What is Labour to do?

Ross McKibbin

In Imperial Russia there was a ‘What is to be done?’ genre of political writing which was – except, perhaps, in the case of Lenin – rarely optimistic. On the contrary, there tended to be an assumption that there was too much to do and probably no chance of doing it. In Britain we find ourselves, mutatis mutandis, in an analogous situation. We have a government which has scarcely any reason to exist and hardly anything of importance to say to the electorate, but we face an almost unendurably long election campaign which that government has at least an even chance of winning – in which case nothing will be done at all. When, therefore, we ask what is to be done, we must also remember that the problem of arrival is inseparable from the problem of what we do when we arrive.

Nonetheless, this is the first time for many years that it has not been utterly fanciful to wonder what a non-Conservative government might do. In practice, because of the electoral system, that means a Labour government. But it also means a Labour government which seems remarkably unready for office. Despite the endless policy reviews of the last few years, it took just a few inaccurate and predictable press comments about taxation to expose frailty at the top of the Labour Party – a reluctance to defend an entirely defensible policy being one of them. What, then, is to be done?

Before it writes its first Queen’s Speech the Labour Party needs to recognise the domestic and external constraints upon its freedom to manoeuvre. Domestically, it will have to cope with the formidable array of vested interests deliberately created by the Conservatives: should they win again, it will be these interests which do it. In the last 13 years the Conservatives have had virtually no other objective than to fashion an electorate which will vote Conservative as a matter of course, and simultaneously to so marginalise the Labour Party that, regardless of circumstances, it becomes an unthinkable alternative. They succeeded, and it is no secret how this was done or what the consequences were: success came in a paradoxical and disastrous way. It has hastened the country’s relative decline, yet as a system it can survive in almost no other environment than decline. At almost every point on the downward path it has been possible to convince enough people that they have a short-term interest in its survival, an interest which overrides what most of them know to be true: that in the long term the system accelerates decline. This, in turn, suggests that any government which attempts to reverse decline – by, for example, dethroning private housing from its central place in the political economy – risks something like social upheaval, since it threatens the expectations of those who were encouraged to believe that they could have their cake and eat it. Thatcherism has thus constructed a mass of vested interests which it is now almost impossible to displace.

In addition, the Labour Party will be bound by political constraints which long pre-date Mrs Thatcher. The Conservatives have always had at their disposal perhaps the mast partisan press in Europe. The fuss over Labour’s proposal to ‘uncap’ national insurance charges shows how effectively this engine of persuasion works. One of the reasons, furthermore, why it works so well is that it operates within a political culture which is itself only quasi-democratic. Unlike Labour, the Conservatives have a large passive electorate which has no material interest in a Conservative government, but also has no confidence in its own political capacities or in those of people, like the Labour Party, who claim to speak for it. Not many Conservative-voting pensioners, for example, will change their allegiances despite the ruthless attack on their standard of life over the last decade. All this means that the countervailing democratic impulses in British society which Labour might draw on are at the moment weak, and hitherto the Labour Party has made little effort to strengthen them.

An incoming Labour government will also be landed with an economy whose capacity to meet its own needs has never been more feeble. The deterioration in Britain’s payments account which began in 1987-8 now seems irreversible except by deflationary measures so severe as to be politically impossible. The destruction of much of the country’s productive resources over the last ten years will tie the hands of a Kinnock government as it has those of the present Conservative one. Labour’s freedom to act has, moreover, been further constricted by external fetters partly of Labour’s own making: I am referring to the decision to enter the ERM and at a rate which effectively overvalues the pound, a decision which had the support of the Labour Party. It is easy to see why Labour did this – to show that it is respectable, that it is European, that it is not like it used to be – but if it is adhered to, the ERM will deny a Labour government not simply a useful but a necessary mechanism. Indeed, the ERM today plays the same role as the gold exchange standard did between 1925 and 1931 – an obvious parallel which has rarely been drawn. The difference is that in 1925 people did not know what would happen; we have done the same thing knowing perfectly well what would happen. Those Bruges-groupers who wish Britain to withdraw from the ERM (or devalue within it) are quite right: if you create an economy as weak and unstable as Britain’s, sovereign power over the exchange rate is one of the few means by which the economy can be kept in equilibrium. We now are in the same position as Keynes argued British governments were after 1925: the only mechanism available is the interest rate, an increasingly ineffective mechanism since it works either as a deflationary blunderbuss or not at all.

