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Labour's first term - and its next
/ John Lloyd - [Electronic ed.] - London, 2001 - 5 Bl. = 25 Kb, Text
. - (Working papers / Friedrich-Ebert-Stiftung, London Office ; 2001,4)

Electronic ed.: Bonn : FES Library, 2001

© Friedrich-Ebert-Stiftung

The British Labour Party approaches an early summer election with an apparently impregnable lead in the public opinion polls. No event or series of events appears to much affect this. The world’s first urban society is to a very large degree insulated against the hard times visited on the countryside by the ravages of foot and mouth. An inefficient (compared with most West European countries) standard of public infrastructure is still plausibly blamed on almost two decades of Conservative starvation of the state sphere – though in truth, Britain has been under successive governments and in the private sector, a low investment country for much of the past century. An assault from left and right on some of the efforts of New Labour to boost the national image and its own, notably the national exhibition at the Millennium Dome, has made some hits, but only light ones.

Two factors which have little to do with New Labour are important here. First, it inherited from the Conservative government of John Major an economy which was then the fastest growing of the large states of Europe: the generally good conditions in the world economy until this year have ensured that economic management has not had to struggle with severe recessionary pressures. Second, the Conservative Party is weak – not as in Germany, because of a corruption scandal, but because it has been unable to define its purpose since its heroic decade of the eighties, when the Thatcher leadership defined a new style of neo-liberal governance, privatised large parts of the public sector, reduced the powers of the trade unions and dragged Labour into the political centre. In doing the latter, however, it itself was unable to re-occupy that centre; and the young leader of the Conservatives, William Hague, has not seriously attempted to do so. The party’s raucous opposition to the Euro and most of the European Union’s policies, its deliberate marginalisation of the pro-Europeanists in the party, its harsh line on immigration, and its confusion over whether or not it is a tax-cutting party has meant it has only once, and that briefly, equalled Labour in public esteem over the past four years. New Labour has, of course, taken joyful advantage of this; but the Conservatives’ shift to a right which no longer commands the support of much more than a quarter of the British electorate was not its doing.

But even so – New Labour’s achievements in the first term have been considerable. This is not, one should say, the view of all – even of all its supporters. As the election approaches, many commentators sympathetic to Labour write of their disappointment that – given its large parliamentary majority, its high ambitions and the many tasks which have to be performed to raise the level of Britain and its people – its record has been so modest. I do not share this view. This article is an argument as to why I do not.

The first thing one should say about New Labour is that it has changed the terms of the political debate in Britain, and assisted in changing it more widely. Because – unlike the SPD, or the French Socialists, or the Italian Democrats of the Left – it had never been a Marxist party, Labour never felt it necessary to be fully revisionist. Never, that is, until the New Labour leadership – Tony Blair, Gordon Brown and Peter Mandelson were the key members – assumed control in 1994 after the death of John Smith. Almost immediately, Blair made it clear that the 'new' was more important than 'Labour'. He signalled the fact most forcefully by replacing Clause Four of the party’s constitution – which had committed the party, when in government, to bring almost everything into public ownership – with one committing it to a market economy, an extraordinary shift. This was followed by a series of speeches by the party leaders, making clear that it would observe the same economic parameters as the Conservative governments; that it would not seek to take back those sectors which had been privatised into public ownership; that it would be an enthusiastic member of both the European Union and NATO; that it would not significantly increase the powers of the trade unions; and that it would retain the British/American nuclear deterrent. Not all of this was, in fact, new; but some of it was, and the presentation of the whole was a sustained and energetic effort to present the party as a progressive-liberal party, keen only on what worked.

This bold move has denied the middle ground to the Conservatives. By taking socialism out of the equation, New Labour has been able to appeal to 'Middle England' in a way it has not since the immediate post-war years. Its left wing has been outflanked, but has been unable to make much of a fight against the party’s centrist policies. Business, especially large corporations which favour Britain’s joining the Euro, prefer the relatively pro-EU Labour Party to the anti-EU Conservatives.

The move towards Europe is seen very differently in Britain than in almost any continental states (only the Scandinavian states are close to the UK mentality). The sense – especially strong in the Benelux countries, France, Germany and Italy – that the Union is a common endeavour which is central to present and future politics, is very largely lacking. A government which, like Labour, wants to (as its phrase goes) "bring Britain into the heart of Europe" has to make the case against the constant and bitter opposition of a press which is largely hostile and a public which remains – so the polls tell us – resolutely against exchanging the pound sterling for the Euro. Where continental states see British foot-dragging over issues like majority voting and tax convergence as being much of a piece with Britain’s persistent scepticism, the British see a government which appears to be readying itself, after the next election, to recommend entry into the Euro to the public in the referendum it must hold on the issue.

This has been the most pro-Union government since the Conservative administration of Edward Heath took Britain into the (then) European Economic Community in the early seventies. In some ways more so: for where Heath could assure the British that this was a mere economic arrangement with no or few political overtones – a manifestly false approach –, Labour is forced to admit that entry into the Euro marks a qualitative change, and that once (if) in, Britain will be more firmly a part of the European continent than it has ever been before. But getting there will be hard: even with another convincing win over the Conservatives, Labour will have to convince an electorate which is no longer loyal to whatever the party for which it has voted wants to do, but instead evaluates and judges each issue on its merits. It will be the largest challenge it has yet had to face.

