Wednesday 27 August 2008

The End of Neo-Liberalism

How quickly the TUC and party conference season comes around. This year rather than a knee jerk response to the threat of recession we need some deep reflection on economic policy. Be in no doubt the world has changed the neo-liberal boom is over.

Our Olympic performance shows that talent is essential for success but only long term investment can guarantee it. Economically we can only sustain our standard of living with high levels of investment. Now made difficult by the credit crunch and how we used that wave of cheap investment.

Recent economic prosperity was underpinned by historically low global prices for the key economic inputs of capital, energy and labour and deregulation and liberalisation enabled us to easily import them.

Western banks recycled surpluses generated from East Asia’s export of manufactures and from the oil and gas exporting countries. For a while they had more capital than they knew what to do with. The Bank of England reports, mangers invested in such complex financial instruments they still do not know what they have done with it! Sadly here this inflow of cheap capital was not invested in crucial infrastructure and productive capacity but was squandered on private equity and PFI schemes that added little to our capital stock or was used to subsidise current consumption.

UK fiscal policy drove a large proportion of this capital into new retail capacity to take advantage of cheap imports and into housing. Not to produce more houses, despite record prices we have had record low levels of construction, but driving house price inflation. Despite conventional wisdom high house prices do not equal wealth. Houses are not businesses, they do not innovate, generate new products, undertake R&D or train people, whilst they may once have been a store of value they do not create it.

This capital was cheap but not free - now it is payback time - the price is record trade deficits, massive public and private debt levels and a weakening pound. Now we need to generate domestic capital a tough task from a generation with no savings culture.

The energy story is a similar. When it was cheap we privatised our energy infrastructure, now it is more expensive we seem surprised that private firms pursue profits rather than the national interest. Our laiseez faire energy policy puts us at the mercy of global energy markets.

We must increase the output of domestic energy requiring capital but global firms take a global view why should they invest when they are making plenty selling us the imported stuff? We now have an underdeveloped energy infrastructure which needs investment across the piece, from renewables, new nuclear stations, new gas storage systems and replacement generating capacity.

Government intervention is vital, but a one off windfall tax is not enough, given the current structure of the industry it will only be paid by yet lower investment. Now sustained investment can only come from the public sector.

The third factor has been our inability to increase the productivity of the UK workforce. Our GDP has grown not by increasing the output per person, requiring higher investment in technology and skills; but by getting a higher proportion of people into work and by getting them to work longer.

This has been further sustained by the flow of low cost, highly motivated and well educated labour from Eastern Europe and from more women working. Now the pressure for higher labour market participation rates is looking desperate with attacks on lone parents and those on disability benefits.

With recession looming, the Poles are going home and the ones that stay are demanding decent pay and conditions. We will have to re-examine our education and training systems as we are forced to depend on home grown skilled Labour - meaning an end to long hours without training or companies having a free ride on skills.

It must be clear now that we can no longer postpone the development of a high investment, high technology, high skills economy. Currently we are not productive enough to import all our inputs. Now our financial services sector has shown the world that it is no better managed than our domestic car industry was.

The NICE decade is over we need the policies to get us saving, to get us developing our own energy supplies, and for us to have a high skills, high productivity economy.

That is the program we need to hear this conference season otherwise the sacrifices currently being made in living standards by Britain’s, workers will be for nothing. We will be letting David Cameron’s Tories off the hook we know they do not have the answers to these problems but does Labour?

Friday 22 August 2008

Can David Milliband Save the Labour Party ?

I cannot help but feel that the metropolitan commentariat do not understand how bad it has become for Labour out here in the country. The reason we need a new leader quickly is not so that we can stave off defeat in general election. Labour is in free fall. The Crewe by-election and the local and London result are not just a sign of a resurgent Conservative Party but that we are faced with the terrible fact that the electorate will vote in each place for whoever they think will beat Labour. They do not care what the policies of the Tories or Liberals are but will now vote for anyone but Labour.

This is simply not enough time to turn things around before a general election but the coming defeat can be mitigated by a swift change in leadership. The current leadership is not only politically bankrupt, can anyone remember any of the 18 Bills in the draft Queens speech, the Party as Tribune has consistently reported is also financially bankrupt.

Changing the leader won’t make things miraculously better but it will stop things getting worse. The test for a new leader is not is he or she Prime Ministerial but can they lead the Labour party in Opposition. Can they harry the Tories and set the agenda without the civil service behind them and with a rather small band of brothers.

I understand that David Milliband is the coming man, remember this is not about winning a general election frankly that is beyond any mortal at this stage, it is about rebuilding the Labour Party and stopping its destruction as any kind of force in British politics.

With this in mind I have some speech notes for David as he triggers the leadership campaign.


