Busting the austerity myth, part 2

Gideon Calder:  Following the 2010 general election, the Coalition message about the economic downturn was a very simple one: that public spending by the Labour government had caused the trouble.  Perhaps the Left’s response will inevitably be more complicated.  Digesting it requires a deal of thinking through economic and historical factors in a way which most people don’t have either the leisure time or the will to do.  Compared to that, a simple message like ‘they crashed the car last time – don’t give them the steering wheel again!’ plays out pretty well.  It seems to me your book gives helpful scope for changing the terms of that debate: by talking about an enabling state, for example, and how public spending is vital for generating wealth.  And one of the most compelling parts of the book is where you talk about tax reform.  Tax is something which we don’t talk well about in political debate.  It tends to be regarded as a taboo, a burden, with negative associations.  But of course, there’s a more affirmative case to be made.  Not just that taxation is inevitable in any functioning society, but that its beneficiaries are not just the worst off, or those most dependent on the state, but everybody.  There’s a part of the book where you set out seven kinds of tax reform which would deliver direct and exponential results.  They’ll strike a strong chord with those already predisposed to the virtues of better progressive taxation.  But they’re all quite a long way from likely implementation…

Peter Hain: Oh they are.  Tax reform like that is way off.   But yes there are simple, popular ways of putting the argument in favour.  On ‘Question Time’, I’ve actually managed to get applause from the audience when pointing out that it’s hardly because Labour recruited too many nurses, doctors, teachers and police officers that the whole global banking crisis spread like a contagion from mortgage defaulting in the US.  People will respond enthusiastically to that message.  But it was the failure to correct the record and get back into a more sensible debate about all that – not just Labour’s failure, but in progressive opinion more widely – which opened the door to the Tories.

But take for example lifting the threshold on National Insurance: ensuring that everybody pays it, and so it doesn’t stop for people on high incomes.  When you actually ask people what’s fair about someone on an income of £20,000 per year paying the full rate of National Insurance when someone on £200,000 or £2,000,000 isn’t, and point out that the bulk of the burden of National Insurance contributions is being dumped on people below the 40% tax rate – well of course, they’ll say what’s fair about that?  A top rate of tax of 62% isn’t shocking, viewed this way.  It’s fair.  What isn’t fair is when the whole burden of taxation is carried on the shoulders of the squeezed middle and the poor.

GC: And yet one of the great victories of the Right seems to be that those same people – the squeezed middle, and indeed often also the poor – have come to regard the mechanisms of taxation as working contrary to their own interests, even when they’re clearly progressive.  So inheritance tax, even the mansion tax, are regarded as threats by those who stand to gain from their redistributive potential.  That’s an impressive feat of distortion.

PH: Yes it is.  It’s very successful propaganda, and keys into the whole ‘aspiration’ agenda.  People may not have a property anywhere near the ‘mansion tax’ level that was talked about – £2 million – but still feel concerned about it.  I think it might be best to drop the ‘mansion tax’ label and just talk about different levels of Council Tax band.  That might get the debate onto a more rational level.  But it just seems absurd that you pay the same council tax on a property worth £20 million as you would on one worth £2 million.  Where’s the equity in that?

GC: You mentioned ‘aspiration’ in that passage there.  This is a much-mentioned word in the current Labour leadership contest.  Do you think Labour has indeed had a problem with recognising people’s aspirations?  What might that amount to, in fact?

PH: I did a lot of campaigning during the General Election in Carmarthen West and South Pembrokeshire.  I realised very early on that the Labour pledges on the bedroom tax and zero hours contracts didn’t necessarily connect with people.  I remember knocking on the door of a young woman on a new housing estate, with her kids in the background: a young professional family.  She was an undecided voter.  Our message to her was ‘Well, Labour’s going to deal with the bedroom tax and raise the minimum wage…’  I said afterwards, as we walked down the garden path: we’re not saying anything to that young professional woman.  She’s a world away from the minimum wage, and the bedroom tax, and zero hours contracts.  These don’t feature in her life.  She might recognise that we’re right on all those things, out of a sense of natural justice.  But those priorities didn’t really speak to her own situation.  And whatever the criticisms we might make of New Labour (and I make plenty in the book), they did speak to that woman, where Labour 2010 didn’t.  Aspiration is really important.  Labour lost that in the late 1970s, and didn’t regain it till the mid-90s.  I’ve never accepted that to appeal to the aspiring means turning your back on the people who’ve been left behind.  You can have a national appeal that corrects the mistakes of New Labour – which was all about aspiration, and not sufficiently focused on those left behind.

