The real meaning of the controversy over the House of Lords

This week Britain’s House of Lords voted to delay the reduction of tax credits for Britain’s poorest working families. Parliamentarians from the ruling Conservative Party are apoplectic at what they say is constitutional outrage – an unelected chamber challenging an elected one. There is an important constitutional issue here, but as usual the Conservatives are pointing to the trees so that we miss the wood. The key issue is not whether the upper chamber is elected; it is how the executive power of the British government should be held accountable, and prevented from excess.

Britain does not have a written constitution. There is no charter of sacred principles which sets out the rights and responsibilities of each part of government and of its citizens. What we have is the result of a very messy process of evolution. It is the result of a struggle between those who want unlimited executive power, and those who want to limit it. We can date this struggle back to King John in 1215 at least. Some may push this back to the time of King Alfred the Great in the late 800s.

Initially the kings claimed their authority from the Divine. They competed for power with their nobles and with the Church. Things have moved on. The power of the Church was crushed by Henry VIII, and the hold of the Divine withered. The House of Lords retains, nominally, the last vestiges of the rights of the nobles. Instead both the divine and the nobility have been replaced by an idea of the Will of the People. But that is just as slippery an idea as that of the Divine.

To most politicians in both Britain’s main ruling parties, the Conservatives and Labour, the Will of the People is represented by a majority in the House of Commons, elected every five years using single member constituencies under the First Past the Post (FPTP) electoral system. In their eyes theses elections confer rights on the House of Commons akin to the old doctrine of the Divine Right of Kings, or the Chinese one of the Mandate of Heaven. This doctrine is often referred to as the Sovereignty of Parliament. The usual practice is that the Commons is controlled my a majority of members from one party, who approve an executive and are expected to support it all of the time. Checks on the executive are regarded as both inefficient and undemocratic. Checks by the judiciary are tolerated (less so if they are at the European level), since most accept that the rule of law is essential to an orderly democratic state. But even that has its limits; the executive chafes at laws that confer rights on ordinary citizens, especially human rights and rights to information. Other checks on power are not accepted. The House of Lords is more there for decoration than anything: a useful political tool to reward politicians for good behaviour, or political donors. There may also be value in the minor revisions to legislation that it proposes from time to time. Hence the anger at this week’s challenge.

And yet many observers feel that this leaves an inadequate check on the executive. There is an argument that unlimited executive power is dangerous rather than efficient, and should be subject to checks and balances. The most famous example of this, of course, is the constitution of the United States of America. The political system there often seems stuck in gridlock, and yet we can hardly call that country a failure, or less democratic than ours. There are three classic ways in which executive power might be limited. A written constitution allowing government actions to be challenged in the courts; a federal constitution that distributes powers between federal and state levels; or an “upper” chamber of the legislature to form a check on the main, popularly elected one. Britain has elements of all three, but they are all weak. The Conservatives want to keep it that way, and weaken the second chamber further.

Is this a bad thing? Conservatives would argue that a strong executive offers decisive government, that is able to develop the economy and protect its citizens better. In particular it is better placed to push through hard but necessary reforms. These reforms may not have been explicit at the time of the government was elected (one of the key arguments against the tax credit proposals), but there is also a sense that the next election casts a verdict on the past government, as well as electing the new one – so there is accountability in the end. Labour politicians are sympathetic to that line of argument, since they want the minimum limits on power when it is their turn.

Liberals oppose this on the basis that it is undemocratic, too beholden to vested interests, and centralises too much power at the national level. These are familiar arguments that I will not try to develop today.

Liberals do have a problem when it comes to the House of Lords though. It is manifestly undemocratic, but simply replacing it with an elected upper chamber with similar powers looks a bit of a nonsense. How would the new upper chamber’s mandate differ from that of the Commons? it could set itself up an an alternative “Will of the People” and simply create deadlock. Wouldn’t it be better to have a single chamber and make that work more effectively? Many liberals might accept that argument in theory, but fear in practice that abolition would not be linked to reforms of the Commons, for example to be elected on a proportional voting system. That fear is well-founded, but it leaves them arguing for something that looks inadequate.

A better way out is surely to come at the problem form a new angle: that of federalism. The new upper chamber might represent the interests of elected governments below the top level. There are many ways that this can be approached, and it would serve a wider purpose. The would help secure a better distribution of power within the country by strengthening local and regional levels of government (I dislike calling this idea “devolution” because it suggests a top-down process). It may also present a more robust solution for Scots’ demands for more self-rule than the unbalanced solutions now on offer. And it is the urgency of the Scotland problem that might give the idea political traction, alongside the widespread recognition that government in England is over-centralised.

That will require some form of constitutional convention to resolve. That is what liberals should be calling for -a not an elected upper chamber by itself.

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The tax credit row: ignorance and obfuscation are rampant

Britain’s tax credit row  reached a milestone last night with a government defeat in the House of Lords. As I said last week, it doesn’t show British politics in a flattering light. Then I complained about the failure of the government’s critics to tackle the financial implications. But ignorance seems to be wilful on both sides. What is the row really about?

First, we need to understand what tax credits are. There are two systems: Working Tax Credits (WTC) and Child Tax Credit (CTC). WTC amounts to £1,890 to £4,525 per annum, plus more for those with disabilities. It starts to be withdrawn when income is above £6,420 and the rate of withdrawal is 41%. In other words, for every £1 you earn above £6,420 your benefit is cut by 42p. CTC is for parents responsible for children. This amounts to a basic £545pa plus £2,750 per child (plus extra if the child has disabilities). For those in work these amounts are added to WTC and withdrawn at the same rate. For those not claiming WTC, withdrawal starts at £16,105 (I’m not sure how that works, and why you would be in work and not claiming WTC, but I’ll leave that for now).

So what were the proposed changes? There are two sets. The first is due to be implemented in April 2016. The withdrawal threshold for WTC is to be cut to £3,850; for those only on CTC the rate is cut to £12,125. The withdrawal rate is increased to 48%. The second set of changes will be made in 2017 to CTC. The £545 family element will be withdrawn, and the benefit per child will be limited to two children. These elements will apply to new families, not those who are currently claiming.

So what do the changes mean? First: the basic amounts of the benefits are not being changed, until the changes in 2017, and the latter do not cover existing claimants. This allows the government to say that it the Prime Minister David Cameron was not lying when he said that “he did not want to cut” CTC, during the election campaign. But, of course, the changed withdrawal rules mean that the benefit is being cut for everybody earning more than £3,850. The impact will be concentrated on lower earners, who will face a high marginal rate of tax, starting at 48%, and rising to 60% as National Insurance kicks in, and then 80% as Income Tax joins the party.  This creates something of a poverty trap effect, reducing the incentives to work. But then again, the tax credits are not being abolished, and workers do keep some of their extra earnings.

