progress is not the elimination of struggle, but rather a change in its terms’ - Aneurin Bevan

Next Labour - will change be moderate or radical?

The past...

David Miliband is using the term "Next Labour" in his campaign for leadership of the Parliamentary Labour Party. What this signals is that even the man widely viewed as the "New Labour" candidate acknowledges that the project is over. In his South Shields speech, it was recognised as factor in the general election defeat - "we were perceived to be defending the old order" when much of the electorate wanted change.

There are very good reasons why our party in government "did not become a movement in our communities rather than just an electoral machine". New Labour was predicated on winning office and holding office on the basis of moderate change, not radical change. To win enough seats to form a government, New Labour had to gain the support of voters who had previously backed the Tories. Since reasoned persuasion could not overcome media hostility, the party leadership adopted a centralised means of making policy and in doing so presented an image to the public which would not offend the ruling elite - and which would be mediated to swing voters.

(Now, perhaps there was no alternative to the New Labour project, perhaps Labour could have continued without rebranding - this is not my concern here. Though it might be interesting to speculate, it is of no relevance to the Next Labour project we must build.)

By accepting privatisation and the deregulation of the economy and abandoning industrial policy and state intervention, New Labour was not making an appeal to Middle England swing voters, it was making an appeal to Upper England - the ruling elite of billionaires and millionaires who are the major owners in industry and finance and who traditionally have sought to topple Labour governments by extra-parliamentary means. Given the choice between a "living breathing movement" of ordinary people or a centralised machine controlled by politicians from above, these people prefer command-and-control: a machine can be replaced or sabotaged with ease, but a movement is stubborn because it is more democratic.

So in office, New Labour was able to implement much needed reforms that benefited people on modest and middle incomes without incurring the wrath of the ruling class. Tax revenues from an expanding financial services industry and a record period of economic stability allowed investment in the National Health Service, in schools, children's centres, education and skills-training.

All of this has changed with the global economic crisis and the resulting bank bailout. The potential for financial meltdown meant that governments across the world had to step in to prevent recession turning to depression - taking equity stakes in banks and providing capital. In the UK, the bailout and the subsequent recession have caused a widening public spending deficit which the Tory-Liberal coalition aims to reduce through large-scale cuts in expenditure.

Through the years in office, a great distance was put between the party's traditional goal of extending democratic participation into economic affairs and the necessity of remaining in office to stop the Tories undoing the achievements that had been made. This meant that impediments to social justice, such as the Tory anti-union laws, were not repealed - and the growth of a bonus culture in the City could not even be criticised by ministers.

...the future...

Lord Griffiths, architect of the Tory government's privatisation and deregulation programme in the '80s, famously defended social injustice by saying of bank bonuses that people should "accept that inequality is a way of achieving greater opportunity and prosperity for all".

However, firms that are owned by their staff or customers, such as the John Lewis Partnership or The Cooperative Group, are able to provide opportunity and prosperity that is shared more equally and sustainably than in traditional investor-owned enterprises. So clearly, arguments in favour of inequality are self-serving rather than scientific, and an alternative is possible. Next Labour must promote democratic enterprise as the prefered model for private sector job-creation and economic development, and argue for an active industrial policy to nurture co-owned firms.

Reflecting the collapse of the financial sector and the world-wide discrediting of deregulation, Labour's geneneral election manifesto promised "A future fair for all". Though co-operative and mutual enterprise was supported more explicitly in the manifesto, both in rhetoric and policy, this unfortunately did not transfer into the election campaign itself.

As many of the party's former ministers have said in the aftermath of the election, it was hard to argue for fairness when there was much about the government's record that was unfair. Jon Cruddas, a backbench MP, has been more explicit about how the party has lost five million votes since 1997:

"many of our own people deserted us. The people who New Labour's architects said had "nowhere else to go" went elsewhere [...] the biggest swing was among skilled manual workers. [...] Immigration has been used as a 21st-century incomes policy, mixing a liberal sense of free for all with a free-market disdain for clear and effective rules. [...] Low pay and job insecurity, despite a minimum wage, has left people on the edge of society looking in on new levels of riches. This has happened while migrant workers are set against British workers by rogue employers looking to shave costs to make a bigger buck. This has not happened by accident. Labour actively took the decision not to better regulate for agency workers, and to not introduce living wage agreements."

Several candiates have raised the issue of immigration, but there's a danger that Labour overplays it. Other issues were motivating voters - the biggest being the economy. For skilled manual workers, many of whom deserted Labour particularly in Southern England, pay and conditions have come under pressure from increased competition from migrant workers and from off-shore outsourcing of jobs to lower-wage economies. However, as Diane Abbott has pointed out in launching her own bid for Labour leadership - it would be a mistake for the party to play into tabloid demonisation of migrant workers, rather there has to be a focus on the issues which are really a problem such as the shortage of affordable housing and job security.

The former schools secretary, Ed Balls, has now announced his intention to stand. Balls is usually tagged a "Brownite" in contrast to "Blairite" David Miliband - though as Jon Cruddas has said when arguing for the leadership campaign to move at a steady pace, "I've known some of them for 20 years but I don't know what they stand for. We should extend this and allow them to define what they are."

The distinctive concept Ed Balls champions is "progressive universalism" - recognising that those on modest and middle incomes have a shared interest in public services which are delivered on the basis of need. The media characterisation of Balls is not flattering - and I think is based upon his own presentational difficulties which result from a speech impediment that he has struggled to overcome.

Andy Burnham, former health minister and the self-proclaimed "continuity candidate" and John McDonnell, who like Diane Abbott is a member of the Socialist Campaign Group, are also trying to win support from their fellow Labour MPs to get on the leadership ballot.

...and the present

If David Miliband has positioned himself as a radical moderate, Ed Miliband positioned himself as a moderate radical in announcing his leadership bid. By backing a living wage campaign, the Cruddas view of immigration as a class issue, and by calling for the party to a rethinking its response to globalisation, he has laid claim to Next Labour by virtue of his distance from New Labour - and by his recognition that the global balance of power between labour and capital has shifted since the crisis, if only in terms of ideas.

But still, Ed Miliband has said the following of the postwar settlement "that gave working people a sense of security" that it "cannot be reproduced". This displays a remarkable lack of ambition because no thought is required on how to provide economic security to working people - rather, there has to be the political will to act.

These are the policy dilemmas, irrespective of who leads Next Labour:

* The UK is integrated into a Europe-wide, and expanding, labour market. Our trade unions are the most tightly regulated organisations in the UK, employees being held back by the worst labour laws in the EU. Will Next Labour stick with the model of a neo-liberal Europe that benefits the few, or will it back a Social Europe that benefits the many?

* Foriegn Direct Investment plays a greater role in the UK economy than ever before, and the incumbent government looks set to abandon the active industrial policy adopted that New Labour belatedly adopted. Will Next Labour switch back to a hands-off approach, or will it champion industrial activism and company law reform that was set out in the manifesto?

* Deficit reduction measures seem certain to result in another recession - another round of job losses and firms going to the wall, another wave of home repossessions and bankruptcies. We will see a sharp rise in poverty and a growing divide between the middle and the top of society. Will Next Labour attempt to position itself towards elite opinion at home and abroad, or will it campaign for the people who caused the crisis to foot the bill?

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