Vol. 22 No. 14 · 20 July 2000

Make enemies and influence people

Ross McKibbin tells Blair what to do

2807 words

The Government begins its fourth year in office in not very good shape: indeed, in something of a fix. It is probably not too much of a fix: not being the Conservative Party should still see them through next time, but not being the Conservative Party is a rapidly wasting asset. And it is hard to find anyone, even among those who will vote Labour, with any enthusiasm for the Government. Most people, at least outside Scotland and Wales and possibly London, would probably find it difficult to name anything the Government has actually done. It is also obvious from the Prime Minister’s last couple of speeches that he has seriously lost his bearings. None of this should be a surprise: it was clear from the way Labour fought the last election that it would end up like this. The Government’s problem is that its operating assumptions and strategies are wholly or partly wrong; and it will have to emend them.

The Government’s first erroneous assumption is that it can get away with policies which involve no significant spending increases. There have been some increases; but they have either been surreptitious, such that voters do not know of them, or so small that voters do not notice them. There has, for example, been increased spending on the NHS; so comparatively little, however, that no one sees the effect. Underspending lies at the heart of the Government’s difficulties: it frustrates every policy and encourages ministers to attack those institutions which have to live with the consequences of their parsimony. Thus Gordon Brown, who has done almost as much as any man to keep poorer children out of the universities, blames the universities for excluding poorer children. There is no evidence that such attacks have done the Government any electoral good at all. To spend more, of course, means to tax more. As with spending, there have been surreptitious (or, like increases in petrol tax, would-be surreptitious) increases in taxation; but underspending can probably only be corrected, given the Government’s reluctance to borrow more, by increases in direct taxation, and this the Government is not prepared to face. It has convinced itself that such increases are politically impossible. There is, however, little evidence for this view. In the first place, most people have only a vague idea of changes in the rate of taxation and how much they pay. It might be thought unsporting to exploit popular ignorance, but it can be done and governments have frequently done it. In any case, voters are not as stupid and greedy as the tabloid press and tabloid politicians assume them to be. Electors know that taxes have to be paid and that they are the price for good public services; which is why the Scottish electorate, by a large majority, gave the Scottish Parliament powers to increase the standard rate of taxation. And if increased revenue is seen to be spent on health or education, for instance, it makes life very much harder for the Conservatives or any other tax-cutting party. The Prime Minister has done precisely this in defending increases in petrol tax, but it is a pity it took an anti-petrol tax campaign by the tabloids to force him to do so.

The petrol tax is, of course, largely, though not quite, regressive: it is an ideal instrument for governments which do not care much about income distribution. And Britain has now one of the most inequitable distributions of income among oecd countries. True, it is not widening; but it has not narrowed. That is to the discredit of any government, but particularly to a Labour one. The Government has done something: it has increased child benefit and is right to emphasise work and training programmes; but such programmes are often cosmetic, or underfunded, or are so long-term that no one now living is likely to be a beneficiary. And the poor need much more than increased child benefit.

There are two reasons why we should worry about poverty. The first is one of simple morality: it is wrong in a rich society for many to be poor, and that, despite the best efforts of modern political economy, is still the view of the majority of the British people. The second is what the Edwardians called ‘efficiency’. No society in which many are poor can achieve its potential, economic or cultural, any more than a human being with a gangrenous leg can live life to the full. New Labour, however, is an adept of modern political economy and adamantly refuses to admit that the prime cause of poverty is poverty. The impoverished are more likely to be unemployed, to be ill, to die young, to have illegitimate children, to be violent, to thieve, to be semi-literate, to be heroin addicts, primarily because they are poor. A social welfare policy which simply gave the poor large amounts of money would be more efficacious than anything we do at the moment. Much money would certainly be wasted; but it would still be worth it. What will certainly not work is the Government’s increasingly punitive rhetoric (and legislation). Nor, I think, does it do it any electoral good. It merely suggests that ministers are hard-hearted and fundamentally disloyal.