The government’s chief advertised mitigation measure is raising the national minimum wage. This should put more money in the pockets of the poorest workers, provided employers don’t cut their hours. But much of the benefit of this will go to workers not claiming tax credits, and it will do little to alleviate the hardships of those worst affected. There seem to be two strategic aims. The first is to transfer some of the economic burden of lower wages to employers. There is a suggestion, for example, that employers are paying lower wages because they know that tax credits will make up some of the difference. The evidence that this effect is important is weak, however. A second strategic aim, not doubt, is to reduce the poverty trap element of the changes – so that workers are pushed through the levels of pay at higher marginal tax rates faster. The problem with these strategic aims that the new levels set for the minimum wage are arbitrary. Much of the cost will have to be borne by small and marginal businesses that can ill afford the cost – they may well choose to cut hours paid, and so undermine the policy.

The worst of the interventions in the debate, however, come from some of the suggestions made as to how to mitigate the effects of the changes. These have centred on raising the thresholds at which Income and National Insurance are paid. This is obvious nonsense. It may be clever to mitigate the withdrawal of a universal benefit by using targeted ones. The mitigation will cost less than the original change would save. To suggest the opposite, which is what these ideas amount to, is plain stupid. Worse, the poorest earners are not even paying these taxes, so exempting them will not help. And yet the BBC interviewer on the Today programme this morning sounded surprised when his interviewee pointed this out to him. This is wanton ignorance. The ulterior motive for these “mitigations” is to provide tax cuts to the better off, not to help the poor and struggling.

Moving on. Here are the points that should be being made in this debate, and either aren’t being made, or are being made by too few people:

  1. The government’s changes are tackling the symptoms of the disease of low pay and poverty, and not its causes. Raising the minimum wage may help, but not by much, and could backfire. The real problems arise from the economic pressures that cause lower wages, and from increasing housing costs that make that poverty harder to bear. The risk is that the savings made from cutting tax credits will ultimately be overwhelmed by the less direct effects of poverty on the state. Instead of making it easier climb out of poverty these changes make it harder.
  2. The cost of tax credits will fall if lower incomes rise. The whole design of tax credits is that their costs fall as the need diminishes.
  3. The 2017 proposed changes, are more harmful and ill-considered than the 2016 ones. Clearly the thought is that the level of benefits is encouraging poor families to be larger. I don’t think any strong evidence is being put forward to justify this. It looks positively vindictive.
  4. The government’s policies are not a vindictive attack on the poor, but an attempt to rebalance the system to something that is more sustainable in the long term. But they are a gamble. They are making several changes at once, without a base of evidence to support them. It is these risks that should be the focus of the debate.

Personally I feel that the basic, original, design of tax credits is reasonably sound. The fact that they are costing much more than originally planned is a problem in itself, of course. But it is also an alarm bell – it points to even deeper problems in our society. If we take away the short term cost to the taxpayer, it does not mean that this problem has been solved. I would tackle the funding problem through taxes on the better off (loosely defined, not just chasing the slippery very rich). But the real energy needs to go into alleviating the causes of tax credits. Nobody is talking about that at all.

 

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Saving tax credits means raising taxes. I’m OK about that.

The current political storm over the British government’s proposed scaling back of tax credits is not showing politics at its best. On one side a cynical Conservative government is pushing through changes will make the poor poorer and reduce social mobility. On the other we have opposition grandstanding that has no interest in suggesting alternatives. I despair.

First of all, what is the fuss about? Tax credits were introduced by the Labour government in 2003. They are a way of providing means tested benefits to those already in work, but on low incomes, and especially those with children. They are designed to taper off as income grows, so that claimants will always benefit from any increase in earned income. They are copied from a US idea, but they have been Britannicised so that they can operate within the country’s system of taxation at source, PAYE. In America claims are made at the end of the tax year when tax returns are filed; the UK use a monthly system.

Originally the problem with tax credits was the operation of the monthly calculations. Inevitably the information they used was often out of date, and so many claimants were faced with clawback claims, for which they were not prepared. We hear much less of this these days. Nowadays the problem is the cost. Claims about this vary, but it was always expensive, and, with low paid jobs multiplying, it has grown sharply. And yet they are well targeted to those most in need, especially families. They do not penalise work, so many means-tested benefits do, while costing much less than universal benefits.

During the coalition years of 2010 to 2015 the government trimmed back tax credits, in particular they tapered off the withdrawal more sharply. Previously incomes up to around £40,000 (from memory – this figure may well be incorrect) could claim something, but this has been reduced. Now the government proposes to reduce tax credits even more harshly, and especially for larger families. It estimates that the savings will be between £4bn and £5bn. That will cause real hardship for many families that include working people. In fact, the very “hard-working families” that we got so sick of hearing about from politicians at this May’s election. The cuts will also be a setback for attempts to give children from poor families a better start, and so reduce inequality.

For all that there is a certain honesty about the plan from the Conservative Chancellor George Osborne. The government’s financial deficit is running at about 5%, far higher than it should at this stage in the economic cycle. During the election the Conservatives made it very clear that they wanted to balance the budget. They also made it clear that they would do so by making cuts to benefits. They were very coy about where these cuts would fall, and even suggested that child tax credits might not be affected – but there really is no other way to make their plans work. This is what politicians do in a democracy: vaguely promise “tough” measures before an election; implement them soon after, and hope the fuss has blown over by the time the next election comes around. A lot of publicity has been attracted by a Conservative voter saying that she felt very let down – but I’m afraid that’s political naivety. If the issue was that important to her, she should have voted for somebody else.

The government are honest, by the standards we have to apply to politicians (no truly honest politician would get elected), but misguided. But a lot of the opposition is a nonsense. It amounts to no more than a collective yelp of pain, and wishes for the government to “reconsider” without offering any kind of escape route. This is particularly annoying from Conservative MPs. They offer no alternative. The various mitigations proposed, such as raising the minimum wage, or tax thresholds, are badly targeted and won’t help much. Tax credits are the most efficient way of doing what they do. Any change is going to make things worse. There is no clever wheeze that will make the problem go away.

The opposition parties: Labour, the SNP and the Lib Dems are at least a little more honest than the Tory moaners. Labour initially got itself into a tangle, but soon put that right. I personally dislike the way these parties (and especially Labour) treat the status quo as a sacred thing to be “defended”, and any change that makes people worse off as tantamount to robbery. It’s still somebody else’s money. If systems of benefits, or public services, aren’t doing what they are supposed to, they should be changed, even it makes some people worse off. Still, that’s what politicians do. And in this case I think they are right. There is so much evidence that poverty in early life ruins chances later, which is why benefits focusing on families are a good idea. The system could be improved, no doubt, but not in a way that makes it any less expensive.

