Labour did not overspend in office. So why do Labour’s leadership candidates keep saying so?

Notes from a Broken Society

Perhaps the most depressing aspect of the Labour leadership contest is hearing the candidates acquiescing in the myth that Labour in office overspent – and, by implication, accepting the Tory framing that Labour crashed the economy.  Of course it is more nuanced than that, but the outcome of the recent election shows that this is not a debate in which nuance plays much part.

The simple fact is that Labour did not overspend.  In fact, as a percentage of GDP, New Labour spent less than Margaret Thatcher – an average of 41.5% of GDP against 44.2%.  And in fact that figure hides the fact that after the 2007/8 crash, with the economy contracting viciously and rapidly, public spending as a proportion of GDP inevitably rose.

Moreover, spending is only one aspect of a deficit – you also need to consider taxation.  And, again, Labour taxed less than Thatcher as a…

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Low paid, informal work is unlikely to be a stepping stone something better as promised

Via Billy Blog, I found this interesting report published by the OECD. It’s a report on inequality and it has this to say on what it calls “non-standard work”:

“Promoting equality of opportunities is not just about improving access to quality education but also ensuring that the investment in human capital is rewarded through access to productive and rewarding jobs. Before the crisis, many OECD countries were facing a paradoxical situation: their employment rates were at record high levels and yet income inequality was on the rise. Typically, rising employment might be expected to reduce income inequality as the number of people earning no salary or relying on unemployment benefit falls. However in recent decades the potential for this to happen has been undercut by the gradual decline of the traditional, permanent, nine-to-five job in favour of non-standard work, typically part-time and temporary work and self-employment. More (often low skilled) people have been given access to the labour market, but at the same time this has been associated with increased inequalities in wages, and unfortunately, even in household incomes.”

The economy is now in ‘recovery’, but this trend which started before the crash has not abated. We are seeing ‘record high’ employment rates again, but no rise in incomes, while we see big rises in temporary or “zero-hours” jobs, and a big increases in self employment, much of which is very low paid, with those newly self-employed reliant upon working tax credits to get by.

When asked about this, Government Ministers will often argue that “any job is better than no job at all”, or that a low paid or zero-hours job will for many be a stepping stone to something better. For some this may be true, but the OECD qualifies this heavily though, saying:

“While associated with lower job quality, non-standard work can be a “stepping stone” to more stable employment – but it depends on the type of work and the characteristics of workers and labour market institutions. In particular, temporary work can increase the chances of acquiring a standard job compared with remaining unemployed in the short run by some 12 percentage points on average. But this is not true of part-time work or self employment, which do not increase the chances of a transition to a standard job… In addition, transition rates remain low when considering a longer time span: less than 50% of the workers that were on temporary contracts in a given year were employed on full-time, permanent contracts three years later.”

As much as the Government trumpets the UK’s high employment rate then, it’s to be hoped that it keeps an eye on job quality as well as quantity. Those taking on part-time, temporary or self-employed roles as there is nothing more permanent available can easily get stuck in that type of work rather than it being a ‘stepping stone’ to something better. Ministers should be concerned with this rather than being complacent, because it is a problem that could have long term impacts and effect everyone, not just those stuck in ‘non-traditional work’.

Government gets nasty to give the illusion of control over immigration

Figures released today showed net migration rising to 318,000, its highest level since 2005 and a far cry from David Cameron’s promise to cut net migration to the tens of thousands. With free movement of labour guaranteed between countries in the EU, this was never a sensible promise to make. The truth is, as long as free movement remains in place, no government can have any real control over net migration whatsoever. For as long as the UK economy out-performs it’s European neighbours, net migration will be destined to remain high. This has always been the elephant in the room.

To try and mask this rather large elephant, the Government of David Cameron has talked up all sorts of measures to ‘tackle’ immigration which will do nothing of the sort. Today, they decided to sink to a new low in an attempt to appear to be doing something – anything. They’ve previously tried to blame the rules around social security benefits on high immigration, but there is no evidence that what has been labelled ‘benefit tourism’ actually exists. Cameron’s latest foray into ‘being seen to do something’ territory is to go after the right wing presses’ favourite bogey man – the illegal immigrant.

Cameron today announced plans to legislate to allow police to confiscate the earnings of anyone found to be working illegally. It is estimated there may be up to 300,000 in the UK who have overstayed their visas, but how many of those are working is not known. 300,000 is less than half the number of migrants that came here just in 2014. In short, it is not a big problem, and certainly not something that is going to make a dent in the net migration figures (if that is indeed its intention).

