The year of the liberal moment

Part 2 of Paskini's Alternative History files. Part 1 is here.

Guardian Review of the Year, December 2010:

As an extraordinary political year draws to a close, one thing is beyond dispute. 2010 has been the year of the Liberal Democrats. It is easy to forget, however, how differently things might have turned out.

With hindsight, Chris Huhne's decision to reject a formal coalition with either the Conservatives or Labour looks obvious. But there were those in his party at the time who urged a "Rainbow Coalition", and even a few who argued for a formal Coalition agreement with the Conservatives.

In those first few weeks after the inconclusive election, the turning point was the deal which Vince Cable and George Osborne struck to make public spending reductions in the current financial year calmed the markets. The fears of those, including some in Mr Huhne's own party, who feared that the UK could go the way of Greece if there was no overall government majority, now seem laughable.

The Liberal Democrats cemented their reputation for economic competence with a devastating response to the government's Comprehensive Spending Review. David Miliband's crushing leadership victory over Ed Balls was followed by a decision to appoint Alan Johnson as Shadow Chancellor and set out Labour's plans for public spending cuts in detail, to head off accusations of "deficit denial". But after a weak and uncertain response from Johnson to the Spending Review, it was left to Vince Cable to make a passionate and authoritative case for an economic policy which put economic growth, not an ideological assault on the public sector, at the heart of Britain's economic recovery.

The dramatic showdown over the government budget, in which the Conservatives were forced to modify their proposals and accept policy after policy which the Liberal Democrats proposed, was perhaps the turning point. The list of concessions which the Liberal Democrats fought for and won - raising capital gains tax by 10%, keeping the 50p top rate of tax and forcing the Conservatives to abandon their plans to cut inheritance tax and winning a commitment to introduce a multi billion pound pupil premium to boost educational attainment for poor children and a major new green energy programme - established them firmly in the centre ground of British politics. The attempts of Education Secretary Michael Gove to claim that the pupil premium was in fact a Conservative idea was met with ridicule.

The negotiations over the Budget highlighted the dilemma for the Conservatives. Some argued for a dissolution of parliament rather than agreeing a deal with the Liberal Democrats which forced them to ditch so many of the cherished policies of the Right Wing. But polls at the time showed clearly that the electorate would prefer to see politicians compromising rather than inflicting another election on them. Like Gordon Brown in 2007, David Cameron decided not to take the risk of serving as Prime Minister for just a few months. With his party sinking in the polls, the window of opportunity for holding an election has now definitively passed.

Indeed, some within the Conservative Party suspect that Cameron has been making use of the need to secure confidence and supply from the Liberal Democrats in order to abandon some of his party's policies, and watched with suspicion as he praised the work of Liberal Democrats such as the party's Home Affairs spokesman, Nick Clegg.

But it was the student fee protests which, in Mr Huhne's words, showed that the Liberal Democrats had replaced Labour as the main party of the centre left. With tens of thousands of young people rallying behind the Liberal Democrat demands to scrap fees, the Conservative policy of uncapping student fees was in jeopardy.

The fateful decision of Labour leader David Miliband to agree a deal on student fees which led to them being doubled was praised by some newspapers as "a bid to regain the centre ground", but provoked fury amongst many of Labour's supporters. The vote showed Labour's divisions, with over fifty left wing MPs joining the Liberal Democrats in voting against, the majority following the Leader and abstaining, and a few such as Tom Harris voting with the government.

With all opinion polls in the past month now showing the Liberal Democrats in the lead, buoyed by substantial support from ex-Labour voters as well as centrist voters impressed by the party's role in moderating the Conservatives, the chances of a Liberal Democrat government seem greater than ever before. With both Labour and the Conservatives looking exhausted and divided, it is clear that 2010 was the year when the liberal moment came.

Displacement activity

Anthony Painter has an article on Left Foot Forward, which argues that Labour has spent the last year engaged in "displacement activity", and needs instead to set out a new vision and to articulate a different future.

The four pieces of "displacement activity" which Labour was apparently involved in was plotting against Gordon Brown, the general election campaign (!), the leadership election and campaigning against the cuts. And what Labour needs to do instead of this permanent campaigning is set out a vision of "an economy that provides good jobs in new creative services and industry; that re-defines public value and values for the post-austerity age; and makes real the promise of the Big Society as a new citizenship that tangibly improves communities and lives."