GC: Often in its political usage, ‘aspiration’ means solely ‘self-advancement’: a better future for me and my family.  But there are other kinds of aspiration.  People may aspire towards living in a better social fabric, a less unequal society, a place which is better for future generations.  Aspiration is not necessarily simply about your own personal fate, or wealth.  Most people would prefer to live in a better environment, a richer community.  New Labour wasn’t great at articulating that side of things either.  But this seems crucial work for progressives, not least to counter the fairly crass individualism of the neoliberal narrative.

PH: I agree.  But we have to concede that the individualistic instinct has become set very deep in our country, encouraged by the media climate in which we’re operating.  If progressive agendas are about anything, they’re about improving the situation for everybody, not just those in poverty or on low incomes.  Or indeed the ‘squeezed middle’.   Though Ed Miliband was the first to define that category, we didn’t really speak for them either.  So many of his policies really resonated – but they didn’t come across in a programmatic or systematic way.

GC: A key focal point of both Crosland’s work and yours is education.  Another indication of the changed landscape since he was writing is that his agenda for comprehensive education now seems nostalgic, rather than futuristic.  Problems around educational inequality have hardly been eliminated. Opportunities for kids and young people to achieve their educational potential are far from evenly distributed, geographically or between social classes.  Do you think the hope that they might be is still realistic?

PH: It’s got to be, if we want to live in a decent, just society.   I think the case for comprehensive education was badly damaged by not focusing relentlessly enough on raising standards, teacher performance and outcomes from schools (as opposed to opportunity within schools).  I mention in the book the way that Neath Port Talbot County Council, from its inception in the mid-1990s, managed to drag itself up from third bottom of the 22 local authorities in Wales, to the top.  Now this is a relatively deprived borough.  But there was an innovative director of education (Vivian Thomas) with policies which said ‘We cannot accept second-best teaching because that produces second-best educational opportunities’.  I noticed myself, over the years as Neath’s MP, how much my local schools’ aspirations and standards had rocketed – and with them, the aspirations of local kids and their parents.  That way of ensuring comprehensive education is about high standards is the alternative to opening the door to a more privatising agenda in education: academies, and free schools, and so on.  The whole marketization of secondary education is I think very dangerous if we’re hoping to promote more equality of opportunity.

GC: Though the book uses examples from Wales, its intended audience is UK-wide and international.  But often things are done differently in Wales – education being an obvious example.   We may see further divergence between what’s done in Wales (and indeed Scotland) now that there is a Conservative majority at Westminster.  How do you see opportunities for Wales to establish distinct ways of doing things, with regard to education, health and the other aspects of policy under Welsh Government control?

PH: There are opportunities, but they are not without threats.  Our educational standards in Wales are simply not good enough.  For too long there was too comfortable an approach by Welsh Labour, in government – really until Leighton Andrews became Education Minister.  We staked too much on Wales being a nicer environment for teachers, free of the assaults on the profession by successive Westminster governments.  But actually the standards weren’t good enough.  The same applies to the health service in Wales.  It’s important that there was less privatising and marketising going on than over the border – and David Cameron’s ‘life or death at Offa’s Dyke’ rhetoric has been simply dishonest.  But still, we haven’t done well enough.  I think that once progressives – whether trade unionists, Labour-leaning people, Plaid-leaning people, or Green-leaning people – opt for a cosier, easier life they sow the seeds of our own destruction.  The real lesson of the General Election in Wales was not that Labour couldn’t deal with the Greens or the nationalists.  It was that Labour couldn’t deal with the Conservatives, who advanced significantly at Labour’s expense.  There was actually a Labour to Conservative swing, in Wales – one of the very few parts of the UK where this was the case.  Any complacency in Welsh Labour coming from the fact that we’re in a far stronger position than Scottish Labour would be very dangerous.

GC: You do say in the book that there’s more of a collectivist spirit in Wales and Scotland than in some parts of England.  Do you think there’s a danger in seeking to ride too far on that, and just assuming that those values by themselves will somehow take care of everything when it comes to health and education?

