commissioning services GPs won’t be able to. Report after report has warned of the risks of the dramatic overhaul in the NHS, particularly when money is tight. But Cameron and Andrew Lansley don’t care. They’ve made a decision and evidence be damned. The difference between this and School Sports Partnerships is that while some kids might get fat with the one change, people might die under the other.

Of course the government don’t want people to die, but the stampede to be the most radical minister in an unelected government is leading to rash decisions which will unquestionably have serious effects on people’s lives. There is a lack of evidence that this is at the forefront of any minister’s mind as he or she lines up the next dramatic shake-up of public services.

Finally we come to the big one. The economy. It’s stalling as the effects of Labour’s stimulus packages wear off. Unemployment is rising and the private sector is failing miserably to fill the gap left by public sector lay-offs, precisely as most serious commentators expected. The only jobs being created are part-time, which provide no security to people and often mean families rely on benefits to achieve a living income. Everything is focused on the deficit. The price of Osborne and Cameron’s blinkered obsession with cutting the public sector to somehow restore economic balance is record-breaking youth and women’s unemployment and, perversely, negligible economic growth.

The short-termism is frightening. Even if the Tories manage to eliminate the deficit in an entirely arbitrary four-year period, what will the consequences of their approach be? We will have a generation of young people trapped in unemployment. A lack of stable communities as people are forced to move around hunting for work. Increasing resentment from those who lose out towards those who seem impervious to the deficit-cutting measures. In short, a much worse country to live in.

For anyone searching for an alternative, look to the post-war period. Despite a deficit and debt which puts the current one in the shade, various post-war administrations managed to invest in huge housing and infrastructure projects and of course, the NHS. Boldness brought great rewards. It’s time for further boldness now. Government should be looking to the horizon and to our future, rather than the present. Of course we must increase efficiency wherever possible and provide the absolute best value for money in our public services, but relentless cuts will hollow out the foundations on which they rely. Once lost, local services will never be recovered.

We should be investing in a genuine green investment bank, with the power to raise funds and independently invest in new technology. Instead we have a fund of £1bn, considered entirely useless by all serious commentators. This country has a proud tradition of pioneering innovation, but short-sightedness from the Treasury is standing in the way of a potentially lucrative new industrial sector. If we don’t seize the initiative, others countries will. We need an active and engaged industrial policy which supports industry, encourages businesses to build links with communities through specialist skills and secure employment and sooner rather than later, the Treasury coffers will feel the benefit.

As for our young people, much better to invest in genuine work placements (such as offered by the now-scrapped Future Jobs Fund) than simply hand out benefits then kick people for not finding jobs which don’t exist. When recovery final does come, how does the country benefit from underskilled and unemployed people, out of touch with work? Pay for jobs and training now and reap the benefits in the future.

The thinking required is joined up. Connect each stage of people’s lives to the next. Attacking Sure Start and removing the element of universality will remove the community cohesion these centres currently provide. I have seen first hand how bringing families from across the community together improves the local area as people recognise they have more in common than they imagined. Turn our schools into a market place of special interest groups and the “sharp-elbowed middle class” and watch as these divisions widen further. I would scrap charitable status for private schools, ease the administrative burden on Heads and work towards a truly comprehensive system where every student has a fair chance, not just those in a position to exploit their time and influence.

Support the Educational Maintenance Allowance which keeps pupils in education and allows them the best chance to achieve. Fund universities properly – we will never be the factory of the world, but we could be its R&D department – in culture, academia and humanities as well as engineering and science. Offer proper alternatives to university too. We should support apprenticeships and training schemes which provide paid employment to young people embarking on a career.

And finally, recognise the importance of a life outside work. Community stability, confidence in the next pay packet, a feeling that work and community are not always separate can rebuild society where too often, poorly paid and part-time jobs for multinational companies leave people feeling undervalued. We shouldn’t be demonising those unable to work, but creating an environment where work is available, properly paid and secure. Then we can tackle the tiny minority who are over reliant on the state.