This might be the defining statement of the Pamphlet Labour tendency - a clever, articulate piece which argues the totally nonsensical proposition that campaigning in elections is displacement activity for the Labour Party and is a distraction from the key task of re-defining public value and values for the post-austerity age.

I would argue the opposite. Labour wins not "when it is the future" (whatever that means), but when Labour activists knock on doors and talk to people. Anything which doesn't contribute to that is displacement activity.

One of the biggest mistakes Labour made over the last few years was to undervalue the importance of grassroots campaigning, and to overvalue the kind of elite politics of student politics to think tank to special adviser to MP to government minister. A kind of vicious circle developed, where Labour drew its ideas from a narrower and narrower group of people, lost the expertise of people who knew how to win elections, and became ever more distant and out of touch in both the content of its policies and the way it communicated them. Correcting that mistake, talking to people and letting their experiences and ideas shape Labour's policies is absolutely necessary.

There is a kind of virtuous circle which the grassroots-led approach taps into. The more people that Labour activists talk to, the more people vote for us. More local campaigning increases the number of members and volunteers, and helps us find excellent new people from all walks of life to become Labour candidates. Better Labour candidates increase the number of people who vote and volunteer for us. And developing policies in response to conversations on the doorstep helps to root them in the real world.

I'm happy to help Anthony develop a vision about making the promise of the Big Society real and talk about ways of creating good new jobs, and I am intrigued to learn about what "public value and values for the post-austerity age" might mean. But let's have those sorts of conversations as a bit of light relief after the important business of a productive canvassing session.

Next year as the cuts hit home, going out and campaigning for Labour will be more important and rewarding than ever. Whether you've never done it before or (like me) you've done some but could do more, why not make a New Year's Resolution to cut out a bit of displacement activity and go knock on some doors?

Useful facts about economics for lefties

Two useful resources for lefties:

1. via Duncan, an IMF research paper on how increasing workers' wages is key to preventing future financial crises:

"For long-run sustainability a permanent flow adjustment, giving workers the means to repay their obligations over time, is therefore much more successful than a stock adjustment, unless the latter is extremely large.

Any success in reducing income inequality could therefore be very useful in order to reduce the likelihood of future crises...[for example] a switch from labor income taxes to taxes on economic rents, including on land, natural resources and financial sector rents...And as far as strengthening the bargaining powers to workers is concerned, the difficulties of doing so have to be weighed against the potentially disastrous consequences of further deep financial and real crises if current trends continue."

If we want to reduce the risk of another economic crisis, and are worried about the level of debt which households and government has, then the evidence here is that it is essential to strengthen the bargaining power of workers against investors (defined as the top 5% wealthiest).

2. The Realignment Project demolishes the arguments put forward by right-wingers in favour of the Laffer Curve:

"A progressive counter to this theory would be to ask – what about government spending, or in other words, social consumption? Because what the Laffer Curve leaves out, and this is endemic of conservative thought, is what taxes pay for. Keep in mind that the premise of the Laffer Curve is that revenues decline because people stop working when taxes eat up their income. However, if we think of taxes as financing the collective or social consumption of goods – what scholars sometimes call the “social wage;” think things like Social Security and other forms of government-provided income – then a decrease in after-tax wage income might be matched by an increase in the social wage, such that real income doesn’t change at all and eliminating any disincentive effect. Indeed, when we think about the actual distribution of income, taxes, and public benefits, for many people the change in income might actually be positive."

Specifically, government action to create jobs can create all kinds of positive benefits:

"By showing how the huge dead-weight loss of unemployed labor – both in terms of lost consumption and lost production – has to be included as an “opportunity cost” inherent in the laissez-faire model, the Baxter Cycle shows that government efforts to provide equal protection against unemployment can actually raise production and produce a more prosperous, more secure, and more just outcome.

And ultimately, this is why conservatives want to believe in an economic law that limits the size of government and proclaims the futility of expansion – because a government that can alter that balance between individual and social consumption threatens the assumed inevitability of the free market. And a theory that suggests to the contrary that the people have the ability to change how consumption is organized for the better is quite powerful weaponry in the rhetorical battle over taxation and government."

How the Lib Dems can still win elections in the future

I know that lots of people are predicting that the Liberal Democrats will get wiped out in the next elections as a result of their betrayals over fees etc.

