Wednesday, 21 December 2011

Balls: “Labour’s opportunity starts now”

"Rightly or wrongly, there is public scepticism about Labour's willingness to take tough decisions on public spending. A big part of my task is to turn that round and win that argument."

In an interview in today’s Independent, Ed Balls argues that Labour have carefully bided their time before attempting to regain the public’s trust on the management of the economy.

Arguing that the focus is finally shifting towards lifting Britain out of its current mess, Balls claims Labour can win the debate on the economy as long as the party displays discipline and credibility. Labelling this a policy of ‘Credible Optimism’, Balls believes the opportunity is now for Labour, with the public increasingly searching for a credible economic alternative.

These themes are echoed in the exclusive interview with the Shadow Chancellor in the upcoming Fabian Review. Published on the 28th December, Telegraph columnist Mary Riddell interviews Ed Balls on Labour’s chance to reclaim the public’s faith on the economy and the challenge facing the party in regaining the kind of support that shot Labour to the 1997 landslide victory.

With Ed Balls set to make the keynote speech at the Fabian's New Year Conference, which is titled ‘The Economic Alternative’, Balls claims people are frustrated after eighteen months of failed economic policy, and have begun to ask, “What’s the alternative?” With this feeling of dissatisfaction rife, unemployment high and growth stagnating, Balls uses the article in the Fabian Review to argue for the establishment of ‘a platform of competence’ and suggests that Labour must both be willing to make the tough decisions and appear to be able to.

Coupled with this renewed focus on economic competence, Balls is using a range of media platforms to extend a hand to Liberal Democrats currently in coalition with the Conservatives. First formulating the basis of an offer in Mary Riddell’s column in the December 13th edition of the Telegraph, stating, “You could do it tomorrow. What’s happening is dangerous and against the national interest. If you can form that consensus tomorrow, I’d be part of it like a shot,” Balls mimics this call in both today’s Independent and the Fabian Review.

While unlikely to lead to a sudden breakdown of the Coalition, the offer itself might unnerve a coalition fraught with problems, most recently intensified by the undeniably incompatible views on Europe. Piling on the pressure, Balls makes it clear that any Lib-Lab pact will be one void of our Deputy Prime Minister, which could potentially lead to a scenario where in the near future Lib Dems are forced to usurp their leader. Either way, as times grow tougher, it will be interesting to see whether Balls' offer unsettles Lib Dems in the Coalition.

"It isn’t when somebody leaves prison; it's what leaves prison."

The quote in the title is from Barry Mizen. Back in 2008, Barry’s son Jimmy was murdered in Lee, south-east London. In response to this tragedy, Jimmy’s family created the Jimmy Mizen foundation and his father Barry Mizen now works as a spokesman for the charity, contributing a chapter to the Fabian’s Society’s new pamphlet ‘Punishment and Reform’.

This is a guest post by Kenneth Way, Media Intern at the Fabian Society.

Speaking at the launch of the Fabian Society's pamphlet 'Punishment and Reform', Barry Mizen articulated a call for a nationwide rethink on the criminal justice system, which argued for a firmer focus on rehabilitation and underlined the failures of the current system.

With an attitude emanating from a deeply personal perspective, Barry is the type of individual who should be informing the upcoming Labour policy review and the debate on criminal justice in the UK. His passion, honesty and inspiration serves as a reminder that the media’s ‘eye for an eye mentality’ is unhelpful and often a hindrance. Instead, Barry’s approach underlines the merits of proper investment in reformative solutions rather than pure punishment and wider adoption of this model could offer an opportunity to stem the growing prison population.

It’s without argument that reaching this opinion is difficult. In fact, Barry made it very clear that his viewpoint is a result of the failures of the current system, claiming, “If harsher punishment worked then I believe me I would be the first to call for it.” However, the past few years have taught Barry that in practice harsher punishments achieve little.

In fact, as Barry informed the audience in attendance, during his son’s sixteen-year life the prison population rose from 40,000 in 1992 to 80,000 in 2008. To steal a line from the man himself: Has society got double as many criminals now as it did then? The answer to this question would have to be a resounding ‘No’. Sadiq Khan MP succinctly expressed this view, arguing we as a society are failing and our communities are failing. As a result of this worrying status quo, the new Fabian pamphlet presents an overdue and welcome opportunity to critique the criminal justice system.

Embedded in this rethink Sadiq Khan MP, who wrote the introduction, emphasises the need to put victims at the heart of the justice system. In this remodeling of the justice system, Khan believes that, “a significant shift in attitudes to and treatment of victims is required”. The Shadow Justice Secretary has spent some eighteen months with the brief, and this collabortation with the Fabian Society comes within sight of the Labour Party’s upcoming policy review.
With this in mind, event chair and Telegraph journalist Mary Riddell identified the retributive mindset of the public and media, which reached unquestionably high levels in the aftermath of the summer's riots, and austerity as the two catalysts responsible for the current prison population. To put it simply, with around half of all adults reoffending within a year of their release the criminal justice system is failing.

Considering this abysmal record on reforming offenders, Mary Riddell asked the panel: Are the perpetrators of crime also victims? Bearing in mind the public’s and more importantly the media’s attitude towards crime, this is a challenging argument to win, but Mizen gives this position credence with an approach alien to many. Coupling this notion with our growing prison population means we cannot afford to dismiss this position as pure idealistic sentimentality.
As Khan, Mizen and the pamphlet suggest we indisputably require a fresh approach.

‘Punishment and Reform’ claims victims should be involved in the judicial process, instead of baying for blood, we should be careful and deliver justice with rational heads. Alongside this, rehabilitation must conquer retribution. Preventive techniques and a focus on early intervention could be key to this rethink and provide us with a criminal justice system many may not feel they want, but definitely the system we need.


Mary Riddel's take on the event and pamphlet can be read here

Friday, 16 December 2011

Nine Paradoxes of the Euro Veto crisis

One week later, as we enter the hangover phase of the Euro-veto crisis, clouds of paradox hang thick in the air. The last week has thrown up contortions, contradictions and ambiguities which have left heads spinning on all sides. Here are nine paradoxes to emerge from the chain of events:

Both a ‘storm in a tea-cup’ and the end of an era: The deal struck by the ‘Europe of 26’ is already fraying at the edges and seems set to unravel before it sees the light of day. Other non-Eurozone members are grumbling and Francois Hollande has said he would renegotiate. So from a legal perspective Mr Cameron’s ‘no’ may have little consequence. He could have bitten his tongue. However psychologically something snapped, in the minds of the Germans and French, as well as with Cameron himself. By walking away from the table the Prime Minister has created a rupture in Britain’s European relations which will endure even as the detail becomes a fast fading memory.

By walking away, the UK won on how the EU should do business: The deal the UK forced on its partners, outside the apparatus of the EU institutions, confirms that the UK’s vision of how Europe should do business has prevailed even without its participation. It is the death-knell for ‘federalists’ who back the authority of the independent European institutions over member states and proves that Britain and France have won their long battle for an ‘intergovernmental’ Europe. In the long-run this will put a break on the pace of political integration even if this looks implausible after the weekend agreement.

A bid to safeguard the City ended up undermining it: A veto ostensibly designed to protect the City’s interests has ended up undermining them. With Britain on the sidelines other member states are now more likely to make unhelpful decisions on financial regulation which the UK cannot veto.  It is curious that Mr Cameron took a position with such a significant down-side for Britain. Of course, it was a compromise package which Cameron hoped would be acceptable to EU leaders, Liberal Democrat ministers and his own backbenchers. The risk in his negotiating position became apparent when Mr Cameron concluded that it was not possible to reconcile the competing demands. He was placed in a position where he had to prioritise his base over the national interest.

Cameron wanted to undo Mrs Thatcher’s work: The Prime Minister wanted to remove majority voting from key elements of single market decision making affecting financial regulation. It was Mrs Thatcher and her Conservative European Commissioner, Lord Cockfield, who presided over the introduction of majority voting to prevent anti free-market forces blocking progress towards the single market. Ever since, the British government has taken pride in working the Brussels machinery to achieve an open and competitive European economy. The centre of gravity has gradually shifted towards the right as a result. Cameron’s demands revealed his own lack of confidence in the Conservatives’ ability to work Europe to their advantage.

