Lessons from history: three policies for a One Nation government

Since Ed Miliband’s speech at Labour Party conference last year, we have heard much talk about One Nation politics, and the broad values it encompasses. On the latter, the Thatcherite ‘wet’ Ian Gilmour’s definition seems to make sense: a politics that emphasises ‘the importance of the social services,’ a concern for ‘wellbeing of the entire population,’ and a ‘continuing view that neo-liberal economic doctrine is alien to One Nation Conservatism’.’ Whether in its Conservative form or not, this seems a sensible enough description of One Nation – though Gilmour’s fourth point, being ‘pro-European,’ is probably more difficult than it once was.

That is all well and good – but we must drill down a little. Concepts like ‘reciprocity,’ ‘pre-distribution’ and ‘responsible capitalism’ are interesting hooks, but it is time to iron out the clothes that will be hung on them a little more. Even if policies such as the below need working into shape, we do need some more concrete ideas on the table.

To contribute to that agenda, I have published a new e-book entitled One Nation Britain: History, the progressive tradition, and practical ideas for today’s politicians. The book has many diffuse ideas (and no doubt is idiosyncratic in parts), but the below represent three points where history seems to show the way for present policy makers. The story of the 1945 government, the Wilson era liberal reforms, and the minimum wage in 1999 are of course sacred cows on the left, and rightly so. But for the purposes of this piece, let’s consider some of the non-Labour progressive precedents our contemporary leaders may draw upon.

The first, given some prominence in discussions of this week’s spending review, is to encourage a shift from welfare to capital spending. In 1929 the Liberal leader David Lloyd George set out just such a programme – pledging, through ‘genuinely bringing forward infrastructure spend’ to borrow today’s jargon, to turn an £8m debit in the Unemployment Insurance Fund into a £24m profit. As his oeuvre We Can Conquer Unemployment suggested, ‘true economy is wise and timely spending…. [and] unemployment is industrial disorganisation. It is brought to an end by new enterprise, using capital to employ labour. In the present stagnation the Government must supply that initiative which will help to set going a great progressive movement.’ His programme was soundly rejected (even by Labour at the time), and years of stagnation followed. Progressive politicians must not make the same mistake again – spending must be viewed in the round, and over the medium term, not just what will make a good press release. Just because the Chancellor does not seem to buy this course (it’s not hard to outbid George Osborne on a 1% success rate for his 2011 Infrastructure Plan), does not mean other parties should rest on their laurels. This may indeed involve some upfront borrowing.

Secondly, we must look to legislate for a living wage. Labour have talked in terms of tax breaks here, and the individual good work of some local authorities – including Camden, Islington and Birmingham – there, but though all parties broadly concede the need to raise the wages of the low-paid, none have taken the leap to out-and-out advocate legislation for it. The concept is often associated with the Webbs and the left. But as One Nation Britain shows, the key thinker here is arguably Harold Macmillan. In Macmillan’s 1938 Middle Way he advocated enshrining a national minimum wage that was above the wage 12 million of a c.20 million workforce were then earning. This national minimum wage was based on the amount needed to keep a family and three children at subsidence. The equivalent today would be £20 an hour, whilst the living wage campaign is actually advocating an increase from the £6.19 minimum wage to £7.45, or £8.45 in London.

To some degree, Macmillan echoed later Conservative arguments on the minimum wage prior to its introduction in 1999: ‘it would be ridiculous to ignore the fact that wages of agricultural workers cannot be raised…without economic repercussions which might, if nothing else were done, actually increase the total volume of poverty rather than diminish it.’ But the point was that Macmillan proposed precisely doing something else – staggered implementation of the new minimum over five years, with the trade unions probably hastening the pace (in his view, no bad thing). The minimum wage, after all, was ‘not only a measure of social justice…but it would maintain the consuming power of those sections of the community who, in the absence of such a provision, would fall below the minimum level, and thus reduce to lower proportions…demand.’  It is on the economic grounds of capitalising the low-paid that the battle may have the most success. Ferdinand Mount is a contemporary Tory who recognises this issue, and the debate may need couching more in these terms than it has hitherto.

Lastly, there is the Financial Transaction Tax (FTT). The FTT is being rolled out by leading European governments of both left (five nations including France) and right (six nations including Germany). It raises $15bn each year in Brazil – three times the revenue of our own stamp duty. But it is the market stabilising aspects that we may most benefit from in the post-crisis era. Keynes recognised that the real economy could be profoundly harmed through speculative activities on the stock exchange, writing in the General Theory that ‘when the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done.’ In 1909 Lloyd George’s People’s budget proposed a series of micro-levies on intermediate trades between buyer and seller – these ‘being mainly of a speculative character’ – which he judged worthy of a 0.01% tax. This rate is much like the tax today’s European policy makers are seeking to implement on the complex derivatives that have so be-deviled our financial system.

In the late 1930s a radical thinker wrote that ‘if it is true that the activities of a very few people are able to set up a series of economic and psychological reactions that result in economic instability and imperil the welfare of the great majority in the community who are engaged upon useful avocations, it would be reasonable for society to seek the means by which its welfare might be defended.’ That man was, once more, Harold Macmillan. An FTT would meaningfully plug this version of a ‘Macmillan gap,’ and, more generally, Ed Miliband should be looking to ape the radical Macmillan of the 1930s rather than the establishment pillar in 1950s Downing Street.

These are but three ideas whose cross-party antecedents have been underexplored in the contemporary debate. Labour will of course need more than these. But in looking to the future, there is every reason to explore the past.

Richard Carr is a Research Fellow at Anglia Ruskin University and author of ‘One Nation Britain.’