Morgan the Old

The Purple Book

The Purple Book
A Progressive Future for Labour
Edited by Robert Philpot
First published in Great Britain in 2011 by
Biteback Publishing Ltd
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Copyright © Robert Philpot and the individual contributors 2011
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Contents
Acknowledgements vii
Foreword: the new centre-ground ix
Ed Miliband
Introduction: today’s choice before Labour 1
Robert Philpot
Renewing our offer, not retracing our steps: 19
building a sense of national purpose
Douglas Alexander
An effective state, not a big state: forging a national strategy 32
Peter Mandelson
Back to the future: the decentralised tradition 45
and Labour’s way forward
Paul Richards
Reviving our sense of mission: 61
designing a new political economy
Tristram Hunt
Making markets genuinely free: 80
redistributing power to all
John Woodcock
Empowerment and transparency: 97
a new settlement for public services
Patrick Diamond
Breaking the link between demography and destiny: 116
how to restart the engine of social mobility
Alan Milburn
Eliminating ‘power failures’: a new 129
agenda for tackling inequality
Liam Byrne
Securing social justice: 144
savings and pensions for all
Rachel Reeves
Restoring Labour’s moral economy: 158
the role of National Insurance
Frank Field
Putting families first: universal care from cradle to grave 166
Liz Kendall
The authors of their own lives: 183
stronger communities and the relational state
Tessa Jowell
A state in society for all: 200
better homes in stronger neighbourhoods
Caroline Flint
Cutting crime and building confidence: 215
empowering victims and communities
Jenny Chapman and Jacqui Smith
One Nation Labour: 231
tackling the politics of culture and identity
Ivan Lewis
Good government and thriving economies: 245
rejuvenating England’s cities
Andrew Adonis
From centralism to localism: 255
building cooperative communities
Steve Reed and Paul Brant
Letting the people decide: 270
redistributing power and renewing democracy
Stephen Twigg
Conclusion: a progressive future for Labour 282
Robert Philpot
Author biographies 304
Acknowledgements
‘Writing that chapter was like giving birth,’ one of our
contributors remarked after theirs had gone through
its final iteration. It is a credit to all of our authors that, faced
with extremely tight deadlines and multiple requests for
revisions, additions and further information, each responded
with admirable levels of patience. Our thanks to them all. My
thanks also to Progress’s chair, Stephen Twigg MP, and vice
chairs (especially Tristram Hunt MP, Liz Kendall MP, Rachel
Reeves MP and John Woodcock MP) who have contributed
chapters to the book, and who provide much wider
service to the organisation. Throughout this project another
contributor in particular, Andrew Adonis, has offered a great
deal of support, encouragement and advice, for which I am
very grateful.
The Purple Book was conceived early in 2011 and we have
been very lucky in Biteback Publishing for all their help in
bringing it to fruition in such a short space of time. Many
thanks to our editor, Hollie Teague, and to James Stephens,
who helped shape the book in its initial stages.
This year marked Progress’s fifteenth anniversary. Without
exception those who I have been fortunate to work with
at the organisation over the years are, in my unbiased opinion,
the best in the business. Their passion, enthusiasm and loyalty
are the key to all that Progress has achieved. Many former
viii the purple book
colleagues have become firm friends, both personally and of
the organisation.
I’d like to thank especially the current Progress team –
Richard Angell, Adam Harrison, Matthew Faulding and
Simon Jeffrey – who have made our fifteenth year Progress’s
most successful and productive ever. It is a small team with
big achievements to its name thanks to the hard work
each and every one of them puts in. In terms of this book,
Richard and Adam deserve special thanks – they have applied
their customary intelligence, diplomacy and humour to this
project. It wouldn’t have happened without them. I should
also mention our intern Felicity Slater, who performed a
number of extremely tedious – but absolutely vital – checking
and proofing duties in the book’s final stages.
Finally, to my parents and to Paul, for all they have given
me over the years, but especially for last year.
Robert Philpot
August 2011
Foreword: the new centre-ground
Ed Miliband
I am delighted to welcome this collection of Purple Book
essays as contributions to the discussion about the kind of
Labour Party we need to build for the future.
You may not agree with all the views expressed in this
book. Nor do I. But I believe strongly that a vibrant debate
across the party, in all its colours, is a necessary condition of
renewal and of returning to power.
Last year we suffered one of our heaviest electoral defeats,
bringing the curtain down on the longest period of government
in our party’s history.
The speed with which Labour has got back on its feet
is testament to the energy, dedication and unity of those
in our party. We have recruited 65,000 new members, won
by-elections, and gained hundreds of council seats.
I am proud to be leader of our great party. And I am proud
of our record in government.
But as well as celebrating our resilience and recovery, we
have a duty to face up to the realities of our situation. In the
2010 election the electorate sent us a clear message, and we
have a responsibility to confront the hard truths behind this
result if we are to learn from what we got wrong and earn
back the voters’ trust.
That’s why Labour has spent a lot of time this year listening
to what people have to say – about us, about their lives,
about the current government and about the kind of Britain
x the purple book
they want – so that we can be in a position to offer our country
hope for the future.
Above all, in my first year as Labour leader, I have learned
two things about Britain in 2011. First, the scale of the challenge
that faces our country and our party. But second, a source
of confidence: that there is a new centre-ground emerging in
British politics, one which Labour can and must occupy.
In Britain today, millions are anxious and insecure.
Although they work hard and do the right thing, the ‘squeezed
middle’ feel they don’t get the rewards that they should. And
they see and experience the contrast between their own experiences
and those at the very top whose income and wealth
has been consistently rising.
Parents worry that their kids will do worse than them –
whether measured in terms of jobs, housing or income. What
I call the ‘promise of Britain’, the idea of continuing progress
across generations, is more under threat than at any time in
living memory. It is a notion of progress that is not just about
what people earn, but about their quality of life and the hours
they work.
And people also see the weakening of the communities
and values that matter to them – responsibility, our obligations
to each other, a sense of solidarity, and people’s ability
to have a say in shaping the places where they live.
These concerns – a new inequality between the rich and
the rest, the fate of young people, renewing the values of
community – all mark out a new centre-ground in Britain.
Showing that we understand this new terrain marks a
crucial staging post for us as an opposition. But addressing
these challenges will require courage for us to change and
shed old orthodoxies – wherever they come from.
To encourage responsibility in our society, we must be
willing to speak out about the responsibilities of the powerful
– from politicians to bankers to those who run the press.
foreword xi
To create good jobs at good wages, we must champion the
role of small businesses against established interests in both
the public and private sectors that can hold them back.
To tackle the issue of falling living standards, we must be
willing to acknowledge and address the inequalities that scar
our society and have damaged our economy.
And to make government a fit and proper servant of the
public, we must face up to the need to reform the state, and
give people more control over the public services on which
they depend.
A common theme across these challenges is that we will
need to take on some of the powerful vested interests in our
country. That is, in fact, where we have always been strongest
as a political party.
Learning from our history in government and daring to
change the way we do politics is not easy. I know many will
find this path uncomfortable and unfamiliar.
But that is why I welcome, and take encouragement from,
the debates being opened up in this book.
Introduction: today’s choice
before Labour
Robert Philpot
The author’s verdict was unforgiving. The Labour government,
he declared, ‘did not fall with a crash, in a tornado
from the blue. It crawled slowly to its doom.’ And the blame
for this catastrophe was its alone: ‘It will not soothe the
pain of defeat with the flattering illusion that it is the innocent
victim of faults not its own. It is nothing of the kind.
It is the author, the unintending and pitiable author, of its
own misfortunes.’
R. H. Tawney’s damning assessment of the fall of the
1931 Labour government, presented the following year in
his essay The Choice Before the Labour Party, is one that few
today would dispute.1 The more self-critical in Labour’s ranks
will, however, recognise the parallels with the death, if not
the overall record, of the Labour government, which was
defeated in last year’s general election.
Indeed, the scale of Labour’s defeat in 2010 – in which
the party polled its second lowest share of the vote since 1918
– was akin to that of 1931. The 6 per cent drop in Labour’s
vote mirrors almost exactly the decline in the party’s vote
between 1929 and 1931. Then, too, of course, Labour had
been at the helm when the country faced a seismic economic
shock not of the government’s making – although, unlike
Ramsay MacDonald and Philip Snowden, Gordon Brown
introduction 2
and Alistair Darling took bold and decisive action to prevent
a recession turning into a depression.
Eighty years on, the lesson from 1931 rests, in part, with the
aftermath of defeat. Then, too, Labour’s defeat was followed
by a coalition government – one which came close to destroying
the Liberal Party. Perhaps more importantly, however, 1931
was the only occasion on which Labour’s ejection from office
was not followed by an even worse defeat at the subsequent
general election. In 1935, the party fell far short of returning
to power, but under Clement Attlee’s leadership it recovered
substantial ground. After Labour’s defeats in 1951 and 1979, the
party fared far less well: on both occasions its share of the vote
and seats in the subsequent general election both fell. And the
one apparent post-war exception to this rule – Harold Wilson’s
surprise defeat in 1970 – is itself not clear-cut: in February 1974,
Labour returned to office without a majority, on a share of the
vote which was lower than that which it had polled four years
previously, and lower than that polled by the Conservatives.
But, mixed though its fortunes were in 1974, Wilson’s
victory stands out for another reason: it is the only occasion
upon which Labour has managed to return to government
within five years of losing power.
A little cold realism
This history is not repeated to depress Labour’s supporters or
to detract from the solid progress the party has made under
Ed Miliband’s leadership during the past year. Rather, it is
rehearsed to remind all those who believe that the coalition
must be defeated at the next general election of the scale of
the challenge ahead. As Tawney’s essay declared, Labour
needed a ‘little cold realism’ now it had had an ‘interval in
which to meditate its errors’.
The causes of Labour’s defeat in 2010 were endlessly
rehashed during last summer’s leadership election, although
only a superficial consensus has been achieved. It is agreed
3 the purple book
that winning a fourth term was always going to be a great
challenge. Add to that the deepest and longest recession since
the 1930s; the scandal over MPs’ expenses which, justifiably or
not, hit Labour hardest; and a perception that, on immigration
and welfare, the party had lost touch with the voters,
including many of its erstwhile supporters, and some marvel
at Labour’s achievement in denying the Conservatives an
outright victory. And all this before account is taken of
Labour’s failure to renew itself after Tony Blair’s departure
from No. 10 in June 2007 and Brown’s widely acknowledged
difficulties in communicating with the electorate.
But, if it is to truly understand the lessons of its defeat,
and how to address them, Labour needs a deeper analysis.
Polling commissioned by Demos’s Open Left project in
the immediate aftermath of the general election provides a
detailed snapshot of public opinion. It found that ‘voters who
left Labour at the last election are more likely to have views
in common with the mainstream of public opinion than with
voters that stayed with Labour’.2
This divergence in attitudes was particularly apparent on
issues surrounding the role of government. Demos’s research
revealed that ‘people who voted Labour in 2010 are much
more comfortable with a bigger, active state [and] they are
less likely to see public sector cuts as a priority’. The authors
went on: ‘The polling data shows that more than one in four
of the voters that Labour lost said they saw government as
“part of the problem not the solution”, compared with just
over one in ten voters that Labour retained. More than half
of voters who stuck by Labour at the last election consider
government to be “a force for good” but among voters that
left Labour this view fell to just one in three.’
Indeed, the depth of Labour’s difficulties is demonstrated
by the views shown towards the NHS – the public service for
which voters have the highest regard and satisfaction and for
which the party received the most credit for its performance in
introduction 4
government. Here, 33 per cent of the voters Labour retained
agreed that the priority should be to ‘avoid cuts’. But among
the voters that Labour lost, that proportion fell to 13 per cent,
while 55 per cent believed that the priority should be to ‘seek
greater efficiency and end top-down control’.
Other findings suggested the limited appeal of statism.
Over one-fifth of voters agreed that ‘central government
interferes too much in local services like schools, hospitals
and the police. They should leave it to the professionals,’ while
33 per cent of voters opted for an alternative, but equally sceptical,
view of the state that, ‘people should have more choices
and control over local services – otherwise professionals or
government bureaucrats end up deciding what happens’.
There is, as Patrick Diamond argues in his chapter, what
many on the left view as an apparent paradox here: ‘The
financial crisis of 2008–9 was initially understood as a failure
of liberal market capitalism, but quickly transformed into a
crisis of public debt and government deficits. Unfortunately
for the left, popular fury against the financial system has not
been accompanied by a restoration of faith in the power of
government. While the crisis was fuelled by irresponsible
banking and financial deregulation, it is the role and size of
the state which has returned to the centre of political debate.’
Labour’s problems are not unique in this regard: since
the onset of the financial crisis, social democratic parties
across Europe have suffered a string of defeats – in Germany,
Sweden, Finland, Holland and Portugal – while prospects for
the Spanish socialists look bleak next year.
But, as international polling for Policy Network demonstrated
this spring, this negative view of the state, and the
parties most closely associated with it, has not as yet – as it
did when the stagflation of the 1970s stretched the consensus
in favour of Keynesian economic management to breaking
point – translated into an upsurge in support for neoliberalism.
3 Instead, suggests Policy Network’s analysis of the data,
5 the purple book
‘at the heart of it lies the question of trust: in state action
[and] in the market economy… Faced with frighteningly low
levels of trust in the state and the market, with widespread
concerns about government redistribution and the role of
corporations, as well as high degrees of cynicism towards the
ruling elite (of which social democratic parties are now seen
to be part), social democrats seem to be on the back foot like
no other political contender.’
Three of Policy Network’s findings, which go to the
heart of the argument of this book, are worth more detailed
consideration.
First, people are palpably frightened by the concentration
of power in the market economy. Some 85 per cent of Britons (a
higher figure than in Germany, the United States or Sweden,
which were also surveyed) agree that large corporations care
only about profits and not about the wider community or
the environment. Voters expressed concern about the harsh
impact the market has on vulnerable individuals, while barely
one-fifth of Britons cited the positive effects it has on jobs
and opportunities as an advantage of the market economy.
Second, voters still see, however, the advantages of
the liberal, competitive functions of the market economy.
Competition is cited as the primary advantage of the market
economy by half of British voters, while 44 per cent value the
wide choice of goods and services it provides.
Third, concern about concentrations of power in the market
economy, its impact on the vulnerable and scepticism about its
ability to create jobs is mirrored by a lack of faith in the role
of the state as a counterweight. Only 16 per cent of Britons
believe that government could stand up to ‘vested interests’;
nearly four in ten are concerned about the extent to which the
state has been captured by those interests; and only 17 per cent
think that politicians will represent their interests. Indeed,
scepticism about the efficacy of state action leads 29 per cent
of British voters to question whether there are, in fact, any
introduction 6
advantages at all to government-led action to improve societies.
Unsurprisingly, a plurality of voters in all four countries
surveyed – and 39 per cent of Britons – believe that centre-left
governments tax too much with too little public benefit.
It barely needs stating that such levels of distrust about
the efficacy of government present a particular problem for
Labour. Indeed, if we look at some of the challenges facing
Britain over the next decade – reforming capitalism to restore
growth in the light of the lessons of the financial crisis,
tackling the plight of the ‘squeezed middle’ by ensuring the
proceeds of that growth are fairly shared, addressing the lack
of affordable childcare and the massive increase in social care
costs that the nation will have to bear as a result of the ageing
society, and reversing the decline in home ownership – none
of these can be tackled without government playing a role.
However, as then governor Bill Clinton argued in the
early 1990s when, following a series of election defeats, the
centre-left was last forced to fundamentally examine its
approach towards the state, ‘those who believe in government
have an obligation to reinvent government, to make it work’.4
Thus, as Policy Network’s polling demonstrates, the necessity
of reinventing government cannot be separated from the task
of tackling concerns – also very apparent – about concentrations
of market power. This, then, is the outline of the emerging
new political centre – which demands concentrations of
power be bust open to restore the voters’ trust in the efficacy
of the state and the ability of the market to create wealth
sustainably and shared fairly.
Is Labour up for this challenge? Tawney’s 1932 essay warned
of the ‘void in the mind of the Labour Party’ which leads us
into ‘intellectual timidity, conservatism and conventionality,
which keeps policy trailing tardily in the rear of realities’. The
challenge of ensuring that policy does not ‘trail tardily in the
rear of realities’ has been met by Labour before through the
process of revisionism. But the party has also responded in the
7 the purple book
past to defeat by engaging in ‘intellectual timidity, conservatism
and conventionality’. This is the choice before the Labour
Party today and it is to the latter option that we turn first.
The politics of evasion
There is, of course, a school of thought that Labour should
adopt a ‘safety-first’ strategy for opposition. This way of thinking
was, indeed, the reaction of some to the party’s fourth
consecutive defeat in 1992, and it has made an occasional
appearance since May last year. In their excellent study of the
failure of the US Democrats and other centre-left parties to
come to accept the real causes of their defeats in the 1980s,
and what it would take to recover from them, Elaine Kamarck
and Bill Galston labelled this mindset ‘the politics of evasion’.
‘Democrats have ignored their fundamental problems,’ they
argued at the time. ‘Instead of facing reality they have embraced
the politics of evasion. They have focused on fundraising and
technology, media and momentum, personality and tactics.
Worse, they have manufactured excuses for their presidential
disasters, excuses built on faulty data and false assumptions,
excuses designed to avoid tough questions. In place of reality
they have offered wishful thinking; in place of analysis, myth.’ 5
Miliband has made clear his determination to resist the
politics of evasion, arguing that ‘one more heave just won’t
do’.6 As he recognises, this way of thinking confuses shortterm
tactics for a long-term strategy. And it shies away from
forcing the party to confront difficult choices, mistaking a
conversation within the Labour Party for a conversation with
the country. It overplays the significance – welcome though
they are – of mid-term by-election or local election victories.
It overemphasises the importance – vital though that is – of
better organisation on the ground, believing that progress can
be measured simply by better targeting of resources or higher
voter identification statistics. And it overestimates the consequences
– important though they may turn out to be – of the
introduction 8
inevitable difficulties and unpopularity that most mid-term
governments run into.
But perhaps most pernicious of all for the party’s chances of
recovery, it can, as Douglas Alexander suggests in his chapter,
‘risk blaming the voters and not ourselves for our defeat’. In
its present incarnation, the ‘safety-first’ strategy assumes that
the coalition’s deficit-reduction plan, the consequent public
spending cuts, and the risk that George Osborne drives the
economy back into recession, will provoke a wave of public
anger that Labour can exploit at the next general election.
That may all be true – although opinion polls continue to
suggest that more voters still blame Labour for the spending
cuts than they do the coalition.
But morally, such a strategy has little to commend it: those
who are suffering most from the cuts – and would suffer most
in a recession – are the poor and the powerless, those who it
is the Labour Party’s first duty to defend. Politically, it has
even less: it is a gamble that takes Labour’s fortunes out of
its own hands and, at root, assumes the party is little more
than a bystander in its own story. It suggests that a relentless
attack on its opponents and a return to the old politics of
‘dividing lines’ will provide the voters with an opportunity to
correct the ‘mistake’ they made of failing to re-elect Labour
last May. Such a strategy will fail for the very simple reason
that it forgets that elections are not simply a referendum on
the performance of a government: they are a choice between
government and opposition; their accounts of the present and
their visions of the future.
None of this is to deny the element of truth contained
in the old adage that oppositions do not win elections,
governments lose them. But it is also true that faced with a
choice between a government they do not like and an opposition
they do not trust, most voters will opt for the former.
Governments may lose elections, but oppositions have to win
them, too. The story of Labour’s defeat in 1992 and its victory
9 the purple book
in 1997 demonstrates this perfectly. Faced with a choice in
1992 between a disliked government, presiding over a recession,
and a distrusted opposition, voters chose the former. By
contrast, when faced in 1997 with a choice between a disliked
government – now presiding over a recovery – and an opposition
which had worked hard and relentlessly to earn the trust
of the voters, the electorate gave the latter a landslide victory.
Some of the ‘safety-first’ adherents will, no doubt, disapprove
of this book because of the final characteristic that
defines their politics: a dismissal of any discussion of ideas
and policy as the self-indulgent antics of ‘wonk world’, far
removed from the concerns of the ‘ordinary voters’ for whom
they claim to speak. This view is bolstered by the notion that
any debate or discussion is not only a distraction from the ‘real
task’ of winning elections, but is detrimental to it: suggesting
that to offer any view that has not first been expressed by the
leadership risks giving the impression to the voters that the
party is divided, and divided parties do not win elections.
What The Economist has termed ‘Westminster’s antiintellectualism’
is, in fact, one important obstacle to Labour’s
renewal. Indeed, it betrays a lack of understanding about the
link between a party’s intellectual vibrancy – its ability to think
about its purpose and beliefs, and how these fit with the country’s
future needs and challenges – and its electoral health.
That link is not hard to prove. Look at the fate of the
premierships of Brown, Jim Callaghan or John Major: each
appeared bereft of new ideas, not only politically but intellectually
exhausted. Callaghan’s government, of course, was not
entirely without new ideas, but it lacked the political will to
bring them to fruition with disastrous effects. Most famously,
it rejected proposals drawn up by the No. 10 Policy Unit
to allow council tenants to purchase their homes. Bernard
Donoughue, the head of the unit and the man responsible for
drawing up the plans, later remarked: ‘It gave Mrs Thatcher a
winning election card. The left-wing reactionaries in the party
introduction 10
had won… The heart of the problem, much wider than the
issue of selling council houses, was that our Labour government
was trapped in the outdated prejudices and undemocratic
structures of its party organisation. Because of this, we
failed to appreciate and respond to the changing realities and
aspirations of many of our own supporters.’7
Similarly, the Royal Commission on Industrial Democracy,
chaired by Alan Bullock, led nowhere. Even concessions to
the unions that workers on company boards would be there
as their representatives and not the entire workforce failed to
buy off what David Marquand has termed the ‘unholy alliance
between industrial conservatives’ in the TUC, CBI and
Cabinet who combined to smother the proposals.8
Indeed, as Blair noted in a speech marking the fiftieth
anniversary of its election, even the Attlee government ran
out of intellectual steam in the space of barely five years. Its
three main weaknesses, argued Blair, were, ‘First, a failure to
recognise fully the realities of the new world order, manifested
in the attitude of the government towards Europe; second, a
reluctance to modernise the institutions of government itself
– what Kenneth Morgan calls the Labour government’s “stern
centralism”; and third, a tendency to look back to the problems
of the 1930s, not forward to the challenges of the 1950s.’9
And it is not only governments but oppositions, too, whose
fate is determined by the perception that they are unwilling
to face the future. Throughout the 1950s, Labour appeared
more concerned with defending its past achievements, worthy
though they were, than with thinking about the challenges
of the future. As Denis MacShane has argued, ‘In the 1950s,
Labour opposed the creation of commercial television,
premium bonds and betting shops. No to Corrie and no to
a flutter pleased bishops and the fellows of All Souls. But
was that where the great British public was?’10 Writing in
1954, Hugh Dalton, Chancellor of the Exchequer in Attlee’s
government, provided his answer. ‘People were very content
11 the purple book
with the Tories. They had stolen the Socialists’ clothes (full
employment, welfare state, etc.),’ he suggested. Indeed, in some
moods he could ‘see no reason, except crass conservatism, for
voting Labour now’.11 Labour’s opposition in the 1980s and
the Tories under William Hague, Iain Duncan Smith and
Michael Howard were similarly intellectually moribund. Each
were repeatedly rejected by the electorate.
By contrast, consider the story of oppositions: Wilson and
the ‘white heat of technology’ in the 1960s; Margaret Thatcher
and Keith Joseph’s development in the 1970s of what would
eventually emerge as Thatcherism; and, of course, the welter
of ideas which accompanied Blair and New Labour in the
mid-1990s – which appeared to be at the cutting edge of new
ideas and thought. Opposition has few pleasures. The time
and space to think is not only one of them, it is also the surest
way out of it.
Back to revisionism
There is, of course, an alternative to the ‘politics of evasion’.
Writing a couple of months before Labour’s general election
defeat last May, James Purnell and Graeme Cooke’s We Mean
Power: Ideas for the Future of the Left offered a passionate justification
for, and explanation of, Labour’s revisionist tradition.
‘True revisionism,’ they argued, ‘is the opposite of abandoning
our principles. It is an attempt to return to them. An ideology
is a combination of three things: values, an idea of society
and the methods by which to implement them. Labour has
spent much more of its history arguing about the third, about
means: which industries to nationalise, whether to abandon
unilateralism, what the trade union block vote should be. The
revisionists have always tried to push the debate back to the
first two – to values, and to society, with the means following
from a clear understanding of both.’12
This is the challenge for Labour today, and it is to meet that
challenge that The Purple Book offers a first, necessarily incomplete,
introduction 12
contribution. Our title has provoked some comment, with
some seeing it as an attempt to mix Labour red and Tory blue
and others drawing comparison with The Orange Book. Today’s
Liberal Democrats do not, of course, have a monopoly on the
use of colours in book titles: The Orange Book derived its title
from the 1928 Yellow Book, while Labour has had the likes of
the Red Paper on Scotland. The Orange and Purple books are
alike in one sole but important respect: both attempt to revive a
tradition from our respective parties’ history that we believe has
relevance for the future. But while The Orange Book attempted
to revive economic liberalism, The Purple Book attempts no such
thing – this has, after all, never been part of Labour’s story. We,
instead, attempt to revive Labour’s decentralising tradition of
participation, self-government and ‘moral reform’.
So, why purple? Because we feel it represents the centreground
of British politics. Unlike the Americans, we do not
normally describe constituencies as safe ‘red’ or ‘blue’ ones or
swing ‘purple’ ones, but if we did, the purple constituencies
would be those marginal ones – in the vast majority of which
the main fight is between Labour and the Conservatives –
upon which the outcome of elections is ultimately decided.
Labour’s revisionist tradition is a rich and strong one. Its
origins lay in the publication of the New Fabian Essays in 1952
and, most famously, Tony Crosland’s The Future of Socialism
in 1956. Labour’s first revisionist leader, Hugh Gaitskell,
captured well the essence of its philosophy in the speech with
which he launched his – unsuccessful – attempt to change the
old Clause IV. Labour, he argued, must adapt ‘to be in touch
always with ordinary people to avoid becoming small cliques
of isolated, doctrine-ridden fanatics, out of touch, with the
main stream of social life in our time’. The party should not,
he urged, ‘wave the banners of a bygone age’.13
It was precisely this argument that Labour’s revisionists of
the 1980s and 1990s – Blair, Brown, Neil Kinnock and Peter
Mandelson – made to the party and which set it back on the
13 the purple book
road to electability. Revisionism’s importance – and its relationship
to New Labour – is underlined by Paul Richards in his
chapter in this book. It is, he argues ‘the only reason we still
have a Labour Party. Without revisionism – which New Labour
dubbed modernisation – the Labour Party would have clung to
outdated policies and be weighed down by dusty ideology. It
would be a political sect, not a governing party.’
The case for the continuing relevance of New Labour –
with its insistence on the necessity of separating means from
ends – hinges on its proponents’ acceptance of this place
within the revisionist tradition. This point is made by two
of our authors. As Alexander suggests in his chapter, New
Labour was ‘composed of positions, personnel and policies.
The personnel have changed and the policies for the 1990s
are not going to be the solutions to the problems in the 2010s.
But the positions – a determination to prioritise credibility
on the economy and a willingness to take bold steps on crime
and antisocial behaviour – are ones we would reject at great
cost to our prospects of winning back power.’
Similarly, Mandelson makes the case that New Labour
‘cannot simply rely on the policy solutions we deployed when
last in office. But we can retain the central revisionist insight
embodied by New Labour: that as a party we are at our best
when we are neither sectional nor regional, but national, challenging
ourselves to make reforms to achieve greater social
equality in ways that will attract support from those living in
very different social circumstances.’
Electoral strategy and the challenge of blue Labour
New Labour’s great electoral insight, therefore, was its understanding
that the party could no longer win by relying on
its traditional base of support but needed instead to build
a cross-class alliance. At times, however, the debate within
Labour’s ranks appears to suggest that the party must rebuild
either its ‘core’ working-class vote or its support among
introduction 14
southern middle-class voters. This was always a false choice
– one which New Labour successfully overcame in its three
election victories – and it is even more so now.
As a new analysis of the British Values Survey by Graeme
Cooke of ippr suggests, understanding the new electorate
means ‘engaging with “Voter-3D”: class, geography and values’.
He suggests three broad values dispositions within the electorate:
the 41 per cent of voters who might be classed ‘pioneers’ and
who are global, networked, innovators, ethical and seek selfactualisation;
‘prospectors’ who, at 28 per cent of the electorate,
value success and status, are ambitious and seek the esteem of
others; and the one-third of Britons who are ‘settlers’ and have
a strong sense of the need for rules, value the local, are wary
of change, and seek security and belonging. But these value
dispositions cut across different classes and ‘it is certainly not
the case that the formerly industrial north is full of “settlers”,
metropolitan areas only have “pioneers” and “middle England”
is a sea of “prospectors”,’ Cooke argues. While avoiding microtargeting
and ‘pick and mix politics’, he concludes, Labour
must assemble a ‘broad majoritarian pitch that has something
to appeal to all values [and] sentiments’. This, in turn, requires
the party to break out of the ‘straitjacket’ of the ‘working-class
northern core versus middle-class southern swing’.14
In the period since the general election, blue Labour has
offered its own analysis of Labour’s time in office and made
a valuable contribution to the debate about where the party
goes next. Its principal ‘guru’, Maurice Glasman, has pitched
it as ‘an attempt to improve and strengthen the early days
of New Labour’ and argued that it is the ‘place where New
Labour needs to go next’.15 There are certainly some shared
insights and concerns with The Purple Book. Blue Labour
has recognised the importance of issues like welfare reform
and immigration, understood the complexity of the debates
around the meaning of fairness (whether our conception
is based around the notions of need or desert can produce
15 the purple book
radically different policy outcomes), and, most particularly,
shares an antipathy to ‘top-down’ statism.
Nonetheless, the limitations of blue Labour are also clear.
To return to Cooke’s analysis of the values dispositions of the
electorate, it is clear what blue Labour’s appeal might be to those
with ‘settler’ sentiments, but less apparent when it comes to the
‘prospectors’ and, especially, the ‘pioneers’. Blue Labour appears
also to have moved beyond an understanding of the need to
acknowledge and respond to voters’ concerns about immigration
to an anti-immigration position with suggestions of a halt to the
free movement of labour within the European Union. Perhaps
most importantly, though, while revisionism seeks to ensure that
Labour remains connected to the world as it is, and the future
challenges changes in society and new aspirations will bring, blue
Labour all too often appears fundamentally backward-looking.
Rather than reassuring the public that Labour understands, and
will help people to manage, the process of change, all too often
blue Labour seems to suggest that the party should attempt to
persuade the electorate that it can resist it. This is a false promise
and Labour should not make it.
Revising New Labour
But New Labour, too, must itself guard against becoming a
conservative force, stuck in the world of 1994 rather than 2011.
Indeed, Labour’s revisionists have made this error before.
Writing in the aftermath of Labour’s fourth general election
defeat in 1992, Marquand noted that, ‘the values embodied
in the … social democratic middle way – a combination of
personal freedom and social justice; of individual fulfilment and
public purpose – are as compelling as they always were. But …
the instruments through which the revisionist social democrats
of the 1960s and 1970s tried to realise their values broke in the
hands of the governments which relied upon them.’16
For many, this would be an apt description of New
Labour’s final years in government. And the solution that
introduction 16
Marquand proposed nearly twenty years ago is as relevant
today as it was then: ‘If revisionist social democracy is to
recover intellectually as well as politically, if it is to serve as a
governing philosophy after an election as well as providing a
platform from which to fight one, it must itself be revised.’17
A ‘revising of New Labour’ requires four things. First, a
willingness, in the words of Miliband, to escape the ‘false
choices’ around Labour’s electoral strategy.18 Second, an
honest account of New Labour’s period in office and its
lessons. Third, a willingness to confront the division within
the left on the role of the state. And, finally, the development
of new policies – guided by the principle of redistributing
power – to confront the new challenges facing Britain over
the next decade. Crucially, these must be explicitly based on a
recognition of the need to restore the public’s shattered faith
in the ability of the state and the market to widen opportunity,
demand responsibility, and strengthen communities.
Reclaiming the decentralist tradition
Attitudes towards the role of the state have long divided what,
in the broadest sense, we might term the left. Marquand has
famously highlighted this with his distinction between ‘democratic
collectivists’ and ‘democratic republicans’. The former
‘were content with the existing state, but for them it was
the agent of social transformation, guided by science, reason
and their own grasp of the dynamics of historical change –
legitimate because it was the emanation of an overarching
society that transcended the individuals who composed it’.19
By contrast, ‘democratic republicans’ advocated ‘civic activity
versus slothful apathy; and, most of all, government by vigorous
discussion and mutual learning versus passive deference to
monarch, capitalist and state’.20 G. D. H. Cole drew a distinction
in British socialism between reformists and revolutionaries
and, more saliently for this discussion, ‘federalists’ and
‘centralisers’. And Peter Clarke’s Liberals and Social Democrats
17 the purple book
has pinpointed the division between ‘mechanical reformers’,
who ‘believe that recalcitrant human nature can be prodded
into the right path only by coercion, and that the primary aim
of those who seek social change must be to get their hands on
the instruments of coercion’, and ‘moral reformers’, who believe
that ‘social change is above all the product of persuasion and
leadership, and state-imposed progress is inherently suspect’.21
Thus, as The Purple Book seeks to demonstrate, abandoning
statism does not require Labour to shed its identity or
adopt the political traditions of its Liberal or Tory opponents.
Instead, it requires us to rediscover an old tradition rooted
deep in Labour’s history which is right for new times. Indeed,
if we look at the manner in which the Conservatives have
attempted over recent years to appropriate the agenda around
mutuals and co-ops, to take just one example, we see that
rediscovering our decentralist tradition allows us to reclaim
what is rightfully ours, rather than attempting to claim for
ourselves what belongs to another.
Democratic republican, mechanical reform or federalist,
what we term the ‘decentralist tradition’ is a rich one. It is the
tradition of those such as the Levellers and Thomas Paine
who fought and argued for a widening of political rights;
of the ethical socialism of Tawney and the guild socialism
of Cole; of the cooperative movement, Robert Owen, the
Rochdale Pioneers and William Morris; of the self-organisation
ethos by which the working class built the early trade
union movement, the friendly societies and other institutions
that reflected their belief in self-help; and the municipal ‘gasand-
water socialism’ of the inter-war years.
However diverse this tradition, there is a common thread
running through it. Resting on the principles of participation
and self-government, it challenges the statist approach that
Labour’s role should be to win elections, seize the commanding
heights of the state – at a local or national level – and use the
power it has acquired to redistribute resources from the few
introduction 18
to the many. Instead, the decentralist tradition, as Richards
describes, requires the left to ‘create new centres of governance,
power and wealth creation, as an alternative to both the centralised
state and the private sector’. This should be the guiding
objective of a future Labour government, and the narrative
with which the party describes its mission as it seeks to attain
office once again. The Purple Book begins to set out how.
1 Richard H. Tawney, ‘The Choice Before the Labour Party’, Political
Quarterly (1932) vol. 3, no. 3, pp. 323–45
2 Richard Darlington (ed.), Open Left: Why Voters Left Labour (London:
Open Left/Demos, 2010).
3 The Quest for a New Governing Purpose (London: Policy Network, 2011).
4 Bill Clinton, keynote address to the Democratic Leadership Council’s
Cleveland Convention, 6 May 1991.
5 Elaine Karmack and William Galston, The Politics of Evasion (London:
Progressive Policy Institute, 1989).
6. Ed Miliband, speech to the Fabian Society Annual Conference, 15 January 2011.
7 Bernard Donoughue, The Heat of the Kitchen (London: Politico’s, 2003).
8. David Marquand, Britain Since 1918: The Strange Career of British Democracy
(London: Weidenfeld & Nicolson, 2009).
9. Cited in Philip Gould, The Unfinished Revolution: How the Modernisers
Saved the Labour Party (London: Little Brown, 1998).
10 ‘Labour’s lost decades’, Progress, March 2011.
11. Cited in Peter Clarke, ‘The Making of the Post-War Consensus’, in A
Question of Leadership: From Gladstone to Thatcher (London: Hamish
Hamilton, 1991).
12. James Purnell and Graeme Cooke (eds), We Mean Power: Ideas for the
Future of the Left (London: Demos, 2010).
13. Cited in Philip Gould, op. cit.
14. Graeme Cooke, ‘Still Partying Like It’s 1995: Class, Culture and Capitalism
and the New Political Sociology of Britain’, presentation at ippr, June 2011.
15. ‘Labour isn’t working’, Progress, May 2011.
16. David Marquand, The Progressive Dilemma: From Lloyd George to Kinnock
(London: Heinemann, 1991).
17. Ibid.
18. Ed Miliband, speech to Progress Annual Conference, 21 May 2011.
19. David Marquand, Britain Since 1918: The Strange Career of British Democracy
(London: Weidenfeld & Nicolson, 2009).
20. Ibid.
21. Cited in David Marquand (1991), op. cit.
Renewing our offer, not retracing our
steps: building a sense of
national purpose
Douglas Alexander
Fresh from experiencing Labour’s 1987 general election
defeat, I headed to the United States in the autumn of
1988, to study at the University of Pennsylvania.
At the time Michael Dukakis, the governor of
Massachusetts, was running for President. He roared out of
the Democratic convention with a seventeen-point lead over
George H. W. Bush. And then, unbeknown to the candidate,
I started volunteering for his campaign.
On polling day I spent many cold hours handing out fliers at
a subway station in north Philadelphia. Literally everyone I met
was voting Democrat. And so it seemed that maybe, just maybe,
America was heading for a Dukakis–Bentsen presidency.
Early the next morning, it became clear what was actually
happening outside the Democratic heartlands. Dukakis
had not won Pennsylvania. He had been defeated across the
country and lost the electoral college 111 to 426.
The risk then, and the risk now, is experiencing a crushing
defeat without fully understanding it. Four years later the
man who introduced Dukakis at that Democratic convention
– Bill Clinton – proved that he both understood the defeat,
and understood what it took to win.
Labour achieved a great deal in office. Leaving government
douglas alexander 20
we looked back with pride at much of what had been done –
Sure Start centres across the country, civil partnerships, dozens
of new hospital buildings, and hundreds and thousands of
pensioners taken out of poverty, to name but a few.
But that pride – and the defensiveness that generally
goes with it – can at times risk blaming the voters and not
ourselves for our defeat. And understanding Labour’s defeat
– with honesty and humility – is the first step back to power.
A wider view
The scale of the defeat bears a brief recap. Just over a year
ago, Labour suffered its second lowest share of the vote since
1918. The 6 percentage point drop in Labour’s vote share was
almost the same as after the collapse of the National government
in 1931. Labour won only 10 out of around 200 seats in
the south of England outside London.
Various accounts of why Labour lost have circulated
since the defeat. Some focus on street-level support, arguing
that Labour’s approach to immigration or the welfare state
contributed decisively to defeat. Others focus on how we lost
permission to be heard when we lost the support of media or
business elites. Yet these analyses, important though they are,
reflect the common tendency to find explanations that simply
validate previously held beliefs. A deeper account demands a
wider view.
And that wider view confirms that Labour is not the
only centre-left party with cause for concern: the French and
Danish centre-left have not won in a decade while, following
the crash, the German and the Swedish centre-left all
polled their lowest-ever votes for at least twenty years and, in
the case of the Swedish Social Democrats, their lowest since
1923. When Clinton and Tony Blair were winning power, the
centre-left was regularly winning against the right. Now it is
the centre-right that is regularly coming off better in electoral
contests with the left.
21 the purple book
Of course each of these setbacks has had distinctive
features reflecting distinctive national circumstances. Yet it
seems undeniable that here in Britain, and internationally,
the market failure of the global financial crash has ended up
damaging the electoral position of the centre-left much more
than the centre-right.
In part that can be explained by the specific steps that
have been taken by our centre-right opponents. There are
clear and common threads in the ‘magpie politics’ appeal
for votes made by the centre-right in countries as diverse
as Canada, New Zealand and Sweden. Each offers a traditional
economic appeal with an assertion of compassion and
concern for issues such as poverty not associated in recent
years with the right.
But our defeat in Britain cannot only be explained by our
opponents’ recognition of the electoral appeal of a politics –
albeit insufficiently – combining credibility and compassion.
We have to examine what is still relevant in the New
Labour prospectus that saw us through three general election
victories. New Labour was composed of positions, personnel
and policies. The personnel have changed and the policies for
the 1990s are not going to be the solutions to problems in the
2010s. But the positions – a determination to prioritise credibility
on the economy and a willingness to take bold steps on
crime and antisocial behaviour – are ones we would reject at
great cost to our prospects of winning back power.
Our challenge is not to retrace our steps to a pre-1990s
settlement on the centre-left but to forge an authentically
new settlement for the 2010s and 2020s. And honestly examining
our positions on the central issues of the role of the
state and on the market is, I believe, vital to understanding
the problems that face our party today.
That examination and that debate is needed, and it is
needed now. Of necessity, many key areas cannot be covered
here. Issues such as crime – not least with the latest riots – or
douglas alexander 22
the future development of devolution form essential parts of
the analysis of other contributions to this book.
But my take on ‘purple politics’ is the almost paradoxical
claim that New Labour was both powerful and partial
and that our future success depends on drawing the correct
conclusions about what to retain and what to reject as we
renew our political project.
So while this analysis does not seek to write a manifesto,
it does seek to analyse the defeat, see how the Conservatives
and Liberal Democrats are changing, and look at some of the
tools we will need to come back.
In my view, this work starts with a new analysis of the role
of both the market and the state.
Markets, aspiration and fairness
The role of the market in our lives has always been central
to Labour politics. For much of the twentieth century, the
debate in the Labour Party was about to what extent the
state should control what the country produced and to what
extent it should be left up to the market. The original Clause
IV represented Labour’s early belief that the more the state
controlled, the better for everyone.
In moving away from that, starting with Tony Crosland
through to the mid-1990s modernisers Blair and Brown,
Labour moved from being market-phobic to being marketsceptics
to finally being seen as market-enthusiasts.
But for those who take pride in having been part of the
party’s modernisation in the mid-1990s, the problems we
have seen in recent years should be genuinely troubling.
Internally, and externally, we had argued hard that Labour
had to accept and harness the creative power of markets –
only to then govern during one of the great market failures
of modern times.
In fact, some of the language endorsing the market in
all its forms and impacts – talk of being relaxed about the
23 the purple book
super-rich or a golden age of the City – reflected an apparently
uncritical embrace that was a product of the anxieties
of the past. Yet the politicians who made these statements
were not bad people. They were progressive people who – in
the face of repeated electoral defeats and continuing media
hostility – forged a progressive settlement for their time.
In retrospect it is hard to overestimate the scale of intellectual
defeat felt by the centre-left in the wake of the 1992
general election defeat. The response was to offer an apparently
uncritical account of globalisation, in part motivated by
the desire to prove that Labour understood the productive
power of modern market economies.
The deal that was offered to the public was this: that
the taxes generated by growth – in particular facilitated by
globalisation in the decade after 1997 – would be redistributed
into building schools, hospitals, and lifting children and
pensioners out of poverty.
But the global financial crisis left Labour looking as if we
had confused good times with a good system. In truth, the
weaknesses of that 1990s progressive settlement were already
being felt years before the collapse of Northern Rock. It is
not simply that, with this approach, Britain was too heavily
reliant on the continued growth of financial services.
Take, for instance, the issue of living standards. In 1997,
we won on the idea that we could continue to promote rising
living standards, but that we could combine it with a more
decent society. But by 2010, living standards were being
squeezed and, just as economic boom turned into economic
bust, record investment in public services was set to be
replaced by significant cuts to public expenditure.
Ed Miliband has highlighted how, ‘since 2003, those at
the top have seen their living standards continue to rise at
extraordinary rates, while those of the rest have stagnated.
For most, flat wages, rising prices, longer working hours,
douglas alexander 24
and the burden of debt and insecurity are increasingly being
placed on them and their kids.’
If we needed to sometimes overcompensate in our
language during the 1990s to prove that we really did want a
better capitalism, rather than to abolish capitalism, then thirteen
years in office acting as pro-market progressives should
remove that worry.
Now, instead, our focus should be on how we achieve
that better capitalism in a very different environment. The
coalition government has adopted a politics of austerity that
risks delivering an economics of decline. We need positive
and specific answers when we are asked how we can build an
economy where ordinary people, not just the elite, have the
power to make a success of their own lives. We can show just
how unlikely it is that an unreconstructed anti-government
strategy is going to deliver the sustainable, stable growth
people want to see.
But to match that intellectual renewal we also need to
make the emotional link to why market economies, however
flawed they are, in the end, are better than the alternatives.
Here the invention of my friend the late David Cairns
comes in useful. He thought up the ‘conservatory principle’:
that no one should be allowed to lead the Labour Party
unless they understood the desire to own a conservatory.
And certainly the charge has been levelled that Labour
politicians do not instinctively understand why people want
small improvements to their standard of living. Being the
party of holidays, home ownership, and an HD TV is something
that the party’s ethical socialist tradition has always
struggled with.
Now, of course, only talking about material concerns,
whether it is tax cuts and council house sales or extra spending
and public provision, can create a diminished politics.
There is more to life than earning and owning. Moreover, the
25 the purple book
word ‘aspiration’ appears more often in the political lexicon
than in the public one.
But, in fact, aspiration – the holiday, the house, the television
– can be about far more than the material. The holiday
might be the one time we get to spend the hours with our
kids that our parents, home by 6pm, never questioned. The
house is a project, an inheritance and a guarantee against
disaster. The television is a chance to relax and be distracted
from the intensity of modern work.
So aspiration does not have to mean one thing, or
consumption for its own sake. But understanding aspiration
means understanding how the loss of savings, the loss of a
home, seeing too much of your paycheque disappear before it
reaches your bank account put people’s dreams at risk.
The route to economic credibility has to start from a real
understanding of aspiration. If you do not understand what
is at stake, you will never understand why people need such
reassurance on economic issues: reassurance that you will do
everything possible to avoid economic crashes, that you will
not suddenly introduce unforeseen taxes or store up problems
by constantly borrowing money to fund day-to-day spending.
It is hard to prove your commitment to these guarantees
but it is the only way you earn the stewardship of the country’s
economy. Whether it is through a focus on productivity
of public spending, on taxation or on the audit and scrutiny
of your policy offer, to be credible means finding means by
which you can make people believe that you believe it.
And in this way, strangely, our ability to take tough decisions
that will be painful for some people today is inseparably
linked with our ability to offer rising living standards in the
future. That is why when I was shadow work and pensions
secretary we made the decision to work with the government
on a number of its proposed welfare measures, rather than
oppose every cut. Accepting some cuts as necessary is a prerequisite
for being able to say that some things will be protected.
douglas alexander 26
It is that bedrock of mainstream economic credibility and
the hope of a return to rising living standards that could allow
us to reject the false choice between aspiration and fairness.
In 1994, the economic test was to prove Labour really was
comfortable with a private sector-led economy. In 2015, the
tests the public set us will be very different. Voters will trust
us not to try and implement a wages policy but they will need
to trust us to protect their living standards too. They will trust
us not to bring back pre-Thatcher union laws but they will
care as much about how we bring the public sector finances
into balance over time. They will trust us not to start nationalising
industries but we will need to earn their trust that we
will ensure public spending is efficient and effective.
Understanding state failure
The extent to which the public judge that a political party
‘gets it’ reflects its approach not only to the market but also to
the state. During our time in office we killed for a generation
the argument that a publicly funded NHS could not meet the
rising aspirations of the British people. The effectiveness of
state action – by both the Bank of England and the Treasury –
in preventing recession turning into depression made the case
anew for a government response to macroeconomic emergencies.
Policies like the national minimum wage showed that
regulation did not always have to be an enemy of jobs and
growth. And the fact that child and pensioner poverty were
reduced by deliberate government policy showed that we had
it within our power to address the fundamental problems of
our society.
But Labour’s increased spending also exposed two fundamental
weaknesses in our approach to the state that we had
not much worried about in 1997. An efficiency argument
on waste hurt our credibility while a fairness argument on
welfare challenged our moral authority.
By focusing on how the state could do good, at times we
27 the purple book
lacked a language for state failure. And that left us fighting
a referendum on the virtues of the public sector – the big
state versus small state argument – rather than on a choice
between action and inaction.
To continue to build the case for the state taking some
action, we allowed ourselves to confuse processes with results
in our arguments. We talked about spending on particular
areas reaching a certain proportion of GDP and used the
word ‘billions’ as if it was the conclusive point in an argument.
With such a monochrome palette, at times we looked as if
we thought there was no problem that government could not
or should not solve. But when people angrily raised something
like GP pay or the salaries of local government chief
executives, we did not have much to say.
Now, in opposition, we should be able to address these
changes. We have won the argument that the state can be
effective – responding to financial crisis and providing public
services – and the Conservatives have accepted it. So we can
be more willing to take a serious look at how the public sector
can swell, how wage bills can spiral and how managers can lose
sight of the needs of the people they are supposed to be serving.
It will not be easy changing the public’s view of us on
these issues. Scepticism towards politicians blends with a
scepticism towards government and that makes the advocacy
of the capacity of government to help improve lives a tough
task. The answer has to be to balance the necessary resources
with the necessary reform. It is the right thing to do in terms
of efficiency, and the wise thing to do in terms of electability.
People need to believe we are as serious about productivity as
we are about investment.
But the record of Labour’s time in office is under assault
not simply in terms of efficiency but also in terms of fairness.
Its fairness was challenged for too little action at the top of
the income scale and, simultaneously, for too much action at
the bottom of the income scale.
douglas alexander 28
In the minds of some voters, some of the very policy
tools designed to make society fairer – like housing benefit –
became a source of resentment, rather than a source of pride.
Too often they reinforced a sense that when we talked of fairness
we were talking about someone else. In fact – by often
seeming to reward those who were not working hard or in
having rules that were flouted by significant numbers – they
too often came to be associated with unfairness.
So if we are going to sustain the case for taking action to
keep inequality in check – and part of that strategy involves
cash transfers – then we are going to have to remake the
political case for action at the bottom of the income scale as
surely as we need to remake the case for action at the top of
the income scale.
Here again, the idea of aspiration could be a guide to navigating
the difficult questions about fairness at the top and at
the bottom.
It is completely legitimate to want to work hard, build a
good business and earn significant sums in the process. It is
not legitimate to want to earn mega-bonuses for undertaking
behaviour that actually puts the business you are employed in
more at risk.
No one starts off aspiring to a life on benefits. No one
really hopes for a job where they can only afford to get by
because of a top-up to their income from the state. But
people do know that awful things can happen, and they want
the state to be ready to help if they do.
We need to redesign our welfare state with that in mind.
A foundation of our original welfare state was the idea that
those who worked would be rewarded: for many it feels like
the welfare state pulls in the opposite direction, not because
they have to pay taxes, but because of the manner in which
they receive benefits.
There is more that can be done to enhance the legitimacy
of welfare through conditionality – taking greater action
29 the purple book
to enforce the duty to work, while if necessary providing
support to make sure the jobs are there. And we need to say
that hoping that others will pick up after us if we are able but
don’t want to work, is utterly unacceptable. No one starts off
with that aspiration but too many end up there.
But we also need to be aware that for many people
on average salaries who worried for their jobs during the
recession, the prospect of getting or losing £65 a week
was just not relevant to them despite years of paying into
the system. Rethinking welfare means looking less to
compensation and more to contribution as a guiding principle
in our welfare state.
A sense of national purpose
As a party, we are only just now grappling with a number
of these issues. To re-evaluate how we won three elections,
to retain the good lessons of government while changing
the things that the electorate told us they were sick of, is an
immense challenge.
After losing the argument in 1979, it took us eighteen
years to get back into office. When the Tories lost the argument
after Black Wednesday, it took them eighteen years to
come back.
To come back in one term is not Labour’s normal experience,
but it can be done. In setting up a review of our policies
and our party structures, Ed Miliband has given us the processes
by which this task can be undertaken.
By the time of the next election, the processes that have
been set up on the reform of our party and the review of our
policy will be complete and the outcomes will be there for the
public to judge.
I believe that there will be fundamental questions by which
they will form that judgement: Do we meet the threshold
of credibility in all of our policy proposals but most importantly
on the economy? Have we genuinely learned from the
douglas alexander 30
message that voters sent us in 2010 – and have a new account
of fairness at both the top and the bottom? Does the way we
manage the party give confidence to people that we could
effectively manage the country? And do we offer a positive
change and a sense of national purpose that people in Britain
genuinely want and believe in?
That last point is crucial. Even if people think you are
credible on the economy, that you get what is going on with
their lives and that you have some valuable policy proposals,
that will not be enough to deliver victory. People might have
done all the calculations and worked out that they would be
better off with a particular party – and then vote a different
way or not at all. Many might only judge on an impression
they have built up from the tone of our language and halfremembered
bits of newspaper coverage.
The type of renewed policy agenda we need will not itself
be sufficient unless we renew the way we emotionally engage
the electorate.
As class distinctions have weakened, what inspiration that
could be found in being ‘the working-class party’ is declining.
In a mobile, fast-changing society simply ‘standing up
for my area’ does not cut it either. And, for all the dreams of
some pro-Europeans, a transnational story has not emerged
in Britain.
The national level – an enduring community of association
– is still looked to for inspiration. At that level, there is
a complex debate about identity which is as much about the
past as the present. What Labour needs is a way of looking
towards the future, because Labour wins when it invites
people to be part of a better future. A conversation about
national purpose is our best route.
That means taking this debate beyond the market and the
state and asking the question: ‘What is Britain for?’ I could
be wrong, but my guess is that people will answer that Britain
is for fundamentally progressive measures at home – like the
31 the purple book
NHS – and internationalist measures abroad. Synchronising
our pride and our patriotism with our best instincts could
allow us not merely to criticise but to compete with everything
this government can offer.
Few parties ever manage to come away from a bad defeat,
look hard at their record, salvage what was good and learn
from what was bad, and come up with something new and
inspiring in a matter of four or five years. That is the scale of
the task before the Labour Party today.
We could shy away from that task, stay in a defensive
crouch and hope our luck turns. I do not think it would work.
But I believe the Labour Party is more than that: Britain
needs us to learn from both our victories and our defeats, and
so renew our offer to serve the country.
An effective state, not a big state:
forging a national strategy
Peter Mandelson
Almost a year to the day after the 2010 general election I
returned to Hartlepool in the north-east of England. I
was reflecting on what the town had been like when I was
first elected in 1992 and the changes it had undergone during
the Labour government after 1997.
Hartlepool had become a depressed, rather sullen, down-atheel
place by the early 1990s. As I knocked on doors I discovered
people who did not think things could get better, whoever
was in charge. They were not inspired by Labour, however
much they wanted to see the back of the Conservatives.
In 1997, there was greater enthusiasm for us. Perhaps it
helped that Tony Blair, too, represented a north-east constituency,
and people thought he would not let down the people
of England’s poorest region.
Overwhelmingly, Hartlepool, like many constituencies
elsewhere, emerged with a hugely positive legacy from the
years of Labour government. New school buildings, a freshly
built primary health and diagnostic centre as well as the
revamped general hospital, a lot of renewed public housing
and the town’s parks, community areas and seafront greatly
changed for the better. The changes were epitomised by
the construction of a new home for the town’s college of
further education. Without doubt, Hartlepool had come on
33 the purple book
in the world in a nation that benefitted from tremendous
regeneration.
Britain’s once-crumbling, Thatcherite infrastructure of
public services inherited by the Blair government could
now boast 3,700 schools either rebuilt or refurbished, as well
as hundreds of wholly new schools with 42,000 more teachers;
over 100 new hospitals with over 44,000 more doctors
and 89,000 more nurses who help perform 3 million more
operations per year since 1997; the biggest programme of
council house building for twenty years; and over 3,500 Sure
Start centres.
For all the Guardianistas’ complaints of New Labour
authoritarianism, Labour’s social reforms have made Britain
more liberal than ever before. Civil partnerships, better rights
for gay people, ethnic minorities, pensioners and parents
(including record maternity pay and, for the first time, the
right to paternity leave) have clearly left their mark on British
society. Free museum entry, free swimming for children and
some of the cleanest public spaces for a century have played
their part, too. And, with more police than ever on Britain’s
streets, crime came down by one-third, domestic violence
down by two-thirds and rape convictions went up by a half.
Yet my constituency lay in a region that was most susceptible
(or least resilient) to economic shocks. As economic
change took its toll in the 1980s and 1990s, alternative sources
of employment did not come naturally or quickly. What
saved the region from sinking were the large foreign-owned
enterprises whose investment the region had successfully
attracted in earlier periods.
