Starmer's survival chances improve

An intervention by deputy leader Lucy Powell makes it more certain that there will be no leadership challenge to Keir Starmer after what are claimed to be an inevitably catastrophic set of election results for the prime minister in May.

Media commentators have been talking about 'when' Starmer goes, but Labour has little to gain and much to lose from a divisive election contest when there is no clear successor.   For the media, of course, driving a prime minister from office is the ultimate trophy.

Of course, a delay would enhance Andy Burnham's chances of getting elected as a MP and Lucy Powell is aligned with him.

Starmer has seen a little recovery in his ratings through his adroit handling of the conflict in the Middle East and, perhaps more important, has won praise within his own party.

Quite why Starmer is so unpopular is an interesting question.  He is doing a serious job in a serious way, but do voters want a prime minister who is an entertainer or celebrity? Surely Boris Johnson was a warning against having a buffoon in the job?

But then all recent prime ministers have had highly negative ratings.   Voters expect more of government at a time when it is able to deliver less.

I see that the Sunday Times is splashing a poll today that shows cabinet ministers losing their seats either to Reform or the Greens.   

A once good paper has degenerated into a right-wing propaganda sheet, but it should be pointed out that there is no general election tomorrow and that people approach the task of voting in a general election differently from responding to a mid-term poll.

Labour's fiscal dilemma

A distinguished group of economists has written to the Financial Times advising against further spending cuts and any return to austerity: https://www.ft.com/content/4b0d4ec3-cfb8-44fa-93a6-4474866dc917

They advise that further taxation is going to be necessary, but beyond stating that it should fall 'on the broadest shoulders' do not specify where it might come from.

Meanwhile a discussion on BlueSky showed Labour supporters disillusioned with what they saw as a Labour government offering more effective implementation of Tory policies.

Some argue that the fiscal rules should be abandoned, referring to what has happened in Germany.  However, that country's ratio of debt to GDP is in the low sixties in percentage terms whereas in the UK it is not far short of 100 per cent.   Abandoning the fiscal rules would certainly force up the cost of government borrowing.

The cost of benefits has risen by something like 40 per cent in real terms since 2013 and is projected to rise further despite recent policy changes: harsh on the most vulnerable or tinkering at the edges, depending on your perspective.

Labour has to exert some fiscal discipline, otherwise the cost of the welfare state will become unsustainable.  Clearly many of those unable to work need more systematic support to enable them to do so.

The left's answer is a wealth tax but the Government has no mandate for that, it would deter investment in the UK and the really wealthy would find ways of evading it.

Personally I would have increased fuel duty, a small increase would have yielded significant revenue and would have been bearable.  I would also have reversed Jeremy Hunt's unfunded cuts in employees national insurance, but Labour boxed itself in before the election.

Labour faces some difficult choices, but a large majority means rebellions will be embarrassing rather than fatal.

Why Rachel Reeves is an economist and I am not

My formal training in Economics is limited to a one year course in my undergraduate degree, admittedly a very comprehensive one,   I later had the good fortune to teach a module on the Making of Economic Policy with the late, great Nick Crafts who courteously pronounced me 'economically literate'.   My economics education was rounded off my teaching a third year PPE economic and political theory module with Ben Lockwood.  So I picked up a lot of economics on the hoof, so to speak.   But I wouldn't call myself an economist.

Rachel Reeves holds an upper second in PPE from Oxford.   She also holds a MSc in Economics with merit from LSE, not an easy programme I am told by people there.   For me, that is enough to count as an economist, leaving aside time working at the Bank of England.   At least she didn't leave a conviction for assault off her cv.

A lot of complaints directed against the Budget have come from the hospitality industry.   However, if the town in which I live is any way typical we have seen a proliferation of coffee shops, cafés and gastro pubs.  Rather than viable businesses being threatened, it seems to me that we have a structural overcapacity problem.

The more general issue here is the right-wing backlash against the Labour Government, culminating in a ludicrous petition for a general election instigated by the very people who defended the narrow majority for Brexit.  Indeed, a petition calling for a second referendum that was signed by four million was ignored (not that I signed it personally).

One would expect distortion from the right-wing tabloid press, but their audience is ageing and declining. Sky's criticisms are perhaps predictable.   More concerning is the BBC's stance which, as personified by 'Tory Laura', thinks that 14 years of accumulated problems can be solved in four months.  The dispute over APR has been illustrated by sentimental interviews with farmers (I have an outstanding complaint against BBC Radio 4).  Even more disturbing are the pronouncements of 'co-president' Musk who uses his social media platform to demand the resignation of the British prime minister.

When I was young I held to the naive view that politics offered the possibility to make things better, provided issues were debated and policies backed by evidence.   Unfortunately, I seem to be handing over a much more sinister world to my gteat-granddaughter.

