That was the week that was…

September 29, 2011 5:55 pm

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Ed speechBy Hopi Sen / @hopisen

How was it for you? Did you see the end of conference and feel that you had been inspired for another year of campaigning and challenging the status quo? Did you emerge charged up, full of hope and optimism about the better future a Labour government would bring?

I hope so. I really do.

I want a Labour government at the next election. I want Ed Miliband to be the Prime Minister. I want to help deliver that victory. I know we’d be a better, fairer, more compassionate government on our very worst day than this lot would be on their very best.

It”s because of that passionate belief in the need for a Labour government and my desire to see Ed Miliband, a decent and honest man in a terribly difficult job where friendship is rare and criticism easy, to be my Prime Minister, that I am forcing myself to say there must be a better way than this.

At this conference the Labour party made a major strategic choice.

The Labour Party is to be a great moral crusade, standing up for the outsider, the little man and woman, for the honest labourer and the struggling entrepreneur. In their name, we will recast society from top to bottom, as we seize at the opportunities grasped by the death-rattle of Neo-Liberalism. It is, as Seamus Milne, Polly Toynbee and others have argued, a big, powerful argument. Ed Miliband said what he most demanded from his shadow cabinet was ambition. He clearly means it.

My worry is that we’ve ventured this major critique of the current situation, without considering what the limitations of our fiscal, political and social ambitions are and what this implies for our ability of achieving these noble aims.

At the same time, those elements of the governing strategy which we intend to follow may even lead us to be tied up with ever more contradictions and problems. As a result, we may find that our critique will begin to sound hollow, unconvincing and windy, leading to ever more desperate attempts to restate, refine and recalibrate it, to increasing incredulity.

Let’s start with the basic assertion. This is that the post-new Labour mission is to fundamentally recast British society so it reflects the values of the decent people of Britain, or as Ed Miliband put it “We changed the fabric of our country but we did not do enough to change the values of our economy.” This is what he intends to change as leader, and as Prime Minister

This is the sort of big, nation-shifting ambition which requires a detailed, coherent policy position to underpin it. After all, What are the “values of the economy” and how does a government change them? It’s not impossible, clearly. Governments intervene in markets constantly to achieve ends but it is undeniably complex, and such a grand project always carries with it the risk of being snagged on the technicalities.

To take one example, a past Labour government tried to encourage a shift of the economy towards producers using a selective employment tax. It was a complete failure. People have seen past attempts by government to intervene, from MG Rover to bank regulation, and seen that quite often we get it wrong.

What about micro-feed in tariffs in the energy market? They’re a noble attempt to broaden the energy supply base of the country. In another sense, they’re transfer of wealth to those who own land.

So, in asserting a gap between good and bad, we find ourselves caught on that “what exactly do you mean?” questions. Did John Rose become bad when he became a banker? Would Fred Goodwin become good if he started a training company? Is Bae good? Then we say, no, it’s not abut businesses, it’s about business practices. Which then leads to another confusion, because weren’t we saying a moment ago that we needed producers, which is surely a type of business?

All of which leads to the slight suspicion that we don’t really know what we mean by a good business and a bad business, except in an undergraduate “nice versus nasty” way, and are desperately searching around for post-hoc economic justifications of our instinctive moral dislikes.

Further, our specific critiques of the values of the economy seem oddly disjointed. After the bankers (more on these anon) the train and energy sectors have borne the brunt of our critique this week. Yet these are two of the most closely regulated industries in Britain. In the energy sector, OFGEM, under a Tory government, is to force energy suppliers to change their business practices right now.

As for the train companies, – they don’t even get to set their own pricing. Some all-powerful vested interest they are. Lex Luthor would sneer.

If these are the vested interests that hold down the ordinary business and families, then what does that say about the sort of intervention we believe in? That it can, or can’t make business behave well? That it needs reform, or that the current settlement is, broadly working and only need a minor revision, a touch of beefing up, a bit of extra muscle?

Here, when we talk abut bankers, we become especially dizzying. Bankers have caused the crisis by embracing casino capitalism, and weren’t regulated toughly enough. Some of them took too great a salary and we should not have regarded them. So we’re going to… say we need a strong, stable financial services sector, and demand the coalition rapidly adopt their strategy on bank regulation. Plus, tax bonuses a bit higher, and not cut their corporation tax. Surely we can see the gaps here?