PH: Yes I do.  There are immense dangers there.  I feel like I’m playing an old gramophone record here.  I have a haunting sense of déjà vu when talking about politics in Wales today, compared to when I really got involved in British politics in the 1970s, living in Wandsworth in south west London.  That had been a Labour borough for generations.  And you could just see it being eaten from underneath by Tory agenda on things like council house sales, coupled with the collapse of old industries and the waning of the solidaristic, heavily unionised communities which existed around them.  Now there’s still a lot of that collective spirit in Wales.  But there are parallel lessons.  During the election campaign, I remember a colleague saying ‘We’re now on a new housing estate – it’s more difficult territory for us.’  And I thought to myself ‘That’s what I remember being told as a Labour canvasser in Wandsworth in the late seventies.’  But if you can’t win those areas, or at least come out even stevens, you ain’t going to win the country.  I think Wales is changing very fast, and I think the Tory advance in May is indicative of that.  The ex-mining communities in the Valleys are being fragmented.  A lot of the traditional Labour support is drifting – too often to UKIP.  So the anti-Tory vote is being fragmented along with the communities themselves.  Welsh Labour’s relative success has got to be built upon.  It had its crisis moment in 1999, with Tony Blair’s insistence (wrongheaded, in my view) on avoiding Rhodri Morgan at all costs.  We had the loss of the Rhondda and Islwyn, and a loss of support to Plaid Cymru.  And that was a trigger for Welsh Labour reinventing itself before a much bigger crisis came along, of the kind that Scottish Labour is now facing.  But we need to take on board the social, economic and demographic changes happening in a community like Neath.  Another anecdote.  When I first came to Neath in 1990 I was able, as the Labour candidate, to get quickly into the heart of the community, even as an outsider – through rugby clubs and welfare clubs and so on.  I lived in the ex-mining village of Resolven at the time, and would go down on a Saturday night at 9 o’clock and find the rugby club packed out, with essentially the heart of the community there: 100 plus people.  Now when you go down there (and it’s been like this for at least fifteen years) there’s maybe one or two old gents in the lounge bar, and in the other a dozen lads next door playing pool.  Now that’s a dramatic change, during my time as an MP.  And that’s happening right across the Valleys.  Welsh Labour constantly needs to be reinventing itself in light of those changes.  We have successfully done this up to now.  But May 2015 was like a flashing warning sign.  If we don’t recognise that, we’re imperilled.

GC: Is ‘socialism’ the best word for how Labour’s politics should now be?

PH: I’m not saying that the word ‘socialism’ should be in every other sentence of the manifesto.  But it’s got to be the ideological foundation of what we are about.   Political education in the Labour movement (indeed in progressive political quarters in general) has virtually disappeared.  When young people joining the Labour Party and getting involved in politics ask for advice about the future, I find there’s no ideological grounding there, to work with.  Which is another reason I felt it necessary to try to provide some of that, with the book.

GC: A big theme for you, as for several of the candidates for Labour’s deputy leadership, is that the party should function more like a movement, and less like a machine.  That’s a tricky thing to pull of, with things as they are.

PH: Really difficult.  It’s a challenge on the scale of when the Labour Party was first formed, a century ago.  Party politics is so weak now, across the board.  Of course, the SNP and UKIP have had their surges – and we’ll see how sustainable these are, in the long term.  But the party political model is bust.  Among the parties in a position to sustain a government at Westminster, all memberships and activist bases have shrunk.  In the 1950s, there were constituency Labour parties with 4000-plus members.  In Glasgow, that ‘Labour heartland’, where we were vanquished in May by the SNP, constituency memberships were on average less than 100.  Effectively they were empty shells, without an organic link to the community.  You need to create a different kind of politics which has that organic link.  It doesn’t mean that everybody has got to be a card-carrying member, in the way they were in the past.  And trade unions are now so weak that Labour’s crucially important link to the trade unions doesn’t give us the reach that it used to.  Only 1 in 10 workers in the private sector (which makes up 80% of the economy) is in a trade union.  And fewer than 1 in 10 are in Labour-affiliated trade unions.

GC: You make a lot of the German model of worker co-ownership and industrial democracy.  Given those numbers you’ve just referred to, I wonder how viable that model now is?  Are unions muscular enough to take on that kind of role?

PH: I’m not sure they are, and they haven’t really shown much enthusiasm for doing so.  The British trade union movement has been quite unsympathetic to industrial democracy, preferring traditional collective bargaining. (Though the two are not incompatible.)  But the point about that model is that it’s economically more successful.  It delivers better outcomes for the workers, which should be the whole purpose of trade unions.

