Not Balls, Not Brown, Not Now

To win credibility, Ed Balls needs a new speech that acknowledges that the Coalition is not all-wrong on the economy.

Perhaps the suddenness of Alan Johnson’s resignation caught most commentators by surprise, or perhaps so much has already been said about the new Chancellor of the Exchequer over the past three years, but by the time that Ed Balls was called upon to take Labour’s lead argument against the coalition, the occasion seemed rather flat.

There are two chief topics of discussion about Labour’s new configuration. The first is whether Mr Ball’s unorthodox economics will have an impact on Labour’s political strategy in opposition. The second is whether giving Mr Balls a portfolio in which he will feel all-powerful will affect the chemistry of the Shadow Cabinet. Both anxieties are considerably overplayed.

Firstly, the Shadow Cabinet, including Mr Balls, endorsed the Darling plan for halving the deficit over the course of five years less than two weeks ago. There are also important political reasons for sticking to the course set out by Labour’s last Chancellor, Alistair Darling; the Party is in no mood to admit that it was completely wrong in its handling of the financial crisis, its current leadership does not have the authority or inclination to outflank the Coalition government on the right (either in part or in full), and confidence in deficit-broadening spending plans is flaky among the media, businesses, and the public (although polls show weakening resolve in that area).

The second reason Ed Balls will be required to act cautiously is that his popularity within the Party is fragile. Although he performed markedly better in the Shadow Cabinet election, coming third with 179 votes, than in the leadership election last year, MPs do not rush to worship at his feet. He will be cheered when he performs well – and he enjoys a sort of folk-hero status for his shadowing of Michael Gove – but like Wayne Rooney, politicians can be all-conquering one week and frustrating the next. Then there is the legacy of thirteen years of briefings – notably the blaming of Douglas Alexander and Ed Miliband for the election-that-wasn’t in 2007.

These two factors will keep Ed Balls on his toes, at least for the short term.

The Fight to Come

The sad departure of Alan Johnson, who lacked detail but was forthright in his defence of New Labour shibboleths, merely encourages the impression that Labour needs to be more aggressive in attacking the government. But where there are political opportunities, Labour ought to beware of political dangers.

Ed Balls was not regarded as a great Education Secretary, and while his Parliamentary performances may have forestalled the rise of Michael Gove, he also lacked the confidence in people’s aspirations that has allowed the current Secretary to re-establish his reforms based on the curriculum.

Gordon Brown’s book on the financial crisis, densely written and frustratingly self-serving though it is, gives an indication of the traps that Mr Balls could fall into. Brown has several arguments, among them that Britain needs to spend to maintain its educational, technological and financial ability to compete with the rising powers and that companies are hoarding cash rather than spending it. On the face of it, this justifies the Keynesian instincts of Messrs Brown and Balls, and their injunctions to the Conservative Party ‘not to return to the mistakes of the 1930s.’

Mr Balls based his economic pitch to the Labour Party on this message – in his widely acclaimed speech to Bloomberg last year. That speech is still being discussed, and Mr Balls may be tempted to say that the lower cost of borrowing justifies a retreat from the austerity programme. That would be a gamble however. The current crisis in the Eurozone is a result of significantly greater risks in Ireland, Spain and Portugal. The attractiveness of British bonds is cause for celebration, but not one we should be complacent about – the danger of a ratings downgrade in May 2010 was real, and no one knows what the implications of a change in tact could be today.

Furthermore, Mr Balls should be wary himself of making the mistakes of the 1970s. The Bloomberg speech raised the spectre of deflation – in 2011, the rising cost of commodities is causing inflation. Borrowing more would risk exacerbating this tendency, and it is for this reason, rather than the risk of protest that David Cameron has considered cutting fuel duty. Another reason that public spending needs to be restrained is that Britain is ageing and growing – meaning that there is no prospect of holding health and education spending steady without changes.

So while globalisation does require a new form of industrial intervention – one that cannot be provided purely by tax cuts – there is no other way to win business confidence and combat inflation than by reform. Indeed, there is a link between business confidence and public opinion, no matter how anti-business the current mood gets.