But yesterday they managed to secure a massive win in a local by-election in Fareham, Hampshire, securing a swing of 27% from the Tories. I was interested in how they did it, and what this might tell us about their future strategy.

Their candidate, Nick Gregory, stood for election last year as a Tory. After losing to the Liberal Democrats in that election, he decided to become a Liberal Democrat. The key policy issue in Gregory's campaign was his opposition to the proposals to build 7,000 eco homes in the area. As he put it, "a Conservative vote is a vote for their plans to build 7000 more houses here".

The new homes, expected to be built between 2016 and 2026, will be subject to the toughest environmental standards ever set for new developments in the country. They must be specially designed so that they need less energy to run. It makes sense that the Liberal Democrats, with their commitment to solving the housing crisis and tackling climate change would, erm, campaign against them.

So any Liberal Democrats feeling worried about the future after their decision to go into Coalition with the Tories and break their promises should rest a little easier. They might have lost support amongst some people who are concerned with trivial matters such as education or the welfare state.

But they can still win elections when they get someone who used to be a Tory to be their candidate and attack the Tories from the right on housing and climate change.

Neal Lawson and the New Socialism

Neal Lawson, chair of leftie campaigning group Compass, explaining the "New Socialism":

"Unlike the Labour Party of the past, we now have to focus on the non-material things that foster contentment and fulfillment. We have to place much greater value on time, care, and cooperation, and aim at a different culture and identity of belonging, with deeper foundations than either production or consumption. We have to redefine "aspiration" to bring it into line with people's real hopes: not just to earn and own, but to reach one's full human potential, and live in a society that is safe, caring, and neighbourly. The old social democracy concerned itself with greater quantity, but the New Socialism's thinking is altogether more qualitative. "

Neal Lawson, chair of leftie campaigning group Compass, quoted in Mail on Sunday explaining the consultancy payments which he received from the organisation:

"Mr Lawson angrily defended the payments of £60,000 last year and £53,498 for the previous financial year, saying they were ‘a pittance’ compared with what he used to earn.

He said he was due the cash because he worked for it ‘24 hours a day, seven days a week’ and acted as Compass’s ‘fundraiser, the strategist, the talker, the thinker, the go-to-meetings person’."

*

It is easy to tell other people that they need to place a greater value on non-material things when you are paid a 'pittance' of £60,000 per year to do so. How is the "New Socialism" going to win over a majority of people when even the man who invented it doesn't believe in it?

Is John Rentoul right about child poverty?

John Rentoul:

"[Flight] said that policy designed to alleviate child poverty has a perverse effect in encouraging people on benefits to have more children than they otherwise would. This has been demonstrated by several academic surveys, not least a recent one by the unimpeachable Institute for Fiscal Studies. In December 2008 it published a paper entitled "Does welfare reform affect fertility?" It was barely reported in the press, for reasons in which social psychologists might be interested, because it found that, since Labour increased child-related benefits in 1999, "there was an increase in births (by around 15 per cent) among the group affected by the reforms"."

John Rentoul is the author of a series called "Questions to which the answer is no". Here's one for his list - "Are John Rentoul and Howard Flight right about child poverty?"

The Institute of Fiscal Studies research doesn't examine the question of whether "people on benefits", by which I assume he means people who are not working, were more likely to have children as a result of Labour's policies. Instead, it found that women who left full time education at the minimum leaving age, and who had a partner who also left left full time education at the minimum leaving age, were more likely to have children as a result of Labour's reforms, particularly the financial help provided by tax credits.

The IFS report also noted, however, extensive research which showed how Labour's reforms helped more lone parents into work- and found that lone parents were not more likely to have children as a result of the reforms. And many of the women with partners who were more likely to have children were in paid employment - the IFS research didn't look at "people on benefits" as a separate group, and aimed to examine the effects of Working Families Tax Credit. I know that the benefits system can be complicated to understand, but it shouldn't be that hard to work out that some of the people receiving Working Families Tax Credit might be families who are working.

To summarise the research accurately - Labour helped families, particularly those on low incomes, with extra cash payments. These payments increased the number of lone parents in work, without incentivising lone parents to have more children. These payments and extra help did incentivise some couples to decide to have children, and in some cases this involved the mother giving up work and staying at home and looking after the children while the father went out to work.