But these parties still should be clearer on what they think the government should do instead. All three of those parties have said they want the fiscal deficit reduced. They make an exception for capital spending – but tax credits is patently not that. Neither are they advocating cuts anywhere else (with exception of nuclear weapons systems, in some cases, but they usually want to increase spending on conventional forces instead).

Neither is it realistic to appeal to economic growth. This is not something that can be turned on and off like a tap by politicians. If it was the Conservatives would have that tap in the “on ” position already. Keynesian stimulus, which may have been relevant in 2010-2012, does not apply at this point in the economic cycle.

The only way to convincingly square the circle is to raise taxes. Of course the far left think they have the answer here: to crack down on tax avoidance and evasion, and to reform corporate taxes. Closer examination reveals these ideas to be chimerical. That still leaves the idea of taxing the rich harder. But the rich are slippery. There are still some things that can be done: taxing land, in particular, and tightening inheritance tax, rather than loosening it, as the Conservatives are doing. I wouldn’t bet on these ideas yielding much new money quickly though.

To have real credibility in “defending” tax credits, the NHS, local government spending, the police, or any other aspect of expenditure, politicians will not carry conviction unless they are prepared to raise one or more of the big three taxes: Income Tax, National Insurance, or VAT. Alas on this all parties are silent.

But such is the importance of tax credits to me, that I would indeed support the raising of one of the big three to keep them in being at current levels. I just wish the governments’ critics would say so too, and so start some real debate about the country’s fiscal priorities.

 

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The SNP’s strategic problem is that independence equals austerity

For much of 2010 a barrel of Brent crude oil sold for under $80.

Graphic from Nasdaq
Graphic from Nasdaq

Then it started to take off, so that in early 2011, it reached $125. Around this time, perhaps not coincidentally, the Scottish National Party (SNP) achieved a stunning victory in the Scottish parliamentary election, allowing them to govern on their own, in spite of the proportional voting system. In the following three years the oil price held at around $110, and it seemed quite reasonable for the SNP to assume that prices would stay there for its financial projections for Scottish independence for the referendum in September 2014. But by the time that referendum was held the price was in free fall. And, again perhaps not entirely coincidentally, the SNP lost the referendum. Now Brent crude trades at under $50. It may be stuck there for some time. Hold that thought in your mind; it is the most important thing to understand about Scottish politics. Scottish nationalism has always been closely linked to oil.

After reviewing the fortunes of each of Britain’s major parties after their Autumn conferences (and one minor one: my own Liberal Democrats) it is the turn of the SNP. Notwithstanding the loss of the referendum, the SNP’s dominance north of the border looks complete. The only way from here seems to be down, but when, on earth, is that going to be?

Commentators on Scottish politics from London, of which I’m one, are notoriously bad at understanding Scottish politics. As, indeed, are English politicians. But surely the same laws of physics apply on both sides of the border? We must try to understand what is happening, and where things might go.

First we need to understand how the SNP achieved its dominance. Nothing could be sillier that the narrative I have heard put about by English leftists that the SNP achieved its success through tapping a popular, anti-establishment mood, and in particular anger at “austerity” to become “a broadly based social democratic party” as one article put it. This is silly not because it is entirely untrue, but because it is so  incomplete that it might as well be. The SNP has achieved its success because it has convinced Scottish voters that it is the best party to look after their interests. This is not based on any particular policy stance, but through an appeal to national identity.

First they destroyed the Conservatives, who used to be a  major force in Scottish politics. They were aided in this by the complete ineptitude of successive British Prime Ministers, Margaret Thatcher and John Major. They managed to make the English look like an occupying power. The SNP were nicknamed the “Tartan Tories” by Labour, because of their appeal to right of centre voters. Their leader of the time, Alex Salmond, sounded distinctly neoliberal, with his wish to turn the country into a corporate tax haven, like Ireland.

But Labour fared better. In New Labour days, that party’s domination of Scots politics started well. The party delivered devolution and won the first two Scottish parliamentary elections, governing in coalition with the Liberal Democrats, who also performed respectably. It no doubt helped that one of New Labour’s architects, and its second Prime Minister, Gordon Brown, was very much a Scottish MP. But doubts were raised about the party’s commitment to Scotland. Its best politicians seemed much more interested in pursuing a career in Westminster than in Holyrood. The party struggled to find a convincing leader after Donald Dewar, Scotland’s first devolved First Minister, died in 2000. Labour’s Westminster “strategists” (as politicos like to call their tacticians) took Scotland for granted. The party’s seats in Scotland were mostly quite safe; there was little understanding of how to handle political competition.

The first cracks showed when Labour lost the Scottish elections in 2007 (by a single seat), allowing the SNP to form a minority government. But the party would not, or could not, understand the implications of giving the SNP such a lift in credibility. After all, Labour did well enough in the 2010 British general election in Scotland. But they should have understood the strategic implications when the party fared badly in Scottish elections of 2011, allowing the SNP to achieve that majority, and a mandate to hold an independence referendum. Labour continued to flounder. To be fair, the party was facing such deep strategic problems after losing power in Westminster in 2010 that it was difficult for them to do other than paper over the cracks and hope for the best. The party’s lack of political skill in Scotland, however, became evident to all in its incompetent leadership of the referendum campaign. The party really seemed to be only about providing careers for talented politicians in Westminster, local jobs for the others, and no use to Scots voters at all.

The SNP, of course, managed to use the referendum to generate a surge of interest in an optimistic brand of politics based on Scottish identity. Its leaders then made a brilliant switch. Mr Salmond stepped down as leader, and handed over to his deputy, Nicola Sturgeon, who had the reputation of being more left-wing. Ms Sturgeon duly turned the focus onto Labour voters. She used the mantra “austerity” in her messaging, to demoralise Labour activists, fed up by their leadership’s more careful line on economic policy. Labour collapsed to just one seat in Scotland (the same as the Lib Dems and the Conservatives) in May’s British general election.

The Labour left hoped that  Jeremy Corbyn’s ascent to the Labour leadership, amid a tide of new members, and his supposedly refreshing brand of “straight-talking, honest politics”, would change the party’s fortunes. Alas no. Scots voters deserted Labour because the party was useless to them. The party has merely turned itself from one form of uselessness to another. A chaotic debating society more interested in policy than power is not an improvement. The next Holyrood election is in 2016. Everyone expects the SNP to increase their majority, mainly at Labour’s expense (the Lib Dems were already crushed in 2011; the Tories have quite a robust core vote).