To the extent that the poor have a lobby it is the public sector, and the public sector is no more liked by the present Government than the poor are. Ministers have scarcely concealed their views and seem to get increasing pleasure from the divisive, inquisitorial and futile routines they impose on public-sector employees. A government interested in winning the next election, or the one after that, should be more careful. To work effectively, the public service, more than any other institution, needs esprit de corps, and there is now – I speak from experience – very little of that. Voters, however, tend to blame the Government if the public sector works badly. Moreover, public sector employees are popular with electors – much more popular than politicians. Despite what the press might tell ministers, teachers are admired by parents; nurses by patients; firemen and ambulancemen by those whose houses are burning down or whose appendixes have ruptured. This dogged admiration for the public sector is an important fact of British life and has major electoral consequences: the Conservative Party paid a heavy price for its alienation of the public sector and its professional employees, and the Labour Party seems set to do exactly the same.

Equally dangerous are the Government’s assumptions about the economy. The credulity with which ministers accept Thatcherite claims as to the vigour and flexibility of the British economy is very surprising. It is perfectly possible for us to agree that desirable things happened to the British economy in the 1980s without at the same time feeling obliged to deliver embarrassing lectures to the Germans and the French – of all people – about how their economies could become as productive as the British. Whatever Mr Blair might think about the leaders of Old Labour, at least they had no such illusions about the capacities of the average British businessman. To make matters worse, ministers have adopted the two principal tenets of Thatcherite economics: that the only thing which matters in production is labour cost and that the only function of the central bank is to control the rate of inflation. Indeed, they hold the second of these much more strongly than the Lady herself did, while the first only encourages the worst habits of British businessmen.

How long this historically bizarre policy can be followed is anyone’s guess. Much depends, presumably, on how easily we can continue to fund the huge current account deficit and whether we enter the euro-zone (and the two are related). The insouciance with which the Chancellor of the Exchequer regards the current level of sterling against the euro and his domination of economic policy remind one alarmingly of the relationship between Ramsay MacDonald and Philip Snowden in 1931: between a Prime Minister who senses that there is probably a better alternative but who lacks the authority or self-confidence to choose it and a Chancellor of formidable personality who is a rigidly orthodox practitioner of ‘this Treasury’s’ traditional policies. That New Labour should end up like this is as depressing an outcome as can be imagined.

I suspect that one explanation for the Government’s credulity comes from its profound admiration for the United States. This admiration is genuinely puzzling. While there are important cultural similarities within the English-speaking world, and they are what the French perceive when they use the term anglo-saxon, British and American political cultures as they have developed this century are quite distinct phenomena. Very few in the Labour Party have believed (except perhaps for a moment in the 1930s) that America was a political model worth copying: quite the reverse. It is further puzzling in that ministers themselves recognise that in certain areas, for instance gun policy, the United States is anything but a model. Yet in social policy or criminal justice American influence has become overwhelming, to the point where the Government’s behaviour can be irrational and impervious to evidence. (See Jack Straw’s attitude to drugs.)

There is one reason why America might be so attractive to New Labour: its public life is now conducted at an extraordinarily elementary level. To politicians who have abandoned one faith without discovering another such simplicity is a godsend. To be like America, however, we would have to start all over again, which would mean not only an institutional revolution, but a revolution in social attitudes. In its attachment to the welfare state, and all that goes with it, the British electorate is European not American. If we are looking for comparators, Scandinavia and the Netherlands are much more appropriate. Indeed, in their economic-cultural-political mix the Dutch are more like us, and we more like the Dutch, than anyone else: they are simply better at it. The Netherlands, in its combination of a liberal social policy, secularity, a generous-minded welfare state, entrepreneurial vigour and a certain Third Wayishness in economic policy, is a much more appropriate model for us than the United States. Instead of being like the Americans, which we cannot and probably do not want to be, we should be like the Dutch, which with a little effort we could be – much to our advantage.