What are the lessons of 1992?

A young relative told me yesterday that after Keir Starmer reduced Labour's planned funding for green investment he will vote Green rather than Labour.  There were similar responses from Radio 5 listeners.

Last week The Spectator had an interesting article on the Green threat to Labour,  Apparently, local polling shows that the Greens are just four points behind in Bristol West, the seat of the shadow culture secretary.

In many ways I think that Labour could also lose some votes to Reform in red wall seats for rather different reasons.   Other Labour voters may stay at home and I think that turnout will be down despite the importance of the election.

Keir Starmer was caught between a rock and a hard place.   He was open to charges of fiscal irresponsibility.   The public finances are in a shocking state.   Conservative plans for public spending allow for only very small real increases when the problem of 'broken Britain' is all too evident.

Reference is quite often made to the surprise Conservative victory in 1992.  Circumstances were different and it is easy to draw the wrong lessons.

I have contributed a chapter to a forthcoming book on John Smith and my concluding paragraphs are relevant:

'One lesson that has lodged itself in the Labour Party’s collective memory has been the myth of the shadow budget.   It is thought to demonstrate that the party must be very cautious about any proposal to increase taxation.  However, the Smith legacy is more complex than that.   Reassuring the international financial community, the City of London that Labour offered a safe pair of hands ‘tended To squeeze out anything too radical or distinctive, diminishing any positive sense of what the Labour Party stood for … Labour risked being portrayed as a pale imitation of the Conservatives.’ 

Labour runs that same risk today under Keir Starmer.  Of course, any new Labour government would have a difficult economic inheritance: low growth, poor productivity and historically high levels of taxation.   It is not unreasonable to reassure business that there would be a more constructive relationship and less erratic policy-making than under Boris Johnson or Liz Truss.  However, Labour has to offer something beyond a more competent version of the Conservatives.  Policy commitments are continually being diluted.   A policy that has become emblematic of this tendency is the refusal to contemplate removing the Conservative Government’s two child benefit cap.   Potential Labour voters faced with an offer of prudence and business as usual may decide to vote for the Greens or not vote at all.'

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[ii] Stuart, John Smith, p.194.

Will Labour back PR?

Britain in a Changing Europe held an interesting webinar yesterday on the recent elections with contributions by Sir John Curtice, Rob Ford, Spectator political editor James Forsyth, and Paula Surridge.

One topic that came up was whether Labour would move to advocating PR.  Labour was characterised as too weak to win, but too strong to fail like other European social democratic parties.  

It was thought that Labour could not win an overall majority, given Scotland, but could form a minority government with Scottish Nationalist, Plaid Cymru, Liberal Democrat, SDLP, Alliance and Green tacit support.

No one would enter into a coalition with the current Conservatives and even the Democratic Unionists were unlikely to countenance a new confidence and supply agreement.

Labour was likely to pile up big majorities in metropolitan areas which were of little use in overall terms.  PR might therefore seem attractive, although the attitude of the trade unions would be crucial.  In the longer term, PR could damage Labour as left leaning voters would feel more able to support the Greens than in the binary politics produced by first past the post.

As always, much depends on the form of PR adopted.   

Voters and parties have divergent values

This study of the social and economic values of MPs, party members and voters is clearly very important and will repay careful reading: https://ukandeu.ac.uk/wp-content/uploads/2020/06/Mind-the-values-gap.pdf?fbclid=IwAR2ryXxUAGq0l5xZaF3CBAVh8emmG1sY_89FsXKMP7YkIsioiqhcVnCnCAE

One key take home message is that the study shows the serious problems both parties have with the electorate, albeit not on the same issues.  Voters are more aligned with Labour on economic values and with the Conservatives on social values.

'The fact that Conservative MPs so strongly reject widespread perceptions of structural unfairness – far more strongly than grassroots Conservative Party members and activists – hints at the challenge the Johnson government will face if the shock of Covid-19 triggers public demand for economic redistribution and reform'

'The Conservative Party won in 2010 and 2015 by insisting on the need for austerity and cuts that chimed with the views of MPs, activists and members on the role of the state, and made sense to a lot of voters. If, however, a sense that "there is one law for the rich and one for the poor", and that ordinary people who have done nothing wrong are being let down by the government, begins to take hold, then the gap between Conservative Party people and voters as a whole could prove deeply problematic for the Johnson government.'

'On the other side of the fence, Labour’s struggles over Brexit between 2016 and 2019 were arguably symptomatic of a disconnect on a wider set of social values between its MPs, activists and members, on the one hand, and many of its potential voters, on the other.'