The success or failure of Labour’s economic policies will depend significantly on its ability to free itself from these constraints. No doubt, however, the first thing Labour must decide is what to undo: an important matter, since it is clear that many voters fear Labour will undo so much that there will be as much ‘chaos’ under them as under the Tories. Labour has been steadily retreating from commitments to undo – hints that the grant-maintained schools might survive, that there are workable forms of hospital optings-out etc. There is here a genuine dilemma. One of the reasons why so much Conservative legislation is incoherent and ill-considered is precisely a desire to get it into law quickly: the more you pass the more irreversible the whole programme becomes. On the other hand, if Labour accepts too much, it risks demoralising such of its activists as still believe in social democracy, and it further distances the Party from its past. That distancing has already damaged the Party enough; further distancing could be fatal. It should, therefore, have a short list of things which it is both politically necessary and socially desirable to undo.

On that list, surely, would be the ending of grant-maintained status for schools, the ending of a destructive ‘competition’ between schools by the restoration of LEA authority, the handing over to the LEAs of the City Technology Colleges (which are at the moment independent schools almost wholly funded by the state), and the return to the NHS of those hospitals which have opted out – if it is still possible to save the NHS from the bureaucracy and expensive anarchy of the internal market. Clearly most of the privatisations are irreversible, however badly executed they were, but Labour should not be afraid of undoing the more absurd. It says it will renationalise water, for example, and so it should. And it should certainly undo the present ban on local authorities using the proceeds from (forced) council-of-house sales to build new houses. That is a piece of ideological nastiness that should go on the first day. This list would actually leave most of what the Conservatives have done intact, but at any rate Labour could live with it. The Conservative Government’s proposals for British Rail would presumably go into the waste-paper basket.

Limited undoing is much less testing than the more positive aspects of an economic policy. It is here, if Labour is serious, that the most difficult and unpleasant choices have to be made. My utopian programme for a ‘progressive’ government would be: substantial increases in government expenditure on health, education, public transport, social welfare and the ‘infrastructure’; raising taxes to an appropriate level – and there seems little doubt that at the moment the country is ‘undertaxed’ – but also major reforms of the taxation system; a re-regulation of the country’s financial system, especially as it affects the housing market, and an end to tax relief on mortgage interest payments; a withdrawal from the ERM, or if not that, devaluation of the pound and its maintenance at the lowest rate compatible with the ERM; a recognition that our capital market is radically defective and that the state is one of the few remaining institutions capable of long views: if that means having to take a major employing concern into public ownership – as is more than possible – then the state should do it.

Fifteen, even ten years ago, such a programme would not have seemed utopian; for a social democratic party it might even have seemed modest. Today it appears almost impossible. But even if Labour does only some of these things – which is likely – it is going to run into opposition. Labour, historically, has not been happy with opposition; it has always tended to adopt consensual positions and to shy away from policies which are divisive. It has done so partly because it usually dislikes social division, partly because it is unsurprisingly fearful of the forces which can be mobilised against it. This would be an admirable policy in ordinary circumstances, but in the last 13 years so many institutions have been politicised, with the Labour Party made (partly by its own doing) to seem lunatic or dangerous, that anything it does is likely to arouse a determined opposition. Since this opposition will be powerfully placed, Labour will need all the support it can get. But it can only get this support by major constitutional and electoral reform. It will have to devote as much attention to electoral management as the Conservatives have ordinarily done, and this the Labour Party has been very reluctant to do. Thus constitutional and electoral reform, which the Labour Party has disliked or thought you left for a rainy day, is not a mere aberration of the chattering classes: it is indispensable to the survival of the Labour Party as a party of government, and to the policies it wishes to implement.

Constantly in Mr Kinnock’s mind should be four things: first, that the Conservatives command nowhere near the majority of the first preferences of the country’s voters; second, that usually Labour commands an even smaller proportion of those first preferences; third, that in most aspects of policy, however, the majority of the people identify themselves with the Labour Party rather than the Conservatives; fourth, the reason that three does not follow from two is that more people think the Conservatives can be ‘trusted’ with the economy than Labour can. What Mr Kinnock has to do, therefore, is to contrive policies which fit three with one – to render the Labour Party itself as legitimate as the policies with which it is associated. Under our present electoral and social arrangements that is hardly likely.