The UK said no when little was at stake for us. Eurozone members said yes to a deal which risks their future: Wielding the veto was bad for Britain’s national interest while by agreeing the UK would have lost nothing. By contrast for all those vulnerable Eurozone members who accepted the accord, the outcome is very risky. The new fiscal rules do not address the problems that brought on the Euro crisis, certainly in the case of Spain and Italy which had healthy public finances before the crash. But if applied strictly, the new regime could plunge Southern Europe into enduring economic turmoil undermining the Eurozone further in the medium term. The fiscal provisions are simply there to persuade Germans to intervene. So observers on the left face the difficult task of opposing David Cameron for walking away and undermining UK influence, while also criticising a deal which would rule out the sort of fiscal stimulus which the US and UK adopted in 2009. For now there is nowhere for pro-European Keynesians to turn. This explains Ed Milibands discomfort on the question of what he would have done. In truth he would have agreed to let the Eurozone do what it wanted as long as the UK was not involved, while believing the course of action extremely unwise.

The version of Britain in Europe most people want is becoming less achievable: Since Harold Wilson’s day Britain has sought a middle-way on Europe, between isolationism and full-speed integration. Every political leader, including David Cameron, has followed this course in one way or another. The week’s events make the UK’s half-way position highly unstable. The UK may now face the remorseless pressure of disaffiliation, reversing decades spent wrestling with forces pulling us inwards. The domestic dynamics of the Conservative Party and the right-wing press could combine with the hostility and exasperation of the UK's European partners to bring about a referendum on withdrawal within a very few years. The UK may end as a small island economy at the mercy of global forces and (if we want access to the European market) of EU rules we have no power to shape. Or perhaps if a referendum says ‘no’ to exit or if the economy takes a nose-dive, Britain will be forced back into the European fold, on terms dictated to us. Whatever happens, the Euro-realist status quo most people actually want is becomes more and more unlikely.

Anti-European English nationalism brings Scottish independence closer: The more anti-European the Conservatives become, the more Alex Salmond can exploit it. A UK referendum on Europe would offer the SNP a perfect platform for an independence vote, predicated on Scotland’s EU membership. For some English Nationalists in Conservative ranks this may be no paradox, as they are increasingly attracted to a right-leaning, free-market England free from all encumbrances.  But it represents a historic parting from the Conservative and Unionist tradition of at least two hundred years.

While all this happens Britain is becoming a more European country and the Atlantic is widening: US politics has lurched to the right over the last decade but the British public remains wedded to a UK version of European social democracy. Only one in ten voters want a smaller state, the NHS is our best loved institution, a substantial majority want to keep current employment rights and want the gap between rich and poor to close, and climate change-denial remains a minority sport. The public shares the Tory’s instinctive Euro-scepticism, but on social and economic issues the Conservatives are drifting into the mid-Atlantic leaving mainstream opinion behind.

And the EU is proving its point on the global stage: David Cameron said ‘no’ just as the value of Britain in Europe was on show in Durban. The climate change deal was far from perfect, but it still demonstrated beyond doubt the essential role of common European politics. In an Asian century the issues Britain cares about – like climate protection, but also political freedom and open economies – will only be advanced through strong, united diplomacy from the EU. Britain cannot go it alone in the 21st centrury.

Monday, 12 December 2011

'In the Black', 'Labour's Business' and 'The Credbility Deficit'

A guest post in a personal capacity from Stephen Beer. Stephen is Senior Fund Manager and UK strategist at the Central Finance Board of the Methodist Church and chair of Vauxhall Constituency Labour Party.

Debate about the economy in the Labour Party is at a really good level now and something I was looking for when the Fabian Society published my pamphlet The Credibility Deficit – How to rebuild Labour’s economic reputation at the Labour Conference this year. However, we need to tackle how we can have a credible economic policy, not simply one that is fiscally prudent.

Perhaps the biggest splash since Conference has been made by In the black Labour by Graham Cook, Adam Lent, Anthony Painter and Hopi Sen, and published by Policy Network (interest declaration: I’m a board member). The authors maintain that Labour needs to embrace fiscal conservatism and show how it will get the annual deficit down and where it will cut spending. They argue that this is a progressive policy, because if the public finances are not under control we will be unable to be progressive about anything much. Instead of triggering a harsh reaction, the discussion paper has been well-received (including by Ed Balls). That’s a healthy sign. However fiscal probity is a necessary condition for progressive economic policy but it is not sufficient. Even if Labour relied on a promise to keep to George Osborne’s latest fiscal plans, it would still not win an election centred on the economy.

What matters is being credible. I make no apologies for banging on about this because we need to get it. It’s the point I made in The Credibility Deficit. We lost credibility with both voters and markets. We lost it with voters because living standards got squeezed for years and we had no credible plan or even rhetoric to answer it. So we need to make sure we have a credible and relevant answer today. We lost credibility with markets because we fudged the way we kept our fiscal rules. Adopting new rules and saying we really will keep to them this time is therefore not going to be enough. Besides, the scale of the financial crisis was so enormous that any fiscal rules would have had to be broken to avoid a deep depression. It will be the same next time. And we lost credibility with both voters and markets because both now need convincing (whether fairly or not) that Labour will keep spending under control and effective. The Conservatives and Liberal Democrats have successfully blamed us for the deficits but if we had cut spending to match the fall in tax revenues, millions more would be unemployed and the UK would be heading rapidly down the economic performance tables.

We are living in grim economic times, with Office for Budget Responsibility forecasts suggesting we have years of flat or declining living standards ahead of us – and that’s if the eurozone actually sorts itself out. At the moment most people believe that austerity is the only answer. It will take a while for countries to travel down the austerity death spiral before they reach out for a different answer. Even if they do, the likelihood is that we will see years of half-hearted stimulus measures some of which, by virtue of their temporary nature, will make things worse.

The big problem is that the economy lacks sufficient demand. If we have a couple of quarters of unexpected growth I fully expect the OBR to change its mind and decide that perhaps more of the deficit is cyclical than it believes today (economic forecasts are not usually accurate; a reason against giving the OBR more say over policy). Business and consumer confidence is low. Who can blame them? Governments need a convincing and credible growth plan as well as a deficit-reducing plan (the In the black Labour authors make this point too) and not merely a new tax cut or spending tweak here and there.

Governments need to convince people and markets that they are fully committed to proactively increasing the productive potential of the economy for the next decade or more. Such a policy will be highly focused on encouraging enterprise and investment: spending on infrastructure will be high; a national investment bank will sit behind bank loans and stimulate small businesses. And government – or at least a Labour government – would stand behind the labour market with a jobs guarantee. The current debate about how Labour can be fiscally sound is welcome and much needed. But we need to do more to restore the economic reputation we spent so many years of opposition building last time around.

Friday, 9 December 2011

Cameron veto undermines Britain's future

This is a guest post by Kenneth Way, Media Intern at the Fabian Society. 


David Cameron’s veto of the proposed EU treaty change is a gross error of judgement and undermines Britain’s future within the union.

Back in May 2010, the Coalition agreement promised Britain would play a “strong” and “positive” role in working with our European partners. However, as Britain woke to discover Cameron used his veto, it became painfully apparent that the government has reneged on this promise and in the process worryingly sidelined Britain in Europe.

This is not the first time the government have forgotten their promise on Europe. In October, in the midst of the crisis, the Conservatives thought it helpful to hold a “symbolic” debate and subsequent vote in the Commons on EU membership. Despite defeating this vote, albeit with the largest rebellion ever on Europe from backbenchers, eurosceptics remain worryingly at large, vocal and influential within the party.

