(originally published on Steve’s blog just before the election result, his piece is an invaluable analysis of Labour’s failings as a valid alternative to Tory ‘rule’).
So, we’re now a mere matter of hours away from finding out who has managed to convince a portion of the population that they are worthy of being allowed into one of the most famous addresses in the world, under a 5 year tenancy agreement. By the looks of the current polling which party that will be is anyone’s guess, although Labour could be seen to be in the more advantageous position.
We’ll be saved from another 5 years of the vicious, malevolent Tories, with their blood-stained public-spending axes, razor-sharp welfare scythes and titanium-plated NHS knuckle-dusters. Labour will rescue us!
But will they? Undoubtedly they are preferable to the Conservatives, and yes (before anyone says it) there’s £28.5 billion of cuts between them (we won’t mention that’s 0.7% of total public spending in the next Parliament – that doesn’t sound as good). Some of their policy pledges are excellent – do not mistake me. But the fact remains, Labour’s overall offering, to some, is centrist mediocrity at best.
Much has been made of the fact Labour model themselves as the party of the “Working Family” (apologies to those of you eating), and they’ll take on the 1%. But if their proposals are “taking them on”, I wouldn’t like to see them fawn.
Their much-lauded 50p tax rate, starting at £150k, is by no means Golden Goose it’s portrayed to be. The OBR described it as “strolling across the summit of the Laffer Curve” – in layman’s terms, meaning that no-one knows how much additional money, if any, it will make.
The “Mansion Tax” (if you don’t know what that is, you’re lucky), is a cheap headline grabber, which the IFS says would be better served by reforming the council tax system, and does not take into account those, for example, owning weekend residences under £2m, and a working week property of the same value – or are these people “poor”?
Labour’s screeched clampdown on tax avoidance & havens is also shallow and ill thought through. The threat of “blacklisting” tax havens is a ludicrous one, as this can only be decided by an OECD vote (currently this list of tax havens is… err… blank). Forcing them to release the data of those with a 25% or more interest in a company logically doesn’t go far enough, their plans completely ignore the reality of how Crown Dependencies really operate, and their proposed reforms to tackle avoidance are without teeth (especially regarding GAAR) – unless you deem recovering £7.5bn out of an estimated £80-120bn a “success”.
Similarly, we have been bombarded with statistics on inequality, rising use of foodbanks, zero hours contracts and sanctioning of those on benefits. But look closely at Labour’s policies, and little will be done to stop the rot.
They will be keeping the benefit cap of £26k (and effectively lowering it in some areas, by making the housing element geographical), which was recently described by a panel of Supreme Court Judges as “breaching the UN Convention on the Rights of the Child”. This is coupled with their abandonment of the target of eliminating child poverty by 2020 (“as a result of this Governments failures” – blame “The Last Tory Government”?), and a 1% cap on child benefit increases for 2 years.
As with many of their other fiscal policies, the 10p tax rate is ludicrous. The IFS describes it as a “gimmick” and a “remarkable failure to learn from history”, and says the difference between it, and raising the threshold (the Tory/Lib Dems plan) is minimal. Oh, and the £8 minimum wage by October 2019? It will be barely more than it would have been anyway (based on the current methodology & historical increases).
Their assault on those dastardly zero hours contracts is pure PR. Forcing employers to offer a regular hours contract after 12 weeks? You can see the rocketing of 4 hour starter contracts coming a mile off, plus this is an issue which affects 250k people. Labour would be better tackling the huge rise in self-employment, which has been the “jobs miracle” of this coalition – the ONS say 1.7m people have entered this form of work since 2009, & on average they earn 40% less than employees.
Labour housing policy will do little to help the 1.8m households on council waiting lists. They have abandoned their “200k homes built a year by 2020” pledge, in favour of “1m homes under construction by 2020”, with no target for how many will be social. Their rent reforms are still soft on landlords, as they offer no protection from rent being hiked after three years, or between tenancies, & work on the assumption that interest rates will remain low; and the “Home Building Fund” for banks? This is a Ponzi-esque scheme, where the tax payer underwrites funds given to banks to build properties, only to pay for it AGAIN, in mortgage interest to the banks.