Labour sought to defend the interests of the consumer in 2008-10; reducing VAT temporarily and introducing scrappage schemes, and still lost the election. It may be that the unseen dimensions to the financial crisis do not intrude onto the voters’ minds, but it is beholden on Mr Balls not to mislead people on the sustainability of current spending. Given that he will not want to be a Labour Shadow Chancellor suggesting that he will raise new taxes, he will be locked into supporting some cuts.

David Cameron’s Felicific Calculus

“It’s time we admitted that there’s more to life than money and it’s time we focused not just on GDP but on GWB – general well-being.”

David Cameron

“No doubt Cameron will use the index to claim that despite rising unemployment, home repossessions, longer NHS waiting lists and unaffordable education, the people of this country are happier under Tory rule. The reality is a gathering gloom.”

Len McCluskey, General Secretary of UNITE

Like much about David Cameron, the Prime Minister’s recent suggestion that the Office for National Statistics (ONS) should collect data about how happy Britons are has given rise to much mirth and cynicism. However, the proposal is also very like Mr Cameron in that it has clearly been thought through and actually offers no little promise for a shift in political attitudes.

I could quite easily give an essay on Jeremy Bentham’s attempts to create his own happiness index, or Tony Blair’s efforts to introduce his own that were squashed by Civil Servants. None of those themes seem so relevant as the increasing depoliticisation of politics over the past couple of decades. This is as much a Conservative as a Labour theme – Thatcher was by no means averse to claiming that hers was the only way forward, or to locking Britain into the ERM in order to control inflation, and while Conservatives object to the Quangocracy that Labour are alleged to have founded, there is a consensus around the use of independent boards in health (NICE-excluded) and independent school in education.

What Labour and the Liberal Democrats will make of the policy is unclear, however. Undoubtedly, they will criticise it as a means of distorting the public’s attitudes and distracting commentators away from economic concerns, especially if they feel that Keynesianism is beginning to become attractive. Some clever young things will want to get at the mechanics of the policy and will probably score some points but my feeling is that this is a dangerous ground on which to attack. Quite probably, only one of the bigger hitters in the Labour Party could do Mr Cameron any damage and it is a telling fact how few big beasts with even a modicum of public trust or stature remain.

The problem I foresee is that Labour politicians do, or will appear to, fundamentally disagree with the premise of the policy. Mr Cameron’s move, I suspect, is about enhancing his own standing on the liberal end of the Conservative Party and in the centre ground of British politics. He will succeed in the former if some of the areas that he has tried to appropriate from Labour, such as housing, figure largely and in the latter if the public appear to want a little less interference, a lot less immigration and progress in education and health, even if this is at the expense of universal standards.

Both Labour and Conservative politicians have a healthy fear that Britain could become a breeding ground for a movement as instinctive and destructive as the Tea Party in America. However justified they might be, this is no excuse to react passionately and ideologically. It is fairly well documented that in the last few years the book of choice amongst Labour-thinkers has been The Spirit Level. Ed Miliband, in his speech to the National Policy Forum last week opined that people want ‘to get on, but also to live in a strong, fair and equal society.’

Speaking up for equality is something that the Labour Party has done little of in the past decade. Tony Blair, in A Journey as in office, was keener that the Labour Party should not forget that people are aspirational at heart. Mr Blair would have made fairly short work of Mr Cameron’s happiness index, as indeed he did when in office (witness this article published just a few months before he left office in June 2007).

Labour would do well to remember that when Mr Cameron took over the leadership of the Conservative Party he intended to make his party more diverse, more optimistic and greener. When, two years into his tenure, the recession changed the entire political landscape, Mr Cameron had to sacrifice much of his agenda to the economic determinism of George Osborne. As the economic gloom lifts, and it appears that it will do, Mr Cameron will be seeking to re-establish a political agenda that revolves around soft individualism, and, dare I say it, social mobility.

Those on the right of the Conservative Party will criticise the idea that government can increase happiness, suggesting that it does best by doing least. Data collected by government will be sporadic and inconclusive but would most likely represent that tightly-contested ground between individualism and government intervention that characterise aspiration in Britain. I suspect that the grievances of the British public will not be on the scale of the Tea Party or the cahiers of the Third Estate. Then again, as John Lennon found out, people can develop strange ideas about their own desires.