Lest Conservatives forget, in the past Europe has ripped stronger blue governments apart. This government does not have the privilege of a stable majority. Modern European history reveals that a severe lack of foresight at the insemination of the European project saw Britain say ‘No’ to Europe on multiple occasions. When the merits of Europe were finally understood, Britain started knocking on Europe’s door only to be rebutted by a dogged and insulted Charles De Gaulle adamant to block British membership. It took until 1973 to join the EEC, some sixteen years after the Treaty of Rome and some sixteen years locked outside a growing union.

We must learn from our past. While we currently remain justifiably absent from the single currency, envision a completely feasible world with a recovered booming Euro and a Pound in freefall. An economy under threat, Britain could look to the single currency as a saviour. This current short-sighted approach towards helping Europe could trigger a response akin to De Gaulle’s refusal to accept Britain into the union. Wise, farsighted decision-making will help ensure that the eurozone survies not only beyond this week, but long into the future, so that one day, if we want or need to, we can join our counterparts in a stable, secure and prosperous single currency.

Rather than fruitless attempts at holding Europe to ransom as the “awkward partner” determined to get a better deal, the government should therefore be forcing its way into discussions central to Europe’s future working side-by-side with our Franco-German counterparts. A Britain standing alongside France and German would remain powerful in these days of the emerging BRIC nations. In fact, if our beloved allies across the Atlantic continue to search for new partners in this globalising world order, the importance of Europe multiplies for Britain.

To counter this approach, British exceptionalism must end in the hearts and minds of the public. We must fight to change the wholly negative European discourse and question the idea that sovereignty is always king. Unquestionably, being pro-European is a traditional vote-loser in Britain. The notion of “Europe bad, Britain good” means the EU is seen as greedy, intrusive and unwelcome, the public are bombarded with press who inform us “Brussels controls Britain” and most of the union’s good work is buried beneath a combination of irrational jingoism and scaremongering hysteria. This attitude must change before it is too late. Failure to respond to this challenge could leave Britain in the European wilderness for generations to come.


You can follow Kenneth on Twitter @kennethway

Tuesday, 6 December 2011

The Price of Patient Privacy

Guest post by Georgia Hussey

Yesterday’s announcement that NHS patients’ data is to be opened up to aid potentially life-saving research seems, initially, to be a fair one. Excluding external factors, such as potential leaks of information, deliberating between patient privacy and the advancements that could be made with patients’ data seems weigh considerably on the side of the potential benefits of the research. Moral philosophy tells us that when presented with an ethical dilemma between two things, the right choice is the one that does the least harm and the most good. So long as anonymity is guaranteed (and the fact that perhaps it can’t is another issue), the potential harm to patients is far outweighed by the benefit of the availability of such information. With an opt-out system resembling the successful organ donor policy held by countries such as Spain (where there are 33 inhabitants in a million are organ donors, compared with 14.1 in the UK), the change can be justified in a similar way; its likely that most people would be happy for data to be used, just as 90% of us support organ donation. The consequences of this decision would indeed be positive: greater medical innovation, encouraging research and facilitating the fight against diseases.

However moral philosophy also tells us that the consequences of an action alone aren’t enough to make it morally right, it must also be motivated by the right reasons. The context of this announcement is therefore crucial: it’s hard not to consider this another move in the right’s creep towards NHS privatisation.

After the controversy that has surrounded the government’s policy on the NHS, hearing David Cameron and Andrew Lansley utter the words ‘private firms’ and ‘NHS’ in the same sentence triggers scepticism. Lansley’s Health and Social Care Bill has faced significant opposition, with many criticising the speed with which it’s been pushed through parliament, as well as the far-reaching implications it will have for our country’s health service. Lansley dismissed claims that the bill will be a major step towards the privatisation of the NHS as “ludicrously scaremongering”, but a document that emerged two weeks ago seemed to also point in this direction. Medical professionals said the implications of the document -a report on ‘Developing Commissioning Support: Towards Services Excellence’- which was sent out to various health organisations, would inevitably be that large sections of the health service would be overpowered by private providers. GP commissioning groups would eventually have to hand over responsibility for some services to private companies, unable to compete with them without support.

The further changes to the NHS announced yesterday seem more worrying within this context. In his speech on life sciences yesterday, David Cameron detailed his plan to open up the NHS to pharmaceutical companies for clinical trials as an effort to foster a closer relationship between the industry and the NHS. With a brief reference to the patients that could be helped, Cameron’s speech centred on the life sciences as “a jewel in the crown of our economy” with the NHS as the convenient cloth to polish it with before the auction. The focus on the economics of the decision exposes where the true interest of the government lies in opening up the NHS. Andy Burnham has rightly warned of the need to “tread carefully” on this issue. Rather than showing themselves as making an altruistic move to encourage medical research, the announcement is the Conservative party’s inability to forgo a chance to twist the NHS into turning a profit.

So although the consequences of using the NHS as a resource for medical research and clinical trials are likely to be mostly positive, the government’s motivation for doing so is cause for concern. Perhaps David Cameron has deliberated about the ethical dimensions of the dilemma, and reasoned that the potential risk to patient privacy is worth the good that will result. But if his motivation is actually based on a “calculation about what’s best for our economy” we do indeed need to tread carefully; if the motivation that lies behind the decision is economic, then David Cameron has sold patient privacy for another jewel to go in his crown.

Monday, 5 December 2011

Was Osborne Right On Public Sector Pay?

A guest post written by Peter Kenway, Director of the New Policy Institute. A longer version of this article can be found here

George Osborne's claims on public sector pay in the Autumn statement do not stand up to scrutiny. In his statement to parliament on 29 November, George Osborne said the following:
"We will set public sector pay awards at an average of 1% for each of the two years after the pay freeze ends.
"Many are helped by pay progression – the annual increases in salary grades that many people are entitled to, even when pay is frozen.
"It is one of the reasons why public sector pay has risen at twice the rate of private sector pay over the last four years."
Was he right?

The latest statistics on average weekly pay from the ONS is for September 2011. These show that compared with four years earlier, average weekly pay in the private sector had risen 6.2% whereas average weekly pay in the public sector had risen by 12.8%, that is, an excess of 6.6% . Osborne’s basic premise is therefore correct – public sector pay has risen more than twice as fast as pay in the private sector.

What about pay progression in the public sector as the reason for this difference? While it is true that many public sector workers do enjoy pay progression, the information needed to quantify its extent, in both the public and private sectors, cannot be gleaned from the official statistics. So no evidence here either way.

But are there other factors that might explain the difference in the rates of growth of pay in the two sectors over the four years and for which evidence does exist? There certainly is, and once this is accounted for, the picture changes dramatically.

Bonuses and Arrears

First, it is clear from the data that bonuses in the private sector were down sharply in January 2009 compared with a year earlier. Given what had happened to the economy and the financial sector in over the previous year, that is entirely understandable. But since this is exactly what is meant to happen with bonuses at times like this, it is absurd to use the collapse as a reason for holding down public sector pay.

Luckily, the ONS publishes alternative series for average weekly earnings which strips out the effect of both bonuses and pay arrears. On this basis, instead of rising just 6.2% over four years, private sector weekly earnings rose 7.8%. Over the same period, public sector earnings rose 12.6%. While the overall picture is the same, leaving out bonuses reduces the gap between the two sectors by nearly two percentage points.

A chart that plots these two series from 2005 onwards can be seen here. One thing this chart shows is how the public and private sectors seem to take it in turns to lead on earnings growth. In 2005, public sector earnings were rising faster than those in the private sector. Between 2006 and 2008 the private sector led. Then from late 2008, the private sector fell back again – for a period of about 18 months substantially so. Since mid 2010 the two sectors have been tracking one another closely.

The Changing Public Sector

Much more surprising is the sudden step in average public sector earnings in mid 2009? What was this? A sudden bout of generosity on the part of public sector employers at the tail end of the recession? No. It is a statistical quirk caused by the fact that from July 2009, earnings in the now nationalised banks, RBS and Lloyds/HBOS, started being included in the public sector. When this is taken account of – luckily again, the ONS produces a public sector average earnings series excluding financial services – the apparent step up in public sector pay in mid 2009 disappears.

