Labour Must Make Case For Borrowing Out Of Recession

Guardian 

Peter Hain, one of the earliest shadow cabinet supporters of Ed Miliband, has urged the shadow Treasury team to do more to make Labour’s case for growth in the aftermath of the local elections.

Hain, writing for Progress Online, suggests he would like the party to be less equivocal about its economic policy and warns that if the party is to win an outright majority at the general election it will need to be performing electorally better than at present.

He writes: “I’m confident Labour can win the economic argument if Ed [Miliband] has the support of a loyal team around him. It’s important that all members of the shadow cabinet play their full role in explaining and defending Labour’s policy and approach.

“Labour’s Treasury team need to get out on the stump now and work even harder. It shouldn’t just be left to Ed and Harriet to carry the heavy load, whether on the World at One, the Today programme or anywhere else.”

Hain, who resigned from the shadow cabinet to pursue other political interests, fears a caution about borrowing is causing voter indecision about Labour. He insists the results are encouraging and show “we have come a long way under the leadership of Ed Miliband since 2010”. But the party also has a way to go, he says.

“If a general election was held tomorrow, Labour wouldn’t win a majority,” he says. “This was always going to be a big ask – under any leader – after our terrible result in 2010.”

He adds: “We’re half way there, both in terms of time lapsed and progress made. I’m confident we’ve done enough to stop the Tories winning outright, and produce another hung parliament. But the truth is if we want a majority in 2015, we need to be performing better than we are now.”

The local election results, he suggests, mean Ukip will remain a political force right up to the next election – but he argues this will benefit Labour.

He writes: “The old Tory-Labour duopoly has been broken. Ukip will remain a force at the next general election, with momentum from next year’s European elections. The right will remain split, at the Tories’ expense. The Lib Dems will do badly in the national share of the vote but probably hold on to all or most of the seats where they are well dug-in and contesting with the Tories; where they are fighting us they will lose. Labour is well-placed in this new four-party arena.”

He argues that the debate about the economy, not welfare or immigration, will ultimately determine the election. “Labour’s focus for the next two years should be squarely on the economy and living standards,” he writes.

“We cannot afford to be equivocal about our economic policy. We need to be more upfront with the public about our intentions. Yes, we will borrow more in the short-term, in order to generate growth that will reduce borrowing in the medium-term. It makes sense to do so with interest rates so low. We will borrow to invest in new homes, major infrastructure projects, refurbishing schools, creating employment. Schemes that will stimulate the economy. But we will nevertheless run a tight fiscal regime.”

Concerns held among those further to the left in the party were also expressed by the veteran Labour MP Michael Meacher. Miliband’s leadership, he argued, had “rightly discarded New Labour neoliberalism, but not yet put anything resonant in its place”.

He added: “What is missing is not more policy, but two or three key exciting ideas which really resonate with the public and set the pulse racing a bit.”

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Ignore the pessimists, Labour is well-placed to win in 2015

Ed Miliband walks through Hyde Park after addressing TUC members at the end of a march in protest against the government’s austerity measures on October 20, 2012. Photograph: Getty Images.

Although Eastleigh was dire for the Tories, most commentators were wrong in suggesting it was also bad for Labour’s prospects at the next election. In fact, it confirmed why Labour can still win in 2015, despite its terrible defeat in 2010, because these are times that defy psephological orthodoxy.

First, the Tories took office on a historically low base for a governing party. Their vote had been stuck over nearly two decades, inching up painfully slowly from a dreadful low of 30.7 per cent in 1997, to 31.7 per cent in 2001, then to 32.4 per cent in 2005 and finally to just 36.1 per cent in 2010 – in government without having won. And that despite facing a Labour Party with an unpopular Prime Minister, which had lost trust, and which had carried the can for the worst global economic crisis for 80 years.  Not only did the Tories fail to win, they managed to gain a mere five per cent in the thirteen years after their landslide defeat in 1997.

Furthermore, just 23.5 per cent or 10.7 million of the electorate actually voted for them. David Cameron became Prime Minister on a pitifully low base. Apart from when Tony Blair led Labour and despite a significant population rise in the meantime, Cameron achieved the third lowest number of Tory votes since 1931 and the lowest Tory percentage of the electorate since 1918.

