SOMETIMES you have to pinch yourself. A Labour leadership candidate calling for the 50p tax band, a 15 per cent wealth tax for top earners, plus increased inheritance tax, corporation tax and capital gains tax. And that’s the supposedly Blairite, Owen Smith. The idea of using public borrowing to boost infrastructure is now so commonplace even the Tories are talking about it. Smith proposed a £200bn fund, his rival Jeremy Corbyn called that and raised the stakes to £500bn, to finance a new investment bank and generate two million jobs Whatever happens to Jezza after this cranky contest, he can legitimately claim to have transformed British politics.
For commentators like me who lived through the cycle of Bennite to Blairite Labour (and back again) the Labour leadership contest, which came to a head last week in the head to head debate between Corbyn and Smith in Cardiff, has induced a state of ideological vertigo. Labour was supposed to have laid to rest “tax and spend” socialism in the early 1990s. Tony Blair produced a pledge card promising never to increase taxes and forced his shadow cabinet to carry it with them at all times. He claimed that the Labour landslide of 1997 had only been possible because of his abandonment of “old Labour” policies that Jeremy Corbyn represented in the 1980s. Yet his supposed protege, the former work and pensions spokesman Owen Smith, now says, “I agree with Jeremy” on everything from the NHS to restoring trades union rights.
It seems hardly credible now, but Tony Blair spent much of his time courting businessmen, holidaying chez Berlusconi, and inviting people from financial services firms like KPMG and PriceWaterHouse into his very government. Tony Blair talked of introducing consumer choice into the National Health Service, breaking up “monolithic state bureaucracies” and endorsed Conservative anti-trades union legislation. It used to be standard practice for retiring Labour ministers to find themselves lucrative private sector niches, often in the areas they used to cover in government. Now the very fact that Owen Smith was a lobbyist for the pharma company Pfizer years ago is a major handicap in his attempt to wrest the poisoned chalice of the Labour leadership.
But is it as poisoned as everyone seems to believe? I’m not so sure any more. The landscape of British politics is changing so fast that it is now acceptable for a Tory Prime Minister to promise to restore living standards, curb executive pay, invest in industry and introduce workers’ representatives onto company boards. Most of us assumed that Theresa May’s acceptance speech last month, with its promise to address “burning injustice” in society, was just for show – like Margaret Thatcher’s invocation of St Francis of Assisi in 1979. But perhaps it wasn’t? She seems to have been responding to a remarkable structural change in political attitudes which means that even a Tory leader has to agree with Jeremy (well, sometimes).
The Thatcherite consensus on low taxation, laissez-faire, consumer choice, right-to-buy and privatisation that endured for fully 30 years after 1979 is under unprecedented assault. It’s not hard to see why. Living standards, especially for younger workers, have been slashed since 2008, even as banker bonuses continued to flow. An entire generation has been priced out of owning a home. Inequality has returned to levels unseen since the Edwardian era. A quarter of those in work are in poverty. The workplace has become a jungle of zero-hours contracts, part-time work and exploitation.
Britain’s industrial landscape following Brexit looks as bleak as in some Eastern European countries after the fall of communism. We have some nifty high technology based on the M4 corridor, but as far as actually making things to export, forget it. Following the worst loss of confidence in decades, the Bank of England has just cut interest rates again, seven years after slashing them to the lowest level in 300 years. It is also planning to ramp up the printing presses again and pump another £100bn into the banks in the vain hope that they will lend it to businesses. Yet even the CBI appear to realise that more is needed and the state must step in where private capital has left the scene.
The 2008 crash was a greater turning point than anyone realised. It certainly boosted political engagement – both in the SNP and Labour Parties – and led to a questioning of the political and economic status quo. The Thatcher/Blair years are beginning to look like a distant and inscrutable age in which working people voted willingly for the enrichment of the property-owning classes and the dismantling of public services. Why did they do it?
Margaret Thatcher sealed the deal with working-class voters by the great council homes bribe, which offered instant entry into the property owning classes She destroyed the unions and dismantled the industrial base, but she was able to finance this thanks to Scottish oil, which helped fill the huge balance of payments deficits after the great recessions of the 1980s. Scots watched bemused as their hydrocarbon wealth was used to create a new and rapacious financial services economy based in the south-east of England.
Many Scottish voters kept faith with the post-war settlement as it was called and continued to vote Labour, even in the 1980s when it was accused of producing electoral suicide notes instead of manifestos. The Scottish National Party rode on the back of this lingering attachment to social democratic values, eagerly adopting the policies – such as free higher education – that Tony Blair abandoned. Alex Salmond consistently attacked Labour from the left, on the NHS, inequality and his enthusiasm for foreign wars.
But the SNP may not be able to present itself as an alternative Labour Party for much longer.The next Labour manifesto – whoever wins – is going to be much more like 1983 than 1997. Free higher education is making a comeback, now that English voters have seen the reality of ever-increasing tuition fees. The SNP led the UK in scrapping the right to buy, but now Corbyn is promising a million new houses, half of them council-owned.
Both the Labour leadership contenders support the 50p tax band that Nicola Sturgeon said was economically “daft” because it would encourage wealthy taxpayers to move south. But not if Labour wins the next election. The SNP is left echoing George Osborne’s plutocratic defeatism on top tax even as Theresa May admits taxation is “the price we pay for living in a civilised society” and promises to clamp down on tax avoidance.
The Nationalists need to reassess their radical credentials or risk being outflanked by Labour on the left. The SNP is still talking about cutting corporation tax even as both the Labour contenders propose to increase it and capital gains tax. Reforming the benefits system involves more than just a name change. The SNP’s quixotic attachment to the UK monarchy is looking weird in an age when privilege and unearned wealth are being challenged by the new politics.
Nicola Sturgeon could start by welcoming the proposal from the Labour frontbench MP Clive Lewis last week for a progressive alliance between Labour, the Greens and the SNP – a proposal that must have left the Scottish Labour leader, Kezia Dugdale, incandescent.
Ms Dugdale has been criticised for spending too much time abroad while her party is in chaos back home. It is a reflection of how little grasp she has on the situation that members of the UK Labour shadow cabinet are openly talking about an alliance with the SNP over her head. Labour is changing fast, and there’s no guarantee that it will lose the next election by a significant margin. That presents opportunities which may not come again. The ground is moving under Nicola Sturgeon’s feet and she needs to move keep left to keep up.
From Sunday Herald