Over-blowing this issue and pretending it has anything to do with high net migration is a rather nasty thing to do, because, like the so-called ‘racist vans‘, it can create a climate of fear and suspicion in communities already feeling alienated from British society. This is purely about political expediency, not addressing a problem that actually needs to be solved.

Cameron also announced his intention today to see if he could also limit the numbers of high-skilled migrants coming from outside the EU. He can’t do anything about unskilled EU migrants coming here, so this is all he has left, but it’s exceptionally dumb. So dumb and nasty all on one day. Must be a Conservative Government.

Labour were too left-wing?

Yougov published some interesting polling results today which in a lot of ways seem contradictory. They asked people about Ed Miliband’s leadership of the Labour Party, and the direction Labour should take in the future. Here’s the results (click to enlarge):

Screenshot 2015-05-18 at 6.27.01 PM

Around a third of respondents think that Labour under Ed Miliband was too left wing and 40% thought the new leader should move Labour more to the centre. This should be a surprising result, as Labour’s manifesto was not remotely left-wing, promising to continue austerity and talking tough on immigration and social security. To me though it shows the power of framing, and how media presentation can feed through to public perceptions. Constant reinforcement of ‘Red Ed’ and labelling certain policies as ‘communist’ seems to have done the trick.

If we contrast this with some other results from the same poll, the picture becomes a bit less clear as Yougov’s Peter Kellner explains in this blogpost. If you ask people where they sit on the political spectrum, the most popular answer seems to be ‘right in the middle’. You get a rather nice bell shaped curve like this:

Screenshot 2015-05-18 at 6.40.00 PM

“The centre is where I am” seems to be the mantra. You hear politicians talk quite a lot about ‘reclaiming the centre ground’. For example the Lib Dem’s entire strategy seemed to be based around placing themselves slap bang in the middle between Labour and Conservative. They failed miserably of course, but not for that reason. Tony Blair was probably the master of claiming the centre ground, but the main point for politicians I guess is that to be successful you need to reframe the centre as “whatever platform we are running on”.

Words associated with left-wing and right-wing have a lot of negative baggage attached now so trying to attach a positive message to them is probably futile. They have kind of lost all meaning now. Everything to the left of whoever is in power is labelled as dangerous socialism, while the same is true to a lesser extent of the right wing.

So what does this mean for Labour? It seems clear that whoever wins the Labour leadership contest will want to present themselves as being in the centre. A moderate. A safe pair of hands. This is probably unavoidable, but being in the centre doesn’t mean your ideas need to bland and middle of the road. If you look at the public’s opinion on a range of issues, they are quite ‘leftish’ on a number of things (while still calling themselves centrist). Here is another finding from the Yougov poll linked to above:

Screenshot 2015-05-18 at 6.54.08 PM

Previous polls have also shown strong public support for nationalisation of certain industries like the railways and utilities. Unfortunately (to me) though, the British people also seem quite preoccupied with making sure those unlucky enough to not have a job are not too comfortable:

Screenshot 2015-05-18 at 6.58.19 PM

To me though, this presents an opportunity. If you can successfully frame yourself as being part of the centre, you can promote some quite radical policies while keeping a lot of voters on side. The public clearly want to see less people dependent on social security payments, so why not give them that by offering a guaranteed job to anyone willing and able to work?

It seems also that people can clearly see that capitalism is working incredibly well for those at the top, but less well for everyone else. There are some quite radical ideas that can tap into this while still being “pro-market”. I liked this recent comment from fellow blogger Neil Wilson:

It’s time to stop being ‘pro-business’ and start being ‘pro-market’.

– If you’re pro-market then you remove power and size differentials wherever they may be to ensure competition is allowed to work.

– If you’re pro-market then you ensure that everybody has an alternative job offer open to them via a Job Guarantee, ensuring there is always competition for labour resources.

– If you’re pro-market you address monopolies and rentier issues to ensure that resources are always fully utilised and available at the best prices.

‘pro-business’ people take the opposite view on these points.

Business needs to be treated as cattle not pets. They are looked after and farmed for what the output they provide, but if they stop doing that then they are culled to avoid wasting resources better used by others.

I think that’s dead right and is an attitude that should have support from across the political spectrum. The more interesting thinkers on the right like Douglas Carswell often talk of their disdain for ‘crony capitalism’, and would likely sign up to policies that were ‘pro-market’.