There are two possible ways in which this might be done. The first is reform of the present voting system. It has at the moment no defence except an instrumental one: it is profoundly undemocratic and unrepresentative, but is thought by its admirers to produce stable and authoritative government. It says much about the way the Labour Party has accepted the assumptions of the British state that until recently it, too, defended the system on these grounds. The instrumental argument, however, is now one that can scarcely be uttered in polite company. We have had 13 years of stable and authoritative government and much good it has done us. As for the argument that PR or some other system would put too much power in the hands of the parties, the history of the poll tax should do for that: the poll tax, probably the most indefensible piece of legislation this century, was driven through the House of Commons by as powerful a party machine as can be imagined, and it required almost a second peasants’ revolt before a minority of Conservative MPs thought it would be prudent to defend the interests of their constituents. The best way of ensuring that the majority in the country which vaguely supports Labour-like policies is adequately represented would, of course, be proportional representation. Those Labour MPs who regard PR as impossible should remember that in a House elected by PR, with the exception of those aspects of trade union legislation which the Labour Party itself proposes to retain, not one piece of specifically Thatcherite legislation would have been enacted. PR would also negate those advantages the present system gives to the largest minority – which usually means the Conservative Party. Over the long term, it would be almost as beneficial to Labour as it would to the Liberal Democrats.

Still, it is undeniable that in a House elected by PR there could be fewer Labour MPs than at present, and if that is thought to be an insuperable obstacle to democratic principle it would be perfectly possible to have the House of Commons chosen on the basis of single-member constituencies elected by the alternative vote, and the House of Lords elected via a party list or some other form of PR, as the Australian parliaments are. In any case, if Labour seriously intends to entrench certain constitutional clauses, so that they cannot be altered except by the approval of both Houses, it is inconceivable that the House of Lords should not be elected on a genuinely representative basis. And even more inconceivable that a social democratic party could continue to permit the upper House to be chosen primarily by birth. Either way, Mr Kinnock should make it clear to his party that the present system offers Labour nothing but brief and unsatisfactory periods in office, if that.

It seems unlikely that Labour could win an outright majority; if there is a Labour government, it will probably be dependent primarily on the Liberal Democrats. If that is so, then Labour should make a virtue of it. It should attempt to negotiate an open arrangement with the Liberal Democrats (not a hole-in-the-wall affair like the old Lib-Lab Pact) for a specified period and an agreed legislative programme. And if the Liberals insist upon electoral reform as a sine qua non, so much the better. For Labour the gains are obvious. It gets assured support for a good part of its legislation and, just as important, it is able to approach that large proportion of the electorate which is prepared to vote Liberal Democrat, but will not at the moment vote Labour. It helps Labour, therefore, to secure a wider legitimation. And if the Liberal Democrats publicly decline an arrangement, Labour still gains.

The second thing a Labour government must attempt is the encouragement of a more democratic political culture. One of the reasons so many English voters believe that the economy is safer in the hands of smooth young bankers with nice voices and public school manners is the way in which a status-graded and hierarchic social system is constantly reinforced. In the past, Labour has made little attempt to modify this system and has been vaguely contemptuous of those who thought that they should try to do so. It has usually been thought less important than Labour’s social or spending policies. But one of the reasons why Labour has so rarely been in a position to implement these policies is a social system which denied to Labour the support of many who actually benefit from them. A democratic political culture is thus essential to the success of Labour’s social policies. At present, for example, anyone who suggests abolishing the honours system as it exists is thought to be rather cranky. But the honours system, exactly because it is so socially acceptable, habituates people to a status-graded society which the honours themselves replicate – knighthoods for top persons, MBEs for charladies. If the House of Lords as at present ‘elected’ is abolished, that would provide the opportunity to do away with the honours system as it now operates. It is not enough for the Labour Party to turn itself into a rather harmless democratic party for the ordinary man and woman if the values of many of those men and women do not allow them to vote Labour whatever sort of party it is.

All these prescriptions are, of course, utopian: the Labour Party doubtless will not win the next election, and if it does, will do none of these things. That, however, gives people in ivory towers the satisfaction of knowing they can continue to urge policies which will never be tested at all, let alone to destruction.