Equally inappropriate now (or becoming inappropriate) is the Government’s electoral strategy, which has hitherto been based on a non-partisan inclusiveness. Given that voters were clearly weary of 18 years of intensely partisan government, this was a defensible strategy and electorally successful. Yet for a number of reasons it seems to me to have only a short life. In the first place, it has become tacitly partisan, only in the wrong direction: not included are the relatively poor. In the second, it is a strategy which cannot cope with well-placed opposition. Faced with the prospect of serious opposition the Government tends to capitulate or align its policies to those of the opposition, and in so doing makes a couple of very doubtful assumptions: that the tabloid press largely determines popular political opinion and that in ‘populist’ issues, typically law and order and immigration, it must match the Conservatives. Both assumptions are, at best, only partly true. The relationship between what the press says and what people believe is quite complicated, and while it would be foolish of any government to ignore press opinion, it would be equally foolish to exaggerate its power. Labour’s victory in the 1997 election, for example, was not due to the support of the Sun – it would have won whatever the Sun said. The Sun supported Labour because it knew that is what the majority of the electorate was going to do. People are in fact sceptical about much of what they read in the press; many do not even know which political party individual papers support. The historical record also suggests that politicians who tell the press to mind its own business usually get away with it.

It is also a mistake to assume that there are certain ‘populist’ issues on which Labour is compelled to be as nasty as the Conservatives. Labour politicians are bad at estimating the strength with which people hold particular views. What is important is not whether voters (say) hate asylum-seekers, but whether they hate asylum-seekers more than they love, for example, the NHS. And in practice the great majority love the latter more than they hate the former. Labour gains little electorally from its descent into the mire of immigration politics: it does not win the support of the real xenophobes while it earns the contempt of almost everybody else. And, for what it is worth, the electoral evidence does not hold much comfort for the asylum-seeker-haters. There are doubtless places, like Dover, where immigration politics always matter, but at the Romsey by-election Charles Kennedy made such a point of his comparatively liberal attitude to asylum-seekers that hardly any voter could have been unaware that asylum-seeking was an electoral issue. Although psephological wisdom has it that the Conservative defeat was due to ‘local issues’ (as if asylum-seekers were not a local issue), it has to be the case that hostility to asylum-seekers was not uppermost in the minds of the Romsey electors.

As a strategy for mobilising the electorate the present one has no long-term future. The Government must find reasons for the electorate positively to want to vote Labour. At the moment these reasons are almost all negative; and sooner or later voters will simply give up. This is a strangely unhistorical attitude on the part of a government whose advisers are constantly searching for ways in which ‘progressive’ governments in the past persuaded voters. The Prime Minister is alleged to admire the old Liberal Party and to regret its demise. One wonders whether he knows anything about it, for its whole history was one of making enemies among the country’s élites, often deliberately. The Asquith Government, not normally deemed to be a failure, won the enmity of the House of Lords, the Army, the Protestant Irish, landowners, protectionists, the City, much of the Church of England and King George V. No Labour Government, not even Attlee’s, faced such a coalition. There was, of course, an unintended element to this; but it was the inevitable outcome of a strategy which originated with Gladstone and was continued by his successors: that you won elections by mobilising voters around pieces of large-scale legislation which benefited many, but which were also partisan and contentious. What was good for Mr Gladstone is good for Mr Blair – as I am sure he would be the first to admit. The Prime Minister is also said to admire Lady Thatcher, and Gladstone’s was exactly the same strategy as the one she followed. Followed, indeed, to the point of recklessness. But she did win three successive elections.

Is the Labour Party up to such a strategy? A good deal will probably depend on the forthcoming spending review, and how far that makes life difficult for the Conservatives. But there are in general not many grounds for optimism. We tend to assume that ministers would do certain ‘progressive’ things if only they had the confidence. But the only time the Prime Minister speaks with confidence is when he is in Thatcherite mode; and his extraordinary comments to the WI delegates about Little Lord Fauntleroy, Karl Marx and egalitarianism suggest he has given no serious thought whatever to something as central to the Labour Party as the distribution of income. Gordon Brown says he doesn’t like the universities but has evinced no other signs of wanting to endanger the status quo. John Prescott appears a broken reed – but could benefit from the spending review. Margaret Beckett, the minister most responsible for Parliamentary reform, has been an almost complete failure. The David Blunkett of Sheffield Council days is scarcely recognisable as the present Education Secretary; while Jack Straw’s attitudes are all too familiar. And they are the big-hitters. Furthermore, the constitutional and political powerlessness of the Parliamentary Labour Party, a powerlessness which has in many ways been the cardinal fact of the Labour Party’s recent history, has meant that ministers have been under little pressure to mend their ways. All of this could have a disastrous conclusion: there is a difference (hard though it often is to detect), and one worth defending, between the present Government and the bottomless cynicism of the contemporary Conservative Party. Yet it is perfectly possible, if not at this election, then the next, that we all will have to live with this cynicism because the Labour Party was too feeble to give the electorate a good reason to vote for it.