In government, Labour has been economically cautious for the first two years of its life, and has for the last two years greatly expanded state spending to the point where warnings are being issued that it is overstraining the public sector in the demands it is making upon it. The public debt has been wiped out, taxes have been raised a little – though not income tax – and the tax take as a whole has grown steadily because of continuing strong growth. Unemployment is now below a million – a figure not seen for two decades. Programmes to assist young people into work have been criticised as unnecessary at a time of economic expansion – but have probably aided the decline in unemployment, while measures taken to raise the standards of the poor have already raised living standards at the bottom end of the income scale by around ten per cent.

The emphasis has been on what Labour once condemned: on the supply side of the economy. Above all, Labour – in common with other European governments – has put much of its faith in education, training and the stimulation of individual enterprise to tackle the large and continuing problem of the 'underclass' of people for whom life in an increasingly sophisticated and skilled labour market is a bewildering series of exclusions. Britain – especially when compared to Germany – has been for much of the last century a poor trainer of its workers. The elite schools and universities have produced a governing and intellectual class which remains of high calibre; but the lack of care for and investment in basic and technical schooling, coupled with the lingering remains of an attitude of mind which sees these as inferior, has meant a workforce less skilled than most in advanced countries. It has also meant an underclass more stubbornly resistant to change and self advancement, and a culture which can be brutish and even violent.

Labour – this is again a common approach of all left-of-centre governments – has realised it must restore power to the state; it is the sine qua non not just of a progressive but of any responsible government after the leeching away of its authority and legitimacy in the closing decades of the last century. It does so as the trends in taxation – so far relatively uncontroversial – are slightly up in most OECD countries, and as the prevailing assumptions and debate are not, as they were in the eighties and nineties, obsessed with cutting government spending but instead with effectiveness of that spending. This is true in low tax/spend states like the USA (around 30 per cent of GDP) and high taxation states like Sweden (50-plus per cent of GDP).

It cannot, however, simply strengthen the state. It has not the resources, competences and flexibility; at a more mundane level, it finds it hard to afford the salaries. This is a vast and understated problem for progressive governments, most clearly seen in France. There, the ENArques who had governed French society and French business since the war are learning – as Erik Israelewicz, editor of the business daily Les Echos put it – that "power no longer, or only marginally, remained in government ministries, but has moved to the boardrooms of private companies". (The French socialist-green-communist government is increasing the number of these private boardrooms through a continuing series of privatisations). Public service is in danger of becoming a sink, rather than a goal, of talent; that problem remains largely unsolved anywhere (the diplomatic service of the USA, global hegemony that it is, is suffering a severe recruitment crisis). Thus partnership at every one of its operating levels, from global to individual, is no longer an option. The task is no longer to replace capitalism but to engage it in the central social tasks which only the state and democratic institutions can confront; and in this, all left-of-centre parties/governments have much to learn, especially in distinguishing themselves from a capitalism which tends to swallow the public sphere in its search for extra areas of profit. The simultaneous promotion of an efficient and productive private sector with the development of an efficient and welcoming public sphere is the goal of all responsible governments; for the moment, the left-of-centre parties have the initiative.

That initiative is, however, less secure than it was. At the end of the last century, the social democratic parties of the rich world celebrated an almost complete hegemony in Europe and North America. Of the states of the Group of Seven major industrialised countries, only Japan did not have its major party of the left in power; of the major states of Europe, only Spain returned a government of the right. The concerns of the left – the revival of the public sphere, the furthering of greater equality, the efforts to frame foreign policies and actions within an ethical dimension, the concern to improve the lives of the poor and to improve working lives – were all, in different ways in different countries, given a new prominence. These remain central to the left’s project, and remain actively discussed within the framework of the 'third way' or 'progressive governance' seminars which bring together the leaders of left-of-centre governments each year. But there are now new challenges – challenges which Labour will have to confront if, as expected, it wins its second term.

The election – disputed as it was – of the Republican George Bush as President of the USA, and his evident intent to govern from the right rather than the centre, at least in economic policy, again raises the example in the world’s leading economy of a model of low taxation coupled with an encouragement of social – often religiously-based – activism as an answer to social problems and division. This is a model which finds more of a welcome in Britain than in most European states; especially when coupled with an increasing scepticism on the part of Bush administration figures towards the European Union, one which chimes well with the British right. Britain’s tax-and-spend ratio – at around 40 per cent – is situated between the European high-spenders and the US low-spend; it presently commands general assent, but could come under renewed pressure if public services are not seen to improve and if the USA is successful in reviving its economy through tax cutting. In the June election, the Conservatives’ largest theme is that the taxes have been wasted – "You’ve paid the taxes: now where’s the service?" is the message. It is not likely to succeed this time: it could grow in acceptance later.

