Jonathan Todd

I had the piece below published on Labour Uncut on 16 June 2010:

The budget response is the great set-piece political challenge. Your opponent has an age to prepare and all the resources of treasury. You stand up when they sit down. By the time you sit down, the political context is virtually set, not least because your opponent’s spinners have tried to fix this. Given the centrality of economics to present politics, it is a bigger challenge than ever. Harriet Harman must rise to this as our acting leader.  Which transience of tenure, of itself, reduces her potential agility compared with a permanent leader. You have to feel for her. Here are a few, hopefully helpful, suggestions.

The first task is to distinguish pragmatic economics from small-state ideology. As the need for deficit management is widely acknowledged, pragmatism is required, but only Thatcherites see this crisis as an opportunity for ideological resurgence.

The second task is to oppose the manifestations of this ideology, while the third is to provide a coherent alternative economic prospectus. This prospectus must contain tax increases and spending cuts, but the mix should reflect a very different ideology from that supported by Tory MPs agitating for a budget akin to the Thatcherite “cold shower” of the 1981 budget. Overarching all of this is the need to gain an audience in a media climate favourable to the coalition.

These steps are crucial to Labour’s hopes of returning to government. However, while this budget intends to frame public finances over the full parliament, Labour’s navigation of these steps will evolve. Harman cannot provide a definitive take. This isn’t just because events – for example, a double dip recession; the risk of which is increased by Osborne’s cutting – could overtake whatever fiscal consolidation plan Osborne has. It is also because the necessary Labour policies will only emerge under new leadership.

David Miliband last week produced some neat ideas: mansion tax on £2m homes (ok, but why not simply a land tax?); extending the bankers’ bonus tax (fine, while it works – evasion this year was surprisingly low and the tax take, therefore, unexpectedly high, which is unlikely to persist); and ending the tax subsidy to private schools (great for Croslandites like me, but Friday’s “Miliband’s class war” editorial in the Evening Standard indicates that it won’t be a completely easy sell).

Ed Balls has played the VAT card, stressing its regressive nature. However, the coalition probably sees this coming and will try to protect those who are on low incomes through changes to income tax – and in so doing, protect themselves from Balls’ attack. Balls isn’t wrong to be assertive on VAT, but our VAT-based attacks should acknowledge the full consequences of the coalition’s tax changes or we will appear partial.

While I expect any VAT increase to, rightly, produce Harman fireworks, as acting leader she has limited ability to pick up the good ideas that the leadership contest is generating and craft them into a response redolent of Labour philosophy. Perhaps a permanent leader would have already made a better fist of the case that, rather than scrapping the child trust fund, it would be fairer to reduce tax relief on ISAs, say. Sadly, we can expect many occasions today when it would be preferable to have someone at the dispatch box able to say: “you wouldn’t need to do X if you had done Y”, where, to paraphrase J K Galbraith, X equals something disastrous done by the coalition (e.g. scrapping the child trust fund) and Y equals something unpalatable that Labour would have done instead (e.g. reducing tax relief on ISAs). The coalition knows this and will try to take advantage.

However, disastrous things have already been done and popular protest has been underwhelming. Since the election of President Obama, possibly the biggest change to the American political landscape has been the emergence of the tea party movement. This has been fantastically effective at mobilising grass-roots opposition to Obama’s “big government”. Labour leadership contenders grasp towards elements of Obama’s movement politics. But, this is already slightly old-hat. Alternatively, they could plant more seeds for the emergence of a leftist equivalent to the tea party movement to rally against injustices like the abolition of the child trust fund.

Robin Cook once said that millions of people think that they benefit from tax credits due to obscure machinations of the inland revenue, not because of Labour decisions. A leftist equivalent to the tea party movement – building on campaigns like don’t judge my family – would leave people in no doubt as to which politicians are responsible for reversing popular Labour policies.

The utility of such a movement is underlined by how quickly media coverage of the deficit has shifted since the General Election. Then, the main focus was when to start cutting and the £6bn at issue is the tip of the iceberg to come. We rightly conceded, during the election campaign, the need to address the deficit over this parliament, but were also right to argue that this job shouldn’t begin this year, as to do so would imperil a fragile recovery. Harman should repeat these points in her budget response, but she shouldn’t expect much media kudos for them. Coverage has moved on, swallowing the coalition’s line that cuts had to come this year, with too few tears shed for the child trust fund and the future jobs fund. The outrage that these cuts merit won’t come from the media, but should come from a mobilised grassroots movement.