Reaction to the Browne Report

The debate over university funding, which one might expect  to be a simple case of measuring up public good against individual benefit arguments turns out to be a good deal more complicated politically. One of the reasons is that universities enjoy a peculiar moral standing as a result of their historical importance (universities returned MPs until the 1948 Parliament Act abolished them) and their symbolic value for the aspirational. There are also a number of different interest groups, including nearly two million students (often concentrated in constituencies around universities, employees and the parents who are forced to support the lifestyle of their offspring if they do not qualify for a grant. Higher Education is a poorly organised sector when one compares it to schools backed by teacher’s unions and local councils, but it carries considerable weight, not least because the Liberal Democrats have a large following in university seats.

One of the recurring problems with the university sector is that, like health, governments are frequently shamed when a smaller portion of our GDP is devoted to it than in other countries. Britain spends about 1.3% of its GDP on higher education, compared to a 1.5% average across the OECD and over 3% in the USA. It is funded less as a proportion (about 50:50 currently) by the public sector than France, Germany or the Netherlands, but more than in South Korea, Australia or the USA, which are amongs the bigger spenders.

Since it became the policy of the British government to expand the participation of school-leavers in higher education (to around 30% under John Major, who famously didn’t go to university) and 50% under New Labour (it has stubbornly stuck at 46%), the university sector has struggled to fund its expansion of places. In 2004, Tony Blair and Charles Clarke made the decision to charge a restricted fee of up to £3,000 per student, per year to fund this expansion, with a system of loans made available so that university remained free at the point of delivery. As Blair later remarked, he came closer to losing his job over the Bill than over Iraq. However, the effects have proved relatively benign. Prospective students have largely not been deterred, and the Browne report found that two-thirds of the extra funding has been spent on staffing, with a further quarter devoted to bursaries and outreach.

In 2009 the dying Labour government launched the Browne report, largely to kick the issue beyond the next election, but with a wide remit to investigate the effects of student funding on the sustainability of the universities and the affordability for students. The terms of reference included;

• The goal of widening participation;
• The affordability for students and their families of studying;
• The best value for taxpayers;
• Simplification of the system.

A Bugger’s Muddle

Since the launch, the austerity agenda has overtaken the fees debate. The government, which floated and then quashed the idea of the graduate tax, can hardly deny that it has had an influence in shaping the report that is now in the public domain. Among the least advertised of Browne’s recommendations is that the public funding of universities, and in particular the element earmarked for teaching resources in those subjects not deemed priorities (most of them), is dramatically pared down. The result is that universities would be forced to charge over £6,000 in order to maintain the same level of funding that they enjoy under the existing system (p. 46).

The government has advanced largely in the dark, afraid to sound radical, but bound to act in the national interest as it sees it. The cap has been removed from tuition fees but the hope is that universities will voluntarily restrict them on the basis that the government will not guarantee unrecovered fees over £6,000 (a noticeable drop from the £7,000 that was briefed). Students will pay back the cost of their own degrees, but only when they earn more than £21,000 and a form of graduate tax may be introduced by stealth in tiered interest rates on the loan.

Whether a market in tuition fees is a good idea remains to be seen. The very best universities seem certain to charge excessive amounts for some of their courses. An MA in History at the London School of Economics currently costs £14,000. The next big development in universities might, therefore, be the Oxford School of Debt Collectors.

Smaller universities and those enjoying less grand reputations are more likely to charge below the unofficial cap, though very few do currently. This will attract more students, but whether demand will improve these universities seems to be uncertain.

The other unspoken truth is that some degrees cost a considerable amount more than others. Fees of £14,000 would buy an impressive history education, probably including the cost of living in the country you were studying. However, they would not buy a first class medical degree. The Browne report does not go into the likely economics of a market in tuition fees, which may push prospective students towards less expensive or more profitable disciplines. That has the potential to do some damage not only to our education system but to our way of life.

Get Smart

Given that today’s students will be the future tomorrow, the National Union of Students (NUS) has been short-sighted and surprisingly inflexible. The NUS opposed tuition fees from the start and is now weighing in against raising the levels of said fees. This is despite the fact that rises in tuition fees were always inevitable, therefore making the organisation seem even more irrelevant than it actually is.