GC: It’s also a feature of societies such as Japan (as well as Germany) where income inequality is substantially smaller than in the UK.

PH: Exactly.  So first and foremost, for me, it produces a better life and better working conditions for the workers concerned – more sustainable jobs, a stake in their enterprises, and a stronger economy in which they and their families can advance.  Whether trade unions manage to make themselves stronger in that set-up is up to them.  (I speak as a trade unionist of more than 40 years.)  Labour could come into power next time and actually legislate for this: create the framework for industrial democracy and project it as a more successful model for businesses, the community and the economy.  It’s not about prioritising trade union membership – it would up to trade unions themselves to recruit, as it is now.  Though sadly, they’re not doing very well at it.

GC: It’s a very pro-European book.  The prospect of a referendum on EU membership makes these interesting times, of course.  Leanne Wood among others has raised the prospect of Wales voting a different way from England, and the aggregated UK poll…

PH: She and Nicola Sturgeon have both raised this.  Were there to be (unthinkably from my point of view) an exit vote, I think that means Scotland leaving the UK.  The anti-Europeans have got to decide whether that’s worth it.  In Wales there’s no real spirit for independence, but that’s not to say that there won’t be in generations to come, if we were to create an entirely different remnant of the United Kingdom, after Scotland’s departure, which people in Wales may in time become increasingly hostile to.  I think it’s very difficult to say that you should decide a general election on the basis of a national UK vote, but then not decide a UK-wide referendum on the basis of a national UK vote.  Making that case is quite self-serving, on the part of the nationalist cause, rather than having any inherent logic to it.

GC: You’ve been a supporter of the idea of a Severn Barrage.  What’s your view of the recently approved Tidal Lagoon project at Swansea?

PH: I’m a supporter of the Swansea Bay Tidal Lagoon. But just remember that it generates a fiftieth of the power that a barrage would.  People in the Liberal Democrats and the Greens who see the lagoons as an alternative to the barrage need to recognise that you’d have to fill the Severn estuary with fifty or more lagoons, to reach the same capacity.  Which would never happen: you’d never get any proper shipping through.  It isn’t an alternative.   And if they establish a lagoon at Cardiff and situate it so that it blocks the route to Somerset, which is where the Barrage would produce the most power, then I’d oppose a Cardiff lagoon.  Hats off to the Swansea lagoon project – though it’s incredibly expensive, given the level of consumer subsidy through contracts for difference that they’re asking for.  That seems prohibitively high, I think, for lagoons ever to be an answer on their own.  The Severn barrage remains a no-brainer for me, and I will continue to campaign for it.  You can’t duck a big decision by seeking comfort in small decisions.  That’s a truth that I’ve learned in my fifty years in politics, in various guises.  The big problem with the barrage has been people getting nervous about it being such an enormous project.  Well yes: that’s the very point of it.  That’s what’s so exciting about it.  Transformative for the south Wales economy.  And transformative in terms of the battle against climate change.   It’s equivalent to two or three nuclear power stations.  I’d have a Severn barrage any time, rather than rolling out gas-fired or nuclear power stations.

GC: Last point.  It’s actually an optimistic book, in ways which might not come fully through in our conversation here.  Are you feeling optimistic now?

PH: Yes.  I remain optimistic because I think that these ideas are realistic, rather than being idealistic pie-in-the-sky.  They’re where my politics has always been: rooted in practical outcomes.  I’ve always been an all-or-something person rather than an all-or-nothing person.  The Left has often gone for all-or-nothing, and got nothing.  I’ve always believed in getting something, and sometimes been criticised by others on the Left for that approach.  I just think that neoliberalism is a failing and failed ideology – for the world, as well as for Wales and the UK.  A neoliberal straightjacket is imposed on Greece and what happens?  The national debt rockets.  The be-all-and-end-all for neoliberals is low deficits, low borrowing, low national debt.  They all go sky-high under this kind of straightjacket.  It cannot work.  Neoliberalism appears to have vanquished the alternative.  But bear in mind that the Tories got 37% of the voting electorate in the general election, which is 24% of the actual electorate.   That does not add up to majority support for this kind of politics.  It just has a winning position at this particular moment, because of the electoral system.