From 1997 to 2007, jobs picked up as annual growth averaged
at 2.9 per cent, allowing living standards to rise and
inflation to be tamed. Yes, incomes did race away at the very
top (much faster than I had ever imagined was likely fifteen
years ago, and in many cases with boards and shareholders
too careless in ensuring a proper justification of executive pay
peter mandelson 34
based on increased performance). But if it had not been for
Labour’s redistribution of income through tax and benefit
changes, inequality would have been far higher. By 2007 UK
average wages were 59 per cent ahead of where they were
in 1997 – only two other countries in the Organisation for
Economic Cooperation and Development could match this
– and real disposable income grew by one-fifth from 1996 to
2008. On Labour’s watch, half a million children were lifted
out of poverty, the new educational maintenance allowance
kept children in school, pensioner credits greatly reduced
poverty in old age while the winter fuel allowance, free TV
licences and bus passes were introduced for all the elderly,
some more in need than others.
Labour invested in the workforce, too. We created a
record number of students in higher education, a majority of
who were women. The New Deal and a new system of skills
training helped over a million people into work, while the
number of apprenticeships was doubled. As a result of signing
up to Europe’s Social Chapter, full-time workers were
given statutory rights to twenty-eight days’ paid holiday for
the first time, and part-time workers are now afforded many
of the same protections.
This is what a ‘progressive state’ means in practice. Real,
practical changes that make a difference to the lives of
millions of our fellow citizens. So let’s not fall for the canard
that voting does not change anything.
I do not know whether to laugh or cry when I hear
Conservative ministers saying now that the problem with the
north east is that it became too reliant on public spending
and public sector employment. As if that was what people
chose. Of course towns like Hartlepool were glad to have
public investment but, given the choice, its people would
have preferred the continued presence of the steelworks, the
General Electric Company and other large industrial plants,
the engineering firms, the busy port and the many small
35 the purple book
businesses supplying the bigger companies. Like elsewhere,
progressive policies, implemented over many years of active
Labour government, central and local, kept the town afloat.
Far from public sector investment squeezing out private
sector growth, as the Conservative world view imagines,
increased public expenditure was the only platform on which
a revived private sector would be capable of flourishing. But it
still needs that strong private sector in order to flourish.
Now, the ‘progressive state’ will become smaller and less
generous as a result of the hole blown in the nation’s finances
by the banking crisis and we know who will pay the price.
In vulnerable parts of our country there will be less fairness;
fewer opportunities will exist for individual advancement
than in those places where the private sector is more vibrant
and there is more money splashing around.
The world may not have been transformed during our
time in government but the individual lives of millions of our
fellow citizens were improved, saved or made better by the
actions of the progressive state advanced and nurtured by us.
Britain had become a better place because of thirteen years of
New Labour in government.
Reassessing New Labour
At the 2010 election we lost not because of our record, but
because voters were not convinced we were the right choice
for the future. The excitement that propelled New Labour
to victory in 1997 and sustained two further victories had
almost faded away by the time we reached last year’s election.
A mixture of drift and uncertainty about what New Labour
meant had set in. Perhaps it was asking too much to sustain
that original excitement and flair, that sense of bold New
Labour purpose, over such a long period of time as well as
through such a profound global financial and economic crisis.
Difficult, but not impossible.
As we regroup and rethink our way forward, we should
peter mandelson 36
take pride in our achievements. New Labour was, and
remains, a highly successful governing philosophy. Our
new generation of leaders are perfectly at liberty to call it
something else if they prefer. But the governing principles
that New Labour embraced – above all the commitment to a
successful market combined with the determined pursuit of
social justice – remain attuned to the issues that will shape
the politics of the second decade of the twenty-first century.
They will remain the basis of the successful renewal of social
democratic politics in Britain.
We fought and won on the centre-ground where the
swing voters are to be found. Now some suggest we should
look elsewhere for electoral support by proposing reconnection
with (what is left of) the traditional working class on
the basis of a nostalgic longing for a lost communitarian past.
I doubt if my former supporters on the Hartlepool estates
would understand what they are on about and, if they did,
they would reject such patronising assumptions about their
aspirations and ambitions.
The problem with killing off New Labour and putting
nothing in its place is that it leads us to clutch at straws and
grab at any passing sentiment. This is what has happened with
blue Labour, which seeks to reconnect the party with its old,
post-war, apparently white and male, industrial working-class
base. These people have moved on, to other jobs, to other
aspirations and, in the main, to an entirely different identity.
I do think blue Labour’s espousing of ‘community’ is attractive
and reminds me of Blair’s pre-1997 belief in local renewal
(before our top-down actions in government fell short of
our pre-election commitments). I also think that motivating
people to bring about improvements in their lives and neighbourhoods
is where Labour should be rather than ceding the
‘big society’ to the Tories. But blue Labour’s platform of ‘faith,
family and the flag’ lacks economic content – by far the biggest
challenge facing the country – and its romantic ideas about
37 the purple book
working-class people turning back the clock is misplaced.
Labour’s people live in the real world and, above all, want
secure, well-paid employment and a safe future for their children,
which is why more activist growth and industrial policies
are needed. This future is not going to come from the sort
of populist, anti-immigrant, Europhobic, anti-globalisation
language used by blue Labour. And however important it is to
address the economic concerns of young people attracted to the
English Defence League, the idea that we should reconnect by
entering a dialogue with this organisation beggars belief.
We should avoid a binary and simplistic debate about
New Labour, for or against. There were plenty of tensions,
compromises and trade-offs over our thirteen years in power
that we should acknowledge and reconsider.
Perhaps our pro-aspiration and pro-business politics
came to define New Labour in a rather narrow economistic
and individualist view of the world. Arguably our enthusiasm
for public sector reform gave too little recognition of
the values of the public realm and the commitment of its
workforce.
Labour’s approach to public service delivery meant change
was rapid in some areas but also too top-down and driven
too much from the centre in other cases. With the collapse
of our ideas for regional government we did little, outside
Scotland and Wales, to reverse Britain’s historic trends
towards centralisation. A big challenge for Labour’s current
rethinking will concern the distribution of political power,
particularly in England, and its model of change in public
services and social policy.
Progressive growth and wealth creation
But in our thinking about the future, our starting point
should be to acknowledge what we did well in advancing the
progressive state – one that combines as much belief in the
power of wealth creation as it does in the need for wealth
peter mandelson 38
distribution – and then identify what we need to do differently
and better next time.
Labour has to be the party not only of the progressive
state but of progressive growth. We do not believe – and never
did – in the free-market trickle-down theory of economics.
But economic growth, driven by a combination of competitive
markets, sustained innovation and responsible business,
provides a rising tide that can lift all boats – and it is the
foundation of everything else we want to achieve for society.
Simplistic attacks on ‘finance capitalism’ will not win us
back many votes. We must not allow the sensible arguments
for a more long-termist business culture and for Britain to
learn the valuable lessons of German and Swedish success to
become naive anti-capitalist posturing. Equally, we need to
go further in our thinking about growth than we did by the
end of our period in government.
Ed Miliband has recognised that we cannot win or govern
on the basis of being against the injustice of the cuts, however
passionately we feel, if we are not economically credible
ourselves. Our political opponents have got some way in
trashing our economic record in order to harm our credibility.
The right says it all went wrong because Labour spent too
much. I do not think that can possibly explain the crisis. After
catching up for years of underinvestment in public services,
ahead of the financial crisis, the growth in public spending
was being brought down into line with the medium-term
growth rate for the economy as a whole. This would have put
debt on a declining path if the banking crisis had not struck.
Yes, as a government we made mistakes. All governments
do. We were too oblivious to the risks of financial deregulation.
We assumed that the tax revenues that came through
in a boom were permanent and sustainable and would not
collapse in a bust, as they did. But it is a grotesque distortion
of the truth that the crisis was the making of Gordon Brown,
or Blair for that matter. It was the breakdown of the global
39 the purple book
financial system that struck so hard at a Britain that had
become dangerously over-dependent on financial services.
We left our industrial activism far too late, relying for too
long on thirty years of Whitehall’s belief that ministers and
markets do not mix.
When the crisis broke, we made the right calls to save the
banks and blunt the impact and duration of the ensuing recession.
In the run-up to the general election, we also made the
right economic judgements to deal with the deficit in a carefully
managed way: tax rises, spending cuts and growth measures.
Our mistake was not to spell out in more detail the implications
of the spending cuts so that people could see we were
serious. By refusing to be clear that our deficit plans were
sufficient, we were unable to persuade the public that the
Tories’ plans were excessive.
But this does not diminish the fact that the Darling Plan
represented a better judgement than the Osborne Plan, which
has frontloaded the necessary cuts on to an economy too
weak to withstand them and has not offset them by building
on our government’s growth strategy designed to rebalance
the economy.
The main driver of growth is innovation based on competitive
markets. But this does not obviate the need for smart,
strategic action by the government to pump-prime certain
investment and contribute selectively to the heavy lifting of
early stage technology or product development and market
entry where market forces alone cannot or do not do the job
themselves.
There is not a country I know in the world where there
is more naivety than in Britain about the difference governments
can make in supporting business. We suffer from the
mistakes of our past, from the 1960s and 1970s, when instead
of government picking winners, losers picked the government.
This led us into the belief that markets alone must
deliver sustainable and balanced growth, with too narrow
peter mandelson 40
a role for government in delivering the consistent policies
and long-term private and public investment needed for all
sectors of the economy to flourish.
This requires the kind of activism I envisaged when I
was first at the Department for Trade and Industry in 1998
and which I returned to when I rejoined the government at
the Business Department ten years later. The knowledge of
continental Europe and the rest of the world I gained as trade
commissioner encouraged me to see the sense of government
helping to facilitate investment in innovation, skills and technology,
as well as taking steps to ensure that its own capital
investment receives a higher priority and that shareholders
are motivated to take a more long-term view of investing in
the corporate sector.
We need to recognise that the financial system has a
key role to play in the real economy. The City and financial
services are a huge global asset for the UK, not least as the
financial capital of the EU’s single market. However, as the
financial crisis showed, that asset can become a liability
unless we get regulation and incentives right. New Basel III
capital and liquidity rules – if internationally implemented
– are essential. New mechanisms for quickly and effectively
resolving failing banks are also vital, both to handle market
sentiment and protect the credit system. And banks and their
boards need to improve their ability to understand, manage
and avoid excessive risk.
We have to recognise that tighter capital adequacy rules
will mean less easy mortgages and more difficult access to
finance for small businesses. Public policy has to address
these issues with a new housing policy based on more building
for rent and shared equity. There has to be additional
finance available for industry based on public–private venture
capital and business growth funds. We also need to align our
financial system with the need for national infrastructure
development to be better privately financed.
41 the purple book
These issues are central because at the heart of our electoral
dilemma is how we can offer a good future of better
quality jobs for Britain’s ‘squeezed middle’. This has to be
based on new sectors and growing businesses, with greater
specialisation, that successfully combine our manufacturing
and engineering prowess with the expanding demand
for services, supported by a population capable of taking on
higher skills and higher productivity. If those New Labour
aspirant supporters who came to feel overlooked by us
towards the end of our time in government are to be won
back successfully, our core offer will have to be an economic
and industrial strategy that delivers this promise of more and
better jobs in the coming decade.
The battleground ahead
Let me conclude this chapter by making some political
observations – born of a lifetime, literally, in the service of the
Labour Party – about the possible battleground we will face
at the next election and whether this is likely to be framed,
again, by a ‘post-crisis’ agenda as 2010 was.
Fundamentally, Britain will still be coming to terms with
austerity and the massive hole in the economy and public
finances created by the global financial crisis. We know the
economy will not be growing quickly and real incomes will
not be rising.
In my view, this means three things. First, we must show
how our policies will ensure value for money and higher
productivity from our public services and continuing reform
to strengthen their delivery. Second, we must keep the tax
burden as low as possible – living standards will be squeezed
enough as it is. And, finally, we must develop policies to keep
our economy competitive and innovative and to create more
higher-value jobs.
Our 1997 manifesto described the New Labour approach
as being ‘wise spenders, not big spenders’. This is, and should
peter mandelson 42
remain, a core principle of our party. We need to be ‘effective
state’ social democrats, not ‘big state’ social democrats.
In this light, and in contrast to the Tories, one of the most
difficult questions for social democrats in the future is how do
we continue to deliver quality public services in a period of
public spending constraint?
We reject the argument of those on the right who argue
that the state is an obstacle to human freedom and who
espouse a vision of the good society based on a smaller state,
shrinking public services and essential support delivered
somehow through the voluntary sector with top-ups and
opt-outs for the wealthy few.
Equally, we unashamedly reject those who espouse the
centralising or controlling state, arguing that the solution to
every problem in our economy and society is to have more
state. What matters is not big or small government, but
whether it values opportunity for all, responsibility from all
and fairness across society.
Our conception of the role of government must evolve
yet further. It is clear to me that we must continue to transfer
power to parents, pupils and patients. We must recognise that
the solution to many of the challenges facing our country will
have to be found in the communities in which people live,
working in partnership with public services, rather than an
expanded central state.
Debate will also be shifting to broader questions about a
post-recovery Britain. How will higher levels of home ownership
and house-building be sustained? In what other ways
will governments be able to give people greater control over
their lives? What are the next stages of the agenda on child
poverty? How will we provide, and finance, social care for our
ageing population? And how will all of these questions be
refracted through increasing global interdependence; indeed,
how will Britain craft its relationship with Europe following
the travails of the eurozone?
43 the purple book
In other words, what kind of national strategy does
Labour want to offer Britain and how should this be rooted
in the challenges of the future? In developing this strategy, we
should recall what we learned a long time ago: that there is no
future for us as a party of class, merely representing sectional
trade union interests. My grandfather, Herbert Morrison,
spoke and wrote of little else as he organised Labour’s efforts
to prepare for the 1945 general election. We knew that, to be
successful, we had to be a cross-class alliance of ‘conscience
and reform’, as a later leader, Hugh Gaitskell, put it. We went
on to accept Tony Crosland’s explanation that there were no
good reasons of principle for us to believe that public ownership
is the ark of the social democratic covenant.
The Croslandite conception of equality remains a leitmotif
for revisionists within the party. The essential goal for the
progressive state should always be to strive for better social
equality – not equality of outcome but a genuine equality of
opportunity in a society where those who do not succeed as
they wish are guaranteed a fair deal.
The goal of greater social equality guided New Labour’s
public service reform agenda as did our unprecedented
investment in schools, hospitals, housing and the creation of
Sure Start.
Yet, in today’s post-crisis Britain, the challenge of social
equality is perhaps more pronounced than in Crosland’s
epoch, or indeed when New Labour first entered government.
The re-emergence of an, at times, brutal ‘fairness gap’
as a result of public sector retrenchment is reversing many of
New Labour’s most important social reforms. There is a real
danger, once again, that today’s school and university leavers
will become part of a ‘lost generation’.
Clearly, we cannot simply rely on the policy solutions that
we deployed when last in office. But we can retain the central
revisionist insight embodied by New Labour: that as a party
we are at our best when we are neither sectional, nor regional,
peter mandelson 44
but national, challenging ourselves to make reforms to achieve
greater social equality in ways that will attract support from
those living in very different social circumstances.
It is time to move on, to think through and set out what
the progressive state needs to accomplish over the next
decade, and how our policies will achieve this. The public will
be ready in the coming year or so to focus on what comes next
after the coalition. We should be in a position to offer some
good answers.
Back to the future: the decentralised
tradition and Labour’s way forward
Paul Richards
There are some socialists who do not think that the problem
of the organisation of life and necessary labour can be
dealt with by a huge national centralisation, working by a
kind of magic for which no one feels himself responsible;
that on the contrary it will be necessary for the unit of
administration to be small enough for every citizen to
feel himself responsible for its details, and be interested in
them, that individual men cannot shuffle off the business
of life on to the shoulders of some abstraction called the
state, but must deal with it in conscious association with
each other; that the variety of life is as much an aim of true
Communism as equality of condition, and that nothing
but a union of these two will bring about real freedom.
William Morris, 1889
Within the British socialist tradition, two broad strands of
thought warily coexist. One is the familiar social democratic
model, whereby socialists win elections, take over the organs
of the state at a national or local level, and use the system to
redistribute resources from the few to the many. The second,
expressed by William Morris at the start of this chapter, is the
cooperative or self-government model, where socialists create
paul richards 46
new centres of governance, power and wealth creation, as an
alternative to both the centralised state and the private sector.
One side will describe the other as control freaks, wanting
to meddle in every area of public life, from the frequency
of fish fingers served in the nation’s school canteens to the
numbers of times a hospital floor must be mopped. The other
side will complain about the utopian dreamers who believe
everyone is straining at the leash to become members of their
local swimming pool management committee, if only given
the chance. It is the difference between those who believe
Labour politicians are elected to wield power on behalf of
those without it and those who believe Labour politicians are
elected to give power away.
This chapter reviews the decentralist, or federalist, tradition
within Labour’s political thought, and the implications
for the modernisation of the Labour Party.
Labour’s local roots
Let us start at the beginning, with Labour’s patron saint and
first leader, Keir Hardie. Hardie learned the organisational
skills that served him well as the architect of the Labour
Party not in politics, but in the temperance movement, in his
union, and in the non-conformist church.
Aside from a scattering of hotels and pubs bearing the
name ‘temperance’, but now serving alcohol, the movement
has left little obvious legacy. When Hardie was a teenager,
working long hours in the coal mines, he threw himself into
the temperance movement. Temperance attracted the political
left: radical Liberals and the early socialists. The movement
was built on local lodges with their banners and insignia,
public meetings, parades, dances, outings and recruitment
drives to encourage people to sign ‘the pledge’.
Caroline Benn makes the point in her biography of
Hardie that:
47 the purple book
strongly allied to the working-class self-help ethic, the
pledge brought many advantages. A great deal of the
social organisation and widespread appeal of later movements
– including the Cooperative Society, trade unions
and Clarion Clubs, even the ILP and Labour Party – were
based on early temperance organisations. For temperance
societies were not merely campaigning bodies organising
parades and marches (which later political parties and
trade unions adopted as well) but ... friendly societies
organising sick clubs and funeral funds.1
Hardie’s teenage zeal for temperance was matched in his
early twenties by his conversion to Christianity. He joined
the Evangelical Union, a non-conformist sect of the United
Succession Church, rooted, not in the ‘respectable’ liberal
middle classes, but in its working-class membership. At the
age of twenty-one, Hardie was chosen as secretary of the
Lanarkshire Miners’ Union, with a brief to recruit and build
the union among the Lanarkshire coalfields. Church, union,
temperance. These were the three pillars of Hardie’s early life,
and where he learned how to build a political movement.
Hardie’s background was not unusual among the Labour
pioneers. They were ‘community organisers’, building their
churches, unions, temperance branches, and then the Labour
movement, from the grassroots upwards. It is oft-repeated,
but worth saying again, that the Labour Party, unlike the
Tories or Liberals, began life outside of Parliament as an
affiliation of trade unions, socialist groups and local branches,
striving to break into the citadels and take power through the
ballot box. Unlike Labour, the other parties began life inside
the political system, and were forced to look outwards as the
franchise was extended.
It is not surprising that the organisational background of
Labour’s founders influenced their political beliefs. The history
of the Labour Party is the history of the swirling eddies of its
paul richards 48
ideology and policies, with competing programmes and platforms,
each with their passionate advocates, vying for primacy.
By rejecting orthodox European Marxism, and adopting
instead the studied vagueness of Clause IV in 1918, the Labour
Party allowed itself maximum flexibility of action. The restatement
in 1994 strengthened the ethical basis for policy, and
disentangled policy from the values that should underpin it.
Into the mighty river of British socialism flow the
tributaries of radical liberalism, trade unionism, anarchosyndicalism,
Christian Socialism, humanism, cooperativism,
Fabianism, and the belief in the equal rights of all men and
women. In more recent times, the political movements of the
late Victorian and Edwardian period have been joined inside
Labour’s walls by environmentalism, anti-racism, feminism,
campaigns in support for equality for gays, people with
disabilities and other marginalised and oppressed groups, and
internationalism.
Centralisers versus federalists
The absence of a single doctrine is a source of great strength,
allowing Labour to be a broad church with only occasional
fractures from the left or right. The socialist writer and theoretician
G. D. H. Cole made the argument that socialism in
Britain could be divided along two axes. The first was between
reformists and revolutionaries. Thanks to its founding in 1900
as a parliamentary party seeking to win seats in Parliament
for working men, Labour has no revolutionary tradition. The
tilt within British socialism has always been firmly towards
reforms to the system, not its violent overthrow. The Marxist
academic Ralph Miliband decried this ‘parliamentarianism’
in his book Parliamentary Socialism in 1961, calling Labour’s
‘devotion’ to Parliament the ‘fixed point of reference and the
conditioning factor of their behaviour’.2
But the second of Cole’s axes has more relevance today.
This one is between federalists and centralisers. Cole himself
49 the purple book
belonged to the federalist camp. As one of the leading proponents
of guild socialism in the 1920s and 1930s, he invented
a complex alternative system of industrial organisation and
democratic participation which would replace both private
industry and parliamentary democracy. Workers would be
members of guilds, based on their trade or industry, and each
guild would send delegates to a commune. Each commune
would comprise industrial guilds, a cooperative council (representing
consumers), a collective utilities council (running water,
gas and electricity), a cultural council and a health council
(providing healthcare free at the point of need).
Guild socialism was thus an expression of the widespread
view in the first decades of Labour’s life that socialism was
not the same as the state. The early pioneers, with their roots
in liberalism and local self-organisation, did not look to the
state for help; they looked within themselves and their own
communities. Indeed, they had a healthy distrust of the state,
which was often associated with repression and anti-trade
unionism. Early Labour manifestos complained about high
taxes and burdens on the individual.
The Victorian belief in ‘self-help’ ran deep in working-class
culture. It emphasised thrift, education, advancement through
hard work and, seen through the prism of working-class life,
contributed to the early trade unions, the friendly societies
(which provided social insurance), working men’s clubs, lending
libraries and a range of other institutions and organisations
run by volunteers, funded by their members and dedicated to
collective security, wellbeing and progress. Thus the British
working class constructed, brick by brick, a ‘big society’ as a
deliberate bulwark against the misery of capitalism, the terrible
uncertainties of unemployment and the inadequacies of the
existing systems of welfare and healthcare.
The cooperative ideal
The most important of these organisations was the cooperative
paul richards 50
movement, founded in the mid-nineteenth century to provide
local food and services to communities without exploitation
or profit-motive. The ideas of Robert Owen, Dr William
King of Brighton and the Rochdale Pioneers have shaped a
worldwide movement which predated and outlived communism,
and which today has the seeds of an alternative socialist
society. The key insight of the co-op is that each member is
equal, and power should be shared democratically within the
organisation. The cooperative ideal does not rely on the state,
but on self-organisation.
Despite the close ties between the Labour Party and the
cooperative movement, including Labour and Co-op Party
sponsorship of MPs, the cooperative movement is not a
formal part of the Labour Party structure. In 1900, the founding
conference of the Labour Representation Committee
heard Mr J. T. Chandler, chair of the parliamentary committee
of the TUC, report that although the Cooperative Union
had been sent a written invitation to attend the conference,
alongside the Independent Labour Party, Fabians, Social
Democratic Federation and trade unions, they had not come.
Hardie sought to include them in the constitution that was
being drawn up. But on the second day, the cooperators were
excluded from the Labour constitution. By not pitching up at
the Memorial Hall in February 1900, the mighty cooperative
movement missed the chance to become enmeshed into the
structure and constitution of the Labour Party.
If the co-op, representing millions of consumers (especially
women) had secured an equal share of the votes and
influence as the trade unions inside the Labour Party, British
socialism in the twentieth century might have run an entirely
different course. Instead of being dominated by industrial,
and then public sector workers, the Labour Party might have
represented a broader coalition of workers, professionals and
consumers, like the Swedish socialist party, perhaps with the
same degree of electoral success.
51 the purple book
Gas-and-water socialism
Thirteen of the original delegates to the Labour Party
conference were councillors. Within the Labour tradition
is the strong influence of ‘municipalism’: the belief that
local government can be an instrument of local reform and
improvement. Joseph Chamberlain, as the radical Liberal
mayor of Birmingham, proved that strong local government
could transform the lives of working people by establishing
municipal gas and water companies, clearing the slums,
building parks, libraries and public baths, and regenerating
the city centre. The centrepiece is Corporation Street, named
to celebrate the transformatory power of local government.
In 1882, Chamberlain had a love affair with Beatrice Potter
who, as Beatrice Webb, went on to lead the Fabian Society
and develop ‘municipal socialism’ (dismissed by its critics on
the left as ‘gas-and-water socialism’).
Where it held power in local government in the years
before the Second World War, Labour developed what we
would call ‘localism’: running municipal utilities, hospitals,
tramways, housing, baths, libraries, schools, parks and employing
armies of direct labour. The London County Council in
particular provided citywide strategic governance, under leftwing
‘progressive’ leadership between 1889 and 1904. Leading
members of the Labour Party to serve in local government
in the pre-war period include Clement Attlee (mayor of
Stepney); Herbert Morrison (mayor of Hackney), George
Lansbury (mayor of Poplar) and Sidney Webb (representing
Deptford on the LCC for eighteen years).
At the 1918 party conference, which adopted Clause IV of
the constitution, another resolution was passed in favour of
decentralised, municipal socialism. It stated:
That in order to avoid the evils of centralisation and the
drawbacks of bureaucracy, the conference suggests that
the fullest possible scope should be given, in all branches
paul richards 52
of social reconstruction, to the democratically elected
local governing bodies; that whilst the central government
department should assist with information and
grants in aid, the local authorities should be given a free
hand to develop their own services ... in whatever way
they choose.3
The resolution went on to say that councils should not only
continue to provide education, sanitation, police, water, gas,
electricity and tramways, but also extend into housing, parks,
town planning, libraries, the provision of music and popular
recreation, and the retailing of coal. This was the Labour
federalists’ ‘Clause IV moment’. Alas, it remains unfulfilled.
Federalism defeated
In 1945, Labour inherited a system of wartime institutions and
regulations, comprising mostly nationalised, state-run bodies
for the direction of industry, manpower and welfare, for example
the Emergency Medical Service (EMS) – the forerunner
of the National Health Service. The ‘evils of centralisation and
the drawbacks of bureaucracy’ were ignored. Faced with the
choice of dismantling these monoliths, or co-opting them to
peacetime purposes in pursuit of Labour’s manifesto pledges,
ministers chose the latter. This was the moment when the
cooperative, decentralist, localist and municipalist traditions
within British socialism were trampled under the boots of
central planning, state control and nationalised corporations.
As David Blunkett and Keith Jackson wrote in Democracy
in Crisis: ‘The party turned largely to nationalisation, not local
control, and to national rather than local administration as it
set out to build some advance positions for democracy in a
capitalist state.’4
Most contentious was the formation of the NHS between
the passage of the NHS Act in 1946 (opposed, never forget,
by the Tories) and the start of the service in 1948. Aneurin
53 the purple book
Bevan opted to create a national structure, pulling together
the mixture of pre-war voluntary and municipal hospitals and
clinics and the wartime EMS. He was opposed in Cabinet by
Morrison, who wanted a role for municipal hospitals in the
new NHS. If Morrison had won the day, local government in
Britain would have retained a strong role in the delivery of
healthcare and disease prevention, and councils would have
been more powerful actors within the state.
Politics in the UK might have been less focused on
Westminster and more devolved to powerful local town halls,
if councils were responsible for public health, as they soon will
be under NHS reforms. With local authority hospitals and
clinics as part of the tapestry of socialised healthcare, the NHS
would have been less of a monolith. Bevan’s concession was a
plan for a network of local ‘health centres’, on the model of
the Finsbury Health Centre which pioneered local services in
the 1930s, but this radical public health plan never fulfilled its
potential. The NHS was, and remains, a service to mend the
injured and ill, not to improve public health through prevention
of disease and unhealthy habits. It remains, too, a service
run from the political centre, despite waves of reforms from
both Labour and Tory governments.
The 1945 Labour government, in creating British Railways,
the NHS, the National Coal Board and the rest, forged the
impression that socialism equals nationalisation and state
control. It was this false impression, against the backdrop of
the Cold War with the Soviet Union and the eastern bloc,
and the manifest failure of aspects of the centrally run welfare
state, that the Tories mercilessly exploited to attack Labour in
the 1970s and 1980s.
It need not have been so. Little in Labour’s ideology or
ethos suggested that nationalisation, rather than different
democratic or cooperative forms of ownership and control,
should take precedence. The favoured phrases before the
war, ‘socialisation’ or ‘public ownership’, do not necessarily
paul richards 54
equal nationalisation. Indeed, the 1918 version of Clause IV
itself refers only to the ‘common ownership of the means of
production, distribution and exchange, and the best obtainable
system of popular administration’, which Sidney Webb
deliberately left open to interpretation, and to the inclusion
of municipal and cooperative models of ownership.
The sociologist A. H. Halsey pointed out that: ‘The
movement that had invented the social forms of modern
participatory democracy and practised them in union branch
and co-op meeting, thereby laying a Tocquevillian foundation
for democracy, was ironically fated to develop through its
political party the threats of a bureaucratic state.’5
The decentralist tradition refused to die in the post-war
period, despite this being the age of the nationalised institution.
A robust critique of nationalised industries and social
services grew up on the left of politics.6 There was a revived
interest in the role of cooperatives and workers’ control of
industry. In 1971–2, shipyard workers on the Upper Clyde
refused to see their yards close, and organised a ‘work-in’ to
keep them open. There was a revival of interest in cooperatives.
In the 1980s, a new municipalism was developed by Labour
councils such as Sheffield, as a ‘dented shield’ against the
Thatcher government’s policies. There were fleeting vogues
for ‘participation’ and ‘industrial democracy’ in the 1970s
and 1980s. Harold Wilson asked Alan Bullock, the Laboursupporting
historian and academic, to chair a commission on
workers’ representation on company boards. The result in 1977
– the Bullock Report – was rejected by the trade unions and
was never implemented. The unions’ objection rested on the
report’s recommendation that the workers’ representatives be
directly chosen, not selected by the union bosses.
New Labour’s missed opportunities
Labour’s 1997 manifesto aimed for ‘democratic renewal of
our country through decentralisation’. The first term was
55 the purple book
characterised by referenda to establish a Parliament for Scotland,
an Assembly for Wales and an elected mayor for London.
These reforms have changed the democratic landscape for the
better, and it seems unlikely that even the most centralising
Conservative government would reverse them (although the
Tories did abolish London-wide government in 1986).
However, the early successes in devolution were not built
on. The next stage – regional government – fell at the first
hurdle when the referendum to establish a north-east assembly
was rejected, 78 per cent to 22 per cent. Further referenda
were postponed, then dropped altogether. Like electoral
reform for the Commons, a decisive defeat in a referendum
pushed regional government off the agenda for a generation.
The move to elected mayors similarly faltered after an initial
wave of success. The reform of the House of Lords, while
successfully removing the hereditary principle, ground to a
halt when no alternative democratic system could be agreed
upon. Lords reform has now become a key bargaining chip in
the coalition government’s internal machinations. Given the
Liberal Democrats’ ineffectual role within the coalition, and
their toxicity with the public, it is entirely possible a democratic
second chamber, resisted by most Tories, will remain
unfinished business.
New Labour’s enthusiasm for democratic reform waned
after the first term. Despite Donald Dewar’s description of
devolution as a ‘process, not an event’, in reality it was a series
of events, not a process. The second term was dominated by
the war against Islamist terrorism and public service reform.
On the latter, the greatest missed opportunity was the failure
to introduce local ownership and democratic control
over public services. The Blair government recognised that
monolithic state institutions, the legacy of previous Labour
governments, were incapable of meeting modern demands
and, crucially, keeping the middle classes onside. This point
– that public services must be good enough to maintain the
paul richards 56
support and use of those affluent enough to be able to pay
for private alternatives – is a vital insight for Labour. Once
a service ceases to be universal because the middle classes
desert it, it risks becoming a poor service for poor people.
Labour’s reform programmes were based on creating
internal markets, competition between suppliers and freedom
to innovate. In a telling passage in his memoirs, Tony Blair
describes the evolution of New Labour’s approach to reforming
the public services:
At first, we govern with a clear radical instinct but without
the knowledge and experience of where that instinct
should take us in specific policy terms. In particular, we
think it plausible to separate structures from standards,
i.e. we believe that you can keep the given parameters of
the existing public service system but still make fundamental
change to the outcomes the system produces. In
time, we realise this is wrong; unless you change structures,
you can’t raise standards more than incrementally.
By the beginning of the second term, we have fashioned
a template of the reform: changing the monolithic nature
of the service; introducing competition; blurring the
distinctions between public and private; taking on traditional
professional and union demarcations of work and
vested interests; and in general trying to free the system
up, letting it innovate, differentiate, breathe and stretch
its limbs.7
This approach undoubtedly led to improvements in the public
services, most obviously in the NHS and in primary schools. The
missing ingredient in New Labour’s reform programme was any
shift in ownership or control over local services. They remained
services done to people, not co-authored or co-owned. A notable,
and laudable, exception was the creation of foundation trust
hospitals within the NHS, fashioned by one of New Labour’s
57 the purple book
leading decentralists Alan Milburn. By April 2011, there were
137 foundation trusts. They are free from central control and have
an element of local democratic control through local memberships,
governors and boards. Some foundation trusts wrote the
Rochdale principles of cooperation into their constitutions.
There are 1.76 million members of foundations trusts, more than
all the UK political parties in the UK combined.
However, despite sporadic experiments with local ownership
and control, the Labour Party left office in 2010 with the
fundamental pattern of ownership of state assets and control
over services mostly unchanged since 1997.
Next time: the lessons
Not only was this a missed opportunity to create a vibrant
not-for-profit sector, to shift the economy towards mutual
ownership models and to create local platforms for democratic
renewal, where citizens could learn the basic repertoire
of democratic activity; it was also a strategic error in political
terms. If the levers of the state remain in the hands of
ministers in Whitehall, when they fall into the hands of the
Conservatives Labour’s achievements can be reversed.
Take the example of Sure Start centres. These were
conceived, uncharacteristically for the Treasury, as locally
owned and managed centres for child development. Although
sited in deprived neighbourhoods they were open to all and,
following their launch in 1998, poor and affluent parents mixed
on equal terms. They were modelled on successful schemes in
the USA and Scandinavia, and soon established themselves as
a New Labour success story. The visionary civil servant who
developed Sure Starts, Norman Glass, wrote in 2005:
Anarcho-syndicalism came rather late for me – between
the arrival of New Labour and the Spice Girls’ first
album. What I learned from visits to successful early
years programmes and local communities was that it was
paul richards 58
necessary, in the case of early years at any rate, to involve
local people fully in the development and management
of the programme if it was to take root and not simply be
seen as another quick fix by middle-class social engineers.8
Yet in 2005, the centralising tendency within the government
swooped and placed them under state control, diluted
their original cooperative, self-governing ethos and turned
them into yet another government programme. The tragedy
now being played out is that if a service such as Sure
Start remains the creature of Whitehall it can be diluted,
diverted, or abolished when one set of ministers is replaced
by another. Coalition ministers are strangling Sure Start
centres to death, an act of injustice that would have been
far more different to conduct if the ownership of assets
and democratic control of Sure Starts rested with their
local boards, not the Department for Education. Surely the
great lesson for the next Labour government is that the risk
in ‘letting go’ of state-run services such as health clinics,
swimming pools, parks and woodland, children’s centres
and other assets is far less than the risks of their abolition or
privatisation by a future Tory government.
The necessity of revisionism
Labour is a revisionist party. Revisionism, defined as the
application of timeless values to changing challenges and the
rejection of policies set in stone and worshipped as idols, is the
only reason we still have a Labour Party. Without revisionism
– which New Labour dubbed modernisation – the Labour
Party would have clung to outdated policies and be weighed
down by dusty ideology. It would be a political sect, not a
governing party. Each wave of modernisation is denounced
by its opponents as a betrayal and a shift away from the true
path. Yet at every stage the results have enhanced Labour’s
electoral prospects and performance in government.
59 the purple book
A look at any Labour manifesto proves the point: policies
swiftly sound old-fashioned, quirky, quaint or locked in
time and place. Labour’s 1900 manifesto called for an ‘end to
compulsory vaccination’ and ‘abolition of the standing army’.
In 1906 ‘Chinese labour’ was a big issue for the manifesto. In
1923, Labour pledged to place ‘the drink traffic under popular
control’. Even Labour’s 1997 manifesto, with its modest
pledges and promises to give schools ‘access to computer
technology’, belongs firmly to the mid-1990s, an age before
the internet and the ubiquity of mobile phones.
Policies are outdated almost as soon as they are produced.
Values endure. This is the essence of revisionism. The latest
phase of revisionism, of which The Purple Book is a part,
must be guided by the decentralist tradition. It can give us a
template for policies across a range of areas – from the public
services to the democratic system itself. It provides us with a
convincing antidote to the ‘big society’, increasingly understood
as a fig-leaf for traditional Tory demands for a smaller
state and lower public spending. It also provides us with an
internal challenge to the default setting that Labour’s answer
to everything is some arm, institution or agency of the state.
This was the tangent that Labour pursued in 1945 and has
wrestled with ever since.
The next phase for Labour should be a return to the
socialism of its founders, based on the ‘little platoons’ of
locally owned and run bodies, under the benign guidance of a
smaller, strategic state. More Hardie, less Stalin; more co-op,
less National Coal Board. Back to the roots of socialism, not
its byways and meanders.
As T. S. Eliot advises us in the Four Quartets:
We shall not cease from exploration,
and the end of all our exploring
will be to arrive where we started
and know the place for the first time.
paul richards 60
1 Caroline Benn, Keir Hardie: A Biography (London: Hutchinson, 1992).
2 Ralph Miliband, Parliamentary Socialism: A Study in the Politics of Labour
(London: Allen and Unwin, 1961).
3 Cited in David Blunkett and Keith Jackson, Democracy in Crisis: The Town
Halls Respond (London: Hogarth Press, 1987).
4 Ibid.
5 A. H. Halsey, Change in British Society (Oxford: Oxford University Press,
1978).
6 For a review of this critique see Paul Richards, Labour’s Revival: The
Modernisers’ Manifesto (London: Biteback, 2010).
7 Tony Blair, A Journey (London: Random House, 2010).
8 ‘Surely some mistake?’ The Guardian, 5 January 2005.
Reviving our sense of mission:
designing a new political economy
Tristram Hunt
The big questions of contemporary western politics – how to
respond to the continuing globalisation of labour markets,
climate change, increasing immigration, rapid technological
advancement and chronically ageing populations – are all
economic ones. Yet despite the obvious repudiation that one
would have expected the financial crisis to have dealt to neoliberal
economics, in Europe and across the developed world, it is
to a resurgent right that voters have turned for answer.
Nowhere is this phenomenon more pronounced than here
in Britain where, with breathtaking ruthlessness, the government
has successfully reframed the crisis in the minds of the
electorate. The political agenda is not dominated by talk of
how to correct the problems associated with unregulated
market power, but about how to correct the problems associated
with unrestricted government spending.
In our journey back to government, it is essential to get
our economic agenda right. Our starting point must be the
acceptance of this uncomfortable political reality: that the
public has accepted the government’s explanation of the
financial crisis. Of course we must be robust in explaining
that the deficit was only 2.1 per cent in 2007–8, compared with
11.1 per cent in 2009, after the seismic shock to the economy
delivered by the financial crisis. We should also continue to
tristram hunt 62
point out that in 2008 the extent of Conservative anger at
our levels of spending led them to match our commitment to
public investment to the last penny.
But politics is not an empirical social science; it is about
people’s perceptions and emotions, their hopes and insecurities.
Directing an incredulous public to the relevant graphs is
not a winning strategy.
Rather, the first component of our economic approach
must be to accept the need to develop a clear strategy for
deficit reduction. We are right to say that the Conservatives
have turned the ‘means’ of deficit reduction into an end in
itself, and that this reflects the paucity of their aspirations for
Britain. Yet a vital means it remains: there is nothing progressive
about running a large budget deficit or wasting money
on interest repayments that could be invested in schools,
hospitals or Sure Start centres. This is the crucial insight the
electorate has already realised and until we move beyond the
‘why’ and ‘who’ arguments about deficit reduction, and articulate
with more clarity the ‘how’, we will not regain our voice.
Choosing positive freedom
The second component must be nothing less than the fullscale
development of a new political economy, one built around
the task, intrinsic to the purpose of the Labour movement, of
distributing power to those who lack it. The exercise of power
is the most basic, fundamental political act for any member of a
free and fair society; in its absence, citizens lack the capabilities
to lead a full life of their choosing. The type of freedom brought
about by the distribution of power is positive freedom, the freedom
to carry out a given action, physically. This contrasts with
negative freedom, freedom from interference, which is the only
freedom that animates the right.
In choosing positive freedom, we reject the false dichotomy
of choosing between freedom and equality, as greater equality
is instrumental in creating the kind of society required
63 the purple book
by the pursuit of positive freedom. Furthermore, the pursuit
of distributing power is, crucially, an economic goal that is
sufficiently pluralistic to accommodate the importance that
different individuals will place upon different aspects of the
good life. Yet it also recognises that a fundamental part of the
good life is provided by human relationships and a sense of
community. Without the sense of solidarity and shared fate
that resilient communities foster, we lack the power to resist
the dual forces of market and state.
It is this sense of resistance that is a uniquely Labour contribution
to social democracy; the distribution of power and the
pursuit of real, positive freedom has always been a leitmotif for
the Labour movement. In the depths of the ‘terrible thirties’,
the last time that Britain faced a financial implosion of such
magnitude, the Christian socialist R. H. Tawney placed it at
the heart of his 1944 essay We Mean Freedom:
A society in which some groups do much of what they
please, while others can do little of what they ought, may
have virtues of its own: but freedom is not one of them.
It is free in so far, and only in so far, as all the elements
composing it are able in fact, not merely in theory, to make
the most of their powers, to grow to their full stature, to
do what they conceive to be their duty and – since liberty
should not be too austere – to have their fling when they
feel like it.
It was Tawney’s model of social citizenship that inspired
the architects of the post-war welfare state, providing a vital
contribution to arguably the greatest intellectual transformation
of the twentieth century: the Labour movement’s embrace
of the democratic state as a means to alleviating market injustice.
Faced once more with a Conservative–Liberal coalition,
complete with its own version of the Geddes Axe, it is to this
tradition within the Labour movement that we must turn for
tristram hunt 64
inspiration. Because, before our post-1945 embrace of statism,
the movement was acutely aware that the state, too, could
be an agent of injustice. Marx and Engels’ assertion that the
state was simply a committee for managing the affairs of the
bourgeoisie did not seem fanciful to a movement suffering
from a series of anti-labour judgments, from the Tolpuddle
Martyrs to Taff Vale.
For in becoming too reliant on the state as the only means
of resisting market outcomes, we have forgotten our associationalist
heritage as a movement of democratic grassroots
activists: our history of cooperatives, mutual societies and trade
unions. It is by turning to this heritage that we can help revive
our sense of mission, to distribute economic power to those
who lack it and build a new political economy around this goal.
A new political economy
But if distributing power is to become the raison d’être of
our new political economy then we currently lack the apparatus
to achieve it. Indeed, the Labour movement currently
faces an intellectual crisis every bit as big as its political one.
This is because the dominant Croslandite model of political
economy – the best way of advancing social justice is through
accepting free market capitalism as it is and redistributing the
proceeds of its ‘perpetual’ growth, which was stretched to its
limits by New Labour – has run its course.
That is not to undermine the significant feats of New
Labour in redistributing economic power. Lifting 500,000
children out of relative poverty, halving the number of people
in absolute poverty and the creation of a national minimum
wage are achievements that we should be proud of and defend.
Most significantly of all, New Labour used the proceeds of
the ten years of growth over which it presided to rebuild the
public realm. The current debate’s fixation upon the impact
of globalisation in creating polarised patterns of ‘winners and
losers’ is understandable – it is right that Labour should be
65 the purple book
primarily concerned with improving our ability to create a
better society for the ‘losers’. Yet this should not detract from
the fact that New Labour did create vast swathes of ‘winners’,
empowering people from all backgrounds with the skills
to succeed in a knowledge-based economy. Nobody could
possibly deny that the Britain New Labour bequeathed to the
coalition was more likely to be seen as an innovative, openfacing
hub of technological and creative excellence than it was
in 1997. Yet, for a variety of reasons, more of the same is no
longer a suitable response to the economic challenges of today.
First, the central assertion of The Future of Socialism, that
growth could continue ad infinitum, recycled in Gordon
Brown’s claim to have ended ‘boom and bust’, and that it
was possible to eradicate the cyclical fluctuations in demand
inherent to all varieties of capitalism, has been shown, with
emphatic violence, to be flawed. Resilience to these fluctuations,
in the form of tighter fiscal policy and a less cavalier
attitude towards borrowing, must be one important component
of our new political economy.
Second, the overreliance on resource-based redistribution
as the only successful strategy for creating a better
society does not truly capture the importance of power: that
resources are nothing without the power to use them. To
characterise, crudely, there is no point giving somebody a tax
credit if they lack the capability to access basic services or
feel completely disengaged from society. Or, more saliently,
in relation to economic power it is no good providing someone
with financial support through unemployment benefits
if that person is not supported by being placed on an active
welfare-to-work scheme.
Rather than redistribution, we should be shifting our focus
to what the political economist Jacob S. Hacker has called
‘pre-distribution’ or ‘the way in which the market distributes
its rewards in the first place’. The contemporary policy trend,
whether through financial market deregulation or the weakening
tristram hunt 66
of union rights and employment legislation, has shifted the
‘pre-distribution’ of economic power in favour of those at the
top. In shifting our focus towards ‘pre-distribution’ not only will
we focus on market reforms that encourage a fairer distribution
of power in the economy before redistribution, but we will also
avoid the perennial political pitfall that excessive reliance on
redistribution generates: the ease with which the Tories deploy
their populist, well-rehearsed ‘tax-and-spend’ arguments. Of
course, resources remain important; their ability to enable
people to expand their choices, horizons and opportunities
should not be understated. However, the left has always argued,
rightly, that everything of value cannot be reduced to money or
measured by price.
As that irrepressible proto-socialist John Ruskin wrote in
Unto This Last in 1860:
It is impossible to conclude, of any given mass of acquired
wealth, merely by the fact of its existence, whether it signifies
good or evil to the nation in the midst of which it exists.
Its real value depends on the moral sign attached to it, just
as strictly as that of a mathematical quantity depends on
the algebraic sign attached to it. Any given accumulation
of commercial wealth may be indicative, on the one hand,
of faithful industries, progressive energies and productive
ingenuities: or, on the other, it may be indicative of mortal
luxury, merciless tyranny, ruinous chicanery.
Even now, Ruskin’s critique has lost none of its force. Indeed,
it is the Croslandite model’s inability to stand in a critical
relationship with the way the market concentrates existing
distributions of power and inequality that is the third reason
we turn to. One of the shortcomings of the New Labour
project was our failure to regulate the banks and our reluctance
to intervene in market outcomes. However, as our
economy becomes ever more exposed to the rapid change that
67 the purple book
globalisation and increasing technological development will
bring, it is no longer enough just to equip the labour market
with the skills necessary to succeed. All-out resistance to
globalisation is not an option. Neither is closing our markets:
openness and competition remain unparallelled in their ability
to stimulate innovation and drive efficiency. Instead, what
is required is a strategic, interventionist response to managing
the economy. This should include the encouragement of
regional specialisation and selecting ‘winners’ based upon
their ability to contribute jobs, develop labour market capacity
and compete internationally. Put simply, globalisation
means that governments can no longer be ambivalent about
the means by which wealth is created.
This lack of a critical analysis of market outcomes also
had one other profound impact, implicit in Ruskin’s critique.
It prevented us from distinguishing between different types
of capitalism and growth. We must reject the argument that
the ‘avenue to economic dynamism is to let capitalism be true
to its atavistic, red-in-tooth-and-claw instincts; that to make
a distinction between good and bad capitalism is fundamentally
to misrepresent its character.’1 The idea that there is
nothing but neoliberal capitalism and traditional socialism
is absurd. There are, of course, many variants of capitalism,
capable of distributing varying degrees of economic power
to its citizens. The goal of our new political economy should
be simple: to pre-distribute as much economic power as
possible, to the lowest levels possible, while remaining sensitive
to personal freedom and individual aspiration. This task
will prove impossible without generating growth. But just
as we can critically choose the type of capitalism we want,
we must also be explicit about the type of growth we mean,
too: growth that is socially fairer, reduces inequality, delivers
securer work, is more environmentally sustainable and, above
all, benefits all regions and not just the City of London.
But if this sets out the aspirations for a new political economy,
tristram hunt 68
it does not outline a process for getting there. The final failing of
the Croslandite-New Labour model was its reliance on statist
intervention, whether through resource-based redistribution
or public service investment as the means for bringing about
political change. Sober assessment of the long-term economic
trends would suggest that, even were such statism still desirable
(and it is not), we are unlikely to enjoy the conditions favourable
to its enacting that we enjoyed pre-2008, if and when we return
to power.
The Resolution Foundation’s first report for the Commission
on Living Standards reveals the shocking statistic that, given
the impact of the recession, living standards will not even reach
their 2001 levels until 2015. Even before the recession, median
wages for people on low to middle incomes were flat from 2003
to 2008, with disposable income falling in every region except
London during this period. The ‘squeezed middle’ is a political
reality and, furthermore, is one that is here to stay.
And all of this is before we even begin to consider the
potential damage the government might inflict on the economy
during the intervening period.
All of which intensifies the need to develop new, nonstatist
means of political change. Trade unions, mutuals
and cooperative societies, and free voluntary associations of
all different hues – all share a common belief that through
democratic association their members are protected from
excessive concentrations of power, whether that be from
global markets or an intruding state. In particular, the role
of cooperative and mutual models of ownership has been
explored to see whether they can provide the launch pad for
a new policy platform.
However, the majority of interpretations have focused
on their ability to reinvigorate our approach to public services
and so to recast our understanding of the relationship
between citizen and state.
Others have highlighted their use as a tool to highlight
69 the purple book
the authenticity of our vision of society when contrasted to
the deficiency of that most audacious of Cameroonian land
grabs, the ‘big society’. Both of these tasks require swift and
urgent attention, particularly that of developing a constructive,
positive response to the ‘big society’. However, a road less
well-travelled is the role that cooperative and mutual models
of ownership can play in reforming the private sector and
developing a different approach to the economic task we have
set ourselves: the ‘pre-distribution’ of economic power. The
first step is to examine the history of the British cooperative
movement.
Rediscovering our cooperative past
Our cooperative roots can be traced back, most obviously
to the Utopian socialism of Robert Owen, and the attempt
to craft an alternative, ‘cooperative’ philosophy during the
early nineteenth century. Owen’s starting point was that
conditioning, not character, was the key to man, who ‘is a
compound being, whose character is formed of his constitution,
or organisation at birth, and of the effects of external
circumstances upon it, from birth to death’. Original sin was
a fallacy and what was instead required was an educational
and social ethos designed to draw out the cooperative best
in mankind. At his factory at New Lanark, he operated a
beneficent commercial dictatorship cutting working hours,
eliminating underage employment, restricting alcohol sales,
improving conditions and introducing free primary education.
In A New View of Society, or Essays on the Principle of the
Formation of the Human Character, Owen detailed how his
experiment could be magnified for society at large and, in so
doing, helped to drive through the 1819 Factory Act limiting
working hours in the textile industry.
Owen’s solution was to establish a series of communes,
which entailed a retreat from ‘the old immoral world’.
More productive was his following of Owenite socialists,
tristram hunt 70
with their criticism of modern competition, who grouped
together under the aegis of the British Association for the
Promotion of Cooperative Knowledge. ‘The selfish feeling
in man may fairly be called the competitive principle,’
announced the leading Owenite William Lovett, ‘since it
causes him to compete with others, for the gratification of
his wants and propensities. Whereas the cooperative may
be said to be the social feeling that prompts him to acts
of benevolence and brotherly affection.’ An economy based
on the competitive system was condemned as inherently
inequitable and unstable: wealth was concentrated, trade
cycles became more extreme and poverty deepened. While
Owen himself increasingly focused his efforts on reforming
religion and ending ‘the unnatural and artificial union of
the sexes’ in marriage, the Owenites during the 1830s built a
political programme around cooperation and a moral sense
of value based on labour-time and just transfer rather than
‘the doctrine of wages’. This led to the establishment of a
series of cooperative shops in London and Brighton, ‘labour
exchanges’ for the direct marketing of goods and trade
unions to advance the cause of labour.
From this tradition emerged the better-known Rochdale
Society of Equitable Pioneers, with a clear focus on retailing
unadulterated foodstuffs at competitive prices. At their peak,
cooperatives played an indisputable central role in workingclass
life. The historian Peter Gurney described the cooperative
store as the ‘defining feature of working-class community
and neighbourhood life’. They were a way of providing services
for the benefit of one another, based on values of reciprocity
and mutual assistance rather than a desire to maximise
profits. These ideas were crystallised in the idea of the ‘divvy’,
the dividend paid out to the cooperative member. The divvy
became part of the rhythm of people’s lives, the little bit of
money that kept the wolf from the door, or the means for
working-class families to build a small reserve of savings.
71 the purple book
But the cooperative societies provided more than just
financial assistance. They also acted as a repository for social
capital, organising events that fostered community cohesion.
In 1950 the Buckingham Co-op Societies’ dairy department
was able to attract more than 3,000 people to their annual
sports day. As one co-op member wrote in 1958, ‘All our wants,
or at least all our needs, could be supplied... Yes, all of us –
men, women and children alike – were well looked after by
the Old Co-op. It could feed, clothe, shelter and in the end,
bury us.’ Even in his last journey, the true cooperative member
brought a ‘divvy’ as a final payment to those left behind. This
vision, of a self-sustaining community bound by relational ties
of common endeavour is authentically Labour. Written on
our membership cards is a proud proclamation of this vision.
The history of the cooperative movement is intertwined and
inseparable from the history of our own Labour movement.
A new model of the firm
But buried within this nostalgic portrayal are some important
insights for developing a modern approach to the
pre-distribution of economic power in a globalised world.
First, it demonstrates the undeniable potential for democratic
association as a means to increase social capital. Clearly there
is a world of difference between the Buckingham Cooperative
Society of the 1950s and a modern, employee-owned, retail
giant such as John Lewis. But that does not mean that the
Labour Party should not loudly advocate for communities to
come together to form the ‘little platoons’ that can contribute
in the fight against the ‘Bowling Alone’ phenomenon and turn
deep-seated trends towards a more atomised, individualistic
society, on their head. We are right to place this type of activity,
influenced by the community organising tradition, at the
heart of the vision for party reform.
However, this history also illustrates a profound contrast in
values, between the ethos of cooperatives on one hand and the
tristram hunt 72
competition-driven ethos of the dominant model of corporate
governance in modern capitalist economies, the shareholderreturn
model, on the other. The cooperative model emphasises
the importance of solidarity, accountability, responsibility for
your fellow member and at its very heart gives you an increased
democratic stake in the direction of the firm. In comparison,
the ultimate goal of the shareholder-return model is the
bottom line, with little value placed upon the quality of the
relationship between firm and employee. Will Davies has
described it as ‘a particularly acute attempt to assert the power
of financial capital over industry, making return on investment
the single benchmark against which all of a firm’s managerial,
technological and employee actions could be measured’.2
Yet, if we are serious about tackling the inequalities of
economic power, pre-distributed by existing market forces,
then this is a challenge we can no longer ignore. The sociologist
Richard Sennett has written about the way that ‘modern
firms destroy the capacity for human beings to tell a coherent
story about their lives or to develop the capacity for craft’.3
Tony Blair’s former strategy adviser and the new director of
NESTA (National Endowment for Science, Technology and
the Arts), Geoff Mulgan, has also observed that ‘there has
been a long-term trend towards more people wanting work
to be an end as well as a means, a source of fulfilment as well
as earnings’.4 We should never be relaxed about situations
where employees are disempowered as a result of their existing
employee-employer relationships.
But what, other than advocacy, can we really hope to offer?
The idea of Mitbestimmung or ‘co-determination’, intrinsic to
the German social democratic model, where employees have
direct managerial responsibility, should certainly be an aspiration.
But interventionist legislation to create this would seem
to be a wrong option. Although we did enjoy some notable
legislative successes in this area during our period in government,
developing new legal forms such as the asset-locked
73 the purple book
Community Interest Company, the best innovations from the
social enterprise sector did not occur because of legislation.