This pressure will be deepened if the right wins in Italy. Italy was the first of the major European states to return a government of the left; and in the Ulivo, progressives outside of Italy saw a government prepared to tackle corruption, inefficiency and clientelism in the Italian state, which had grown huge under previous governments of the Christian Democratic right, and of the centrist coalition led by Bettino Craxi. In many ways, the Ulivo governments did fulfil their promise. The public deficit was brought down in order that Italy qualify to enter the Euro, inflation was reduced, government became clean (there were fewer high-level financial scandals in Italy in the late nineties than in France or Germany), and large efforts were made to improve regional governments and tackle the old problem of southern under-development and criminality. But the other old Italian problem – fissiparous coalitions and debilitating quarrels between the parties and leaders which form the coalition – could not be overcome. The left lost its aura: in Silvio Berlusconi it has an opponent of some charisma and huge wealth, who also owns the major part of Italian TV. He, too, proposes large tax cuts as a way to stimulate the Italian economy.

His success is based on another issue, which all governments must face with greater coherence and determination: mass immigration into Europe from the east and south. It is one of the more difficult features of the complex of movements we call globalisation – the ability of large groups of relatively poor people to fulfil their ambitions, usually with the aid of 'people carrier' gangs, to make a better economic life for themselves than they can hope for in their countries – whether China, or Albania, or Nigeria. The USA is a society in part founded on this phenomenon, and is relatively good and liberal in continuing to deal with it. Europe is not. Its two old nations, Britain and France, had been constrained to 'welcome' imperial citizens; its largest economy, Germany, has only with this centre-left government tackled a legislative-psychological block on anyone not of the German race being a citizen; most other states, as big Italy and little Ireland, had been used to export their huddled masses, not receive them – one of the largest reasons why the part-xenophobe Italian right is likely to win the election next month. In its second term, New Labour must do much more in two directions: one, to clarify, make transparently just and justify immigration laws; and second, make the case for larger engagement with and export of aid to countries whose citizens flee them.

This cannot be done for much longer with a combination of anti-racist measures for ethnic minorities who are already citizens, coupled with ever-tougher controls on those who are not. The moral issues, for the left, are too compelling to allow for comfort; more materially, the need for most European societies to retain their population levels by means other than birth – which is now failing – becomes urgent. Europe faces a large question which can only be resolved by its left: how to transform its states into receivers, rather than exporters, of immigrants? How, that is, to become more like the USA and Canada in at least this area.

These are vastly difficult issues to confront. The right has an easier task, in playing upon a popular reluctance to see massive change in society, competitors for jobs especially at the lower-paid end of the labour market and cultural differences. No European society is free of ethnic tension; indeed, it is tending to grow rapidly. As this is written, one of Britain’s Victorian industrial towns, Oldham, is confronting a stand-off between its large Asian minority and some whites, who charge that Asian youths have declared some parts of the town as 'No-go' areas for whites and have been inflamed by the savage attack by an Asian gang on an elderly white man. Spokesmen for the Asian youths say that they are the constant subject of racist attacks, and that the police do little. The scene can be reproduced across the continent: the grievances of both sides deepening as the perception that the state has abandoned them to the attacks of the other side takes hold.

Will it be possible to create, in our old societies, a new approach to race, culture and difference? One state which has made this a large part of its civic foundations – Canada – recommends itself as an example. There, multiculturalism is the assumed basis of the state, coupled with an attachment to civic duties and rights to which all must adhere. Through facing and to an extent surmounting the challenge of a Franco-American culture in Quebec Province by a nationwide elevation of French to parity with English, Canada has countered the charge that all nationalities are forcibly assimilated into an Anglo-Saxon culture which destroys them. Immigrants to the society are given clear guidance and rules of governance, but they are not made to conform to a cultural type.

If something of this kind is not attempted and immigrants – especially the poor – are kept out with ever-tougher controls, the illegal immigrant population will simply swell, and the anger of the society against them grow. Illegal immigrants, by definition, cannot be citizens; to make citizens of immigrants from cultures widely different from our own takes the kind of conscious, state-led effort with which the left’s traditions fit, and are comfortable. It is one of the largest challenges facing us.

New Labour’s second term will be more testing than its first – it cannot count on good economic times; it must win a referendum on the Euro if it wishes to deepen its engagement with the European Union; it no longer has a close ally in the present IUSD administration; the opposition will, probably, begin to regain strength. Old problems – such as the guerrilla attacks in Northern Ireland – have diminished but are not solved, and may again become critical. Yet in its first four years, Labour – out of power, before then, since 1979, with no period in which it has had two full terms of government, with a history of economic crises badly handled – has proved itself to be capable of good governance. That was a necessary start; the next step is to make stronger the sinews of the public sphere, improve the openness and democratic habits of the society and lay the base for the 21st century being a progressive one.

John Lloyd is a former foreign correspondent for the Financial Times and Associate Editor of the New Statesman

The opinions expressed in publications of the Friedrich-Ebert-Stiftung London Office are those of the author(s) and do not necessarily represent the views of the Foundation.

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