It is true that in mid-2009 the public sector was still doing better than the private sector (where earnings at this point had slumped). This would still be true even if the two banks were still in the private sector. We estimate that if they were, private sector earnings would have risen 8.4% over the four years. Over the same period, public sector earnings excluding financial services rose 11%. So there is still a gap but it is down to 2.6%.

Conclusion

Failure to take account of the effects of something as big as the nationalisation of RBS and Lloyds is a gross error. Osborne’s claim depends upon it. Once that error has been corrected however, it is less the small difference between the two sectors that is the story than the large difference between earnings growth in both sectors and inflation at 5%. The resulting fall in ‘real’ wages – that is wages after allowing for inflation – is a major reason why the economy is now so sluggish. Since the economy will not recover until pay picks up, bigger rises in both sectors, and especially in the private sector, are fast becoming a patriotic duty.

Wednesday, 30 November 2011

Labour’s Business and the Unions

One of a very limited run of Labour’s Business will be given to every delegate who attends our annual conference entitled The Economic Alternative on January 14th. Full details and how to buy your tickets can be found here. Please purchase your tickets early to avoid disappointment.

Mark Rowney has worked for several years as a senior finance lawyer specialising in transport, energy and infrastructure at Clifford Chance LLP.

On Monday, two well known Labour party activists (Luke Bozier and Alex Smith) launched a pamphlet entitled “Labour’s business: Why Enterprise must be at the heart of Labour politics in the 21st century”. It aims to be not “a Labour manifesto for business”. Instead recognising that “in twenty-first century Britain, business must be at the very core of what it means to be Labour”, it aims to “inform future work on how Labour can become the party of enterprise”. When so far to date, Labour’s business policy is the incomprehensible distinction between so called predators and producers, and with yesterday’s budget statement offering little hope for the future, “Labour’s business” is a very welcome development.

Chapter Two of the pamphlet acknowledges the extremely important and valuable relationship that Labour has with business through the unions. Mark Glover is to be commended for giving thoughts on how Labour should embrace this relationship rather than give the tired and dated argument that comes from the right of the party for distancing Labour from the unions (not so say that many of Rob Marchant’s points in Chapter Three, such as weakening the hold unions have over candidate selection aren’t valid).

It’s understandable that many in Labour want to distance themselves from the unions. The unions, on the whole, have failed to modernise their public perception and relationship with the public. As a result, public discontent with the unions tars the image of Labour. However, Labour should help the unions to come up to date, not distance itself from its founding associations.
With polls showing that only 38% of the public back today’s strikes, it is clear that despite the simplicity and eloquence of the unions’ message, it does not get through. Hand on heart, the best I can empathically say for the unions is that if you kick a dog, don’t be surprised if it bites back. I know I’m factually wrong on that metaphor, but it’s what I feel.

Unions exist to support their members but their definitions of “support” and “members” seems weak. I have no idea if the day after Gaddaffi died, union members started sending recruitment and development teams to Libya, but they should have. Supporting members means growing in membership, targeting the 81% of people in the private sector who aren’t members. It means spreading the values of basic employment rights, non-discrimination and health and safety laws, to other developing countries. It means sitting on the board and taking responsibility for social corporate responsibility. It means being seen to be a positive force for business and change in society, not a barrier. Labour should help the unions achieve this goal.

“Labour’s business” doesn’t just talk about the internal relations of Labour with business and aims to be a jack of all trades. By its very nature, the pamphlet is superficial but that is its strength rather than its weakness; it aims to promote debate rather that set out a detailed line of argument. With eighteen chapters written by twenty different people and edited by two, the pamphlet varies in its tone and thought processes. Conflict in the thinking inevitably and happily arises.

Yet my suggestion for the initial focus for debate is to be found in Section One of the pamphlet. For as Section One argues, how can Labour really have a serious policy for business if it first does not have the internal relations with business and the capacity and culture for those relationships to develop and grow?

The Fabian Society would like to thank Alex Smith and Luke Bozier for their kind donation of the book.

Tuesday, 29 November 2011

Autumn Statement 2011: the Fabian reaction

George Osborne must be secretly delighted at the Eurozone debt crisis. Not only can he pass on the blame for a UK slowdown that is largely home-grown but, more importantly, the prospect of irrational bond markets turning on the UK offers the only possible justification for the fiscal stance he reaffirmed today.

That is the thin veneer masking the truth of this Autumn Statement. Standing back from the detail this was a ‘no change’ budget. Yet everything has changed in the last year. Osborne’s deficit reduction plan was written when the Chancellor had reason to hope for a V shaped recession and recovery. Now we know this will be an L shaped depression. It is already inevitable that British GDP will sit below its pre-crisis peak for longer than in the 1930s. On top of that comes the Eurozone debt crisis and political stalemate in Washington. No wonder that despite the cuts Osborne will now borrow more than Alistair Darling ever planned.

All our economic history suggests the only route to recovery from such dire straits is to stimulate domestic demand. But instead the Chancellor is persisting in sucking public spending out of the economy. His proposals for encouraging more private sector consumption and investment are well meaning enough, but totally inadequate for the task at hand. To kick-start the economy we need a big increase in business investment, financial sector lending and spending by asset-rich households. But none of that will be enough to resist the double headwinds of fiscal contraction and global economic turmoil. Osborne is becoming the counter-Keynesian chancellor, content to see pro-cyclical fiscal policy that actually exacerbates stagnation.

So those are the headlines. Here are some of the details that lept out for me:

(1) The Liberal Democrats deserve credit for preserving inflation indexation of out-of-work benefits. Low income groups find it hardest to cope with rising prices and we must remember that over the last 30 years the value of benefits in comparison to median earnings has plummeted. It’s only fair that, on the rare occasion that inflation outstrips earnings, poor households see the benefit.

(2) The flip-side is that the big reduction in tax credit payments will hit low and middle earners hard, reducing overall consumer demand and worsening work incentives. Although the poor are protected for now, these reforms further undermine the universalist principles of our welfare system. Fabian Society research indicates that tightly targeting welfare on low income families and reducing entitlements for mid and high income groups stores up problems in the long run. Evidence from across the OECD shows that because public consent is so important for sustaining welfare, systems which support higher income groups are also the most effective at preventing poverty. It is depressing that ‘anti-universalist’ sentiments seem to be dominant within both Coalition partners, even though each party contains proud universalist roots (Beveridge and Macmillan spring to mind).

(3) The fresh cuts to current spending are particularly concerning, given that they will pay for capital spending which may not come on stream for some time. This risks sucking money out of the economy at a moment of crisis. The idea of using public money to leverage in private investment is good in principle, but the rumblings in the press suggest that the deal is far from sealed. The Treasury will need careful watching to see if the pension funds and sovereign investors really come up with extra infrastructure spending.

(4) A final thought on State Pension Age. The chancellor seems once again to have pre-empted consultation on what is a key change to welfare entitlements. In principle I support increases to State Pension Age, if they are sufficiently gradual that each generation can expect to draw a pension for the same share of their adult life as the last. But there is a big caveat, which I wrote about a few weeks back. With health inequality rising, any increases to State Pension Age have a disproportionate impact on low income groups. On average men in the poorest fifth of English neighbourhoods become disabled at 55. Until this public health disaster is addressed can the left really feel comfortable with a rising pension age?

Monday, 21 November 2011

Unlocking our housing wealth: a Keynesian stimulus on the cheap?

Andrew Harrop, General Secretary of the Fabian Society, outlines a proposal featured in yesterday’s Independent on Sunday for a time-limited voucher to incentivise people to unlock their wealth and get spending. A government cash-back deal worth £2,000 per home would see £100 million of public money turn into at least £2 billion of cash. The money would boost consumer spending and increase the volume of home sales.

The Government’s housing strategy, launched today, is intended to be a boost to economic growth. But by focusing entirely on the construction of new homes the Government has taken a very narrow view on how housing can stimulate the economy.  For owner-occupied homes are a huge reservoir of wealth which could be converted into higher consumer spending, if we get the incentives right.