Labour still lacks new growth model

Labour still lacked a new growth model argued Professor Colin Hay at an End of New Labour? workshop at the University of Warwick last Friday. This would involve the channelling of credit out of the housing market to targeted export oriented sectors of the economy. An alternative account to the crisis of debt in terms of a crisis of growth could just about be detected.

It was difficult to see how a model of privatised Keynesianism (reliant on debt to fuel growth) could be resuscitated. High levels of private debt had increased the sensitivity of demand in the economy to interest rate variations.

There was a large interest rate spread between the LIBOR wholesale rate and mortgage and commercial lending. This functioned as a form of bank recapitalisation and was a drain on consumer demand and investment.

A manufacturing rebalancing of the economy would be very difficult to achieve. There was a need for downward pressure on the actual cost of borrowing. One could politicise the spread of credit, shaming banks. The Bank of England should be made responsible not only for base rate but for monetary policy more generally. Mortgage holders were likely to respond positively to such a strategy, but it was not sufficient.

Andrew Gamble asked how, given the extent of financialisation and individualisation, could this be reversed politically? How could the state change the supply of credit, what capacity would it need?

Peter Burnham raised the question of whether government needed a growth model. Jim Bulpott would have argued that it need it politically, but not economically. As far as manufacturing was concerned, the value chain was broken and three-quarters of what was left was in workshops employing small numbers of workers. One could not impose rates on any bank.

In summary the discussion suggested that there was no easy route out of the current crisis.

100 days to go

I got an E mail message this morning from Chris White, the prospective Conservative candidate for Warwick and Leamington, reminding me that it is 100 days to the expected date of the general election on May 6th. Chris also points out that there has been only one change of government in Britain in the last thirty years, something he is hoping to change by bringing the constituency into the Conservative column once again.

Although Warwick and Leamington was not selected as one of the homes of 'motorway man' in a recent article in the Financial Times Chris may find some of them as he goes door to door given the proximity of the M40. 'Motorway Man' replaces 'Worcester Woman' as the new median voter. A typical motorway man is a middle aged middle manager in industry from a Labour voting background who is materialistic in his outlook. He lives with his family in a modern house, perhaps on reclaimed land, so close to a motorway that it may be in earshot. Read more here:

Motorway

Chris may take heart from the latest British Social Attitudes survey which suggests that the number of Conservative identifiers now exceeds the number of Labour identifiers for the first time for many years. Moreover, voters' attitudes seem to have shifted to the right on economic issues, but not on social issues which is consistent with Dave's stance (leaving aside his rather retro views on marriage): Attitudes

As a voter who has not yet made his mind up how to vote, I am surprised that so many Labour supporters seem to think that Gordon will win or that there will be a hung Parliament. Dave does need a big swing, even if the Conservatives are doing better in key marginals than elsewhere. But will voters really opt for another five years of Gordon Brown just to keep Dave out? They may not be enthusiastic about Dave, but they are even less so about Gordon.

The election may provide an opportunity for the Liberal Democrats and other small parties, but whether they can seize it remains to be seen. An interesting article has appeared in the latest Political Studies on the BNP vote which confirms that Labour is very vulnerable to them and also that UKIP voters, although sometimes overlapping, are generally different in their characteristics and outlook from BNP supporters.

Doubting Dave

It is sometimes argued that the only thing Dave Cameron cares about is getting the Conservatives back into office. There is no doubt that he does genuinely believe that the Conservatives would do a better job than Labour and some people might think that was not too difficult.

I always thought that one of the keys to understanding Tony Blair was his religious beliefs, caught so effectively in Private Eye's 'Vicar of St. Albions' series which also featured characters such as 'Mr Prescott from the working man's club.' Blair still makes the occasional appearance as head of an ecumenical organisation called DAFT.

In my view Blair was the most devoutly religious prime minister we have had since Gladstone. Sensitive biographers like Antony Seldon, surely one of our outstanding chroniclers of modern British politics, picked up on this. Students were always more sceptical, but I think that some of his behaviour on Iraq could be seen as a misconceived moral crusade.

Dave Cameron is a doubting high church Anglican, but I think that some of the ideas he really cherishes stem from his beliefs. Whether they make good policy is another question.

As a general narrative, Dave emphasises the 'broken Britain' thesis. I would agree with him when he says that people should not expect government to sort out all their problems and that local communities should do more for themselves. However, that is easier in some communities than others and often a lot depends on one or two dedicated individuals with leadership qualities who aren't available everywhere. And if Britain is broken - and I am not sure that I like such negative messages - I am not sure that government can put it back together again (although its actions can have positive or negative effects).

More specifically, Dave wants to support marriage and stable families. In his own life, he has experienced challenges in his family which would test most people. I am not sure I would have coped as well as he has if I had experienced similar circumstances, particularly if I was in public life.