Second, Labour under Ed Miliband has quickly recovered its natural vote which had, stage by stage, defected, in the main to the Liberal Democrats, after the introduction of student fees and, above all, the Iraq War. That vote felt utterly betrayed by the Lib Dem leadership’s enthusiastic embrace of a right wing economic agenda which makes Margaret Thatcher look moderate; it will very likely stay with Labour and not easily go back to the Lib Dems except, perhaps, as in Eastleigh, where Labour cannot win.

Third, and perhaps most importantly, the Tory-Labour duopoly of British politics seems broken. Since its high point in 1951, when 97 per cent voted Tory or Labour, it has collapsed to just 65 per cent – that nadir the culmination of a long trend in the rise of smaller parties, reflecting progressive disillusionment with British politics and declining turnout. UKIP’s stunning performance at Eastleigh confirms that this will not easily be reversed.

Furthermore, in the past, people might only vote every four years in a general election and for their local council, often on the same day. Now there are five-yearly European elections, annual elections for multiple layers of local government in many parts of England, and elections every four or five years for devolved institutions in Wales, Scotland, London and Northern Ireland.

The more opportunities people have to vote for different bodies or posts, the more politically promiscuous they become. The Lib Dems have been the main beneficiaries but also UKIP, Plaid Cymru and the Scottish National Party. Once people break the habit of a lifetime by not voting either Labour or Tory, they were more likely to do so again and it has become much harder to win them back, even at a general election.

In addition, some people have started to vote for different parties at different elections. In Wales, for example, significant numbers have voted Labour in a general election, Plaid for the Welsh Assembly and Lib Dem or independent for their local councillor. People have started to mix and match, enjoying greater choice and liking the idea of politicians having to work together in power.

As the political scientist John Curtice has persuasively argued, “the hung parliament brought about by the 2010 election was no accident. It was a consequence of long-term changes in the pattern of party support that mean it is now persistently more difficult for either Labour or the Conservatives to win an overall majority.”

Coalition politics may become a semi-permanent fixture at Westminster, just as it has in local government.  In which case, coalition needs to be done a lot better than under the Cameron-Clegg government, where it has become a byword for broken promises, betrayals and sheer incompetence.

By joining with the Conservatives on an agenda that repudiated all their long claims to progressive credentials, the Liberal Democrats lost, if not forever, then for at least a generation, their niche as the ‘anti-politics’ party – the reservoir for the growing group of disaffected British voters.

But, the recovery by Labour of its natural supporters apart, there is no reason to suppose that the two main parties will bounce back to their previous hegemony. Some of the anti-politics vote the Lib Dems attracted has gone elsewhere, especially to UKIP and the Greens. Given the crisis in Europe and the fault line in the Tories, UKIP are likely to poll well at the next general election, mainly at the Tories’ expense.

All of this means – and Eastleigh confirmed –  that David Cameron won’t win the next election.  Even on a bad day, and doubtless after a relentlessly negative and well-resourced Conservative assault, Labour is well-placed. On a good day, the party could well defy the odds and win outright in 2015.  But it is at the very least realistic for Labour to be the largest single party, able to form a government. The question then is: with whom?  And the major answer would come if, as also seems likely, the Orange Book Lib Dem leadership – which hijacked the party and took it into bed with the Tories – is repudiated by a membership desperate to restore the tradition embodied by Asquith, Lloyd George, Keynes, Beveridge, Jo Grimond, David Steel, Paddy Ashdown, Charles Kennedy and Ming Campbell.

That assumes, of course, that there are sufficient Lib Dem MPs remaining after a probable battering in 2015. In constituencies where they are well dug-in against the Tories, such as Eastleigh, the Lib Dems will hold their own, although they will certainly lose seats to Labour.

On the same night as Eastleigh, most pundits missed Labour’s spectacular victory in a council by-election in a ward where a Tory councillor resigned. It was in the Tory-held seat of Wirral West, a key marginal which Labour lost last time.