What the NUS should be arguing for is a student’s agenda to go with the increased funding. Too many universities spend their resources on fancy new administration buildings or accommodation for international students. Yesterday, discreetly hidden in the Evening Standard, LSE announced plans to push ahead with a new £21m student’s union, which is hardly a necessity, although of course, these projects can sometimes increase revenue, or be fair in themselves, such as living wage campaigns at UCL.

In fact, like a student who spends all week going out but quietly and discreetly works during the day, the NUS has been more productive than it appears and the Browne report has floated several ideas around making student funding fairer. One has been lobbied for by the Open University, and concerns extending grants to part-time students. The others require universities to expand student places by 10%, to increase laboratory hours and to obtain teaching qualifications for staff. These proposals sound promising, but had the NUS been sharper or more able to cooperate with the Russell Group, it might have been able to achieve increased contact times across the board, a proportion of university budgets set aside for teaching and greater resources, such as podcasts and digitised chapters where demand highest. These are the bread and butter of the debate about what students should be getting out of university.

The Labour Party will find it difficult to contest Vince Cable’s reforms, having introduced the fees originally and despite the two key parts of the reform (the cap and state contributions) that the government is doing away with. They will almost certainly vote against the government, which needs more than half of its Liberal Democrat members to support any measures introduced, but will hope for the Bill to go through so that they don’t have to deal with its sharp edges in the next Parliament. They are also open to the continued claim of ‘deficit denial’. Nonetheless, there are practical suggestions for reform that could also be used to embarrass the government’s apparent lack of rigour. It will be interesting to see how hard Ed Miliband and John Denham lead into the debate, starting with Prime Minister’s Questions.

 

Miliband of Brothers

The mood at the Labour Party Conference is said to be like a wake, with 49.35% of the delegates distraught and a chunk of the other 50.65% concerned that they may have elected the wrong brother. In contrast, today started off as a kind of retirement party, with most feeling that they were too cool to be there, but still prepared to listen kind-heartedly to elder statesmen Jack Straw and Alan Johnson (the latter showing what an eloquent, if unspectacular leader he might have been) before the new leader addressed the class of 2010.

The speech itself compensated for at least some of the speculation and criticism that has diminished the result but there is still an element of shock about Ed Miliband’s victory derived from the momentum of his campaign and the unpreparedness of David Miliband for defeat.

The Machinist

What Ed’s victory does show, for those who care to look, is an ability to position himself politically and the means to employ a formidable machine behind him. Ed learnt on the campaign trail – it seems to have been some time since his declaration speech in which civic empowerment, regulation of the banks and immigration featured strongly. Those themes recurred, up to and including his first leader’s speech, but the more important ones were criticism of the Iraq War, coming out for a living wage and the vehemence of his attack on ‘US-style capitalism’.

There was always an element of ‘stop David’ to Ed’s campaign – not that he necessarily instigated that mood, but he was ruthless enough to capitalise on it. David was discredited by being tied to the War on Terror after he refused to turn his back on the last government’s foreign policy, particularly the Iraq War. Ed sought desparately to nullify Ed Balls and Diane Abbot by stealing their natural constituency in the Trade Unions and did so. He then tacked rightwards in order to convince wavering party members and MPs that he was a credible, centrist candidate for the leadership. Ultimately, there are good reasons for arguing that six MPs swung it.

David, on the other hand, was content to eschew the machine politics that are intrinsic to a party as bureaucratic as Labour and always appeared to be concentrating on the next battle. Set-pieces such as the Keir Hardie lecture or the King Solomon speech (oh, yes) were on a different level to any other in the entire race, but focussed too intently on the next General Election and not on the leadership one. For someone who raised so much money, David seemed determined not to spend it.

What is interesting in these circumstances then, is not so much that Ed won the leadership, but that doing so brought him dangerously close to ruin in his first day as leader. Admittedly, the press resented the defeat of their choice (and The Sun and The Times feature prominently in their caricature of ‘Red Ed’), but a General Election can never be won by moving from the left to the centre ground. If the candidate is not discredited immediately, he appears opportunistic. Moving left from the centre ground is a slightly different matter, as David Miliband’s public profile has suggested. This dangerous label, the uninspiring victory speech and the ghost of his brother put Ed Miliband on the defensive and if he deflected some criticism on the Andrew Marr show, he still had a lot to do today.