The Conservatives want to use the tax system to support marriage. Personally, I can't see a lot of difference between a long-term stable partnership in which two people are married and one in which they are not. To be fair, Dave's definition of marriage includes civil partnerships and I am quite sure that he is not pursuing any kind of anti-gay agenda.

Some research has now come out under the aegis of the authoritative Institute of Fiscal Studies which suggests that the proposal to introduce a married couple's tax allowance would not achieve the party's goal of reducing child poverty. When I looked at this more closely, I found out that the research had actually been carried out by Gingerbread, the one-parent charity. They are a very reputable organisation but, quite legitimately, they have a particular view about family policy. (If you want to look at the study go here: Gingerbread .

Paradoxically, the two Conservative policies I have most reservations about - the marriage tax proposals and the inheritance tax changes - are ones that I (or my estate) would benefit from.

Of course, one can never base a voting decision on particular policies. One has to look at a party's programme in the round, its leaders, its likely competence in office compared to its opponents - and, last but not least, its local candidate. One could vote for a candidate who one would thought would make a good addition to his party's ranks while still having reservations about that party's policies.

What concerns me about the marriage tax proposal is that runs counter to Dave's avowed commitment to modernity. The inheritance tax proposals seem to me to buying into a Daily Mail agenda when the real beneficiaries will not be middle Britain folks whose houses have become worth a lot of money. There may be a case for raising the threshhold, but not as far as £1 million.

Of course, given the state of the public finances, neither policy may be put into effect all that quickly. But symbolism in politics is very important.

Having been somewhat critical of the Conservatives, I must say that Labour strategy seems to be at sixes and sevens or perhaps, to put it more charitably, it is an attempt to appeal to everyone that it is unlikely to succeed. The core vote strategy appears to have gone out of the window for now and an attempt is being made to portray Labour as the party of aspiration and 'middle Britain' which doesn't seem to be very credible to be given that so many 'new' Labour policies have been ditched.

Indeed, Mandy now seems to have come out in favour of an interventionist industrial policy which is surely an abandonment of new Labour's creed as outlined after the election by guru Giddens. But that is for another day.

The plot that failed

It now appears that Geoff Hoon and Patricia Hewitt, or 'Dim and Dumb' as one newspaper has called them, thought that up to six Cabinet ministers would come out to support their attempt to unseat Gordon Brown: Plot

Quite why they thought cabinet ministers would be willing to put their heads up the parapet when they haven't in the past is unclear, particularly given that Geoff Hoon is a former Chief Whip and should understand the parliamentary party. Perhaps the person who posted in response to an editorial in The Guardian had a point: 'I'd alway's thought Hoon was a "bit" dim, but after his appearance on Newsnight tonight I'd have to upgrade that to "thick as two short planks", qualified with "mind bogglingly naive".'

There are quite a few losers from this failed attempt. Gordon Brown had David Cameron on the back foot in PMQs yesterday, but now Labour once again can be presented as a divided party that is more interested in internal in fighting than the many problems that face the country. One of the problems is that Gordon is clearly in a state of denial over public expenditure cuts, thinking that a growth miracle that no one else believes in can stave them off or at least reduce their impact.

As Trevor Kavanagh of the Sun - one of our best political correspondents - pointed out on Radio 5 this morning David Miliband comes out of this badly. His endorsement of the prime minister, PSA prize winner Kavanagh pointed out, amounted to saying 'I am in the government as foreign secretary and working on my boxes.' Once again he has shown himself unable to wield the knife, something that has already finished off the hopes of fading star Alan Johnson. Of course, the problem is that if you wield the knife you may debar yourself from the prize, Michael Heseltine being the prime example.

Increasingly this looks like an exhausted government that has run out of ideas and has lost the collective will to live. The risk for Labour is that whoever becomes Leader of the Opposition may inherit a shattered and divided party. Even Harriet Harman with her aristocratic iciness and her trade union credentials might find that a poisoned chalice.

You really couldn't make it up

To say I was surprised would be an understatement when Reuters rang me up to say that two former Labour ministers are proposing a secret ballot on whether Gordon Brown should continue as party leader. I am pleased that a more experienced commentator also finds it extraordinary: Coup

Leaving aside the dubious constitutionality of the move, taking this action just months before a general election is unprecedented. If it was successful, it would be some while before a new leader was installed. In the interim, chaos would reign. And just who is this charismatic leader in waiting who is going to save Labour's bacon? This is a gift wrapped present for David Cameron just after he had an uncertain start to his policy launch.

The underlying narrative is that there are Labour MPs who think that it is Gordon Brown who is denying them a chance of winning the general elction. Brown is unpopular, but this is not really just about personalities. It is about the exhaustion of the New Labour project with a battle going on between those (e.g., Peter Mandelson) who are still loyal to the project and those who want to see a return to core Labour values.