What else have we proposed, as a flavour of what we would do to shift the nation’s economic values – worker representation on remuneration committees? It is a sensible, long term reform that will make a difference. But do we really think it’s going to fundamentally change the values of British business?

The left-wing critique of Ed Miliband’s speech was that the rhetoric was nice, but the the underlying policies to achieve them were meaningless or absent. They’re right to say if the policies appear emptier than our rhetoric, then whatever we say will be dismissed as waffle.

But there’s another problem. While we have a critique of the values of our economy, we are making tangible, specific proposals which will effectively dictate the terms of what we can do as a government. I support these proposals. I think they’re the right thing or the country and the party. It’s just we’ve done little to explain how these mesh with the enormous ambitions we have.

At this conference we’ve made it very clear that if were are in government from 2015, we will reduce the deficit and get the national debt down. We’ve said we’re not going to raise taxes, except on marginal areas like banker’s bonuses and not cutting corporation tax in certain industries.

All of these thing are prayed in aid whenever we are accused of being left-wing. This leaves an odd impression. We’re going to rip up the rules, but we’re going to rip them up from the new centre ground, because the rules say you only win elections from the centre ground.

Further, it implies that although Neo-Liberalism is apparently dead, it still has a strong grip on the core policy apparatus of the Labour Party. Ed Miliband said the day after his speech “Spending is not going to be the way we achieve social justice in the next decade”.

Jim Callaghan told the Labour Party we couldn’t spend our way out of a recession, Ed Miliband is saying we can’t spend out of injustice either. No big tax increases. No spending commitments. Paying down debt. We are all fiscal Conservatives now. I believe strongly in this, but I’m not sure it’s clear that the party does, and if it does, why it believes it, for anything other than tactical political reasons.

No wonder we sometimes seem to slip into moralising parables as we argue that the power of intervention will be enough to make the economy good. We’ve denied ourselves money and are still debating what policy interventions would actually work.

We find ourselves making audacious claims for our ambition and our essaying a self-congratulatory bravery for challenging the old way of doing things, while proposing vague or minor policy adjustments and fiscal self-denying ordinances on the other. To cap it off, we pledge to rely on intervention to achieve social goals even as we admit that past intervention failed to achieve just that.

I fear that as long as we approach our strategy in such a way, it cannot but confuse and dismay those who we wish to support us, people who I believe are sceptical about our ability to transform the nation, doubtful of our economic competence, and understandably fearful of the risks of the unknown, and of change.

But surely there’s another way, consistent with the general thrust of our fiscally conservative progressive agenda?

If we start with the proposition that the one thing the crisis has shown us is the limitations of the power of the Nation state, we can recognise that a government can only ever be one player in a worlds of businesses, organisations, communities, and individuals, all with contesting agendas ambitions and needs.

Then we can argue that the state must be sustainable to be strong for its citizens. So a government permanently weakened by debt is one that will struggle to deliver for its citizens when crisis comes. So we must reduce debt over the long term.

Second, the forces that contest the state, and our need to fund government carefully mean it a government should act in limited, strategic ways to make the changes it seeks to society. All interventions must be carefully, accurately judged to make the maximum impact.

This requires a careful, good governance. The price of faith in government is an eternal search for ways it can do things better and cheaper and with less error.

Finally, we could then set out the small, partial, limited interventions we would make, and justify how these would do some good for those whose values we seek to uphold.

I wonder that if we followed a route based on the virtues of restraint, not grand ambition, then perhaps a progressive vision that encompasses deficit reduction, changing our national values, and making our economy work for those who need it most might sound consistent, credible and purposeful, not the windy assertion of values, moralising and contradictory boastfulness and grovelling apology that marked this conference.

This would require a shift of emphasis. We should not seek to hide, or get out of the way quickly our commitment to reduce debt. We should make it the cornerstone of our future agenda.

We should not make great claims for our power to change, but small ones, because we’ve seen how hard it is to do good, and how easy it is to go wrong and to waste money.

We should seem to seek to build allies among the private sector, not appear to attack them for not conforming to our expectations. (We’re not, we protest, but they feel we are).

Most of all, we should recognise our task is huge, our resources greatly lesser.

So, in the words of the old poem, our thought must be the harder, our hearts must be the keener, our minds the greater.

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