Another thing illustrated by the speed with which debate has moved on since the General Election is the thin, but real, distinction between economics and ideology. Were the cuts this year pragmatic or Thatcherite? Certainly the micro consequences – the loss of the child trust fund and the future jobs fund – should be resisted. But lots of economists who would balk at being labelled Thatcherite, including the Labour peer Lord Desai, indicated that cuts this year should be part of a pragmatic deficit response. Economists do not speak as one and it’s usually possible to find one who buttresses your ideology.

The easy course is to seek out this economist and use their arguments to provide a veneer of protection for ideological positions. However, like most veneers, cracks can easily be exposed. The tell-tale sign of this tactic is argumentation predicated upon less than credible claims. For example, the coalition’s habitual canard that their austerity programme is needed to stop us turning into Greece. Harman should read Rachel Reeves on why their scaremongering is ideological motivated. But, just as the coalition are grasping towards economic arguments that allow them to retreat to their Thatcherite comfort zone, so, too, there are economists who encourage Labour to remain in our ideological comfort zone.

Their charms should be resisted by Harman, who should instead be carefully studying last week’s report by the office of budget responsibility (OBR). It showed that the economy is in stronger shape than the coalition’s apocalyptic talk implies. Consequently, if Osborne takes actions as dramatic as this talk suggests, then, he will have defaulted to Thatcherite instincts. If Harman can use the OBR’s report to expose this, she will have done a great job. The other things that we need – a full Labour plan for deficit management and growth; a left-ist movement to resist the coalition’s extremes – are for further down the line; hopefully, to be crafted and inspired by our next leader. But an important task can be accomplished today: to damn Osborne’s fiscal trajectory as regressive, ideological and Thatcherite.

Ok, I’ve been to dinner parties. But not in Islington. Though, I probably am in the “chattering classes”. Still, I’ve never been at dinner parties where “innate and uninformed” prejudices against London comprehensives have been expressed, the superior virtues of Harriet Harman to Peter Mandelson have been extolled or Polly Toynbee, Greg Pope, Barry Sheerman and Charles Clarke – aka Mistletoe & Whiner according to John Prescott - have been lavishly praised. In the past day or so, I’ve noticed, without trying, that all of these things have been said to occur at the dinner parties of the chattering classes.

I can only wonder at what horrors would be alleged to occur at these parties – if that is the right word – if I made my observations more dedicated and maintained them for a longer stretch. Thankfully I have better things to do.

Nonetheless, I have to ask: What is going on? Can the honour of non-chattering class status be bestowed on me? I do hope so. Or, alternatively, is all of this chattering classes stuff just a term of lazy journalism and thinking?

If the clattering classes do exist, perhaps, we’d all be better off if they could take out their frustrations at “murder cafes”, rather than having their frenzied wrongs spill out at their so-called ”dinner parties” (Is food even served? Aren’t parties meant to be fun?) The “murder cafes” concept is explained 5 minutes 20 seconds into the video below, which also contains many ideas that David Cameron might want to take up as he takes forward the promised beefing up of his policy platform in the new year.

[youtube=http://www.youtube.com/watch?v=qE5sxADDhew]

Interesting developments. And news to delight Harriet Harman, amongst many others, I am sure. Efforts are afoot to create Lehman Sisters or something akin to it. Amidst the continuing regulatory and legislative whirlwind that the financial crisis has – not unreasonably or unexpectedly - unleashed, it is noteworthy that the creation of Lehman Sisters is a market outcome, not the consequence of a regulatory or legislative initiative. As such, I hope it has been properly factored into counterfactual analysis of the government’s latest plans, as part of H. M. Treasury’s impact assessment processes. These plans now seem somewhat unnecessary if these counterfactuals really can conclude that another financial crisis will be avoided in the world of Lehman Sisters et al.

MPs have abused their expenses, seeming to treat them as perks or part of their remuneration. In doing so, they have shattered a social contract with actions that sometimes appear criminal.

It is ironic, then, that in this week Gordon Brown has given us his first key note speech on crime as PM and John McFall has alleged that remuneration packages in the financial sector have lead to a social contract being broken.

So, MPs and bankers both stand accused of breaking a social contract. What does this mean? And what are its consequences?

Wikipedia defines a contract in these terms:

“A contract is an exchange of promises between two or more parties to do, or refrain from doing, an act, which resulting contract is enforceable in a court of law. It is a binding legal agreement”.