All this is without touching on:
The reduction in student fee’s to £6k per annum will have no effect on the poorest 50% of graduates; guaranteed apprenticeships for school leavers “if you get the grades” – and if you don’t?; complicity in the promotion of fracking, ignoring advice from Friends of the Earth calling for a full moratorium; ignoring an official government report on national security threats, which made no mention of Nuclear threats nor Trident; broad support for (what many consider to be toxic) TTIP and weakened language on ISDS; pledges for the disabled, which have been deemed an “afterthought”, and ignore calls to save the Independent Living Fund and abolish Work Capability Assessments; obession with getting young people on “the mortgage ladder”, amid worldwide debt being at it’s highest levels in history.
So we won’t touch on any of that.
However, the elephant in the room? The Nelly, whom is standing there, is frantically flapping its ears.
The Financial Services Industry, & Labour’s continued appeasement of it, may well be the final nail in their coffin over the next 5 years.
For all Labour’s tough talk in the past 18 months on the spanking of the Bankers, there is little of any substance in their manifesto. The Banker’s bonus tax? Companies will simply offer share options, or change the timings of their bonus payment (the IFS, not me). Increasing the Bank Levy? Hardly a Marxist assault, as the coalition have done it 8 times. Putting the rate of corporation tax back up? It will still be the most competitive in the G7, & if companies don’t like it, profits will go overseas.
Many economic commentators are already predicting a forthcoming economic crash, much worse than the one seen in 2007/08. We have now entered another “7½ Year Itch” (a period where markets rally before collapsing); a coincidence? This would be the third time, so that’s one hell of a quirk. Many other signs are there – and when the BBC’s Robert Peston even mentions it, then something’s up.
Labour is doing nothing to firewall the UK from this. For them to deny knowledge is disingenuous, when one of their senior advisors was responsible for the US banking deregulation that led to the 2008 crash. The reasons for the Party’s “head in the sand” attitude are debatable (and not for this blog), but by scrapping previously tabled pledges like separating bank’s high street and investment operations, setting no timetable for the sale of our stake in RBS, and being apathetic to HSBC’s crimes, they are demonstrating complicity.
If Labour were really acting for the “99%” of us, who have had to suffer at the hands of the unbridled greed of a small minority of society for far too long, they would have a manifesto that began to negotiate a path to economic & industrial security – a move away from the reliance on the FSI and towards class justice for the people of the UK.
Instead, we have Capitalists trying to save Capitalism, with an agenda set by the very people who shafted us in 2008 (and will do so again, before we’ve even had time to lube up); an agenda which is explicitly designed around them – with absolutely no regard for the rest of us. We are not alone in this – Obama and the Democrats are instigating the exact same program in the U.S.
This is why, for all Labour’s pledges on “An NHS with Time to Care”, “Controls on Immigration”, and whatever else they wish to inscribe on mugs and Biblical slabs of rock, they are, simply put, just not good enough.
Same Old New Labour – “Beyond the Third Way” or a stealthy MK2?
In January, in Washington, the Center for American Progress held a seminar, launching a “major new report, aimed at establishing sustainable and inclusive prosperity over the long-term in developed economies”. The Inclusive Prosperity Commission (IPC) – a transatlantic board convened by the centre – promised to table “innovative policy ideas” that will “spur middle-class growth”.
The IPC board is headed up by Lawrence Summers (Secretary to the Treasury under Bill Clinton, & cited as one of the architects of the banking deregulation that led to the 2008 crash), Steve Rattner (who manages Michael Bloomberg’s investments), Lord Sainsbury, and Judith Rodin (who works for The Rockefeller Foundation). What’s that smell? Oh yes, big business.