Besides, those innovations can largely be characterised as bringing
private sector insight into the ethos-driven third sector.
Reversing the direction of this flow is long overdue. Labour
should actively encourage the formation of mutuals and cooperatives,
and other inherently democratic models of the firm,
as a means to organically encouraging the Mitbestimmung end.
There is a wide body of research to suggest that these models
of shared ownership help to empower staff and increase their
overall wellbeing.5 There is also evidence to suggest that they
make more responsive and efficient businesses. Increased
power begets increased engagement and, so the argument
goes, this leads to greater efficiency. The recent success of the
cooperative economy would seem to reinforce this argument:
between 2007 and 2009, a period when the overall turnover
growth of the whole British economy contracted by 1.8 per
cent, the cooperative economy’s turnover grew a staggering
24.6 per cent.6
The easiest policy response available is to provide tax
breaks, incentives and reducing the regulatory burden for
new mutual start-ups or spin-outs. In Italy, the success of the
mission-driven ‘social’ cooperative movement, which grew
as a response to the challenges of social and labour market
integration in the late 1980s and early 1990s, was built upon
preferential rates of VAT, corporation tax, tax exemption
for charitable donations and privileged public procurement
rules. Labour could commit to waiving the VAT charge on
public service contracts for cooperatives, charities and social
enterprises that deliver on specific social outcomes. This will
allow such organisations to tender for such contracts on an
equitable playing field with the VAT-exempt public sector.
On cooperative spin-outs from public services, we could
ease the regulatory burden by committing to funding the
discrepancy between existing employee conditions and the new
tristram hunt 74
mutual ones for a period of two years. One of the biggest challenges
faced by small mutual spin-outs is matching the terms
and conditions of public sector contracts which, under TUPE
(Transfer of Undertakings, Protection of Employment) legislation
they are legally obliged to offer. Providing a small amount
of funding for a two-year ‘TUPE holiday’ would not ultimately
solve the problem of renegotiating contracts, but it would
alleviate this challenge at the crucial moment of spinning-out,
reducing staff and union anxiety, and allowing the new cooperative
breathing space to develop a sustainable business plan.
We should also fully commit to transferring assets to
community groups, where appropriate. The work of Elinor
Ostrom, the political economist who won the 2009 Nobel
prize for economics, has sharply illustrated the idea that
resources, or ‘shared commons’, can be effectively managed
by the people who use them as opposed to governments. The
cooperative model is the perfect embodiment of this spirit;
pubs, schools or even the British Waterways network of
canals could easily be transferred to new community cooperatives.
Indeed, buried in the darkest reaches of our 2010
election manifesto are tentative propositions for precisely
these initiatives, initiatives that for all of its ‘big society’ bluster,
the government is reluctant to match.
As far as employee share-ownership is concerned, Labour
should consider, despite the potential for a tax loophole to be
created, reversing our 2003 decision to remove the tax break
on creating employee benefit trusts. To ensure that shareownership
becomes a reform that empowers the lowest-paid
members of a firm and those who generally have less power to
take advantage of such schemes, we could hardwire progressive
considerations into the policy: tax breaks the firm receives as
part of the scheme might only apply if a significant threshold
of shares have been distributed to all members of staff.7
However, perhaps the most important thing to do will be
to provide new mutual forms with adequate access to capital.
75 the purple book
Whatever the size of the investment fund that is eventually
awarded to the Big Society Bank, Labour should consider
improving on it. We should also resist the disingenuous
appropriation of this idea by the Conservatives: it was a
Labour government that set up the initial Social Investment
Taskforce. And, as part of the strategy for regional, inclusive
growth, we should look at developing strong, well-funded
regional investment funds.
Remutualising the financial ecosystem
There can be no doubt that the banking crisis gave the
mutualism movement fresh impetus. In the wake of such an
unprecedented crisis it was perhaps inevitable that something
which can allow people to exert democratic control over previously
unaccountable financial institutions would be bumped
up the policy agenda. Labour knows that it did not do enough
to rein in the actions of the banks during our time in office.
But our previous caution should encourage boldness now. We
should not be too timid to move our mutualism agenda into the
financial sector. Not only can this help to shake up the existing
pre-distributions of power with the sector, and the economy
more broadly, but it should also create a more stable and secure
financial sector. A variety of commentators from across the
centre-left have long argued that the financial system should
be as diverse as possible and last year, borrowing an old Will
Hutton metaphor, The Economist wrote that ‘just as an ecosystem
benefits from diversity, so the world is better off with a
multitude of corporate forms’.8
These commentators are right. Labour must seriously
consider proposals that promote the growth of a financial
sector more grounded in our values. Britain’s financial
services industry is among the least diverse in the world, a
situation exacerbated by the Thatcherite policy of aggressively
encouraging building societies and credit unions to demutualise.
A new generation of financial cooperatives and mutuals
tristram hunt 76
can play a vital role in redressing this balance; a diversity of
institutions will help to maintain the stability of the whole
financial system.
However, this task is not easy. Financial mutuals can have
more difficulty in securing capital and the impact of sharing
the proceeds of growth can also sometimes lead to slower
capital accumulation. These disadvantages make it unlikely
that, left to its own devices, the market will provide this
new generation of financial mutuals. Merely vacating the
space, as the government is doing, will not work. Providing
incentives for other banks to capitalise fledgling mutuals,
providing community investment tax relief for people
who use them, and the Employee Ownership Association’s
proposal for expanding the existing Share Incentive Plan so
that it benefits all members of a firm and is not merely a
way of enhancing executive salaries, are all ways that Labour
could provide the right structural framework to allow mutuals
to flourish.
One proposal that Labour should definitely commit to is my
colleague Chuka Umunna’s campaign to remutualise Northern
Rock. Similarly, Labour should actively consider ensuring that
the 600 branches that Lloyds TSB was ordered to sell off as
part of the interim report of Sir John Vickers’ Independent
Commission on Banking be sold to new or existing mutual
organisations. This would prove far more effective at leveraging
the kind of responsible and engaged shareholders required
to regulate financial excess than the Deputy Prime Minister’s
proposal to distribute shares to every taxpayer in Britain.
Notwithstanding the expense and the administrative burden,
the main problem with this idea is its financial illiteracy. Even
if a decent entry price could be guaranteed, the bank’s share
price is likely to collapse as millions of new owners, as is likely,
immediately cash in their shares. Similar voucher schemes,
such as in the Czech Republic, merely resulted in unscrupulous
private investors buying up the shares at discounted rates. In
77 the purple book
this scenario it is difficult to see how the public finances would
be best served by these proposals.
However, we must be careful when developing a mutualism
agenda for the financial sector not to present mutualism
as a panacea for the sector’s problems. A thorough critical
interpretation of the financial crisis is required in order to
learn the appropriate lessons; to blithely suggest that mutuals
are inherently unrisky or that their employees were immune
to indulging in the practices that caused the crash, would
be wrong. Indeed, while the Co-operative and Nationwide
emerged from the recession in positions of relative strength, it
was only the buy-outs of the latter that saved the Cheshire and
Derbyshire building societies in 2008, and the Dunfermline
in 2009, from going to the wall. Rather than prohibit risky
investment for these smaller firms, their mutuality may actually
have encouraged it. Denied the easier access to capital
enjoyed by non-mutuals, they were forced higher up the ‘risk
curve’ and thus proved more exposed to the riskier tranches of
subprime mortgages and credit default derivatives.
The fate of the Cheshire, the Derbyshire and the
Dunfermline highlights two key insights that must inform
the type of new mutual we seek to encourage. First, that
financial mutuals are businesses: they must compete. Any
new mutual that attempts to detach itself from the rest of
the financial sector is unlikely to acquire enough business to
survive. And, second, that governance structure alone guarantees
neither success nor sensible sustainable investments. It is
people, not structure, that really determines the behaviour of
any organisation; unless the new mutuals’ members, employees
and shareholders desire the right type of investment then
the benefits of mutualising the financial ecosystem will be
unrealised. The new mutuals we encourage must embrace the
ethos and values that underpinned the nineteenth- and early
twentieth-century cooperatives. They need to once more play
an active, democratic role in their members’ lives. At the very
tristram hunt 78
least this should include optional education and training
programmes to improve their members’ financial literacy.
Intrusion into the private sector will be politically difficult.
We should not delude ourselves into thinking that public
anger at bankers’ bonuses will automatically neutralise those
‘overreaching state’ arguments. The interim Vickers report has
largely focused on the internal structure of Britain’s biggest,
diversified banks. But part of its scope is to explore ways
of ‘reducing systemic risk in the banking sector’. We await
its final conclusions in September, but it remains amazing
that the only serious reforms to emerge from the financial
crisis are of public services. By carefully promoting financial
mutuals, Labour can tread this political tightrope and help to
create a more equitable, stable and democratically accountable
financial sector.
Redistributing economic power
This article only offers an embryonic contribution to a policy
platform that might return Labour to power. But even the
most inventive policy agenda in the world will not deliver us
victory unless we fully appreciate the size of the challenge we
face: it is no exaggeration to say that our crisis is every bit as
big as that faced by Tawney and his colleagues in the midst of
the Great Depression.
Electoral success is based on two factors: economic
competence and the ability to communicate a compelling
vision of a future society. Without a clear strategy for deficit
reduction, Labour will fall at the first of these two hurdles.
Embracing more democratic models of ownership can help to
communicate the vision of society and our values of solidarity,
cooperation, reciprocity and community empowerment in
ways that the public can understand. That society works best
when people work together and share in each other’s fate.
That when people are trusted to help deliver a better society,
they will respond responsibly and effectively. And that
79 the purple book
the route to a better society, to real empowerment, is to give
people a truly democratic stake in that society.
These models of ownership should also form part of our
new political economy, the development of which is the only
way we can truly satisfy these two preconditions for success.
The goal of distributing economic power through institutions
of democratic association is a uniquely Labour story,
deeply embedded within the intellectual traditions of our
movement. This and the pursuit of positive freedom that
it engenders must become the raison d’être of our political
economy. We must reject the false choices that many will
suggest to its achievement; between equality and individual
freedom, prioritising the middle-class progressive vote or the
working-class communitarian vote, or between the politics of
aspiration and the politics of preventing insecurity.
It is to the task of developing this political economy that
we must all, with urgency, now apply ourselves.
1 Will Hutton, ‘Liberal Social Democracy, Fairness and Good Capitalism’,
in Michael McTernan (ed.), Priorities for a New Political Economy: Memos to the
Left (London: Policy Network, 2011), pp. 25-26.
2 William Davies, Reinventing the Firm (London: Demos, 2009).
3 Richard Semnett, The Corrosion of Character: The Personal Consequences of
Work in the New Capitalism (New York: Norton, 1998).
4 ‘After Capitalism’, Prospect, 26 April 2009.
5 For a good example, see John Craig, Matthew Home and Dennis Morgan,
The Engagement Ethic (London: Innovation Unit, 2009).
6 The UK Cooperative Economy 2010: A Review of Cooperative Enterprise.
(Manchester: Cooperatives UK, 2010).
7 For a full exposition of this policy, see Will Davies, Reinventing the Firm
(London: Demos, 2009).
8 ‘Schumpeter’, The Economist, 19 August 2010.
Making markets genuinely free:
redistributing power to all
John Woodcock
If Labour is serious about handing power to individuals
and if it is serious about winning the battle of ideas again,
it must recast its uneasy relationship with the concept of
markets.
To successfully and enduringly challenge the ascendency
of the right and to map a way forward for the country in this
new era, we need to reclaim from conservatives the right to
define what makes markets free and fair. That requires us to
rethink our fundamental arguments about the relationship
between government, the individual and the economy. As we
seek to devolve the power of the state to communities and
individuals we must similarly devolve power in the market to
employees, businesses and regions.
Labour has rarely, at heart, been a protectionist party. In
splitting from the Liberals in the early twentieth century, the
labour movement never wholly split from the free trade argument.
The internationalist foundation of the Labour Party
informed a belief that protectionism inevitably proved deeply
damaging to working people both at home and abroad, whatever
its short-term attractions. When Labour first entered
government in 1924, it was on the basis of a free-trade bloc
with the Liberals following the defeat of the Conservatives’
protectionism at the ballot box.
81 the purple book
Indeed, markets have provided the majority of working
people in Britain with standards of living that previous generations
could not have dreamed of through ensuring lower costs
and greater availability of food, consumer goods and travel.
In recent decades, the market was the essential basis of the
information technology revolution, which has served not only
to support wealth creation, but has facilitated a shift of power
towards individual consumers and has been both a trigger and
tool for movements demanding greater democracy.
Throughout Labour’s history the underlying credo has
been that economic growth is the basis on which social
reform, rising living standards and equality of opportunity can
most effectively be built. Whether explicitly stated or not, the
reliance was always on market forces, tempered or corrected
as necessary, to deliver that growth. In The Future of Socialism,
in many ways the founding text for the story that eventually
became New Labour, Tony Crosland was clear that greater
levels of equality not only can be, but are most likely to be,
achieved alongside a free market. While Crosland’s vision was
that ‘the subjection of all life to market influences’ was a thing
of the laissez-faire past, his prescription relied on an exportled
market economy to provide economic growth. Similarly,
he saw a free – and in many cases less regulated – market
as the means by which the availability and affordability of
consumer goods and services could be increased for working
people. These concepts inspired the social market thinkers
of Labour’s mainstream throughout the late 1970s and early
1980s. While its prominent proponents, such as David Owen
and Roy Jenkins, split from Labour, in many ways the influence
of their thinking remains stronger within Labour today
than it does in the contemporary Liberal Democrats.
New Labour, under Tony Blair and Gordon Brown, also
explicitly recognised the ability of liberal markets to provide
opportunities and standards of living where more restrictive
economic policies had consistently failed, and sought to
john woodcock 82
harness the wealth they generate for social democratic ends.
As Ed Miliband said in his speech to the British Chambers
of Commerce:
In the 1990s, New Labour’s core insight was that a
successful and dynamic market economy is the foundation
on which a strong and just society must be built.1
But the left, including New Labour, has never sought to
contest the basic definition of what has been termed a free
market, broadly: the minimisation of government regulation
to achieve the most efficient distribution of goods. We need
to question that now, at a time when progressive politics is
at a low ebb across the world. The failure of government to
regulate financial markets effectively has perversely weakened
the progressive left’s political creed, which states that it is the
principle role of government to protect the individual from
the inherent inequities of market forces. Instead, the crisis of
financial capitalism has drawn people towards parties who
state the answer is less government, not more.
With the public’s refusal to embrace a ‘progressive
moment’ in the wake of the government-led bailout of the
banks, the left’s historic ambivalence towards markets has
unexpectedly left us flat-footed.
To get back on track we should restate a basic principle that
has endured in the 111 years since Labour was founded in large
part by private sector trade unionists at the Memorial Hall: it
is part of Labour’s DNA to accept that markets should be as
genuinely free as possible for all participants – be they producers,
consumers or employees – because of the innovation and
wealth that freedom generates. But we go beyond this, too. Just
as elsewhere in The Purple Book we seek to reform the state in
part by looking back to earlier inspirations for decentralised
socialism, so too we must look to how the market can not only
be free itself, but how it can empower people to be free. In the
83 the purple book
times we live too many now feel that neither the state nor the
market can empower them. It is Labour’s job to make sure that
both do. That is why Labour under Ed Miliband’s leadership
accepts that markets are here to stay but are not immutable;
instead, we are seeking to win the argument over what it is that
we want the market economy to do for its participants.
After the crash: three prescriptions for a better market
economy
To look to the future we must first look at our recent past
to decide what should be the enduring lessons we take from
the financial collapse, particularly in the context of Labour’s
failure to sustain itself in office after it.
As Prime Minister, Brown probably did more than anyone
else to lead the global response to avoid economic disaster. He
was, of course, right to identify the need for a tighter international
regulatory framework to increase transparency and
prevent a repeat of the situation where markets were devoid
of scrutiny and excessive power was wielded destructively
and irresponsibly. And he correctly identified that a political
lesson of the crash was the importance of government
action ‘where markets fail’. As he told the TUC in September
2009: ‘The lesson of the 1930s is that whenever banks collapse
and markets fail, governments cannot stand aside; they must
ensure that the savings of people, their mortgages, their credit,
are all protected and that they must intervene to save jobs.’2
But the success progressive parties have had in defining
the role of government in the event of such a monumental
collapse has proved insufficient to convince electorates
that they should be trusted to govern in the post-crisis age.
Instead, national debates have been more focused on the
question of how we get our economies back on track. And
there, argument between parties on the left and right has
rightly centred on what is the optimal role for government
to shape and stimulate the market economy – not whether
john woodcock 84
we should retreat from market capitalism itself. Labour has
not, therefore, retreated into an anti-market comfort zone. As
shadow business secretary John Denham has said: ‘The next
Labour government will have to be relentless, a single minded
focus, in creating the conditions for private sector growth.
That means, without any ambiguity, creating the conditions
in which companies compete within fair markets.’3
Yet to do so successfully and convincingly, we must overcome
an inherent disadvantage that has held us back for
decades in the battle with the conservative right to shape the
kind of market economy we want. We must explicitly recognise,
and be comfortable with, what in fact we implicitly accepted
decades ago: that markets are the only effective way to deliver
the kind of economy and the kind of society we want.
Instead of outright opposition, the danger for the
progressive left is surely this: if we attack the free market
dogma of the Tories without a coherent and boldly set out
counter-proposition of what kind of markets we think are
best, our position can too easily be misconstrued as unerringly
taking the side of government in a battle of state
versus market. Indeed we can sometimes deceive ourselves
into thinking that we are against markets, when in fact we
are engaging in an argument over the kind of market we
want and the optimal role for government in achieving it.
This is in contrast to the Tory version of the free market,
which seeks to hack back the state. We, though, understand
that the state and the market have a strong inter-relationship
and that to weaken one weakens the other. Our true
position is arguing for a more equitable and, crucially, a
more economically efficient kind of market economy to a
Conservative Party that remains instinctively hostile to the
concept of state intervention.
But misalignment between the rhetoric we adopt and our
actual position on markets not only impedes the thinking
we need to do to renew, it also risks leaving us seeming out
85 the purple book
of step in a world where belief in enterprise economies as
the best foundation for advancing our goals is remarkably
entrenched in the UK and across the world.
A poll of 20,791 individuals across twenty countries
conducted by the Program on International Policy Attitudes
of the University of Maryland in 2005 found a clear majority
in all but France believing that ‘the free enterprise system and
free market economy is the best system on which to base the
future of the world’. Around 66 per cent of people in the UK
agreed compared to 27 per cent who disagreed – above the
global average of 61 per cent versus 28 per cent.
An attempt to redefine what we mean by free markets can
take inspiration from Isaiah Berlin’s seminal 1958 essay Two
Concepts of Liberty that drew a distinction between negative
and positive concepts of liberty.
Negative liberty, wrote Berlin, equates to ‘freedom from’
– the absence of external interference. Positive liberty, on
the other hand, is ‘freedom to’ – the freedom to reach one’s
true potential. In many areas of social policy, as progressives
we have been successful in building a narrative of positive
freedom, defining ourselves as the would-be conquerors of
William Beveridge’s five giant evils. Yet in the economic
sphere, the conservative right has achieved rhetorical primacy.
The ‘free’ in ‘free markets’ has come to be universally accepted
as defining a negative liberty, the near-total withdrawal by
government from the functioning of the market. The closer
you can get to that theoretical paradise of total freedom
through absence of government involvement, the better.
So, besides adopting more measured cuts to public spending
to prevent market slowdown, if Labour is to become the
progressive champion for markets that work for people? What
steps can we take to ensure they deliver genuinely progressive
ends? Three broad areas to consider are: new models of
the firm and ownership; regularly reviewing regulation; and
defining fairness and intervention in the economy.
john woodcock 86
New models of the firm and ownership
In the private sector, we should support models that concentrate
power in the hands of a more diverse set of constituents.
The global cooperative economy, a prime example, is
responsible for an aggregate turnover of more than $1tn, with
over a billion people being members of a cooperative around
the world. Owned by stakeholders from within the business
– whether that is the staff, customers, the local community
or a mixture of these – it is this element that allows these
businesses to challenge the stereotype and redistribute power
and dividend in ways difficult for a more conventional business
model. Mutuals are clearly on the rise in the UK, partly
thanks to the efforts of a decade of Labour in government to
support the sector and the determination of organisations like
the Co-operative Group of stores, which has been able to buy
itself into the ‘Big Five’ supermarkets in the UK.
But we should seek to understand how other countries,
like Spain where the large and multifarious Mondragon
Cooperative Corporation is based, have for so many decades
been more successful in fostering mutual ownership than the
country whose Rochdale Pioneers produced the first modern
consumer co-op.
We should be prepared to place greater faith in the ‘enterprise’
element of cooperatives, questioning whether mutuals
are held back in the UK by the fact that our law on cooperative
societies only covers organisational governance and not
employment issues. In Spain, members of cooperatives are
treated solely as co-owners and therefore self-employed in
law. In the UK, overlapping legal structures that can treat
workers in co-ops as both co-owners and employees often
risk confusion that may impede the dynamism that co-ops
need to compete.
So Labour in opposition should work with its sister
organisation the Co-operative Party to re-examine comprehensively
whether further legal or cultural steps are needed
87 the purple book
genuinely to level the playing field and produce a significant
change in their viability and existence. At their best,
progressives can work within the framework of dynamic,
enterprising markets to pioneer models that spread power
and wealth widely across communities.
We should also engage seriously with the emerging
concept of shared value capitalism, the idea of business moving
beyond the basic concepts of social responsibility into a world
view where operating in socially and economically beneficial
ways is economically advantageous; that business should not
simply do good, but do well by doing good. This is an idea
gaining favour with some of the world’s leading companies,
including Google, General Electric and Johnson & Johnson,
and represents a rebuff to the conservative orthodoxy that the
best thing government can do for business is simply to get
out of the way.
But most importantly, rather than either railing against
their inherent inequities or using acceptance of them as a tool
to show that we can be trusted with economic orthodoxy, we
should embrace and shape for ourselves what we mean by a
genuinely free market – empowering workers and challenging
the long-held orthodoxy that says a market can only be
free when the state withdraws fully from it.
Regulation and fairness
Those on the left should never fall into the trap of assuming
regulation comes at no cost. There should clearly be limits to
intervention: challenging the notion that the optimal level of
intervention in any market is zero does not mean that it can
be perpetually increased without impact.
How to do that is a difficult question for any government. In
its final term the previous Labour administration examined, but
ultimately rejected, the idea of regulatory budgets that would
have imposed strict limits on the level of increased cost that
departments could place on businesses through new regulations.
john woodcock 88
Regulatory budgets could have provided a check on those
regulations whose utility was outweighed by the cost of implementing
them. Yet they were perhaps too crude a mechanism
and could themselves have been burdensome to implement
in Whitehall. Most importantly, budgets would struggle to
adequately capture the areas where regulation improves the
economic efficiency of markets as well as providing a social good.
In opposition, Labour will need to scrutinise the application
of sunset clauses, which would time-limit certain new
regulations. While we should have confidence that we can
continue to win our case on particular issues and take opportunities
to improve legislation to make markets work better,
Labour is right to be wary that sunset clauses could increase
uncertainty for businesses who complain that unexpected
changes greatly increase the expense of complying with
regulation. Above all, any Labour government worth its salt
should guard against attempts to use parliamentary chicanery
to sweep away important protections that are currently
embedded in the statute book.
But we do need a new approach which recognises that
Whitehall, local government and agencies have often seen
increased regulation as a first rather than last resort; that
governments of all stripes have at times allowed stated ambitions
on controlling the growth of regulation to be trumped by
competing priorities. The last Labour government’s groundbreaking
work measuring, and seeking to minimise, the
unnecessary cost to businesses from new regulations should
not be forgotten in this new era. Instead, the new programme
for government that Labour presents will be founded on a
radical overhaul of our approach to regulation. We will seek
to end the culture that too often places unnecessary burdens
on well-run businesses but is ineffective in changing the
behaviour of their badly-run competitors.
That approach should be ingrained in the thinking of
western progressives seeking to ensure their economies
89 the purple book
remain competitive against emerging countries who are often
prepared to accept far lower standards of environmental,
safety and social security protection.
Yet whatever mechanisms we agree on to control the
unnecessary growth of regulation, we must keep in mind that
in an overwhelming number of cases, total withdrawal of
government action restricts opportunities rather than expands
them, and so perverts a genuinely free and open market.
Of course, even traditional free marketeers did not advocate
the law of the jungle. They stipulated that a basic level of
regulation was necessary to enforce two conditions that they
deemed essential to the functioning of a free market: property
rights and no barriers to entry. But we have never properly
challenged the minimalist interpretation that defined absence
of barriers to entry as being purely the absence of legal barriers.
To reclaim this debate and genuinely become the party
that champions and rewards individual aspiration, the question
we should ask of any market is what the appropriate
minimum level of intervention should be to make it genuinely
free: that is, free to allow all potential participants – producers
and consumers – to have a fair chance of participating
successfully within it.
Fairness and intervention
Besides constantly keeping under review how free a market
is against the social impact it has, we must consider how we
decide to define fairness. In areas like health and schools we
decide that fairness means that access to services should never
be impeded by personal income or location. So in health, the
rules for access to the NHS have been drawn very tightly and
specifically since its creation.
Compare that to the market for broadband, where, rather
than stipulating everyone must have free access at the point
of use, we implicitly define fairness as consumers having the
opportunity to enter the market by purchasing a service at
john woodcock 90
a reasonable price. Therefore, government intervention in
the market has taken the form of investment to eradicate
the minority of ‘not spots’ in pockets of the country where
no service was available to customers, coupled with a strong
regulator designed to ensure lower prices for consumers
through competition between providers.
Such targeted intervention can be the means to injecting
fairness into a market that otherwise does not meet social
need. How do we make this a reality while continuing to
champion the liberal private sector or cooperative enterprise
as ways that ensure Britain remains competitive in an everadvancing
global economy? And how does our ethos differ
from that of the Conservative right in these areas?
It differs because right across the economy, and at every
level, we are seeing the damage perpetrated by a government
that has regressed to the traditional view that government is
the principle barrier to strong individuals enjoying economic
success, rather than a potential facilitator of that success and
disperser of power across the market economy.
Nowhere is this more apparent than in the role the new
administration is prepared to countenance for government in
driving growth in sectors of the economy.
In the last years of the Labour government, Lord
Mandelson, then business secretary, gave increased energy
and focus to a policy he described as ‘industrial activism’:
identifying where greater government intervention in sectoral
markets could help build the capacity of businesses and
their employees. This was more than a short-term response
to the global economic crisis, though of course job creation
and economy diversification were vitally important at such
a time. The strategy also sought to equip British industry
for the challenges of the coming decades, but this has been
systematically scaled back in scope and ambition by the new
government.
Thanks to the short-sighted withdrawal of a government
91 the purple book
loan, the support given to Sheffield Forgemasters has become
the best-known example of this. Forgemasters was chosen
for a loan, not to prop up a struggling firm, but because it
demonstrated that it had the skills base and the ability to
break into an emerging marketplace – pressure valves for a
new generation of nuclear power stations.
By carefully targeting support within certain sectors,
government sought to intervene to open up and increase
freedom for British firms to reach their true potential in
emerging markets, creating jobs and raising skills. There were
examples where we missed a trick during our last period in
office. Renewable energy technology is an area where Labour
began the work to facilitate market entry by UK firms, but
should have acted faster in a global market that is predicted
to grow in value from £33bn in 2006 to £139bn in 2016. In
future, targeted loans or other forms of support from government
could help British industry break into markets of this
size – and in doing so can help to redistribute power in the
economy, supporting small businesses, cooperatives and firms
in economically deprived areas.
Far from calling a halt to this approach as ministers
have now done, government should be learning from what
was most effective through the global recession to develop a
targeted activism for the leaner decade ahead. We need to get
better at pre-empting global trends in industry, considering
the demographic, environmental and sociological changes
that will shape future markets.
How do we avoid simply replicating the shortcoming of the
‘picking winners’ policy of past decades – only this time with
sectors rather than individual companies? We should recognise
that there should always be a role for political leadership in
crucial decisions on our future – ministers need to make decisions
and be held accountable for them by the electorate. But
we should not entrust the future competitiveness of the UK
economy, even to ministers as good as Mandelson, without
john woodcock 92
being prepared to consider re-engineering the way government
itself promotes entrepreneurial risk-taking in its public servants.
The banking system boiled over partly because a system
developed that gave huge financial rewards to short-term fluctuations
in value at the expense of longer-term stable returns.
But Whitehall, which can make decisions every bit as critical
as an investment bank, still represents the other extreme. The
government’s shareholder executive is full of bright people
with private sector experience. But it still lacks the prospect
of basic risk and reward that – for all the faults that were laid
bare in the financial crash and must now be corrected – has
driven growth and innovation in the private sector for many
decades. So we should consider a bold recasting of incentives
in the public sector which more effectively rewards genuine
sustained success that facilitates economic growth in emerging
sectors, seeking to attract the very best talent that currently
is captured by high salaries in the private sector.
There has been a similar retrenchment in the government’s
will to help drive regional and local economic success
under the Conservatives. Businesses and working people
seeking to succeed across the country are being held back by
shrinking support to help every region of the country reach
its full potential.
With total central government funding of around £2.26bn,
the regional development agencies sought to promote
economic development, business efficiency, employment,
skills and sustainable development. The new local enterprise
partnerships are being asked to do more (including local business
regulation and national infrastructure implementation)
and better with no guaranteed central government funding,
just ad hoc awards from a £1.4bn regional growth fund and a
£400m LEP capacity fund, both spread over four years.
The regional development agencies were not perfect. There
were variations in how effective they were at targeting investment
where there was a genuine need for it to drive private
93 the purple book
sector growth. And Labour never cracked the accountability
question once its early big idea of regional assemblies had
been resoundingly rejected. But on the whole they worked.
Now there are concerns about a new system which has
centralised investment decisions over a much smaller pot in
Whitehall. The reduction in support for local economies is
so great that it calls into question the government’s role in
stimulating economic success in areas cut off from the established
engines of growth in the UK.
A party that believes in positive action to make markets
free in a way that empowers individuals should make the case
for regional and local intervention in the economy where
playing fields are not level. If there are barriers to firms
growing and creating jobs in parts of the country, like my
constituency of Barrow and Furness, we should redouble our
efforts to remove those barriers, rather than accepting the
idea floated by the current government that people should
just move to where the jobs are.
It is not simply social justice and a desire to sustain communities
that insists we should act in this way. We should also
be prepared to act on the grounds of economic efficiency: as
the previous administration’s industrial strategy explicitly
recognised in its final years in office, participants in a labour
market and industrial capital are ‘sticky’ – they cannot just
uproot at the drop of a hat. Taking a minimalist view of what
makes markets free rejects government intervention to boost
regional economies. But this will not drive greater efficiency:
it will actually necessitate diverting more money to the cost of
economic failure in higher benefit bills and lower tax receipts.
Seeking greater accountability for interventions to boost
regional and local economies is difficult. Previous attempts
to give greater decision-making capacity to regions or
sub-regional areas have had mixed success in capturing the
public’s imagination. On the other hand, centralised decision-
making in Whitehall is too remote. Many infrastructure
john woodcock 94
improvements, such as significant transport schemes, require
a coordinated action on a scale greater than the boundaries
on which local government currently operates. We should do
what we can to make the new local enterprise partnerships
a success but consider how the successful model of directly
elected mayors could operate more widely and with greater
economic powers without leaving at a disadvantage areas that
do not fall within a definable city-region.
Most radically, a commitment to new forms of intervention
in markets should lead us to consider whether we can
empower business to have a more effective say over what
happens to the wealth they create. One issue we could explore
is whether there is a way to give enterprise partnerships a
greater say over the distribution of revenue from business
rate taxation without recreating the inequity and inefficiency
of the government’s current reform of the rates. As shadow
communities secretary Caroline Flint has rightly pointed out,
the Tories’ plans for localisation of business rates risk severely
impoverishing areas with low business density at which
increased business support could most effectively be targeted.
That problem would need to be addressed and the
accountability of enterprise partnerships would need to be
strengthened beyond the current loose groupings. But if a
workable proposition could be found, it could inject genuine
vitality into local investment and decision-making that has
too often been absent in recent decades. That would address
a basic gap in political systems around the world, where the
principle of no taxation without representation does not
directly apply to businesses, who pay their taxes yet have no
formal say in how it is spent.
Consumers must be strong in any market economy that
genuinely empowers individuals and enables them to prosper.
Yet the coalition government is determined to dismantle
the framework Labour created to empower consumers and
uphold fair competition and fair treatment in domestic
95 the purple book
markets. Consumer Focus is being scrapped, and the Office
of Fair Trading and the Competition Commission are being
merged.
We should pledge now that Labour will restore government’s
role as champion of the consumer in the UK economy
through creating effective levers of redress for individual
consumers without recreating the downsides of the United
States’ class action culture. And we must explore new ways to
champion diversity in markets against the concentration of
power in any one body, be it the state or an overly dominant
market leader.
For individuals seeking to succeed at work, the new
administration has retreated from the last Labour government’s
commitment to offer continued support to enable
people to better their chances of getting back into the labour
market or progressing within it. Far from accepting a more
limited role for intervention to empower people to succeed
in the labour market, it is time to examine what role a lean
but active state could play in facilitating access to support for
job seekers, which goes beyond the minimum level currently
available to all who have met basic contributory requirements
or whose family income is below a certain level.
Guaranteeing genuine freedom
These ideas are among many that we should consider as
the progressive left seeks to shape a world that will remain
dominated by markets at all levels. The new programme for
government that we construct must be tested by a Labour
Party that has the courage to take on the right and redefine
what makes a market genuinely free.
New Labour’s success in the 1990s came in convincing
people we were serious about ending the false choice between
economic efficiency and social justice.
But that must not be a once-in-a-generation repositioning
of policies to capture the centre-ground. To give
john woodcock 96
progressive ideas the best chance of dominating the postcrisis
global economy, we should move on from the false
debate that sets free markets against government. Instead
we should define a new role for government as guarantor
of genuine freedom for all within markets. From national
intervention down to individual support for working people,
the test for government action should be whether it spreads
genuine power and freedom better than the status quo, which
still too often hoards power and wealth in the hands of the
already privileged.
Labour must never lose its burning passion to tackle the
injustice we see around us. But if we are to succeed, we need
to show the public that we understand the world we seek to
shape. Above all, we need to demonstrate we are prepared to
tackle the failures of both market and state that hold people
back. So let’s embrace a new radicalism that shapes the market
economy in the name of true freedom and fairness for all.
1 Ed Miliband, speech to the British Chamber of Commerce, 7 April 2011.
2 Gordon Brown, speech to the Trade Union Congress, 15 September 2009.
3 John Denham, speech to ippr North, 26 May 2011.
Empowerment and transparency:
a new settlement for public services
Patrick Diamond
The financial crisis of 2008–9 was initially understood as
a failure of liberal market capitalism, but quickly transformed
into a crisis of public debt and government deficits.
Unfortunately for the left, popular fury against the financial
system has not been accompanied by a restoration of faith in
the power of government. While the crisis was fuelled by irresponsible
banking and financial deregulation, it is the role and
size of the state which has returned to the centre of political
debate. Voters rightly fear the unrestrained power and inequality
of markets, but remain doubtful as to what government can
do. According to the latest evidence, many believe that centreleft
parties are too prone to increasing taxation while failing to
manage public expenditure wisely.1 The demise of neoliberalism
has not rejuvenated support for the interventionist state.
Indeed, the error so often made by social democrats has
been to confuse anger at the excesses of the market with public
backing for the traditional state. This does not mean that
anxieties about the ferocious squeeze on lower and middle
incomes together with soaring inequality at the top are
unfounded: they remain deeply resonant with British voters.
Nonetheless, antipathy to New Labour’s heavy-handed and
centralist approach sowed the seeds of public disillusionment
well before the financial crisis. The centre-left will not be
patrick diamond 98
trusted to govern until it recasts the state’s role as an agent of
economic and social progress.
That insight has profound implications for the future of
Britain’s public services.2 This chapter does not provide a
detailed audit of Labour’s performance in government over
the last thirteen years.3 It is clear that public services face a
series of challenges today that pose fundamental questions
about how they should be organised and run. They have to
cope with rising expectations among those who use public
services. They have to accommodate rising costs. They have to
deal with the new right critique of bureaucratic failure. And
public services have to respond to the social and economic
challenges of globalisation after the crisis.
This chapter contends that such challenges will be met
only if Labour seeks to rebuild confidence in an empowering
state. Incompetence and bureaucratic centralisation erode trust
not only in political parties, but in institutions and the role of
government as a force for good. That requires the next Labour
government to prioritise the decentralisation and redistribution
of power in the name of a fairer and more equal society. The
most fundamental assumption that should guide the party’s
programme is that power must be located at the lowest possible
level consistent with the public good. This animating vision
must drive the next phase of institutional adaptation and reform.
The chapter begins by addressing the case for empowerment
in public services, located within the communitarian and
pluralist strands of the British Labour tradition. Decentralising
power in order to emancipate citizens and local communities
has deep roots in Labour’s history, as exemplified by Thomas
Paine, Robert Owen, William Morris, R. H. Tawney, G. D.
H. Cole and latterly Paul Hirst. The participatory socialist
tradition has always valued self-government and bottom-up
action, instead of relying on monolithic national institutions
to uphold and sustain the common good. The empowering
state transcends both free markets and centralising
99 the purple book
government, ensuring a decisive shift in the balance of power
towards individual citizens and communities. Nonetheless, an
agenda of empowerment is insufficient given the range of challenges
facing public services as they seek to square the circle of
rising expectations and rising costs in conditions of austerity.
Too often the debate about public services has detached the
structure of provision from how they should be financed. This
chapter argues that Labour has to reframe the debate about
financing in the context of the fiscal squeeze and the longterm
structural challenges confronting the British state.
The centre-right has succeeded in casting the size of the
state as the central issue in British politics, but it is imperative
to redefine the terms of debate concerning the quality
of public goods and public infrastructure. The connection
between taxation, public services, and economic and social
cohesion needs to be restated as an essential component of
a dynamic and socially cohesive society. Proper debate about
the nature and scope of taxation, including how to fund public
services, will be critical to the legitimacy of British democracy
and the vitality of the public domain. Empowerment
and public investment must go hand in hand.
The tradition of self-government
Before reviewing the evidence for different models of public
services and exploring how they might respond to new
challenges, it is essential to draw out the implications of
different conceptions of markets, state and civil society. Social
democratic governments over the last century have been
characterised by a deep paradox of purpose, torn between
competing statecrafts, each of which is a legacy of the past.
On the one hand, there is the tradition of ‘mechanical
reform’, which is essentially top-down and dirigiste. It is
assumed that not only economic life, but social and personal
behaviour will be managed through regulation and intervention
by the centralising state. Labour’s approach in the NHS
patrick diamond 100
and schools has often been portrayed as ‘mechanical’, despite
the onus on devolution, liberalisation and quasi-markets.
On the other hand, there is the tradition of ‘moral reform’,
sustaining an implacable faith in the empowerment of
individuals through an enabling and ‘steering’ state.4 Earlier
conceptions of the Third Way emphasised partnership,
democratic renewal and citizen participation, though these
were rarely translated into new models of provision.
The tensions and contradictions between such approaches
are self-evident. Over the last decade, the traditional model
of the top-down, centralising state has been broken as the
result of constitutional reform. However, a new model has
not yet emerged that genuinely empowers individual citizens
and localities. There is a marked tendency to conduct debate
in terms of simplistic caricatures such as centralism versus
localism, big state versus small state, and ‘public good’ versus
‘private bad’. The centre-left should have the confidence to
cultivate a more sophisticated and nuanced approach. At
the same time, progressives need to determine how they can
guarantee a fairer distribution of power.
Labour should opt emphatically for a conception of
moral reform, embracing the tradition of ‘self-government’
elaborated by Harold Laski, Richard Crossman and J. P.
Mackintosh. This demands active engagement in the public
sphere in return for the devolution of power and control.
Moral reform is preferable because if communities feel a
stronger sense of ownership, new coalitions of support will
be forged that help to sustain public investment. The pace
of improvement might be slower, but change is more likely
to embed and endure. In any case, mechanical reform erodes
public and professional confidence in the efficacy of the state.
The tradition of self-government is not about rolling back
the state, nor asserting that greater localism is a panacea.
Trusting people is risky because people can be wrong: localities
may be small-minded, insular, even corrupt. They may
101 the purple book
lack the capacity to exercise control, and it becomes harder
to safeguard access and equity. Indeed, any attempt to shift
power and control from the centre leads to dilemmas. To
ensure accountability, for example, governments have imposed
centralised targets in return for investment. Incentives might
conflict with bottom-up, peer-driven pressures to improve,
however, and national targets and regulatory oversight can
reduce the scope for local experiment and innovation.
Any credible programme for devolving power has to
explicitly acknowledge such trade-offs. Nonetheless, the relationship
between the state, public institutions, communities
and citizens will continue to change regardless of whether
‘empowerment’ is an explicit objective of government policy.
The great failing of past social democratic governments
has been the misguided belief that they will achieve radical
domestic reforms through the existing machinery of the
state. The aspiration of forging an active industrial strategy,
for example, has been constantly derailed by the dominance
of the Treasury in economic policy-making. The Treasury’s
essentially liberal, free market instincts have sought to
prevent the emergence of an active and developmental state.
It is precisely the top-down and elitist nature of the British
state that has most frustrated progressive ambitions.
The case for empowerment
There has long been a fundamental divide between the neoclassical
right and the social democratic left on the role of the state
and public services in British society, reflecting contested conceptions
of personal liberty and social justice. The right continues to
believe that ‘empowerment’ is about freedom from restraint, a
conception of negative freedom. Its claim is that people attain
control over their lives only when the state gets out of the way,
leaving the ethic of ‘social responsibility’ to fill the void.
In contrast, progressives elaborate a conception of empowerment
as the expression of positive liberty: not merely freedom
patrick diamond 102
from interference, but the capacity to do and to be, which is
enabled by public goods and public services. This is what the
Nobel Prize-winning economist Amartya Sen envisages in the
concept of ‘capabilities’.5 Capabilities are a variety of freedom:
the substantive freedom to achieve ‘functioning combinations’.
Less formally put, this is the freedom to develop and sustain
various conceptions of the good life and the common good.
There is an affinity between the capabilities approach and
Tawney and Tony Crosland’s conception of democratic equality.
6 The implications for public services are quite profound:
• The capabilities model does not mean treating individuals
as if they are the same, but treating people
according to their circumstances;
• Those circumstances are defined by the individual
receiving support, hence the importance of personalised
provision and an awareness of the barriers that
prevent choice;
• This approach emphasises the importance of local and
tacit knowledge, hence the value of devolution and the
decentralisation of power;
• The notion of capabilities does not demand equality of
outcome, but rather that people should be enabled to
make choices concerning the outcomes of their own
lives: it is not authoritarian, but enabling.
In essence, this amounts to a strategy of equalisation through
empowerment: enabling individuals and communities to
take greater responsibility for their own lives. The claim that
uniformity of provision ensures equality of outcome ought
to be contested. Social democrats need to acknowledge that
state intervention has left a multitude of social and economic
ills untouched. Class divisions have been entrenched while
social mobility appears to have slowed down dramatically
since the 1950s.
103 the purple book
The claim of this chapter is that decentralisation and devolution
are critical agents of change in public services, but there are
other reasons why devolving and decentralising power remain
critical to the progressive cause. First, a top-down, centralising
state is wholly inconsistent with the forces that are reshaping
politics and today’s economy. The future challenge of global
economic competition requires a state that is agile and responsive
with the strategic capacity to regulate and shape markets.
Britain is an increasingly diverse society where needs
and aspirations differ greatly between localities. Social and
economic change has fragmented identities, breaking down
traditional occupational and geographical hierarchies, and
creating a more complex distribution of spatial disadvantage.
The most salient fact is ‘hyper-diversity’: many neighbourhoods
that were relatively homogenous in terms of ethnicity
and social class are now more mixed.7
The rapidly changing make-up of communities underlines
the case for localised strategies that promote equity and wellbeing
in accordance with Sen’s vision of enriching capabilities.8
The cultivation of the civic is inescapably concerned with the
politics of place in contemporary Britain. The hollowing-out
of civic life is felt in the erosion of local democracy and local
public institutions, but there is also incredible civic energy
that can be released by a subtle combination of community
leadership and bottom-up reform.
The empowering state should also be based on a balance of
rights and duties for the individual as well as the state. Much
of what governments have sought to achieve requires the active
engagement of citizens. Public health, safer neighbourhoods,
a better start for disadvantaged families depend not only on
the delivery of services, but how citizens choose to help themselves.
This is best achieved where services are located closer
to people with discretion to vary provision according to local
circumstances and needs. Finally, individuals lead complex
lives where they may be materially richer, even with the
patrick diamond 104
downturn and squeeze on median incomes, but are also increasingly
anxious and insecure. They need personally tailored services
that give confidence as well as care, empowerment as well
as higher standards. These are more likely to be delivered where
power and control are properly devolved from the centre.
The public services Britain needs
Britain has entered a period of radical change: indeed, the
structural environment for public services will be markedly
different by 2015. The government is applying the tightest
squeeze on public spending since the Second World War,
while demand is rising sharply in health and social care: cuts
and reprioritisation are the key drivers of change. Structural
reform is overturning existing arrangements. Whether the
purpose is greater localism or enhanced competition, a phase
of major change is underway. One of the key challenges
for any opposition party is to determine which reforms to
consolidate and which to reverse. At the same time, Labour
should have the confidence to elaborate its own model of
active and participative provision which takes account of the
varying nature of public services:
Type of service Examples
Some public services are universal
and are ‘purchased’ and organised
on our behalf: we use them as
citizens. This applies particularly
to regulatory services and public
infrastructure.
Street cleaning, refuse collection,
emergency healthcare, road
maintenance, policing and environmental
protection.
Some public services are organised
universally but structured to
provide a degree of choice. The
state cannot afford unlimited
supply, but theoretically organises
sufficient or surplus capacity to
provide for consumer preferences.
Schools and GP registration are
the most familiar examples.
105 the purple book
Some public services enable
citizens to choose from a wide
but approved list of state-funded
providers.
Free nursery entitlements, direct
payments for the recipients of
social care, university places and,
increasingly, hospital elective care.
Some services combine all or most
of the features outlined above.
Hospital care is the best example
since choice can be applied to
elective care, but is less applicable
in emergency cases requiring a
more universalist approach.
Any initiative that seeks to devolve power and diversify provision
has to acknowledge that no model will be suitable across all
contexts: it is necessary to maintain a range of levers and drivers
of change. Six principal approaches can thus be identified.
First, the empowerment of local government. There must
be a new settlement for local government giving real control
over policy and performance rather than just the limited
conception of ‘earned autonomy’. This has to include greater
fiscal freedoms and a reining in of the target culture.
Second, the use of both ‘voice’ and ‘choice’. Placing power
and control in the hands of citizens requires a variety of governance
strategies: individual and collective choice should be
extended through greater use of ‘purchaser-provider’ models.
The separation of purchaser and provider enables public
bodies to purchase services on behalf of citizens, allowing for
the removal of failing providers, improving responsiveness
and incentivising innovation. This model is not a panacea and
may be inappropriate, for example, in relation to primary care
in the NHS. But it has been the direction of travel in key
public services, notably state education, since the early 1990s.
A future Labour government ought to give local education
authorities explicit regulatory powers to oversee the development
of education services in each local community, monitoring
access and equity while ensuring a flourishing local
ecology of schools. Another aspect is widening personalised
budgets, crucial to any strategy of empowerment, including
patrick diamond 106
for adult skills and helping long-term unemployed people
back into the labour market.
Third, the creation of more self-governing institutions. The
progressive agenda means nurturing genuinely self-governing
institutions built on the model of foundation hospitals in
the NHS. In his seminal essay The End of Laissez-Faire,
John Maynard Keynes referred to the importance of semiautonomous
public bodies that lie between the individual and
the state, whose criterion for action is the public interest. This,
he argued, helped to sustain an appropriate ‘balance of powers’
between market, government and civil society.9 Academy
schools, for example, ought to be reconstituted as public
interest bodies incorporating a wide array of community and
stakeholder interests. Similarly, early years and Sure Start
centres should be granted much greater self-autonomy.
Fourth, the acceleration of the notion of citizen redress.
Devolving power to the citizen means recognising the importance
of ‘coproduction’, as well as a clearly defined contract
between users and providers focused on mutual rights and
duties, including proper rights of redress where services fail
to deliver basic standards. For example, if schools fail to
meet minimum attainment standards for more than three
successive years, a competition should be triggered to bring
in alternative providers. Parents should also have the right to
trigger competitions for new schools where standards fail to
improve. Separately, the onus on coproduction in public services
includes developing mechanisms of ‘affiliative welfare’,
such as timebanks that encourage reciprocity and mutuality
between citizens.
Fifth, the granting of more rights to community ownership.
Citizens should have additional freedom to own and manage
public assets including equity stakes in social housing, as well
as leisure facilities and public amenities owned by the community,
capturing the spirit of the early cooperative movement.
One important example is Community Land Trusts (CLTs),
107 the purple book
which develop housing and other assets at affordable levels for
long-term community benefit. The value of land and equity is
permanently ‘locked in’ by separating the value of the building
from the land it stands on, while CLTs are often run according
to cooperative and mutual principles. There are currently
around eighty CLTs across the UK, but Labour should stimulate
their expansion by widening access to capital financing.
This drive for community ownership is not inconsistent with a
greater role for democratically elected local government.
Finally, the building of a decentralised ‘steering’ state. This
echoes the principles of ‘reinventing government’ pioneered by
Bill Clinton and Al Gore to reform the US federal government
in the 1990s. The danger is that localities will be compromised
by the constant flow of centralised edicts going against the tide
of bottom-up reform. Therefore, the structure of government
departments needs to be reviewed, accompanied by radical
reform of the civil service. As a first step, the Department for
Communities and Local Government ought to be abolished
altogether, while the Wales Office, the Scotland Office and
the Northern Ireland Office could be merged into a single
Department of the Nations. This is not about arbitrary cuts
in central capacity, which governments so often fail to deliver.
Instead, all programmes and agencies at the centre should be
subject to a public value test: decentralising and removing functions
altogether, focusing resources on the frontline, and enabling
neighbourhoods and communities to devise their own solutions.
Labour has to show that it is willing to apply high-octane
reforms to an excessively centralised and bureaucratic state.
Future funding pressures
It would be quite wrong, however, to detach the debate about
the structure of public services from the future financing of the
public realm. The coalition is determined to reduce the size
of the state, having announced cuts of at least 25 per cent in
departmental budgets, and a planned reduction of the public
patrick diamond 108
sector deficit through a combination of 73 per cent spending
cuts (£74bn) and 27 per cent tax rises (£24bn) over the next
four years.10 The financial crisis is estimated to have permanently
weakened the UK public finances by about 6.5 per cent
of national income, or £90bn a year. Fiscal retrenchment to
shrink the UK budget deficit is accepted across the ideological
divide, but the centre-left needs to recast the terms of debate.
The Conservatives have sought to reduce the deficit
without considering what future level and quality of public
services Britain will need. They have not faced up to any of
the fundamental challenges, from changing demography to
new technology. Ministers insist that improved services will
simply be delivered through efficiency savings, but this is illusory.
The table below illustrates that spending is likely to keep
rising as the result of long-term fiscal pressures:
2008 2018 2028 2038 2048 2058
Education 5 5.6 5.8 5.6 5.5 5.6
Pensions 7.6 8.1 9 9.9 9.9 11
Health 7.4 7.9 8.6 9.2 9.6 9.9
Total (age-related)
spending
20 21.7 23.4 24.7 25 26.6
Other spending 20.4 19.1 18.9 18.6 18.1 18
Total spending 40.5 40.8 42.3 43.3 43.1 44.5
Source: HM Treasury (2008) Long-Term Public Finance Report: an analysis
of fiscal sustainability
Nonetheless, these estimates may still be relatively conservative:
recent research has shown that an additional 6 per cent
of GDP will be needed to meet the social costs of ageing by
2030 alone.11 In the coming decades, the proportion of elderly
people is likely to increase substantially.
This trend results from a combination of factors, including
increasing life expectancy, and the ageing of two large cohorts
109 the purple book
born in the 1940s and 1960s. They have a direct impact on
age-related expenditure such as state pensions and healthcare.
Alongside HM Treasury forecasts, this will increase to 47 or
48 per cent of GDP the share of national income allocated by
governments within the next twenty years. The challenge will
only be met by refocusing and restructuring public services,
while facing up to hard choices about the composition of the
UK tax base.
The centre-left has to cultivate a more open and honest
debate about the future of public services, returning to the
relationship between tax, public spending and societal wellbeing.
Social democrats fundamentally believe that individuals
are part of a strong civic community where public
goods contribute significantly to quality of life. There is a
legitimate debate about the size of the state in any democratic
society, but proposing that civic ‘platoons’ fill the
void vacated by public sector retrenchment is misguided.
Economies with high levels of self-sustaining community
provision, such as the US and the Nordic countries, draw
on deeply rooted values and norms that have endured for
centuries. It is hard to envisage how this might be replicated
during a single parliament, particularly in the absence of
capacity-building by state institutions, which the ‘big society’
seeks to replace.
Nonetheless, the strategic backdrop to the next election
will be one where there is little appetite among the public
for traditional ‘tax-and-spend’ remedies given the squeeze
on living standards, downward pressure on real wages and
increased burdens among families, including university
tuition fees and the cost of social care in older age.12 The
opposition will seek to portray Labour as the party of high
taxes and incontinent spending that cannot be trusted to
manage the state prudently and efficiently. More government
cannot be the answer to every problem. Labour needs a new
strategy which re-casts the terms of public debate.
patrick diamond 110
Towards transparency
The debate about public services too often separates funding
and provision, as the Plant Commission’s Paying for Progress: A
New Tax for Public Spending acknowledged over a decade ago.13
Research on the tax system and public provision exposes a deep,
underlying psychological ‘disconnection’ between the taxes citizens
pay and the services they receive. This reflects not only the
incomprehensibility of the UK tax system, but uncertainty as to
where taxes are going and whether government uses the money
well. The paradox is that the public does not perceive that services
have improved, even where its own experience was far better than
anticipated. Not only does the state have to deliver improved
services, it must also convince the public this is the case.14
The most intriguing finding is that if citizens are relatively
certain that additional money will improve services then they
are prepared to countenance additional taxes. The priority for
the centre-left is to ensure people feel better ‘connected’ to
the taxes they pay. The legitimacy of taxation and sustained
support for additional spending will only be achieved when
the public better understand how their taxes are spent and feel
confident they are being used well. This should be achieved by
‘earmarking’ taxes more directly for specific purposes, despite
concerns that ‘hypothecation’ reduces the flexibility with
which governments can use revenues:15
• A hypothecated NHS and social care insurance fund
would merge income tax with National Insurance,
renewing the contributory principle. Transparency
may help to loosen ‘tax resistance’, guaranteeing that
higher sums are focused on citizens’ priorities. Both
health and social care are universal needs which are
inefficiently allocated by markets, as well as ‘superior
goods’ for which demand rises as incomes increase;
• The use of time-limited levies for special capital expenditures
such as investment in transport infrastructure,
111 the purple book
especially at the local level, where local referenda might
be held to agree the specific proposal. These levies are
removed when sufficient funds have been raised;
• The use of tax and public service pledges where governments
set principal rates of tax such as income tax.
Ministers must set out what additional revenues are
designed to achieve and, where possible, the auditable
improvements that will be delivered;
• The earmarking of environmental taxes for designated
tasks such as improvements to public transport infrastructure,
alongside incentive-based taxation that seeks
to reduce adverse social and environmental impacts;
• Grant the power to vary basic and higher rates of
income tax by a maximum of 3p in the pound to local
authorities in England, subject to a popular mandate
through a local referendum; and enable local councils
to levy a supplementary business rate to fund specific
improvements in consultation with local businesses;
• Reform council tax, which remains highly regressive
and penalises the poorest households hardest. There
is a case for introducing a new set of property value
bands in order to achieve a fairer, more progressive
local taxation structure.
This is not to imply that the burden of taxation in the UK
ought to rise. Given the squeeze on real incomes, a future
Labour government should seek to take more citizens out of
the tax system, progressively reducing the tax burden through
fundamental reform of the tax system as outlined in the
Mirrlees Review.16 This called for widespread changes, allowing
the tax system to ‘go progressive and go green’, to direct
and indirect taxation, environmental taxes, business taxes and
taxes on savings.