A further departure from the London lefties’ idealisation of the SNP is that the SNP conference was as far cry from the “new politics” they espouse. The Observer columnist Andrew Rawnsley said that it reminded him more than anything of a Conservative conference under Mrs Thatcher. The SNP are ruthless politicians, managing their message with discipline, and extending their hegemony to as many parts of Scottish life as they can. There is no open debate of party policy. This is not good for the quality of government there, but the party can and do blame any problems on the Westminster government. The SNP’s record is not all bad, though: the Scottish economy is more buoyant than any other part of the UK outside London and the English South East. Whether that arises from the SNP’s neoliberal tendency, or from its social democratic one, probably depends on who you talk to.

The SNP’s successful discipline arises from a clear, unifying purpose: their quest for Scottish independence. And therein lies their biggest strategic problem. That $50 oil price. That leaves little left to tax. It causes collateral damage to the oil industry based in Scotland.  It makes much of remaining oil beneath the North Sea unviable. This knocks a huge hole in the SNP’s economic plans for independence, which handed out goodies to all interested parties.

The low oil price is a product of America’s shale revolution, and increased energy efficiency. Meanwhile Iran will re-enter that oil market, and demand from China is tailing off. That $50 price could be around for quite a while. The “peak oil” theory is dead and buried. There is no sign that the SNP have any idea how to plug the gap in their plans for independence between $50 and $110.

And here’s the thing. In spite of this price collapse in oil, the Scottish economy is performing well. It is diversified, and the non-oil bits are doing taking up the slack. The tax revenue damage is being taken by the UK as a whole, which unlike Scotland would be on its own, is big enough to absorb it. You could not have a better illustration of why the Union makes such good sense for Scotland. It acts as a wonderful economic shock absorber. And, as Greece and others have shown, joining a currency union does not solve this problem. Before long, Norway will be providing a clear illustration of the challenge an independent Scotland would be facing. Independence means austerity.

Ms Sturgeon used the conference to manage down her party’s expectations of a second referendum soon. But with a low oil price and deteriorating demographics 2014 may have been their best shot. Unless Britain is mad enough to vote to leave the EU, the case for independence will be more difficult to make in future. It will take some time before the penny drops. But surely the SNP’s days of hegemony are numbered?

But for their different reasons, Scotland’s other parties are unable to exploit the SNP’s strategic weakness. Paradoxically, though they may have won the argument on independence, it may not help to make too much of their unionist views.  Just as England’s middle ground voters are not averse to austerity, Scotland’s middle ground clearly prizes its national identity, and isn’t scared of independence talk. Perhaps the tactic should be to concede the idea of a future referendum, especially in the absence of a proper federal settlement. That might clear the field to examine the SNP’s actual record. But that might take a higher calibre of leadership amongst Scotland’s opposition parties. For now the SNP does not face a serious challenge.

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Are Eurosceptics suffering from the boiled frog syndrome?

boiling-frog1
By CJ – Juesatta

Within two years the United Kingdom will have a referendum to decide whether or not it stays in the European Union. Despite a fair amount of noise in the media, the serious political campaigning hasn’t started yet. But the Ins seem to have the edge. This is an interesting turn of events.

It helps to put your passions to one side to make any sense of the emerging campaign. I heard one commentator  suggest that the electorate is split into three roughly equal shares: those who are firmly for In, those firmly for Out, and those who are floating between the two. I don’t know how accurate the numbers are (the firm Ins sound a little high), but it’s a good way of looking at it. The campaign will be decided by the floating third, and these voters do not have the emotional investment in the issue that of either the Europhiles like me, or the Eurosceptics. The arguments the committed supporters on either side find convincing will cut little ice them. The In and Out campaigns will have to concentrate on the sort of arguments that will sway these uncommitted voters, and not those that have already made up their minds.

I think that this is giving the Europhiles the edge. Until recently the Eurosceptics have had the field to themselves. They dominated the media with their passionate arguments about sovereignty, over-regulation, and the general incompetence with which the EU is run. Europhiles were in despair; we never heard somebody coming up with a really convincing argument about why we should stay in – just some rather soft stuff about trade and peace and international prestige. We were losing the argument, it seemed. The Outs raced ahead in the polls. But they also became over confident in the strength of their own arguments. The Europhiles, on the other hand, were forced back to a more realistic assessment what they had to do – and they realised that the main thing going for them was sheer bloody inertia. Passion would not win the day for them.

But the Eurosceptics, or too many of them, still think that their passion and argument is what is needed. But this is no good for the cold, hard job ahead. That they can’t agree to form a single umbrella organisation shows that they haven’t understood this – discipline among the passionate is hard. It reminds me a little about the fable of how to boil a live frog. The story is that if you throw a frog into hot water, it will just jump straight out of the pot. But if you put it into cold water and slowly heat it up it will not notice until too late. I hope nobody has tried this out on real frogs, and it almost certainly wouldn’t work if they did. But makes an important point anyway.

The Eurosceptics have been placed in a favourable media environment, like the frog in cold water. But ever so gradually it has become less favourable. The turning point was probably when the Prime Minister, David Cameron, decided to call his bankbenchers’ bluff and hold a referendum. Then it was clear that leaving was no longer a theoretical proposition, and the quiet voice of inertia started to speak. It was certainly no great push by the In camp in the media. The polls slowly but surely turned against the Outs, though in the last month the Ins have dropped back, after Europe struggled with the refugee crisis. Too many Eurosceptics haven’t noticed how the climate has changed, and are failing to adapt.

This is especially evident with attitudes to Mr Cameron’s “renegotiation” of the UK’s membership terms. This clearly an important part of the In strategy. He plans to flourish some impressive achievements to the electorate as a clinching argument to the floating voter group. This could be a decisive move, but only if he manages to exceed expectations. So a subtle Out campaign should be trying to raise those expectations. Instead most of them pouring scorn on the whole exercise. The Europhiles are egging them on by also playing down expectations – but that is in their interests.

To be fair, some of the Outs understand the problem. Lord Bamford, a notorious Eurosceptic, has reserved judgement on Mr Cameron’s renegotiation, and is wisely holding his fire for now. This was flagged by some of the Eurosceptic newspapers yesterday. That is better than slagging off the whole exercise, but still not quite the position they should be taking.

But things are far from hopeless for the Outs. Three things might work for them. The first is if they can focus anti-establishment anger on the EU. The establishment – mainstream politicians and big business leaders – will largely rally behind the Ins. And yet the public is suspicious of these figures. Anti-establishment-ism played well for the SNP in the Scottish referendum, though it still wasn’t enough. But that was a very different situation.

The second thing that could play well for the Outs is panic about immigration. Free movement rights within the EU is one of its great glories, and has been of enormous benefit to Britain – and Britons make use of it themselves with glee. But immigration makes most Britons nervous. If this nervousness is raised to panic proportions, the Ins have no really convincing answer. Unfortunately it makes no difference whether or not the panic is actually relevant to Britain’s membership of the EU. The media storm over migrants at Calais earlier this year had nothing to do with British EU membership (the situation would be just the same, perhaps worse, if Britain was out) – but it still dented people’s confidence in EU membership.