1) I have decided to stand for the leadership of the Labour Party. There can be no greater honour for me than to lead the Labour Party (note not New Labour). The Party has been my home and my family for all of my adult life, a family that includes, the trades unions and the co-operative movement (note to self they are saving us from bankruptcy) and it would be true to say that like all families we have had our differences some of them profound but I have never wanted to be in any other.
2) We are not conservatives, neo-conservatives or liberals we are democratic socialists and we must never forget it. I have the honour of representing a working class constituency and we have to ensure that we build outwards from the base. (Must stop the rot with working class voters)
3) Many of you will now that I had severe doubts about the war in Iraq . My loyalty to the party and its leader meant that I kept my council at that time. Today I cannot stand by when it is clear we need a fresh start to win back the trust of the people. (Message:Ant-war but loyal).
4) I have youth and experience. I understand how events in far away places can impact on life here in Britain and how we have to be internationalist in our outlook. (Cameron just has youth)
5) The greatest threat we face today is not Islamic terrorism but climate change. We have to have a major push for renewable energy we are not as a nation short of wind or waves, not only saving the planet but also saving imports of oil and gas. (I have a track record on this)
6) Britain can look forward to a bright future but we have to rectify some of the over zealous elements of the market that have damaged our country, like the housing bubble, it will take some time but we can do it. (Subtext: I will regulate where Gordon failed to tread).


How will he see the last two Labour leaders?
On Gordon Brown, he has been a great servant of the party and the country but new times and new challenges need new ideas and new remedies and that is what I can offer.

On Tony Blair, being close to the leadership I can see how it is possible just because of sheer pressure on time to get isolated from the everyday concerns of people when one is deeply involved in global politics and that is what we have to guard against.

And how can he take on the Tories:
On David Cameron, I like him, he has done a good job in reshaping the Conservative party, he accuses us of stealing his clothes but I think he has stolen ours and they look a little too big for him.

A change of leader now will not stave off defeat but it will breathe new life into the Party and give us a base to build from. There is no point waiting, that base will only get smaller, we have already lost half our members and half of our councillors all that delay can do is delay the process of renewal and rebuilding. This is the test of the new generation have they like those in Gordon Browns book the courage to make the change.

Is the Co-op Commonwealth Still Alive?

Is the dream of the Co-operative Commonwealth still alive?

Joining the Co-op Party I had to “assert my belief in the co-operative commonwealth”. I never had a problem with this. In my sitting room there is a framed Walter Crane print of ‘liberty’ one hand holding aloft the light of ‘socialism’ shining as the ‘co-operative commonwealth’ whilst the other hand fought the serpent of ‘capitalist constriction’. This came to mind as next month sees the Co-op Party conference at Methodist Central Hall (Methodism and Co-operation – seems appropriate) begin drafting its general election manifesto.

Like the Trade Unions the Co-op movement came into politics for defensive reasons. The sector was badly treated in World War One price controls and rationing schemes where biased to private traders and the Military gave little consideration to Co-op Societies; one was faced with 102 out of 104 male employees being conscripted.

The last straw was Asquith’s clumsy attempt to tackle profiteering, an excess profits tax, which has been described as the co-operators Taff Vale. The 1917 Co-op Congress passed a resolution to “seek direct representation in parliament”. Later that year a National Emergency Conference set up a Central Co-operative Parliamentary Representation Committee and agreed a platform of ‘industrial, social and economic reform’, expressing the movement’s views on profiteering, agriculture, taxation, banking, housing, education foreign policy, and demobilisation, the ‘democratising of state services’, as well as safeguarding the interests of voluntary co-operation and resistance to any legislation that would hamper Co-op progress.

Those issues of profiteering and demobilisation seem somehow topical again. Ten years after its formation in 1927 the Co-op formed an electoral alliance with Labour that has lasted for eighty years. It maybe a relationship that is a throwback to the Labour Party’s federal past but on today’s membership cards its role to ‘promote co-operative values and principles inside and outside the Labour movement, representing all types of co-operative organisation’ could not be more important.

In the Blair years the Party was not immune to ‘modernisation’ General Secretary Peter Hunt attempted to flesh out the concept of the ‘Third Way’ with ideas of new mutualism which where developed with the aid of a new “think tank” Mutuo. Certainly the Party needed better developed co-operative and mutual public policy prescriptions. Unfortunately the ‘Third Way’ for Tony Blair was nothing more than a rhetorical device to cover his rightward drift. Hunt also worked hard on the youngsters around Brown at the Treasury as the best hope for the legislation the Co-op movement needed to make it fit for the 21st century.

For last years 90th birthday Greg Rosen wrote a new short Co-op Part history published as co-operator Gordon Brown was making his ascent to No 10. The Party was full of optimism, writing in the New Statesman; Martin Bright said that “It could be argued that the Co-operative Party is one of the most influential groups of MP’s within Labour. Its chair the international development minister, Gareth Thomas, is a respected figure. Ten cabinet ministers are members as were four of the deputy leadership candidates. All the most influential younger Brown-era ministers are also members (Ed Balls, the Milliband Brothers, Andy Burnham, James Purnell). Could it be”, he asks, “that those searching for a Brownite politics will find it here”?

Somehow I can’t imagine that lot looking for the Co-operative Commonwealth, nonetheless, new Co-op Party General Secretary, Michael Stevenson, has a record Parliamentary Group of thirty members, who maybe a broad church but with the Government looking increasingly bereft of ideas this years Co-op conference could not be timelier. The Party has the enthusiasm and talent of co-operators, from agriculture to housing, financial services to telecommunications, who now run some of Britain’s most successful businesses to call upon.

Many co-operators feel that there has been too much emphasis on selling Labour to the Co-op or putting a cosmetic co-op gloss on health and education reforms rather than ‘promoting’ genuine co-operative solutions to Labour. The true test will be real Co-op measures finding their way into a real Labour manifesto. That is the way to ensure the Co-op Party reaching its centenary.