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Vol. 22 No. 15 · 10 August 2000

It was Ross McKibbin’s bad luck that Gordon Brown should have announced large increases in public spending just as his article criticising the Government’s failure to spend more was published (LRB, 20 July). But he has no excuse for the other errors he makes.

As the Tories, the CBI, the Institute for Fiscal Studies and many others have all pointed out, Brown has increased direct taxation substantially. He has raised taxes paid by businesses and, through changes to national insurance payments and income tax allowances, by middle-class individuals. He has not, however, raised the basic or higher rate of income tax, in line with Labour’s manifesto commitment. Some indirect taxes, including petrol tax, have also risen, but in the last Budget the Chancellor actually discontinued the fuel-tax ‘escalator’ he had inherited from Kenneth Clarke.

The real novelty in tax and spending policy has been that the taxing has been done before the spending, to the great benefit of the public finances. The reduction in the National Debt since 1997 will translate into scope for additional spending of £3 billion a year from 2003. And the recently announced increases in expenditure will not be subject to emergency belt-tightening: I know of no economist who believes them to be anything other than easily affordable even if there is a recession.

Although the gap between rich and poor widened in the UK during the 1980s and early 1990s, this country does not, pace McKibbin, have one of the most unequal income distributions of OECD countries. The figures show very clearly that the UK is a little less equal than Germany and a little more equal than France. The Western European nations are roughly similar in this respect.

I do not believe the Government is complacent about either poverty or the UK’s low level of productivity. It is hard to characterise a Chancellor who introduced a minimum wage and a new tax credit to top up low pay, and raised £5 billion from privatised companies to pay for reducing unemployment as not caring about poverty. As for inflation, there is nothing worse for the poor. Rising prices do most harm to those on low and fixed incomes because their incomes do not keep up. Economists describe the reduction of high inflation as a policy which is ‘super pro-poor’, in other words one which benefits the worst off far more than the best off. The Netherlands, held up as a model by McKibbin, has a government budget surplus and only 2.5 per cent inflation. There is a great deal of consensus among economists that the profession made a mistake in believing large government budget deficits and inflation don’t matter. Almost all now believe, as a result of compelling evidence over more than three decades, that macroeconomic policy should aim for no more than moderate deficits and for reasonably low inflation. Disparaging this evidence-based shift in the professional consensus as ‘rigidly orthodox’ is puerile.

Diana Coyle
London W13

Ross McKibbin argues that New Labour should stop trying to emulate the American model and consider the Dutch. That might be a good idea, but only as long as the dikes here hold against the rising tide of Amerikaanse toestanden – ‘American conditions’. At the moment, after more than a decade of not-so-Third-Wayish policies, the Dutch political class has lost some of its enthusiasm for what the cheerleading business press here calls ‘modernisation’, i.e. the adoption of the Anglo-Saxon model. An important reason for their hesitation has been a growing awareness of how that model – disastrous transport and public utility privatisations, skewed school systems, worsening snob and yob cultures – has panned out in Britain.

David Sogge

It is not surprising that Ross McKibbin is unimpressed with Tony Blair’s Government. What should be more worrying for New Labourites is the way that it has failed even on its own terms. The tacit aim of New Labour has been to deliver enlightened, competent, modern, unideological government. They have, however, been stupid enough to make three clear errors. First, they have presented themselves as a party of principle, which they patently are not. Hence so many wonk-hours wasted looking for something to call the ‘Third Way’. Second, they have presented and continue to present themselves as a whizz-bang party which will change everything for the better overnight in the teeth of the forces of conservatism, when their method is clearly designed to produce gradual improvement, without making too many waves. Third, all too often they have given in to these same forces of conservatism – the culprit here is usually Jack Straw, who dismisses rational, enlightened measures such as freedom of information, favouring instead a dash to the right with Ann Widdecombe, a race which, as nearly all commentators (McKibbin included) have pointed out, he cannot possibly win.