And the third thing is chaos within the EU itself. This might arise from the ongoing refugee crisis, or from another Euro zone crisis. It makes no difference that both these crises show that Britain’s already-negotiated opt-outs allow us to stand on one side. It still reduces the comparative advantage of staying in over leaving.

For all that the Ins need to hold their nerve. The best case for In is an unspectacular one. Britain has prospered by and large in its years as part of the EU (even if you can’t prove it would have been worse off out); EU processes are deeply embedded into our way of life – as the passport controls when travelling to EU countries shows. Leaving the EU would create a colossal mess which would, incidentally, put the Union at risk. It is up to the Outs to make a convincing case that life would be actually better outside. Not that things wouldn’t change much. And in concrete terms that affect daily lives, not in terms of abstract ideas like parliamentary sovereignty. That will be more than hard for the Outs to do.

So that is why I’m not that bothered that the launch of the In campaign this week was a bit anaemic, and is chairman a bit colourless. The task in hand is bit like that of a defence lawyer: not to prove his clients’ innocence, but to make the prosecution stew. in its own contradictions.  Like that boiled frog.

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David Cameron: master of the middle ground

After diverting my readers with the fringe entertainment of the Labour Party, and the even more eccentric fringe of the Liberal Democrats, it’s time to look at the politics that really matters: Britain’s Conservative Party. They had their annual conference last week, and this gives us some idea of what to expect in the next five years.

The speed with which the Tories, led by David Cameron, have assumed the ascendency in British politics is astonishing. Not six months ago I, along with many others, thought that they would be unable to win the General Election in May, and that they were so toxic to the other parties that they would have difficulty in forming a new government. But they succeeded in securing a narrow but decisive victory. I had failed to understand how England’s centrist voters regarded the political scene, and how cleverly the Conservatives were able to exploit those voters’ anxieties.

And as if that result wasn’t good enough for the Tories, the subsequent left-wing takeover of the Labour Party has removed the principal opposition party from the field for the time being. The Labour leadership’s priority seems to be to consolidate the left’s power in the party, rather than take on the Tories.  Meanwhile the Liberal Democrats have been crushed, and even Ukip, the Tory’s rivals to the right, look like a busted flush. Only the SNP look in fighting form, and they are confined to Scotland, which is of minimal electoral importance to the Tories. The next General Election is due in 2020, and at present nobody can see that it can produce anything other than another Tory victory, and quite possibly a landslide.

How the Conservatives take things from here is therefore the most important question in British politics. The first thing to note is that the position of its leader, David Cameron, looks secure. The vultures were circling for his expected failure in May, so his triumph is a very personal one. And he has earned his strong position. He has a powerful instinct for the middle ground in English politics (which extends to much of Wales too, though he seems to have little grasp of Scotland’s politics). What he understood in a way Labour politicians did not is that this middle ground, the floating voters who decide elections, had not moved to the left, as it was fashionable to suggest. These voters accept much of the economic conventional wisdom that the left dismisses as “neoliberal”. They do not want higher taxes; they think that the previous Labour government spent too much on benefits and public services; and above all they fear the loss of private sector jobs that might arise from a new economic crisis. These are concerns that Labour failed to address, because, as we now see, much of its core support disagreed. Middle ground voters in England became so afraid of the consequences of a Labour government (and especially one dependent on the SNP), that they happily ditched the Lib Dems, who were also trying to pitch for their votes.

But Mr Cameron understands other things about these middle ground voters, which make both Labour and Lib Dem politicians uncomfortable. They are suspicious of the European Union, but open to pragmatic arguments for staying in. They are nervous about immigration, especially (whisper it) of those from Islamic countries. But they also don’t want to be racist. Mr Cameron treads this ground with skill.

What the conference made clear was Mr Cameron’s strategy for his party, shared by his chief ally, the Chancellor George Osborne. He plans to set up a fortress in the centre ground, much as the Labour leader Tony Blair did for his party, to secure its hegemony over British politics. He will continue to push through his largely neoliberal economic policy, and in particular a dramatic rolling back of tax credits. They hope to reduce the overall cost of the state to a historically low level, by making further cuts – though trying to preserve the beloved National Health Service. Within this overall framework Mr Cameron and Mr Osborne want to tackle three important issues: the European Union; the economic weakness of northern England; and the country’s overheated housing market.

On the EU, Mr Cameron aims to “renegotiate” Britain’s terms, and then present the country with an in-out referendum. This is a bold enterprise, not least because his party cares deeply about it, and mainly disagrees with him. It could profoundly change the party he leads; it could even destroy it. Losing the referendum (i.e. taking the country out of the EU) would cause his whole project to unravel.

On the north, the duo’s approach is to devolve and invest. This will be very interesting to observe – their approach is surely sounder than previous attempts to address the issue. They hope that it will revive the party’s fortunes in the north, much as Mr Blair revived Labour’s in the south (ground that Labour has now lost).

On housing Mr Cameron seems to be surrendering to the conventional economic wisdom – that is a simple game of numbers, and that setting targets for new homes, and taking a firm hand on planning delays, will help ease the crisis and make home ownership more widely available. Social housing plays no role in their thinking; neither is there a recognition of the pernicious role of cheap finance. Few feel that their strategy has sound foundations. Housing looks like something of a Tory blind spot – they draw too much support from owners of homes who enjoy the sky-high prices. They may yet surprise us though.

The biggest problem with Mr Cameron’s plan to establish Tory hegemony is his wish to step down as party leader and Prime Minister before the close of the parliament. None of his possible successors has his touch. Mr Osborne is a better strategist, but the public will find it harder to trust him. Theresa May, the Home Secretary, is playing to the party’s right, endangering her centre-ground credentials as she does so. Boris Johnson, the London Mayor, has flair but lacks depth. A messy transfer of power could easily upset the project.

Two other hazards await, just to deal with the known unknowns. The first is Scotland. The SNP’s dominance remains unchallenged. Mr Cameron has not played his cards well here, with a particularly foolish bid for “English votes for English Laws” made too hastily of last year’s independence referendum.  He does not like to fiddle with the British constitution, and yet some kind of federal settlement, involving much such fiddling, looks to be the only way to seize the initiative. If the SNP were to secure a second referendum and win it, it would be catastrophic for the Tories – who set much prestige on the union, even though it actually makes life harder for them politcally. Just fighting them off could be a massive distraction.

The second hazard is the economy. All looks well for now, and yet the growing problems in “emerging” economies threaten the developed world’s financial system. This could cause a new financial blow-up just as the US sub-prime market did in 2007 and 2008. That could dent the government’s reputation for economic competence, which is core to its appeal.

But such is the weakness of Britain’s opposition parties, that it is hard to believe that even these troubles could stop the Tories. But things can change quickly in politics.