The New Labour Playbook and Ed

It was therefore reassuring that Ed’s speech was politically and emotionally sophisticated, (even if it had to be squeezed into the Obama formula of life story, narrative, pragmatism, unity). He has been criticised for ditching the ‘New Labour Playbook,’ but in reality it was always going to be impossible to triangulate when your party is the sole alternative to a coalition that is broadly based.

David Cameron was the first to see that the latest divisions in politics were not between parties but within them and by supporting Blair’s education reforms in 2006 he drove the wedge deeper between Old and New Labour. Ed Miliband appeared to understand this, heaping praise on the old New Labour (contradiction?) positions on law and order and Alistair Darling’s reaction to the financial crisis.

On the one hand, Ed Miliband will find it easy to triangulate on the deficit reduction plan.  But on the other, he had to hug the coalition tight on civil liberties, law and order and welfare reform in order to convince the public that Labour are still the party of ‘hard-fought British liberties’. He did so successfully, for the most part, while also finding space to attack the government for offering defendants in rape trials anonymity and their peculiar attitude to CCTV (which, crucially, also showed that he could tell a joke as well as his brother).

There were also some bold strides either ahead of, or to the left of the coalition, depending on your view. The much-vaunted ‘living wage’ formed a centrepiece, and the EU Agency Directive and ‘good society’ also got mentions. The ‘good society’ may sound like a neat counterpart to David Cameron’s big society, but with Ed as with every other activist who likes that term, I wonder if they know what they mean by it, and worry that they do.

One thing that Ed Miliband is very keen on is equality (The Spirit Level is appearently outselling even Ralph Miliband tomes at Conference – no word on A Journey). In this, he ought to be careful. As Tony Blair puts it, Labour needs to ‘get’ (another Ed-ism) aspiration. Ed’s associates, notably Neil Kinnock and Roy Hattersley, see left of centre-majorities as low-hanging fruit and both the impending fiscal tightening and the referendum on Alternative Vote (which won Ed the leadership) will encourage this tendency. On the contrary, Labour will have to fight hard for its reputation and landing blows on the government is only half the battle. The Party is unlikely to have an easy road back to power and will have to challenge itself before the public finds it fit for purpose.

Ed’s Long Shadow

All of which brings us to the Shadow Cabinet. There are two scenarios which will hugely influence Ed’s freedom to choose his team, and David is not the major player. Instead, the key will be the performance of Ed Balls and whether he floats or flops. Balls got approximately eighty first or second preference votes from MPs, suggesting that he will top the poll (unless David stands). If there are any notable shifts in voting in Balls favour, this will strengthen his claim to have an anti-cuts majority in the party and therefore close in on the Shadow Chancellor’s position.

It is in Miliband’s interests to have Balls onside, but Yvette Cooper has an eye for detail that would make her a surer touch in a very unstable playing field. Miliband has also suggested that he would prefer an emollient Home Affairs spokesperson who ‘gets’ civil liberties. Balls is soundest when on the attack, and Health would therefore be a very suitable post for his talents, given that it is an area in which the government is divided (the Lansbury reforms). Getting him to take a portfolio other than the Shadow Chancellor will be the first challenge for Ed Miliband. The second will be stomaching a handful of Blairite ministers, preferably at Education and Welfare and Pensions.

Copenhagen – Among the Rubble, Something Extraordinary

The results of Copenhagen are more substantial than you might think

It seems as though the Copenhagen Accord, barely baptised, has already been dragged below the waves – a precursor to civilisation’s own destruction. Almost no-one has been prepared to praise the outcome of the two-week summit, and least of all, the politicians who contributed to it. I for one (and it seems I am pretty lonely), am confused by this. I can appreciate the frustration of those who were desperate to broker a deal (and particularly those with an election next year), but the political segment of the conference seemed like a great success to me.

From where I was watching, Copenhagen moves the world a good deal closer to a consensus and answers many of the more contentious questions about how the balance of responsibility will be adopted.

Mid-week, we were told that the key to a deal was financial support for developing countries – to help adapt to the inevitable environmental changes and to develop low-carbon economies. $100bn was the price put on Copenhagen and as a Western European whip-round could produce less than 10% of that figure all looked lost in a sea of hypocrisy and recriminations.

