The road ahead for Labour

This article is from the October issue of Total Politics

If Ed Miliband has learnt one lesson over the summer break, it’s that boldness can reap rich rewards. He has secured his position and killed off destabilising Westminster whispers, transforming the political dynamics of the Labour conference. Yet while the Labour faithful will be now more hopeful for their future electoral prospects, the party also knows that its road back to power will be long and hard, and that it has only taken the first steps.

Until recently, Miliband has appeared to suffer from excessive caution and incessant calculation. ‘Hackgate’ put paid to that. By getting ahead of the story and making audacious, principled demands of both the prime minister and the Murdoch empire, he won over a number of MPs in his party who didn’t vote for him, as well as journalists in the lobby who had previously written him off.

Similarly, his measured tone in the aftermath of the riots across England, and the success of his call for an inquiry into their causes and consequences, appeared to show him leading political debate, not following it. Making the running is the hardest thing an opposition leader can do. Miliband showed he was capable of setting the political agenda.

Beneath the headlines, however, the untold story has been the quiet emergence of stronger Lib-Lab ideological and political co-operation. Both parties relished the confrontation with News Corporation. Historically liberated by powerlessness to take a critical stance on cross-media ownership, the Liberal Democrats have long considered Murdoch’s corporate media and political power inimical to liberal commitments to pluralism. Labour has turned Miliband’s bold seizure of the moment into a wider critique of symbiotic concentrations of power in the media, public authorities and the commanding heights of the corporate sector. Each party has found a progressive voice on a subject previously thought off-limits in mainstream political discourse.

Also, the recent turmoil in the global economy has elucidated different responses from the coalition partners. While Conservative briefers have been flying kites about cutting the 50p rate of tax and supply-side deregulation, Lib Dem ministers have focused on quantitative easing, the structure of the banking system and how to secure patient finance for business growth. Labour policy chiefs report greater congruence with their Lib Dem counterparts on these issues, despite the gulf that still divides them on fiscal policy. And on the riots, it was Labour and the Lib Dems who were on the same page with their responses.

These may be straws in the wind, but the space for ideological conversation between Labour and the Lib Dems has widened since the prospect of a deeper centre-right realignment disappeared last May. Labour and Conservative tribalists share a certain hubris about the collapse of the Lib Dem vote in the May elections and the failure of the of the AV referendum, but no credible psephologist would say that either party was on course to return to majority power, or that the era of coalition politics was over.

The Lib Dems are a strongly democratic party. The grassroots membership exercises considerable influence over policy. Its members are largely supportive of the party’s entry into the coalition government, but to the left of The Orange Book-inspired leadership. The Social Liberal Forum is growing in stature and power, and can look to influential supporters in the House of Lords. This is where alliances between Labour and Lib Dems can have parliamentary consequences, as the government realised early on with its NHS and police reforms. The fertile intellectual exchange between the liberal and Labour traditions that produced some of the 20th century’s finest progressive achievements may yet return to bear new political fruit.

Over the longer term, however, Labour’s prospects depend critically on whether it can set out a new, post-Blair/Brown strategic direction for its political renewal, secure economic credibility and connect with changing currents in British society that are reshaping the electoral landscape.
While the policy review process toils away behind the scenes, the ‘two Eds’ have a huge task to show not just that Osborne’s Treasury is getting the recovery wrong, but that they have learnt the right lessons of their time in Brown’s Treasury.

Chief among these must be the need for the economy to be restructured away from debt-financed private consumption, housing market bubbles and over-reliance on the City, towards wealth creation that secures higher real wages for the broad mass of the population and a sustainable trade balance.

Rethinking political economy is the key to regaining credibility on the public finances. The deficit was due to a calamitous drop in tax receipts, as the collapse in the housing market, business failures and the City crash revealed the weak, thin base of government revenues. To ensure greater future resilience, and to prepare for an ageing society, the country needs new sources of wealth creation, to broaden its tax base and back public service and welfare reforms that support full employment. The VAT rise is here to stay, and tough choices are needed to prioritise public spending on services that increase the employment rate. Public service reforms must produce greater efficiency and cost-effectiveness if demographic pressures and popular expectations are to be met.

Labour needs a fresh ideological agenda alongside an electoral strategy that widens its base of potential support, and must appeal ethically to younger, graduate and liberal voters, while simultaneously protecting cherished institutions and ways of life. It must break free of the psephological straightjacket that trades off caricatures of ‘core working-class’ and ‘swing middle-class’ voters. The vital economic coalition is between the expanding professional class and a resilient ‘working class’ that is increasingly female, part-time and service sector.

The party must also confront the cultural dimension to modern politics. IPPR research analyses the British Values Survey and identifies three core values dispositions: 41 per cent of voters are ‘pioneers’, globally-focused, innovative and self-actualising; 28 per cent are ‘prospectors’, valuing success and status, ambition and the esteem of others; one third are ‘settlers’, with a strong need for rules, localism, are wary of change, and seek security and belonging. Crucially, these dispositions cut across different classes and regions.

Miliband faces a political juncture where the future is genuinely up for grabs. Unlike in the 1980s, the Conservatives seem capable of no more than tactical manoeuvres in response to volatile public opinion. That provides a historic opportunity: Labour can not only win power, but also transform politics. To do so, it must understand the new sources of energy in society to recast its ideological agenda and redraw the electoral map.

Nick Pearce is director of IPPR