‘The radical centre’ is a phrase I’ve often heard (usually by people who are neither radical nor in the centre), but it does sort of capture an approach that could be successful. Convince voters you are in the centre and they’ll feel comfortable coming out to support you even if your policies offer a clear break with the status quo. It’s all about hitting the right notes by framing your ideas in the right way. It will be hard for any Labour leader to achieve this though, but hopefully one or more will at least try something new. The early signs are not great though.

Labour leadership contenders – compassionate and aspirational

Mary Creagh is the latest Labour hopeful to throw her hat into the ring for the race to become next leader of the Labour Party. I just saw her being interviewed on the local news and she used very similar language to her rivals. Here’s what I mean:

Chuka Umunna

“…in my view the Labour Party does best when it marries together its compassion for the vulnerable and the poor with others’ ambition, drive and aspiration to get on and do well.”

Yvette Cooper 

“We need a Labour party that moves beyond the old labels of left and right, and focuses four-square on the future. Credible, compassionate, creative, and connected to the day-to-day realities of life.”

Tristram Hunt

“We can only achieve a Labour government if we can combine a compassionate story about supporting those who need it most with a sense of optimism and hope for those who aspire to climb life’s ladder.”

Liz Kendall

“We need to show people that we understand their aspirations and ambitions for the future. If you look right across England, we did not do enough to appeal to Conservative supporters, and we must.”

Mary Creagh

“We want our country united, forward-looking, confident, and proud not fearful, introspective and insular. We want a country where aspiration and compassion go hand in hand. A country for everybody.”

Andy Burnham

“Our challenge is not to go left or right or to focus on one part of country or another, but to rediscover the beating heart of Labour and that must always be about the aspirations of everyone and speaking to them like we did in 1997.”

So six candidates, some compassionate, some aspirational, and some both compassionate and aspirational who could not be more different. Take your pick Labour members!

Getting your priorities right

After his somewhat surprising victory last week, David Cameron gave a speech outlining his intention to bring the country together. About his last government he said:

The government I led did important work. It laid the foundations for a better future and now we must build on them. I truly believe we’re on the brink of something special in our country: we can make Britain a place where a good life is in reach for everyone who is willing to work and do the right thing.

So foundations laid, a majority won, time to hit the ground running with policies that will help achieve that ‘good life’ for all right? It was a nice speech, but the priorities of his new government seem rather different. Far from building on these foundations, the immediate priorities of the Conservative Party seem to be rather different. Here’s the policies that seem to be top of their list:

Bash the BBC

Further undermine free speech under the guise of tackling extremism

Hobbling the Freedom of Information Act

All but ending the right to strike

Scrapping the Human Rights Act

I not quite sure how these things go together with ensuring the good life for all (at least all who are “willing to work hard and do the right thing”, but I’m sure the ‘one nation’, ‘good life’ will be announced soon!

An accurate assessment of Chuka Umunna

Inexplicably (to me) the current favourite to be the next leader of the Labour Party is Chuka Umunna. I thought Bill Mitchell gave quite a good assessment of the problem with Umunna in a longer post about the problems Labour-type parties are having across the developed world. Umunna, and (let’s face it) most if not all of his rivals have eerily similar thoughts on where Labour have gone wrong. Here’s Bill’s assessment:

In the days following last week’s election, various candidates for the Labour Party leadership have emerged. An apparent front-runner, Chuka Umunna exemplifies why British Labour and Labour-type parties around the world are failing and have lost meaning.

He told the press on Sunday (May 10, 2015) – ‘No-one is too rich to be in Labour’: Chuka Umunna sets out leadership stall:

1. “Labour was wrong to run a deficit before the financial crisis”.

2. Condemned “Ed Miliband’s attacks on ‘wealth creators’”.

3. “Labour can regain power within five years if it is ‘pro-business’ and makes clear no one is ‘too rich to be part of our party’”

4. “you can’t be pro- the jobs we want to see unless you are backing the people that create them”.

5. “Labour must appeal to middle income voters in England who have ‘ambition, drive and aspiration to get on and do well’”

He is a lawyer by background.

He is being championed by the pompous and scandal-prone Mandelson, part of the New Labour movement in Britain which destroyed the nature of the Labour Party once and for all in that country and turned it into another pro-business party with tenuous claims to its past.

There is nothing I have heard since the election disaster last week that indicates that anyone who is likely to lead the British Labour Party understands they have no existence if they continue to think that capital is the wealth creator and workers get the benefits of that endeavour, that a political party has to be ‘pro business’, that mass consumption and indvidualism is to be prioritised over decent work and collective well-being.