Then Hilary Clinton brought good news. In the words of John F. Kennedy, America would ‘pay any price, bear any burden’ to make the deal stick.

Unfortunately, Obama then went and put his proverbial foot in it. Transparency of emissions was essential, and inspections to that end could not be avoided. Of course, he was speaking to an important constituency that would not impose on America what other countries could get away with – the force that wrecked Kyoto over a decade ago. However, he infuriated China and in return was humiliated to find a lowly official was to meet him in place of the Chinese Premier.

American spokesmen could hardly conceal their delight at the way Obama marched into a meeting demanding to speak to President Wen – ‘well, he was on time’ – one said. Nonetheless, as a result, the projected cap on carbon emissions – 80% by 2050 – was left out of the Accord.

After that example of going one step forward only to jump back two, the summit collapsed into chaos. The cause was partially procedural. For a week and a half technical discussions had been conducted, only for a completely different class of politicians to arrive and tear up what had been agreed, until more drafts were floating in the Danish capital than snowflakes. The high-level diplomacy collapsed when the Prime Minister of the Maldives, Mohamed Nasheed, leapt at his chance to push his motion reducing what had been agreed as the highest safe rise in the climate from two to one-and-a-half degrees Celsius.

Obiter dicta, I would love to hear what the left think of Hugo Chavez, who tried to play his disreputable part in ruining such an important cause.

Given the circumstances, it was remarkable that any agreement was made. But there was an agreement. The rich world has agreed that it will have to fork out for the process, and decided the benefits outweigh the costs. Tacitly, the numbers that a successful deal will ultimately be measured against have been floated and have even been the subject of approximate consensus. In a year’s time the world will return to the matter at hand. By then, the UN should have adopted a more sensible procedure. The opponents of a deal have ousted themselves, too late to achieve recognition (making China’s diplomacy look like statecraft) – and early enough to be pressured into falling into line.

The prospects for success are much brighter than you have been led to believe. As we desperately need reminding, few great political achievements have been concluded in so short a space of time – least of all those (like the abolition of slavery) that are comparable with this. Politicians (especially Barack ‘last President to reform health care’ Obama) should restrain from promising the world, even if they can’t help it.

A Classic New Labour Commotion

In many ways, it is a classic New Labour public relations cock up – raised expectations, simplistic targets and demands for immediate success. Most critics will tell you that New Labour’s multi-nationalism has been a disaster. To those on the left, it simply ignored the UN in 2003. To those on the right, Labour has caved in at almost every European Summit it has attended.

The truth is much more complicated. New Labour has deployed a similar strategy in international affairs on more than one occasion, and the Copenhagen Summit bears a striking resemblance to the G8 Summit held in the middle of the Make Poverty History campaign in 2005.

On both occasions, Britain led the world on the terms of debate. In 2005; the Commission for Africa, of whose report 50/90 recommendations were implemented. In 2009; the Stern Report. On both occasions Labour stirred up national sentiment, then took a back seat to the more trustworthy celebrities and notables who we were to accept a hectoring from in place of the politicians.

As a force in multinational negotiations, it has been unquestionably significant. But the flip side is that it almost always results in the government achieving less than was promised. No one is convinced that by joining ‘the Wave’ Peter Mandelson and Ed Miliband are ordinary folk. They were disappointed that 2005 did not see a deal on agricultural subsidies and in 2009 if there is no legally-binding emissions target there is nothing to talk about. Perhaps the one bright point politically is that they have out-manoeuvred the formerly ‘green’ Conservative opposition.

But behind the scenes, Labour politicians have been able to punch above their weight as a result of their moral authority and technical ability. Copenhagen is an exceptional example.

Between them, Brown and Miliband were like a combination of the almost entirely incompatible Gladstone and Disraeli and the 1870s. Miliband was roused from the point of collapse to harangue the Sudanese Premier for his comparison of the Summit to the Holocaust, while Brown laid out the conditions of a deal and was elected to preside over the summit in place of the flaking Danish PM, Lars Lokke Rasmussen.

That combination held what was left of the Copenhagen Summit together. Next year, personnel could make a similar difference either way.