And this demonstrates a political truth that all should ponder. Political success requires both a strong core vote and an appeal to middle ground voters. It is a hard conjuring trick. Labour failed to, or were unable to, understand and appeal to the middle ground. The Lib Dems failed to develop and retain a core vote. Mr Cameron has pulled off this trick for the Tories. He successor may fail. And that would make British politics very turbulent indeed.

 

 

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Barcelona: Europe’s capital of modernism

The outside of the Sagrada Familia, approaching its Nativity Façade,IMG_3083 was extraordinary but somehow familiar. It has become Barcelona’s most famous landmark. But I was not ready for the inside. The soaring columns; the vaults like a giant forest canopy; the different coloured light coming in through the stained glass windows. This basilica seems little more than half-finished but it completely overshadows the city’s fine and (mainly) medieval cathedral. And that is evident from the numbers who go and see it. That sums up Barcelona very nicely.

Last week was my first visit to the city. What struck me most was how at ease the place is with the modern. Two eras stand out. First was the later part of the 19th Century and early 20th. This was the when the Sagrada was started, and, in common with many major European cities, Barcelona exploded in size. The genius of architect Antoni Gaudi stands out, but the general self-confidence and exuberance of the architecture is striking. By comparison London building of the era seems obsessed with past forms, from medieval Gothic, to classical to, even, old Venetian architecture. Meanwhile Gaudi’s naturalistic forms foreshadowed Art Nouveau, and now look timeless. For much of the 20th Century, when Fascists and Communists held the initiative, brutal straight lines and right angles held sway, in an effort to show the superiority of human endeavour over the natural world – and Gaudi’s modernism looked whimsical and irrational. And yet there is nothing whimsical or irrational about natural forms. Gaudi’s architecture is functional and his forms resolve to simple mathematical principles. Nowadays we understand this better, and the Sagrada’s interior looks uncompromisingly modern. Such vision, lasting over such a stretch, is rare. London never truly embraced this sort of modernism. Paris dismantled much of its wonderful Art Nouveau pieces, like its Metro station entrances. Viennas’ Secession movement fared better, perhaps, but the surviving examples have the air of museum exhibits.

Barcelona’s second period of modernist self-confidence started in the 1980s, after the pall of civil war and fascism was lifted, and was revealed to the world at the Barcelona Olympics of 1992. This second period has not ended. Apart from accelerated progress on the Sagrada, and its successful integration of Gaudi’s vision with modern engineering, there is a lot of confident modern work. This is most visible on the coastal part of the city. This stretches from the beach-side facilities and marinas with their focus on leisure, to the highly impressive modern port facilities. And in the suburbs there are modern residential areas, smart modern factories, and sweeping roads and bridges. Barcelona is an old city. At its heart there are ancient buildings and narrow medieval streets, all built on Roman era foundations. But I have not seen such an ancient place wear its modernity with such ease.

What of Barcelona’s politics? It is hard for a tourist to say much based on a week’s visit, simply looking tourist sites. The Catalan independence flag, the Estelada, was everywhere though. The evident strength of the Catalan independence movement draws an obvious parallel with that of Scotland in the UK. But I was struck by its different historical origins.

Catalonia is an older political entity than Spain itself, but has never had a period of full independence. Its spell as part of Moorish Al-Andalus was brief; its political origins were as a frontier region of Charlemagne’s Christian empire, and as such it looked to France for political and cultural leadership. This was not the case with all of modern Catalonia, it must be said, as the southern regions remained under the Moors for much longer, but it was true of Barcelona, which emerged as the area’s principal city. The connection with southern France was much diminished after the crushing of the Cathars in the 13th Century.

Catalonia developed its own political structures in the medieval periods, including a proto-parliament, and became part of the wider political entity of Aragon. It flourished as a trading entrepot, until it was eclipsed by ports with better access to the New World.  In the 15th Century, with the Moors being pushed back towards Granada, Aragon and Castile were united to form the basis of modern Spain. Spain in turn formed part of the wider Habsburg empire. These political entities were sensitive to local political structures,however – more resembling the union of British crowns under the Stuarts in the 17th Century than the United Kingdom of the Act of Union. But the Spanish Bourbon monarchy which replaced the Habsburgs in War of Spanish Succession, and in particular the crushing of Barcelona on 11 September 1714, after a long siege, brought an end to that. Catalan patriots date the era of Spanish oppression from this infamous date. Catalonia regained a degree of autonomy in the 19th Century during Spain’s political turmoil, and when industrialisation took off. This was crushed by General Franco’s Nationalists in the Spanish Civil War of 1936-1939.

But, of course, the picture is complex one. Barcelona drew in migrants from all over Spain. Its cosmopolitanism no doubt contrasts with the rural conservatism of Catalonia’s Pyrenean villages. I can’t begin to predict how Catalonia’s future will play out. What I can say is that Barcelona’s modernism, and its whole feel, is very different from the rest of Spain. It feels closer to the heart of Europe. And it is a wonderful place to visit.

 

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4 liberal themes on economics and public services: my contribution to Lib Dem Agenda 2020

Agenda 2020 is the consultation exercise being carried out by the Liberal Democrats to set the framework of policy in the period up to 2020, when we next expect parliamentary elections. At this stage the idea is to keep the thinking at quite a high level. This is always quite hard for political activists. We somehow got onto VAT on tampons in the consultation exercise in Bournemouth. Then again, I’m always saying that political types on the left are too abstract. I haven’t submitted the following contribution yet, but the idea is to be strong on general direction, with only a few pointers on the detail. I’m afraid that it’s still a bit longer than my normal posts.

Economics, public services and wider Liberal Democrat policy

Economics and public services should be at the heart of any political narrative. Too often in the Liberal Democrats both topics have been neglected. The party has opted for a simple middle ground between the Conservatives and Labour. The 2015 General Election was no exception, at least as far as the headlines went. The time has come for a much more robust narrative. Here are some ideas on what this might look like.

The story so far

After 1945 the great Liberal thinkers Maynard Keynes and William Beveridge founded a post war consensus on economic management and public services. This was based on the state taking responsibility for managing the business cycle through fiscal policy, and a greatly expanded set of state services, funded by much higher taxes (compared to pre-war levels), to fulfil a series of new entitlements, designed to ensure that everybody obtained a basic level of wellbeing. These ideas were taken on by the Labour and Conservative Parties, and developed into an overbearing state, which also took over a series of failing businesses, from railways, to steel, to even aero engines.