British households own around £3 trillion in housing wealth. Just converting a tiny amount of this into cash could boost consumer demand by billions. For the sake of the economy there couldn’t be a better time for those with housing equity to run-down some of their assets and use it to maintain their standard of living. People can do this by moving to cheaper homes and using the proceeds or, if they want to stay put, they can take out either a second mortgage or an equity release product. Overall the result would be that households would own a little less of the nation’s housing wealth and the financial sector, awash with money from quantitative easing, would take on a little more.

To make this happen the Government should introduce a simple, eye-catching voucher to encourage people to cash-in while times are tough. It could be modelled on the car scrapage scheme which offered people £2,000 to upgrade their car. That was an incentive to persuade drivers to spend from £10,000 upwards on a new car. The multiplier effect would be much greater if a similar voucher was used to unlock housing wealth, as the sums involved tend to be a lot higher: an average equity release is worth £50,000 and when people downsize their home the sums are at least as much.

The voucher could be used towards the upfront costs of moving for anyone making the shift to a cheaper home, or it could be a cash-back offer to top-up a financial product. How would it work? If the first, say, 50,000 applicants were eligible for £2,000 each for unlocking at least £40,000, that would unlock a minimum of £2 billion of cash at a cost of £100 million. Schemes like this always have some ‘deadweight’ costs, but today far fewer people down-size their home or take out cash than might be considered economically rational (at the last count only 15,000 equity release products were sold in a year). The attraction of the scheme would be partly to publicise the benefits of cashing in on housing and this might have lasting behavioural benefits.

The immediate beneficiaries of the scheme would be people with existing equity, who are mainly in mid and later life. In itself this may be no bad thing as many ‘asset rich’ older people live off very low incomes and could in principle spend a lot more of their money. But the scheme would also help free-up our sticky housing market. A good proportion of the cash would no doubt pass to younger relatives to help them raise a deposit for a home; meanwhile when older households downsize they would free-up larger homes: two different routes to boosting the volume of housing transactions, with all the wider economic activity this implies.

The obvious pitfall for this scheme is that it is regressive by design: a cash incentive to encourage people with wealth to spend it (although perhaps a mere £2,000 would not be much of an incentive to sell-up for the genuinely rich). It would only be distributionally fair as part of a broader package with more progressive elements (such a great deal for the Daily Mail reading classes might even buy political cover for other pro-poor elements of fiscal stimulus). Even if it were introduced on its own however, the very strong multiplier effect of the voucher means Keynsianism should beat socialism on this occasion. And if the scheme was successful in boosting house sales it might even be self-funding, through the proceeds from all that Stamp Duty.

Friday, 18 November 2011

Men-only policy debates must go

A new campaign to end all male panels was launched this week. The campaign is promoted by a growing group of women from many walks all life, including politics, think thanks, charities and academia, all involved in promoting gender equality as the way forward to build a more progressive, sustainable and fair Britain.

The campaign is timely, as we are witnessing the dire consequences multiply of a world long dominated by men and by masculine visions. The finance empire, which has collapsed dragging Europe into darkness, was built on short-lived money and little or no interest in a long-term outlook, is a key example. The crisis in the EU, far from being simply a crisis of the Euro, is, to me, the crisis of an ideology which has pervaded for too long.

Women, and women’s approach to development and growth, can drive radical change. It is not by chance that women do often manifest change and progress. The recently elected female-led Denmark’s government, just to name one. Or the leading female figures in Latin America. This is why it is appalling that some organisations could even conceive an all-men panel in a policy roundtable. These gentlemen’s conversation can no doubt be lively but they are history in reverse.

A few months ago we launched Fabiana, the new magazine of the Fabian Women’s Network to respond to a new way of feminism which is surging across the UK. We realised that women’s presence is necessary, but just the starting point: women need to be driving change at all levels across public life, from politics to businesses.

We see the next vital step is creating policies from a feminist perspective, and how that perspective can shape a vision for Britain and the world. To achieve that, it is essential to establish a fresh dialogue between genders: for this reason, Fabiana hosts both female and male voices to deepen understanding and debate of foreign policy, welfare state, and financial markets. We want to encourage this dialogue between women and men who share the same conviction that female presence and ideas are the way forward to create the innovative policies we need to modernise our world.

I grew up in Italy, a country where all-men debates are quite common, to put it mildly. Once in a while – the best case scenarios – I would hear frantic conversations followed by the afterthought: ‘We need a woman, let’s find one’, as if it were only a matter of courtesy or some tedious formality. The country where I grew up and where I have been involved in politics for ten years before moving to the UK in 2008, is now in the public eye because of the downfall of its misogynist PM (Silvio Berlusconi). Being a feminist in Italy – together with many others – has been challenging, but has taught me a great lesson: that women need to remain vigilant at all times, as their rights and achievements are always a slippery slope.

With that conviction, together with Seema Malhotra and many others, I supported the idea of reacting and firmly saying we will not attend any all-men panels policy debates, without exceptional reason: there is simply no space for this in today’s world.

We live in a difficult age, and history shows us that financial crises are always hard times for women. Not just financially, but also in terms of ethics and the erosion of progressive values. In addition, women are bearing the brunt of the reckless cuts perpetrated by the Coalition government, being pushed out of the workforce, seeing their income driven down whilst cuts to legal aid undermine their access to justice and make them less protected from violence.

Let all progressive men stand with us women, and join us in our campaign. All-men debates are a worrying sign of sickness. Let’s stop it now, for the sake of women, men and Britain.
To join, you can sign here.

Ivana Bartoletti
Editor of Fabiana
w. www.ivanabartoletti.co.uk
t. @IvanaBartoletti

Thursday, 17 November 2011

Fabian New Year Conference: Looking back (and ahead)

Labour’s storming victory at the first by-election of the Parliament in Oldham East seems a long, long time ago. It was just after that Ed Miliband gave his speech to the Fabians New Year conference.

Looking back now. It’s clear to see how much of what happened in 2011 for Labour was sketched out in this speech. Talking to a packed hall of Fabain members, Miliband set out the three challenges Labour must face to win back power.

The first challenge was the need to understand why our economy has stopped working for the majority of people. This line of argument showed clearly the thinking that led to the good/bad capitalism theme that formed the centrepiece of Miliband’s conference speech. This theme is now at the heart of political debate.

From Peter Oborne to the Occupy LSX movement, discussions about the failure of our economic system and its effects on people are taking place across the political spectrum. But looking back to Janurary 2011, Fabian New Year Conference was talking about and debating these issues indoors long before we saw the steps of St Pauls occupied.

As well as the economy, Ed Miliband set out two further challenges in that speech: How to move away from managerialist policy-making and reconnect with our communities; and the third was about moving politics away from vested interests and renewing our democratic spirit.

The Blue Labour agenda, one of the most colourful internal Labour debates was precisely about the need to reconnect with communities. This was about identity politics. The Fabian Society continue to be at the heart of this discussion. How we reengage locally without dismissing the important role that the active state can play will be a major focus for the Fabians and the Labour party in the coming years.

The challenge of taking on vested interests was seen no more clearly than in the phone hacking scandal. Ed Miliband’s capturing of the public mood over the summer gave the ultimate platform to this central challenge. It’s a challenge that is now also a central part of the economic message. Vested interests, asset strippers have been identified as part of the problem.

Renewed democratic participation and wealth creators are some of the solutions we now explore. Whether this was in the refounding Labour process or laying out the challenge for taking on monopolies in the energy industry - the agenda was set out at New Year Conference 2011.

Today, as we reach the last few weeks of the year, the news is that we are to miss our deficit reduction targets. In addition, youth unemployment has hit 1million. We are also hearing murmurs of contagion fears in the Eurozone crisis. The coalition said there was no alternative. But one is very much needed. It is against this backdrop that we prepare for Fabian New Year Conference 2012: The Economic Alternative where Ed Balls and a host of other leading commentators will set out their stall on what that alternative should be.