Also involved is a certain Ed Balls (Shadow Chancellor of the Exchequer). Balls and Summers have been working on this report for 18 months as joint Chairs of the commission, and also developing the Labour Party’s economic (and in some respects ideological) policy for 2015, using the same mantra as the IPC.
In a speech by Balls in June last year, he broke the Labour vision of a “new inclusive prosperity for the 21st Century” into three sections: Hard-headed Internationalism, Work and Skills, and Industrial Policy. These three sections covered more than just economics – they touched on fiscal reform, education, welfare, immigration, foreign policy and BIS. It pretty much formed the basis for Ed Miliband’s speech to the party conference (excluding the deficit – always forgettable), and will most likely shape their manifesto.
What’s interesting about the new buzz phrase of “Inclusive Prosperity” is where and who its conception has come from.
It would appear Lawrence “Larry” Summers has been a rather busy man. As well as being instrumental in nurturing Labour’s new ideology of “Inclusive Prosperity”, he was, in 2012, sowing his conceptual seeds all over another notion – the creation of a joint project between McKinsey & Company and The Henry Jackson Society.
“Inclusive Capitalism” (look familiar?) is described as a “Long-Term” way of “maximizing the extent to which capitalism can heal its own ills”, in the hope that “the capitalist system that has made our societies great will continue to do so”.
The report, which Summers wrote along with Adam Posen (chum of Labour economist “Danny” Blanchflower), The Ontario Teachers’ Pension Plan, a couple of Tory Lords and a hedge fund manager, broke this vision of “the most powerful economic system we have for raising people out of poverty and building cohesive societies”, into three sections (ring any bells?): Reforming Management and Governance for the Long-Term, Education for Employment, and Nurturing Start-Ups and SMEs. These three sections covered more than just economics – they touched on fiscal reform, education – yes, you get the idea.
The report and its findings have been widely endorsed by the economic illuminati – most notably Christine Lagarde, High Priestess of the IMF (describing its need to “infuse the consciousness of all economic leaders”), and Mark Carney, Caretaker of the BoE (envisaging a glorious utopia “in which individual virtue and collective prosperity can flourish”)
But delve a little deeper into the muddied waters of “key party” boardrooms, and you’ll find that that two of “Inclusive Capitalisms” main proponents – Dominic Barton and The Ontario Teachers’ Pension Plan – also swing together on the advisory board of the FCLT Group – “Focusing Capital on the Long-Term” – a think-tank dedicated to “value creation” for investors & markets (no mention of raising people out of poverty, or collective prosperity, there).
Corporate leviathans also involved in the FCLT, and wanting a piece of the “value creation” on the back of “Inclusive Capitalism”, include Barclays, AXA and Unilever to name but three. Who wouldn’t? Dominic Barton recommends “paying directors more”. They break their vision of “rewiring the ways we invest, govern, manage”, to “lead to better focus on long-term outcomes” into three sections (seriously): Fight the Tyranny of Short-Termism, Serve Stakeholders, Enrich Shareholders and Act Like You Own the Place.
But crucially, the FCLT cites the “growing concern that if the fundamental issues revealed in the (financial) crisis remain unaddressed and the system fails again, the social contract between the capitalist system and the citizenry may truly rupture, with unpredictable but severely damaging results”. Translated? Both the FCLT and “Inclusive Capitalism” are merely PR firewalls – coercing the public into believing that Capitalism knows it’s been naughty, and will play nicely from now on – sharing a portion of its pie; the size of the portion? The same as it’s always been.
So, just how in tandem are the ideas of Big Businesses’ “Inclusive Capitalism”, the FCLT’s “Long-term value creation” and One Nation Labour’s “Inclusive Prosperity”? When you study them side-by-side, most of the ethos is cross-transferrable. “New principles on compensation”; fiscal policy to encourage “Long-Term Investment”; scrapping quarterly guidance to encourage “Long-Term planning”; it’s all very Long-Term, and could have been copied and pasted back and forth, albeit with the use of a thesaurus – maybe that’s what Ed did…
Herein lays the fundamental problem.