By the 1970s the state had lost control of its finances and the country was heading for towards economic collapse. Public services had been captured by vested interests, with very little regard for their users. In reaction to this emerged a new conventional wisdom, initiated by Margaret Thatcher and expanded by Tony Blair. This new thinking was again based on liberal principles, and it is often referred to as “neoliberalism”.  The idea was that citizens should be empowered as buyers in a market economy, with the state stepping back to provide only basic services and a basic safety net. Much of the regulation of the business cycle would be taken up by monetary policy, so as to reduce the role of the state. Marginal rates of tax on income were cut, though overall levels of tax increased, if anything.

Probably not coincidentally, this change to public policy was accompanied by dramatic shifts in technology and global trade. Society changed substantially, mostly for the better. Living standards advanced, life expectancy improved, and pollution was cut. But now the country, in common with the rest of the developed world, seems stuck. Most economic growth just benefits a rich elite; businesses hoard excess earnings rather than invest or pay their workers more; property prices escalate. The number of badly paid jobs rises; most younger people are shut out of decent jobs and decent homes. Demand for health and care services grows, while public resources do not keep pace. And prosperity is restricted to a small number better-off areas, especially in the south east of England.

Liberals should worry. Power is being concentrated among a wealthy elite of people connected to big businesses. This trend Is abetted by a highly centralised national government that would rather deal with these large businesses, or else large public agencies like the NHS, than directly with the public. The power of the markets works for many people, but it is failing many more. Many people have inadequate leverage in the markets for jobs and homes in particular, leaving an unequal power balance in both domains. This state of affairs breeds fear and insecurity, which in turn leads to the rise of the political extremes of right and left, which threaten social cohesion.

In the meantime thinking on economic policy has not caught up with these profound changes. Most economists still think of the economy in a highly centralised way, in terms of aggregates across the whole economy, rather than the fate of its component parts. And thinking about productivity is stuck with ideas appropriate to manufacturing industry and economies of scale – and not to the efficient use of the human resources the country actually has to hand, in an economy increasingly dominated by personal services. The left rails against a series of pantomime villains, but resists any serious progressive reform of public services. This old thinking simply concentrates more power and wealth into the hands of a well-connected elite. Public services are dominated by functional silos based on political empires, not people’s actual needs.

We need fresh thinking, and my suggestion is to organise this around four liberal themes.

Liberal theme 1: green growth

Green growth means the advancement of human wellbeing while reducing the consumption of physical resources, especially non-renewable energy. The twin objectives are to ensure that everybody has the chance to live a healthy and fulfilling life in a comfortable environment, while easing the stress on the local and global environment.  There are two aspects to this: developing and implementing technologies that are more environmentally efficient, and breaking the idea that ever increasing consumption is the path to improved wellbeing. This requires a profound change in outlook – though one that is already taking place.

Green growth may or may not entail economic growth as currently measured. That depends on how advanced wellbeing is reflected in the monetary economy. In the short to medium term it entails a substantial level of investment, in more efficient homes, power infrastructure and transport infrastructure, as well as research and development. If properly carried out these investments will entail improved economic growth. Longer term growth requires the harnessing of human resources more effectively. This means a wider distribution of information management and decision making, or:

Liberal theme 2: small is beautiful

Large organisations, be they businesses or government agencies, are one of the main threats to green growth and liberal values. They concentrate power in the hands of the elites that control them, leaving the majority of their employees disempowered, and unable to react most effectively to the world as they find it. The elites are geographically concentrated, leading to geographic concentrations of power and wealth, and the hollowing out of communities elsewhere. This hollowing out leads to a waste of human resources, which must be tapped if green growth is to take root. Furthermore, large commercial organisations have a tendency to hoard surplus earnings (often abroad) rather than invest them, acting as a further drag on the economy.

Of course large organisations also play a vital role in any efficient economy; they are the best organisational form to take on some functions. But these are not as many as often supposed. A liberal government must change the legal and regulatory environment so that it favours large organisations less. This will include reforms to political structures, banking and taxes.

It will also entail a substantial reform of public services:

Liberal theme 3: public services that solve problems

It should be obvious that the main reason that public services are inefficient is that they do not work together to solve people’s problems. Housing, mental health, addiction, crime and poor physical health are very often bound together in one person’s feeding on each other – and yet we persist in trying to deal with each of these issues separately, in separate chains of command all the way to Cabinet. Often the key is making all the relevant services work together in such a way that the user moves to a better way of life, with less call on the public purse. Usually what happens is that the relevant agencies work against each other.

Public services should be organised to meet the needs of people, and solve problems rather than playing pass the parcel. This should be the foremost area for the development of policy, based on best existing practice. There may be a number of possible approaches.  Some of things are clear, however:

  • Changes will be easier to implement if responsibility for public services is more localised and more integrated.
  • Some form of empowered professional intermediary will usually be required to assess the users’s needs, to coordinate the different agencies and, where needed, to negotiate the compliance of the user. Empowerment will mean some form of budgetary control. This means a step back from the current tendency to disempower and de-skill such intermediaries, like social workers and probation officers.
  • Large scale functional outsourcing will usually take services in the wrong direction. Repeated tendering also leads to a dumbing down, a tendency to gloss over more complex issues. The greater use of local social enterprises may well be a better approach in a framework that ensures proper accountability.

Public services should help with some of the most difficult problems relating to poverty; but this has to be in a wider context wealth and income distriubtion. We also need:

Liberal theme 4: redistribution to correct imbalances

A well-ordered, liberal society might not require the redistribution of income and wealth. And liberals dislike redistribution for its own sake – different levels of wealth may simply reflect freely made choices over how to balance accumulating money with other things life has to offer. But in our society imbalances of wealth and income pose a threat. The less well-off are denied the opportunities that should be theirs. Excessive wealth can be used to buy political influence and monopoly power, reducing choices for others. The accumulation of wealth may also lead to excess savings and economic stagnation. Liberals must embrace redistribution, albeit warily.

Redistribution needs to work at two distinct levels: personal and geographical. The wealthy must be taxed on both income and assets (land, in particular), and the worse off must be compensated through access to benefits and rights to state services, especially housing. Children must be a particular focus of redistribution as early years are critical to life chances.

Also funds must be redistributed from wealthy regions and districts to those less well off, to offset the negative network effects of clusters of wealth.

At both levels redistribution arrangements must be designed so as not to create dependency. Those less well-off should be encouraged to improve their lot – but at the same time the level of redistribution must fall as the need for it falls. Systems of redistribution based on universal rights (like the state pension) have their place, but have limits too. Truly liberal systems of redistribution will require careful design.

A policy programme to match

At this stage the idea is to sketch out broad political priorities, and not detailed policy programmes. I do not believe that in most cases a radical departure is needed from adopted Liberal Democrat policy. The high level emphasis will need to be rethought, however.