I agree. Why would anyone vote for a red Tory, when they could have the real thing?

What does Cameron’s reshuffle tell us?

We learnt more details about Cameron’s ministerial team today, and his choice of personnel exposes Tory thinking in certain key policy areas. The holders of the three key jobs are unchanged with Osborne, May and Hammond remaining in post at the Treasury, Home Office and Foreign Office respectively. Jeremy Hunt remains at Health demonstrating that acting disgracefully whilst in office need not harm your career.

Surprisingly maybe to some, Iain Duncan Smith kept his job at the DWP. I would have thought the thinking there is that people already hate Duncan Smith, so why ruin someone else’s career when they can let him force through an extra £12bn in welfare cuts? Given the track record of IDS, it seems unlikely to end in anything but disaster.

Being in favour with George Osborne seems to be good for your career. Key allies Sajid Javed, Amber Rudd and Matthew Hancock all got promotions. Hancock in particular is someone with no obvious talents who was slavishly loyal throughout the last Parliament, never shy of going on TV to defend the indefensible. He seems to have got his reward.

Other appointments include John Whittingdale – a man who doesn’t think the BBC should exist – appointed as culture secretary, and Michael Gove at Justice (who surely can’t be any worse than Chris Grayling). Boris Johnson – for no good reason that I can discern – gets a seat at political cabinet whilst he tries to combine the full time job of being an MP with the full time job of being Mayor of London.

Finally, Priti Patel – one of the most free market Tories – is given the job of Employment Minister. Expect lots of talk of ‘personal responsibility’ and not much support for those out of work.

There is a remarkable stability to Cameron’s Cabinet. Most of the top jobs are still with the same people as the last Parliament. There were favours given to key allies, and the appointment of a pro-Murdoch, anti-BBC Culture Secretary speaks volumes, while we must still watch this space for the inevitable downfall of IDS at Work and Pensions.

A few thoughts on the Tories’ GE victory

The reaction to the result of Thursday’s election on the left has been one of confused outrage. How could so many people back the evil Tories after five years of austerity? Protests were organised on Facebook, and all day on my Twitter timeline, people have been Tweeting about how the Tories have no mandate because 75% of adults did not vote for them.

Well you know what? 80% plus people did not vote for the Labour Party either. I am someone who has never voted Tory and can’t imagine any circumstances under which I would, but I just couldn’t stomach voting for Labour this time either. They just didn’t deserve to win. I suspect a lot of people felt the same way as me. Turnout barely hit the mid 60s%.

We have a first past the post electoral system in the UK. It’s not a fair system, but the result under this system was fair. More people voted Tory than voted for any other party and they have won enough seats to command a majority in the House of Commons. People who voted Tory aren’t bad people, they just think differently to you.

Moving on to Labour, the early signs are not great. None of the MPs who currently say they are considering leadership bids particularly inspire confidence that they can transform the fortunes of their party. The front runner seems to be Chuka Umunna, a man who seems to be held in high regard by those inside Westminster, but who I’ve always thought has nothing interesting to say about anything. His strategy seems to be to do what Labour’s opponents have always demanded. An apology for ‘overspending’.

The Conservative’s majority is small. They will struggle to get anything controversial through, and anything the leadership wants, they will have to trade with the right wing nutters on their backbenches to pass it. That does not make for harmonious government. The Fixed Term Parliament Act means they will probably limp on for the full five years though.

Hopefully, the childish hissy fits that have followed the election result will soon make way for some more constructive opposition to whatever bright ideas the Conservative front bench come up with over the next few months. A lot of the pressure is going to have to come from outside Parliament as it did with things like on the sell-off of forests early in the last Parliament. Petulant protests against the legitimacy of a democratically elected government probably ain’t going to do it though.

How to win and lose elections.

Modern Monetary Theory: Real Economics

At the risk of the accusation of being  pretentious, I’ve never won or lost an election ever, I thought I’d deviate from my usual economic commentary and have a try at explaining why Labour did so badly in the recent UK elections and what needs to happen for them to do better in future. There  are are an awful lot of disappointed Labour supporters around, who might be looking for some answers as to why an expected Labour small win suddenly turned into quite a large Conservative win.  There’s probably many Liberal Democrat supporters feeling somewhat depressed too, but they don’t need any similar explanation!  Something went obviously very  wrong for Labour on polling day. Either those potential Labour voters who had indicated to the pollsters they would be voting Labour did not show up on the day, or they changed their minds at the last moment and voted for someone else. The pollsters sampling methods cannot…

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