How we engage with the big questions on the economy are now the key to being seen as a credible government-in-waiting. Once again, if you want to be at the heart of the debates driving Labour in 2012, there is no better place to start than the Fabian Society New Year Conference.


Tickets for the The Economic Alternative are on sale now and going fast. Don't miss out: http://www.fabians.org.uk/events/events-news/the-economic-alternative-fabian-new-year-conference-2012

Wednesday, 16 November 2011

The Minimum Wage is Not Red Tape

Dominic Raab framed his Conservative Home article today with this statement: “Gloomy unemployment figures out today show unemployment at 8.3% and, more disturbing still, youth unemployment at 21.9%.” 

Aside from using the word unemployment three times in one sentence, what else is wrong with this picture?

The answer lies in Raab suggests as a means by which to address the problems he cites. Here are some of the main ideas he puts forward for young people out of work today:

- Allow small businesses to pay below the minimum wage for 16-21 year olds
- Make it easier for employers to fire people
- Abolish the need to employers to invest in their workforce and offer training

These are just three of the ideas from the Centre for Policy Studies’ ‘Escaping The Strait Jacket – Ten regulatory reforms to create jobs’ published today. This publication looks at how red tape is holding back the UK economy.

Let us be very clear about something. The minimum wage is not a form of red tape that holds back growth in the economy. The minimum wage is one of the finest achievements by a Labour government that sought to raise living standards to build a better economy and society. The minimum wage is one of the most important policies for ensuring that work really pays.

Furthermore, employment laws are as such that it is already easier to fire someone in the UK than it is in the rest of Europe. Who would benefit from changes our system further in favour of employers? Working for less pay with less security is a horrible suggestion for solving our growth and jobs problems. Add in ideas like lessening investment in training and we have a viscous cycle of low-paid, low skilled workers with insecure jobs.

The sum total of all this policy is jobless growth. This is the kind of recovery achieved by the policies Raab is advocating.

The dividing lines with the solutions offered by the centre-left speak volumes about the space between the two main parties today. From the 5 point plan spearheaded by Ed Miliband & Ed Balls, number one offers a much better suggestion:

A £2 billion tax on bank bonuses. This would fund the building of 25,000 homes and 100,000 jobs for young people. This approach takes money from the sector in the economy that enjoys some of the highest pay and if banks won’t lend to small businesses, it is right and legitimate that we tax them to invest in jobs and growth.

The dividing line between Tory and Labour policy could not be illustrated any clearer than in Ed Miliband’s consistent support for a national living wage. The living wage would see living standards rise at a time when those in the middle are feeling the pinch of rising prices. This would truly increase the will to work by increasing the rewards of it. Raab offers instead to lower wages, and in turn lower living standards. 


There is plenty more depth and detail to the economic alternative emerging from Labour. The five point plan includes reversing the VAT rise and bringing forward long-term investment projects to stimulate the economy. An approach that top economists agree is now necessary to avoid a decade of high unemployment and slow growth. It is exactly this kind of economic alternative that we’ll be discussing in depth at this year’s Fabian New Year Conference. Make sure you’re there to be part of the debate.

Wednesday, 2 November 2011

Widening health inequalities signal trouble ahead

Last month brought depressing news for political observers of an egalitarian bent. The Office of National Statistics announced that the gap between life expectancy in the poorest and richest communities in the UK had widened, with men in Kensington and Chelsea now living on average 13.5 years longer than men in Glasgow.

This headline measure of health inequality actually masks an even worse story. For in recent years geographic differences in the length of disability-free life have increased more quickly than variations in life expectancy itself. In poorer neighbourhoods people not only tend to die earlier. They live with ill-health for longer as well. And the gap is edging higher.

This matters because health inequality is ultimately the most important dimension of social justice. Not only do most people value long, healthy lives above all else, but variations in health in middle and later life mark the culmination of lifelong inequalities. The overwhelming conclusion of the 2010 Marmot Review on Health Inequalities was that gaps in the incidence of long-term disability and then premature death are the result of enduring inequalities of money, power, educational achievement, employment opportunity, and environment. Stereotypical health-related factors, such as unhealthy lifestyles or industrial accidents, only explain a small part of the variance.

This is just the latest piece of bad news on inequality. Since 2007 income inequality has reached its highest level since records began. This has been caused not just by the well-documented excesses of the super-rich, but also by low income families failing to keep up with the middle. In hindsight, it looks like Labour's anti-poverty agenda before the crash was a heroic effort at running up a down escalator. Income inequality was stabilised through redistribution, but the underlying economic forces driving wider inequality did not go away. Now, with the economy still becalmed and the coalition's priorities elsewhere, the prospects for closing income gaps are gloomy.

Income and health inequalities are very different, however. Income is a snapshot (albeit a very important one) while health inequalities tell us about our whole life-course. In this respect looking at health is more like looking at our lifetime earnings profile. The gaps we see today are a result of the accumulated experiences of decades, not the period of office of the most recent government. Indeed, over the long-term, Labour's time in office may well turn out to have a positive bearing on gaps in lifetime health and wealth, because many of the key childhood inequalities, such as gaps in GSCE attainment, did close modestly. It goes without saying that it will be decades before we know what impact this will have on earnings differences let alone health inequalities.

Meanwhile the widening gaps in life expectancy should be ringing alarm bells within the Department for Work and Pensions (DWP). Ministers are about to consult on rapidly accelerating the planned increases to the state pension age. When you look at the averages, it is hard to quarrel with the proposition that the pension age should rise so that future increases in life expectancy are split fairly between working life and retirement.

But widening health inequalities make the argument far harder to sustain. If men in Glasgow can only expect to live to 73 and the rate at which their life expectancy is improving is not keeping up with the national average, why should their pension come later? The dilemma is then exacerbated by inequalities of disability. In the poorest fifth of English neighbourhoods the average man can expect to become disabled at 55, a figure that is rising gradually but by less than the nationwide figure. Can we really expect these people to wait longer for their pension, or will solutions to such tragic concentrations of ill-health need to come first?

The DWP may not like to hear it but its next wave of reforms will be a non-starter, unless the formula for increasing state pension age is firmly anchored on prior improvements to healthy life expectancy in poor communities. The prospect of savings to the massive pensions bill should be an incentive for all corners of government to work together to prioritise closing the health gap.

A version of this post also appears on politics.co.uk

Homes for Citizens: the politics of a fair housing policy

The Fabian Society returned to the housing debate last week with an excellent debate at the launch of our collection of essays, Homes for Citizens; the politics of a fair housing policy.
Hillary Benn had his first outing as Shadow Secretary of State for Communities and Local Government – and judging by what we saw, Benn is looking like good news for progressive housing policy.

This is not the time for simple opposition to current housing reforms; but for imaginative and fairer solutions to real problems, across all tenures. These range from the scarcity of social housing, to the problems of an increasing unaffordable and often poor quality private rental sector, and to the thwarted aspirations of those who want but cannot afford to buy their own home.

These problems all require clear policy thinking – and we saw much of this at the seminar in the contributions of Brian Johnson of Moat housing association, and Duncan Shrubsole of Crisis. A flexible approach to tenure, allowing far more fluid movement between ownership and renting, is crucial if we are to meet people’s aspirations whilst providing real security and making the best use of stretched resources. That may mean, for example, that a social housing tenant’s rent increase as their financial position improves. But if we are serious about individual security and stable communities with a mix of tenures and incomes, we can never endorse a policy that forces these households to up sticks and leave their homes. Flexible rent should never threaten anyone’s sense of security in their own home.

There is also a desperate need for clearer policy thinking about the needs and rights of those in the private rental sector. Whilst there are many good landlords, there is very little obligation placed on those who – either through intent or simple lack of experience – do not offer a quality service. Disrepair and poor quality housing is all too common. Security, too, is a real issue. A six month tenancy offers no one a sense of stability in their own home.
But in addition to all this, policy must be embedded in a clear and principled political vision. The changes we need to make in British housing provision are wide reaching and challenging. Labour’s housing policy will not begin to be heard if it does not build on the common stresses and strains experienced by so many households, regardless of their tenure. Polling frequently shows that one in four adults, across all tenures, experience high levels of anxiety because of the seemingly ever increasing costs of all types of housing.