Although he still has ground to make up, the new context for British politics means Ed Miliband is looking increasingly like the Prime Minister-designate.

http://www.newstatesman.com/politics/2013/03/ignore-pessimists-labour-well-placed-win-2015

 

 

 

Why Labour should put the Robin Hood tax centre stage

Great government policy rarely enjoys an easy ride. Challenging the status quo will always ruffle the feathers of vested interests. So 11 European countries should be congratulated for taking on the titans of finance and agreeing to implement a financial transaction tax (popularly known in the UK as a Robin Hood tax).

Today, their proposal for a micro tax of 0.1-0.01% on stocks, bonds and derivatives received the thumbs-up from EU member states at the Economic and Financial Affairs Council meeting in Brussels, meaning they can plough on to implementation, possibly as early as next year. Europe’s largest economies – Germany, France, Italy and Spain – are signed up. IMF chief Christine Lagarde recently gave her blessing. It will help ensure the financial sector plays its part for the damage caused to our economies. Yet there is one notable refusenik: the UK. Our government opted out, choosing instead to dance to the City of London’s tune.

The social justice arguments for an FTT are incontrovertible: the City’s financial elite may have sparked the financial crisis, but it is the rest of society, especially the poor, who are paying the price with the harshest programme of austerity since world war two. Yet amid the 2.5 million unemployed and the threat of a triple dip recession, the financial sector has over the past year enjoyed one of the strongest performances of any sector on the FTSE 100. But it is the economic common sense, the potential to raise billions in additional revenue, that has led the centre-right in Angela Merkel’s Germany, Mariano Rajoy’s Spain and Mario Monti’s Italy to back this tax. It will collectively raise the 11 countries involved £30bn a year – no small beer.

The size of the UK’s financial sector means we have even more to gain. Can the government really afford to turn down an additional estimated £8bn of annual revenue? Imagine what could be achieved: we could fund job creation programmes, spreading investment across our regions, giving the million young unemployed the skills to enter (or re-enter) the workplace. We could fund the British Investment Bank (BIB) that Ed Balls and Chuka Umunna have rightly put much emphasis on. In Wales we already have such an institution, Finance Wales, which was set up by the Labour-led Welsh government in 2000 and manages £300m worth of capital to SMEs. Rolled out across the country, it could bypass the bottleneck of banks refusing to lend to cash-starved SMEs, helping them to be the drivers of growth.

This is not about punishing the banks, but about getting Britain back on a stabler footing. The rate is set so low precisely to avoid hitting either the City or longer-term investments such as people’s savings and pensions. Undoubtedly an FTT would reduce certain areas of City trading – high-frequency computer trading that was memorably referred to by Adair Turner as “socially useless” – and this should be seen as a distinct advantage. The process would help rebalance the economy away from an over-obsession with the City’s short-term rewards towards other, less volatile, less geographically concentrated sectors such as manufacturing.

President Obama may support an FTT in his second term and we should actively encourage him to do so, but even without US support, Europe is right to forge ahead. The UK already has an FTT on share transactions. This doesn’t drive business away – on the contrary, London’s stock exchange is one of the most successful in the world. The exchequer benefits by some £3bn a year from this FTT, something George Osborne often seems to forget. Other financial centres also have unilateral FTTs – Hong Kong’s raises £1.7bn a year, South Korea’s £3.8bn and Brazil’s more than £10bn (pdf).

As the Bank of England’s executive director of financial stability, Andy Haldane, said recently, there is no “ideological chasm” that needs to be bridged in order to roll this tax out to other areas of the financial markets such as bonds and derivatives. As Labour continues to articulate its vision of a responsible capitalism, it is time to put the FTT centre stage. Between Europe and our own stamp duty, we have the blueprint to make this happen. In times of fiscal difficulty, tax needn’t be a dirty word – the financial transaction tax could be one of the most popular taxes this country has ever seen.

http://www.guardian.co.uk/commentisfree/2013/jan/22/labour-robin-hood-tax-government

An Era of Coalitions Could Be Upon Us

The Independent 

…but if it is, they should be more mature than this one, and Labour needs a radical rethink of how it conducts its politics

Cosy texts between Ed and Vince. Lib Dem-hating Tory backbenchers who tell their Labour Oppo’s they have already written off the next election. Public antipathy to being sold a pup by the Government that austerity is working when it palpably isn’t. Does all this mean politics is shifting to a Labour win next time?