Despite the recession, child poverty actually fell between 2008 and 2010. Rentoul may believe that the new government should abandon one of the most effective anti-poverty programmes in the world. But financial support to reduce poverty is part of the solution, not part of the problem.

What's wrong with the New Socialism

John Harris and Neal Lawson have written a very long article on the Compass website claiming that it is time for "The New Socialism".

After painting a gloomy picture of the current situation, they write:

"So where is the light? It comes from two places: from leaders, and from people. Both tell us that it is both feasible and desirable to renew social democracy - socialism even - but that renewal must be truly transformative. It cannot be about a change of direction, but a paradigm shift to a very new form of left politics.

Let's start at the top."

No.

If you want to talk about a New Socialism, then absolutely and fundamentally you do not "start at the top". Apparently "among writers, thinkers and activists outside parliament, a new socialism has been cohering for the best part of five years". What Harris and Lawson don't realise is that this is the problem, not the solution.

After paragraphs of praise about how imaginative they and their friends have been, with a bit of sucking up to Ed Miliband, Harris and Lawson don't discuss how ordinary people have been involved in the development of the new socialism, beyond an anecdote about how managers and cleaners alike would like to get home from work in time to read bedtime stories to their children.

This article, and Lawson and Harris' entire approach, could do with a big dose of "show, don't tell". They tell us about how the New Socialism will be an alternative to the crisis of social democracy, but they don't show any evidence for this. Jon Cruddas, who has been involved in developing all this stuff, was in a tough re-election campaign earlier this year. The logic of Harris and Lawson's analysis is that his campaign should have been about an alternative to materialism which emphasises caring and sharing, action on climate change, electoral reform, user involvement in public services and making the tax case for the public sector. Suffice to say that none of these were major features of Labour's campaign in Dagenham and Rainham.

The process of grassroots campaigning, of trying to persuade people, involving them and reshaping ideas and policies in line with their priorities, is absolutely vital. Rather than being a top down project, where a few influential people persuade the leader of the Labour Party to adopt their ideas, New Socialists need to get out into neighbourhoods across the country - building from the roots, getting their power by persuading people to vote from them, rather than from pamphlets.

No one should take seriously claims that the "New Socialism" is a better electoral alternative to social democracy/New Labour/Labourism until leading "New Socialists" actually make use of these supposedly popular arguments and win elections with them. I'm sympathetic to some of the ideas which Harris and Lawson put forward. But until the New Socialism is shaped by people at the grassroots, rather than just being a project of "writers, thinkers and activists", then it is at best irrelevant and at worst harmful.

Questions to ask your Labour councillor

Following on from the previous post, here's five questions for Labour councillors to reflect on, and which Labour activists could ask their councillors. The intent is not to catch anyone out, but to get people thinking about how we can all work together.

1. How does the council budget which you've voted for reflect the priorities of Labour supporters and activists?

2. Has your Labour Group discussed and developed a political and organisational strategy for campaigning against the cuts? How can non-councillors help support this work?

3. What has been the impact of central government cutting council budgets by 28%or more, as George Osborne has done, rather than 20% as Alastair Darling planned to do?

4. Which services have been saved by setting a legal budget rather than refusing to set a budget and forcing the section 151 officer to do so?

5. What advice should I give to people who are angry about the cuts so they can get involved in community campaigns and make a difference?

Labour councillors and cuts

In recent days, there has been some comradely discussion between lefties about what local councils, and specifically Labour councillors, should do in response to the cuts.

Leftie activists make helpful and informed points such as “on a point of principle, Labour councillors should resign rather than make any cuts and if you don’t agree then you are a sell out”, and Labour councillors make inclusive and coalition building points such as “you don’t know what you are talking about and I know better than you about why these cuts have to happen and aren’t my fault”.

Let’s try and find some consensus.

The leftie activist case argues that the duty of local Labour councillors is to resist the cuts, through a variety of strategies such as increasing borrowing rather than making cuts, transferring assets to community groups, resigning en masse and forcing central government to make cuts, and building a mass movement of resistance. This is inspired by the example of Poplar, Liverpool, Clay Cross and other past socialist heroes.