Kieron O’Hara
West Bridgford, Nottinghamshire

The 3.1 million workers given the right to four weeks’ paid holiday by this Labour Government would, I hope, disagree with Ross McKibbin’s statement that ‘most people … would probably find it difficult to name anything the Government has actually done.’ So would the beneficiaries of the minimum wage and the working families tax credit. The difficulty is that the working poor tend not to be members of the Labour Party. So activists, and presumably Oxford intellectuals as well, have lost touch with Labour’s real achievements at the same time as the Party has made mistakes, as in the selection of its candidate for London mayor, for example.

Chris Purnell
Pratt’s Bottom, Kent

Vol. 22 No. 16 · 24 August 2000

There are several points that should be made in reply to Diane Coyle’s letter (Letters, 10 August). First, as I made clear in my article, I was fully aware that increases in Government expenditure were to be announced. How could I not be? Nothing in recent times has been more signalled. And, believe me, I welcome the increases. But, as Coyle must surely know, this is ‘catch-up’ expenditure, and the point is whether the increases were significant enough to repair the damage of the last twenty years. Even assuming that all the money is spent, and it is quite unclear how a privatised transport industry can or will spend money required of it in the absence of much stricter political direction, public funding will remain – in my view – much too low. The squeeze on public finances, which the announced increases only to some extent correct and which has been remorseless under the present Chancellor, was wholly unnecessary and has done serious damage to the country’s social infrastructure. I am also fully aware that the Chancellor has increased taxation. But if we are to raise public expenditure to appropriate levels, he will have to increase taxes further, or borrow, and I would be surprised if he did either. I hope Coyle is right when she says that the present increases are proof against recession, but I would not bet on it.

Second, the gap between rich and poor, Coyle demurely notes, ‘widened’ in the 1980s and 1990s. That is one way of putting it. In Britain, as in other English-speaking countries, income inequalities are now at late 19th-century levels, and such inequalities have consequences. This country, for example, has a degree of infantile and juvenile poverty, both economic and cultural, which would have shocked our political élite thirty years ago. Such deprivation is, of course, partly beyond direct government intervention, but the principal reason for it was the progressive withdrawal of various forms of income support under the Conservatives and changes in the labour market. I repeat what I said before: it would be better to give large unconditional amounts of money to the ‘work-poor’ than continue the half-hearted and increasingly conditional policies now being followed.

Coyle notes that the Government imposed a windfall tax on the privatised companies as a way of ‘reducing unemployment’. But that tax was not designed to reduce unemployment, at least as that phrase is normally understood. It was designed to finance the New Deal; and the New Deal was designed to get people off the unemployment registers into a programme which is part work and part training in the hope that its graduates will then find permanent employment. I was in favour of the tax and am sympathetic to the aims of the New Deal. But I am sceptical as to its efficacy. It is underfunded and too narrowly focused: the problem is much wider. I doubt that it would survive any serious weakening of the labour market. Few such programmes do.

Third, inflation. The effects of inflation vary. Some people do well, others badly. How they cope depends on how far they can protect their real incomes. The poor protect them badly because they are already poor – and the government of the day may compound their difficulties. It is historically false to assume that inflation is, as it were, politically neutral. More important, however, is that one of the best ways of making people poor is to make them unemployed, and one of the best ways of doing that is to put anti-inflationary policies ahead of all others. At present, in determining minimum lending rate – now the main instrument of monetary policy – the Monetary Policy Committee of the Bank of England is obliged to concern itself primarily (though not exclusively) with the likely rate of inflation. We have so far been shielded against the employment consequences of their actions because the economy is generating a larger number of part-time jobs in the tertiary sector than it is losing full-time ones in manufacturing and because we can fund the current account deficit. If either of these ceases to be the case, and monetary policy remains the same, we are in for trouble. And the exchange rate of the pound seems not to be a matter of much concern to the Treasury.

