A Touch on the Tiller

Apparently, some people are asking "What is the point of Labour?" Of course, this is a question that has been asked pretty much constantly for the last 100 years. Even during the halcyon days of the postwar Attlee government the party was roiled by existential doubt, triggered by mundane but symbolic issues such as prescription charges. A constant refrain has been that other anxious question "Is this what a Labour government should be doing?", which implies a catechism of correct policy as much as the more nebulous "Labour values" that are regularly invoked nowadays. Martin Kettle is the latest to wonder what is the point of the party, but he undermines his own analysis at the start by describing Rachel Reeves as "a traditionally social democratic, centre-left Labour chancellor". This highlights that the problem in defining the point of a Labour government is that there is no agreement on what constitutes social democracy any longer, let alone the "centre-left". Reeves' own view was expressed in 2015: "We are not the party of people on benefits. We don’t want to be seen, and we’re not, the party to represent those who are out of work. Labour are a party of working people, formed for and by working people."

Kettle's diagnosis is that "Labour is now an alliance of positions, interests and instincts rather than a party with a unifying direction or a leader who clearly articulates an overarching plan for government. As a result, Labour has become several small parties in one." But 'twas ever thus. Labour has always been a coalition of interests and factions, and its leaders have necessarily been skilled at managing the resulting tensions. Even during the New Labour years, when policy went with the grain of wider developments (neoliberalism, neoconservatism, weak communitarianism), there were substantive disagreements on social, economic and foreign policy. Kettle's real point is that the party never fully embraced the secular shift of the electorate: "The essential fact is that Britain is significantly more middle class, better educated, more outward-looking and more liberal. Yet Labour still struggles to adapt to, never mind to lead, this intricate, nuanced and continuing change." In other words, the failure of the SDP to supplant Labour in the 1980s, and the willingness of the party to return to its Labourist comfort zone after 2010, which is what Reeves' words really indicated, has left it facing in too many directions.

The chief problem with this analysis is the assumption that Labour's blue-collar electorate is fundamentally illiberal and backward-looking, which is why they have been attracted to Reform. This suggests that Kettle himself has failed to evolve his thinking since the 1980s. Even a brief glance at the opinion polls indicates that Reform have prospered primarily at the expense of the Conservatives, while Labour is losing support mainly to the Liberal Democrats and Greens, with the latter now acting as a proxy for "the left". The latter drift has been characterised as mainly among under-30s, which is probably accurate, and by what Kettle describes as Labour's "more ideologically driven supporters", code for self-indulgent, middle-class lefties, and which is likely wide of the mark. If it is true that Labour is losing progressive voters while Reform is obviously attracting Tories, this leaves you wondering where the working class has gone to. For Kettle, it simply disappeared with deindustrialiation. The sociological reality is that today's working class is increasingly made up of young, insecure renters in precarious employment. In criticising Labour, Kettle does so through a mental model - the blue to white-collar shift - that has been out of date for decades.

In this, liberal commentators of a certain age find common cause with Blue Labour nostalgists such as Julian Coman who believe that things started to go wrong for Labour when "From the 1980s onwards, the cutting edge of progressive thought became overwhelmingly preoccupied with the rights and freedoms of the individual." This is a gross misrepresentation of the history. The rise of the feminist, anti-racist and LGBTQ+ movements were collective endeavours, not the triumph of the neoliberal monad. Coman's prescription is "a collectivist politics that preserves the ethical insights of universalism, but that also foregrounds the values of social cohesion, collective obligation and communal wellbeing – and is willing to negotiate tensions that might result". Predictably, he espies this turn in both Shabana Mahmood's desire for "order and control" over immigration and in Andy Burnham's wish to overcome "the subjection of democracies to the arrogance of rootless international capital" (Burnham actually spoke of the need to "stop being in hock to the bond markets", which isn't quite the same thing and certainly lacks the whiff of xenophobia.)

A better way of understanding what is the point of Labour is to ignore the vibes-based commentariat and look at the government's fiscal policy, which inevitably tells us whose interests they think they are working for. Chris Dillow makes the important point that what matters in the coming budget is not how much money is raised, or how that is done, but whether it will reallocate the real resources necessary to improve public services and to boost the long-term trends for investment and productivity. Labour's historic reputation, in the sense of justifying its existence rather than just staying in office, has been based on two periods of goverment: 1945 to 1951, and 1997 to 2010. The former was notable for a period of austerity, when consumption was deliberately depressed, in order to invest in industrial rebuilding and the securing of foreign markets for exports. This was made harsher than it needed to be by the heavy investment in defence, but it obviously succeeded in improving the fabric of the public realm. The New Labour years saw a significant uptick in public investment, funded by a benign economy, albeit one built on the insecure foundations of financialisation.

In that first period, Labour clearly advanced the interests of the industrial working class through high levels of employment and comprehensive (if not particularly generous) welfare. Social reform took a back-seat until the 1960s and foreign policy preserved too many illusions for too long. In the second period, Labour had a more national and less class-based appeal and focused largely on public services management, leaving economic policy to the markets and an "independent" Bank of England. Its reliance on outsouring and private finance has proved to be a strategic mistake, on a par with its failure to control the finance sector. If in the first period the party clearly represented the interests of labour, in the second period it conceded the government's role in the allocation of real resources to the interests of capital generally and the City in particular. That's a pretty profound change and truly remarkable in the context of the party's history. The pushback after 2008, both the return to a Labourist comfort zone under Ed Miliband and the evocation of a revivalist social democracy under Jeremy Corbyn, attempted to redress this in favour of labour. 

To date, the Starmer government has indicated a marginal preference for capital but has also tried to support labour. So in last year's budget there was a modest increase to the national minimum wage and also a rise in capital gains tax rates (though not to parity with income tax). The true significance of the rise in employer NICs, along with the higher NMW, is that it should act as a stimulus for capital-labour substitution, particularly among low-wage jobs, and thus a rise in productivity. But as with the rest of the budget, it was a half-hearted measure rather than part of a core strategy to shift real resources from consumption to investment. All the signs are that next week's budget will be more of the same: tinkering at the edges with fiscal drag providing the chief means to fund increased public spending. This suggests that the current Labour administration remains trapped in the same worldview that hobbled the Blair and Brown governments: a belief that left to its own devices capital will deliver growth and higher wages, and this in turn will generate higher tax receipts for public spending.

The pointlessness of this Labour government then is not down to Keir Starmer's lack of vision or his inscrutability ("His innermost beliefs are a mystery even to the cabinet", according to Rafael Behr), any more than it is to the inadequacies as Chancellor of the woman dismissed by her patronising critics as "Rachel from Accounts". The lack of point is the point. This is a government that was engineered by the politico-media caste to thwart the left, eject the hapless Tories before they did any more damage, and otherwise just sit tight until something turned up to give the economy a boost. Possibly AI, possibly better trade deals with the US and EU. This is a government that refuses to publicly choose between the interests of capital and labour and believes it can steer a course between the two. But each touch on the tiller simply enrages more people, now on one side, now on the other. The result is a general collapse in support. Perhaps we will all be surprised on Wednesday and the pre-budget leaks and briefings will turn out to have been a cunning diversion, but I suspect that what will see is another timid exercise that will satisfy few.