The measures proposed in this chapter are intended to
make the tax system more transparent, irrespective of overall
patrick diamond 112
levels of taxation. The purpose is to make public investment
more sustainable for the long-term. Another example of
transparency is the use of co-payments in public services.
The co-payment approach in higher education will no doubt
continue, though the government’s reforms pay insufficient
attention to the contribution of stakeholders, imposing a
larger burden on the individual recipient without properly
considering the obligations of employers and society at large.
Central to the notion of redistributing power should be
the principle that citizens should not only have a greater say
over how public services are funded, but that, via enhanced
transparency, they should also be able to make informed decisions
about how their taxes are spent, and to what effect. Thus
while public services must be effective and efficient, they
must also be seen as such, enabling citizens to better understand
what is being done with the taxes they pay. This should
include giving every household an annual citizen’s statement,
which sets out clearly how the tax system works and
how public spending is allocated, as the Plant Commission
initially proposed. It should also include an expert audit of
government performance, undertaken by an independent
fiscal authority accountable to Parliament, which advises
government on tax and spending decisions, and provides
transparent information to citizens.
Under Labour, the notion of public investment underwent a
modest rehabilitation, but the public’s confidence and willingness
to pay taxes must never be taken for granted. The priority
should be to improve the quality of services and ‘connect’ the
public better to taxes and government spending. This reflects
a wider debate about how the civic contract between citizens
and government ought to be renewed in contemporary society.
The Conservatives have a political strategy as well as an
economic one: to secure a landslide victory at the next election
with a little over 40 per cent of the vote by adopting a
tax-cutting agenda. Labour must confront this, not least by
113 the purple book
reminding voters that it will merely recreate the decrepit and
underfunded public services that so troubled them in the early
1990s. More intellectual and political self-confidence will have
to be displayed than in the New Labour years.
Nonetheless, the short-term and long-term pressures on
public spending are significant and Britain has a large structural
deficit; it also needs a strategy to make the state more
efficient. This can be achieved partly through making tough
choices in policy terms: for example, developing a defence
procurement strategy in conjunction with Britain’s European
allies, and reconsidering the efficiency of spending in the
criminal justice system where there is little evidence that
custodial sentences for less serious offences reduce long-term
offending.17 It is also necessary to contain increases in public
sector salaries, especially ‘top pay’, while ruthlessly auditing
annual baseline departmental expenditure. Labour must
never again concede the mantle of public sector efficiency
to the centre-right. The challenge is to make the state more
accountable and responsive rather than removing it altogether,
reforming centre-left statecraft rather than abandoning
the terrain of government working in the public interest.
A new settlement for public services
The argument of this chapter is that the financial crisis and the
counter-reaction to New Labour’s agenda of mechanical reform
have heightened the importance of decentralisation and the
redistribution of power through public services. To square the
circle, the tax base which sustains high-quality services needs
to be reconnected with the public. The next progressive agenda
must think afresh about the role of markets and the public
interest, including the future of the New Public Management
paradigm, which sought to make the public sector operate
more like the private sector via the embrace of market-oriented
reform and privatisation that evolved in the 1980s.
In recent years, the case for insulating service delivery
patrick diamond 114
from political interference has also grown in salience.
‘Depoliticising’ the entire NHS is hardly sustainable, given
that the NHS constitutes almost 10 per cent of the British
economy. But public bodies such as the National Institute for
Clinical Excellence demonstrate the advantage of allowing
experts to take decisions about the availability of drugs and
medical treatment.
The devolution of power in Britain is an important prerequisite
towards building a fairer, more equal society. Giving
individuals and communities control remains empirically
important in increasing subjective wellbeing, constructing a
deeper bond of allegiance between citizens and public services.
In the past, centre-left governments failed to entrench enduring
support for the public domain. Labour became increasingly
associated with the unresponsive and incompetent state. Public
services were apparently insensitive to the needs of individuals
and the wider community, making it harder to generate intrinsic
support, paving the way for the firestorm of Thatcherism.
At the heart of today’s debate is the appropriate balance of
responsibility between individuals, the community and the
state. Citizens who contribute to public provision should have
the ability to influence and shape institutions, instead of being
merely passive recipients of what the state provides.
This reflects two fundamental principles of democratic
empowerment that should inform the future social democratic
agenda. The first is that power should be spread widely:
self-government means diffusing power as widely as possible.
The second principle is that the ideal of self-government
entails a politics of pluralism, power-sharing and negotiation.
From the constitution to public services, power cannot
be concentrated within an over-mighty central state. For, as
Tawney said, ‘A society is free in so far as, within the limits
set by nature, knowledge, and resources, its institutions and
policies are such as to enable all members to grow to their
full stature.’18
115 the purple book
1. See YouGov polling on Trust in Centre-Left Parties and Politics undertaken
between 18 and 22 March 2011: www.policy-network.net.
2. It is important to acknowledge that in the context of devolution, national
governments define divergent reform pathways. Nonetheless, the insights
contained in this chapter can be applied to public services in England, Wales,
Scotland, and Northern Ireland.
3. For a measured assessment of Labour’s achievements, see Polly Toynbee
and David Walker, The Verdict: Did New Labour Change Britain? (London:
Granta Books, 2010).
4. The concept of moral and mechanical reform is elaborated by Peter Clarke in
Liberals and Social Democrats (Cambridge: Cambridge University Press, 1978).
5. Amartya Sen, The Idea of Justice (London: Allen Lane, 2009).
6. David Riesman, Crosland’s Future (Basingstoke: Palgrave Macmillan, 1997).
7. Geoff Mulgan and Nicola Bacon, ‘Promoting Well-Being and
Neighbourliness’, in How Equality Shapes Place: Diversity and Localism
(London: Solace Foundation, 2008).
8. The UK’s ethnic minority population is no longer characterised by homogenous
‘black’ communities, and there is no longer a simple division between ‘minorities’
and ‘the majority’. According to the Office for National Statistics (ONS), 42 per
cent of London’s workforce is foreign-born. Changes are marked in the younger
population. In England, 19 per cent of schoolchildren in maintained schools are
from ‘non-white’ ethnic groups while in London the figure is 53 per cent.
9. John M. Keynes, The End of Laissez-Faire: The Economic Consequences of the
Peace (London: Prometheus, 2004).
10. See HM Treasury, Budget 2011.
11. Howard Glennerster, Financing the United Kingdom’s Welfare States
(London: 2020 Public Services Trust, 2010).
12. The Centre for Economics and Business Research recently estimated that
UK household disposable income will fall by two per cent this year, the largest
decline since 1921.
13. Raymond Plant, Paying for Progress: A New Politics of Tax for Public Spending
(London: Fabian Society, 1999).
14. Matthew Flinders, ‘The Future of the State’, in Varen Uberoi et al., Options
for Britain II: Cross-Cutting Policy Issues – Changes and Challenges (Oxford:
Wiley-Blackwell, 2010).
15. These proposals draw on recommendations made by the Plant Commission.
See Raymond Plant, op. cit.
16. See the Mirrlees Review: Reforming the Tax System for the 21st Century
(London: Institute for Fiscal Studies, 2010).
17. Ministry of Justice, Compendium of Reoffending Statistics and Analysis,
October 2010.
18. Richard H. Tawney, Equality (London: George Allen & Unwin, 1931).
Breaking the link between demography
and destiny: how to restart the
engine of social mobility
Alan Milburn
The pursuit of social mobility has become the new
holy grail of public policy. Intractable levels of social
inequality and, until recently at least, flatlining social mobility
have seen parties from across the political spectrum pin
their colours to the meritocratic mast. The Conservatives
and Liberal Democrats in government have followed New
Labour’s lead in making one of their key tests of success the
creation of a fairer, more fluid society. That is a development
progressives should welcome.
The proof of the pudding is, of course, in the eating. It is
not intentions that count in politics. It is actions and, above
all, outcomes. I believe that making social mobility happen
requires a new New Labour approach to social change in
which the state both plays an active part and actively empowers
citizens and communities to play theirs.
Demography and destiny
Social mobility is about ensuring that each individual, regardless
of their background, has an equal chance of progressing
in terms of income or occupation. The task of breaking the
transmission of disadvantage from one generation to the next
is a long one. Britain seems to have lower levels of mobility
117 the purple book
than other comparable countries and our society has become
more ossified, not less, over time. When social mobility
stalls, social disadvantage becomes entrenched. There are
clear correlations in our country between where you start
out and where you end up. If you grow up in poverty the
chances are you will live your life in poverty. If you end up in
a low-achieving school the chances are you will end up in a
low-achieving job. If you miss out on university the chances are
you will miss out on a professional career. When people feel
the aspirations they have for their families and communities
are unfairly thwarted then social responsibility and individual
endeavour are undermined. Poverty of aspiration then kicks
in; social resentment builds up. If Britain is to avoid being a
country where birth determines fate, we have to do much more
to break the link between demography and destiny.
The last Labour government made much progress towards
that goal, through policies like the minimum wage and the
primacy accorded to education. Children who received free
school meals had faster improving GCSE results than those
who did not. Similarly, some ethnic minority groups, such as
African-Caribbean boys, began to close the attainment gap.
Primary schools in the poorest areas improved almost twice
as fast as those in the most affluent. In secondary education,
city academies improved results at four times the national rate
despite having twice the number of pupils on free school meals.
The truth, however, is that the glass ceiling was raised but
it was not broken. The education attainment gap between
rich and poor narrowed but, as Leon Feinstein’s work demonstrates
so graphically, low-ability children from wealthy families
still overtake high-ability children from poor families
during primary school. Similarly, child poverty fell but was
not eradicated. The gender pay gap narrowed but the top
jobs still go to men, not women. The long-running decline in
social mobility was halted but it has not reversed.
In good part, New Labour did not get as far as we would
alan milburn 118
have liked because unfreezing British society is a project that
will take decades to achieve. But we compromised our own
efforts by a fundamental inconsistency in approach. My experience
in government of making change is that clarity and
consistency are the foundation stones on which progress is
built. For all our good intentions – and many groundbreaking
initiatives – Labour in government did not have sufficient
of either. At some points the priority was social mobility, at
others the eradication of poverty. Tony Blair spoke to aspiration,
Gordon Brown spoke of equality. Of course, we were
always on the terrain of fairness. But we failed to accurately
define what we were trying to achieve – in part because
we seemed to be pursuing two notions simultaneously and
sometimes independently: one was equality of opportunity,
the other equality of outcome.
The problem with equality of outcome is self-evident. It
would need to be imposed by a central authority and determined
irrespective of work, effort or contribution. It would
deny humanity, not liberate it. The problem with equality
of opportunity is, in the words of R. H. Tawney, that the
invitation for all to come to dinner takes place in the sure
knowledge that circumstances would prevent most people
from attending.
Future challenges
Today’s world is a very different place from Tawney’s. A
globalised capitalist economy and welfare state social democracy
have successfully combined to eradicate many of the
social evils that gave birth to progressive politics. Thankfully,
poverty today is a stranger to most families in countries like
ours. Laws protect workers and uphold gender and racial
equality. It is not that disadvantage has been eradicated – it
has not – but that it takes different forms. As Amartya Sen has
noted, families and communities can suffer not only economic
disadvantage but social, educational and cultural disadvantage
119 the purple book
as well. A more holistic agenda is needed. In my view, its focus
needs to be on how we narrow the gap in life chances between
the less well-off and the better-off so that those who have
the aptitude and aspiration to do so get a fair opportunity to
progress – regardless of their starting point in life.
Labour should make fairness in life chances our new
progressive cause by empowering individual citizens and
local communities to progress. The goal we should be aiming
for is to reduce the extent to which a person’s class or income
is dependent on the class or income of their parents.
That will require us to be far sharper at pursuing a differentiated
public policy approach to social mobility, one that
recognises the fact that different groups in society have different
starting points in life. One approach will need to focus
on those, such as the 1.6 million children living in absolute
poverty, who might be a minority in Britain but who are a scar
on a wealthy modern society like our own. Sharply targeted
interventions – including income transfers and financial
incentives – will be needed if those families are ever to get
onto the first rung of the social ladder. The other approach,
however, is for the majority who are on the ladder but still
encounter barriers that prevent them from moving up it. Here
there is a need for a wider opportunity-creating agenda. These
are distinct, although, of course, intimately related approaches.
It is sometimes suggested that we have to choose between an
economics-led or an opportunity-led agenda to social justice.
The truth is both are needed. The trick is to avoid confusion
between them. When that happens the result is not only poor
public policy, it can also result in poor politics with the needs
of lower-income families seemingly in conflict with the needs
of middle-class ones. At the end of Brown’s premiership that,
sadly, seemed to be where we ended up.
So in future we need to be explicit that a society where
opportunities are frozen rather than fluid hurts more than
those at the very bottom end. It hurts the people Bill Clinton
alan milburn 120
once famously called the ‘forgotten middle class’. You can see
that already with internships. They tend to go to the few who
have the right connections, not the many who have talent.
Yes, we need to beat poverty, but social progress – if it is to be
for the many, not the few, in our society – also has to be based
on unleashing aspiration.
The role of government
We will need to accept that governments and others can do
more to equalise opportunities throughout life, but in the end
social mobility relies on individual drive and ambition. It is
not something that can be given to people: it has to be won
through their efforts and endeavours. Many of the things that
determine life chances are, in any case, way beyond the reach
of government: individual temperament, family life, social attitudes.
And there are many questions that other institutions in
civil society – employers, professions, universities to name but
three – have to answer if social progress is to be achieved.
None of this is to suggest that government – the state –
has no role.
When it comes to social change it is inconceivable that
poverty or disadvantage can be overcome without the state
playing its part. Poor people are hardly able to spend their
way out of poverty. They need help with education, housing,
training, childcare. That is why those on the new right of
politics who continue to reject the role of the state are an
ideological blast from the past, not a progressive politics of
the future. The challenges of the modern world call for the
state to play its part. They also call, however, for the state to
know its place. It is only the state that can equalise opportunities
throughout life and empower its citizens. Equally, only
citizens can seize those opportunities and realise their own
aspirations to progress.
So, if we are to make faster progress towards a more
open mobile society in Britain, we will have to be far clearer
121 the purple book
about what governments can do and what they cannot. At
the simplest level it is parents who bring up children, not
governments. What parents do holds the key to what their
children can do. Parental interest in a child’s education has
four times more influence on attainment by the age of sixteen
than does socioeconomic background. Improving children’s
life chances means improving support for parents, building
on the progress achieved by Sure Start, but reforming it so
that it more actively empowers parents to make informed
choices that are right for them and right for their kids. And
since we know that children’s self-esteem and expectations
are in part shaped by the areas that they grow up in, and the
social networks they take part in, empowering communities
to develop will also help children to develop.
History suggests that social progress is made more from
the bottom up than the top down. It is time to apply that
lesson. Too often governments – including New Labour –
have fallen for the fallacy that once the commanding heights
of the state have been seized, through periodic elections,
progressive change automatically follows. In truth this works
neither for citizens nor for governments. People are left
confused and disempowered. Governments end up nationalising
responsibility when things go wrong without necessarily
having the levers to put them right. In the future, progress
depends on sharing responsibility with citizens so that they
become insiders, not outsiders.
Such a change is in-keeping with the times. In a world
of massive insecurity and constant change people are looking
for greater control in their lives. At the same time public
expectations have rightly moved up a gear. People nowadays
are more informed and enquiring. Consumers are getting a
taste for greater power and more say. The problem is that,
while people may have become more empowered as consumers,
they do not yet feel empowered as citizens. Ours remains
a ‘them and us’ political system. It was framed in an era of
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elitism. Rulers ruled – and the ruled were grateful. Economic
advance and universal education have swept aside both
deference and ignorance. Now the internet redistributes
knowledge and offers us the chance to be active participants
rather than passive bystanders. Representative democracy
worked for the last century. It is a more participatory democracy
that will work in this.
And equity demands that it should be so. The sense of
hopelessness that clouds the poorest communities grows out
of disempowerment. Of course, beating crime, creating jobs,
and rebuilding estates can help. But I believe that this cloud of
despondency can only be dispelled through a modern participatory
politics which allows both local communities and
individual citizens to share more evenly and directly in power.
One example: as a teenager I lived in the west end of
Newcastle upon Tyne. It is slap-bang in the middle of a
decades-long failed experiment in urban regeneration. It is
not through lack of effort, whether from local councils, development
agencies or national governments. It is certainly not
through lack of resources. In the last thirty years this four-mile
stretch of urban Britain has received £500m in regeneration
monies, much of it from the public purse. It almost breaks
my heart to see what has gone wrong. I have seen houses
rebuilt and refurbished only to be knocked down, and then
seen the process repeated in a bewildering array of projects
and programmes. Some achieved successes but overall they
missed the mark. The population has fallen by one-third.
One-quarter live with a limiting long-term illness, four in
ten adults have no qualifications and one in two women are
economically inactive. It is officially classified as among the
most deprived communities in Britain.
There is no single reason why it all went wrong. Thatcherite
recession broke the relationship between employment and
housing that had conceived west Newcastle in the first
place. As jobs left the area so did families, attracted by better
123 the purple book
schools and new homes springing up in more desirable parts
of the city. And as the housing market slumped – at one time
you could buy a flat there for £1 – landlords moved in. They
lived off the housing benefit system and many cared little for
who their tenants were or how they behaved. Meanwhile,
the battery of successive government initiatives too often left
skills, schooling and support for families playing second fiddle
to rebuilding or refurbishing housing. But, most importantly
of all, they failed to secure the buy-in of the community.
There were, of course, worthy attempts to involve local residents.
The complaint is not so much a lack of consultation
– people complain of feeling consulted to death – as a lack of
a sense of ownership of what is being done to their communities.
The people who were supposed to benefit from these
schemes were never fully involved either in their formulation
or their implementation. It is a myth that such communities
lack social capital. They are rich with voluntary groups and
community leaders – often women – whose expertise could
be far better harnessed in running housing estates, local parks
and childcare centres.
The tragedy of west Newcastle graphically demonstrates
that the old top-down agenda has run its course. In any future
New Labour government the whole thrust of policy should
be to empower people and their communities. Both local
police and health services should be made directly accountable
to local people through the ballot box. Local councils
should be freed from much central government control by
moving their system of financing from national taxes to local
ones with local communities having the right through referenda
to determine locally decided tax rates. As in the US,
Canada, Australia and many other countries, locally elected
bodies would be able to borrow either from the markets or
through local bond issues. The aim would be to get local services
better attuned to the needs of local communities. Where
local services are failing, communities would have the legal
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right to have them replaced. Community courts and restorative
justice should spearhead a reinvigorated effort to deter
and prevent antisocial behaviour. Community-run mutual
organisations could take over the running of local services
like children’s centres and housing estates.
Education and employability
Empowerment should not be limited to communities. It
should extend from the collective to the individual. Education
policy is a case in point. Of course, there is no single lever on
its own that can make Britain more socially mobile. No single
organisation can make it happen either. It is far too complex
an issue for that. It is as much about family networks as it
is careers advice, individual aspirations as school standards,
career development opportunities as university admission
procedures. But the key is employability and education.
Social mobility speeded up in the 1950s thanks to a big
change in the labour market: the shift from a manufacturing
to a services economy drove demand for new skills and
opened up new opportunities for professional and whitecollar
employment. More room at the top enabled millions of
women and men to step up as a consequence. Social mobility
has slowed down in the decades since, primarily because
of another big change in the labour market: the move to a
knowledge-based economy. Since the 1970s technological
change has been skills-biased. People with higher skills have
seen large increases in productivity and pay while those with
low skills have experienced reduced demand for labour and
lower average earnings. Today we have a segregated labour
market. Those with skills and qualifications enjoy greater job
security, higher levels of prosperity and better prospects of
social advance. Those without skills find it hard to escape a
world of constant insecurity, endemic low pay and little prospect
of social progress.
Bridging this divide is the key to healing social division in
125 the purple book
our country. Study after study has come to the same conclusion.
Time spent in education – including the vital early years
– is the most important determinant of future social status
and success in schools is the most important factor determining
mobility. So aligning education policy with a broader
approach to social mobility policy is key. The trick is to get
the right balance between the state acting and the state activating.
A future New Labour education reform programme
should aim to do so.
First, since there is such a strong correlation globally
between higher levels of education spending and higher levels
of social mobility, education must remain top of New Labour’s
policy and political priority list. Whatever the short-term
pressures for public spending reductions might be, education
must remain a long-term priority for investment. A commitment
to invest more of our national wealth, particularly in
schools and early years, is a prerequisite for any government
or party serious about making a reality of social mobility.
Second, since the chances of a child who is eligible for free
school meals – roughly the poorest 15 per cent by family income
– getting good school qualifications at age sixteen are less than
one-third of those for better-off classmates, the twin objectives
of New Labour’s future education policy should be to raise
educational standards and narrow educational inequalities.
The one without the other will doom Britain to lasting social
division. So any future government should sign up to explicit
five-year targets for reducing the gap in attainment between
children from less well-off and better-off backgrounds.
Third, since aspiration often has to be nurtured New
Labour should commit to embedding social mobility
programmes across all schools. Many are already doing so, but
without a strong national drive it will remain a lottery as to
which pupils get the chance to participate. A national ‘raising
aspiration’ programme would build on the best practice of the
Aimhigher (which raises awareness about higher education
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options and opportunities among school children) and the
Gifted and Talented programmes, and involve professions,
voluntary groups and universities in providing new opportunities
for pupils with potential to visit universities (including
with their parents); to take part in professional work taster
sessions and summer schools; and to benefit from personal
mentoring and school alumni support.
Fourth, since schools nowadays need to help students
build up a CV of soft skills – because that is what employers
and universities are increasingly looking for – all state schools
should ensure every child is able to participate in a range of
extracurricular activities. Of course, schools need to be judged
on their success in delivering good GCSE and A-level results
but they should also be assessed by Ofsted on the quality of
their soft-skills programmes and on the progress pupils make
between starting school, leaving school and their destinations
after school. And since New Labour reforms in other parts of
the public services saw performance improve where rewards
follow results, we should find ways of incentivising schools
financially to improve pupils’ overall outcomes.
Fifth, since greater autonomy – in the shape of city academies,
trust schools and the first parent-run schools – has
produced better results, New Labour should guarantee that
all schools have the chance to become more autonomous.
There need be no single model. They could be academies or
trusts, parent-owned or community-controlled, run by social
enterprises formed by teachers or by chains run by voluntary,
or for that matter, private sector bodies. The aim should be to
make greater autonomy the norm not the exception among
all schools.
That brings me to a final area for reform – empowering
parents to choose good schools. Here we need to be especially
candid. Selection by academic ability may have largely gone
from our schools system, but selection by social position still
lingers. There might not be an overt marketplace in education
127 the purple book
but there is a covert one. Look at the financial premium on
house prices in areas served by the best-performing state
schools. Better-off parents can afford to move house to
get their children into a good school. They can afford extra
tuition or private education. The more wealth you have the
more choice over a good education you can buy.
No one should decry those parents. They are merely doing
what all parents want to do – get their child into a really good
school. The problem is that, despite all the progress that has been
made, there still are not enough of them and poorer parents,
because they lack the market power of their better-off counterparts,
invariably find themselves at the back of the queue.
That cannot be right and it has to change. There is more than
one way of doing so. Both parent-run schools and the pupil
premium, if implemented well, could make a big difference. But
while they empower parents collectively, they do not empower
parents individually. Neither policy gives the poorer parent a
right that is readily available to the wealthier parent: the right
of exit, the ability to take their child out of a poorly performing
school and into a better one. None of the political parties have
been prepared to grasp this nettle. It is time they did.
The next Labour government should accord individual
parents with children in schools where performance is officially
assessed as consistently poor – often in the poorest
parts of the country – a new right to choose an alternative
state school. Those parents would be given an education
credit weighted to be worth perhaps 150 per cent of the cost
of educating the child in their current school. They could
then use the credit to persuade the better-performing school
to admit their child. The admitting school would have a positive
financial incentive to do so. Indeed, for children holding
an education credit the alternative school would be free to go
above its planned admission numbers – although of course
it could decide to cap its expansion at what it considered an
appropriate level.
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The losing school would also face a sharp financial incentive
to improve. It would not only lose a pupil, it would also
lose the cash it cost to educate them. I know some will find
this unacceptably harsh. And, of course, the education credit
would need to be properly piloted, but it is simply not right
– and we should no longer tolerate the fact – that too many
children, invariably those from less well-off backgrounds, are
still not getting access to the best education. Correcting that
injustice means shifting the balance of power to put more
choice in the hands of parents who the system currently
disempowers. If education really is to be the motor of social
mobility, then poorer parents, not just wealthier ones, need
the power to fulfil their aspirations for their children.
We will not create a mobile society unless we create more
of a level playing field of opportunity. My contention is that
it is not ability that is unevenly distributed in our society,
it is opportunity. The core purpose of any modern progressive
government should be this: to break down barriers of
entrenched privilege and vested interest; to open up avenues
of advancement so they are available to all, not just some; to
redistribute power and opportunity in our society; to narrow
the gap in life chances in our country. That is what New
Labour should be working in in its next phase to achieve.
Eliminating ‘power failures’: a new
agenda for tackling inequality
Liam Byrne
When Tony Blair made his first speech as Prime Minister,
he stood on an estate in Southwark and said concentrations
of poverty and unemployment represent ‘the greatest
challenge for any democratic government’. How prophetic
those words turned out to be. We are a party that is terrifically
proud of our record and we become prouder every day we see
the damage this government is doing.
One of the reasons for that is that our record of fighting
poverty was, quite literally, one of the best in the world.
When the Organisation for Economic Cooperation and
Development studied its members in 2008, the UK was
one of the only countries where median household income
continued to rise – and income inequality declined.1
However, by the end of 2009 my work at the Treasury
was beginning to uncover the problem that came to be called
the ‘squeezed middle’. We can now date the problem back
to 2004–5; yet even so, for the lion’s share of Labour’s time
in office we could point to rising productivity growth, rising
wages and median family incomes up by a quarter over our
time in office – an almost unprecedented achievement.
The numbers, the headlines, the lines to take, never quite
seem to do justice to the material transformation of lives in
Britain, but nonetheless, they are worth recalling:
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• 2.8 million more people in work than there were in 1998;
• 500,000 fewer children now in income poverty. Indeed,
new figures show that in the last year of the Labour
government (2008-9–2009-10) 200,000 children were
lifted from relative poverty. Between 1998 and 2010, the
percentage of children in relative poverty fell by 6 per
cent – or 900,000;
• The poverty rate for pensioners down by one-third;
• A doubling of the annual growth rate of the income of
the poorest 20 per cent.
Is that a big deal? Well, compare our record to the policies
of a neoconservative administration across the Atlantic, the
government of George W. Bush. After the progress of the
Clinton–Gore years, American families have gone backwards
since 2000: real median household income actually fell by
over $1,200 year as the link between rising productivity and
rising wages snapped.2 America was getting richer – but the
wealth was simply not shared among ordinary people. As
Paul Krugman recently put it: ‘The value of output an average
worker produces in an hour has risen almost 50 per cent since
1973. Yet the growing concentration of income in the hands
of a small minority has proceeded so rapidly that we’re not
sure whether the typical American has gained anything from
rising productivity.’3
So, yes, our achievement was a very big deal. But there
is always a ‘but’ for the Labour Party. ‘Progress,’ said Nye
Bevan in the only book he ever wrote, ‘is not the elimination
of struggle, but rather a change in its terms.’4 The work that
there is still to complete is staggering – and now, as we look
ahead to 2015, it is already clear that we will have huge global
forces ranged against equality and a very different political
climate in which we have to build a new kind of consensus
for a Labour vision of the welfare state.
131 the purple book
The global economic challenge
Let me start with the politics. When Labour was at its
strongest, we governed on the basis of a simple premise: that
economic efficiency can go hand in hand with social justice.
The challenge for us, however, is that by the end of our time
in office, people saw something rather different: economic
injustice and social inefficiency. Bankers and corporate chieftains
running off with massive salaries and bonuses on the
one hand, and rising welfare bills on the other.
At the heart of this problem was the simple fact that while
we got the economics of globalisation right, we got the politics
wrong. Globally, the greatest achievement of the progressive
left over the last two decades was to act as co-authors of the
globalisation which has transformed the wealth and prosperity
of the world, and in turn lifted hundreds of millions of
people out of poverty.
But, at times we looked too comfortable, too cosy you
might say, with the newly powerful that this new globalisation
created. We did not do enough to stand alongside the
newly powerless. We were basically too optimistic about the
financial markets’ ability or ambition to regulate themselves
well, and too optimistic that the undoubted gains from global
growth would distribute themselves fairly. There is no better
emblem of all this than the banking sector, which became the
most dangerous new concentration of unaccountable power.
By the end of the twentieth century, globalisation had set
the stage for the greatest ‘capital flow bonanza’ in economic
history. After the Asian crisis of the late 1990s, surplus nations
like China exported hard and saved harder. Some $7tn of
foreign exchange reserves were amassed, and much of it headed
towards US Treasury bills.5 Faster international capital flows
helped make sure that most of the West’s banking system had
a stake in America’s ‘financial innovation’, generally known by
its better moniker ‘subprime debt’. Indeed some 40-60 per cent
of securities generated by US financial institutions ended up
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in portfolios of foreign investors.6 In turn, these flows underpinned
a banking system that took on dramatic amounts of
new debt. In the US, financial sector debt rose from 22 per
cent of GDP to 117 per cent. By June 2008, leverage ratios at
European banks had grown gigantically; Credit Suisse stood at
three to one. ING stood at forty-nine to one. Deutsche Bank
stood at fifty-three to one. Barclays stood at sixty-one to one.
As Mervyn King recently pointed out, UK bank balance sheets
were, until the Second World War, stable at around 50 per cent
of GDP. But over the last fifty years, they have ballooned to
five times the size of our economy, and alongside them has
grown a shadow banking system $7tn in size.7
When this system crashed it destroyed one million jobs,
and £400bn of UK net wealth – most of it household wealth.8
So, as Ed Balls has argued, we did not challenge or control
that new private power effectively enough. We got the politics
of globalisation wrong.
While this banking boom was gathering pace, wages
for ordinary workers were coming under huge pressure. In
Labour’s first five years in office, between 1997 and 2001,
workers’ share of national earnings rose from 68 per cent to
around its post-war average of 73.5 per cent.9 But then the
trend went into reverse. Productivity kept on rising – by over
9 per cent between 2001 and 2008 – but workers’ share of
national earnings fell, from 73.5 per cent to 69.6 per cent.
Over the same period, corporate Britain saw its rate of return
soar – from 11.8 per cent in 2001 to 14 per cent in 2008.
What did that mean for workers? In 2009, workers’ share of
national earnings was around £768bn. Yet if workers’ share of
the national economic pie had matched the post-war averages,
an extra £23.4bn would have ended up in people’s pay packets.
This new inequality – of power, of reward – fuels a sense
among most voters that they no longer get out of government
what they put in. Most still feel that government is important.
A majority prefer a government that tries to tackle our
133 the purple book
national problems than a government that simply leaves the
pitch. But, voters feel there would be a lot more help available
for the responsible, for those who do the right thing, if
we stopped subsidising the irresponsible who do the wrong
thing. That is why we have to modernise the welfare state to
restore a sense of the ‘something-for-something’ deal.
If we look ahead to the economics of 2015, global growth
is likely to be weak. The eurozone remains beset with trouble.
Business leaders in Germany are highly cautious about the
prospects for sustaining German growth. America is still to
publish, never mind implement, a deficit-reduction plan of its
own. Regional integration in Asia – a key objective of China’s
new five-year plan – may fuel a faster and faster ‘race to the
bottom’ as production is relocated from the overheating coastal
areas to cheaper inland China, Vietnam and Bangladesh.10
The fiscal latitude of any future Labour government will be
narrow. If we suppose that George Osborne persists with
his deficit-reduction plan, and removes the structural deficit
entirely in five years, we will still have debt as a proportion of
GDP at 60 per cent.
These are the political and economic realities of the world
in which a new Labour government will have to think about
reversing inequality. I think we can conclude the old methods
are unlikely to be available – even if they still worked. So I
would like to propose a renewed approach. It is not really
inspired by Whitehall, or Westminster, but by Hodge Hill,
the constituency I have served for the last seven years.
Fighting poverty from the bottom up
Like much of the Midlands, the ancient history of my
constituency is lost history; it is a place that was forged in
the Industrial Revolution. Its life was animated by the great
entrepreneurs of the nineteenth century; industrial and civic
giants like Joseph Wright, William Morris and Lord Norton.
liam byrne 134
But its life has been changed by their modern successors;
the entrepreneurs in the wider story of globalisation who
have moved industries, firms, jobs and livelihoods elsewhere
and left behind a legacy of unemployment and poverty.
Today, Hodge Hill has the second highest unemployment
rate in the country and the highest youth unemployment.
These are the circumstances which have shaped my political
life, priorities, outlook on the future and my determination to
see the fight against poverty as a cause we in our party take
the responsibility to lead.
And, it is my constituency that has taught me that if we
want to roll back inequality, we have to roll out power. This
means moving beyond our old argument that equality of
opportunity is enough. It is not.
Why do I say this? A couple of years ago, we marked the
150th anniversary of J. S. Mill’s On Liberty, the founder of the
liberal tradition. It is a tradition of freedom, in my view, inestimably
improved in more recent times, first by John Rawls
and now Amartya Sen.
It has been Sen, in particular, who has argued that for
freedom to be truly meaningful we must deliver a far better
equality in ‘“substantive freedoms” – the capabilities – to
choose a life that one has reason to value’. This argument
takes us beyond the idea that poverty is simply the absence
of income – beyond the notion that equality of opportunity
is on its own enough. It tells us that both income and opportunity
might get you to the starting line in life, but without
capabilities – what I would call ‘powers’ – you will only get so
far down the track, stopping perhaps a long way short of your
ambitions, or indeed your potential.
This emphasis on capability or power is absolutely vital.
It recognises that we must break out of a confined and
contorted debate about simply ‘equality of outcomes’ and the
thin notion of an equal place at the starting line of a race that
135 the purple book
is ultimately fixed. Crucially, it takes us beyond the idea that
poverty is simply the absence of income.
Not long after it was published, I met Sen at Harvard to
talk about his book, An Idea of Justice. He summarised for me
the problem of talking simply about opportunity: ‘If many
things are open to me I have opportunity to do them if only
I could, but if I’m illiterate and education has been neglected
[then] I might not be able to use that opportunity ... without
the help of the state and the society, which allows me to
acquire the education, which allows me to use the opportunity,
I won’t have any great use of that opportunity.’11
This argument stresses the reality that a fair distribution
of power is something that cannot be frozen in aspic. We do
not fix it and then stop. We do not get people up to a fixed
threshold of power or capability and then halt. Rather, the
capabilities or powers that people need to thrive, to live that
life that they have reason to value, is something that has to
advance as society advances: ‘Human life consists of doing
certain things … to be able to take part in the life of the
community, to be able to talk about subjects that interest me
– in all kinds of ways there are different freedoms that affect
our lives and you assess what our lives are like by looking at
the various freedoms we have … These freedoms … are the
human capabilities that we are looking at. Capability is just
looking, saying, don’t try to assess society in a way that is
detached from the lives and freedoms of the people.’12
This argument corresponds very much with what I witness
in Hodge Hill, where the thing that troubles me most are the
‘power failures’ which stop my constituents moving up in life.
The lack of power to walk where you might chose for fear of
crime. The lack of power to go to college even though you
have the dreams, the talent, the grades. The lack of power to
get a job even though you want a better life for you and your
family. The lack of power to be able to lead a life that you have
a reason to choose.
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The power to work
This perspective is important because it reminds us that, in
the battle for equality, a simple measure of equality of income
does not mean enough. A more basic equality of power would
mean far more. This takes us to a far more sophisticated and
meaningful agenda for action against poverty. Crucially, it
tells you that if you want to tackle poverty you have to give
people the real power to work: to get a job, to advance and
not to worry constantly about being laid off, or losing a shift.
A simple illustration. If we raised the employment rate of
just one ward in Hodge Hill to the national average, we would
bring in £100m of extra wages each year. No government
regeneration programme could ever match that. That is why
Labour is, and always will be, the party of full employment.
But to give people the power to do the big things often
means giving them the power over the small things: skills,
transport links, childcare. To this picture we have to add
real action to boost the supply of jobs, which is why John
Denham’s work exploring ways of backing small and medium
enterprises and entrepreneurs, and making the UK a more
attractive place to invest, is so important.
But fixing power failures is about more than just work.
If you want a community to do better, then the community
has to act as the authors of its own shared future. However,
communities cannot function properly and people cannot
work together if they fear leaving their homes at night
because the community is riddled with crime, drugs and
distrust. What we found in Hodge Hill is that we were going
to make no progress in building an alliance of citizens for a
richer place unless we got crime sorted out first.
That is why this was my first campaign. Meeting after
meeting with local residents spent literally mapping the
hot-spots, grot-spots and places where the drug dealers
dwelt. Building the dossiers for police action. So, neighbourhood
policing and community justice are not simply
137 the purple book
community safety issues. They are fundamental to the fight
against poverty. Respect, I came to learn, is the ground-floor
of renewal.
Further, if we want to fix these power failures for the future,
then we need young people to have the self-confidence and
savoir-faire to actually pursue their ambitions beyond school.
For five years I have worked with young people, local secondary
schools, the University of Birmingham and the Templeton
Foundation to study why so few of our young people go to
university – when my work with young people told me that
their top priority for new investment was learning a new skill.
I found no shortage of aspiration. Some 80 per cent of our
young people want to go to college.
But what we found is that these young people lacked a
sense of how the world works. What James Arthur, who led
our Templeton Foundation-funded research, described to me
as the lack of a ‘mental map’ of how to get on in life. This is a
roadblock for our young people. It is a power failure. To break
it down our young people want to develop, not only their
understanding of the things around them, but an understanding
of the things inside them, self-confidence, self-esteem,
ambition, motivation and nerve. These are things that some,
but not all, of us were lucky to get from our parents; things
that a small few often get from the finest public schools.
My point here is that to roll back poverty we have to
roll out power and it is an agenda that stretches far beyond
the boundaries of a debate about simply the future of the
welfare state.
So what is needed? When I met with Sen he left me with
an intriguing idea. That if we want to answer the question
of what powers people need today, you need something of
a national conversation. So, in the interests of getting that
conversation going, here is a first list of just what capabilities
or powers a centre-left government in the UK might wish for
its citizens.13 It was drawn up by a team in the Treasury and
liam byrne 138
Cabinet Office, which I asked to examine all of our public
service targets against a handful of basic powers we want to
see in the hands of citizens.
Some capabilities are difficult to measure and deliver such
as ‘family life’ and ‘aspirations’ – but as a set of objectives
which we should strive to achieve, it is not a bad place to start:
• To survive and have good health;
• To be skilled and knowledgeable e.g. to be able to read,
write, communicate, be numerate;
• To have a good job which brings in a sufficient income;
• To have a decent place to live;
• To be free from fear or attack;
• To have a strong, supportive family life;
• To be part of a strong, active community;
• To have a healthy, sustainable natural environment;
• To be able to move around and access different places
easily;
• To have aspirations for the future.
Renewing the welfare state
The challenge now, though, is to build a political consensus
for the kind of arguments made here. Reform of the welfare
state is one of the starting points. Right now the Tories are
speaking to the country’s sense of pessimism. They are happy
to play into a dialogue of the depressed.
Sometimes, when I listen to the rhetoric of this government,
I am reminded of Ronald Reagan and his attack on
‘welfare queens’ thirty years ago. Reagan was determined
to dismantle Lyndon Johnson’s Great Society. Running for
the presidency in 1976, he told the story of a woman from
Chicago’s South Side who he alleged had eighty names,
thirty addresses, twelve social security numbers and was
claiming social security, food stamps and welfare under every
alias. Reagan never named her, but his myth inspired a movement
139 the purple book
that started with a call to responsibility and ended by ignoring
cries for help as he set about the biggest attack on the
measures to promote equality in American history.
We have to hope this government will not repeat Reagan’s
mistake. The signs, however, do not look good. The Chancellor
has proposed a budget that puts 200,000 more people out of
work, puts the benefits bill up by £12.5bn, and borrows £43bn
more than planned to pay for it all. The result is a stealth
squeeze of people’s tax credits, help with childcare, university
bills, travel bills and an attack on the most vulnerable people
in our society.
We have to offer a different vision for the welfare state
that rejuvenates a sense among the majority that government
can do good. This is far from impossible. While it is
true that the public feels that governments waste a lot of
money, a large majority of people still feel that the solution
to the problems we face today is not less government but a
different kind of government; a government that restores a
‘something-for-something’ deal, and a sense of just deserts
and reciprocity.
Franklin Roosevelt once spoke passionately of the democracy
of opportunity: a place where everyone, no matter who
you were or where you came from, if you worked hard you
deserved to do well. Today, people want alongside that democracy
of opportunity, a democracy of responsibility. Where we
do not subsidise those who break the rules whether they are
in the boardroom or on benefits, and where we instead reward
those who do the right thing.
That means that we have to renew the welfare state so that
it more clearly combines an attack on poverty with a rejuvenation
of those ‘social insurance instincts’ that helped forge
it in the first place. This is not easy – as some commentators
have already pointed out. 14 The contributory principle only
covers about 10 per cent of working age benefits today.
But we can make progress by exploring three ideas.
liam byrne 140
First, is the idea of looking at reward for contribution in
the widest sense. That is why Ed Miliband has said we should
explore the way we reward those who do the right thing,
for example by looking again at the way we allocate social
housing. These are ideas that innovative local authorities, like
Newham and Manchester, are now exploring. In essence, your
place in the queue is affected by whether you are doing the
right thing, getting a job, paying taxes, being a good tenant
and neighbour, and so on.
Add to this the trend for more and more people to become
self-employed – not least as firms push down fixed costs and
move the risks of variable demand onto a more self-employed
work-force. Nearly 750,000 more people have become selfemployed
in the last decade. Thus as more and more higher
earners face the uncertainties of unemployment, we need
to examine whether there is a way of protecting people’s
income in the first period they are out of work, as they do so
successfully in Denmark. And this is an approach that could
have widespread public support: 67 per cent of people in our
private polling say that people with a history of paying into
the benefits system should get a higher level of support if
they lose their job.
Third, we need to look at the new ‘lifecycle of savings’.
Young people now can expect to have many more jobs in
their lifetime than their parents. Our polling shows that the
public is really worried about how hard it has become for
young people to earn enough to pay off their college debts,
save for a deposit for a house and then save up for a pension.
Today, families face a radically new lifecycle for savings – with
tuition fees to pay back, big mortgage deposits to save for, and
the cost of social care and a pension that needs to nourish
them far longer in old age. We have to ask how the welfare
state is helping ordinary working people face new risks.
To this picture of new risks, we have to look at whether
there are new ways in which welfare services can be delivered
141 the purple book
in a way that strengthens relationships in society. How can
we do more to encourage mutuals, co-ops, social enterprises,
organisations that are powered by the value of human relationships,
to help deliver a stronger welfare system in the future?
If we can propose reforms that speak to these instincts, we
can build far bigger alliances for progressive politics. Why?
Because, quite simply, an approach that puts the rejuvenation
of social relationships and mutual obligations centrestage
is more likely to command a wider political consensus.
It connects to a different tradition of freedom which takes
account of some of the legitimate criticisms made by the new
right of old-fashioned welfare programmes.
Samuel Bowles and Herbert Gintis, developing the work
of Robert Axelrod and others, underlined how absolutely
central this notion of reciprocity is for retaining support for
progressive values: ‘The welfare state is in trouble, not because
selfishness is rampant (it is not) but because many egalitarian
programmes no longer evoke, and sometimes now offend,
deeply held notions of fairness, encompassing both reciprocity
and generosity, but stopping far short of unconditional
altruism towards the less well-off.’15
This approach speaks not to ‘unconditional altrusim’ but a
‘something-for-something’ deal. Nick Pearce of ippr recently
put the argument like this: ‘In focusing almost exclusively on
outcomes, reform strategies may miss important insights about
how the procedures that govern public services – and in particular
their fairness – elicit particular responses from the public.’16
Capabilities for all
I think we can roll back poverty by rolling out power, and I
think we can build a political consensus for the kind of values
we support, by reforming the welfare state to restore a sense
of reciprocity and mutual obligation.
But this argument about power has wider importance for
the left.
liam byrne 142
We should be the party that tells an optimistic account
of our national renewal and our prospects in a world that is
going to be transformed again in the next thirty years. By
2050, China, India, Brazil, Egypt, the Philippines, Indonesia,
Iran, Mexico and others will account for 60 per cent of global
GDP in a surge of growth that could push two billion people
into the global middle class – around 70 per cent of these in
India and China.17 That could create incredible demand for
the kind of things we make and sell.
The challenge for Labour is to make sure that this new
wealth is not wealth concentrated in the hands of the few.
Reform of our welfare system and a new agenda for a determined
rollout of power in our country is the best guarantee
that we will succeed.
1. OECD, Growing Unequal? Income Distribution and Poverty in OECD
Countries (Paris: OECD, 2008).
2. Analysis courtesy of the Centre for American Progress.
3. Paul Krugman, Conscience of a Liberal (New York: Norton, 2007).
4. Aneurin Bevan, In Place of Fear (London: Heinemann, 1952).
5. Such was the wall of demand for Treasury bills, that by August 2005, Alan
Greenspan was pondering a ‘conundrum’. The Fed had raised interest rates
from 1 to 3 per cent. But the long-term rate on US Treasury bills was not rising,
it was falling, from 4.9 per cent to under 4 per cent. As the Fed raised the
headline interest rates between 2004 and 2006, from 1 per cent to 5.25 per cent,
long term rates and mortgage rates barely moved.
6. Nouriel Roubini, Crisis Economics: A Crash Course in the Future of Finance
(London: Allen Lane, 2010). Roubini estimates that half of the collateralised
debt obligations and mortgage backed securities created in America were held
by foreign investors.
7. Mervyn King, Second Bagehot Lecture, Buttonwood Gathering, New York
City, 25 October 2010.
8. Office for National Statistics, Economic Review, August 2010.
9. Analysis commissioned by Liam Byrne from the House of Commons
library reveals that broadly speaking, since 1948, British workers have laid
hands on around 73 per cent of our national earnings.
10. See, for example, Cheng Siwei, speech to the Pacific Economic Cooperation
Council’s General Meeting, 13 May 2009.
11. Liam Byrne, interview with Amartya Sen at HM Treasury, 3 September 2009.
143 the purple book
12. Ibid.
13. Martha Nussbaum has also had a crack at drawing up a similar list.
Martha Nussbaum, Women and Human Development: The Capabilities Approach
(Cambridge: Cambridge University Press, 2000).
14. Nick Pearce, ‘The limits of the contributory principle’, ippr, 14 June 2011.
www.ippr.org
15. See Samuel Bowles and Herbert Gintis, ‘Is Equality Passé? Homo
Reciprocans and the Future of Egalitarian Politics’, Boston Review (1998) vol.
23, no. 6, pp. 4–25.
16. Nick Pearce, ‘Fair Rules: Rethinking Fairness’, Public Policy Research (2007)
vol. 14, no. 1, pp. 11–22.
17. See for example Goldman Sachs analysis.
Securing social justice:
savings and pensions for all
Rachel Reeves
In Britain today the distribution of wealth is fundamentally
unequal, with the top 1 per cent of people holding nearly
one-quarter of all assets. We have a persistent problem of
undersaving among Britons – 13 per cent of people have no
savings at all and out of the G7 countries only the US saves
less. As a proportion of GDP, Germany and Japan save almost
double what we put away. And we now have a government
that – by scrapping child trust funds, the Saving Gateway and
through its treatment of savings in its reform of the benefits
system – does not recognise the contribution that assets make
in terms of empowering people and families.
Savings and assets make a huge difference to our opportunities.
They provide options – to go into further education,
rent or buy a house, perhaps start a business, buy Christmas
presents for the family or go on holiday. They determine
options on redundancy, whether an individual is able to
change jobs or end up in debt in an emergency like a car
breakdown or illness. It can also mean the difference between
drawing on savings and borrowing from high-cost lenders.
Pension savings might make the difference between taking
on part-time work or taking early retirement. And they can
then determine whether individuals are able to keep their
home and, for example, provide for social care.
145 the purple book
Undersaving and asset inequality form a collective problem
too: without sufficient private resources more people
will rely on welfare in tough times and poverty, including
pensioner poverty, is a greater risk.
Crucially, savings and assets can act as a springboard or
safety net throughout our working lives – removing insecurity
around unexpected payments and providing the platform on
which social mobility is based. Asset-based welfare, or assetbased
empowerment, sees the role of the state as a facilitator,
building the framework in which individuals can make their
own decisions and choose to live the life they want.
Therefore, when we return to power an asset-based
approach to social policy must be at the heart of Labour’s
strategy for improving equality and opportunity. The welfare
system is a crucial tool for realising social justice and equality
– it provides a minimum quality of life and is a floor upon
which individuals can build their lives, as the Beveridge
Report set out at the creation of the welfare state. As David
Blunkett has said in his writings on asset-based welfare ‘individuals
must have the opportunity to accumulate and control
assets in order to have equal life chances. We must ensure
that assets, such as savings, are spread widely through society.’
A nation of undersavers
We are not talking just about emergency or ‘rainy day’ situations,
but for retirement, too. The average monthly income for
couples in retirement is £564. This compares with over £2,000
for the average UK family. Though that is a significant increase
from 1997, it is still not enough to give people meaningful
options. According to research from Scottish Widows, 20 per
cent of people are not saving for their retirement and only 51
per cent are making sufficient provision for their retirement.
And there are significant distributional issues: undersaving
is most acute among the lowest earners, and this is the
case across both the public and private sectors. The highest
rachel reeves 146
proportion of those without pension savings is among employees
with the lowest earnings. That means that across all employees
87 per cent of those earning less than £5,200 per year have
no non-state pension provision. This compares with 73 per cent
of those earning between £5,200 and £10,400 per year; 68 per
cent of those earning between £10,400 and £15,600; 55 per cent
of those earning between £15,600 and £20,800; 44 per cent of
those earning between £20,800 and £26,000; 35 per cent of
those earnings between £26,000 and £31, 2000; and just 23 per
cent of those earning above £31,200 per year. In the private
sector, over 60 per cent of employees on average earnings have
no non-state pension provision. That number rises to over 70
per cent for people earning just less than £20,000.
These low levels of personal savings are not a new phenomenon.
For the last thirty years we have been saving less than 20
per cent of GDP, but the share of income saved has gradually
fallen from over 18 per cent in 1980 to just 12 per cent in 2010.
Research from the Institute for Fiscal Studies has shown that
the run-up to the financial crisis saw families accumulating
very little liquid wealth between 2000 and 2005, and that this
was particularly stark among ‘younger families and those on
the lowest incomes’.
The IFS also estimated that, in real terms, incomes fell
by 3.8 per cent in 2010–11, and that household incomes will
continue to fall in real terms over the coming three years.
The immediate outlook does not look good for households
addressing their lack of savings.
In addition to the immediate challenges in a world of
squeezed living standards, a substantial part of the problem
is a result of more fundamental – and complex – structures.
First, the pension system that we have today was designed
in the 1940s for the 1940s. This was a time when men made
up almost 70 per cent of the workforce, part-time workers
accounted for just 4 per cent of the workforce and most people
entered the workforce into what they considered to be a ‘job
147 the purple book
for life’. We have seen a huge change over the last sixty years:
in 1951, 40 per cent of women aged 15–64 were economically
active, compared to 71 per cent today. And in 1951, virtually no
men worked part-time, compared with 13 per cent today, and
for women, the proportion has increased from 25 per cent to 44
per cent. Labour made inroads into reforming the pension and
savings system to reflect these changes – particularly recognising
the role of women as mothers and carers for the state pension –
but problems persist, including for occupational pensions.
Second, while Labour began to experiment with the idea of
an asset-based welfare system when in government (explored
in further detail in the next section), thanks to the coalition
government we are returning to a welfare state that does
not recognise the role that assets and savings play in building
opportunity and empowerment. And, worryingly, the
idea of savings for lower-income earners is being implicitly
discouraged in its reform of the welfare system, with the introduction
of a £16,000 savings cap on eligibility for universal
credit, which will ultimately punish – or disincentivise – lowincome
working families who want to save for the future.
Third, the tax relief structure is fundamentally flawed and,
one could argue, unfair, acting as a significant factor contributing
to the distributional problems of saving: the incentives
to save offered to low-to-middle income families through the
tax relief system are very limited. HM Revenue & Customs
estimate that around £19.7bn of tax relief was given to pension
contributions across all taxpayers in 2009–10, and within this
total an estimated two-thirds of the relief was on contributions
made by higher-rate tax payers.
Labour’s record in government
Against the backdrop of very low rates of saving and a period
where incomes grew substantially, but financial wealth, at least
for most households, barely increased at all, Labour set out on
a series of reforms, and it is important to understand what
rachel reeves 148
we achieved in order to lay out the priorities for empowering
people through assets and savings when we return to power.
Pension system
When Labour came to power in 1997, the immediate priority
was tackling unacceptable levels of pensioner poverty.
Between 1997 and 2010, 1.1 million pensioners were lifted out
of poverty, and pensioner poverty now stands at its lowest
level for almost thirty years.
In addition, the Labour government recognised the need
to instigate reform of the state pension system. So in 2002,
Labour established the Pensions Commission to look into the
undersaving problem in the context of ‘a new pension settlement
for the twenty-first century’. The result was the Turner
Report, which, among other things, recommended the introduction
of automatic-enrolment whereby every employer is
required to enrol their employees (earning above a minimum
threshold) into a pension scheme and to pay into that scheme.
Labour legislated for this in the Pensions Act of 2007 and
2008 and auto-enrolment will roll out from 2012. The result
will be up to seven million people who previously were not
saving, now putting something aside for their retirement. In
the pensions bill, the coalition government is in the process
of watering down the scheme, characteristically pulling the
scheme away from up to 1.5 million people – mostly women
– by raising the earnings threshold at which employees will
be auto-enrolled and by introducing a three-month waiting
period before employees are enrolled.
Welfare system
In government, Labour also recognised the role that assets
have in welfare policy. It understood the reality of what social
research had been telling us, specifically, as an ippr report in
2006 put it, that ‘an asset can act as a springboard, working
not just to alleviate immediate poverty (as income assistance
149 the purple book
can do), but also to transform the opportunities available to
an individual.’1
A number of Labour reforms were designed to enable
increasing numbers of people to share in the benefits of asset
ownership, the biggest of which was the child trust fund. The
child trust fund acts as a long-term tax-free savings account
designed to ensure that all young people can have access to
assets and a financial foundation at the start of their adult lives.
The fact that a new mother leaves hospital with forms to
easily access a platform for saving from day one of their child’s
life was a significant nudge to save: 73 per cent of eligible
parents took advantage of this baby bond, creating 5.8 million
accounts. £700,000 a week was put away with child trust funds
in 2010 according to the Children’s Mutual, and up to 50 per
cent of families who opened accounts for their children were
saving every month. Using the full tax-free allowance of £1,200
a year, savings could be built up to cover the cost of university,
set up a small business or provide the deposit for a house by the
time the child is eighteen. Savings of around £50 a month from
birth would potentially generate a pot of some £20,000 on the
child’s eighteenth birthday. That is potentially life-changing.
In addition, the Labour government introduced the Saving
Gateway, designed to match the savings of people on low
incomes with public funds. It was aimed to get the poorest
saving, by adding 50p to every £1 saved in the programme, and
aimed to reach eight million people on benefits and on tax
credits. The Saving Gateway would have provided up to £300 a
year in matched funding for people putting away money for the
future. The Saving Gateway and child trust fund offered tangible
financial benefits for those who traditionally have the fewest
assets, as well as building a habit of saving among low-income
groups, parents and children alike. But these benefits were not
recognised by the coalition government and were scrapped.
Before their abolition, these schemes saw the government’s
role increase as an active supporter in encouraging
rachel reeves 150
savings. By putting forward some direct support such as
the child trust fund, and tying other support to long-term
savings, the government created steps to overcome the barriers
to savings. But with nudges like this towards individual
saving, and soon through Labour’s policy of auto-enrolment
into pensions, attitudes can be slowly modified and saving
can become a habit rather than an exception.
A future agenda for Labour
The big question for the next Labour government is how it
will maintain and build on the momentum that was created
between 1997 and 2010, as well as tackling what else is needed
to address the structural barriers to saving that exist. Critically,
what can be done to help empower people to build up assets
and to save to empower them to expand their options? In
this section, I set out three priority areas: ensuring automaticenrolment
is a success; renewing the asset-based welfare
system, including finding ways to get at the normally hardto-
reach groups such as through credit unions; and reform of
the tax relief system for saving.