Although conventional wisdom says it’s too big an ask for Ed Miliband to lead Labour to victory in 2015 after such a terrible defeat just five years before, new times defy electoral orthodoxy.

The Tories took office without winning on a historically low base for a governing party. Their vote inched up painfully slowly from a low of 30.7 per cent in 1997 to 31.7 per cent in 2001, then to 32.4 per cent in 2005 Ω and finally to just 36.1 per cent in 2010.

Read full article on the Independent website here  

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Western policy on Syria is failing on a monumental scale

The only way forward for Syria is to broker a political settlement, in consultation with Russia and Iran.

Peter Hain The Guardian 22/10/12

Russia and Iran have been culpable, there has been a catastrophic failure of diplomacy by the west and its allies. UN secretary general Ban Ki-moon’s call for a ceasefire and an arms embargo is a welcome challenge to the west’s floundering policy. Britain, France and the US, as well as their allies, Turkey, Qatar and Saudi Arabia, need to recognise that neither side is going to win the civil war engulfing Syria. Nor will the Turkey’s call for western military intervention to halt the humanitarian disaster resolve the crisis. A political solution has to be the priority.

The Syrian leader, Bashar al-Assad, is reported to be willing to consider the proposal by the UN-Arab League envoy, Lakhdar Brahimi, for a ceasefire for the four-day Eid al-Adha holiday on 26 October. The western powers and the Arab arms suppliers should urge their friends in the opposition to declare they will reciprocate if Assad makes good on his tentative promise.

Western demands for regime change were never going to work because this isn’t simply a conflict between a savage regime and the Syrian people. Assad and the ruling Shia-aligned Alawite minority form a tenth of the population and fear being oppressed by the Sunni majority. Christians and other minorities are similarly nervous. Together, those behind Assad constitute nearly a third of Syrians.

The war has also become a wider proxy for Sunni versus Shia, and Saudi Arabia versus Iran. There is also bitter suspicion at the west’s real intentions from Russia and China and their allies. They insist that they never authorised UN backing for military force to depose Muammar Gaddafi last year, and refuse to be “tricked” again. The Iraq invasion also poisons trust of the west. Libya today – its people at the mercy of warring militias and jihadist opportunists, the US ambassador assassinated – is hardly a good advertisement for repeating that regime-change recipe in more complex Syria.

David Cameron’s recent high-minded rhetoric at the UN general assembly ignored the presence of al-Qaida fighters among the west’s favoured rebels.Assad and the minorities and other popular forces that support him fear becoming victims of genocide, so will fight on. If the Syrian regime was somehow toppled without a settlement being in place, the country would descend into even greater chaos.

Russia is determined not to allow that anarchy, mainly because Syria provides its only Mediterranean port in the region. Iran also has key interests, malevolent or otherwise. Syrian refugees have already flooded into Turkey and Lebanon, the latter destabilised, with its police chief assassinated, and now plunged into a political crisis.

The only way forward is to broker a political settlement, with Russia using its leverage to ensure that Assad negotiates seriously. Without pandering to Vladimir Putin’s ruthless rigidity, engagement with Russia is critical – as is consultation with Iran. Otherwise a settlement will not happen.The guidelines for a political transition approved by the five permanent members of the UN security council at the Geneva conference in June still provides the best road map – but only if the US, the UK, Saudi Arabia and their allies drop their current stance and help to implement it.

However unpalatable, Assad may have to be granted immunity in order to get him to sign up and stop his barbarity. All state employees, including those in the armed forces, must be allowed to keep their posts, to avoid a repeat of the chaos caused by America’s de-Ba’athification in Iraq. A Yemen-type process may even figure. There, a hated president did not resign but did not stand for re-election. A coalition government of national unity could then prepare for Syrian elections, due in 2014.

The current British-American policy is failing on a monumental scale. Unless there is a radical change, all the hand-wringing and condemnation is either empty or hypocritical – or both.

http://www.guardian.co.uk/commentisfree/2012/oct/21/west-policy-syria-failure-russia-iran