With so many households in this position, it is surely the right time to make housing a central pillar of Labour Party politics. And the aim should be not to speak to different group as if their problems were unique to the tenure they find themselves in, but to stress instead the interconnection of these problems. Better private and social rental sectors is not at the ‘expense’ of homeownership but a benefit to all, taking much of the heat out of the market for those that really do want to own their own home. There is no ‘zero-sum’ trade-off here – and no inherent conflict of electoral interests.

What we have instead is the potential for a wide coalition of interests – and potentially a deep consensus behind a far fairer approach to housing reform than is currently on offer. This, we hope, is the kind of message that Benn will take to heart, and it is a process of principled and practical change that we hope to have contributed to with Homes for Citizens.

James Gregory is a Senior-Research Fellow at the Fabian Society.

Tuesday, 1 November 2011

Vulture or dodo? - Expanding On Ed Miliband's Vision

A guest article by author Philip Monaghan. Philip argues that whilst Ed Miliband’s idea to reform the capital markets is well intentioned, it needs to be backed up with big and bold policy specifics if it is to boost UK prosperity

Philip Monaghan is a writer and strategist in the fields of economic development and environmental sustainability. He is the acclaimed author of the books How Local Resilience Creates Sustainable Societies (out February 2012) and Sustainability in Austerity (2010). Philip is Founder & CEO of Infrangilis


Whilst the response to the Labour leader’s conference speech has been mixed, Ed Miliband’s contentious attack on “predatory asset-strippers” and subsequent campaign against alleged overcharging by greedy energy companies has chimed with hardworking but struggling households across the social spectrum. Yet a nagging concern is that Miliband’s emerging remedy for the “fast buck” ethos of the market vultures is destined to go the same way as the dodo unless it is thought through a little more.

A call for “long termism” as part of a better capitalism is all well and good. But people will quickly want more specifics for this vision. To be credible it needs be able to withstand the charge it is anti-business. To be sustainable it must make best use of diminishing resources as we embark on a long and slow recovery.

As my new book sets out, core to this is an understanding that reform on how we get money to work for the people (as opposed to the other way around) is a complex situation that requires global and local interventions as well as national ones. It has to be about more than just letting big banks go bust next time or forcing the bailed out banks to lend to small businesses. These are necessary but not sufficient. Let me take two cases in point here, where there is a gap in the current thinking on key leverage points.

Reigning in the credit raters: firstly, at the global level, it is time to downgrade the racket of country credit rating agencies. Firms like Moody’s, Fitch and S&P are profit-motivated actors that have the power to make nations go bust. When they downgrade the credit worthiness of countries like the USA, Italy or France, the cost of borrowing goes up, this slows the pace of recovery from the recession but more than this hurts the poor the most. Yet it is these very same firms that gave AAA ratings to Lehman Brothers, with disastrous results, and so helped to create the global banking crisis in the first place. To solve this power imbalance and get big money working for the public good again we need to force Parliament to properly scrutinise and regulate this invisible but corrosive industry. As a first step, this must involve rating each of the raters according to the transparency of their decision-making, competency to operate and avoidance of conflicts of interest. But to work, this UK action needs to be part of a transnational effort with liked minded reformers in Europe and the USA, to ensure there are clear and consistent global rules.

Re-directing the £143bn of local authority pension funds to the green economy: secondly, at the local level, we need to make it much easier for local councils to access their own municipal pension funds for local regeneration schemes. It is legal to do so already, yet this practice is uncommon due to the regulatory red-tape and a lack of awareness and competency. We not only need UK government to make it clear that this is possible but that it is expected, and as such will be monitored. This should include the presumption that any low carbon regeneration projects (e.g. district reneweable energy schemes which generate clean power and a healthy profit) that meet their investment criteria shall take priority for these funds. As part of this, local ‘low carbon enterprise zones’ should be widely established through existing local authority planning frameworks (similar to the ones springing up in Manchester, Zaragoza and Baoding). This zoning involves nurturing clusters of low carbon business start-ups, including the promotion of local apprenticeship schemes to get young and unemployed people on the jobs ladder. Additional benefits of this intervention is that it make our communities more resilient against national energy price rises, and frees up some of the money earmarked for the coalition’s (well intentioned but delayed) Green Investment Bank for other frontline public services like social care and education that are under threat during a period of financial austerity across our town halls.

This is an aggressive and progressive approach to boosting the UK’s prosperity. It not only makes best use of scarce resources at a time when money is tight, it also provides a fresh injection of life into our flagging manufacturing base, whilst protecting the planet for tomorrow’s generations. Do not listen to the naysayers who will argue it is too difficult. Fighting and winning the Second World War was also difficult. This is all very doable, but only as long as we have the appetite for the fight and the collective nous to make it so – regardless of one’s political colours.





Monday, 31 October 2011

Decentralisation, pluralism and people power: who could possibly disagree?

Labour’s long tradition of participation, self-government and moral reform is being re-claimed by voices from all sides of the party. Decentralisation, pluralism and people power: who could possibly disagree? It’s one thing, after all, that members of Progress, Compass and Blue Labour all sign up to, in their different ways.
But politics is about trade-offs and priorities. Yes, Labour should adopt a ‘presumption of decentralisation’, but there are clear restrictions on how, and how far, this should be pushed. This is both because there are difficult tensions within the left-decentralist agenda, and also because decentralisation risks becoming a distraction from the huge national ambitions we need to embrace.
Our politics of the state must first be about the big, long-term challenges which only collective action on a national scale can resolve: growth and productivity; demographic change; carbon reduction; housing supply - and, for us on the left, a fairer labour market for the middle and bottom, reduced health inequalities and closing the gap in life chances. Labour’s years in office show what the state can achieve, and not just through tax-and-spend; for example long-term, sustainable frameworks for pensions provision and carbon reduction.
Britain’s public finance settlement remains overwhelmingly an issue for the central state too. To win again we need to provide cast-iron reassurances against spending profligacy, overseen by the Office of Budget Responsibility. This could take the form of a promise on the deficit, perhaps animated by a pledge that during economic recovery, taxation and spending would only rise in line with growth.
Creating this ‘cover’ with respect to the overall size of the state, would provide Labour, if we win, with the opportunity to radically restructure how public money is raised and spent. This could include greater devolution of public service spending, and perhaps the introduction of more local taxation. But most of the task is for the national state. Labour should re-write the tax-code to make it pro-green, pro-work, pro-asset stability, long-termist and progressive. We should also see what scope there is to integrate tax and welfare, to bind everyone into a common, more universal and contribution-based system. Nor should we any longer tolerate social security being a cause of widening inequality, but instead index state credits to earnings; an example of a small change from the centre which over decades will transform life chances.
So the decentralist agenda will need to jostle with an inevitable and desirable programme of central action. But there is also intense competition within the decentralist camp itself, with many visions and versions of the new empowering state. Decentralisation may be a guiding principle, but it is also a toolkit, and there are different objectives and consequences implicit in the tools we choose. Some decentralist solutions seek to disempower and by-pass local democracy, while others aim to strengthen it. Giving cash to service users and big payment-by-results contracts are both pluralist innovations, but their consequences are totally different. At every turn we must ask what means and ends we are pursuing and how they may rub-up against each other: personal control and responsibility? stronger democracy? professional autonomy? savings, efficiency and competitive innovation? enduring public institutions? community and civic life? and of course, better service outcomes?
Finally decentralisers on the left must be extremely wary that they are not widening, rather than narrowing, inequalities of power. There is always the risk that those with the nous and sharp elbows will act in ways that benefit themselves rather than the community at large. There is a fine line, for example, between creating aspirational inner-city schools that bind professional parents into comprehensive education and Michael Gove’s vision of free schools which seem to be all about giving privileged parents the ability to opt-out. The left’s version of power-to-the people must be about levelling-up, for those without control over their lives, not just giving more to those who do.
A version of this article appears in November’s Progress magazine

Tuesday, 18 October 2011

Free Schools for Social Justice: Opportunities for Twigg

A guest post by @eylanezekiel from @ON_School provides us with an insight into how the Education policy review debate is perceived from outside the Westminster bubble. The argument is that the debate about free schools provides a real opportunity for Labour to demonstrate a positive alternative.