This comes from a recognition that a divided society is an unhappy society. As bankers waltz on, bonuses in hand, ordinary workers are suffering. A paltry, watered-down bank levy does nothing to ease the sense of unfairness that the economic crisis created. The country cannot tolerate further division between the haves and have-nots. We can’t return to the way things were before. Labour gambled on an asset boom and a drip-down from the financial sector. While the revenue this created rescued our public services, the wider picture was ignored. But what this means is more government spending, not less. But this time, we need to spend to invest in the long-term. Only then will we see a rebalanced economy with stable, fulfilling jobs for everyone. This will bring the deficit down as genuine, secure growth returns to our country. It creates a future full of hope for our children, rather than debt and despair and it shows that while innovation is to be rewarded, greed never should be.

This government shows no signs of looking to the future, only a panicky rush to make changes before public will make it impossible. They may be building for their own futures, but for the rest of us, the outlook is bleak.

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Don’t Confuse Ideology with Arrogance

The former Lib Dem spin doctor, Olly Grender, drew my attention to an article on the Labour Uncut web site today, with the implication that I am an out and out Labour tribalist with a sense of moral arrogance. Naturally, I disagree. I believe passionately in the politics of the left, but I often find myself frustrated with the Labour machine as much as the opposition.

However, there is some truth in the line Peter Watt takes in the article that Labour has a sense of moral superiority. We do tend to think our way of doing things is better, fairer and just, well, right. It’s easy to forget in this context that some people, even those we profess to stand up for, may disagree with our approach. The entire working class doesn’t think that government can play a vital role in levelling an inherently uneven playing field. People of all incomes and backgrounds can hold the view that individuals should be left to sink or swim, according to their luck and efforts.

Peter Watt is right to remind Labour that projecting values onto people is a dangerous game. What he must not forget, however, is that while it’s entirely wrong to hold the blinkered view that our ideology is the only humane one, and that all Tories are evil, it’s vital we retain an ideology. Without a motivating ideology, the Labour movement means nothing. Trying to be all things to all people was arguably the major failing of the Blair / Brown years. A lack of courage of your conviction is as bad as no conviction at all.

In opposition, Labour must rediscover its soul, not simply allow itself to be buffeted by events and the media’s reaction to them. We must be able to say to people that as the Labour Party, we believe in social democracy. We believe the government can help people get on and improve their lives. We believe that life is inherently unfair and politics can help those born in less fortunate circumstances to have the chances to succeed. We believe that capitalism has its limits and the free market doesn’t have all the answers. We believe that when difficult choices are to be made, our first concern should be for those least able to protect themselves from the impact of the decisions.

Yes, we must listen to people more, but if we fail to approach them with a vision, then they’ll never trust us. Look at the state of the Lib Dems, who are suffering a backlash against their brand of politics in which long-held principles turn to dust at the sight of government.

If you think you can please all of the people, all of the time, you are doomed to failure. You can’t be a libertarian and a social democrat. You can’t be a free marketeer and a socialist. If you try, you’ll end up confusing yourself, confusing the electorate and most importantly, lose your soul.

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Against All of My Instincts, I’m Leaning Towards Ed Balls

When the leadership campaign began, I knew one thing – I definitely wouldn’t be voting for Ed Balls. Now, having read his speech at Bloomberg this week and analysed the reaction (in particular from the Financial Times), I am starting to think he offers the most coherent response to the most important issue of this parliament – the spending cuts.

Ed laid out a Keynesian vision for growth, which as I’ve argued again and again, is the only genuine way to reduce the deficit without causing serious and lasting structural damage to the economy which could last a generation.Some commentators have suggested that Balls is taking a risky approach by nailing colours to a mast which may prove to be unfounded. I don’t accept this.

I don’t think the thrust of Ed Balls’ argument is “take my approach or face calamity”. He has laid out a viable and impressive alternative economic vision which has the weight of history behind it and allows for a more socially responsible approach to the deficit. What Labour does with Balls’ analysis is what’s important. It is not necessary to use the politics (or economics) of fear which has driven the coalition’s public approach to the deficit. With a reasoned and supported economic argument behind him, Balls has opened the door to new way of challenging the cuts agenda.

The media has bought wholesale the need for cuts to reduce the deficit and the question now is where the pain should fall. Balls is tackling the premise behind this. Labour can never win public support if they simply challenge where the cuts should happen – they will appear sniping and incoherent. An alternative (quasi-Keynesian) vision for economic recovery based on investment, fair tax rises and, yes, some spending cuts gives Labour a platform to challenge the underlying assumption which currently gives the coalition the opportunity to ideologically cut at will.