Ensuring automatic-enrolment is a success
We must ensure that automatic-enrolment is a success and
that it achieves what it sets out to do. That is, ensuring that the
auto-enrolment framework gets people on modest-to-middle
incomes, often in small businesses, saving for their retirement.
The watering-down of the pensions bill will be a retrograde
step, but we must be clear that the priority will be to let the
rollout get under way in 2012. There will inevitably be teething
problems that will be identified and dealt with, but equally
as important will be the review planned for 2017 in the next
parliament. This review must revisit some of the questions that
are raised by auto-enrolment now, in terms of who is excluded,
and we must also be extremely aware of any further rises in the
earnings threshold as the income tax threshold rises.
151 the purple book
There are some other core questions that must also be
addressed in the review in order to make auto-enrolment
the success that it can be. Currently, those with multiple
jobs with no one job earning above the earnings limit are
not automatically enrolled – and this should be looked at
so that these people are also entitled to be automatically
enrolled, recognising that, increasingly, people have more
than one job and more volatile work patterns.
The industry must also address the question of ‘annuitising’
small pots of money – i.e. turning a pot of money into
an annual income when they retire. This is something that
will become increasingly important as the first of those to
benefit from auto-enrolment start to retire. Many people are
likely to have very small pots after just a few years in the
workplace under automatic-enrolment and, at the moment,
due to the relative cost of annuitising small pots of money,
pension providers are often reluctant to annuitise amounts
below £5,000. This will need to be addressed, including
making it easier to merge small pots to ensure people can get
meaningful pensions out of their savings.
Alongside automatic-enrolment, the previous government
also set out the proposals for the National Employment
Savings Trust, an occupational pension scheme which was set
up to ensure all employers have access to a simple scheme for
the employees that they will need to auto-enrol. There will
be issues here that need to be addressed too. In particular,
the cap on annual contributions into NEST accounts that
currently exists will need to be reviewed if we want people
to build up adequate retirement incomes, as will the restriction
on savers’ ability to transfer amounts of money in and
out of the scheme. This could also help significantly with the
challenge of annuitising small pots of money and of excessive
charges in some occupational pension schemes, especially for
people with lots of small pots with different providers built
up in different jobs.
rachel reeves 152
Renewing asset-based economics
Second, and perhaps a much bigger challenge, is that of
renewing the asset-based welfare system that the Labour
government embraced through the introduction of child
trust funds and the Saving Gateway. The government has
scrapped these on the grounds that they are unaffordable, but
in doing so it has missed the point that it is the infrastructure
– for example, of each child having a unique account number
created for them at birth – that counts as much, if not more,
than the actual sum of money given by the government to be
invested. For example, in principle, the ‘nudge’ and success of
the child trust funds work with only a very small contribution
from government, because it is the framework that is given to
parents that is the key to encouraging saving.
However, as we renew our approach it is right to look at
how we could improve it. Even though the child trust fund
encouraged saving for children in many low-income households
it would be wrong to say it reached all those it was
intended to reach, and the next Labour government will need
to develop new and innovative ways of reaching those for
whom the conventional ways of saving, through for example
banks and building societies, do not work.
One way to achieve this is through credit union networks,
which can assist in broadening and widening savings on a
local, community basis. Credit unions are cooperative financial
unions owned and controlled by members that lend
within the union. And on a personal level, I have seen the
difference that credit unions make to neighbourhoods when
they are local and active.
In my area of Leeds two credit unions are available and
provide a stable footing for savings for people otherwise at
risk of turning to loan sharks and entering dangerous spirals
of debt. Leeds City Credit Union operates from one-stop
centres, the location where benefits, libraries and advice
are delivered, while Bramley Credit Union works from a
153 the purple book
community centre, church and school in a small area within
west Leeds. These credit unions know the needs and priorities of
their members, and can tailor their solutions to the communities
they serve.
If we can tie the Saving Gateway and child trust fund
mechanisms to local community-based solutions in this way
we can empower individuals, and free communities from
the ties of debt and welfare. It is something that the mutual
sector and credit unions can offer which the state cannot.
Current schemes for financial education – funded by the
financial services industry and government – could be delivered
effectively by funding schemes led by credit unions at
the community level and linked to the success of building
assets, while decreasing the reliance on high-cost credit.
There are other areas where credit unions and mutuals
are better placed than the state to provide the most appropriate
solution to the problems we face. Many people are
simply unaware that they are chronically undersaving, and
are unaware of the consequences this will have on their lives
further down the road. Because credit unions and mutuals are
embedded within their communities, they are uniquely placed
to take the role of trusted information distributor to address
the information gap which exists across large segments of
the population. They can provide localised and individualised
information, informing people of the long-term benefits of
saving, helping them achieve realistic objectives.
If credit unions are to expand into this much larger role we
also have to address the barriers which currently limit their
size. One of the main challenges that credit unions face is
building up and sustaining a strong branch presence due to
the significant costs associated. Against the reality of declining
numbers of local branches of high street banks, the historic
underserving of rural communities and poorer areas by banks,
and the importance of face-to-face interaction to successfully
engage those with less experience of financial services and
rachel reeves 154
savings, building up a strong local credit union presence in
communities across the UK has to be a priority if the objective
of widening access to savings and assets is to be realised.
A partnership between credit unions and the Post Office
could provide a solution to this problem, expanding credit
unions’ availability and visibility, and helping to maintain the
viability of the valued local Post Office branch network as
well. The Post Office has an unrivalled high street presence,
with one located in almost every community. In the postfinancial
crisis era, when trust in the banking industry has
been eroded, people’s trust in the Post Office has remained
high. As the Association of British Credit Unions highlights,
allowing credit unions’ products to be made available via the
Post Office network ‘would provide a much needed revenue
stream to the Post Office, greatly boost the availability and
visibility of credit union services and significantly expand the
level of competition in the financial services industry’. In the
context of empowerment it could greatly expand the reach
of products to those with the least savings and help engage
those who have been hardest to reach through traditional
models of encouraging savings.
Grasping the nettle of undersaving is an opportunity for
us to draw on the cooperative and ethical socialist roots of our
movement, unleash the benefits of mutualism, emphasise the
local credit union and, most of all, to ensure that everyone,
particularly those with the fewest resources, has their own
savings on which to rely and build. Cooperatives, friendly societies
and trade unions are examples of where people have come
together to insure against risk and ensure that they have made
provision for unexpected expenses. Credit unions and mutuals
provide savings provision that the government cannot match,
with community-based products on a micro scale.
They should be emphasised as a core part of the solution
to undersaving and the importance of assets in providing
opportunity and equality. For example, taxpayer-owned
155 the purple book
banks, particularly Northern Rock, could be utilised as the
hub of the Saving Gateway, potentially as the facilitators of
building savings as the building society and mutual model
were originally created to do, forming partnerships with local
credit unions to bring savings to the heart of our community.
And, most important, they work from the community
centres and churches within our communities, rather than
the banking halls. A building society model, plugged into
our communities through the network of credit unions, could
transform our poor record of saving, particularly among those
on most incomes.
Restructure the tax system
Pensions tax relief must also be reformed. Tax relief and
employers’ National Insurance relief significantly improve
employers’ incentives to remunerate employees through
pension contributions and, as the Turner Report pointed
out, ‘under reasonable assumptions, an individual’s pension
is increased by 8 per cent over that which could be obtained
by saving out of post-tax earnings into an ISA, and by 17 per
cent over that which could be obtained if they saved out of
post-tax income into accounts subject to the normal rate of
tax on investment income’.
But the Turner Report also highlighted that if people
could also persuade employers to contribute to pensions
funds, reducing cash wages but keeping total pay the same,
they could be 40 per cent better off than saving in a nonprivileged
tax form.
However, the reality is that the benefits of tax relief are
skewed towards higher-rate taxpayers who have the biggest
savings pots already. In 2009–10, two-thirds of the £19.7bn
given in tax relief went to those paying the highest rates of
income tax. Figures by income decile from the Department
for Work and Pensions have shown that 75 per cent of tax
relief went to the top two income deciles, whereas those in
rachel reeves 156
the lower five deciles totalled less than 10 per cent of the
total tax relief between them. Hardly surprising, then, that
the Pensions Commission concluded that the benefits of tax
relief are ‘extremely unequally distributed, and do not flow
primarily to those most in danger of undersaving’.
It cannot be right that those on high incomes paying 40
per cent tax only have to save £600 to generate £1,000-worth
of pension savings, while those on middle and low incomes
have to save £800 to generate the same amount.
The government has taken some steps to address the issue
by limiting the annual tax-free savings threshold to £50,000,
from a previous level of £255,000, while limiting the total
pensions pot to £1.8 million for tax-relief purposes. Eighty per
cent of the 100,000 people affected by this move have incomes
of more than £100,000 a year. But this does not go far enough.
The next Labour government must be bolder. It must
remove the 50 per cent rate of tax relief and it must find
ways to create a more progressive system. The problem is
that those on the lowest incomes are undersaving, yet they
have to pay 80p to save £1, compared to those on the highest
incomes earning over £150,000 who only have to pay 50p.
Replacing tax relief with matched contributions, or a system
that was even more progressive, offering higher relief to those
on lower incomes than those on higher incomes, should be
explored. At present, the pensions tax relief rewards those
who already have the highest savings and can most afford to
save. This seems to be a very inefficient use of the £20bn spent
on pensions tax relief and is in urgent need of attention.
Empowerment through assets
We know that we undersave in Britain. A phenomenon that has
grown over time has been thrown into stark relief during the
recession when families have struggled to cope with stagnant
incomes, rising prices and a jump in unemployment. Increasing
longevity and more flexible and insecure labour markets have
157 the purple book
at the same time made savings more important, both as a buffer
in hard times and as an income stream in retirement.
The last Labour government sought to get to the heart of
the problems of inertia and myopia with automatic-enrolment
into occupational pension schemes, the creation of the child
trust fund and plans for the Saving Gateway. While the coalition
government seeks to undermine that progress, Labour
must look to the future. We recognise that fiscal constraints
make further subsidies difficult, but we also recognise that
an asset-based approach to social justice and social mobility
must be at the heart of our welfare and taxation agenda.
To meet these challenges more targeted tax relief to boost
the savings of those on middle and modest incomes would
be a much more efficient use of scarce taxpayer resources,
while making automatic-enrolment work for those on such
incomes and those in multiple jobs will also be key.
But we must also recognise that, if we are to truly empower
people, assets play a core role, and it will be important to
those who most need support to encourage savings, financial
education and advice with a tailored and local approach.
Harnessing the power and reach of credit unions in all of our
communities to deliver personalised support as part of lifetime
savings accounts, and a more targeted and reinvigorated
Saving Gateway, would draw on Labour’s cooperative and
mutual roots, and help achieve the objective of empowering
those people who most need a buffer against the shocks that
life throws at them. That should be Labour’s progressive and
empowering approach to building savings and pension provision
for all.
1 Dominic Maxwell, Sonia Sodha and Kate Stanley, An Asset Account for
Looked After Children: A Proposal to Improve Educational Outcomes for Children
in Care (London: ippr, 2006).
Restoring Labour’s moral economy:
the role of National Insurance
Frank Field
Every action of government – as with all institutions –
embodies values. Governments teach their values by
the very act of governing. It has always puzzled me that
left-wing activists see government as a powerful weapon in
positively changing people’s habits, with respect to smoking
for example, but recoil from judging the negative impact that
means-tested welfare has on behaviour. As welfare is by far
and away the largest single government budget it necessarily
powerfully influences our behaviour, whether for good or ill.
It can, for instance, encourage thrift, saving and work, or it
can appear oblivious to its effect on such values.
The Attlee government’s welfare state embodied core
Labour values about fairness and reciprocity, reflecting the
central belief of Labour voters that welfare should be earned
by contributions. The system Clement Attlee adopted paid
out benefits based on individuals’ contributions. Welfare
was very largely awarded on the basis of contributions and
public housing was allocated to those who had waited longest
and who were best-behaved. Later, however, these values
came under increasing pressure. And, in 1997, without any
discussion within the party or the wider country, and with
only a passing reference in the manifesto to a review of taxes
and benefits, Tony Blair and Gordon Brown tore up this
159 the purple book
established welfare contract. In place of Labour’s traditional,
contributions-based contract they put means-testing at the
heart of New Labour’s strategy, entirely disregarding the
fact that the values it instils, and its impact on behaviour, are
totally the opposite to what had gone before.
By simply concentrating on the levels of poverty (as
defined by income) New Labour stripped out the wider providential
role welfare plays in working-class budgets. Fairness
ceased to be based on contributions and reciprocity and was
supplanted by a single mechanical calculation of supposed
need. This fundamental change in direction amounted to a
war of attrition against working people’s moral economy.
It cannot be stressed enough that this enthusiasm for
means-testing is a recent phenomenon. The whole party had
historically held a much stronger opposition to means-testing
than St Augustine took on chastity and continence. In his
famous quip, the saint expressed the desire for chastity – but
not just yet. Like St Augustine’s view on sin, the party has
known the difficulties of entirely eliminating means-testing:
there are always a number of people who, for various reasons,
do not qualify for insurance benefits. But its resolution was to
minimise the role means-tests would play in welfare.
After 1997 New Labour warmly embraced means-testing
– under the euphemistic cover of tax credits – as though it
was a crucial building block in the new society. The number of
people whose minimum income was determined by meanstesting
grew from 13.7 million to 22.4 million during these
thirteen years.
Moreover, Labour’s means-tested welfare left power decidedly
in the hands of the Chancellor of the Exchequer, who
decides each year who gets help, but extends that help only
on the condition of partial serfdom; trying to free yourself
from this serfdom results in massive financial penalties. Not
only are marginal tax rates way beyond the level imposed on
the very richest, a partner’s income is also taken into account.
frank field 160
National Insurance, by contrast, builds a floor underneath
families so that the family, apart from the claimant, is free to
add to the family’s income without penalty.
This means-tested strategy was central to Labour’s attack
on poverty among pensioners and families. Although it gained
less public attention, the drive on pensioner poverty was the
more impressive of Labour’s welfare achievements if we are to
consider only short-term, immediate outcomes. The numbers
of poor pensioners were cut by 1.1 million over the 1997–2010
period down from 2.9 million and at a cost of £86bn.
The record in reducing family poverty is more disappointing.
After spending over £150bn the number of children
living in poor families has been reduced by only 800,000
– from 3.4 million to 2.6 million. Worse still, the tax credit
payments have, like immigration, held down the wages of the
lower paid. Under current rules, the system makes it nigh on
impossible for most claimants ever to earn enough to free
themselves from means-tested assistance. We have thereby
created a new benefits serf class whose economic behaviour is
largely determined by the eligibility rules.
Moral hazards
Labour’s means-tested strategy to combat pensioner poverty
involved far less moral hazard when compared with that for
working-age poor people, and therefore parents, but it still
came with a pretty big political price tag. Far fewer pensioners
will be affected by work incentives for the simple reason
that most of them will have given up work anyway. But the
unfairness of the pension credit system rankles with pensioners
whose savings disqualify them from help. ‘Clearly the
government views me as a fool. I should have blown every
penny I had and then claimed benefits just as all too many
people in this road have done’, is a refrain all too many decent
working-class elderly voters tell those canvassers who wish
to listen. Moreover, no studies have been conducted on the
161 the purple book
impact of the offer of pension credit on the savings that
lower-paid workers make while employed.
The violence that means-tests inflict on the working-class
moral economy is in a different league when considering its
impact on people of working age. Means-tests have a major
impact on incentives to work: tax on each additional £1 of
earnings plus the loss of means-tested help imposes marginal
tax rates of up to 95.95 per cent, and with the new universal
credit just under 20 per cent of the working poor will still
face a tax-and-benefit loss rate of 50 per cent or more. But
means-tests have also fundamentally changed the attitudes
and character of all too many claimants.
The argument that ‘it doesn’t pay me to take a job; I would
only be £15 or £20 a week better off’ marks a sea-change in
working-class attitudes. Means-tested benefits, designed as
a temporary safety net, have been turned into a pension for
life for all too many claimants: we have, in effect, created a
class of dependents, as addicted as anyone on crack cocaine.
The change has meant that not all claimants see work as their
ultimate goal: too often they balance their extra income against
the required effort and judge the rewards insufficient. It is difficult
to exaggerate how fundamental this change in attitude has
been and the size of the political challenge it throws up for
working out a new strategy for the next Labour government.
During my time as MP for Birkenhead I have come to the
conclusion that there needs to be a fundamental change in
the attitude of many claimants. Too often the safety net that
benefit claimants are offered today is seen as an income for
life, and particularly by young adults. We cannot afford to let
this view take root any more deeply.
There are, therefore, two strategies that governments can
adopt to bring the values of welfare back into line with the
sense of decency that characterises not only working-class
culture but also society more generally.
The first is to continually tighten up the eligibility rules
frank field 162
for the main income support benefits, such as means-tested
jobseeker’s allowance, with the aim of forcing reluctant workers
back into the labour market.
The alternative is to begin again, emphasising why work is
so crucial to an individual’s fulfilment and as a mainstay for
the family, and to reflect this new emphasis in an insurancebased
welfare system. Welfare would then begin again to
play a virtuous role. It would emphasise Labour’s traditional
values, and by so doing help develop a self-policing system
as an ever-growing proportion of voters begin to see a direct
link between how well the scheme is run, and the rules abided
by, and the premiums they pay.
Both strategies, of course, need to be employed. But there
would be greater support and understanding, and a wider sense
that justice was being done, if both approaches were pursued
together. So what shape should a major rebuilding and repositioning
of insurance take in a twenty-first century welfare state,
which simultaneously shifts power away from the centre?
Reinventing insurance-based welfare
First, we need to decide what the aims of the system should
be. This needs to reflect the uncertainties that a global economy
places on the budgets of ordinary families and how these
can best be countered by an insurance-based system.
Too much is made of how obsolete William Beveridge’s five
war-time ‘evils’ are. Unemployment was then the chief cause of
poverty. It remains so today if we consider the numbers who are
genuinely unemployed and who lodge in the incapacity benefit
(now employment support allowance) queues. Let me illustrate
the form an insurance-based welfare scheme could take
by examining one element of it: that against unemployment.
Newly means-tested unemployed claimants often explode
with anger when told, after paying in to an insurance scheme
for decades, that the only help they are entitled to is a sixmonth,
time-limited derisory insurance-based benefit of
163 the purple book
£67.50 per week. After six months a partner means-test is
applied, and often working wives’ or husbands’ income
disqualifies the unemployed person from any help whatsoever.
But where an individual has played by the rules, and built
up an exemplary contribution record, a new insurance system
should surely ‘reward’ this. A National Insurance scheme
would seek to provide unemployed claimants with a fixed
income relative to the insurance premiums each claimant has
paid. The scheme, as noted earlier, would provide claimants
with a floor income on which they could build. Individuals
would, furthermore, make their own decisions as to how good
their contribution record is. The system would, of course, be
backed up with a tough system of moving people into work,
including time limits on benefits.
Similarly a new system should encourage claimants to
be less risk-averse when re-entering the labour market by
supporting them with a fast-track re-eligibilty criterion.
Facing an often insecure range of job prospects, our current
system rewards the faint-hearted who do not take risks to
get back into work, yet being in work is the best place to find
better job opportunities.
We would be wise, in the first instance, to propose a salarybased
insurance system that is one where the higher the salary
the higher the contributions, but so too are the level of benefits.
Workers entering the labour market for the first time, or immigrants,
would not qualify until they had made a minimum
number of contributions. Those who had not met this criterion,
or had not gained credits for being carers, would be dependent
on a less generous means-tested system of allowances.
These two moves would not only draw immediate political
support, they would also set the framework for how the
reshaping of welfare would progress. It would also open up
the possibility of extending insurance cover to new areas of
need, such as long-term care.
It would, for instance, be sensible to include long-term
frank field 164
care, where only one in six of us will need to spend significant
extra costs – currently £24,000 on average for a woman – as
part of a new insurance-based welfare system.
While no sensible person would deny the difficulties
there are in policing eligibility to ‘benefits’, private companies
already run schemes for higher-income groups, and such a
task should not be beyond a universal scheme.
Owning welfare
Two further issues must be dealt with. The first is cost and the
second is ownership. I tried to deal with both these issues in
papers before the 1997 election.
At that time the government actuary costed the schemes
I was proposing. These numbers are now out of date, but they
underscore a crucial point that must not be ignored. Better
welfare is not going to come cheap. It has to be paid for and
this will involve fundamental political questions: how the
costs fall on individuals and which other sources of revenue
or the withdrawal of which tax allowances might be used to
finance both the transition to, and then the regular costs of,
the new system. Moreover, there will also be questions about
how quickly the scheme can realistically be introduced.
Hence the importance of salary-related contributions
and benefits if a wider coalition of support is to be rebuilt
for welfare reform. In his first budget Brown talked of the
‘National Insurance tax’, for reasons best known to himself.
Voters have never viewed their contributions as a tax, as the
present government will soon learn as it tries to combine
taxes and National Insurance.
The scope for reform along these lines was inadvertently
initiated by the National Insurance change the last government
made specifically to bring NHS funding up to the
European average. When the then Chancellor was cornered
into changing the rules to introduce a specific National
Insurance contribution for the NHS he was met with over165
the purple book
whelming support. Not only in increasing by one percentage
point all National Insurance contributions, but in lifting the
cap which currently limits the size of all contributions from
those on higher incomes. These two changes increased the
National Insurance revenue by around £75bn over the last
eight years.
There is a further major change that should be embraced.
National Insurance must be converted from a state-run
scheme to one which is mutually owned by its members.
Here this policy fits further with The Purple Book’s theme of
redistributing power.
Before 1997 I posed the question as to how the Bank of
England’s governance model – of being responsible to, but
possessing a high degree of independence from, government
– could become more democratic, and form the basis for voter
ownership of what would clearly become a member-owned,
insurance-based welfare state. It is clear to me that the Bank of
England is the ideal place to house a new National Insurance
system although it will need to become more accountable to
Parliament.
New Labour’s means-tested strategy has done enormous
harm to the moral order of working-class families. It has cost
huge sums in revenue and it has failed to reach its single goal
of halving child poverty.
Reshaping welfare along insurance lines in a scheme
which is owned by the contributors will appeal to workingand
middle-class voters alike. It will begin to reshape the
public finances, with voters owning their scheme and having
a say on both contribution and benefit levels. Such a reform
would therefore be seen as a staging post to voters having a
more direct say over what they pay and to what services they
contribute. And, most importantly, it sends out a clear moral
message that benefits are to be earned and that reciprocity
will sit at the heart of the welfare society.
Putting families first: universal care
from cradle to grave
Liz Kendall
Families matter. They help make us who we are as individuals,
give us love and support, teach us how to behave
and shape our values, beliefs, confidence and self-esteem.
Families are also the building blocks of our communities
and society as a whole. The ability of parents and carers to work
and financially provide for their families is critical in improving
living standards and tackling poverty and inequality. The quality
of the home environment and parents’ involvement in their
children’s learning has a profound effect on how well children
do at school. Families also make a huge contribution to the
health and wellbeing of our increasingly ageing population,
through the care and support they provide for elderly relatives.
So families are central to creating opportunities and life
chances, and providing wider emotional, social and financial
support, which is why family policy must be at the heart of
any progressive vision for the future.
Families also matter politically. Winning the ‘family vote’
has long been a key battleground in British politics. At the
last election, Labour promised to help ‘hard-working families’,
championed our record on family-friendly working,
childcare and tax credits, and promised to support families of
all shapes and sizes.
The Conservatives claimed they would protect Sure Start
167 the purple book
(a pledge they have since broken), reward marriage in the tax
system and make Britain the most family-friendly country in
the world. The Liberal Democrats opposed tax incentives for
marriage and promised to allow mothers and fathers to share
parental leave.
That all the main political parties put childcare and
family-friendly policies at the heart of their 2010 manifestos
is testament to the huge strides Labour made when we were
in government.
We introduced free nursery places for three- and fouryear-
olds, established 3,500 Sure Start children’s centres,
and helped families with the costs of childcare through new
tax credits. We produced the first-ever national strategies
for childcare and for supporting carers. We also increased
maternity pay and leave, introduced paid paternity leave for
the first time, and brought in a new right to request flexible
working. Many of these changes faced considerable opposition,
including from the Conservatives, and were achieved in
no small part due to the efforts of our women MPs.
Yet, despite our very real achievements, too many families
at the last general election felt we were out of touch with
the reality of their daily lives. In my own constituency, many
families – too ‘rich’ to get help from the state yet struggling to
make ends meet – told me they felt let down by Labour. And
our ‘offer’ to families at the last election was not clear enough
or bold enough to convince many voters we were still the best
party to help them through difficult times.
In order to win again, this must change.
Labour must once again show we understand the pressures
and anxieties families face in the here and now, and that
we will offer them a positive alternative for the future.
This will require us to more clearly articulate Labour’s view
of the relationship between individuals, families and state.
The role of government is not to tell families what form
they should take or how they should live their lives, but to
liz kendall 168
create genuine opportunities within which families can
themselves determine how to build a better life.
Making these opportunities real means ensuring a range of
resources are available to families, including services, financial
support and, crucially, time. Securing these resources is not
something that can be left to markets alone – it requires an
active role for the state.
The way these resources are provided also needs to change
to redistribute power between the state and individuals and to
give families more control. In order to retain support in the long
run, public services must respond to wider changes in society,
where people want and expect to be given a greater say. There is
also increasing evidence that the quality and outcomes services
achieve can be improved if users play a more central role.
Of course, families come in very different shapes and
sizes. They face different circumstances and have different
views about the help and support they need. So there is no
one single policy or initiative that will secure the ‘family vote’.
However, many families face similar pressures and have
similar hopes for the future. These pressures and hopes are
influenced by profound social and economic changes that
have shaped family life in Britain in recent decades, and will
continue to do so in the years ahead.
Family structure and demographic change
The structure of Britain’s families is changing. While marriage
remains the most common form of partnership – figures
show that in 2006 half the adult population were married – it
is now less common than it has ever been.
More couples live together before getting married.
One-fifth of all couples are expected to be in a cohabiting relationship
by 2021, compared to 12 per cent of couples in 1996.
Divorce rates rose steadily throughout the latter part of
the twentieth century, stabilised in the mid-1980s, and then
declined: in 2007 divorce rates were at the lowest level since 1981.
169 the purple book
According to the last 2001 census, 5 per cent of all families
are ‘stepfamilies’ – a figure which is likely to have increased
over the last decade.
The number of lone-parent households has increased too:
around a quarter of all children are being brought up by single
parents, compared with one in fourteen in 1972. Women are
having their first child much later, in part due to their increased
participation in the workplace. This in turn is affecting the size
of families, with parents having fewer children than in the past.
The ageing population is also changing family life, bringing
new caring responsibilities. There are 1.7 million more
people aged sixty-five now compared to the mid 1980s. At
the same time, the percentage of the population aged under
sixteen has decreased, a trend that is set to continue. By 2034,
23 per cent of the population is projected to be aged sixty-five
and over compared to 18 per cent aged under sixteen.
Living standards
Living standards have risen steadily over the last fifty years.
During the immediate post-war period, these increases were
driven by greater educational opportunities and technological
change. In the 1970s and 1980s living standards continued
to rise as more women went out to work. In the late 1980s
and 1990s rises in living standards were fuelled by financial
deregulation and the credit boom; and in the 2000s they were
boosted by the introduction and expansion of tax credits for
people of working age.1
Average incomes continued to grow during the recession in
2008–9 and 2009–10, even after taking account of inflation and in
spite of the increase in unemployment. However, average incomes
will be more than unwound in 2010–11 as the long-term effects of
the recession are felt and higher inflation erodes living standards.2
Furthermore, there is no guarantee that increasing
prosperity will be fairly shared among all sections of the
population when Britain’s economic growth returns.
liz kendall 170
Living standards for those on low-to-middle incomes
stagnated even before the 2008–9 recession. While productivity
has continued to grow, the gains have not fed into pay
packets, particularly of low-to-middle income earners. There
has been a stronger increase in top wages than those at the
middle or bottom and the balance between wages and profits
has also changed, with workers getting a smaller slice. There
has also been a deeper and more fundamental shift in the
way technology is driving jobs growth. Instead of displacing
jobs at the bottom and replacing them at the top, today’s
technologies are displacing jobs in the middle.3
Other trends have had a profound effect on living standards,
particularly for those on low and middle incomes. Inflation
has hit these families disproportionately hard and prior to the
financial crisis mortgage repayments for families owning their
own homes were actually rising, despite falling interest rates.
Working patterns and caring responsibilities
The last fifty years have also seen major changes in working
patterns.
Mothers’ employment tripled between the 1950s and late
2000s, and two-thirds of mothers are now employed. Fortyfour
per cent of women now work part time, and there has
also been a significant increase in the number of men working
part time, with the proportion doubling from 7 to 14 per cent.
Ninety per cent of families where both parents are employed
work at least some atypical hours (outside 8am to 7pm). Eighty
per cent of working fathers in couple families, and half of all
working mothers, including single mothers, work atypical hours.
Our ageing population is also leading to significant
changes in working patterns. As people live longer, they
are working for a longer period of their lives. For example,
between 1975 and 1995, the economic participation of men fell
as many took early retirement. From 1995 to 2005, this trend
was reversed.
171 the purple book
The increase in mothers who work and our ageing population
is putting family time under increasing pressure. The
2007 British Social Attitudes survey found that 84 per cent
of full-time women workers and 64 per cent of part-time
women workers want to spend more time with their families.
It is not just mothers who are feeling the squeeze on their
time: half of all fathers say they are not spending enough time
with children. This is partly due to the number of hours men
have to work, but also because they are much less likely than
women to live in the same household as their children.
A recent survey by the National Family and Parenting
Institute found that the greatest concern about family life is
caring for elderly relatives. Worries about caring for elderly
relatives are likely to increase, particularly as the ‘baby
boomer’ generation reaches old age and more people in their
fifties face caring responsibilities.4
Squeezed incomes, squeezed time
The consequences of the financial crisis and public spending
cuts combined with longer-term changes in family structure,
living standards, working patterns and caring responsibilities,
are having a profound effect on family life in Britain today.
Many families are anxious about their jobs. They find life a
constant struggle to make ends meet financially as the cost of
living rises. Families are also worried about finding enough
time to look after their children and elderly relatives. Their
incomes are being squeezed, but so too is their time.
This is particularly true for families on low-to-middle
incomes. These families cannot afford for one partner to stop
work or go down to working part time. At the same time,
they often cannot find the formal care services that would
help them strike a better balance between their work and
family life. Even when formal care is available, it is often too
expensive for ordinary families to afford.5
Childcare costs across the UK are high, with annual price
liz kendall 172
increases outstripping wages. The cost of childcare in England
for a child aged two and over increased by 4.8 per cent last
year, with similar increases for children aged under two.6
This is a major barrier to parents getting work and escaping
the low pay/no pay cycle. Lack of flexible childcare in the
evenings, at the weekends and during school holidays is a
particular problem.7
The costs of social care are also very high. The latest
evidence from the Personal Social Services Research Unit has
shown that the average total cost of residential care for over
65-year-olds who use it – including both accommodation and
care – is £50,000. One in ten people over sixty-five years old
who need residential care face costs of £100,000, and one in a
hundred face costs of over £300,000.
The challenge for progressive politics
The anxieties and pressures on Britain’s families raise two key
challenges that Labour must address when developing our
future family policy.
First, while a return to economic growth is absolutely
critical, it may not be sufficient to ensure increasing prosperity
is fairly shared among all families, particularly those on
low and middle incomes. Childcare and elderly care look set
to become even more important than before in helping these
families increase their earnings through work.8
Second, increasing incomes alone will not be enough to
help families secure the kind of life they want to lead. Time
is an increasingly precious but rare commodity in family life,
particularly for those on low-to-middle incomes.
This presents Labour with a huge opportunity, but also a
challenge.
The opportunity is that providing universal, high-quality
and affordable childcare and elderly care and boosting family
time through more flexible working cannot be left to markets
alone. It requires an active role for government, which is
173 the purple book
something progressive political parties are best placed to
achieve.
The challenge is how Labour can achieve these goals
during uncertain economic times, when growth is at best
fragile and when public spending and services are being cut.
Since the election, Labour has rightly opposed the government’s
public spending cuts for going too deep and too fast,
risking the jobs and growth our economy urgently need, and
threatening the public services on which families depend.
However, Ed Miliband and Ed Balls have made it clear that
Labour will not oppose every cut. This is crucial, particularly as we
approach the next election, as it would risk raising expectations
that every cut will be reversed if Labour regains power, which is
neither convincing to the electorate nor realistic for a party that
is determined to demonstrate we are a government-in-waiting.
There is a strong case that protecting early years services
and care for the elderly should be a priority for Labour, as
cutting these services will have long-term consequences for
individuals, families and taxpayers.
Reducing early years services and closing Sure Start children’s
centres will make it harder for parents to find work.
It will also reduce children’s later life chances, leading to
increased costs for other public services. Yet the government
is cutting the early intervention grant, which includes funding
for Sure Start, by 11 per cent this year, and 7.5 per cent next
year. Two hundred and fifty children’s centres are set to close
this year, affecting 60,000 families.9
Cuts to social care will also harm the health and wellbeing
of older people and end up costing taxpayers more in the long
run, as many older people end up in hospital or requiring
more intensive and expensive residential care. Spending on
older people’s care is set to be £300m lower over the next four
years. Real spending on older people will be £250m lower in
2010–15 than 2004–5. At the same time the number of people
over eighty-five has risen by two-thirds to 630,000.10
liz kendall 174
So Labour should continue to make a strong and powerful
case against these cuts. But we will not win again on an anticuts
agenda alone. We must offer a clear and positive vision
for the future, and an alternative agenda for government.
Political debate about public services has long been dominated
by the core services of education and the NHS. When
Labour was in government, we championed investment and
reform in schools and hospitals. This was urgently needed
after eighteen years of neglect by the Conservatives.
However, there are compelling reasons why Labour should
now place a greater emphasis on championing childcare and
care for the elderly.
The experience of countries like Sweden and Denmark
suggests the provision of universal, high-quality childcare
helps promote higher employment levels among women.
Increased female employment is crucial to supporting the
long-term sustainability of the welfare state as the population
ages, to reducing the gender pay gap and to allowing more
women to provide for their own old age.11
Childcare is also critical to tackling child poverty, improving
life chances and promoting social mobility.12 The Joseph
Rowntree Foundation estimates that getting early years services
right could move between a sixth and half of all children
out of poverty.13 High-quality early years provision benefits
all children, but particularly boys, children with multiple
disadvantages, and those with special educational needs.14
It is also likely to produce net economic gains in the long
run by reducing expenditure on the costs of ‘failure’, such as
welfare benefits and the criminal justice system.15, 16, 17
A similar case can be made for prioritising care for the
elderly. Services that promote the health, wellbeing and
independence of older people, and which prevent or delay
the need for higher intensity or institutional care, have been
shown to improve the quality of life of older people and
deliver significant savings in reduced NHS spending.18 Fully
175 the purple book
integrating health, housing and social care, and shifting the
focus of both these services towards prevention and early
intervention could lead to even greater benefits, with some
reports suggesting savings to the NHS of £2.65 for every £1
spent on integrated care.19
Improving support for informal carers would also help the
wider economy. Carers UK has shown that one in six unpaid
carers gives up work to care. This not only harms their own
living standards but the economy as a whole, as their skills
and talents are lost to the workplace, and through increased
spending on welfare benefits.
Universal care from cradle to grave
The profound impact of the very earliest years of a child’s
life on their later life chances, and the clear benefits of highquality,
preventative social care, suggests childcare and care for
the elderly should move to the top of Labour’s agenda. Our
ambition should be to secure high-quality care from cradle to
grave, transforming childcare and elderly care into universal
public services that are as integral to our country and the social
fabric of our communities as schools and the NHS.
This will mean difficult decisions about Labour’s priorities
for future public spending.
These decisions should be informed by the work on ‘capabilities’
developed by Amartya Sen. Sen argues that material
wellbeing is not an end in itself, but the means to a better life.
Income and economic resources are important because of the
capabilities they endow people with – the ability to achieve
certain aspirations and to participate in the social life of the
community.20, 21
In other words, people’s ability to choose the life they want
to lead is shaped by their opportunities in the widest sense –
their health and wellbeing, and their skills, educational and
social opportunities – as well as their income.
This suggests Labour needs to consider how to strike a
liz kendall 176
better balance between funding for tax credits and benefits,
and funding for services like childcare and care for the elderly.
These services play an absolutely crucial role in helping
families work and increase their living standards, in tackling
poverty and inequality and in improving outcomes for young
children and older people. They are also more visible and
tangible than other types of family support, which arguably
makes them harder to reduce or remove, particularly during
uncertain economic times and when public spending is tight.
The report of the Commission on the Funding of Care
and Support, led by Andrew Dilnot, provides a particularly
important opportunity to develop a secure and sustainable
system of funding for older people and their carers in future.22
The Commission proposes to increase the current meanstested
threshold above which individuals have to pay for
their residential care from £23,250 to £100,000, and to place
a cap on the overall amount they pay of between £35,000
and £50,000. The Commission also calls for an end to the
postcode lottery in the eligibility for social care so that local
councils meet the ‘substantial’ needs of individuals, rather
than the present situation where many local authorities are
meeting only the needs of those assessed as ‘critical’.
Labour has taken a bold stance on this issue by offering to
work with the government in taking the Commission’s proposal
forward. Our ambition must be to develop a system of funding
for social care that is both fair and affordable and which has
broad-based support, to ensure sustainability over the long term.
Alongside decisions about how best to fund early years services
and care for older people, Labour must also develop a clear
plan to improve the way these services are delivered in future.
A full set of policy proposals on how this should be done is
beyond the scope of this chapter. It instead focuses on a central
issue: redistributing power to give staff, users and carers a
greater say and greater control through the greater use of mutuals,
social enterprises and the voluntary and community sector.
177 the purple book
The Conservatives are attempting to claim this territory
through their plans for the ‘big society’. Labour should treat
the coalition government’s supposed conversion to supporting
voluntary, mutual and cooperative organisations as a sign of the
strength of our enduring principles and values, and not a threat.
However, the reality is that the government’s ‘big society’
aims to roll back the state and leave volunteers to fill in the
gap. The Conservatives fail to understand that a key ingredient
in helping local people and communities take on real
power and control is a democratically elected, enabling state.
There is a huge opportunity for Labour councils to champion
new ways of delivering childcare and care for older
people, demonstrating how this can be achieved in practice,
even when we are not in power nationally.
One of the key challenges in social care is improving the
quality of the workforce. Social enterprises have shown they
can help increase skills and training opportunities for staff,
which in turn help improve the quality of care for older people.
For example, Sunderland Home Care Associates is an
employee-owned organisation with 300 staff who deliver
7,000 hours of care to older people a week, including washing,
bathing and showering, preparing meals and supporting
carers. Staff have a vital role to play in making decisions about
how the organisation is run, such as helping set budgets, pay
and conditions. They also have extensive opportunities for
training and study to NVQ levels two, three and four. As a
social enterprise, any profits made are spent on improving
services or rewarding staff.
Labour must also consider how to improve the quality of
the childcare workforce. One option would be to learn from
the experience of the Teach First model in schools.
Teach First was established as a charity in 2002, with funding
from government and the corporate sector. It has been a
huge success in recruiting 800 high-achieving graduates to
work in Britain’s most challenging schools. By recognising
liz kendall 178
that government does not always know how best to solve
problems, Labour helped create an innovative scheme – run
by the third sector, with backing from the state and business
– to improve children’s life chances.
Labour should consider piloting a Teach Early Years First
scheme to attract the best and brightest graduates into childcare.
This could help increase the quality, skills and motivation
of the early years workforce and improve the life chances
and aspirations of children in disadvantaged areas.
Another way that voluntary and community groups can
help improve the quality of services is by better engaging and
involving families.
Charities like Home Start train volunteers who have
parenting expertise themselves to visit families in their own
homes, offering friendship and support to deal with issues like
post-natal depression and practical help, such as encouraging
breastfeeding. The Peers Early Education Partnership helps
parents in deprived communities understand the importance
of the very earliest years for their children’s learning, and
how they can make the best of everyday activities to develop
children’s literacy and numeracy skills, their self-esteem and
their propensity to learn.
Involving members of the wider community can also help
improve support for older people and their carers.
For example, time banks are not-for-profit organisations
that allow people to ‘deposit’ one hour of their time to help
other members of the local community, such as offering lifts,
accompanying people to the shops, providing companionship
and checking up on people after hospital discharge. When
they need help themselves, people can ‘withdraw’ one hour of
time and support in return.
Time banks have been shown to help isolated older people
remain independent and stay in their own homes by providing
them with much-needed practical help and support.23
Greater use of time banks could also make a real difference in
179 the purple book
supporting the UK’s six million informal carers, four million
of whom are of working age.
Boosting time to care
Boosting time to care should be at the heart of Labour’s
family policy agenda. Time should be seen and treated as an
integral social value – crucial to helping families and communities
choose the kind of life they want to lead.
There is also a strong business case for family-friendly
working, as it helps companies retain the skills and experience
of parents and carers, boosts staff morale and productivity,
and helps save time and money on the costs of recruitment.
The UK has a very different system of parental leave
compared to other countries, with the gap between what mothers
and fathers can take among the highest in OECD countries.
British mothers are entitled to twelve months’ maternity
leave, nine of which are paid at the statutory rate and fathers
get two weeks’ paid leave around the birth of a child. Other
countries have a shorter period of statutory maternity leave,
followed by a reserved proportion of leave for fathers, then
extended parental leave entitlements, which can be shared.
Labour should learn from international experience about
the benefits of redistributing time more fairly between mothers
and fathers. Some countries have pioneered the use of
‘daddy quotas’: a period of leave that only fathers can take
– they have to ‘use it’ or they ‘lose it’. For example, in 2000,
Iceland divided leave into three blocks: three months’ nontransferable
maternity leave, three months’ non-transferable
paternity leave, and three months for parents to determine.
This has led to a significant increase in the amount of time
fathers take overall, and on how joint leave is shared, with
dads now taking one-third of the shared entitlement.
A separate and increased entitlement for fathers in the UK
could help change cultural norms, including at work so employers
see fathers’ time with their children as equally important to
liz kendall 180
that of mothers. It could also help improve child outcomes.
There is increasing evidence that time spent by fathers with
their newborn children is crucial to securing lasting bonds and
that this can help fathers stay in contact with their children
even if they are separated from the child’s mother.24
As well as time off around the birth of children, Labour
should build on our record in government in championing
flexible working.
Labour introduced a right to request flexible working,
initially for families with young children and then all children
under eighteen and carers. However, some studies have
suggested that the right to request is overly complex and that
its effectiveness could be improved.25 Labour should consult
with businesses about how family-friendly working can be
strengthened in future. This could include offering the right to
request flexible working to all employees (not just parents and
carers of older relatives); extending it to agency workers who
are currently excluded; and starting entitlements from day one,
instead of after twenty-six weeks as at present, so that employees
and employers can be clearer about their needs from the start.
Putting families first
Childcare, elderly care and time to care should now be at the
top of Labour’s future policy agenda. Our ambition should
be nothing less than to transform support for families from
cradle to grave.
In uncertain economic times, this will mean difficult
decisions about the balance of funding for different public
services, and between the amount of money spent on these
services, tax credits and other family benefits.
The way we deliver childcare and elderly care services also
needs to change. We need to draw more deeply on Labour’s
mutual and cooperative tradition to give users and carers a
greater say and control over their services – as individuals and
members of the wider society. This will require a fundamental
181 the purple book
redistribution of power between the state, individual families
and the community as a whole.
Labour has a huge opportunity to show families we are
the party best placed to help them live the life they want
to lead and to support them through difficult times. It is an
opportunity we must seize with both hands.
1. James Plunkett, ‘Growth Without Gain? The Faltering Standards of People
on Low to Middle Incomes’, Resolution Foundation Commission on Living
Standards, 2011.
2. ‘Long term effects on living standards yet to be felt’, Institute for Fiscal
Studies, 13 May 2011.
3. James Plunkett, op. cit.
4. Stephen A. Hunt (ed.), Family Trends (London: National Family and
Parenting Institute, 2009).
5. James Plunkett, op. cit.
6. Daycare Trust, Childcare Costs Survey 2011 (London: Daycare Trust, 2011).
7. Ronald McQuaid et al, How Can Parents Escape from Recurrent Poverty?
(York: Joseph Rowntree Foundation, 2011).
8. James Plunkett, op. cit.
9. ‘250 Sure Start children’s centres face closure within a year’, Daycare Trust
and 4Children, 28 January 2011.
10. Age UK, Care in Crisis, Causes and Solutions (London: Age UK, 2011).
11. Gøsta Esping-Andersen, ‘Towards a New Welfare Equilibrium’, Report to
the Progressive Governance Conference, July 2003.
12. Kathy Sylva, The Effective Provision of Pre-School Education (EPPE) Project:
Final Report (London: Institute of Education, University of London, 2004).
13. Jane Waldfogel and Alison Garnham, Eradicating Child Poverty: The Role of
Key Policy Areas (York: Joseph Rowntree Foundation, 2008).
14. Kathy Sylva and Fiona Roberts, ‘Quality in Early Childhood Education:
Evidence for Long-Term Effects’, in Gillian Pugh and Bernadette Duffy (eds),
Contemporary Issues in the Early Years (London: SAGE, 2010).
15. Gøsta Esping-Andersen, The Incomplete Revolution: Adapting to Women’s
New Roles (Cambridge: Polity, 2009).
16. James J. Heckman, ‘Policies to Foster Human Capital’, Working Paper 7288
(Cambridge MA: National Bureau of Economic Research, 1999).
17. Pedro Carneiro and James J. Heckman, Human Capital Policy (Cambridge
MA: National Bureau of Economic Research, 2003).
18. Department of Health, PSSRU National Evaluation of Partnerships for Older
People Projects, 2007.
liz kendall 182
19. Turning Point, Benefits Realisation: Assessing the Evidence for the Cost Benefit
and Cost Effectiveness for Health and Social Care (London: Turning Point, 2010).
20. Amartya Sen, ‘The Living Standard’, Oxford Economic Papers – New Series,
1984, vol. 36, Supplement: Economic Theory and Hicksian Themes, pp. 74–90.
21. Amartya Sen in Geoffrey Hawthorn (ed.), The Standard of Living
(Cambridge: Cambridge University Press, 1987).
22. Department of Health, Fairer Care Funding, 4 July 2011.
23. New Economics Foundation, The New Wealth of Time: How Timebanking
Helps People Build Better Public Services (London: New Economics
Foundation, 2008).
24. Dalia Ben-Galim, Family Policy: Where Next for Parental Leave and Flexible
Working? (London: ippr, 2011).
25. Ibid.
The authors of their own lives: stronger
communities and the relational state
Tessa Jowell
The ‘task before the Labour Party’, wrote R. H. Tawney
in 1931, is ‘not to pretend that change is smooth. It must
promise less and demand more, say less of what it will do but
more of the responsibility that rests with the public. Seeing
the public as partners in a common enterprise to achieve its
goals it must be less of an electoral machine, more of a movement
and a crusade.’1
In today’s context ‘seeing the public as partners’ would
mean allowing local residents to commission their own
services; giving local communities the opportunity to identify
the priorities for local spending; or putting people in
need in touch with local residents with skills and time to
give. Stronger communities will be built through stronger
relationships, not through pseudo-commercial transactions
between the provider and receiver of services. A new
role for the state will need to be conceived – the relational
state, committed to developing people’s relationships rather
than the technocratic language of outputs, targets, and
value-for-money.
We need to build on local examples of citizen action to
make them the rule, not the exception. Rather than trying
to rebuild society as it looked before the financial crisis, we
need to use this opportunity to reshape the communities we
tessa jowell 184
live in so that the most disadvantaged also hold power. To
quote Tawney again, ‘the practical thing for a nation which
has stumbled upon one of the turning-points of history is not
to behave as though nothing very important were involved
… but to consider whether what it has done hitherto is wise,
and, if it is not wise, to alter it.’2
The post-war settlement of the 1940s and 1950s established
universal solutions to problems that were experienced
nationwide. The post-financial crash settlement needs to
address problems that are unique to people’s experience street
by street. Even if the challenges are similar in Brighton as in
Bradford, the best solutions will come from locally conceived
action and tailored state support, as opposed to nationwide
monolithic government.
The role of the state needs to move with the changing
demands of the times and, therefore the role of politicians
in Westminster and the town hall will need to change too.
In the future, politicians will need to be able to combine
the robust nature of national politics with a more grounded,
humane approach to local representation. People rising to the
challenge of local activism should feel that they are the leaders,
while the politicians harness ideas, nurture fledgling civil
action and, when necessary, guide their local leaders through
the maze of central government.
David Cameron’s ‘broken Britain’ narrative and the
response of the ‘big society’ in return is the Tories’ best shot
at meeting this challenge. It fails because it is a confusing
blend of sepia-tinged nostalgia akin to John Major’s ‘warm
beer’ speech, a noblesse oblige approach to philanthropy and
naked hatred of state intervention. It is significant that their
slogan is ‘big society, not big government’. They don’t want
a smaller state, or even a cheaper one. They want a nugatory
state – one that does not impinge on the lives of people to any
great extent. This is a hopelessly inadequate formulation to cope
with the huge pressures created on society by globalisation and the
185 the purple book
attendant job and family insecurities. Instead of being inspiring,
the Tory ‘big society’ leaves people to fend for themselves
creating more insecurity, not less.
The left, though, must find ways to give communities the
means to solve problems in their own ways and, in doing so,
to create their own futures. The accruing benefits to individuals
and communities who will discover their own agency will
be worth the risk of difference caused by decentralisation.
Truly putting power in the hands of the many not the few
could form a radical alternative to the Conservative vision of
a little platoon society and define the next stage of Labour’s
transformational purpose.
New Labour’s legacy
The accusation that in government New Labour never fully
embraced the need to steer, not row, as David Osborne and
Ted Gaebler suggested in their book Reinventing Government,
has some merit. But in recognising some of the missed
opportunities of our thirteen years in power, we should not
overlook the real transfers of power to communities which
did take place.
As Tony Blair said in his speech to the National Council
for Voluntary Organisations in 1999, ‘history shows that the
most successful societies are those that harness the energies
of voluntary action, giving due recognition to the third
sector of voluntary and community organisations’. Under
New Labour, it is estimated that the size of the third sector
almost doubled and received £12.8bn from statutory sources
in 2007–8. The creation of new mutuals in public services
personalised and shaped provision around the needs of
individuals, as well as promoted democratic accountability.
Mutuals make our communities stronger by putting more
democratic power in the hands of users, enabling decisions
to be made by representatives of the community rather than
unelected appointees.
tessa jowell 186
The biggest expansion of mutualism took place in the
NHS, with the creation of more than 130 NHS foundation
trusts with nearly two million members. Of the fortytwo
trusts ranked as ‘excellent’ in the 2008 Healthcare
Commission annual health check, the vast majority – thirtyeight
– were foundation trusts. The Labour government also
launched over 100 cooperative trust schools, which involve
the wider community in the running of the school, including
local people, businesses, voluntary groups, charities, parents,
pupils and staff through membership of a council or forum.
But while a greater role for mutual and other community
organisations did drive improvements and made services
more responsible to people, the way in which commissioning
operates means that this transfer of responsibility for services
did not meet its full potential. Too often services failed to cut
across the silos of government departments, and the emphasis
was too often on the old Beveridge institutions rather than
the character of communities and the needs of people.
The operational dimension of procurement and performance
meant that voluntary and community organisations
have been made subject to the processes of the way the state
governs. The emphasis on market mechanisms in public service
delivery, and the adoption of technocratic terminology and
measures, has been found to alter the way in which voluntary
and community organisations behave.3 Accountability
has therefore flowed upwards to its funders, rather than to
members, service users or trustees – the guardians of the
values on which the organisations are founded.
None of this should deny that public services got better.
Public service reform in government was an evolutionary process
starting with investment in the first stage, moving towards
greater accountability and measurement of efficacy in the
second, and personalising services in the third. Thirteen years
of governing may have led us to a technocratic place, but it was
necessary to raise standards in public services to their current
187 the purple book
levels. Our mission for public services, however, must be to build
on this third stage of greater community and individual control
of public services. We know that stronger communities are
formed by individuals pursuing relationships with a common
purpose, and we must find ways of building on the progress we
made in government if Labour is going to grasp the next stage
of the unending process of transforming public services.
The Conservative alternative
The ‘big society’ should be Labour’s territory. As an idea, it
speaks to Labour’s principles of solidarity, mutualism and
collectivism. Labour also understands that the third sector has
always played a complementary role to the statutory sector,
campaigning and agitating for improvements, rather than
just taking over failing services as in the Conservatives’ view.
The failure of the coalition to pursue the ‘big society’ through
progressive principles means that the bonds of community
are likely to weaken over the course of the next parliament.
According to a recent NCVO survey of charity leaders, 55
per cent of charities plan to cut staff and 35 per cent plan to
decrease the amount of services they offer.4 These are hardly
conditions from which a blossoming of community life and
organisations will grow. At the very moment expectations are
being raised, public sector cuts are damaging the capacity to
expand the sector.
This is because the Conservatives’ stance is first and foremost
ideological – you have either civic action or government
support, but not both. They wrongly believe that the presence
of local or national government intervention inevitably enervates
flourishing communities. This doctrinaire obsession
with a smaller state defeats the objects of the ‘big society’.
Under the indiscriminate impact of public sector cuts, the
essential elements of community life are being starved of
sustenance. What the sector loses in the next two years may
become impossible to rebuild in the next ten.
tessa jowell 188
The relational state
Even if there were miraculously large increases in the amount
of money for public sector spending in the next decade, there
will not necessarily be the public appetite for the state to
spend it. A study by Demos, which looked at the attitudes
of voters who switched from supporting Labour at the last
election, found marked dissatisfaction with the role of the
state. Almost one in five (19 per cent) agreed that ‘central
government interferes too much in local services’ while more
than one in four (27 per cent) of the voters that Labour lost
said they saw government as ‘part of the problem, not the
solution’. Only one in three former Labour voters considered
government to be ‘a force for good’ improving their lives and
the lives of their family.5
This requires Labour and the left to develop a new theory
of government intervention. Government must move away
from the ‘delivery state’ to a ‘relational state’, as Geoff Mulgan
argues.6 ‘Conceived as a production line,’ Mulgan suggests,
the delivery state ‘has repeatedly hit barriers. Even if the
targets are met they may miss the point. The public may not
be grateful. They may not share in any sense of achievement.
And they may resent the tools used to achieve success.’ The
goal of government is to constantly seek legitimacy, but ironically
the tools it uses can help to divorce people from its aims
almost as much as if it had none in the first place.
Instead, Mulgan suggests government can succeed better
by ‘directly addressing the quality of its relationships with the
public, rather than doing so indirectly through promises and
their delivery’. Both market logic and an overly bureaucratic
approach may achieve narrow outcomes, but they miss out
on the crucial dimension that allows doctors to heal, teachers
to teach and carers to care. A relational state would value the
relationships they build with their patient, pupil or client, and
the successes and failures they experience together.
We need to give greater recognition to the humanity of
189 the purple book
people who serve the public. Whether it is the carer who dresses
an older person in the morning, or the health visitor who gives
a young mum the confidence to breastfeed, or the social worker
who brings a young person out of their shell; our approach to
politics needs to value the quality of their relationships more
than established or conventional performance measures. There
is a reason why patients cite the kind attention they receive
from nurses as a key indicator of whether they are satisfied with
their NHS experience, because it is the quality of human relationships
that shapes their views of the success of the treatment.
New Labour often talked of the need to devolve power to
the individual and pursued this through a number of successful
measures – for example, individual budgets and the expert
patient programme. But the way it measured success was still
through numbers rather than the quality of the person’s lived
experience. Even the most commendable programmes failed
to recognise the importance of individual or community
buy-in. The closure of Accident and Emergency departments
to make way for polyclinics, for example, while based in
efficacious medical evidence, failed to recognise the loyalty
users had to local institutions and the role they played in
supporting their sense of local security. Little effort was put
into tapping users’ allegiance for the old and converting it to
enthusiasm for the new.
It is no surprise, therefore, that people react with mistrust
when the state announces changes or closures when they have
no stake in the resulting structures. They campaign to keep
what they have because they don’t believe it will be replaced
with anything better. But if people are put in charge of service
design and, crucially, delivery, it will make it easier for the
transformation of public services to take place, and ensure
that the nature of public services are constantly changing in
order to meet the changing needs of the population.