For those of us outside the Westminster Village, and working around public services, we can see that change is needed. Those of us working in Education understand that Schools are an organ of community and recognise that we are connected to all aspects of the world that the families around us live in, and create.

The Tories defined the recent debate in the late 80s, and seem to have done so again, for the next cycle in policy in education. There are many fears about the future these changes will bring. The belief in free market forces, in public services, has opened the doors to poor outcomes for all communities in England.

In the Purple Book, Stephen Twigg talks the language of decentralisation and empowering local communities. If Labour is actually to own this space instead of talking about it in seminar rooms, it needs to better engage with the programme of reforms being undertaken by the Coalition Government.

In education, there is the perfect opportunity to do so. By engaging in the policy debate and pointing out how Labour values of equality, fairness and social justice can enhance them, Labour will actually be doing the job of offering an optimistic vision of the future. This is what states like Singapore are doing. They have watched our experiments in ‘Raising Standards’ through national strategies closely and learned that this is not the flag to gather round. After all, who would lower standards? In Singapore, they are moving away from a results-oriented culture, to practices that are more "holistic and balanced” - not because it is politically easy - but because it produces better outcomes for their children and their society.

At the moment the coalition are decentralising for the sake of it, more than likely so the market can come in. If Labour can engage to show how empowered communities can come in, it’ll be a long way to making that optimistic offer.

The debate must change. It is time for us to accept that we need to rethink of how we fund, organise and educate our kids. There are some key challenges, both national and local:

  • Build new governance and accountability arrangements for schools
  • Ensure that schools have the right to create a local curriculum
  • Build tools for mapping students' and schools' wider education ecology
  • Reconnect education with housing, economic, transport and environmental policies
  • Assess for competency not certification
  • Rethink Child Protection Policy
  • Rethink teacher education and build a programme of public engagement with education
  • Build school-university collaboration to democratize research
  • Develop and ethical code for the educational use of digital and bio-technologies
Prof. K Facer - Learning Futures - 2010


The Free School policy is a badly formed plan for change - however, it did create some exciting possibilities. We believe it is possible to answers some of these challenges in the city of Oxford - by building Oxford New School - or ONSchool.

ONSchool is an attempt to hijack this Tory policy, and put this movement of social entrepreneurship, back towards the principles of a healthy and fair society.

We have placed social justice and community values at the core of a Free School Proposal.

We have proposed a school that is governed through Cooperative Values, accountable, reflexive and transparent in its administration, innovative in the use of curriculum and technology, and in Collaboration with local schools and the Local Authority.

However, ONSchool is one proposal in a national policy picture that is bleak and uncertain. In order to succeed and thrive, ONSchool needs to be part of a wider debate that is able to offer a challenge to the domination of Academy Chain sponsors.

We need to be innovative and fast. Otherwise, the legal frameworks will be in place to make change impossible for another 15 years (see Sweden).

There must be other, fairer ways to do this. We are trying to do this in Oxford - but we need help - as the tide towards a more divisive education system working against us.

We need a clear, bold, innovative policy from Labour, and fast!

You can read more about Oxford New School here: http://www.onschool.org.uk/

Friday, 14 October 2011

Two tribes: Labour must reach out to the Lib Dems

Looking back on the second conference season of the coalition era, it's clear that the ‘two tribes' of centre left politics are in very different places on the prospect of working together. The overwhelming feeling at the Liberal Democrat conference was that the party stood ready to cooperate with Labour again any time the electoral maths permit. Meanwhile Labour is at a cross-road and divided on how it should approach the Liberal Democrats.

The party needs to reach out the hand of friendship by recognising that the coalition is a tragedy of electoral maths, rather than a betrayal of principle. The alternative will be significant Conservative gains in the south and the spurning of swathes of recent Liberal Democrat converts who could be persuaded to give Labour another chance.

At the first of a pair of conference meetings hosted by the Fabian Society and Centre Forum, Liberal Democrat delegates were overwhelming positive about working with Labour, despite feeling bruised by the rough-and-tumble of Labour's opposition tactics. Norman Lamb, Nick Clegg's key parliamentary aide, went as far as to call for ‘civilised dialogue' with Labour well in advance of a general election.

By contrast, a week later in Liverpool, there was deep division within the Labour ranks on how, or indeed whether, to engage with the Liberal Democrats. The immediate, visceral anger at the Lib Dems for getting into bed with the Tories may be starting to fade, but Labour remains sharply divided along more historic lines. Pluralists, those open to broad alliances of left and centrist political voices, are pitted against tribalists, who view Labour as the only legitimate vehicle for progressive politics and see Lib Dems, Greens and Nationalists as just competitors to crush.

Labour's tribalists risk making a huge mistake of electoral strategy. Election battles between Liberal Democrats and Labour are often bitter and brutal (with sins on both sides) but they cast too long a shadow over Labour's thinking, considering how infrequent they are. In almost every English constituency the battle at the next election will be between the Conservatives and either Labour or the Lib Dems. For both parties to prosper they need to return to the days of an informal anti-Conservative alliance.

The starting point is for Labour to recognise that in the minds of voters, the two parties are at least partly substitutable. Historically this has played to Labour's advantage with each party ‘lending' voters to the other to win marginal seats. These patterns of support go part of the way to explaining why, at the last election, Labour would have needed only a 3% lead over the Tories to win a majority, while the Tories' needed 11%, according to UK Polling Report. The changes to constituency boundaries narrow this gap, but only a little.

Take the Lib Dem marginals first. For decades, many instinctive Labour supporters have voted for the Liberal Democrats where they are the main contender. If this support were to unwind the Lib Dems could face electoral catastrophe, perhaps returning to a rump of 20 MPs. So far this does not appear to be happening. According to the Tories own polling, Lib Dem support is holding up a little better in Tory-Lib Dem marginals than it is elsewhere. A quarter of Labour sympathisers in these seats say they would vote Lib Dem, despite everything that has happened. It is hugely in Labour's interests to maintain this position. In the event of another hung parliament, whether the Lib Dems or the Tories take twenty odd seats in southern England could be decisive in determining who will govern.

Voters who backed the Lib Dems last time are also crucial in the far more numerous Labour-Conservative battlegrounds. Although pundits like to talk about ‘swing' voters, who switch straight between red and blue, Labour's fortunes are just as dependent on how many people vote for the Lib Dems and other minor parties. Nationwide, over the last two general elections more of Labour's lost votes went to the Liberal Democrats than to the Conservatives. That pattern may be beginning to play-out in reverse, with the polling in the Labour-Tory marginals suggesting that Labour is regaining a little more support from people who voted Lib Dem than Tory last time.

Labour's polling lead is soft, however. Hanging on to these disaffected Lib Dems will be crucial for Labour in the bumpy three-and-a-half years to the next election. Labour faces a choice about how to shore up this new found support. It can continue to present Nick Clegg as a latter-day Ramsay Macdonald, guilty of selling out the centre left and his own convictions. But this message of scorn and disparagement implies his voters were foolish and gullible in 2010. Is that really what Labour wants to say to them?

An appeal on these lines of course greatly diminishes the chance of Labour supporters lending their votes to Lib Dems in the south in 2015. But it is also very high-risk in the Labour-Tory marginals, given the likelihood that the raw wounds of the coalitions' first year will heal. Labour activists may see Liberal Democrat actions in government as betrayal and hypocricy, but who is to say the public will in three years time? Far safer, surely, to woo the Lib Dem vote? Labour should represent the coalition as a tragedy of electoral maths for both the tribes of the centre left.

Reaching out a hand of friendship is more likely to win back Labour's post-Iraq diaspora, rather than maligning the electoral choices voters made to punish Labour in power.