From “Labour Hame” 2011
We’ve been struggling through financial crisis for three years now. And we will, economists seem to agree, live with reducing living standards and significantly constrained public expenditure for a further decade, perhaps two. That prospect significantly weakens the main left and centre policy tool of the past fifty years: using public expenditure to address social problems. So what does progressive politics do in a time of no money?
All parts of the left need to address that question. (And ‘left’ encompasses at least parts of Liberal Democrat, SNP, even Conservative parties – though their own pre-occupations may regrettably prove more diverting). For Labour, that question, daunting though it is, should be welcomed with open arms. It means big thinking – thinking through ways to change the rules of the game, change some of the ways in which our society and economy work.
Let me begin an agenda for that thinking. Here are four things:
Create new work.
The fundamental issue in a time of no money is to open more opportunities for more work for more people. Shopping and banking are our two key industries right now, propped up by high property prices. All are in decline. And their revival is no way to build a better economy in which there’s good work for everyone. We’ve tried things – selling our companies to big foreign investors, bringing in the Chinese, special business tax breaks, bonfires of regulations and straight subsidies from the taxpayer to business. They haven’t worked well and the more of the same isn’t good enough. The New Economics Foundation (www.neweconomics.org) has been looking for better ways. With most new work created in small enterprises, they place emphasis on renewing the local economy, creating and retaining wealth close to home and stopping its extraction by national and international interests and monopolies. That will support sustainable and the long-term prosperity, as will changes in public procurement to create new local markets and changes in taxation to favour long-term productive investment, not predatory short-term gambles.
Break down vested interests.
Our economy is hidebound because our society is hidebound. Rigid powerful interests defend their own wealth rather than the good of us all. They entrench inequality and prevent innovation; both drain and hinder our economy. If sustainable prosperity for all is to be achieved, progressive politics must dare to devise a focussed and deliberate programme of challenge and open reform for the City of London, our far-from-free foreign-owned Press, the Private Schools, many of the Professions, big business, even the Civil Service.
Reform our constitution
(No, nationalists, that’s not what you think. It’s much more important than ‘barbed-wire-at-Berwick’.) Breaking open the vested interests will allow reform of the ways in which our society and economy are constituted, allow room for legislative reforms which promote equality, enhance freedoms and underpin social cohesion. We can devise legal changes to the way large companies are constituted to give workers and customers an equal say with that of shareholders, changes to give us all more control over the money which banks hold and lend on our behalf, changes to the courts to give access to justice to the poor as well as the rich, changes to the governance of press and media so they serve everyone’s interests, changes to constitute and guarantee the independence of local government.
Make public services personal and local.
All governments endeavour to make public services more relevant and more cost effective. For the left, I suggest there are two governing principles. First, public services are public and they must be shaped by public interest rather than market practice. And, second, because all public services except social security transfers are delivered locally, they should be governed locally – both as a way to ensure public accountability and, by removing a tier of government and relating services to each other as well as the real needs of real people, to deliver better value for money. That means health run locally, education run locally, police run locally, social care run locally – creating the situation where it is a promotion to rise from MSP or MP to the local leadership of a city. Audit should be to the community not to professional auditors (with their own vested interests).
In a time of no money, it is deep structural and cultural reform to change the way we do things, which will provide the bedrock prosperity for the future. And provide a coherent political platform to counter the nay-sayers and blame-layers.
Of course – there could be more money in the public purse than there is if everyone paid the tax appropriate to their means. We need a common European level of business taxation to prevent the absurd dutch auction in corporation tax which Ireland indulged in to its detriment and which the Scottish government now propose. It doesn’t create new jobs – simply poaches them from elsewhere – and excuses business from engaging with the public good. The yet more blatant forms of tax haven must be closed down through wider international action. And, one more constitutional change, the outdated defence of ‘tax-payer confidentiality’ at home must be removed from all except basic rate PAYE payers – paying tax is a legal contract to society which should be open to scrutiny just as any other legal obligation.