In the end, it doesn’t matter whether the worst downside of the austerity drive comes to pass, with Balls’ vision, there exists an alternative idea to hold up to people and say “Even though we avoided a violent double-dip, we could have tackled the deficit in a much fairer way.” There is nothing at all wrong in basing Labour’s approach on Balls’ view, because it has intellectual weight regardless of the outcome of the coalition’s actions. Put simply, the recovery is not black and white and even if the coalition don’t fail utterly, a viable alternative can retain credibility. I think the risk to Labour is in failing to have an economic vision which underpins Labour’s opposition, rather than worrying about being notionally “wrong”.

For this reason, with my ballot still uncast, I find my pen hovering above Ed Balls’ name for the first time. It’s not something I thought would happen, but if nothing else, it’s proved the value of the context in drawing out what’s important in our new leader.

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Why I Won’t be Supporting AV

I support PR. There, I said it. In fact, I said it time and again throughout the election campaign and I haven’t changed my mind. What I have never been very keen on (and indeed made clear during the campaign) is AV. There are two reasons for this:

1) AV is not PR – it doesn’t produce results which are proportional to the choices of the electorate and therefore isn’t much of an improvement on FPTP. There is a common assumption among AV supporters that somehow AV delivers MPs with at least half of the electorate’s support. This isn’t true, because it wrongly assumes that second or third preferences are equivalent to first choices. As a Labour supporter, I would now put Labour first, Green second and only if pushed very hard, Lib Dems third. If that third choice is counted towards the eventual total of the Lib Dem, does that mean my support was as fulsome as those who chose Lib Dems first? Hardly.  But that is a “benefit” that AV claims. What AV can produce, therefore, is a “least worst” candidate and I fail to see how this improves democratic representation.

Our current party system is badly suited to AV because all parties set out their stall in contrast to the others. The nature of the two and a bit party system we have demands that parties look for differences rather than common ground. We don’t have variations on the left and right. This makes preferences much less appropriate here, because in reality, the choices are so few. AV just isn’t appropriate in the UK and of itself, isn’t enough of a change to encourage the formation of smaller parties which would broaden the spectrum.

2) It has become clear that this proposed AV referendum is as far as we are going to go down the path of electoral reform for the foreseeable future. I completely refute the view that this is somehow a stepping stone to PR. The country and our politicians will not support another change in five years time. One election with AV then switch again? Not realistic. Two? Well then you are talking about 10 years before the next change. It’s terribly naive to see AV as the first step along a path to properly proportional voting. What we should be offered is a choice of systems at the same referendum. I hate the patronising implication that people couldn’t understand any more than a single option presented to them at one time.

So, after much consideration, I will not be supporting AV at any referendum. It doesn’t improve significantly on the current system and it rules out proper change for a generation. Clegg and the Lib Dems have been sold a pup. And as an aside, I won’t be told by Lib Dems that I am backing away from an election promise – six million pots calling the kettle black, I’m afraid.

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Labour Must Find a Clear Message on the Economy

A new day, a new cut announced and the same failings from the Labour Party to challenge the Tory’s position with a coherent message. There is a very real threat that the economic debate is being lost without ever really being held. The leadership election is becoming a distraction. Labour needs a strong team in place to put the counter-argument to the ideologically-driven austerity of the coalition, and the endless hustings, although helpful in their way, are leaving us behind.

The frustration is that the counter argument does exist and some very serious economists are making it. Nobel Prize winners Joseph Stiglitz and Paul Krugman both have issued stark warnings about the dangers of government contraction at a time of depressed global demand. Excessive retrenchment now, when export markets are weak and local demand low, will force businesses under and push more people out of work. Increased unemployment leads to lower tax revenues and higher benefit and social costs. Stagnant growth means lower corporation tax take and a deficit which, regardless of how hard you cut spending, will never be properly controlled.

I don’t expect everyone to agree with this view. However, it is a valid and serious perspective. It supports the left’s view that governments exist to help in times of trouble. When the economy, here and abroad, is stable and growing, then withdraw the spending. Benefit costs will fall anyway as more people get into work. Some spending can certainly be lost with minimum impact, especially if the private sector is strong enough to take up the labour slack. The deficit and the debt can be managed down as growth increases. It’s a sensible, viable and economically-literate response to small state, free market Thatcherite economics. And it’s a message we need to be delivering now, again and again, in a unified way.