The basis of Labour’s campaign, so far, revolves around the fact that they are not “New Labour” – Ed Miliband declared, after his victory over his Brother, that “era was over”. He is famously quoted as saying “While there’s capitalism, there’ll be socialism, because there is always a response to injustice”. The party faithful still see him as “Red Ed”, bringing the Left home to Downing Street.
This is simply mythical. When you have party policy which is formed from the findings of big businesses own self-serving analysis, directly influenced by the agendas of some of the most powerful corporate leaders in the world, “socialism” doesn’t get a look in – and to think it does is delusional. Courting big business? Labour may as well employ a pimp.
So, is the Third Way still alive and kicking in Labour? When Ed Balls delivered the speech I referred to earlier, outlining his “Inclusive Prosperity” vision, he called it “Beyond the Third Way”. Beyond, by definition, means “at or to the further side of”. Based on the fundamental thrust of the Blair/Clinton triangulation of policy – the marriage of right-wing economics, with left-wing social values – I would concur that we haven’t gone beyond, merely turned around on the spot a few times. Yes, the Third Way IS alive and kicking, hidden with stealth behind a faux-socialist PR campaign.
Speaking of Blair, one can only surmise that his (swiftly denied) assertion that Labour would not win in 2015 was either a calculated PR stunt by David Axelrod, to affirm Miliband’s “socialist” credentials, or a sign Tony’s a bit pissed that the Two Ed’s are out-triangulating him.
I’d say it’s a big dollop of both.
UPDATE – Tuesday January 26th.
So, it looks like Labour’s incestuous relationship with big business also see’s it swinging with them on other matters, too.
After the Parlimentary vote on the amendments to the controversial “Infrastructure Bill”, there was general bemusement as to why Labour abstained on section NC9, calling for a complete moratorium on fracking. Over the weekend prior to the vote, there was a concerted effort by many in the party, to promote the fact they would be supporting this – Margaret Curran, for example, tweeted “No Fracking in Scotland Under Scottish Labour”.
When it came down to it, however, the majority of Labour MP’s abstained, and the motion was defeated 308 to 52 (whilst Labour’s own amendments, tabling “tougher regulations”, passed without a vote).
Delve a little deeper, and the possible reasons for Labour’s stance become, once again, explicitly clear. The original investigation into fracking (which Labour based these amendments on) was a project by The Royal Society, who “carried out a short review jointly with the Royal Academy of Engineering of the major risks associated with hydraulic fracturing”
Also authoring the findings of this review, was a Dr. John Roberts, who also is Chairman of not one, but two Asset Management Companies, who BOTH advise on investments in the US shale gas industry. He also happens to be Chair of the Royal Bank of Canada, who – yes, you guessed it – advise on the same as the other two companies.
On top of the Royal Society’s report, Labour also commissioned Sir John Armitt to do a complete review of their infrastructure policy, from airports, to the rail network, to energy (including fracking). This report has formed the basis for their overall policy for the 2015 General Election.
Also advising on this report, were Andrew Adonis (a usual suspect in any Labour policy-making), the founder of Barclays Infrastructure Funds Management, and notably Rachel Lomax, a non-executive Director at HSBC. Her involvement is “notable”, because HSBC provide banking services to Cuadrilla (the company who Labour granted the 1st ever explorative licence to), and also gave a £63m banking facility to Dart Energy – the company planning to go into Coal Bed Methane (CBM) production in Scotland.
Could any influence from the people mentioned above, have “persuaded” Labour not to back the full moratorium on fracking? Interestingly they chose to ignore advice from Freinds of the Earth, who urged them to support amendment NC9 (but yet happily adopted other recommendations of theirs).
“All In This Together”? Yes, they bloody well are.