The councillors’ case is that the law is quite clear. Councillors have to set a legal budget, or the council’s designated section 151 officer will do so. Refusing to get involved with making cuts won’t stop them from happening, it will just ensure that there are bigger cuts which reflect the priorities of an unelected bureaucrat. People who are angry about the cuts shouldn’t be shouting at or denouncing councillors, but should focus their anger on the Tory/Lib Dem government which is responsible for these cuts.

In summary, the activists are Wrong but Romantic, the councillors Right but Repulsive.

The law is indeed quite clear, and was written to stop all the clever wheezes which Labour councillors came up with in the 1980s to avoid making cuts. In addition, councils don’t even have the option of raising council tax in the short term. The timescale is also very tight. Councils won’t know their final funding allocation for next year until December, and will have to have a budget in place by around February. It’s easy to talk about “building a mass movement to fight the cuts”, but setting one up in twelve weeks is going to be a bit of a stretch, and it is much harder to build a national anti-cuts movement against cuts in local government spending then against, say, student fees – by definition the issues in each area are different.

There is no point in denouncing Labour councillors for making cuts this year. Sweeping moral statements about the immorality of making cuts achieve literally nothing except antagonising people. The position of calling for “no cuts” is not credible – is it really the case that lefties should oppose every single cut to the number of senior managers that a local council employs, for example?

This is not to let councillors off the hook, however. The specific solutions which leftie activists call for might not be credible, but they are articulating real and important concerns. Labour councillors need to do more than just work out how to minimise the impact of the cuts and then vote for a budget which adds up. Being a councillor is a political role, not a bureaucratic one.

Specifically, councillors need to make sure that they don’t get caught up in the town hall bubble. Local government finance is a very, very dull subject, most people don’t really know the difference between, say, a councillor and MP, and lots of people are going to be furious when they feel the impact of these cuts. There’s no particular reason in the abstract why people will understand the need for cuts, or understand why councillors chose to make the cuts which they did.

So councillors need to be out in the community, explaining their decisions to people, listening to their ideas and concerns, making sure that anyone can understand the dilemmas which they faced and – crucially – helping to organise people who are angry about the cuts to help them do something productive.

Some specific ideas:

- Labour Groups should allocate time in their group meetings to discussing their political and organisational strategy for responding to the cuts. This can include ensuring that they organise speakers at residents’ associations and community groups, agreeing lines to take, making sure leaflets explain what is happening and why. Develop allies – a message that the council isn’t to blame for these cuts and people should focus their anger on the government is much stronger if made by people who are not councillors and who are well known as anti-cuts campaigners, champions for elderly people and so on.

- As part of the budget, a paper should be published which shows the difference between a 20% cut in local government funding (as proposed by Alastair Darling), and the 28%+ cuts imposed by George Osborne. This shows exactly which services are being cut as a result of the Tories and Lib Dems. In Ealing, for example, the council would have been able to reduce spending by 20% over three years without any cuts to front line services. But because Labour lost in May, millions will be cut from front line services.

- If possible, the cuts which would be required by the section 151 officer if the council refused to make cuts should also be set out. This is a powerful argument to make against those who say that councillors should resign rather than make cuts (“if we didn’t take these decisions, here’s what would have happened”). But also, it is a point of accountability. The argument “we had to make these cuts because otherwise the section 151 officer would have done these terrible things” rather disappears if it turns out that Labour councillors were voting for a budget which would have been identical to the one imposed by law.

- Labour councillors need to try to create more opportunities to share ideas and learn from each other, and to adopt good ideas from party members, supporters and others. There’s probably scope for a website which could help with this – I note that the LGA, which presumably should fulfil this role in part, isn’t doing so.

- Above all, give people hope and a chance to be involved. If Labour councillors make the argument “we had to do what we did, these cuts are inevitable, here’s why your alternative ideas are nonsense, if you want to oppose the cuts you should go and deliver my leaflets”, then they shouldn’t be surprised if people choose instead to join up with local anti-cuts campaigns and denounce them as sell outs. Councillors need to show how they are on the side of people angry about cuts, and work as equals with them on organising to build an alternative. Be prepared to make concessions, show people how their priorities are reflected in the decisions taken, help set up clever and interesting ways to organise anger against the cuts.

I know that there are all sorts of examples round the country where Labour councillors and activists are working well together and doing all the above and more. But I hope the above principles are ones which both leftie “no cuts” activists and councillors who have been working for months to minimise the impact of cuts can see the advantages of.