So, Ed Balls, Ed Miliband, David Miliband, Diane Abbott, Andy Burnham, Alan Johnson and anyone else who may crop up on TV and be asked by a Tory / Lib Dem “Well, what would you do?”, or “Well you would be doing exactly the same”, feel free to use this:

“Our approach is different. We agree with the Nobel economists who say growth is the best route to reducing the deficit. Cutting projects like Building Schools for the Future not only harms the children, it harms the private businesses who rely on this work to survive.

Savage cuts now, when there is no demand in the economy and our export markets are depressed, leave private business with nowhere to turn. You are not just cutting public sector waste, you are hitting the private businesses who supply our vital public services.

If these businesses go under, unemployment goes up, which, as Mrs Thatcher discovered, is a very expensive problem to deal with. Higher benefit spending and lower taxes, plus less money for people to spend in the shops.

We want to tackle the deficit – halve it by 2015 – but cutting now in such an excessive way, driven by an ideological desire to hammer the state will kill recovery.

We have a duty to support businesses and people, until the recovery, here and abroad is secure. Then we will see the deficit fall as tax revenues grow and people start to spend.

That is the time to make cuts, and make them in a fair way. Ensure tax rises fall on those most able to pay, unlike VAT. Make the banks pay a sensible amount back to society.

Cutting now risks a prolonged depression and the deficit will never fall. We would offer support now and make cuts later, when the economy is growing again. Yes, those cuts will be tough, but they’ll be against a backdrop of an economy on the up and they can be made in such a way as to protect the poorest in our society.

It’s simply untrue to say there is no choice in this. There is a clear choice – growth, jobs and a sensible plan to reduce the deficit, or ideological cuts which ignore the global economic climate. Yet again, the Tories are making the wrong call.”

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How Did the Poor Become the Problem?

The Tory-Liberal government has achieved something remarkable in recent days – it has managed to transform the entire debate over the budget and our response to the financial crisis into a discussion about how feckless and work-shy the poor are. Not content with a budget almost universally regarded as unfair on the lowest earners in society, they have now framed the debate on cuts with a discussion about welfare versus services. This has led to much discussion about who are the least deserving of the poor. Is it the disabled person receiving money because they are unable to work, is it the single mother, or the absent father? Is it those lazy council estate tenants who just won’t get up and move to somewhere where the streets are paved with well-paid employment opportunities?

And the rich? Those largely responsible for the current predicament? Well, their easy tax dodge of using Capital Gains Tax instead of Income Tax has been slightly adjusted to make it only an awful lot better than paying Income Tax, rather than spit-in-your-face, laugh-out-loud better. And banks will somehow have to find £2bn to pay a levy. I suggest they use the savings from the lower rates of Corporation Tax.

What’s particularly shocking about the response to these measures is not so much the inevitability of them, but that the media agenda has been so easily manipulated to allow these unpleasant judgements on the least advantaged in society to become mainstream.

Making arbitrary distinctions between the deserving and undeserving poor completely overlooks the basic problem – we live in a society where it is perfectly acceptable for people to be poor. Why are they poor? Almost exclusively because their parents were poor. When it was decided that the UK could no longer be a serious manufacturing economy and stable employment in sensibly paid manual jobs evaporated, then people had nowhere to turn.

It seems staggering to me that anyone can think a massive withdrawal of the state from people’s lives is going to improve this. You can’t blame people for “failure” if they are not given a fair chance to succeed. As a society. we should be proud of helping everyone to advance and this should come through massive investment in education, social housing and support for industry and innovation (particularly co-operative models).

At times like this, I struggle to see any justification at all for allowing such ridiculous levels of inherited wealth and completely unjustifiable high pay and corporate profit. Rich people who lecture the “undeserving poor” might want to consider starting everyone at the same level at birth and analysing the consequences. The selfish, patronising and divisive tone of this debate is frankly frightening. We have a completely unmerited confidence in the stability of our society. Much more of this unfettered and unfeeling worship of rampant neo-liberal capitalism and this stability will start to face serious stresses.

It is time the Labour Party started to enter this debate on the side of the ordinary citizen. Our failure to challenge the new orthodoxy vigorously and with intellectual rigour is allowing the coalition to continue its assault on the people least to blame for the recession almost unchecked. Whatever the outcome of the leadership election, now is not the time for timidity.

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