A relational state would recognise that the process of
building community change is almost as important as achieving
tessa jowell 190
the change itself. This will require the state and politicians
to value individuals more than bureaucratic institutions. It
will need us to put far more trust in people’s ability to create
change for themselves, find the tools and capacity building to
support them, and be less nervous about the risks of taking
decisions out of the control of public servants. In doing so, we
build more confidence in the case for change, in turn embedding
the legacy of investment in communities.
‘Community where possible, government where necessary,
partnership always’
Too many local initiatives are stifled by the high barriers the
state has erected to provide accountability for public money
and ways of minimising risk. While it is essential that services
which are based on reciprocity, or community relationships,
are held to account, we need to have a bigger debate about
what measures are necessary for the safety of the public, and
those that make true community engagement impossible.
One good example of this in practice is the system of
universal Criminal Records Bureau (CRB) checks. These
were introduced in reaction to the Soham murders and the
universal public anxiety about the safety of children. Seven
years since their inception, these are widely seen to be onerous
and bureaucratic. Sometimes the rigmarole of needing
to go through checks, just to volunteer for an hour a month,
puts off more good people than it catches bad. In particular,
the length of time these checks take mean that short-term
volunteering projects cannot reach out to a wider pool of
people in the community without a huge undertaking.
Such complexities need to be addressed through a debate
about how we recalibrate the relationship between communities
and the state. The coalition has announced that it is
changing the rules relating to criminal record checks for
people with time to give who wish to work with children
or vulnerable adults, so that organisations have the option
191 the purple book
of asking for a check or managing the risk of allowing
that person to give time without one. This may address the
obstacles that CRB checks have created, as long as local
organisations keep best practice in mind (for example, by
continuing to require checks for volunteers who are unknown
to the project leaders) and ensure that the public are not
exposed to unnecessary risk.
If we are to expect greater community involvement, it
is right that risk management is placed with local organisations
rather than the national state. Often the leaders of
local community organisations will have built relationships
based on trust which allows them to take a legitimate risk.
The state’s responsibility should be, however, to ensure that
any organisation that wishes to check someone’s background
can do so in a timely way. Online technology opens up
the opportunities to streamline checking systems, and it is
hoped that the coalition’s ambition to ‘retain the benefits’ of
the online vetting and barring system will be seen through.
The key here, however, is to divine the right role for the state
which is to protect the public against unnecessary risk in the
voluntary sector while ensuring that people’s opportunities
to transform their communities for the better are not stifled.
Another of the main barriers people cite that stop them
giving time is their work. Fifty-eight per cent of those interviewed
in the 2008–9 Citizenship Survey said that their work
commitments prevent them from giving time while 31 per cent
said that caring for children at home takes up their spare time.7
As pressures on time and home life have become greater, this
is likely to form the key problem for building stronger relationship-
based communities. Therefore, negotiating stronger
links with local employers and gaining their commitment
to activity in the community will be important. We should
consider incentives for businesses to give staff opportunities
to volunteer to enable those people who can prove they want
to make a difference in their community to do so.
tessa jowell 192
Often those communities which need to build the strongest
bonds are those in which it is most difficult to find people
with time to give. According to the Citizenship Survey,
people living in big urban areas (particularly London), with
poor qualifications, who are out of work or on low pay, who
were not born in the UK and who feel unsafe in their neighbourhood,
are least likely to give time in formal and informal
activities. It is instructive that they are also more likely to
feel they cannot influence decisions in their local area and,
when asked their view about other people, they agree with
the statement ‘You can’t be too careful’ rather than ‘People
can be trusted’.
Until now, giving time has been seen as a good addition
to the health of our society, rather than something we see as
a necessary part of being a good citizen. If we are seriously
to redistribute power to localities, it will be very important
for all residents – particularly those from lower-income
backgrounds – to be involved to avoid those with the loudest
voices and sharpest elbows from monopolising things. Part of
the problem has arisen with the nature of the welfare state,
which has created a sense that it is ‘not my problem’ or ‘someone
else will fix it’. This was not the aim of William Beveridge
or the early ethical socialists such as Tawney, who saw the role
of the state as to liberate people to help themselves.
Indeed, release from Beveridge’s ‘five giants’ was on the
prerequisite that recipients of the state’s largesse played their
part in creating the conditions for moving forward. Want
would be defeated by out-of-work security, but the individual
had to both seek work and pay National Insurance to receive
the benefit. The new NHS would help combat disease, but
people had to maintain their own health. Ignorance would be
defeated through the extension of secondary education, but
young people would have to work hard to get their exams.
Squalor would be eradicated through a combination of new
social house-building and house-proud tenants. Finally,
193 the purple book
idleness could be challenged through a goal of full employment,
while the task of the person who was unemployed was
to keep themselves ‘fit for service’.
The right to state support was matched, every time, by
individual responsibilities. If genuine community engagement
is to get off the ground, a sense of human agency must be our
starting point. The role of the state is therefore to open doors
and create possibilities, but the obligation should be on the
individual and their community to find the answers to their
destiny. Labour’s new maxim should be ‘community where
possible, government where necessary, partnership always’.
Our expectations of human endeavour should be high and
the universal assumption should be that our duty is to play
an active role in our communities. We are all responsible for
making society what it is.
Bringing power back to the community
The relational state seeks to create ‘public value’ rather than
just efficiency. By focusing on the quality of relationships
with people, rather than the quantity of outcomes, the state
can improve public service performance more effectively than
managerial methods. One of the ways to do this is by making
processes ‘über-local’, as Mulgan has argued. That means
pinpointing those activities which are best carried out by the
community for the community and which have the greatest
opportunity of developing relationships. Mulgan suggests
prioritising systems which encourage citizen feedback and
one-to-one relationships; treating public sector employees
and people as participants, not bystanders; viewing public
services as a platform, rather than a deliverer.8
The following examples show how a relational state could
work in practice to empower communities, but by its very
nature, these solutions cannot form a programme for national
governance. Each community will have its own smörgåsbord
of options and it should be for each community to determine
tessa jowell 194
what is best for them. Local government is, in any case, in
the best position to provide the support and direction for
redistributing power since it operates at the closest level to
people. Labour’s councillors in local government should be
the standard bearers for injecting a sense of community leadership
in their wards, not by telling people what to do, but
encouraging them to take control for themselves.
National government’s role is to agitate on behalf of
community empowerment, provide the funding to build
capacity – particularly start-up and transition costs – and to
incentivise local authorities who are not doing enough by
providing funding for pilot projects. So how could community
empowerment work in practice?
First, for services that are best provided collectively
– for example, integrated health and social care – there is
a strong case for community-led commissioning. At the
moment too much of the state’s role is about commissioning
services for people. Community-led commissioning
would require the state to commission services with people.
It recognises that, often, local people know more about their
needs than commissioners do and that, with support, they
can help commissioners to build smarter solutions to local
problems. The relational state would support this because it
helps to build relationships between decision-makers and
service users.
Turning Point is a social enterprise which runs a
community-led commissioning model called Connected
Care, which enables communities to become involved in
the design and delivery of health and social care, as well as
other support services. Working in ten deprived communities
across the country, their model has reduced costs by shifting
the emphasis of services towards prevention; helped commissioners
develop a better understanding of the needs of the
local population; and developed communities’ capacity to
engage in service redesign.
195 the purple book
Indeed, community-led commissioning can also help to
strengthen social networks. It is sometimes the little things in life
that stop people from finding a new job or getting better. Mostly
it is local social services which try and pick up these cases, but as
the government cuts spending, local authorities are increasingly
focusing their spending on the most acute cases. Initiatives such
as Southwark Circle provide an answer to the gap that could
be left by the state’s retreat from such areas. It works with over
250 older people and matches them with local ‘neighbourhood
helpers’ who volunteer to take care of households tasks, forge
social connections and find new directions in life.9
In this instance the relational state would encourage social
enterprises and the voluntary sector to run programmes like
this with different sections of the community, by instituting
stronger voluntary and community organisation commissioning
practices.
Thus the role of the state in this respect is to encourage
local authorities to build community-led commissioning into
as much as it can do. Using organisations such as Turning
Point to learn from, local authorities need to recognise the
value of involving the public in making decisions about services.
It helps local people to understand the pressures public
services are under and gives them a stake in creating better
services – an important spoke of the relational state.
Within the commissioning community, there is clear
recognition that making users commissioning partners is
good practice, but there needs to be a stronger steer from
government that this should be the norm.10 We should
consider including a pro-social clause in every commissioning
contract, placing economic value on positive social outcomes,
therefore helping to shift commissioning values towards the
community and away from strict performance measurements,
which can miss the real difference community organisations
make on the ground.11 Such a clause will force commissioners
to consider the extra community benefits voluntary and
tessa jowell 196
community organisations provide (for example, community
involvement), over and above single outcome measures, and
ought to lead to greater commissioning of organisations
which involve users and the community as a matter of course.
Government should also require all public bodies to
develop a voluntary and community sector commissioning
strategy. This will ensure that bodies are required to meet
with the local voluntary sector to show how community-led
commissioning will work in practice.12
Second, participatory budgeting – which was pioneered
in Porto Alegre in the late 1980s – is designed to give local
people not just a say in how services are provided in their
area, but to allow them to allocate money. Around 10 per
cent of the city’s population takes part in setting the budget
which has led to a shift in the spending priorities of the city’s
council and is reported to have led to an improvement in the
extent and quality of the provision of basic services to the
city’s disadvantaged communities.
An example in the UK can be found in Lewisham
Council’s eighteen ‘local assemblies’, one for each ward,
which include ward councillors, council officers, voluntary
and community sector representatives and local residents to
deliberate on locally important issues. As people feel they
have been involved in the decision to allocate funding to
projects, their commitment to a project’s destination grows
stronger. Websites for each of the local assemblies track the
decisions taken and keep people up-to-date with progress.
This is another example of building relationships between
people with a view to improving the outcomes of communities.
By taking part in setting a budget locally, people feel
more ownership over what happens to them.
In the National Evaluation of Participatory Budgeting
it was found that people’s sense of their ability to influence
local decision-making improved through the process, greater
capacity in the community was built, and people who partici197
the purple book
pated had an increased sense of self-esteem and confidence.13
By moving dry decisions about public spending from the
dusty offices of the bureaucrat into the melee of the street,
people feel more engaged with the decisions which directly
affect them, and local representatives are more accountable
for them too. By increasing transparency, there is also a good
knock-on effect of greater scrutiny of poor decision-making
by public bodies. All of this helps to improve community relationships
and the sense that the community is in in charge.
Therefore, we should consider giving local communities who
wish to introduce participatory budgeting a right to request a
pilot in their community, if money can be found from central
government. This will ensure that those councils which are
reluctant to have the extra scrutiny of the public are forced to
allow dissatisfied communities to hold them to account. Most
aspirational local authorities will see the inherent benefit in
such schemes, however, as best practice spreads.
Third, credit-based time-banking. Edgar Chan created
the concept of time-banking in response to frustration with
social services in the US, which he felt were too top-down
and failed to utilise the assets of the community to help
people help themselves.14 The UK only recently adopted timebanking,
most notably with the Rushey Green Time Bank set
up in 1999, which put patients suffering from depression and
isolation in touch with volunteers in their neighbourhood.
Time banks can provide opportunities for linking volunteers
with many local projects including childcare, home repairs,
befriending schemes, language lessons and many more skills
which the community needs. Most banks operate on the
basis that a person donates an hour of their time and can take
an hour of someone else’s time in return. Time-banking is a
great relationship builder. It requires individuals to donate
time in return for another’s. It also puts local people in charge
of finding their own solutions to life’s little problems.
Credit-based time-banking goes one step further.
tessa jowell 198
Lambeth Council is considering a scheme which would allow
residents to give their time in return for credits that would
give them to be rewarded with financial or other benefits.
This follows a model in Wales which has been piloted by the
organisation Spice, which hosts the time bank in a public
sector agency and offers credits to time-givers such as free
trips, recreational services or visits to local events.15 Given the
huge potential of time-banking and the role it could play in
the ‘big society’, it is extraordinary that the national volunteering
charity TimeBank has had its funding for core costs
cut by the Office for Civil Society.16
The current government’s cuts to the third sector and its
ideological commitment to a state on sufferance will undermine,
not replenish, our disjointed local communities. A
return to an old command-and-control state, however well
meant, is not the answer, either.
Only when we recognise that people and the quality of
their individual experiences of public services are often more
important than the service itself will the left be able to seize
the ‘big society’ mantle. Community commissioning and
budgeting, building the framework for local social networks
and time banks: these are the tools the left needs to grasp if it
is to find new meaning in the word ‘empowerment’.
The relational state could help to shift the balance finally
away from Whitehall to communities across our country. By
prioritising relationship building, collaboration, user feedback
and local decision-making, communities could be given
a new lease of life.
The Tories’ localism is a mask for cuts and contempt.
Our localism has to be trusting people’s instincts and their
better natures. Labour’s mission must be to support people
to become the authors of their own lives. We have always
been optimists, and we have the chance in the next few years
to puzzle out not how to survive the cuts, but how to infuse
Britain with optimism for the future.
199 the purple book
1. Richard H. Tawney, Equality (London: George Allen & Unwin, 1931).
2. Richard H. Tawney, The Acquisitive Society (New York: Harcourt Brace and
Howe, 1920).
3. ‘Instituting the “Third Sector” as a Governable Terrain: Partnership,
Procurement and Performance in the UK’, Policy & Politics (2008) vol. 36 no. 2,
pp. 155–71.
4. ‘Charity leaders’ confidence levels hit rock bottom’, NCVO, 29 March 2011.
5. ‘Poll shows Labour voters lost faith in the state’, Demos, 3 August 2011.
6. Geoff Mulgan, The Birth of the Relational State (London: The Young
Foundation, February 2010).
7. Department for Communities and Local Government, 2008-09 Citizenship
Survey Volunteering and Charitable Giving Topic Report, April 2010.
8. ‘A Public Service Renewal Agenda for the 21st Century’, The New Synthesis
Project, United Kingdom Roundtable Report, London, 16-18 November 2010.
9. For more on Southwark Circle see www.southwarkcircle.org.uk.
10. National Skills Academy for Social Care, User-Led Organisations and
Commissioning: 18 Good Practice Learning Resources (London: National Skills
Academy for Social Care, 2011).
11. For more on this see BASSAC and DTA’s response to the Government’s
Commissioning Green Paper: www.bassac.org.uk.
12. For more on this see NAVCA’s response to Government’s Commissioning
Green Paper, 5 January 2011: see www.navca.org.uk.
13. Department for Communities and Local Government, National Evaluation
of Participatory Budgeting in England.
14. Edgar S. Cahn, ‘Time dollars, work and community: from “why?” to “why
not?”’ Futures (1999) vol. 31, no. 35, pp. 499–509.
15. See Timebanking Wales: www.timebankingwales.org.uk.
16. Timebank, ‘Government Pulls the Plug on Timebank Funding’: www.
timebank.org.uk.
A state in society for all: better homes in
stronger neighbourhoods
Caroline Flint
Pollsters have told us over the years that housing is not one
of the big four or five decisive factors at general elections.
They will tell you that 18.7 million people own their homes,
most without help from government. That the economy,
crime, the NHS or immigration matter more to people. But
try telling that to the 4.4 million people on a waiting list or
the three million struggling to get a foot on the property
ladder or the 1.4 million households in substandard housing
in the private rented sector.
In the 1980s the Tories had only one policy – to sell council
houses and shift the political debate by creating a million new
working-class homeowners. Their flagship councils followed
suit, selling off estates with vigour and even screening new
tenants to ensure potential buyers were moving in. The denial
of revenues from council house sales, a deliberate policy to
reduce public reinvestment in social housing, reinforced by
rate-capping councils, created the huge backlogs of disrepair
that Labour inherited in 1997.
Today’s Tories share their predecessors’ scepticism and
ideological suspicion of the involvement of the state in
providing housing. Their only answer is to leave it to the
market.
201 the purple book
The consequences of this approach, and the challenges facing
an incoming Labour government, are clear: an even greater
residualisation of social housing, entrenching deprivation and
other social and economic ills; an expanding but unregulated
private rented sector, where too many properties are not decent
and rent is perceived as ‘dead money’; and the hopes of a generation
of would-be first-time buyers going unfulfilled.
More than a roof over your head
Labour’s challenge is to fill this policy void; to rectify the
hopes unrealised, the aspirations denied, the hardship caused
by creating new relationships in the market and in social
housing, which shift the balance of power and opportunity in
the interests of individual security and advancement, and the
common good. The case for using the power of government,
then, is a strong one and the benefit of public investment in
housing is clear.
But our answer to this challenge must be realistic, both
about the complexity of the housing market and the limits of
what the state acting alone can achieve, as well as likely future
levels of public expenditure, not least because certainty for
lenders and housebuilders alike is crucial.
Just simply providing more housing, vital though that it
is, is no longer enough. We must be honest that for too long,
and in too many places, our housing policy was too divorced
from the creation of communities that people want to live in.
A successful housing policy must be about more than a roof
over your head.
That means thinking about housing in terms of people’s
relationship with their home and with their neighbourhood
in a way that goes beyond just talking about tenure, which
empowers individuals and neighbourhoods to take control
over where they live, and where people are able to take advantage
of decent public spaces and good local services, in strong,
safe communities.
caroline flint 202
Our aim should be to redistribute power so that people
have control over their home and their neighbourhood, so
that everyone can enjoy the sorts of power and choice those
with financial means already have.
But for our offer to the public to be credible, we have
to be candid about our housing record when we were in
government.
As a former housing minister, I know that during the last
Labour government nearly two million more homes were
built, including half a million more affordable homes. But it
was not enough.
There are reasons why we did not do more. In 1997 we
inherited a £19bn maintenance backlog and over two million
substandard homes in desperate need of renovation. Our
Decent Homes programme put that right and brought a
million and half homes up to a decent standard.
But it came at the cost of not building enough new homes
to keep up with demand. While local resistance to new housing
developments suggests that the connection between the lack of
housing supply and rising housing costs is not fully understood,
there can be no doubt that whether it is a first-time buyer struggling
to get a foot on the property ladder, or a family looking
for somewhere to settle, or the housing benefits bill, what is at
the root of all these problems is a lack of affordable housing.
To compound the problem, as housing has becoming
increasingly unaffordable, public subsidy has shifted from the
supply side to the demand side. Thirty-five years ago, 80 per
cent of the housing budget actually went on bricks and mortar,
on building new homes. Now, more than 85 per cent of the
housing budget goes on helping people with their housing
costs, because the lack of affordable housing has driven up
rents and house prices so much. That is unsustainable. But
it’s also an inefficient use of a public subsidy; pouring money
into private landlords’ pockets neither gets to the root of the
problem nor helps people secure assets of their own.
203 the purple book
A foot on the ladder
Today, the average age of a first-time buyer without parental
help is thirty-seven, and this could rise to the mid-forties by
the end of this decade. The number of first-time buyers is at its
lowest level for forty years, the typical deposit on a property
is more than half the average income and people are being
forced to change or reorder important life decisions, such as
when to marry or have children. Some research even suggests
that couples are consciously delaying having children because
of housing costs, potentially with long-term implications for
their ability to conceive.
No one can doubt that the credit crunch has exacerbated
the problems for first-time buyers, with mortgage lending
plummeting, but the downward trend in the numbers of
first-time buyers predates the global financial crisis. Even
before 2008, during a period of easy mortgage finance,
affordability problems were preventing many people
from buying.
We should forget those who say home ownership is losing
favour, penning articles from the comfort of owner-occupied
leafy suburbs and country cottages. The desire to be close to
family, invest, improve, move to the nice neighbourhoods,
leave something behind for the next generation, or just have
a few square metres all of your own – conservatory and all – is
instinctive, and the drive to own is unshakeable. Crucial to
Labour’s agenda is enabling this aspiration to be enjoyed as
widely as possible.
Limiting the opportunities for home ownership is more
than just a cause of frustration for would-be first-time buyers;
it fundamentally shapes the sort of society we live in. Giving
people a stake in the property market and allowing them to
build up an asset base is empowering because it gives people
control over where they live. The shift to owner-occupation
that took place in the twentieth century was crucial to creating
a fairer society, where assets were more evenly spread, and
caroline flint 204
helped to reduce inequality between the very rich and those
on middle incomes.
That trend now appears to be in reverse, with housing
wealth increasingly concentrated among existing owners and
the older generation, creating a chasm between those able
to rely on help from parents, and those with no parental
resources to call on. Labour must have a positive offer for
these people, especially those families who would not qualify
for social housing, but who cannot currently afford to buy
their own home.
That does not mean encouraging irresponsible lending
to those unable to meet their mortgage repayments, as
happened in the US with so-called NINJA (No Income, No
Job or Assets) loans, because that does not empower people:
it traps and eventually impoverishes them.
Instead we should be looking to new and underdeveloped
models of home ownership. This can only be done if
additional finance, particularly from institutional sources, is
brought to bear on the task of increasing the supply of new
affordable homes.
The single biggest problem facing potential first-time
buyers at the moment is the level of deposit required. But
the other side of the coin to struggling first-time buyers is an
ageing society. The number of people over eighty-five in the
UK is predicted to more than double in the next twenty-five
years, and to treble in the next thirty-five.
Is it not strange that parents and even grandparents, whose
mortgages may be paid off, see their children or grandchildren
struggling to find deposits, when all the security a mortgage
lender might require is locked up in their own home?
We need to be more imaginative about the power of equity
release, on fair terms, to transfer assets from one generation to
the next. Equity release gained a bad name because of the fees
and poor rates of return. But intergenerational transfers of
assets would be easier if equity transfer was provided as part
205 the purple book
of a package by mortgage lenders, backed by government. A
lender could, for instance, use spare equity in a parent’s or
grandparent’s home as additional security against a mortgage.
This would enable first-time buyers to get a more manageable
mortgage, with a smaller initial deposit, without needing
large cash transfers or increasing the risk to the lender.
Equally, the market is not good at enabling people to trade
down in their later years, so that they can move to smaller or
more manageable properties. Many older people want to stay
close to friends, to family, to the church they know. But as a
result, some stay put for as long as possible, even though they
may struggle with a family-sized house.
Providing housing that better meets the needs of older
people would not only be good for the people who live there,
it could also potentially free up housing that may otherwise
have been underoccupied, as older people choose to move
from a larger home to something smaller.
We should examine whether a council, housing association
or even a letting agency could offer a smaller rented property to
an older person. In return, instead of having to sell their home,
the housing provider could take a lease on it for a defined
period, which they would then be able to rent out. The rental
income from the larger property would more than cover that of
the smaller, and potentially even provide an additional revenue
stream, which could either be returned to the original homeowner,
or kept by the housing provider to subsidise rents for
low-income families, or invested in new affordable homes (or
some combination of all three, as an incentive to the existing
owner, as well as prospective housing providers and tenants).
This would offer the most efficient use of all properties,
help to release finance in later life that would otherwise
remain unused, while avoiding an unnecessary early sale and
retaining the home as a family asset, which could then be
handed down to children and grandchildren, so that they can
begin to build their own asset base.
caroline flint 206
For the families renting the properties, given the lack of
suitable family accommodation in the private rented sector,
and the insecurity associated with short-term assured tenancies
which often only last six months, it could also potentially
provide better accommodation and greater security than is
currently available.
But for first-time buyers without parental assets to rely
on, the challenge of getting onto the first rung on the ladder
remains.
Shared ownership schemes are ideal for young couples as
they allow for joint ownership of a property. Nearly half of all
buyers of shared ownership homes in 2008–9 had household
incomes below £25,000, nearly a quarter had incomes below
£20,000, and the average age of a shared ownership home
buyer was thirty-two, compared to an average of thirty-seven
for first-time buyers without parental assistance.
By purchasing as little as 25 per cent, paying rent on the
remaining share, and with the option to build up a larger stake
as and when circumstances allow, they allow first-time buyers
without a big deposit to gradually move to full ownership.
Rent-to-buy schemes also offer another way for first-time
buyers, without the ability to raise large deposits, to begin
to build up their own asset base. By offering a discounted
rent, and in some cases even the return of a portion of rent
paid, rent-to-buy schemes mean that tenants are able to build
up a deposit, allowing them to access home ownership, often
through shared ownership schemes.
Such schemes have already helped over 130,000 first-time
buyers, but they have the potential to help many more. To
date, they have been pioneered by housing associations, but to
expand them we need to be looking at how we can get greater
private sector involvement, from both developers and lenders,
in shared ownership schemes.
Shared ownership lending is more complex than a traditional
mortgage. But at the moment the way loan-to-value
207 the purple book
ratios are calculated (which determines whether, and how
much, the lenders are prepared to offer) penalises shared
ownership; the loan-to-value is calculated on the buyer’s share
of the property, rather than the value of the entire property,
even though the lender is able to claim against the landlord’s
share too were the borrower to default on their mortgage. In
this way, the ratio, and the level of risk it implies, is overstated
for shared ownership models. Indeed, the risk to lenders, and
the level of repossessions, is actually lower for shared home
owners than for traditional home owners or even buy-to-let
properties. Lenders need to understand this and become
more familiar with shared ownership models. For that to
happen Labour’s housing policy review will be looking
closely at whether clearer and fairer guidance is needed from
the government, the Council of Mortgage Lenders and the
Financial Services Authority.
Nor is it a huge leap to envisage the mortgage lenders
retaining 10 per cent of the equity in a house to secure their
lending, pooling the risk through industry-wide funds and
thereby enabling smaller deposits to be required. Similarly,
some local authorities, such as Sunderland, are looking at
how they can stimulate their housing markets and support
first-time buyers by providing mortgages. Sunderland offers
mortgages of up to 90 per cent, but no more than three times
the household income and up to a maximum of £200,000.
Their mortgages are only available to people who are in
secure employment, with a good credit history, but who have
been unable to secure a mortgage elsewhere. While such an
approach may not be viable in areas of higher housing demand
or higher house prices, it is certainly worth exploring.
Equally, mutual home ownership offers another way to
provide affordable housing. It works by making land available
as a community asset held in perpetuity by a Community Land
Trust, whose sole objective is to provide affordable housing to
local people. Because the cost of the land is separated from the
caroline flint 208
cost of the development, the housing is much cheaper and
more affordable for people looking to rent or buy. And due
to the fact that the housing is explicitly and permanently for
local people, some of the most common objections to development
can be overcome, not least the fear in some places
that new housing will just be bought by outsiders, driving up
the costs of housing for local people.
Birmingham Cooperative Housing Services are at the
forefront of the mutual home ownership model. Co-op
members effectively pool their resources to help the co-op
to buy properties. Members build up shares in the housing
development, allowing them to develop equity, which they
can sell to the co-op or on the open market if they leave. This
model shares power and promotes democracy and self-help
in equal measure.
Renewing social housing
Social housing is fundamental to a decent, civilised society.
But it must be more than just a last-chance saloon or a refuge
for the dispossessed. It should never entrench deprivation,
reinforce dependence or hinder social mobility.
In the most obvious sense, that means giving people in
social housing much greater influence over what happens on
their street, in their estate or around their neighbourhood.
The shift from councils managing their own housing stock
to arm’s-length management organisations was intended to
improve the management of social housing and give tenants
more of a say in decision-making. But we need to be honest
about how well this worked, whether it went far enough, or
if there is more that could be done to improve the nature of
the relationship between social housing providers and their
tenants so that, instead of being passive recipients of decisions
taken by others, tenants have the right – and the ability
– to actively shape where they live. The best housing associations
already do this. And the evidence from cooperative
209 the purple book
and mutual housing associations shows that they can deliver
high levels of resident satisfaction, as well as foster resilient,
vibrant and engaged communities through self-management
and mutual ownership.
Building on the ‘right to manage’ where stock transfer
ballots are being held, we will look closely at the idea of
giving them the option of a community-led mutual. Even
where ballots are not in the pipeline, if there is demand from
residents, there is a case to be made, in principle, that they
should be able to petition for a ballot, where they could then
vote to move to a community ownership model. For this to
have effect, formal rights need to be backed up with capacity
building, provided by either local authorities or housing
associations, so that communities have both the right and the
ability to take greater control over where they live.
Indeed, the ethos of the friendly societies – of mutual
action, common values and empowering people to come
together to improve their neighbourhood – is one that should
be transplanted not just to social housing but to other types
of tenure too.
But empowering social tenants goes beyond giving them
greater control of their housing and means looking at how
we can use social housing to give people greater control over
their lives, their employment and their relationship with the
community they belong to.
Allocation by need means that, where demand is highest,
only the poorest, most vulnerable and most marginalised have
any chance of renting a social home. Over time, the impact of
right-to-buy sales and the failure to adequately replenish stock
has led to a profound residualisation of social housing, with
prospective tenants forced to clear ever-higher tests of need,
creating estates characterised by a vicious cycle of worklessness
and deprivation, and neighbourhoods scarred by narrow
horizons and low ambitions. We must seek to reverse this.
caroline flint 210
Labour councils like Manchester and Newham point to a
different way of doing things. In Newham, they are looking
to prioritise those in employment in their allocations policy,
so as to support people in work. In Manchester, as well as
helping the most vulnerable with housing, their allocation
gives priority to those who contribute to their communities
– what they describe as having a ‘community connection’.
That means more than just living or working locally. It covers
people who have been involved with a community-based
voluntary activity in the area for at least six months, as well
as people who provide employment or a service in the area,
which provides job for local people or a service for the local
community.
Those systems reward good tenants and good neighbours.
They are fairer because they look not just at what people
receive but also at what they put in. And they encourage the
kind of responsible behaviour that makes our communities
stronger and safer.
Other than an innate conservativism, there’s nothing
stopping more local authorities doing this. Indeed, many are
already looking to councils like Manchester and Newham for
inspiration. But if priority for social housing allocation is, at
least in part, determined by national laws which state which
groups must be given reasonable preferences, it is certainly
worth looking at whether the existing national guidance
needs revisiting.
But if greater powers to shape the places people live in are
devolved to local authorities, in return we must also empower
local people to hold their council to account and ensure those
powers are being used to maximum effect.
Labour’s Together campaign, which brought communities
into the process of tackling antisocial behaviour, supporting
communities and tilting the balance of power away from
their violent neighbours, is a model for future action.
211 the purple book
One of the most effective police powers is the civil order
to close a crackhouse. Where properties were reported for
Class A drug dealing, the police obtained a closure order,
moving in within forty-eight hours and boarding them up,
searching and arresting the inhabitants where required.
What many people would welcome is an eviction order
– call it the ‘Hasbo’ if you will – against antisocial neighbours:
a simple mechanism for the police to employ where
a household is reported repeatedly for antisocial or violent
behaviour. The power for residents to petition the police, to
submit complaints confidentially, leading to a magistrate’s
order could be a powerful tool. Imagine if the family most
people fear is evicted and refused the right to live within five
miles of the area, whatever their housing tenure? What a
message that would send out.
Experience has shown how hamstrung councils are when
they evict a family, only for them to rent a property privately
100 yards away and the problems and the fear continue.
What does ‘power to the people’ mean if it is not on your
own doorstep?
The crackhouse policy was so popular because people saw
their complaints, their fears for their children, being turned
into action, and the culprits dispersed or arrested. A central
ingredient of Labour’s neighbourhood empowerment is for
residents to know that the state is on their side and that
justice prevails.
Empowering tenants in the private sector
The fall in first-time buyers, and the government’s failure to
invest in social housing, means that the rapid growth we have
seen in the private rented sector over the last two decades is
likely to continue. Reversing the historic trend of the twentieth
century, which saw private renting displaced as the most
common tenure by owner-occupation, more and more people
will be spending time in the private rented sector.
caroline flint 212
Most people living in the private rented sector are happy
with their home. But to talk of a single ‘private rented sector’
belies its heterogeneity and complexity. Alongside mobile
young professionals, students and those on high incomes
in the choicest locations paying prime rents, is the housing
benefit market, as well as immigrants, asylum seekers, and
those in temporary accommodation.
And there is a serious problem, particularly at the bottom
end of the market, with a minority of rogue landlords who
exploit their tenants and fail to meet their responsibilities.
Nearly half of all homes in the private rented sector, over a
million properties according to the Chartered Institute of
Environmental Health, would not meet the Decent Homes
standard.
Our answer must be to empower people to hold their
landlords to account and drive up standards in the private
rented sector. When we were in government, work had begun
on a register of landlords, and we will look closely again at
how we could create the best possible standards regime with
robust rights for tenants. We will look also at what bodies
are needed to implement and, where necessary, enforce them,
and how we communicate with tenants to make sure people
know their rights. Such a system could empower not only
tenants, but responsible landlords too.
But it would be naive to believe that such a system alone
would be sufficient to drive up standards, especially at the
bottom end of the private rented sector, not least for tenants
currently living in poor quality housing, who would understandably
be reluctant to report their landlords and risk
jeopardising their home. So we must be prepared to look at
the housing benefit system too and ensure it is more closely
allied with our objectives for housing policy.
Housing benefit is paid towards 40 per cent of private
rented tenancies, and 40 per cent of those properties would
not meet the Decent Homes standards. I find it difficult to
213 the purple book
accept that the state should be subsidising substandard housing,
or lining the pockets of irresponsible landlords, or indeed
that the state has no sway over the market. By introducing a
landlords’ register you could ensure that housing benefit was
only paid in respect of properties that met the Decent Homes
standard. In this way you could empower people renting
privately and drive up standards without requiring an overly
burdensome regulatory system.
For young professionals and students, the flexibility of the
private rented sector is its greatest asset. But we need a private
rented sector that works better for young families. The short
tenures that characterise private renting, and the high turnover
of residents that it encourages, can be disempowering for
individuals and communities. If people are spending longer in
the private rented sector then we need to ensure they can do
so with the security that is needed to raise a family, find stable
employment and contribute to the community. Similarly, if
we want to give people a greater sense of control over where
they live, we have to appreciate how destabilising and difficult
it is to build strong, resilient communities, with high levels of
trust and social capital, when people find themselves with a
new set of neighbours every six months.
In theory, there are no restrictions on longer tenancies
being offered, but in practice they are rarely available. One
of the reasons they are not is because, at the moment, many
lenders offering buy-to-let mortgages stipulate that borrowers
can only offer short tenancies of six or twelve months,
for fear that if interest rates rise landlords would be saddled
with tenants paying below-cost rent and left unable to service
their mortgage. Our housing policy review will consider why
a longer fixed tenancy of five or ten years could not contain
some flexibility on rents. While it would need to ensure that
rents could not be dramatically increased overnight, there
could be a mechanism for rents to be periodically reviewed so
as to reflect any changes in interest rates or other demonstrable
caroline flint 214
costs. Longer tenancies of this nature could benefit not only
tenants looking for stability, but also landlords looking for
the security of a regular, guaranteed rental income. In turn,
the risk to lenders would be reduced too, as the likelihood of
gaps between tenants, with the landlord being left to pick up
the bill, would be cut.
Power for the many
For two centuries, the great reformers have looked at housing
as essential to the civilising of society, to creating stability and
even to avoiding revolution. Government-led house building
epitomised the British renaissance and recovery from the
traumas of the Second World War. A decent home for all was
the ambition then, and it endures today.
A badly organised or mismanaged housing system –
whether private or public – can stifle aspirations, halt mobility,
deny choice and reinforce dependency, without intending
to do any of these. That is why we must get it right. In 2015,
Labour can use housing to embody the best of Britain. We
can demonstrate optimism, show empathy with those who
strive to get on, and demonstrate our accord with the ambitions,
hopes and dreams of every family.
Labour’s vision must rebuild the concept of homes in real
communities, not houses in dormitories: neighbourhoods
where pride matters, where neighbours matter; where people
live and enjoy, and do not simply exist. To do so, we must
recast the relationships between tenant and landlord, mortgage
holder and lenders, and resident and community. We
must recast rights and responsibilities that go beyond paying
the rent on time or stop at the front door. In so doing, we
can build a stronger, fairer society where power, wealth and
opportunity are in the hands of the many, not the few.
Cutting crime and building confidence:
empowering victims and communities
Jenny Chapman and Jacqui Smith
Crime and justice should always be one of Labour’s priorities.
Everybody is affected by it, but if people cannot
afford security or to move away from antisocial behaviour,
you suffer more. If you cannot afford insurance because there
are many burglaries where you live, then having your house
broken into is a financial as well as a personal disaster. It is not
just partygoers who have to walk home late at night, but also
low-paid, shift and female workers. Those with least financial
clout and power suffer most from crime and antisocial behaviour.
That’s why tackling crime and supporting victims must
be a central part of a progressive political agenda.
This chapter examines how to redistribute power to
local communities in order to improve accountability in the
criminal justice system. Crime intimidates victims and the
wider community and makes people feel powerless. Giving
people information and influence over how crime is tackled
acts to redress this power imbalance and makes detection and
prosecution more likely. We begin by reflecting on Labour’s
record in tackling crime and considering various approaches
to involving communities, including some examples from
the US. For us, this chapter is an opportunity to open a
conversation about how Labour should approach crime
and punishment. The role of the victim, the community,
jenny chapman and jacqui smith 216
sentencing and the prison service are given particular attention.
A common theme is a call for greater openness and
transparency throughout the system, from reporting of crime
to the completion of sentence.
We do not, however, focus on international or organised
crime and counter-terrorism work in this chapter. That is not
because these are not important. Globalisation impacts upon
crime as well as the economy and there will continue to be
real challenges for policing in tackling drugs, organised crime
and terrorism in the coming decade. We note that the Serious
and Organised Crime Agency (SOCA) had begun to make
progress towards a more international and intelligence-led
approach to tackling this type of crime. The government plans
to replace SOCA with a new national crime-fighting agency
in 2012. It will include organised crime, border policing
and the Child Exploitation and Online Protection Centre.
Labour should watch to see whether the planned replacement,
the National Crime Agency, builds on SOCA’s work or
disrupts its progress through a needless reorganisation.
Labour home secretaries were often charged with populism
by the liberal-left. Frustration with a criminal justice system
that consistently failed to focus sufficiently on communities
and victims led politicians – as the only directly accountable
part of the system – to speak up for the views they heard
daily on doorsteps and in their surgeries. Faced with the
pain and impotence of victims and the tired resignation of
local communities, it is not surprising that politicians try to
gain the initiative with criticism of judges, public association
with high-profile victims and tough words on reforming
the system.
Prioritising the interests of victims is the right political
instinct, but it needs to be turned into long-term reform.
The appalling treatment of Milly Dowler’s family during the
trial of her killer earlier this year shows that there is still a
very long way to go. Bob Dowler described the experience of
217 the purple book
gaining justice for his daughter as ‘a truly mentally scarring
experience on an unimaginable scale’.1
Labour’s record
In this chapter, we argue for a real shift of power to local
communities, accountability of policing and the wider criminal
justice system, and strong, statutory rights for victims. But we
should not forget that there were notable successes in pushing
reforms in this direction during our time in government.
Labour left government with crime lowered. There were
fewer victims and the chance of being a victim was at a historic
low. British Crime Survey data reveals that crime has fallen
by 43 per cent since 1997.2 Predictions of increases in acquisitive
crime through the recession have so far proved false. The
number of police officers increased. Workforce reform enabled
the introduction of highly visible police community support
officers, and the percentage of people reporting the police
doing a ‘good’ or ‘excellent’ job rose from 47 per cent in 2003–4
to 56 per cent in 2009–10.3 Police officers were freed to concentrate
on the work that most needed their expertise and training
by the civilianisation of support roles.
Neighbourhood policing teams were established in every
part of the country. All forty-three police forces in England
and Wales signed up to the Policing Pledge in December
2008. It laid down a minimum standard of performance for
the 3,600 neighbourhood policing teams, including holding
monthly ‘beat’ meetings with the public, and abiding by
target response times, such as getting to somebody within
fifteen minutes of a 999 call. In scrapping this, the current
government mistakes a guarantee to the public for a centrally
imposed target. In fact, all central targets and most central
data collection was scrapped by Labour, leaving just one
national target: to increase public confidence that the police
were dealing with the issues that matter most to local people.
This focus guaranteed that police had to engage locally, had
jenny chapman and jacqui smith 218
to determine local priorities and had to communicate results.
Labour also introduced local crime maps so people could
check what was happening to crime in their neighbourhood.
Labour recognised that antisocial behaviour was not just
a nuisance, but was having a devastating and sometimes
even fatal effect on individuals and their neighbourhoods.
Antisocial behaviour orders were starting to have an effect
and we were wrong to play down our focus on antisocial
behaviour towards the end of our time in government. Labour
rightly focused on domestic violence and sexual abuse where
victims are particularly powerless. Introducing new services,
particularly independent advisers and advocates for victims,
meant they had support through the criminal justice system.
Support was also provided in dealing with the wider impacts
of these crimes, such as financial, health, family and housing
issues. We recognise that this support remains patchy across
the country. This is unacceptable and must improve.4
Labour understood that supporting victims of crime, and
preventing crime, involved changing public services beyond
the criminal justice system. For example, preventing repeat
offending among young people involved a number of agencies.
Authorities gained the power to remove young people
from the street to a place of safety and early intervention
projects, involving multi-disciplinary teams, worked with
families to prevent their young people going off the rails. This
is not simply a police or social service function, but the business
of professionals from education, health and housing too.
Local criminal justice boards brought together all the
agencies involved to promote a more coherent approach,
although they still lack real visibility or accountability.
Stubbornly high reoffending rates were starting to shift.
When controlling for changes in offender characteristics,
the proportion of offenders reconvicted has fallen by 10.4 per
cent since 2000.5 Reducing reoffending remains the holy grail
of criminal justice policy. Probation services were building
219 the purple book
stronger partnerships with local authorities, the private and
voluntary sector to ensure effective ways of turning offenders
away from crime.
A fair deal for victims
Home Office research suggests that four-fifths of all directly
detected offences had victims or witnesses able to provide
helpful leads.6 The police know that they cannot tackle crime
alone and they certainly cannot achieve convictions without
support from victims and people willing to act as witnesses.
But there needs to be a fair deal here. If the public provide
information, sometimes at actual or perceived risk to themselves,
the least they deserve is to be told what the result of
their contribution was.
Community confidence in the criminal justice system will
only grow if victims are treated properly, well supported and
well informed. Labour knows the needs of victims are not
adequately understood. We appointed Louise Casey as the
first commissioner for victims and witnesses, who agrees that
the system is balanced away from victims: ‘Offenders have
rights within the criminal justice system to ensure their interests
are protected. And rightly so. However, victims make do
with codes, charters and pledges, which are well intentioned,
but not enforceable.’
Labour must commit to legally enforceable rights for
victims – to support, to information, and to a say within the
system. In this way victims know what they can expect from
the system and have the power to challenge where services are
lacking. We will say more on victims’ role in sentencing later.
Empowered communities
Crime has an impact beyond the victim and their family.
In some communities, people feel that crime and antisocial
behaviour has made them all victims even when they
are not directly affected. Labour understands that citizens
jenny chapman and jacqui smith 220
can improve their lives by getting involved in determining,
designing and sometimes providing the services they need.
Furthermore, evidence suggests that being able to take
control and influence crime-fighting priorities does not just
make communities feel empowered, it has a positive impact
on levels of crime too. Home Office analysis suggests that
people living in areas with strong informal social control,
where residents think that neighbours are willing to intervene
to stop minor crime and disorder, experience lower levels of
crime and antisocial behaviour compared to otherwise similar
neighbourhoods. 7
There are several programmes already in existence at
home and abroad that we believe Labour should examine
more fully with a view to widening their use to empower
communities throughout the country. But we do not have to
wait for Labour to win the next election; the party in local
government can begin piloting and implementing these
programmes now.
First, we should begin by involving more communities in
the Community Crime Fighter programme. Nearly 4,000
community activists have received training to help them challenge
criminal justice agencies on the level of service they
provide.8 Volunteers are given training and act as a link between
the police and the public. Similar approaches to community
involvement are found in the US. Citizen police academies
are used by many police departments to offer members of the
public training and education about the structure and operation
of the police. Evening courses generally run for a number of
weeks with students visiting police stations and meeting officers.
Students are encouraged to share their experiences with
others and become an informal volunteer support network for
the police. Critics argue that participants are already supportive
of the police and rarely fully reflect the communities where they
live. The truth is that all efforts to engage the public take time
to become the norm and that, providing the professionals are
221 the purple book
aware of the need to make extra effort with under-represented
groups, involving willing community activists is better than
involving none at all.
Second, there is no doubt that careful planning of meetings
and use of local intelligence is important in tailoring
an appropriate approach which prioritises engagement of a
cross-section of the community. In Houston, officers relied
on existing community groups to assist in establishing and
running community police stations. Volunteers are based in
community venues and assist the police in conveying and
receiving information. Volunteers do not replace police officers
but support them at a very local and grassroots level. This
is an interesting idea that should be piloted in the UK, with
care taken to involve individuals from an appropriate range
of backgrounds. In Houston, volunteers came predominantly
from white middle-class backgrounds. The programme
evaluation found that benefits such as a reduction in the fear
of crime were restricted to this population and that poorer
minority communities did not hear about, or benefit from,
the work. Officers, councillors and community activists
leading public meetings or coordinating activities need to
be aware of the danger of excluding some groups from the
benefits of their programmes. Nonetheless, it is important
to remember that the ‘usual suspects’ can often become the
most dedicated core of volunteers. Rather than putting off
the most dedicated participants, enlightened practitioners
find ways to harness their enthusiasm and availability while
not excluding others.
Third, community engagement experts make the point that
participants must be involved in a process to improve their
lives, not simply used as a tool in a police initiative. Feedback,
real-time information and a two-way dialogue are essential.
Similar projects can have very different outcomes depending
on the quality of the relationship between agencies and the
public.9 Getting the flow of information right is difficult but
jenny chapman and jacqui smith 222
crucial and there are many ways of doing so. In Darlington, the
Police and Communities Together programme is in its third
year. Monthly meetings are held for residents, police and other
agencies to share information. Up to three policing priorities
are agreed. Police commit to returning to the next meeting and
updating residents on what has happened, residents undertake
to act as the ‘eyes and ears’ of the police and organise to support
them. A typical example would be establishing activities for
young people to assist in reducing antisocial behaviour. There
are many similar approaches being taken around the country.
We believe there must now be a thorough evaluation of the
impact of these programmes so that lessons can be learned and
implementation improved.
Success of such engagement initiatives is unlikely if
communication fails. There are already examples of hyperlocal
websites enabling people to pool information about
vandalism, fly-tipping, areas where drugs are being used and
sold, or acute noise nuisance. Labour councils could lead
the development of these in their areas and bring together
agencies to respond through publicising their action on the
websites too. Labour needs to understand that citizens want
to communicate in ways that make life easier for them. This
means providing a variety of methods.
Some areas have experimented with the use of Facebook
as a tool for sharing local crime information. Previously a
volunteer may have received information from the police
and delivered a newsletter to neighbours. An alternative is to
create a Facebook group, or similar online forum, where the
police can communicate with residents, respond to enquiries,
receive intelligence and provide information and reassurance
quickly and cheaply. This allows for the engagement of those
who might not come to a public meeting but are interested in
the safety of their neighbourhood all the same.
The government is wrong to scrap ASBOs and replace
them with either weaker injunctions or orders that require a
223 the purple book
criminal conviction. However, they are right to propose giving
communities the ability to initiate action where agencies fail
to respond. But a right to take community action without the
capacity to ensure that it can happen is an empty promise. This
is a good example of where Community Crime Fighters can
support communities to make their voices heard. Police and
local authorities should also have to report their response to
this community call to the locally elected crime representative
as well as directly back to those who made the complaint.
Crime maps were an important step forward in providing
timely, local information on crime levels, but they stop
at the reporting of the crime. We would like to show what
happens next. Labour should ensure that crime mapping
also includes ‘justice mapping’ so that information about
what happens when a crime is reported is shared. This should
include whether a conviction took place and what sentence
was received. The golden thread running through our criminal
justice system in the future must be transparency. This
starts with the police working together with communities
to prevent crime, but must extend to the easy accessing of
sentencing information for those who have become victims.
Labour strengthened the confiscation of assets regime and
ensured that a significant part of the proceeds of confiscation
went back to police forces and other agencies. However,
people rarely see what happens to them and there is little
local say in how they are spent. Baroness Newlove, in her
recent report on safe and active communities, proposed that
where communities work together to reduce crime, they
should be rewarded with money from confiscated assets to
reinvest in crime prevention and they should decide how it is
spent.10 This is a good idea that Labour should support and,
where possible, Labour councils and mayors should start to
put it into operation now.
And there are other innovative Labour authorities that
could be the inspiration for future national policy. As Steve
jenny chapman and jacqui smith 224
Reed and Paul Brant outline in their chapter, community-led
commissioning in providing diversionary youth activities can
be both more effective and more efficient.
As Reed has argued elsewhere:
Many councils spend several hundred thousand pounds
a year to steer young people away from gangs, but with
success rates barely any different to what Mimi [the single
mum and pastor leading the work] achieved. So why was
this community-led initiative so successful? It’s because
the community itself understands the social networks,
individuals, families and highly localised circumstances
far better than any outside professionals could do. They
use all this, driven by their urgent concern for their own
children, to engage with the young people and divert
them away from the ruinous path they are following. It
works, delivering better results for the community but at
a fraction of the cost of what the public authorities were
spending.11
Accountable policing
Our proposals encourage local police and criminal justice
accountability to residents, but there is more we must do
to deliver truly accountable policing. We will enter the next
general election campaign in an era of directly elected police
and crime commissioners. Labour cannot be arguing for a
return to unelected and largely unnoticed police authorities.
We must demand more, not less, direct accountability.
In most areas of the country, a single force commissioner
will be distant from the day-to-day crime concerns of most
localities. To make an impact he or she will have to come into
conflict with the chief constable – this is where the threat to
operational independence will emerge. Labour should argue
for direct election of crime commissioners to represent part
of a force area perhaps coterminous with the areas covered by
225 the purple book
crime and disorder reduction partnerships – the multi-agency
groups set up by Labour to tackle crime, drugs and antisocial
behaviour throughout a geographic area – which could be
chaired by the directly elected member. These representatives
would then make up a force-level authority.
At a neighbourhood level, accountability depends on the
existence of a neighbourhood policing team and the guarantee
of regular consultation with local communities. Together with
the reinstatement of the Policing Pledge already discussed,
Labour should improve incentives to officers to remain in
neighbourhood roles for longer. This reform, which has been
recommended in a government review of police pay and conditions
by Tom Winsor, must be delivered.12 Furthermore, there
should be dedicated training and recognition for this role – it
must have the highest status, not just be a route to promotion
to a more ‘specialised’ role. Just as our best teachers have been
given special incentives and status in recognition of excellence
in the classroom, our officers should be rewarded for providing
top quality neighbourhood policing. Teachers no longer need
to take management roles in order to gain additional rewards;
the same principle should apply to policing.
Labour should restate its commitment to obliging the
police and their partners to build the confidence of the local
community. The coalition government has removed the
requirement for police forces to report on their progress in
delivering the British Crime Survey measure of local people’s
confidence that ‘the police and local council are dealing
with the antisocial behaviour and crime issues that matter
in the local area’. The importance of this measure is that it
focuses policing on how crime and antisocial behaviour can
be reduced – how the police are working with local partners,
addressing their priorities and communicating the results. It
would drive the type of involvement and transparency that
we want to see, and Labour should insist that forces publish
their results on this measure.
jenny chapman and jacqui smith 226
Victims, communities and sentencing
What happens after the police have done their job also matters
to victims and the wider community. Most favour reparation
and support rehabilitation as a means of safeguarding others.
The public and the professionals share insights into the underlying
causes of criminality. With regard to previously offending
under-eighteens, 82 per cent of the population consider ‘better
supervision by parents’ to be a ‘very’ or ‘somewhat effective’
measure in preventing further crime, compared to just 14 per
cent who see it as an ineffective measure. Treatment to tackle
drug addiction (77 per cent) or binge drinking (74 per cent),
and better mental healthcare (73 per cent) are also considered
successful measures in preventing under-eighteens reoffending.
13 But the public want to know that alongside effective
rehabilitation comes punishment, and they do not want to pay
for expensive prison sentences that leave offenders unprepared
for life away from addiction or crime.14
Public confidence in sentencing is weak. It is difficult for
victims to understand what a sentence means, how long will
actually be served and how an offender will be monitored
upon release. Politicians of all parties have made commitments
to increase transparency in sentencing but little has
changed. Labour needs to establish a sentencing framework
where the victim’s experience is put first.
The public are unconvinced by the use of community
sentences, with 60 per cent seeing community sentences as
‘a soft option’ or ‘weak and undemanding’.15 There is greater
support for community sentences where the sentence directly
benefits the people who have suffered as a result of the crime.
The public say they want community punishment that is
visible, manual and where breaches are rigorously enforced.
We think it is appropriate for victims to be allowed a greater
say in determining the nature of a community sentence. The
use of restorative justice as an alternative to conventional
sentencing, or as an alternative to entering the criminal
227 the purple book
justice system at all, shows high levels of victim satisfaction.16
Implementation of restorative justice is poorly funded and
lacks a national strategy. We must learn from forces such
as Lancashire and Durham where restorative justice and
greater use of discretion among police officers is becoming
commonplace.
We can go much further in integrating the courts and judiciary
into local communities, ensuring they work with other
agencies and give people a sight and say into sentencing and
offender management. We know that victims of crime can
differ in their attitudes to punishment. Judges already listen
to the experience of victims in impact statements, but victims
do not have any formal role in determining a sentence. We
should explore the possibility of allowing victims the right to
provide a recommendation, and whether or not this should
be binding, on the length or type of sentence, within clearly
defined ranges available to the judge.
In December 2004, Labour set up the first community
justice centre in north Liverpool (based on experience from
Brooklyn, New York). Different agencies under the same
roof ensure joint working aimed at engaging the community,
with a single judge bringing together a range of measures in
sentencing to address underlying causes of offending. Early
evaluations are cautiously positive.17 The project should be
piloted in other areas and evidence gathered with a view to
replicating community justice centres across the country. All
those passing sentences need to become better acquainted
with the true nature of community sentences and undertake
regular training to help inform their decision-making.
Holding prisons to account
It is not just transparency in community sentencing or length
of sentence that matters to victims – what happens inside
prison is important too. Using time behind bars to challenge
offending behaviour, educate, rehabilitate and help prepare
jenny chapman and jacqui smith 228
people for a non-criminal life is the desire of any prison
governor or justice secretary. This frequently fails because
programmes are ineffective, resources inadequate and release
not properly planned. Labour needs to consider how to make
better use of the resources that already exist within prisons.
Prison officers are the largest professional group working
in our prisons, with thousands of others including teachers,
psychologists and probation officers supporting inmates to
become law-abiding citizens upon release. We believe prison
officers are an under-utilised resource within the criminal
justice system. Rehabilitation needs to become a ‘whole
prison’ objective involving all staff. Prison officers spend more
time with prisoners than any other professionals. They form
the most influential relationships with inmates and have the
greatest opportunity to alter the beliefs and values of the
incarcerated. Labour needs to ensure more prison officers are
trained to act as Personal Support Officers, with the duty of
becoming the key figure in the rehabilitation of a number
of inmates. Personal Support Officers can negotiate regime
regulations to ensure timely access to courses, act as a role
model in demonstrating good interpersonal skills and write
informed reports on inmates’ progress.
If prison officers are to have an increased role in the
rehabilitation of offenders, we need to examine recruitment,
training and remuneration policies. As more officers fulfil
duties beyond security alone, different personal qualities
and higher levels of qualification should be required. The
government cannot leave rehabilitation to the third sector or
specialist services and neglect the most influential people in
the lives of inmates.
If the job of prisons is to rehabilitate offenders, then the
performance of prisons needs to be assessed according to how
successful they are in improving outcomes for the community.
Aside from maintaining security, the reoffending rate
should become the most important measure of how well
229 the purple book
a prison is doing its job. Ways of ensuring all staff benefit
and share the incentive to make preventing crime central to
their daily work need to be considered. Currently, government
Inspectorate visits and reports from organisations with
an interest in prisons, such as The Howard League, provide
detailed qualitative insights into practice, but comparison of
outcomes by establishment needs to be extended. Governors,
prison officers and others working in a prison do not know
how well they have done their job in rehabilitating, and are
not rewarded or recognised when they succeed.
Poor conditions, cruelty, violent incidents and security
breaches are investigated and measured, but all prisons need
to be accountable for their outcomes, not just their practices.
Recidivism information for inmates previously held at prisons
of a similar security category, across both the public and private
sector, should be available for comparison and to provide feedback
to prison officers and others. Currently, those working
with offenders rarely find out whether their efforts have been
successful or have failed. Good outcomes should be recognised
and rewarded through the pay structure and also through
allowing successful prisons greater freedom to innovate.