The main policy implications of taking forward the four liberal themes are:

  1. Political reform, and especially the devolution of power to regions and districts. This is essential to create the right political environment. This may be combined with a new federal settlement for the UK and reform of the House of Lords. Electoral reform is important to ensure a plurality of power – but the priority must be to implement proportional voting systems at local level rather than at Westminster. A further important strand of political reform should be restricting the influence of wealthy individuals and organisations, especially through political donations.
  2. A programme of green investments must be instituted, including high quality social housing.
  3. With public service reform the emphasis should be on bottom-up initiatives – but national funding structures will have to be reviewed to facilitate this.
  4. The tax and benefits system will need to be re-examined. The Lib Dem commitment to increasing personal allowances must be rethought, as it is inefficient as a redistribution policy. Restoring tax credits is a higher priority. Taxation of land in some shape or form makes sense, though we may get no further than reforming Council Tax.
  5. On overall fiscal policy it is best to manage down expectations of additional government spending – though the principle that the government (including local governments) can borrow to invest must be clear.
  6. The banking system must be reformed to allow new, locally-based lenders to come into play. Investment in the “real economy” should be encouraged to create new assets, While avoiding a merry-go-round of existing assets.
  7. The UK should act internationally through the EU to curb tax avoidance, especially by large corporations. Trade agreements and relations with the EU should be viewed through the prism of promoting smaller businesses, and not simply advancing the interests of large multinationals.

Of course there are many more important policies that have a bearing on the economy and public services – not least reducing the level of carbon emissions. But overall such a policy platform should be quite distinctive from the orthodoxies of right and left, and yet fully in tune with modern times.

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Corbyn’s moral crusade leaves too many questions unanswered

On Tuesday afternoon I did something for the first time ever. I watched a Labour leader’s conference speech. I had been encouraged by the advance billing that it would not be a long one. It lasted a full hour, so on that count I was disappointed. But what to make of it, and the revolution that has overwhelmed Britain’s Labour Party?

The first point to make is that its delivery was very low-key – which is entirely what we had been led to expect. Jeremy Corbyn wore a jacket and tie, but not a suit; and his tie wasn’t quite done up. His delivery was quite flat, and he often stumbled over his words. He was unable to deliver humour successfully. The speech itself rambled a bit – a bit of a struggle for me to concentrate completely at that time of the afternoon. But this is all very novel, and designed to show an unspun “authentic” politician, who is a nice man to boot. He had a rather lovely knowing look which he delivered from time to time in brief pauses. The contrast with Lib Dem leader Tim Farron’s speech last week, a much sharper and high octane affair, was very striking. Each is playing to their strengths, and not being rammed into uncomfortable poses by expert advisers.

A couple of things about its content are worth noting. He delivered a strong attack on the Conservative government’s economic policy, describing the shallowness of its supposed success. In this he was picking up from Shadow Chancellor John McDonnell’s speech the previous day. Labour is trying to establish a strong economic narrative to rival the government’s – and one that will garner support from respectable, mainstream economists. Unlike Mr McDonnell though, he said nothing about how Labour would deal with the country’s finances. This was all of a piece with his speech – rallying his supporters by stoking up moral outrage, but not trying to challenge them by hinting at hard choices ahead.

A second point is worth noting: he gave a lot of time to international affairs. I don’t think many previous leaders did this. This may be because he has a bit of form associating himself with international campaigns, not all of them entirely respectable. He made it plain he was for upholding human rights and against warmongering. He condemned Saudi Arabia in particular, and opposed military intervention in Syria. He did not, of course, attempt to tackle rather trickier issues, like Israel-Palestine or human rights in Venezuela, where he has a record of supporting its leftist regime. But this internationalist theme is a striking area of common ground with liberals.

For the Labour Party itself, Mr Corbyn said that he wanted to encourage internal debate, and not worry too much about how this is portrayed in hostile media. He made clear his opposition to the Trident nuclear weapons system, without seeking to impose it on the party as a whole. He also called for political debate to be carried out in in an open and civilised way, in a kinder more caring form of politics – not just within the party, but outside the party too. This gave rise to a standing ovation – though it is possible that this was because his audience mistook it for the end of the speech. Judging by a number of people sneaking out towards the end, the Labour delegates were as misled as I was about the length of the speech – and no doubt some had trains to catch. Those of us outside the party, who have witnessed the tribal abuse dealt out by Labour supporters, will believe any such change in style when we see it. One suspects that they can’t see the difference between plain speaking and throwing insults. Indeed the very next day Deputy Leader Tom Watson described the Liberal Democrats as a “useless bunch of lying sellouts”, among other things. So much for that then.

The whole thing made a lot more sense to me after reading Peter Kellner’s article in the New Statesman, actually written before the speech. In it he points out that by tradition Labour presents its cause as a moral crusade (or jihad if you are a Muslim, though I doubt that Labour politician has been brave enough to use that word!) – and not as a class struggle against capitalism. This helps mask the party’s attitudes to capitalism, which vary from outright hostility, through grudging tolerance, to positive enthusiasm. Mr Corbyn’s speech was firmly in this tradition – morality ran right through it. And it did not take a stand against capitalism – indeed he suggested that small and medium sized businesses should have better access to credit, albeit through a nationalised bank.

And it has to be said that the new Labour party does not seem to be playing to the hard left traditions that many of us were familiar with in the 1980s. The emphasis is on members setting policy in a bottom-up, “democratic” process. I put “democratic” in quotation marks, because a self-selected minority using voting procedures to determine their direction is a far cry from democracy – but Lib Dems adopt the same conceit. Nevertheless this is a long way from party activists acting as a revolutionary vanguard, and setting policy as generals choose lines of attack in real wars. I am told this is “democratic socialism”. Of course, this sort of inclusiveness is quite characteristic of the early stages of leftist revolutions – but I think Mr Corbyn genuinely means it. Some of his supporters may not.

The trouble for the rest of us is this. The shopfront may be a moral crusade that is quite attractive, and behind it may be inclusive and open party processes. But so far all this has produced is a blank slate. And with blank slates there is a tendency to project your wishes onto it. Old-left anti-capitalists think the party stands for nationalised industries and intrusive political leadership. Some of the younger recruits surely think it stands for something more liberal. But outsiders do not know what, in actual, concrete terms, the party stands for.

And based on what Mr Corbyn has said of his own beliefs, and what many of his trade union backers have also said – and what both of these have not said – there is every reason to think that what Labour will eventually come to stand for will not be at all liberal. They do not seem to believe in free markets; they are suspicious of the devolution of power; they do not appear to believe in electoral systems that foster plurality rather than polarisation.

And if the moral crusade turns out not to be based on liberal principles, it will merely consolidate power amongst a different, and likely even narrower, political elite. Until Labour moves off its moral high horse and gets its hands dirty, I will withhold judgement, even if I afford them some benefit of the doubt. Meanwhile I am not tempted to move away from a political party whose liberal principles are not up for debate.

 

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