One final point. I am struck by the historical innocence of Coyle’s letter. She writes as if the ‘consensus’ now apparently reached by the majority of economists is in some way new. That is not so. The kinds of policy that Coyle espouses – policies almost invariably called ‘prudent’ – are as old as political economy itself. I would guess that in 1931 the majority of economists were urging the wisdom of more or less the same policies. Rigidly orthodox they may not be; orthodox they certainly are. Whether such a consensus exists depends, I suppose, on which economists you have lunch with. As far as the policies of the present Government go, I know of no such consensus.

I think Chris Purnell has rather misunderstood my argument. I was not saying that the Government has no achievements. That would be absurd. I argued that as a result of the timidity of its programmes and its extreme reluctance to excite opposition, the majority of people in practice would find it hard to name anything the Government has done. That is no doubt unfair on the Government, but it is also the case.

Ross McKibbin
St John’s College, Oxford

I suppose it is an accolade that Millbank thinks enough of the LRB to sponsor some communications in rebuttal of the mild criticisms of the Government made by Ross McKibbin. However, the Flett Socialist Instant New Labour Rebuttal Unit is ever at hand as well. Diane Coyle writes of Gordon Brown’s ‘huge increases in public spending’. In fact, the increases restore spending levels to those of the last Government but even Major didn’t have the cheek to hand over huge sums of public cash to fat cat companies through PFI/PPP schemes, which is what Brown means by public spending.

Keith Flett
London N17

Vol. 22 No. 18 · 21 September 2000

The Poverty Lobby discredits itself even in benevolently neutral eyes when it goes in for hysterical exaggeration. Thus Ross McKibbin (LRB, 20 July) spoils his own case when he writes that ‘in Britain … income inequalities are now at late 19th-century levels.’ It is certainly true that since those days the educating classes have taken a gigantic knock relative to, say, hairdressers, but how on earth can McKibbin be so sure about the relative inequalities of the late Victorian age, given that the statistics are so inadequate? The British Army in the Boer War had to turn down a quarter of volunteers because they were physically too feeble, from malnutrition; the architecture of British towns tells its own story: the townhouses of the aristocracy and the plutocracy in Mayfair (one is now the Dorchester) or the middle-class fortresses of, say, Pollokshields or Kelvinside in Glasgow had to be kept going by an uncountable host of badly-paid domestic servants – a tenth of the adult population, if you could count them. And what of the millions of penniless Irish or Eastern European immigrants, crowding into the Jack the Ripper quarters of the great cities, or the Hebridean crofters forced to climb perpendicular rocks to lasso fulmars to give substance to their porridge?

It would have been more interesting had the Good Doctor said what might even be the truth: that relative inequality in the 1930s, or even the 1950s, was less than today. He would then of course have a problem: how to explain that, with state spending for the relief of poverty rising, relative poverty has got worse, not better.

Norman Stone

For Ross McKibbin to reach a fair view of the Blair Government, he might have considered what has not happened since 1997. Handling Irish terrorism has been an extremely delicate operation and may yet fail, but Blair’s strategy of edging terrorists towards constitutionalism seems so far to have succeeded. Heading off separatist Scottish nationalism through devolution may also fail, but this is the only route towards that desirable outcome which a humane democracy can take. Diverting Britain from the dead-end of Tory Europhobia marginalises the Conservative Party with serious opinion, especially when Blair takes care to retain what was best in Thatcherism: privatisation, the curb on trade-union power and the retreat from corporatism. Failing to wreck the healthy economy inherited from the Major Government and keeping promises to the electorate may not thrill the Far Left, but at least it has shielded this Labour Government from the mid-term economic crisis that prevented its three predecessors from gaining two successive full terms in office. Abandoning the old, class-ridden, unrealised and therefore politically disillusioning promises on social issues may have provoked some of Labour’s conservatives, but piecemeal attacks on social problems (‘social exclusion’ in its various dimensions: sink estates, illiteracy, youth unemployment and specific areas of poor educational or health performance) offer some hope of consensual and therefore secure advance. And failing to reform the electoral system while simultaneously appropriating Liberal policies is the best way to re-create the party of the Left which marginalised the Conservatives for so much of the 19th century.

McKibbin, who has entertained us all during the past decade by taking pot shots at every government, perhaps needs reminding that a Labour Government which seeks re-election cannot afford to concern itself only with opinion on the Left.

Brian Harrison
Corpus Christi College, Oxford

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