From preventing crime to completion of sentence we have
argued that victims of crime deserve greater status in the
criminal justice system and that empowering communities
will help to reduce crime and to catch and convict criminals.
It has not been possible in this chapter to focus on all crime
or all the agencies and professionals involved in criminal
justice. We have deliberately highlighted those areas where
redistributing power to communities, victims and professionals
is likely to bring the greatest gains in cutting crime and
building confidence. Some of this work is already under way
in Labour local government. But only a Labour government
can ensure that it will happen everywhere.
jenny chapman and jacqui smith 230
1. Caroline Davies and Karen McVeigh, ‘Milly Dowler family say Bellfield
trial was “mental torture”’, The Guardian, 24 June 2011.
2. Home Office, British Crime Survey 2009–10, 2010.
3. Home Office, ‘Crime in England and Wales Quarterly Update’, Home
Office Statistical Bulletin, April 2011.
4. Polly Rossetti and Ellie Cumbo, Victims’ Justice? What Victims and Witnesses
Really Want from Sentencing (London: Victim Support, 2010).
5. Ministry of Justice, ‘Adult Reconvictions: Results from the 2009 Cohort’,
Ministry of Justice Statistical Bulletin, March 2011.
6. Louise Casey, Green Paper Response: Commissioner for Victims and Witnesses,
Ministry of Justice, 2011.
7. Home Office, ‘The Drivers and Perceptions of Antisocial Behaviour’, Home
Office Research Report 34, 2010.
8. Baroness Newlove, Our Vision for Safe and Active Communities, Home
Office, 2011.
9. Mike Maguire and Tim John, ‘Intelligence-Led Policing, Managerialism
and Community Engagement’, Policing and Society (2006) vol. 16, no. 1, pp.
67–85.
10. Baroness Newlove, op. cit.
11. ‘Taking on crime cooperatively’, ProgressOnline, 21 May 2011.
12. Home Office, Independent Review of Police Officer and Staff Remuneration
and Conditions, March 2011.
13. Natalie Hart, Parents not Prison (London: YouGov, 2010).
14. Louise Casey, op. cit.
15. Blair Gibbs (ed.), Fitting the Crime: Reforming community sentences
(London: Policy Exchange, 2010).
16. Giselle Cory, Summing Up: A Strategic Audit of the Criminal Justice System
(London: Victim Support, 2011).
17. Katharine McKenna, Evaluation of the North Liverpool Justice Centre,
Ministry of Justice, October 2007.
One Nation Labour: tackling the politics
of culture and identity
Ivan Lewis
For the centre-left now, as through history, the politics of culture
and identity poses the ultimate challenge. Our instincts to be
internationalist, liberal and champions of multi-cultural societies
jar with the growing insecurity of citizens buffeted by rapid
economic and social change. To those who urge no compromise
with the electorate I say not only is that a political cul-de-sac,
but it would be an admission that our politics has nothing to
offer people whose legitimate concerns can be dismissed as
neither reactionary nor bigoted. That does not mean we should
pander to racism or collude with those who would have our
country retreat to a mythical bunker where ‘Little England’ can
somehow be protected from the realities of change.
But if we are to be a credible alternative government we must
offer positive answers and not vacate territory that the mainstream
right seeks to monopolise and the far-right to exploit.
Mistrust about our instincts and values on identity and culturerelated
issues is one of the key reasons why voters have rejected
social democratic parties across Europe. In an age of austerity
that suspicion will remain unless we are willing to break free
from outdated comfort zones. Ed Miliband has made it clear
that Labour will confront and tackle these issues as we build
a new agenda for a fairer Britain in a rapidly changing world.
Over the past forty years we have seen the National Front
ivan lewis 232
become the British National Party and, more recently, the
emergence of the English Defence League. Far-right movements
have gone from mobilising around ‘the nation’, to Britain
and now to England. As Jon Cruddas constantly reminds us,
the resurgence of English national identity raises big questions
for Labour, questions which are magnified by the impact of
Scottish, Welsh and Northern Irish devolution. But, paradoxically,
as Richard English wrote in his recent paper for ippr, the
resurgence of English cultural identity has not been accompanied
by assertive nationalism.1 Therefore there is real scope
to both respond sensitively and seriously to this resurgence of
English identity while seeking to build a new sense of national
mission and commitment to the United Kingdom.
In Scotland, despite the Scottish National Party’s recent
political success and the need for Labour to learn lessons, a
significant majority of the electorate remains steadfastly opposed
to Scottish independence. The government at Westminster
is pursuing policies and a too-fast, unfair cuts agenda which
will divide Britain. This will fuel resentment and alienate an
increasing number of people, further eroding their weak political
support in the north of England, Scotland and Wales.
This political environment provides Labour with an
opportunity to demonstrate that we have the values and policies
to be the UK’s authentic ‘one nation’ party. By addressing
the electorate’s cultural and economic insecurity with an
ambitious and credible vision for the future we can begin to
regain the confidence of both ‘heartland’ voters and voters
in the south, west and east of England: One Nation Labour,
listening to and speaking up for Britain’s ’silent majority’.
I write this chapter from the perspective of someone whose
life has been rooted and enriched by a strong sense of cultural
identity, growing up in a tight-knit Jewish community located
in a north Manchester suburb, where I continue to live and
which I represent as one of the three towns that make up my
constituency. My life, and that of my children, is inextricably
233 the purple book
tied up with a faith community which remains vibrant, a
multicultural suburb which has a very strong sense of community
identity, distinct from its host local authority, and a Britain
which has given me the opportunity and privilege to serve my
community and country. For me these anchors have been a
source of strength. But I know that a diminishing number of
people in today’s society live their lives in one place or identify
with a faith community, that their sense of identity and cultural
affiliation is more complex and less settled.
The global market, mass migration, the terrorist threat,
climate change, advances in science, technology and communication,
intergenerational aspiration and an ageing society
all make perpetual change in Britain inevitable. We live in an
age of serious and growing personal and collective insecurity.
People feel less able to control their own lives and the destiny
of their families, and worry about their government’s capacity
to exercise control in areas where they expect stability and fairness.
This summer’s outbreak of looting and criminality in some
of our cities has left people feeling angry, but also bewildered.
Today, in an increasingly globalised world, people yearn for
a sense of identity and belonging. Some find it through family,
work, community networks, good causes, sport or faith. Others
live isolated, atomised lives or, worse still, in a permanent state
of siege, with poor opportunities and low aspirations or a
distaste for change fuelling fear and, for some, hate. This siegelike
mentality has been reinforced by a combination of the
failures of politicians and sections of the press, who understand
the potency of insecurity and fear among their readership.
The centre-left should be change-makers, leading and
embracing change in the pursuit of progress. But we should
also be acutely sensitive to people’s need for reassurance, their
expectation of state intervention where change leads to undesirable
or unintended consequences, and a natural human desire
for an oasis of calm amid the surging waves of change. Citizens
must have a stake in change, feel they can exercise control and
ivan lewis 234
rely on public institutions to preserve enduring values. To use
a human analogy, people’s anxiety and sense of disorientation
grows when they feel their life is spiralling out of control.
Appraising the past
To build a better future we need an honest appraisal of our past.
New Labour’s modernising zeal was good for the country
and the party. For the country it promoted a sense of renewal
and confidence. And, until our latter years in government,
we were the political party in Britain strongly identified with
change and the future. This was undoubtedly positive and a
major reason we achieved a historic three successive election
victories. It is far too easy for some of our opponents to rewrite
history about many of our positive achievements. ‘Compared
with a decade ago, this country is more open at home and
more compassionate abroad. That is something we should all
be grateful for.’ Not the words of a Labour supporter, but the
words of David Cameron in his speech on the steps of 10
Downing Street on the day he became Prime Minister.
But there was also a reluctance, a hesitancy to face up to the
fact that too many people on low and middle incomes felt they
were being left behind, with their sense of injustice fuelled by
a system which, to some, appeared to favour people receiving
benefits and choosing not to work, migrants who were being
helped but had not contributed to Britain, and irresponsible
senior bankers who caused the financial crisis but continued to
receive excessive payoffs and bonuses while everyone else was
paying the price for their recklessness. Others felt migration was
changing the nature of our society and undermining Britain’s
way of life. The new threat from global fundamentalist terrorism
put the spotlight on radicalisation and extremism in Britain.
The impact of globalisation meant we should have pursued
an active industrial policy to protect and create jobs and build
a more balanced economy as an integral part of our strategy,
not simply a response to the financial crisis. We could have
235 the purple book
introduced a points-based system earlier to better control
immigration. We underestimated the scale and impact of the
influx of eastern Europeans and should have done more to
address the effect this had on local communities, public services,
and the jobs and wages of UK workers. We should have
done more to increase the supply of decent affordable housing
and continued our programme of welfare reform. Labour and
previous Tory governments should have acted earlier to tackle
radicalisation in some Muslim communities by adopting a
zero-tolerance approach to anyone, including religious leaders,
who preached hate, and by refusing to legitimise organisations
unwilling to condemn extremism or the use of violence.
When devolving power to Scotland and Wales we should have
devolved more power to English local authorities and communities.
As market forces reshaped high streets and closed Post
Offices we should have given communities greater support to
take over facilities and community assets. Too often it was the
state, the market or nothing. What about the community?
The positive elements of the ‘big society’, such as enabling
community organisations and local people to have greater
control, should have played a greater part at the heart of New
Labour’s agenda, alongside the active state that did so much
to renew our public services and reduce the inequality which,
unchecked, would have further degraded our society. That combination
would have transformed, not simply improved, Britain.
The tragedy of Cameron’s ‘big society’ is that as an antidote to a
withered state it is destined to fail and be a ‘lightening rod’ for
public scepticism about the government’s motives. However, it
is vital that we do not allow this to give succour to those on the
left who favour a paternalistic state and seek to marginalise the
importance of citizen and community empowerment.
None of this means that we did not take steps in the
right direction. We did, but it took too long for us to adopt
a coherent strategy. Some of the positive changes we introduced,
such as incapacity benefit reform, the points system
ivan lewis 236
for immigration and the requirement to learn English and
pass citizenship tests, were lost in a ‘fog’ of public cynicism.
The politics of insecurity
Before we address how Labour should respond, it is important
to examine the causes of that insecurity and acknowledge
that it did not arrive solely with the election of the current
government. The course they are set on will slow down our
economic recovery, choking off not only growth but hope,
and increasing fear and division. We need to understand how
large numbers of our fellow citizens feel removed from the
cosy consensus of Britain’s elite and a Labour Party activist
base that, while becoming more diverse, still does not look
sufficiently like Britain. A recent survey undertaken by antifascist
organisation Searchlight concluded that a new politics
of identity, culture and nation has grown out of the politics of
race and immigration. Two groups now make up what could
be described as the middle ground of British politics. One
group is insecure and pessimistic about the future, likely to
be working class, live in social housing and view immigration
through the prism of its economic impact on its opportunities
and the social impact on its communities. Interestingly,
this group includes a significant representation from BME
communities and identifies with Labour politically. The
second group, which largely identifies with the Tories, is
generally older and is or has been professionals and managers.
It views immigration as a cultural issue, with concerns
about the impact of immigration on national identity and
immigrants’ willingness to integrate.2
To be more specific, increasing numbers of people work
hard for diminishing returns. Capped or reduced wages and
rising bills mean treats for the kids, the family holiday and
the night out with friends can no longer be taken for granted.
Resentment, even anger, follows. The costs of higher education,
shortage of jobs and affordable housing creates not only anxiety
237 the purple book
among young people but parents and grandparents too. And
in some areas this insecurity is compounded by seeing their
neighbourhood change with concentrations of new migrants.
We also see alienation among other groups. In some innercity
areas parents live in fear of a gang culture which threatens
to ruin their children’s lives. Some young people grow up
with no positive parental or adult role model, are influenced
by negative forces and trapped in a cycle of intergenerational
deprivation where there are few opportunities and no sense
of responsibility. Christians feel angry when liberal secularists
do not see the irony of their anti-faith bigotry, and are
infuriated when they hear of employers banning workers from
wearing crosses while people of other faiths are free to dress in
accordance with their religious beliefs. Some young Muslims
feel alienated from their community, strongly oppose British
foreign policy and are victims of racism. Many communities
are experiencing rapid change. Most of the pubs have gone,
the neighbourhood Post Office is no more, and the mix of
small independent shops has long been replaced by a supermarket
and array of charity shops.
Blue Labour has raised some of these issues in its critique
of New Labour. While I cannot pretend to share Maurice
Glasman’s analysis or views on all issues, he and others are
right to unsettle us with some home truths about our failure
to take seriously people’s disquiet about some of the changes
which took place on our watch, as well as pointing out that our
managerialism sometimes failed to take sufficient account of
the nature and value of relationships which are so important to
every aspect of life. Equally, blue Labour has to acknowledge in
its contribution to the debate about the future that the forces
of globalisation and modernisation bring good as well as bad
changes, and we will only regain public support with policies
and values which speak to the aspirations of people both for a
better standard of living and a better quality of life.
This malaise in our sense of identity is taking place at a time
ivan lewis 238
when public confidence in the pillars of the establishment is
at an all-time low. The MPs’ expenses scandal, the reckless
behaviour and excessive bonuses of senior bankers, the crisis
engulfing parts of the national press and Metropolitan Police
reinforces a public view of an unaccountable elite which lives
in a parallel universe and is detached from their anxieties. For
too many, Labour was seen as a party which looks like, and
speaks on behalf of, an urban metropolitan elite. We are not
that, but we will only prove that this is not the case through
our style of politics, community campaigning and the audacity
and boldness of our ideas and vision for the future.
The role of the state and affordable public investment is
important. But we should put people and communities at the
heart of our future offer, redistributing power from Whitehall
to the town hall to local residents, from the City square
mile to towns, cities and regions across the country, responding
to people’s insecurity by giving them greater control and
a strong stake in decisions which affect their lives.
Our overriding vision should be to adopt a policy agenda
which puts integration at the heart of a strengthened, one
nation United Kingdom – integration which respects devolution
of specified powers and the diversity of different cultures
and faiths with a strong aversion to forcing everyone to be the
same. But this would also be integration which asserts common
values and rules which, alongside the law, are non-negotiable,
have no opt-outs and are applied without fear or favour.
I believe these are some specific proposals which would
help to build a stronger, more united, country consistent with
Labour values.
Opportunity, aspiration and responsibility
We should be explicit about the rights and responsibilities of
citizenship in a modern Britain, a new covenant which binds
together not only state and citizen but families, employers,
local government and communities. A covenant which offers
239 the purple book
people fair access to early years support, high-quality education
and childcare, the NHS, apprenticeships, jobs, affordable
housing and dignity in retirement. In developing this new
covenant we should be clear that fair access includes reasonable
standards of personal and family responsibility, a much
greater correlation between contribution and benefit in a
reformed welfare system and, where appropriate, co-produced,
locally developed projects rather than top-down, state-run
programmes. Affordability underpinned by fiscal responsibility
will require us to achieve the right balance between state,
private, philanthropic and personal financial contributions.
In every community priority should be given to fighting
the antisocial behaviour and crime which can blight communities
and prevent people from escaping a vicious circle of low
aspirations and low expectations.
The most innovative projects often come from community
leaders, parents, mentors, voluntary organisations, faith
groups and local authorities who know their communities
best and can secure value for money. In communities where
positive role models are in short supply, we should place
a much greater emphasis on the potential role of mentors
to transform people’s lives. In the aftermath of the recent
violence and criminality on our streets it is time to listen
more to the local innovators and pioneers, the unsung heroes
who sometimes, in small ways, have shown that change based
on both opportunity and responsibility is possible even in
the most challenging of communities. Programmes dictated
by ministers and designed by officials in Whitehall should
be a last resort and only deployed when local solutions have
failed. Central government should play a much greater role in
identifying, disseminating and supporting best practice.
All citizens, irrespective of their personal circumstances,
should have a right to information about benefit and public service
entitlements. This would be a way of both empowering people
and also busting some of the myths which surround this topic.
ivan lewis 240
Patriotism and national pride
This year’s royal wedding showed the strong patriotic feeling
which endures in every part of the UK. This is to be celebrated
and not mocked. Some people on the left are all too willing
to be selective when promoting the importance of community
and solidarity. The same applies to reclaiming the flag on St
George’s day from the far-right and ensuring public buildings
fly the flag throughout the year. Those who challenge Labour’s
patriotism should be reminded that the pursuit of a fairer,
more united, country where every citizen is given the chance
to pursue their potential is patriotism in action. This does not
mean people of other political affiliations are not equally patriotic
but they should not be allowed to claim moral superiority.
The 2012 Olympics promises to be another historic occasion
which will strengthen national pride, but we need to do more
than express our patriotism around one-off events.
I am attracted to the idea of a new rite of passage for teenagers
which would involve them undertaking an educational project
focused on learning about British history, their local and family
heritage, culture and family tree. This could enable young people
to explore their personal ‘roots’ and strengthen their knowledge
of our history. Graduation ceremonies would celebrate student
achievement but also act as a focus for local and national pride.
Three institutions which showcase Britain at its best and
enjoy overwhelming public support are the NHS, the BBC and
our Armed Forces. Yet public engagement and involvement in
these is limited. They are run by a managerial and professional
elite. We should review how we can bring these institutions
closer to the communities they serve, turn citizens and communities
into ‘shareholders’, active participants and cheerleaders
for their contribution to our society. We should, therefore, give
serious consideration to a proposal, first floated by Tessa Jowell,
that the BBC could become a mutual organisation, so that all
those who pay the licence fee become its members and owners
with, for instance, rights to elect the trustees who oversee its
241 the purple book
operations and direction. In the future we should also consider
strengthening the BBC’s role and duty to contribute to the
economic, social and cultural wellbeing of every region.
In terms of the NHS, future health reform in England
should consider developing and extending the model which
gives local people the chance to become members of their
NHS hospital foundation trust to primary care, so local
people can have a greater voice in decisions about their local
NHS. We should also advocate the greater use of personal
budgets, not only as a means of giving patients greater control
but also integrating NHS and social care funding streams.
Our Armed Forces retain a special place in the heart of the
nation. Departure and homecoming parades should become
the norm in every community where our troops are based.
Attendance at Remembrance Sunday services could become
a statutory part of the secondary school calendar. New lottery
funding available for heritage projects could be used to clean
up every cenotaph across the country.
By contrast, the European Union is an unpopular institution
which is run by a remote bureaucratic and political elite.
Labour must develop a reform agenda in consultation with the
electorate. This starts from the basis that on economic, political
and security grounds it is in Britain’s national interest to remain
in the EU and seek to play a leading role in influencing its
future. However, pro-Europeans willing to make the case for
the EU must show an equal determination to demand reform,
much greater accountability and transparency. The public has
a right to know and influence EU decisions which affect our
way of life and sense of fairness, whether it be on issues such as
budget priorities, value-for-money or prisoner votes.
English identity
As I stated earlier, a resurgence in English identity raises
profound questions for Labour. In the market towns, villages,
council estates and suburbs there is a desire to express pride in
ivan lewis 242
Englishness, partially born out of patriotism, partially as a cry of
defiance from people who feel alienated from the mainstream
political establishment. They write off politicians as being the
same, are sceptical about progress and pessimistic about the
future and feel their identity is being marginalised in their
own country. Improving opportunities and raising aspirations
as part of a new rights-and-responsibilities covenant would
make a difference. But a major double-devolutionary shift of
power and resources from Whitehall to English local government
and on to local communities would also enable people
to feel a greater sense of control and ownership over decisions
which impact on their way of life. The Labour Party should
consider the organisational, policy and campaigning implications
of responding sensitively and seriously to the Englishness
agenda. The argument for an English Parliament has not been
won and there appears to be little public support for elected
regional government as demonstrated by the north-east referendum
result. But we should not and cannot close down the
debate about the best way of ensuring English-specific issues
are given a fair hearing.
Controlled immigration
Controlling immigration is both consistent with Labour
values and a duty of all responsible governments.
We should maintain a points system and could consider
establishing an independent body which would monitor
immigration control, report regularly on the impact of all
immigration, including from the EU, and consult the public.
We know as a result of the immigration points system that
we have skills shortages which can only be filled by non-EU
migrant workers. Therefore, over the next decade we should
set the education and skills system an explicit objective to
eliminate this skills gap. This would not only reduce immigration
but be a good test of our education system’s progress.
Local authorities should receive tailored support to help
243 the purple book
manage the impact on public services and community relations
of new arrivals. Every effort should be made to match
new migrants and asylum seekers with community networks
to help with settling in and support integration.
The public does not understand why UK taxpayers should
fund the cost of prison places for foreign nationals. We should
explore how they can either be returned to their country of
origin to serve their sentence, or for that country to be billed
for all costs incurred. Similarly, there is a strong case for
anyone granted UK citizenship who subsequently commits a
serious crime to be stripped of their citizenship.
Radicalisation and extremism
A new Prevent strategy should focus on both young Muslims
at risk of radicalisation by extremists within their own
community and young white people vulnerable to indoctrination
by far-right groups. Inciting young people to commit
acts of violence or hatred should carry aggravated prison
sentences. Universities cannot be allowed to hide behind a
free speech argument in failing to deal with conduct which
oversteps the mark and becomes incitement or intimidation.
In future, one option worthy of consideration would be to
transfer the Prevent strategy and programme from government
to an arm’s-length charitable trust; a trust run by leaders
and activists from the communities Prevent is seeking to
influence. Like in any set of similar arrangements, the trust
and its agents would have a duty to pass on information about
any threats to national security to the relevant authorities.
A more explicit commitment to integration would also
mean young people from different faiths and cultures should
be supported to meet and learn about each other’s lives and
beliefs. As a strong supporter of faiths schools, I believe they
would be strengthened, not weakened, by forming links with
other faith and non-faith-based schools. This would also be
relevant to schools serving very different socioeconomic and
ivan lewis 244
ethnic populations. Under Ed Miliband’s leadership, Labour
has begun a journey which provides us with a real opportunity
to address these deep-rooted and challenging issues of
culture and identity. His focus on the ‘squeezed middle’, the
British promise, responsibility at every level of society, and a
wide-ranging policy review process provides a platform for us
to connect with the insecurities and aspirations of the mainstream
majority. As we expose the poor choices being made by
this government we must reconnect our party with all sections
of the electorate and become the one nation party offering
hope and a better future to all. There should not be any ‘no-go’
areas for Labour. Indeed, we will build organisational capacity
and arrange events not only in key parliamentary seats but in
parts of the country where Labour is less well established. As
well as working to rebuild trust among our core voters we can
be confident in taking our case to the village halls, golf clubs
and women’s institutes of Middle England.
This approach will be in stark contrast to the government
at Westminster and SNP in Edinburgh who are dividing our
country at a time when personal and collective insecurity is
crying out for a renewed sense of national unity and purpose.
New Labour, blue Labour, and anyone who wishes Labour
well will challenge conventional orthodoxies, promote new
ideas, sometimes disagreeing vehemently, but showing that the
British Labour Party can be the incubator that fuels the renaissance
of social democratic parties across Europe. The party
which takes equal pride and inspiration from the anthems of
‘Jerusalem’ and the ‘Red Flag’ is well placed to address the new
complex cultural challenges our country faces. One Nation
Labour can once again ensure that hope triumphs over fear.
1. Richard English, Is There an English Nationalism? (London: ippr, 2011).
2. Nick Lowles and Anthony Painter, The New Politics of Identity (London:
Searchlight Educational Trust, 2011).
Good government and thriving
economies: rejuvenating England’s cities
Andrew Adonis
Radical democratic devolution was the hallmark of the first
two years of the Blair government. The Scottish Parliament,
the Welsh Assembly, the mayor of London, the Northern
Ireland Assembly – all were set up with significant powers
following positive referenda. Each of them has been broadly
successful, transforming democratic accountability and
consent, and promoting better government.
But then it stopped. There was no devolution worth the
name within England beyond London. Nor, apart from a
few elected mayors for local authorities, has there been much
local democratic innovation. In the decade after 2000, policy
on decentralisation within England was largely a failure,
bordering on fiasco in the case of the botched attempt to
introduce regional government, defeated by four to one in
the 2004 referendum in the north-east.
The consequences of this failure are serious. For all the
Blair-Brown investment in public services, regional inequalities
have not appreciably narrowed. Above all, this is a crisis
of England’s cities beyond London. Poverty, unemployment,
poor skill levels – these bedevil virtually all of England’s cities
outside the south-east.
Visit these cities, and first impressions are generally
favourable. City centres have undergone attractive regeneration.
andrew adonis 246
University quarters, in particular, are thriving. But travel a
short distance beyond and the view is very different. High
unemployment, low skill levels, seriously underperforming
schools, too few private sector businesses, social housing
estates on-the-edge – for all the investment of recent years
– and acute divisions between rich and poor districts: this
is the general character of England’s cities outside London.
In income per head, public infrastructure and private sector
business formation and location, they are virtually all poorer
than a string of cities in Germany.
There are some partial success stories. Advanced manufacturing
is alive and well in Sheffield and Bristol. Leeds has
a concentration of legal and corporate services. Manchester
boasts the greatest concentration of students west of Moscow,
and the best tram system in Britain. But all these cities also
have deep and wide concentrations of poverty.
Some major cities struggle to tell much of a positive story at
all, in terms of their underlying economies. Liverpool has lost
nearly half its population in the last fifty years; 40 per cent of its
jobs are in the public sector. Newcastle and its conurbation are
headquarters to only one FTSE 100 company – Sage – whose
new chief executive has decided to locate to Paris. Four in ten
of Bradford’s population are in the bottom tenth of national
income earners. Birmingham’s population is still 100,000
lower than a generation ago; it has an unemployment rate
twice the national average and among the lowest skill levels in
the country. Type ‘Made in Birmingham’ into Google, and the
first item listed is ‘Birmingham’s Industrial History Website’.
According to economic projections prepared for the city council,
Birmingham’s employment is forecast to be 4 per cent lower
in 2020 than in 2008. In the five years to 2008 the city gained
10,000 public sector jobs but lost 3,000 private sector jobs.
It is time for a fresh start. Labour needs a credible plan
for devolution within England to promote local leadership,
accountability and empowerment. This needs to start with
247 the purple book
a plan for radically improving the government of the major
cities and city conurbations. Half of England’s population
lives in the major conurbations, yet outside London it lacks
strong political institutions and voice; it is largely poor; and
it is excessively dependent upon a public sector which is now
being cut systematically.
I suggest three key policies for a renewed Labour policy
on city empowerment:
• Elected mayoral authorities for the six major cityconurbations
beyond London: Greater Manchester,
Greater Birmingham, Greater Leeds, Greater
Liverpool, Greater Newcastle and Greater Bristol
(whatever the most popular names ultimately decided
for them). Substantial powers should be handed
down from Whitehall to the mayors of these cityconurbations,
on a par with the mayor of London and
the Greater London authority in respect of transport,
policing, planning and economic regeneration;
• A requirement that city councils with weak leadership
and a poor record of promoting jobs and growth should
also adopt the mayoral model. Alongside mayors, there
should also be pilots of ‘city parishes’ with their own
councillors, budgets and responsibilities within city
and large urban authorities;
• Far greater tax and fiscal incentives for local government
at large to foster new businesses and – where
there is demand – new housing, within a reformed
council and business rates regime.
City-conurbations
The introduction of regional government into England
foundered in 2004 not only on the absence of English
regional identity, but also because the devolution plan itself
was incoherent. It was extra bureaucracy to no clear purpose.
andrew adonis 248
The key services and functions where the ‘democratic
deficit’ needs redressing within England are policing, transport,
infrastructure planning and economic development.
These are handled, or best handled, not at a regional but at
a subregional level. In respect of England’s major cities, this
means at the level of the city-conurbation because – with the
partial exception of Birmingham, which with a population of
one million is the largest single-tier local authority in Europe
– no city council outside London is sufficiently dominant
within its employment and travel-to-work conurbation to
take responsibility alone for these major services and functions.
The city of Manchester, for example, covers a population
of less than 500,000 within the Greater Manchester
conurbation of 2.6 million. In the north-east, Newcastle is
not even clearly the largest city within the Tyne-and-Wear
conurbation; Sunderland is about the same size.
Consider Manchester further. While the region of the ‘north
west’ is purely a geographical expression, Greater Manchester is
a recognised conurbation and the existing organisational basis
for key services, including a police force and the Integrated
Transport Authority responsible for local and regional public
transport. But none of these services is directly accountable to
the public. Who can name the chair of Greater Manchester’s
police authority or its ITA? Regional transport, in particular,
needs dramatic improvement, while the imperative for more
effective economic development and business promotion is
obvious. Most of these points apply equally to England’s five
other city-conurbations outside London.
The coalition is seeking to introduce elected police
commissioners to make the police more accountable. But
policing is not the only conurbation-wide service which
needs democratic leadership and accountability. Nor is it
sensible to treat the police as a standalone elected service.
The coherent policy is to create conurbation-wide elected
authorities; and to do so by means of a mayor, promoting
249 the purple book
direct accountability and high-profile leadership rather than
a new tier of political bureaucracy (which, for good or ill, the
pre-1986 metropolitan authorities were seen to be.) Alongside
these city-conurbation mayors there should be a small elected
council to hold the mayor to account and agree the mayoral
budget and major decisions.
This is precisely the model introduced by the Blair
government with such success in Greater London. The
mayor of London, elected alongside an assembly of twentyfive
members, is responsible for policing, transport, economic
development and has significant influence on skills policy
through the London Skills and Employment Board. Much
of this responsibility and power is in fact shared with others,
including central government and the thirty-two elected
London boroughs.
But by the nature of his profile and electoral mandate,
the mayor has influence out of all proportion to the letter of
statute. When I was transport secretary, hardly a week passed
without Boris Johnson being in contact about some issue
or other. The £16bn Crossrail project, which will transform
east–west London rail connections, would not be happening
without Ken Livingstone and Johnson – not only because of
their successful lobbying of central government but, equally
importantly, because of the impressive partnerships they built
with the private sector, persuading central London’s businesses
to pay a supplementary business rate which will finance
a quarter of the cost. And London would probably not have
won the Olympics without the mayor. It was only narrowly
won and throughout the evaluation there were concerns at
the state of London’s transport and infrastructure, which
Livingstone was able to assuage personally and categorically.
Greater Manchester, Greater Birmingham and the
other city-conurbations need mayors to match London’s.
Establishing these city-conurbation mayors should be one of
the first acts of the next Labour government.
andrew adonis 250
City mayors and city parishes
A starter for ten: name the leaders of Birmingham, Leeds and
Manchester city councils, three of the largest cities outside
London. Stumped? You are in good company. I have yet to
meet anyone who can name all three, which sums up the weakness
of democratic leadership and accountability bedevilling
most of our cities. In some cases there is not only weakness
but also chronic instability. Bristol has had seven changes of
leader in eight years. Until last year, the leadership of Leeds
alternated every six months between the Tories and the Liberal
Democrats as part of an extraordinary coalition arrangement.
Compare Birmingham with San Jose in California and
Cologne in Germany, cities of a similar size. Chuck Reed,
mayor of San Jose, has a web presence thirty-three times
as great as Mike Whitby, the leader of Birmingham City
Council. Jürgen Roters in Cologne has a web presence nineteen
times as great, and he has been in office only eighteen
months. But you don’t need to look abroad. A New Local
Government Network poll conducted during the first term of
elected mayors found that, just eighteen months after being
elected, on average 57 per cent of people could identify their
mayor, compared to only 25 per cent who could identify their
leader in councils without a mayor.
Strong, accountable, high-profile political leadership
is essential to transforming the cities. From national and
international experience, directly elected mayors could play a
positive role. Germany, for example, has now moved entirely
to the elected mayor model for its cities, including in the
northern German cities – within the post-war British zone –
which previously had the leader-and-council model. None of
these cities is proposing to change back.
The Blair–Brown governments should have moved
decisively to introduce mayors into the major cities beyond
London. They failed to do so not because of doubts about
the policy – which both Prime Ministers supported – but
251 the purple book
because of vested local government interests which saw, and
still see, mayors as a threat, when they ought to be welcomed
as an opportunity for civic renewal. There are exceptions,
notably Leicester, which in 2011 became the largest city
outside London to elect a mayor. The first mayor of Leicester
is Labour’s Sir Peter Soulsby – who, tellingly, considered it
more worthwhile to become mayor than continue as one of
the city’s MPs – winning the election with more than half
the vote on a wave of enthusiasm for his candidacy and the
office. But in most other cities, apart from Birmingham
where Labour’s Sir Albert Bore is in support, councillors of
all parties are blocking this necessary reform.
Contrary to what many councillors allege, the experience
of mayors has been largely positive. How many Londoners
do you know who want to abolish the mayor? The London
experience has been a spectacular success, which is highly
relevant for the major cities and city-conurbations beyond
London. Of smaller mayoral cities and towns, the mayors
in Doncaster and Stoke-on-Trent have not been effective.
In both cases, mayors were created to overcome chronic
local authority dysfunctionality and it has not worked. But
these are the exceptions, not the norm. In the other thirteen
authorities with mayors, the record has been broadly positive.
This, again, is particularly true in London. Hackney, Newham
and Lewisham have all had successful mayors (Jules Pipe, Sir
Robin Wales and Sir Steve Bullock respectively). All three
are Labour, all three have a great track record, and all three
were re-elected for third terms last year. And these are large
authorities. Lewisham alone has a population almost as large
as the city of Newcastle. Outside London, three of the four
mayoral incumbents were re-elected this year, so, again, the
public generally likes what it sees.
Nor is it the case that mayoralties breed maverick or
irresponsible Independents. More Labour than Independent
mayors have been elected so far. Of the Independents, most
andrew adonis 252
– including Middlesbrough’s Ray Mallon, Mansfield’s Tony
Egginton, and Hartlepool’s Stuart Drummond (the so-called
‘monkey’) – are obviously competent, and have been re-elected
and forged good working relationships with their councils.
In the case of cities with weak leadership and chronic
problems, including Birmingham and Bristol, Labour should
be supporting the introduction of elected city mayors in
the referenda which the coalition is requiring to be held in
May 2012. However, when Labour comes to decide its policy
for government in respect of city mayors and new cityconurbation
mayoral authorities, a requirement for referenda
before implementation should not inevitably follow. Virtually
all changes in local government organisation, including the
creation of entirely new local authorities with substantial new
powers, have not in the past involved referenda. A judgement
needs to be made on the degree of political consensus
supporting the creation of mayors and new metro-mayoral
authorities. Labour should consult intensively on an outline
reform plan before the election, shaping precise proposals,
conurbation by conurbation, in response to this consultation.
Provided these proposals generate a reasonable degree
of consensus, they should, I suggest, be implemented on the
back of clear manifesto commitments rather than referenda.
However, mayors alone will not reinvent city government,
and they are only part of what needs to be done to
build accountability and civil engagement. Even in cities
with effective strategic leadership, such as Manchester, the
councils themselves are too large either to hold the administration
properly to account or to articulate local interests
and concerns. Manchester has ninety-six councillors, Leeds
ninety-nine, Liverpool ninety, Birmingham 120. Newcastle
with seventy-six and Bristol with seventy seem positively
small by comparison.
There is a case for reducing these numbers. This could take
place alongside pilots in devolving power to ‘city parishes’
253 the purple book
– elected local ward communities – to foster greater local
consultation and to extend local control and innovation in
respect of local amenities, including libraries, parks, streetscapes
and leisure facilities, which at present are too often
neglected and undervalued as community resources. Such
community councils might also attract more young people
to take part in their local government. Until recently, Leeds
council had more councillors over the age of eighty than
under the age of thirty-five. There are few councillors in their
twenties in any city council outside London.
Incentives for growth
Every council leader worth their salt should have a plan for
growth. But very few have. More effective strategic leadership
– and the creation of mayors where appropriate – are
part of the answer. Also important are stronger incentives for
mayors and council leaders to promote planning, infrastructure
and development decisions which attract new and bigger
businesses and foster substantial new housing – particularly
brownfield development – where there is demand for it.
Local taxation is among the great minefields and graveyards
of British politics. The trauma of the poll tax is now
past, but a new system of local taxation to enable councils to
raise significantly more of their income locally – a desirable
goal in itself – is still too risky a venture without stronger local
leadership and consensus on key components (which would
need to include fairer property valuations and/or a readiness
to countenance an element of local income tax). However,
within broadly the existing regime of council tax and business
rating, significant new incentives should be provided for
councils to promote growth.
To encourage extra housing where it is needed (as it is
in much of the Midlands and the south in particular), there
should be a significant council tax bonus for councils authorising
sustainable and affordable developments. The coalition
andrew adonis 254
has proposed a ‘new homes bonus’ matching extra council tax
income from new housing developments for a six-year period.
This is far too short to give a strong incentive for councils to
agree to development and provide the associated infrastructure.
The bonus should be for a fifteen- to twenty-year period,
over which associated infrastructure and local amenities need
to be provided and sustained.
To encourage new business activity, councils ought to
be able to gain the business rate benefit accruing from new
business developments to which they give planning consent,
without losing the extra income to the national business
rate pool and equalisation machinery. There are a number
of options, including ‘tax increment financing’ (a method
to use future gains in taxes to finance current infrastructure
improvements) and a bonus to local tax revenue similar to
that proposed in respect of housing. However, again, the
bonus proposed is only for a period of six years; it needs to
be for twenty or twenty-five years to maximise incentives and
meet its purpose of enabling councils to plan and provide
essential infrastructure.
An ambitious version of both of these policies is needed to
provide strong incentives to council leaders to promote jobs
and local investment. And the use of these incentives should
then be at the heart of every city’s plan for growth.
At the end of the nineteenth century, Joseph Chamberlain’s
Birmingham was commonly described as the best governed
city in the world, and the city of a thousand trades. If
Birmingham and England’s other regional cities are to flourish
anew, they need to compete hard for those two accolades
in the twenty-first century, and Labour must provide them
with the tools for the job. Good government and thriving
economies go hand in hand.
From centralism to localism:
building cooperative communities
Steve Reed and Paul Brant
The welfare state has made Britain healthier, wealthier and
better educated than ever before. But it has generated
problems too. The tendency of the state to take over problems
and create universalised solutions to meet them removes
power from communities and can smother local innovation.
In extreme cases we have created a culture of dependency
instead of fostering self-reliance – a traditional working-class
value that underpins aspiration and self-confidence.
People contrast unresponsive, top-down public services
unfavourably with their experience elsewhere in life where,
as consumers, their personal choices and preferences matter
more. If we do not make public services more responsive we
risk a loss of public confidence that will open up opportunity
for more privatisation. That would create a more polarised and
less fair society as the poorest, whose needs are less attractive
to a profit-driven market, are left behind.
The progressive response should be a rejection of top-down
services in favour of new ways of running services that draw on
our party’s rich mutual and cooperative traditions, with the aim
of sharing power more equally between the citizen and the state.
Labour in power did not trust local government enough.
By 2010 the Audit Commission recognised that local government
was the most cost-effective part of all government.
steve reed and paul brant 256
Labour’s inspection regime – the comprehensive performance
assessment – helped drive this improvement by giving
the public a way of measuring their council against others.
But the CPA failed to reward success with autonomy, and the
inspection regime eventually became overbearing, displacing
local priorities with initiatives favoured by Westminster civil
servants and generating a costly performance bureaucracy.
From time to time Labour talked about promoting localism,
but double-devolution and the empowerment white
paper were not followed through. Too often Labour sought to
bypass rather than work with local government: arm’s-length
management organisations were an attempt to take housing
out of local government control, academies were a first step
in breaking up local education authorities. The problem with
these reforms was that they did not hand more power to local
communities, they centralised it in the hands of civil servants.
This centralising tendency made Labour feel, and eventually
become, more remote. We should have used local government,
as the tier of government closest to communities, to
enable communities to take control.
Local government localisers
Politicians now all talk the language of localism and empowerment,
but they differ significantly in what they understand
this to mean. The following chart shows how the differences
cut across party lines. This explains why some Tories ‘get’ the
‘big society’ but others see it as a pointless distraction, and
also why some Labour councils and ministers keenly pursue
models of localism while others do not. The dominant model
for public services in Britain is ‘central-government centralisers’
with a strong centre determining how services will be
delivered locally. Some initiatives that appear localist – such as
free schools – are not, because the funding and accountability
are all dependent on national government and power remains
in the hands of the people providing the service, not in the
257 the purple book
hands of the community using it. Other local authorities want
to localise power as far as the council, but no further. This is
local centralism – it does not empower communities, and it is
how many local government officials think. This chapter argues
that Labour needs to move our local government agenda
towards a new form of double-devolution, where power is
devolved to local government so that local government can
devolve power to people and communities. We call this model
of enabling local government ‘cooperative councils’.
Central government localisers
Ministers that want communities
to control services while bypassing
local govt (e.g. free schools)
Local government localisers
Councils that want to enable
communities to control services
(e.g. cooperative housing,
community-led youth services)
Central government centralisers
Ministers that want to control
centrally how services are delivered
locally (e.g. benefits, tax, job
centres)
Local government centralisers
Councils that want to control
services delivered to communities
(e.g. council housing, local education
authorities)
(We thank John Anderson of KPMG for permission to reproduce the above chart.)
The case for cooperative services
Handing more power to communities and the people who
use public services means a different role for local councils
and councillors. Councils today are primarily top-down
organisations that do things to communities. Services are
channelled through silos, like housing, social care or youth
activities, without much consideration of their cumulative
impact on individual neighbourhoods. The community is
relatively passive rather than closely involved, and is treated
as a cohesive whole rather than a complex set of differing
needs. Decisions about what a service looks like and how it
steve reed and paul brant 258
works are taken by professionals who do not use the service
and who generally do not live in the neighbourhood that
is affected.
We must turn this traditional model upside-down to give
the community more control. The council must become an
enabling platform upon which community-led services are
built. Council support would make community-led services
sustainable by offering services such as IT, HR and people
management, legal and regulatory compliance advice, and
would intervene to resolve disputes or address serious failures
in performance. The council would provide facilitators
able to link communities with the resources available to
help them analyse their needs and procure services to meet
them. Making community-led services sustainable is critical
to making the model work. Without this support, services
moved into the community risk being gobbled up by the
private sector if they are unable to match the economies of
scale that would allow them to survive open tendering processes.
This is cooperative commissioning, and it is one of a
number of ways control over services can be devolved. Others
include setting up trusts, social enterprises or mutuals led by
the community.
Councils would be judged on their ability to help communities
meet their own needs and solve their own problems.
They would set an ethical and political framework to guide
decisions over which needs to prioritise for investment. For
the model to work to maximum effect, all local services, not
just council services, should be included. This would break
down the barriers between different services so communities
can tie them up in ways that suit local needs. Building on the
previous Labour government’s Total Place pilots this would
include current council services, local community health services,
local police and other criminal justice services such as
probation, employment and benefits services, as well as local
schools and public housing. Communities would participate
259 the purple book
in allocating resources and challenging providers by having
open access to performance and cost data to help scrutinise
and shape services in a cooperative model of participatory
budgeting.
Some communities have more capacity to participate
than others, particularly those dominated by middle-class
professionals. Councils would need to support more deprived
communities so they can play a full part, including training
and paying community facilitators and champions to engage
excluded communities and individuals.
Of course, more variety in the kind of services on offer
and how they work brings with it higher levels of risk. Some
services will fail as new approaches are tried, but we need
a different approach to risk if we want to create the space
for communities to innovate, learn and do things differently.
Robust contracting will allow councils to intervene if
things go badly wrong or to guarantee access to everyone
who should be entitled to use a particular service. This would
prevent particular groups trying to exclude others.
The cooperative approach is about empowerment, it is not
cuts-led. But at a time of austerity councils must deliver best
value for money. By doing more of what communities want
and less of what they do not want we stretch every pound
of public spending. By opening up services to innovation we
find new ways to help communities realise their ambitions,
often at lower cost. Value, however, must be understood in
its widest sense. It is because Labour understands the importance
of social, economic and environmental value, as well
as value for money, that we are proposing community-led
delivery models rather than Tory-style competitive tendering
based on price alone.
A common criticism is that community-led services are
not accountable through the ballot box. We believe local
control over services adds to the democratic mandate by
making services more immediately accountable to the people
steve reed and paul brant 260
who use them. Communities can use cooperative commissioning
or their own representatives on trust boards to replace
service providers or to reshape services as local circumstances
change. Councillors will have a new role as community
organisers, identifying local need and working with local
community groups to link them in to resources that are available.
Instead of being expected to provide all the answers,
councillors will help communities find their own.
A major flaw in the Tories’ ‘big society’ is the way it aims to
replace skilled paid staff with untrained volunteers, deprofessionalising
public services so they can be done on the cheap.
Altruistic volunteering is immensely valuable and cooperative
communities will need much more of it, but volunteering
cannot be the heart of how public services work. The primary
reason individuals will participate is reciprocity: you give to
get. It is the principle that in previous centuries led miners
in South Wales to set up friendly societies, or factory and
dock workers to form trade unions. It recognises that ‘we’ is
bigger than ‘I’. Individuals will be able to influence the services
that affect their lives the most and that is why they will
get involved. But there is a place for more tangible incentives
too. It should be possible to return the efficiencies of these
new ways of working to the individual local communities
themselves through discounted council tax, cut-price use of
leisure facilities, community benefits, or access to job-skills
training and apprenticeships
The challenges facing local government over the next decade
A combination of increased demand, decreased resources and
the Tory reintroduction of a form of compulsory competitive
tendering through the new ‘right to challenge’ means that
councils will be hit from many sides in the coming years.
Councils disproportionately provide services to the most
vulnerable in society, particularly the young (education, child
protection, youth services) and the old (care, sheltered housing,
261 the purple book
transport). In some councils as much as 80 per cent of net
spending goes on children’s and adults’ services. Demand in
these areas is growing as high-cost new technology and medical
procedures keep people with complex special needs alive
much longer. Alongside a lower birth rate this has created an
ageing society with a greater number of vulnerable people
facing complex care needs.
Increasing demand for services runs up against radically
reduced resources. We are already seeing the effects of this as
councils restrict care services – home-helps, carers, residential
homes – only to those in the most critical need. People with
lower levels of need receive little or no help until their lack of
support worsens their condition enough to make their needs
critical. It is in lower-level categories of need that communityled
services have an important role to play. By removing the
assumption that the state will do everything, by delivering
public services in ways that foster responsibility rather than
dependency, we can promote the idea that it is alright to look
in on elderly neighbours to make sure they are well, to offer
to help with the weekly shopping, to use council funding in
the form of personalised care budgets to pay neighbours or
relatives to offer regular care and support where needs are
not so great as to require more expensive professional help.
Not only is this kind of neighbourliness good in itself, it is
also preventative – it supports vulnerable individuals instead
of letting them sink into a worse condition requiring more
expensive interventions. Government funding cuts will force
councils to move away from universal provision to more
targeted and preventative services. Cooperative communities
can help achieve this. Instead of just striving for ‘more for less’
we must learn to do things ‘differently for less’.
A growing number of progressive Labour councils are
working together to create a new cooperative model for local
public services. The new Cooperative Councils Network,
launched by Ed Miliband in July 2011, brings these councils
steve reed and paul brant 262
together to learn from each other and produce a new localist
agenda for Labour. The services that are emerging offer
new ideas for the party nationally. It is shaping a radically
different approach from old-style top-down public services.
It offers the chance for the party to redefine itself to meet
the demands of a modern, diverse and pluralist Britain while
remaining true to our political heritage.
A new settlement for local government
The UK suffers from the most centralised government in the
world. Too much policy is driven by London-based policy
groups, media and civil servants and Westminster politicians
convinced that the political world revolves around them.
Central government is too remote from local circumstances
to act as the agent of empowerment for local communities.
Only local government can play this role, but for that to
happen we need to rebalance the power relationship between
local and national government. The three necessary elements
to achieving this are reform of the balance of taxation, local
influence over national legislation, and the principle of
subsidiarity.
Funding is the single biggest cause of local government’s
dependency on national government. The majority of local
government funding is handed out by Westminster, allowing
national government to dictate how it is spent. We have
government capping of council tax, central control over funding
for housing, nationalisation of schools funding, central
control over business rates, and – under Labour – hundreds
of different ringfenced grants that limited local discretion.
Local government currently exists on licence from national
government in an unhealthy parent–child relationship that
holds back local government’s ability to develop.
If Labour wants to be really radical we need to tilt the
balance of taxation so that it is more equally shared between
national and local government. This is already common in
263 the purple book
other countries. Swedish municipalities levy income tax and
charges and have significant discretion in deciding which
services to offer. In the US, the federal government, the states
and localities all raise taxes separately in a range of different
ways but without sufficient redistribution to ensure that
funding follows need. Any reform in the UK would need
a redistribution mechanism, preferably controlled by local
government as a whole rather than by Westminster. This is
necessary to ensure that poorer areas are not left to decline
as richer areas prosper. A land-use tax would help councils
promote sustainable use of land and retain a property-based
element to taxation, common in many countries.
Other countries include local government in their national
legislatures. The German upper house, the Bundesrat, represents
the regional Länder and has the power to veto legislation
from the directly elected Bundestag. The US Senate has
two representatives from each state regardless of size to counterbalance
the House of Representatives, which is elected in
proportion to the size of population. England is the constitutional
poor cousin of the nations of the UK, with nearly all
powers retained by a national government which can legislate
ignorant of the pressures and needs at local level. A reformed
House of Lords should have representation from the upper
levels of local government, which can scrutinise legislation
from this unique perspective. With the revising and scrutiny
powers of the current upper house, the new chamber would
ensure the interests of communities were not overlooked by
the House of Commons. Local government representation
on parliamentary select committees would ensure a localist
perspective is involved in the scrutiny of all new relevant
legislation.
The final piece in the jigsaw is subsidiarity – the rule that
decisions should be taken at the lowest appropriate level of
government as close as possible to the people. This principle
is already enshrined in EU decision-making. Labour should
steve reed and paul brant 264
apply the same requirement to national decision-making.
Government should be required to justify why any legislation
is taking place at national rather than local level. Enshrining
this principle in law, creating a genuine devolution of power
to councils and communities, would leave no need for a
Department for Communities and Local Government. It
could be abolished, with any residual functions transferred to
the Cabinet Office, saving considerable sums of money.
Upper-tier local authorities, or groupings of them, should
take over areas currently managed by quangos such as regional
health authorities, national parks or planning authorities.
Health, regional planning, regeneration and transport policy
would all benefit from more local accountability. Where
city-regions have directly elected mayors, it is appropriate
for a forum of council leaders to hold them to account.
In London a forum of this kind would replace the existing
London Assembly, justifiable on the grounds that borough
leaders have a clear and direct interest in decisions taken by
the mayor of London and are therefore more likely to hold
him or her robustly to account.
Empowering people and their communities
Traditionally the left emphasises the rights of the collective
while the right emphasises the rights of the individual. This
led Margaret Thatcher to assert, ‘There is no such thing as
society’, and the Labour Party’s constitution to declare that
‘By the strength of our common endeavour we achieve more
together than we achieve alone’. In fact, both individual rights
and the common good matter. They are mutually dependent
on each other, so the point is to strike a balance between
them and understand that you cannot empower individuals
without empowering their communities, and vice versa.
We must also recognise that every locality is different,
made up of different communities with different needs
and ambitions. That is why localism is so important. A single
265 the purple book
top-down model of public services cannot meet all those
different needs. The Beveridge-inspired model of public services
this country created after the Second World War suited a
country that was far more homogenous and was just emerging
from the command-and-control wartime economy. That
model no longer works so well in the more diverse Britain we
know today. We need local flexibility and more local variation.
There is no single model we can apply to all public services.
What matters is that individual service users and the
communities they are part of have more control as a result
of any change, are empowered to adapt the way those services
are delivered to suit local circumstances, and as a result
develop a stronger sense of self-reliance and the ability to
work together in cooperation. The council, in this scenario, is
the enabler – making available a set of resources that allows
this to happen.
This is not about replacing skilled professionals with
untrained volunteers. It is about placing the resources of
the state at the disposal of the community who decide, with
appropriate support and guidance, how best to use them. In
each of these services the model is different but the approach
is the same. The people who use the service have more
control over it, and the outcome is better services that are
more responsive and help build communities’ control over
their own destiny. It is an approach that Labour’s cooperative
councils are now seeking to extend across the full range of
services they provide.
We can see how this might work by examining three
different service areas.
Community-led youth services
Some urban estates and neighbourhoods suffer from high
levels of youth offending, including violent youth gangs.
Traditionally, young people getting involved in criminal behaviour
are identified and targeted, with support. This usually
steve reed and paul brant 266
means professionals from outside the estate involving them
in pre-existing projects and schemes designed to divert them
away from offending. This way of working has only limited
success because the services do not recognise the particular
problems in a given neighbourhood, and it is often difficult to
reach the most excluded and most vulnerable young people.
A community-led service would work differently. Turning
Point, a leading national social enterprise, has developed
a model of community control over services that works. It
involves training members of the community to act as facilitators
so they can engage with the people who live in an affected
neighbourhood, including the most marginalised. Applied to
youth services, the facilitators, supported by trained professionals,
would help the whole community analyse the things
that lead to offending, such as chaotic families, lack of positive
activities for young people, low educational achievement
or low aspiration caused by high levels of unemployment. The
community would then decide what action is necessary to
correct this, and choose organisations able to provide services
to meet these needs. This is likely to create a very different set
of services to that which is currently on offer, and there will
be differences from neighbourhood to neighbourhood. This is
a far more effective approach because it recognises that not all
communities are the same and involves local people in a way
that more remote models of service provision do not.
Cooperative housing
Cooperative housing makes up only 0.6 per cent of the total
housing stock in England and Wales. In Sweden it is nearer
18 per cent, in Germany 10 per cent and Canada – where
government funding has been available to start housing
co-ops – around 10 per cent. Members of a Swedish housing
cooperative elect their own board of directors annually from
among the residents and manage their own block or estate.
The board controls, within legal limits, who is allowed to join
267 the purple book
the co-op as existing members move out. Tenants in privately
owned housing developments are allowed to form their own
cooperative and make an offer to the owner to buy it. If the
owner decides to sell, the cooperative has the first right of
purchase as a shared equity scheme where every member
owns shares which may be purchased through bank loans like
a mortgage.
While they are relatively few in number, there are many
different forms of housing cooperatives in the UK. Watford
Community Housing Trust is a ‘gateway’ model that allows
residents in the formerly council-owned housing estates to
opt into becoming shareholders in the trust by purchasing
shares. The resident-owned trust manages the estates and all
housing services. Other cooperative schemes allow people
on low or fixed incomes to become property owners without
running the risk of taking on unaffordable mortgages
because they can choose the amount of equity they purchase.
If a buyer’s income suddenly collapses, instead of losing their
home they simply reduce their monthly equity purchase
but retain what they have already built up. This is a socially
responsible form of the right-to-buy that offers a progressive
response to Margaret Thatcher’s flagship policy from the
1980s without the risks associated with subprime lending or
a reduction in the amount of affordable housing. It creates
mixed-income housing neighbourhoods rather than ghettoisation
of the poor. It also offers a route for first-time buyers
to get a foot on the housing ladder – important when you
consider that today buying your first home is so difficult that
the average age of a first-time buyer is thirty-seven. Councils
can use their land assets, planning powers, housing policies
or make investment available to promote more cooperative
housing as part of the UK’s housing mix.
Mutualised care services
For many frail, elderly or disabled people the experience of
steve reed and paul brant 268
coping with disability is deeply distressing if, after a lifetime
of self-reliance and independence, their lives are suddenly
taken over by professionals. They are told which daycare
centre they will attend, when and where respite care is available,
when their home will be cleaned, and even what meals
they will eat or when they will go to the toilet. Instead of this,
many councils now offer personalised budgets where care
users receive a budget worth the value of the care services
they would have been allocated. Instead of being assessed
and told what services they will get, an adviser helps them
choose what they want to do with their lives and what
services they need to achieve that. They often choose radically
different things to what the state gave them, and they end up
more satisfied.
Councils can push this model further by supporting the
development of micromutuals of personalised budget-holders.
This brings together groups of people who share a similar
type of disability, care objective, faith or ethnic background,
or who live in the same area. By pooling their care budgets
they can use their strengthened purchasing power to force
faster change in the care services that are available to them.
For instance, if older Somali women want care provided in
the daytime by other women, they can band together and
purchase care in this form. The point is that the people who
use the services are in control, not the professionals.
Trusting communities
The time has come for Labour to trust local people more.
A new form of enabling local government can reinvigorate
communities and give them back the power that top-down
public services have taken away. Labour must never cede the
political territory of communities, participation and mutualism
to the Tories. It is part of our political DNA.
The ‘big society’ started life as a longer phrase: ‘big society,
not big government’. The Tories fail to understand that the
269 the purple book
state stepped in to support vulnerable groups because the
Victorian mechanism for helping the ‘deserving poor’ was
more full of holes than a Swiss cheese. They aim to marketise
public services, extend the profit motive, break up state
provision, and treat people only as consumers or providers
of services in a market. They fail to realise that communities
and the people who make them up are about more than
commercial transactions.
Where the Tories want to roll back the state, Labour
must change the role of the state. Labour must argue for
the socialisation of public services – putting them under
the control of reinvigorated communities whose energy,
insight and creativity will deliver better outcomes. It is only
when we acknowledge the human relationships that make
communities work that we can build public services that
support cooperative communities.
Letting the people decide: redistributing
power and renewing democracy
Stephen Twigg
In the aftermath of the failed referendum on the Alternative
Vote, and with tricky waters ahead for House of Lords
reform, it might look like the end of the road for democratic
reformers. Pigeonholed as the concerns of out-of-touch,
metropolitan elites, there is a danger that the notion of redistributing
power through democratic methods will be quietly
forgotten. It simply is not a priority for many Labour people,
given the financial crash and the Tory assault on public services.
After all, they say, when the house is falling down all
around you, there is no point in tinkering with the foundations.
But for me, democratic reform is about addressing the
public’s lack of faith in politics. Clearly the British public was
not persuaded that AV would make any positive difference.
So, where do we go next?
Democratic power, put in the right hands, can be powerful
indeed. From the Suffragettes to the Chartists to the civil
rights movement, democratic power can help to shift huge
power blocks in society down to individuals. When there is
no obvious pressing need for democratic change, however,
little steps in the right direction can seem too much trouble
for too little gain, particularly when progressives are already
in positions of power or hoping to achieve it. If we know how
to get our hands on powerful levers, the argument goes, why
271 the purple book
can’t we simply gain control of the establishment and use the
levers of power to promote progress?
Progressives need to turn this thinking on its head. Is it up
to politicians to determine how power is wielded? Even when
parties like Labour get into government, does it necessarily
follow that, as rational actors, politicians want to give the
people more power when it is easier to do things for them?
Have not politicians themselves become part of the powerful
and lost touch with the public? Often too many of us in
politics assume that we know what the public wants, taking
away their capacity to effect change themselves. In the Arab
world people are risking their lives for democracy. Yet, here in
the UK, it is widely believed that politics is all about power,
patronage, privilege and pecuniary advantage. Of course, this
is anything but true. Elected representatives do sometimes
give away power, for example, as Labour did through devolution
or by establishing elected mayors. Most work hard for
our constituents. Yet there is a powerful lack of trust in UK
politics and politicians.
Given the intractable problems with achieving solutions
for national politics, perhaps democratic reformers should
focus on the local. After all, this is where people themselves
feel they can make more of a difference. In this year’s Hansard
Society audit of political engagement, 51 per cent of respondents
agreed with the statement: ‘When people like me get
involved in their local community they really can change the
way their area is run.’ This compares with only 30 per cent
who agreed that they can change the way the UK is run by
getting involved in politics at a national level.1 If people feel
that they can have an effect on the way things are run at a
street level, they could be persuaded that they can also have
an impact on national policy.
In politics, everyone says they would like increased citizen
involvement, but often forget why. As Stella Creasy wrote
in her pamphlet Participation Nation: ‘Engagement and
stephen twigg 272
empowerment activities can unleash … “civic energy” within
society by helping the public to learn the skills and confidence
they need to be able to participate in either civil or
civic action.’2 By involving the public in civic activities, they
are more likely to continue to support a policy or government
activism because they feel ownership of the process.
Rather than feeling something has been done to them, it has
been done with them. But by its very nature, public engagement
can be messy, fractious and counterproductive if it is
conducted in the wrong way, or if politicians over-promise.
This chapter investigates the avenues which democratic
reformers should explore by weighing up which mechanisms
would redistribute power the most. As we saw with
the electoral reform referendum, saying that a change is for
the people does not mean that the people will necessarily be
in favour. Therefore, finding the reforms which genuinely
redistribute power and then making the case for them must
form the focus of any next steps by progressives. Banging the
same old drums and hoping that someone will listen is not
an option.
Who wants to become a Labour MP?
The phrase ‘you’re all the same’ has become a truism on the
doorstep for politicians of all hues. It is generally taken to
mean that all governments make the same mistakes, and all
politicians are greedy and corrupt. Many of us spend our
time trying to disprove that claim. But there is one way in
which politicians are becoming the same as each other, and
rather different from the population. House of Commons
research shows that 90 per cent of the 2010 intake of MPs are
university-educated, compared with 20 per cent of the adult
population. More than one-third of MPs attended fee-paying
schools, while just 7 per cent of the population did. Despite
the increases in female and BAME representation, 62 per cent
of the House of Commons is still white, male and over forty.
273 the purple book
One of the reasons for this may lie with how people get
involved with political parties and the way our candidates
are selected. In 2005 only 1.3 per cent of the electorate was
a member of a political party, a fall from 4 per cent in 1983
and much lower than the average membership of European
political parties.3 Labour has seen an encouraging rise in
membership since the general election, but at around 200,000
this is still a large drop from the 400,000 members it had in
1997. Most analysis of the fall in the membership of political
parties agrees that it is due to a number of factors including
changes in the socioeconomic make-up of the UK, the explosion
of single-issue groups, and the pressure on people’s time.
The fall in membership has resulted in fewer people being
involved in selecting Labour’s MPs. The average constituency
Labour Party has around 300 members. This equates to a
very small percentage of the local population. When candidates
were selected by large memberships fifty years ago, it
was easier to see how they reflected the wishes of the local
population.
How, then, could Labour seek to increase the influence of
ordinary people over the decision of who represents them?
One way would be to introduce closed primaries. I do not
advocate open primaries where supporters of other parties
could vote in Labour selections. Voting in a closed primary
would be restricted to Labour supporters. To guarantee the
sanctity of party membership, members should still have
the important responsibility of selecting the shortlist which
would then be opened up to a vote by registered supporters
of the Labour Party. Not only would this help to involve a
wider group of local people in the selection of their Labour
candidate, it could, contrary to popular assumption, also help
to increase Labour membership.
By showing that Labour members have the opportunity
of selecting the shortlist of local candidates, Labour could
market membership to registered supporters on the basis that
stephen twigg 274
they get to have a wider choice in the primary if they join.
Research by Will Straw conducted for Progress has shown
that the introduction of primaries has historically been
‘grounded in two principles: an optimism about the power of
activist-based politics to change society for the better, and a
belief that citizens should be able to hold their politicians to
account’. As such, they are a good candidate for redistributing
power.
Primaries by themselves will not, of course, automatically
increase working-class or other representation. All-women
shortlists and other mechanisms to increase representation,
such as mentoring, will need to continue. But, crucially,
primaries could show the electorate that our doors are open
to our supporters.
In the US, Barack Obama reached out to unregistered
voters, ethnic minority voters, young people and trade union
members to register them as supporters for his primary
campaign. The fact that he had to build a base of support
before he went into the presidential campaign meant that far
more people were engaged than might otherwise have been.
The French socialists are now holding an open primary to
choose their presidential candidate as a way of reinvigorating
the party. The party itself runs the primary, setting up
10,000 polling booths and allowing anyone to vote for one
euro, including fifteen- to eighteen-year-old members of the
party’s youth organisation.
In 2004 the Greek socialist party PASOK organised
primaries in which 900,000 Greek citizens were said to
have voted out of a population of eleven million, particularly
engaging working-class supporters.
There is a key opportunity for Labour to seize the moment
as the government has performed a somewhat unnoticed
U-turn on its agreement in the coalition programme
to fund 200 primaries.4 Once again, it looks like the
Conservatives were only interested in primaries as a way of
275 the purple book
decontaminating the Tory brand. Instead, Labour should
seize the primaries, mantle and campaign for the money to
conduct primaries to be made available as promised. This
would also help to show the public that Labour is prepared
to try out different ways of engaging them in the high end
of politics.
As Ed Miliband has said, consideration should also be
given to auto-registering trade union levy payers whose
union is affiliated to Labour as full Labour supporters. In
leadership contests, this would mean that Labour’s union
members would be canvassed in their own right. Instead
of the paltry 9 per cent turnout in last year’s leadership
contest, the fact that candidates could canvass all parts
of the membership, would mean that political levy payers
would be engaged with. Imagine if Labour’s leader could say
he or she had the support of a million members rather than
200,000. It is also important that the oddity of multiple
voting in leadership elections be abandoned. In many cases,
individuals have a number of votes to cast because they are
a member of different affiliated organisations. Affiliated
organisations could still engage in the voting process, but if
people are members of the Labour Party they should not be
allowed to vote more than once.
Opening up access to the Labour Party and how it operates
should be an important organisational goal. Following
the Refounding Labour consultation, the party must focus
its efforts on building local parties’ capacity to organise in the
community. Labour needs to be seen to be the trailblazer on the
local issues which matter to people’s everyday lives. This is not
simply good politics, it will help to ensure Labour activists are
talking about the changes people wish to see and campaigning
on practical measures that make a difference in the here-andnow.
It will mean that more members are indeed the change
they wish to see in the world, to quote Mahatma Gandhi. The
concurrent effect will be that the party’s eyes and ears will be as
stephen twigg 276
close to local people as possible. Being active in the community
will also help Labour to identify future leaders, both for their
communities and to stand as representatives of the party.
Let the people decide
As part of the coalition deal, the Liberal Democrats negotiated
another attempt to reform the House of Lords. Labour
champions a fully-elected chamber. The arguments for
democracy in the upper House have been rehearsed ad infinitum.
It goes without saying that people who set the laws that
govern the people should have a mandate from the people to
do so. No matter how talented, independent or hard-working
peers might be, it does not change the fact that they are
accountable to no one and yet can have a strong impact on
our legislation – just look at their refusal to back the equal
age of consent, the ban on hunting or the introduction of
proportional representation in European elections.
Labour should support the use of the Parliament Act if
the Lords, inevitably, put up a fight for their lives. But what
if Lords reform does not go through this time? Labour’s
thirteen years of government was littered with long-grass
moments and most constitutional observers expect the new
legislation to run into trouble. Perhaps the answer is to
return to the option of a citizens’ convention, a deliberative
body of at least 100 people selected from the electoral roll
and charged with putting a series of proposals to Parliament
to improve British politics. This mechanism would be the
best way of avoiding the inevitable compromises and vested
interests within and between political parties, and would
allow the public to take charge of creating the change
Britain’s democracy so sorely needs.
Taking constitutional decisions out of the hands of politicians
and giving it to the people would be a hugely symbolic
redistribution of power. It would show that not all political
discussions need take place in the confines of Parliament and
277 the purple book
would deliberately give the public a reason to be interested in
democracy issues. While the final decision to change would,
of course, be taken by elected politicians, the process of deliberation
by a random jury of the public could help to stimulate
what is often a dry and technical discussion. It would ensure
that the case for change was made by the consumers, not the
producers, of politics, and that any systems that were put
forward were chosen not on the basis of partisan interest, but
for the benefit of the public.
It is clear that if the public is to feel closer to the decisions
that are taken in its name, Labour must embrace
the importance of local government. Progressives should
campaign for local authorities to have more power to scrutinise
local providers both within the public and private sector.
Councillors should have the legal power to insist bodies and
companies give information to scrutiny committees and
attend scrutiny meetings. The public does not always have
the time or inclination to follow the detail of public sector
finance, commissioning or contracting-out arrangements, but
councillors should, in its name.
More and more local services are now being delivered in
partnership with the local council, but current powers limit
the way in which council scrutiny committees can hold them
to account. The Centre for Public Scrutiny, in its recent
commentary on the Localism Bill, recommended ‘that scrutiny’s
powers over partners should be brought broadly into
line with those over the authority itself – the power to require
attendance at meetings, to require the provision of information,
and certain rights to make recommendations which go
beyond what is provided at present’. It is particularly important
that scrutiny committees are given the powers to refer
decisions to the secretary of state. Not all local issues can
be resolved at a local level because of national government
decisions, and such referral powers help to put pressure on
central government to reconsider.
stephen twigg 278
As the coalition pursues its ideological break-up of local
service delivery, the role of local scrutiny will become more
important. As more academies and free schools fall outside
of local statutory control, and GP commissioning starts to
undo the NHS monopoly of service provision, it will be
up to local councillors to ensure that services are providing
value for money, ensuring that they meet their contractual
obligations, and highlight practices which are damaging to
the wider community, for example, ‘cream-skimming’ where
contractors pick the easiest users to provide services to.
What about decisions which cannot be taken at a local
level, but should be at a regional or city-region level? The
Conservatives are proposing referendums next May on the
creation of directly elected mayors in England’s twelve largest
cities outside London. I know there are different views in
the Labour Party about this proposal in different cities and I
anticipate that some will say ‘yes’ and others ‘no’.
There are important lessons to learn from the Greater
London experience. Following Margaret Thatcher’s abolition
of the Greater London Council in 1986 the capital city was
run by a series of quangos and joint boards until the restoration
of democratic city government in 2000 with a mayor and
London Assembly. Even sceptics in London accept that the
Greater London authority has been a success.
The main functions of the GLA are city-regional in character
– policing, fire and rescue, economic development, transport
and strategic planning. If strong city-regions are part of
how we deliver growth outside of London, might these regions
learn from the governance model which works in the capital?
Merseyside has five local authorities, none of which has
opted for an elected mayor. Under Conservative plans, the city
of Liverpool will vote on having a mayor next year. Would it
not make more sense, as Andrew Adonis argues in his chapter,
for the Merseyside city-region to have a directly elected mayor
with responsibility for the key strategic functions that are
279 the purple book
already exercised on a joint-council basis, like police, fire and
transport, but with the crucial addition of responsibility for
economic development? As an aside I think this model would
provide the democratic leadership that the government claims
for elected police commissioners without the many disadvantages
that this Tory reform entails. And, on the central issue of
economic renewal, this would give Merseyside (and the other
English city-regions) a stronger voice.
City-regions can make a real difference. It might be that
this can be achieved without creating directly elected mayors,
but I do think (whatever people’s views of Boris Johnson or
Ken Livingstone) that the GLA’s success is in part a product
of having a mayor directly accountable to the voters.
Beyond city-regions, there is a broader argument here
about the distribution of power between Whitehall and local
government. There is a very legitimate centre-left case that
fears that the Tories’ localism will result in a further redistribution
of resources from the poorest to the more affluent
parts of the country. The challenge for Labour’s decentralisers
is to develop a model that retains the redistribution of
resources while fostering greater local independence, including
greater scope for local fiscal flexibility. Our ultimate goal
is an economy where the gap between rich and poor localities
is narrowed so that there is less need for such redistribution.
That laudable goal is a long way off and until then it
is vital that we defend the principle of a fair redistribution
of resources – otherwise our proper desire for a more equal
distribution of power could work disastrously against our
goal of a more equal distribution of life chances.
Redistributing political power to the powerless
One group of people who have no political power are sixteenand
seventeen-year-olds. Despite paying tax and engaging in
a whole range of adult activities, this section of the population
cannot vote. Labour was committed to introducing votes
stephen twigg 280
at sixteen in its manifesto and should continue to support
the extension of the franchise. Young people are bearing the
brunt of the Tories’ policies, which have hiked up university
fees, abolished the Future Jobs Fund and slashed the
education maintenance allowance. It is crucial that they are
recognised as full citizens and given the power to determine
the decisions which are made in their name.
Voting inequality is rife in the UK. If you are old, white
and rich your voting power is three times that if you are
young, black and poor. According to research by ippr, the gap
between the rate at which the youngest and older age groups,
vote has grown consistently since the 1970s. While in 1970
there was an eighteen-point difference between the 18–24 age
group turnout rate and the 65–74 age group rate, by 2005 the
gap was forty points.5 Non-voting has become entrenched
in many poor communities, leading to a concurrent loss of
voice in the political process. Combined with our electoral
system, which forces political parties to focus on marginal
seats, the fact that young people, poorer people and some
ethnic minority communities do not vote skews politicians’
incentives to concentrate on high-turnout areas.
Introducing compulsory turnout in the UK could help to
combat this. Such a reform would require cross-party support
so Labour would have to tread carefully. If the trends continue,
the only voters will be those who already hold a good deal of
power because of their wealth and status. If everyone has to turn
up to the polling station, political parties might be forced to
win over undecided voters, rather than concentrating all their
efforts on turning out those voters they know already support
them. In the absence of electoral reform, this could help to
change the way we conduct politics. Since turnout is lowest
in local government elections, perhaps a pilot on compulsory
turnout could be run in receptive local authorities to see if the
public takes to it? Of course, voters would remain free to spoil
their ballot paper or vote for none of the candidates.
281 the purple book
The future for democratic reform lies in the local, the
personal and the practical. As fewer people feel like politics
has anything to offer them, new ways of allowing citizens to
participate in political activity with as few barriers as possible
is the only way of trying to halt the downward trend. A healthy
democracy is predicated on societal involvement – leaving
things up to politicians creates a disconnection between what
the state does in the name of the people and how they receive
it. While Whitehall might be good for pulling levers, it is not
so good at bringing about long-term change in communities.
As Tessa Jowell argues, if public services need to become
more relational, so does politics. Understanding that political
parties need to change to accommodate new ways of reaching
out to supporters and electors will be key to Labour’s
renewal in opposition. So too will finding new ways, such
as a citizens’ convention, to ensure that the redistribution of
power goes straight into citizens’ hands, rather than solely
to another layer of government. If Labour can redirect its
reforming efforts from the top to the bottom, it has a chance
of re-engaging with the public in a way which could finally
help to change the political consensus for good.
1 Audit of Political Engagement 8: The 2011 Report (London: Hansard
Society, 2011).
2 Stella Creasy (ed.) Participation Nation: Reconnecting Citizens to the Public
Realm (London: Involve, 2007).
3 John Marshall, ‘Membership of UK Political Parties’, House of Commons
Library Note, 17 August 2009.
4 ‘An end to open primaries?’, BBC, 3 May 2011.
5 Emily Keaney and Ben Rogers, A Citizen’s Duty: Voter Inequality and the
Case for Compulsory Turnout (London: ippr, 2006).
Conclusion: a progressive future
for Labour
Robert Philpot
New Labour’s achievements in government are detailed
throughout this book. Just three of them illustrate the
historic nature of what the party achieved during its time
in power. Alan Milburn and Liam Byrne identify Labour’s
efforts to tackle poverty and raise the glass ceiling on aspiration.
‘Our record fighting poverty,’ argues Byrne, ‘was, quite
literally, one of the best in the world.’ Jenny Chapman and
Jacqui Smith suggest that, for all the liberal-left’s criticism
of Labour home secretaries’ alleged populism, ‘Labour left
government with crime lowered. There were fewer victims
and the chance of being a victim was at a historic low.’ No
other post-war government can make such a claim. And
Andrew Adonis believes that ‘radical democratic devolution
was the hallmark of the first two years of the Blair government’.
The Scottish Parliament, Welsh Assembly, the mayor
of London, and Northern Ireland Assembly were, he notes,
successful in ‘transforming democratic accountability and
consent, and promoting better government’.
But, as our authors also detail, where New Labour fell short
it did so because of a failure to develop a wider understanding
of the strengths and weaknesses of the state and markets.
New Labour’s embrace of the market economy in the
mid-1990s both reflected political realities – as Douglas
283 the purple book
Alexander notes, ‘In retrospect it is hard to overestimate the
scale of intellectual defeat felt by the centre-left in the wake
of the 1992 general election defeat’ – and brought with it
huge benefits. As Tristram Hunt reminds us, New Labour
used the ‘proceeds of the growth over which it presided to
rebuild the public realm’. Nor should we fall for the myth that
New Labour did not challenge the unequal distribution of
power in the market economy: the significance of measures
such as the minimum wage, tougher competition laws and a
host of new rights in the workplace – including the right to
join a trade union – should not be underestimated. Moreover,
as Peter Mandelson notes, with his arrival at the Business
Department in 2008, New Labour embraced an industrial
activism strategy that challenged ‘the belief that markets
alone must deliver sustainable and balanced growth’.
However, New Labour’s approach to the market now needs
to be rethought not just because of the failures of regulation
and overreliance on the financial services industry, that the
banking crisis exposed and which, in the words of Alexander,
‘left Labour looking as if we had confused good times with
a good system’. Just as crucially, even before the onset of the
financial crisis and recession, New Labour’s original promise
to promote economic efficiency and social justice was being
undermined by the fact that, as Liz Kendall outlines, ‘while
productivity has continued to grow, the gains have not fed
into pay packets, particularly of low-to-middle income earners’.
Byrne points to the startling fact that in 2009, workers’
share of national earnings was around £768bn. Yet if workers’
share of the national economic pie had matched the post-war
averages, an extra £23.4bn would have ended up in people’s
pay packets.
And this is not simply the result of the financial crisis
and recession. Both the Resolution Foundation’s first report
for the Commission on Living Standards and earlier work
for the TUC outline the manner in which, outside London,
conclusion 284
disposable income was falling for those in the ‘squeezed
middle’ in the five years prior to the onset of the recession.1
Its impact, in turn, suggests that it will not be until 2015 that
living standards return to their 2001 levels.
New Labour revised, but did not fundamentally alter, the
revisionist critique of the market developed by Tony Crosland
in The Future of Socialism. Put simply, this rested on the notion
that economic growth – and through it stronger public services
and resource-based redistribution – would allow the state to
correct and compensate for the weaknesses of the market.
Whatever its past strengths, the limitations of this essentially
statist approach are now apparent. As Hunt argues,
‘sober assessment of the long-term economic trends would
suggest that, even were such statism still desirable (and it is
not), we are unlikely to enjoy the conditions favourable to its
enacting that we enjoyed pre-2008, if and when we return to
power’. Moreover, not only did New Labour most definitely
not put an end to ‘boom and bust’, but ensuring resilience
to future fluctuations will require a tighter fiscal policy and
a ‘less cavalier attitude towards borrowing’. The stubborn
persistence of long-term unemployment and poverty underline
that resources are nothing without the power to use
them. However important, tax credits and unemployment
benefits alone cannot transform the lives of those living at
the sharpest end of the market’s failures.
Three interrelated responses are required. First, a greater
recognition, through the kind of industrial activism that
Labour began to embark upon before it left office, of the
need to promote the kind of private sector growth which is
sustainable and which, as Mandelson argues, is ‘based on new
sectors and growing businesses ... that successfully combine
our manufacturing prowess with the expanding demand for
services’. Second, what Hunt, drawing on the writings of
the political economist Jacob S. Hacker, terms a shift from
redistribution to ‘pre-distribution’, that is ‘the way in which
285 the purple book
the market distributes its rewards in the first place’. This will
require market reforms that promote a fairer distribution of
economic power but the political prize is one that will ‘avoid
the perennial … pitfall that excessive reliance on redistribution
generates: the ease with which the Tories deploy their
populist, well-rehearsed “tax and spend” arguments’.
Finally, as John Woodcock argues, Labour must not lose
sight of the fundamentally empowering nature of markets:
‘Markets have provided the majority of working people in
Britain with standards of living that previous generations
could not have dreamed of through ensuring lower costs
and greater availability for food, consumer goods and travel.
In recent decades, the market was the essential basis of the
information technology revolution, which has served not only
to support wealth creation, but has facilitated a shift of power
towards individual consumers and has been both a trigger
and tool for movements demanding greater democracy.’
But if Labour was at times too hands-off with the market
it was also, as James Purnell and Graeme Cooke argued in We
Mean Power, ‘too hands-on with the state’.3 Mandelson suggests
that ‘Labour’s approach to public service delivery meant change
was rapid in some areas but also too top-down and driven too
much from the centre in other cases. With the collapse of our
ideas for regional government we did little, outside Scotland
and Wales, to reverse Britain’s historic trends towards centralisation.’
At the same time, as Alexander argues, Labour’s comfort
with the notion of market failure was not matched by a similar
scepticism of the state: ‘By focusing on how the state could
do good, at times we lacked a language for state failure. And
that left us fighting a referendum on the virtues of the public
sector – the big state versus small state argument – rather than
on a choice between action and inaction.’
Nowhere, perhaps, was New Labour’s statism more apparent
than in its attitude towards local government. As Steve
Reed and Paul Brant write, ‘Labour in power did not trust local
conclusion 286
government enough… From time to time, Labour talked about
promoting localism, but double-devolution and the empowerment
white paper were not followed through. Too often Labour
sought to bypass rather than work with local government.’
Indeed, as Paul Richards argues, Donald Dewar’s description
of devolution as ‘a process, not an event’ was turned on its
head as it became ‘a series of events, not a process’. Regional
government for England, the creation of a democratically
elected House of Lords, the much-promised referendum on
electoral reform, elected mayors – each of these remained
‘unfinished business’ by the time of Labour’s departure
from office.
What Patrick Diamond terms ‘New Labour’s heavyhanded
and centralist approach’ was also apparent in its public
service reform agenda. Thus, while the Blair government was,
as Richards suggests, correct to recognise that monolithic
state institutions were incapable of meeting modern demands,
its greatest missed opportunity was the failure to introduce
local ownership and democratic control over public services.
‘They remained services done to people, not co-authored or
co-owned,’ he rightly argues.
There was one exception to this: the creation of foundation
trust hospitals, which – with their local memberships,
governors and boards – offer a possible template for Labour’s
future public service reform agenda. Indeed, this major
expansion of the mutual principle into public services saw
nearly two million people become members of their local
foundation trusts – more than the membership of Britain’s
three political parties combined.
And, indeed, what could have turned into another powerful
example of the merits of locally run and controlled public
services was missed when Sure Start centres’ original cooperative
and self-governing ethos was snuffed out after 2005, as
Whitehall effectively turned them into just another centrally
run government programme.
287 the purple book
The fate of Sure Start under the coalition government
illustrates the fatal political error of Labour’s failure to truly
devolve power in our public services. Had the assets and
control of these hugely popular centres been located locally,
rather than in the hands of the Department for Education,
the coalition would have found it far less easy to begin the
destruction by stealth upon which it is now engaged.
While acknowledging that local ownership and control of
public services does not come without risks, Diamond makes
the wider case for such an approach: ‘If communities feel a
stronger sense of ownership, new coalitions of support will
be forged that help to sustain public investment. The pace of
improvement might be slower, but change is more likely to
embed and endure.’ However, as Milburn argues, the statist
approach actually ends up promoting public cynicism and
undermining public confidence in the ability of government
to affect progressive change. ‘People are left confused and
disempowered,’ he writes. ‘Governments end up nationalising
responsibility when things go wrong without necessarily
having the levers to put them right.’
Nor should we forget the waning capacity of statism to
deliver even on its own terms: its inability to deliver greater
equity or social mobility in an age where global economic
competition demands a more responsive, agile and strategic
state and where an increasingly diverse society means that
needs and aspirations – and therefore the responses to them
– differ greatly between localities.
The promise to create a future ‘fair for all’ was at the heart
of Labour’s bid for a fourth term. Unfortunately for the
party’s attempts to attain it, Labour’s conception of fairness
and that of large numbers of the public were increasingly at
odds. As Alexander writes, the party was ‘challenged for too
little action at the top of the income scale and, simultaneously,
for too much action at the bottom of the income scale’.
Government appeared to lack a response to voters’ anger at
conclusion 288
runaway pay at the top of the public and private sectors, while
some of the policies it employed to make society fairer – like
housing benefit – became a source of resentment. ‘Too often
they reinforced a sense that when we talked of fairness we
were talking about someone else,’ suggests Alexander.
In his chapter, Frank Field underlines this problem with
his attack on New Labour’s use of means-testing in its welfare
policy: ‘In place of Labour’s traditional, contributions-based
contract [Gordon Brown and Tony Blair] put means-testing
at the heart of New Labour’s strategy, entirely disregarding
the fact that the values it instils, and its impact on behaviour,
are totally the opposite to what had gone before. By simply
concentrating on the levels of poverty (as defined by income)
New Labour stripped out the wider providential role welfare
plays in working-class budgets. Fairness ceased to be based on
contributions and reciprocity and was supplanted by a single
mechanical calculation of supposed need. This fundamental
change in direction amounted to a war of attrition against
working people’s moral economy.’
The lesson here is clear: a party that believes in the utility
of government activism can never be, as Labour appeared,
indifferent to the values that that activism appears to promote.
Restoring Labour’s economic credibility
Labour left power with its reputation for economic credibility
dented but not shredded. But despite the anaemic
recovery over which the coalition has presided, a relentless
assault on its record has left most voters more confident in
the current government’s ability to manage the economy than
in Labour’s. Restoring faith in Labour’s economic credibility
is the cornerstone on which the party’s political and electoral
viability – and thus all of the aspirations contained in The
Purple Book – rests. This imperative features in many of our
authors’ contributions.
Labour’s response to the banking crisis and recession was
289 the purple book
the correct one, and the Darling Plan’s careful emphasis on a
balance of tax rises, spending cuts and growth measures to cut
the deficit was the right judgement. However, as Mandelson
also notes, ‘our mistake was not to spell out in more detail the
implications of the spending cuts so that people could see
we were serious. By refusing to be clear that our deficit plans
were sufficient, we were unable to persuade the public that
the Tories’ plans were excessive.’
This is a crucial lesson for Labour as it attempts to regain
the public’s confidence. As Kendall argues, ‘Ed Miliband and
Ed Balls have made it clear that Labour will not oppose every
cut. This is crucial, particularly as we approach the next election,
as it would risk raising expectations that every cut will be
reversed if Labour regains power, which is neither convincing
to the electorate nor realistic for a party that is determined to
demonstrate that we are a government-in-waiting.’
Hunt, too, is correct in his analysis that, while the coalition
has turned the ‘means’ of deficit reduction into an ‘end
in itself ’, Labour needs to be clear that it is a vital means
because ‘there is nothing progressive about running a large
budget deficit or wasting money on interest repayments that
could be invested in schools, hospitals or Sure Start centres’.
There is another strong progressive argument for controlling
spending: the need, highlighted by Diamond, ‘to take
more citizens out of the tax system, progressively reducing the
tax burden through fundamental reform of the tax system’.
Indeed, given the continuing pressure on real incomes, any
Labour strategy to tackle the plight of the ‘squeezed middle’
that does not go beyond critical work–life balance issues to
the fundamental question of how we reduce the taxes of those
on low and middle incomes will be necessarily incomplete.
Tax reform is clearly part of the equation here, but so, too,
will be Labour’s commitment to being, in the words of the
1997 manifesto, ‘wise spenders, not big spenders’. This, in turn,
will require more clarity from Labour over time on the ‘how’ of
conclusion 290
its own deficit reduction plans and thus its own future priorities.
To make a reality of social mobility, Milburn argues for
‘a commitment to invest more of our national wealth … in
schools and early years’. This, he says, should be ‘top of New
Labour’s policy and political priority list’. Similarly, Kendall
suggests there are ‘compelling reasons why Labour should now
place a greater emphasis on championing childcare and care
for the elderly’. The former because it is critical to promoting
higher employment levels among women, thus supporting
the long-term sustainability of the welfare state, tackling child
poverty and promoting social mobility; the latter because it
will not only improve the quality of life of older people, but
also deliver significant savings in NHS spending.
Picking priorities requires, of course, difficult and tough
choices. Kendall calls, for instance, for Labour to ‘consider
how to strike a better balance between funding for tax credits
and benefits, and funding for services like childcare and care
for the elderly’. The implications of such a debate will not be
easy but a progressive case can be made for them. Prioritising
funding for childcare and primary education over and above
universities, for instance, can be argued for on the basis that
they are crucial to whether young people from disadvantaged
backgrounds get into higher education in the first place.
Similarly, redirecting expenditure from wealthier pensioners
– like winter fuel payments, for instance – to help fund
universal social care will help meet the challenge of an ageing
population and again relieve pressure on the NHS.
Other authors point to further elements of the agenda that
Labour will need to pursue to restore its economic credibility.
Diamond, for instance, emphasises the need for far greater
tax transparency to ensure citizens can ‘make informed decisions
about how their taxes are spent, and to what effect’.
Similarly, the measures outlined later in the ‘Reforming the
state’ section to deliver ‘high-octane reforms to an excessively
centralised and bureaucratic state’ will demonstrate Labour’s
291 the purple book
commitment to ensuring that maximum value is wrung from
every pound of taxpayers’ money.
By making the case that Labour needs to finally abandon
its embrace of statism, The Purple Book seeks to make another,
related, contribution to the issue of Labour’s restoration of
its economic credibility – demonstrating that the party will
not respond to every problem with a new central government
programme, and thus higher taxation and spending. Equally,
though, our desire to develop an alternative to statism differs
fundamentally from that of the Conservatives in that we
are seeking to put genuine power in the hands of citizens –
through new rights to redress in failing public services and
guaranteed national minimum standards, for instance – to
enable them to hold services to account and thus ensure those
services become better than ever.
Power and responsibility
The redistribution of power is, of course, not a new objective
for Labour. The new Clause IV calls for ‘power, wealth and
opportunity’ to be placed in the hands of the many, not the
few. Neither is the redistribution of power a replacement for
Labour’s historic commitment to promoting equality and
freedom. Hunt captures the links between the three thus:
‘The exercise of power is the most basic, fundamental
political act for any member of a free and fair society; in its
absence, citizens lack the capabilities to lead a full life of their
choosing. The type of freedom brought about by the distribution
of power is positive freedom, the freedom to carry out
a given act, physically. This contrasts with negative freedom,
freedom from interference, which is the only freedom that
animates the right. In choosing positive freedom, we reject
the false dichotomy of choosing between freedom and equality,
as greater equality is instrumental in creating the kind of
society required by the pursuit of positive freedom.’
Similarly, Diamond – in keeping with a number of our
conclusion 292
other writers – draws on the writings of Amartya Sen and his
conception of ‘capabilities’ to define our conception of power,
suggesting that it amounts to ‘a strategy of equalisation
through empowerment: enabling individuals and communities
to take greater responsibility for their own lives’.
Responsibility is, of course, the counterpart to power, and any
agenda to redistribute power must ensure that it is part of what
Byrne terms a ‘something-for-something deal’. There is a moral
and a political case for this argument. Morally, the pursuit of
equality is, for instance, farcical if some people are being held to
different standards, or to account for their behaviour in different
ways, than others. This goes as much for those in receipt of
housing or out-of-work benefits as bankers or those seeking to
exploit tax loopholes. Politically, as Byrne suggests, quoting the
work of Samuel Bowles and Herbert Gintis, support for the
welfare state cannot rest on notions of ‘unconditional altruism’.
Instead, it must reflect ‘deeply held notions of fairness, encompassing
both reciprocity and generosity’.
So what might this all mean in terms of a governing
agenda? The Purple Book authors share a belief in the need for
reform of the state, market and our political system in order to
redistribute power. The specific policies contained within the
book, however, are advocated by each author alone – although
similar approaches and proposals can be seen in different
authors’ proposals. However, what follows is a summary of
the principal proposals contained within the book.
Reforming the state
First, we need a major devolution of power from Whitehall
and Westminster to local government and local communities:
• The principle of subsidiarity – the rule that decisions
should be taken at the lowest appropriate level
of government as close as possible to the people – is
enshrined in EU decision-making. It should now be
293 the purple book
applied to national decision-making, with government
required to justify why legislation is taking place at a
national rather than local level;
• Half of England’s population is in the major conurbations,
yet outside London strong, responsive political
institutions are lacking. Elected mayoral authorities
should, therefore, be established for the six major city
conurbations beyond London: Greater Manchester,
Greater Birmingham, Greater Leeds, Greater
Liverpool, Greater Newcastle, and Greater Bristol. As
in London, powers over policing, transport, planning
and economic regeneration should be transferred to the
mayors. City councils with weak leadership and a poor
record of promoting jobs and growth should also adopt
the mayoral model, and ‘city parishes’ with their own
councillors, budgets and responsibilities within the city
should be piloted. Outside of urban areas, upper-tier
local authorities, or groupings of them, should take over
areas currently managed by quangos, like regional health
authorities, national parks or planning authorities;
• In order for it to exercise real power, the balance of
taxation between local and national government needs
to be tilted. A redistribution mechanism – preferably
controlled by local government – should be retained,
but greater tax and fiscal incentives to foster new
businesses and encourage the building of more homes
should be granted to local government. A reformed
council and business rates regime should be examined,
as should proposals for a land-use tax to promote the
sustainable use of land and enable the retention of a
property-based element to taxation, and the granting
of local authorities in England the power to vary
the basic and higher rates of income tax by 3p in the
pound, subject to a popular mandate through a local
referendum;
conclusion 294
• Local authorities should have more power to scrutinise
local providers both within the public and private
sectors, including the right to insist information is
provided to scrutiny committees and representatives
attend scrutiny meetings;
• The devolution of power to local government needs
to be accompanied by a devolution of power to local
communities, building on the principles of the ‘cooperative
councils’ model. Community-led commissioning
should be promoted, with communities using
cooperative commissioning or their own representatives
on trust boards to replace service providers or
reshape services as local circumstances change. Locally
generated efficiencies should be returned to individual
local communities, while credit-based time-banking,
to allow residents to give their time in return for
financial and other benefits, should be examined. We
should consider how to give local communities a right
to request participatory budgeting and more rights to
community ownership – for instance, of leisure facilities,
public amenities, or children’s centres – with the
value of any public assets turned over ‘locked in’ to
ensure long-term community benefit and prevent any
future privatisation.
Second, we need to reinvent central government, deliver
high-octane reform and build a decentralised state:
• The structure of central government departments should
be reviewed and major reform of the civil service undertaken.
As a first step, the Department for Communities
and Local Government should be abolished with
residual functions moving to the Cabinet Office, while
the Wales, Scotland and Northern Ireland offices could
be merged into a single Department of the Nations;
295 the purple book
• All central government programmes and agencies should
be subject to a ‘public value’ test: decentralising and
removing functions altogether, focusing resources on
the frontline, local neighbourhoods and communities.
Third, the tax burden should be kept as low as possible, with
far greater transparency employed to ensure taxation is meeting
citizens’ priorities:
• Given the squeeze on real incomes, a future Labour
government should seek to take more citizens out of
the tax system, progressively reducing the tax burden
and fundamentally reforming the tax system;
• A hypothecated NHS and social care insurance fund,
merging income tax with National Insurance, should
be considered;
• The use of time-limited levies for special capital expenditures
and the earmarking of environmental taxes for
specific tasks should be encouraged;
• All citizens should receive an annual statement explaining
how the tax system works and public spending is
allocated, with an expert audit by an independent fiscal
authority, accountable to Parliament, also provided.
Reforming public services
First, we need to ensure more power is transferred to public
service users and local communities:
• Citizens should have new rights where services are
failing. For instance, if schools fail to meet minimum
attainment standards for more than three successive
years a competition should be triggered to bring in
alternative providers. Parents should also have the
right to trigger competitions for new schools where
standards fail to improve;
conclusion 296
• To encourage greater social mobility, we need to take
radical steps to empower parents in schools that are
officially assessed as consistently poor. They would have
the right to choose an alternative state school, and be
granted an education credit worth 150 per cent of the
cost of educating their child in their current school;
• We should widen the use of personalised budgets,
including for adult skills and the long-term unemployed.
Local authorities should support the development
of micromutuals of personalised budget holders,
allowing them to pool their care budgets and use their
strengthened purchasing power to force faster change
in care services;
• We should provide legally enforceable rights for the
victims of crime, with a sentencing framework that
puts victims’ experience first and gives them a greater
say in determining the nature of community sentences,
while exploring the possibility for them to make
recommendations on the length and type of sentence,
within clearly defined ranges. ‘Justice mapping’, where
communities can see what happens when a crime is
reported, could allow communities to work together to
reduce crime. Such communities should be rewarded
with money from confiscated assets to reinvest in
priorities they have chosen to prevent crime;
• We should examine how we give social housing tenants
the right – and the ability – to actively shape where
they live. This should include looking at how those who
wish to move towards a community-led mutual model
of housing might be able to do so. We should also look
at how we empower people to hold their landlords to
account and drive up standards in the private rented
sector. By introducing a landlords’ register, for instance,
government could ensure that housing benefit was
only paid in respect of properties that met the Decent
297 the purple book
Homes standard. This could empower people renting
privately, and drive up standards without requiring an
overly burdensome regulatory system;
• We should examine turning the BBC into a mutual
organisation, so that all who pay the licence fee
become its members and owners with, for instance,
rights to elect the trustees who oversee its operations
and direction;
• We should consider transferring the Prevent strategy
and programme – which combats extremism and
radicalisation – from government to an arm’s-length
charitable trust, run by leaders and activists from the
communities the programme is seeking to influence.
Second, we should free public services from centralised
control, while ensuring proper local accountability:
• We should create more self-governing institutions,
built on the model of foundation hospitals, with local
democratic control and ownership. We should consider,
for instance, applying this model to primary care;
• We should guarantee all schools the chance to become
autonomous, with a variety of models – from academies
to trusts, parent-owned or community-controlled – all
provided as options.
Third, we should ensure our public services respect the values of
the public: providing opportunity for all, demanding responsibility
from all, and helping to strengthen communities:
• We should renew the welfare state so that it more
clearly combines an attack on poverty with the
rejuvenation of the social insurance principles upon
which it was originally based. We should consider
moving towards a salary-based insurance system where
conclusion 298
higher salaries require higher contributions, but also
provide higher benefits to those who lose their jobs.
This would help people to protect their incomes in
the first period when they are out of work, as they do
successfully in Denmark. We could also consider the
costs of long-term care as a part of the new insurancebased
system. National Insurance would be converted
from a state-run scheme into one which is mutually
owned by its members;
• We should consider other ways in which public services
can reward those who contribute in the widest sense.
As innovative Labour local authorities like Newham
and Manchester are doing, we should consider, for
example, how social housing could be allocated on the
basis of rewarding good tenants and good neighbours.
Conversely, we should consider ‘Hasbo’ eviction orders
against antisocial neighbours: a simple mechanism for
the police to employ where a household is reported
repeatedly for antisocial or violent behaviour. This would
be a power for residents to petition the police, to submit
complaints confidentially, leading to a magistrate’s order
banning people from living within five miles of the area.
Fourth, government should encourage the development
of ‘asset-based empowerment’, building the framework in
which individuals can make their own decisions and choose
to live the life they want:
• We must ensure the ‘auto-enrolment’ principle behind
the pensions reforms introduced by the previous
Labour government is a success and revisit the position
of those – mostly women – whom the coalition’s
changes have sought to exclude;
• We should examine how the principles behind the
child trust fund can be renewed, while also improving
299 the purple book
any new scheme so it reaches those our previous policy
did not. Utilising credit union networks – and allowing
them to expand via the Post Office network – could be
one option;
• We should reform pensions tax relief by removing the
50 per cent rate of tax relief and exploring replacing tax
relief with matched contributions or a system that is
even more progressive, offering higher relief to those
on lower incomes than those on higher incomes;
• We understand that giving people a stake in the property
market also allows them to build up an asset base. To
assist those struggling to get onto the housing ladder,
we should be looking to new and underdeveloped
models of home ownership. We should consider the
power of equity release, on fair terms, to transfer assets
from one generation to the next. We also need to examine
how we can get greater private sector involvement,
from both developers and lenders, in shared ownership
schemes and how we can encourage the development
of mutual home ownership. To encourage the latter,
councils should use their land assets, planning powers,
housing policies, or make investment available.
Finally, we should prioritise tackling the ‘care crunch’:
• Labour should consider placing a greater emphasis in
terms of investment on early years services and care for
the elderly, which are crucial for improving working
opportunities, reducing poverty and increasing living
standards for those on low-to-middle incomes;
• We should have as our goal the transformation of
childcare and elderly care into universal public services.
The Teach First model – which brings the brightest
graduates into some of Britain’s poorest schools and
conclusion 300
communities – would be applied to childcare with the
piloting of Teach Early Years First;
• Labour should consult with business about how familyfriendly
working can be strengthened in the future.
This could include offering the right to request flexible
working to all employees, including agency workers,
from their first day of employment. It should also
examine the case for redistributing maternity leave
time more fairly between mothers and fathers, with a
separate and increased entitlement for fathers.
Reforming the market
First, we should encourage new models of ownership in the
economy to empower employees in their workplaces, thereby
ensuring a fairer distribution of rewards:
• We should actively encourage the formation of mutuals
and cooperatives and other inherently democratic
models of the firm through tax breaks, incentives and
reducing the regulatory burden for new mutual startups
or spin-outs;
• To further employee share-ownership, we should
consider reintroducing the tax break on creating
employee benefit trusts abolished in 2003, but hardwire
in progressive principles by ensuring the tax break
only applies where a significant threshold of shares
have been distributed to all members of staff;
• We should consider improving on whatever investment
the Conservatives provide for the Big Society Bank, to
ensure new mutuals have adequate access to capital.
Second, to help create a more balanced, stable and secure
financial system, we should encourage a new generation of
financial cooperatives and mutuals:
301 the purple book
• We should provide incentives for other banks to capitalise
fledgling mutuals, provide community investment
tax relief for people who use them, and expand the Share
Incentive Plan so that it benefits all members of the firm
and is not merely a way of enhancing executive salaries;
• We should commit to the remutualisation of Northern
Rock;
• We should consider ensuring that the 600 branches that
the interim report of Sir John Vickers’ Independent
Commission on banking ordered Lloyds TSB to sell
off are sold to new or existing mutual organisations.
Third, we should look to develop strong, well-funded regional
investment funds to encourage regional, inclusive growth.
Reforming the political system
We should increase the power of citizens over who represents
them:
• We should introduce ‘closed’ primaries for the selection
of Labour parliamentary candidates;
• We should support the creation of a fully elected second
chamber, while considering the manner in which – as is
the case in the upper chambers of many other national
legislatures – it might also include representation from
the upper layers of local government;
• If Lords reform stalls during this parliament, we should
consider the option of a citizens’ convention. Taking
constitutional decisions out of the hands of politicians
and giving it to the people would be a hugely symbolic
redistribution of power. It would show that not all
political discussions need take place in the confines of
Parliament;
• To ensure politicians do not simply focus on high
turnout areas, we should consider the introduction of
conclusion 302
compulsory turnout, with pilots run in receptive local
authorities.
The Purple Book represents simply the first chapter in what
we hope will be the new story of Labour revisionism and
revival. Our focus has been on the domestic agenda – and
important elements of that, like environmentalism are, we
are aware, largely absent from these pages. Similarly, the
challenge of assembling an agenda for how Labour might
in government contribute to the redistribution of power
internationally – from promoting democracy and human
rights overseas to trade justice and widening the circle of
winners from globalisation – was, unfortunately, beyond the
scope of this project. But it is one that progressives within
the party must return to.
For all the many achievements that Labour governments
have to their name – and now, more than ever, these
are important not to forget – there is a pattern to what has
limited their ambitions and weakened their political and
electoral viability: the common thread running through the
‘stern centralism’ of the 1945 government; Labour’s inability
in the 1970s – exemplified by its attitude to the ‘right-to-buy’
and the Bullock report – to understand new desires by the
public to own, participate and control; and New Labour’s
own missed opportunities and unfinished business, is the
party’s overreliance on Whitehall-driven ‘mechanical reform’
at the expense of the creation of new centres of governance,
power and wealth creation. Despite differences of approach
and emphasis, our authors are united by a belief in the importance
of Labour rediscovering its decentralising tradition
and thus discovering new ways to redistribute power in the
second decade of the twenty-first century.
But this book and project has been guided by another
strongly held belief: that with boldness, radicalism and a
willingness to think anew about how it can make real its
303 the purple book
progressive aspirations, Labour can, to paraphrase R. H.
Tawney, once again become the author of its own fortunes.
1. Stewart Lansley, Life in the Middle: The Untold Story of Britain’s Average
Earners (London: TUC, 2009).
2. James Purnell and Graeme Cooke (eds), We Mean Power: Ideas for the
Future of the Left (London: Demos, 2010).
Author biographies
Andrew Adonis is a member of the House of Lords and was
Secretary of State for Transport, minister for schools and
head of the No. 10 Policy Unit in the last Labour government.
He is currently director of the Institute for Government.
His book, Academies: The Reinvention of English Education, is
published in the autumn.
Douglas Alexander MP is shadow Foreign Secretary and
the Member of Parliament for Paisley and Renfrewshire
South. Between May 2001 and May 2010 he served in a wide
range of ministerial positions, including Secretary of State
for International Development and Secretary of State for
Transport. He is a qualified lawyer.
Paul Brant is deputy leader of Liverpool City Council, where
he has served as a councillor since 1995. He stood as Labour’s
parliamentary candidate for Southport in 2001 and 2005.
He is also a Co-operative Party member. Professionally he
practises as a barrister and has previously been selected as The
Times lawyer of the week.
Liam Byrne MP is shadow Secretary of State for Work
and Pensions, coordinator of Labour’s policy review and the
Member of Parliament for Birmingham Hodge Hill. As immigration
minister, he created the UK Border Agency and led the
305 the purple book
biggest overhaul of Britain’s border controls since the Second
World War. He joined the Cabinet under Gordon Brown and
in 2009 was promoted to Chief Secretary to the Treasury, where
he negotiated Labour’s deficit reduction plan across Whitehall.
Jenny Chapman MP is the Member of Parliament for
Darlington. Her interest in the criminal justice system grew
from working in the prison service in her early twenties. She
went on to work for the former Health Secretary to Alan
Milburn and has served as a councillor in her local community.
Patrick Diamond is Gwilym Gibbon Fellow at Nuffield
College, Oxford, and a visiting fellow in the department
of politics at the University of Oxford. Now a member of
Southwark Council, he was the former head of policy planning
in 10 Downing Street and senior policy adviser to the
Prime Minister. He spent ten years as a special adviser in
various roles at the heart of British government, including 10
Downing Street and the Cabinet Office.
Frank Field MP is the Member of Parliament for Birkenhead.
He was director of the Child Poverty Action Group between
1969 and 1979. He was chair of the social security select
committee in the run-up to the 1997 election and minister for
welfare reform in the early years of Tony Blair’s government.
More recently he was asked to report to the Prime Minister
on poverty and life chances. His latest publications include
Attlee’s Great Contemporaries: The Politics of Character and
Saints and Heroes: Inspiring Politics.
Caroline Flint MP is shadow Secretary of State for
Communities and Local Government, and the Member of
Parliament for Don Valley. She currently chairs Labour’s housing
policy review. She held a number of ministerial posts in the
last Labour government, including minister for Europe. As
author biographies 306
housing minister her achievements included a £1bn housing
package, new shared ownership and shared equity schemes to
help first-time buyers, and a mortgage rescue scheme.
Tristram Hunt MP is the Member of Parliament for Stokeon-
Trent Central, elected in May 2010, and is a vice chair of
Progress. Prior to entering Parliament, he was senior lecturer in
history at Queen Mary, University of London. As a historian
and broadcaster, he was the author of numerous books, TV and
radio series, and served as a trustee of the Heritage Lottery Fund.
Tessa Jowell MP is shadow minister for the Cabinet
Office and the Olympics, and the Member of Parliament
for Dulwich & West Norwood. She served as a minister
throughout the last Labour government, spending eight of
its thirteen years in the Cabinet. As Secretary of State at the
Department for Culture, Media and Sport between 2001 to
2007 she pioneered London’s successful bid for the Olympic
Games in 2012 and remains on the Olympic Board.
Liz Kendall MP is the Member of Parliament for Leicester
West, elected in May 2010, and is a vice chair of Progress. In
October 2010 she was appointed to Labour’s frontbench team as
a shadow health minister. Her previous roles include director of
the Maternity Alliance and of the Ambulance Service Network.
She was an associate director at the Institute for Public Policy
Research, where she led work on health, social care and children’s
early years. After the 1997 general election, she was special
adviser to Harriet Harman MP and then Patricia Hewitt MP.
Ivan Lewis MP is shadow Secretary of State for Culture,
Media and Sport and the Member of Parliament for Bury
South. Prior to becoming an MP he was chief executive of
two voluntary organisations, Contact Community Care
Group and the Manchester Jewish Federation, and served
307 the purple book
as a Bury councillor for eight years. During Labour’s period
in government he served in five government departments,
including the Department for International Development.
Peter Mandelson is a member of the House of Lords. He was
elected to Parliament in 1992 and entered British government
in 1997, serving as Secretary of State for Trade and Industry and
Secretary of State for Northern Ireland. In 2004, he became EU
commissioner for trade until 2008, when he re-entered the British
government as Secretary of State for Business, Innovation and
Skills, and First Secretary of State until 2010. He published his
autobiography, The Third Man, in 2010. He is currently chairman
of Global Counsel and senior adviser to Lazard.
Alan Milburn was Member of Parliament for Darlington
between 1992 and 2010. He served in the Cabinet as Chief
Secretary to the Treasury, Secretary of State for Health and
Chancellor of the Duchy of Lancaster. He has chaired the
Panel on Fair Access to the Professions, and is currently the
independent reviewer on social mobility for the government,
reporting on child poverty and social mobility.
Ed Miliband MP is the leader of the Labour Party and the
Member of Parliament for Doncaster North. He served in
the Labour government between 2007 and 2008 as minister
for the Cabinet Office and as Secretary of State for Climate
Change between 2008 and 2010. As climate change secretary
he led the British delegation to the Copenhagen summit and
worked to ensure that a global agreement was established.
Robert Philpot is director of Progress and editor of its
monthly magazine. He is a former special adviser to Peter
Hain MP and to Tessa Jowell MP. Before joining Progress,
he was a graduate teaching assistant at Brunel University,
teaching American politics and history. He has written for
author biographies 308
publications including The Guardian, New Statesman, Tribune
and Renewal.
Steve Reed has been leader of Lambeth Council since 2006.
He is pioneering new cooperative models of running local
services and aims to make Lambeth Britain’s first cooperative
council. He is also deputy leader of Local Government
Labour and London Councils board member for children’s
services and employment. He was this year named by the
Local Government Chronicle as one of the three most influential
council leaders in the country.
Rachel Reeves MP is the Member of Parliament for Leeds
West, elected in May 2010, and is a vice chair of Progress.
In October 2010 she was appointed to Labour’s frontbench
team as shadow minister for pensions. As a member of the
Business, Innovation and Skills Select Committee, she challenged
the government’s decision to cancel a loan to Sheffield
Forgemasters. Previously, she was an economist at the Bank
of England, British Embassy in Washington and at Halifax
Bank of Scotland.
Paul Richards is a Labour activist, columnist and author. He
joined Labour in the mid-1980s and has served as a branch
chair, party press officer, parliamentary researcher, parliamentary
candidate in 1997 and 2001, and special adviser to two
Cabinet ministers. He was chair of the National Organisation
of Labour Students, and chair of the Fabian Society. His
books and pamphlets include The Case for Socialism, Labour’s
Revival, Tony Blair In His Own Words, and How to Win an
Election. He was one of the founders of Progress in 1996, and
has written for Progress magazine regularly ever since.
Jacqui Smith became Britain’s first female Home Secretary in
2007. Following a successful teaching career, she was elected
309 the purple book
to Parliament in 1997, became a member of the Treasury
Select Committee in 1998 and was appointed a minister in
the Department for Education in 1999. In a ten-year ministerial
career, she held many roles, including minister for equality,
when she was responsible for the Civil Partnerships Act.
She left Parliament in 2010 and now works as a consultant
and broadcaster.
Stephen Twigg MP is the Member of Parliament for
Liverpool West Derby, elected in May 2010, and is chair of
Progress. In October 2010, he was appointed to Labour’s
frontbench team as shadow minister for Africa and the
Middle East. He has been an active member of the Labour
Party for twenty-nine years, holding many roles including
MP for Enfield Southgate, deputy leader of the House of
Commons and general secretary of the Fabian Society. He is
a member of Usdaw, the shopworkers’ union.
John Woodcock MP is the Member of Parliament for Barrow
and Furness, elected in May 2010, and is a vice chair of Progress.
In October 2010, he was appointed to Labour’s frontbench
team as shadow transport minister. Before entering Parliament
he served as political spokesman for Gordon Brown and was
special adviser to former Cabinet minister John Hutton MP.
He became chair of Labour Friends of Israel after the death of
David Cairns MP.
Progress is an organisation of Labour Party members,
aiming to promote a radical and progressive politics for the
twenty-first century. It seeks to discuss, develop and advance
the means to create a more free, equal and democratic Britain,
which plays an active role in Europe and the wider world.
Diverse and inclusive, it works to improve the level and quality
of debate both within the Labour Party, and between the
party and the wider progressive community.