But what is a social contract? An exchange of promises between two or more parties to do, or refrain from doing, an act, which resulting contract is enforceable in a court of public opinion? Harriet Harman once threatened to throw a banker to the lions in this court but MPs are now as likely to suffer a mauling as even Fred the Shed.

That said, the long history of the term social contract, appealed to by thinkers from Thomas Hobbes to John Rawls, makes it harder to properly define in terms as concise as Wikipedia’s definition of a contract. The vagaries of legal courts are legion but are nothing as compared to the vagaries of the court of public opinion, for one thing. In contract disputes, it is also usually clear between whom the original promise was reached. In contrast, it may be a surprise to some bankers that they have a contractual obligation - a social contract – to anyone beyond their employer. Presumably, MPs have, at least, a dim memory that the Fees Office are not the people with whom they have entered into a contract. Electors, I believe, they are called. The ultimate sanction in the case of MPs who break their social contract is also clearer than it for bankers. It is to be found at the ballot box. Fred the Shed will be grateful that this doesn’t determine his fate, as he would only receive two votes: one from a Hearts player and another from Jackie Stewart. Though, there are MPs, elected with fat majorities, who must now wonder whether they are any more capable of attracting popular support.

When once respected MPs and bankers can dredge such depths of unpopularity, the ballot box may not seem for all an entirely adequate sanction for the breaches of the social contracts that have occurred – not least when this sanction doesn’t even apply directly to bankers. Some may sigh and shrug, feel even more powerless than they do already and not vote. Some may vote for a party like UKIP, up 12 points in the polls in the past 7 days, in the belief that minor parties will be more respectful of the social contract than major ones. Some may react even more extremely: voting for the BNP and/or engaging in violent protest. Am I getting too excited?

I’m not sure. Trust has been lost on a massive scale, as it is when any contract is broken. This is very difficult to recover. Tony Blair, for example, never regained the trust that he lost over the invasion of Iraq. Broken trust begets broken trust, as violence begets violence. Broken trust often begets violence and vice versa. Certainly, neither broken trust nor violence begets anything positive. Only negativity suggests itself.

Britain has, rightly, moved away from the absurd, unjustified hierarchies that defined us as a deferential, class-based society. But it is hard to imagine a society that doesn’t need leaders of some kind in politics, business and elsewhere. Social contracts are formed between these leaders and those that they lead but such contracts are only viable when the leaders can command respect on some basis. This respect has long since ceased to derive from class, while most of our present leaders in politics and business struggle to command respect by virtue of their abilities and virtues. The breaking of social contracts would, therefore, seem to have produced a crisis of leadership. Whether it produces anything graver than that will depend what, if anything, emerges to fill the vacuum of trust and respect that this crisis has opened up.

The Sunday Mail reports that support for Labour has fallen to 23 percent – the lowest since opinion polls began in 1943. If Labour polled this badly at a general election, the party would lose 200 seats to the Conservatives, who would hold a massive, carte blanche majority of 220. The survey was also the first to record that the majority of voters want Gordon Brown to stand down now as PM.

These are desperate times, indeed, for Labour and while the expenses revelations “will hurt the reputation of all politicians”, argues Andrew Rawnsley, ”the damage is likeliest to be greatest to Labour at the next election”. Another poll supports Rawnsley’s view. There have been many highs and lows under PM Brown. But each low seems lower and more desperate than the last one. I didn’t think it was possible to go any lower than the McBride affair but recent days have probably managed it.

It may be that everything that has been revealed in recent days was “within the rules”. What McBride was up to certainly was not. Nonetheless, Brown’s response in both cases was to blame the rules and insist upon their reform. But people, especially public figures, have to take responsibility for their actions, irrespective of what the rules may or may not say. While the McBride affair was undoubtedly depressing in the extreme, there is something even more depressing about the expenses revelations because the people concerned are people who are widely respected and admired within the Labour Party, in contrast to McBride.

Of course, as I have heard Tessa Jowell and Ed Miliband say on TV, we should avoid making judgements on the basis of partial information and Ben Bradshaw and Phil Woolas also challenge the versions of events that have been reported about them. I am afraid, however, that, whatever the reality of the situation may prove to be, the damage has already been done and the dye has been cast for Labour. The party can now only, to mix metaphors, walk into the hurricane of public anger.    

What a prospect. It must make the most battle hardened Labour campaigner nervous about door knocking. Those lions have been lead to this by the expenses claims of the donkeys that lead them. Alan Johnson, however, doesn’t appear quite so donkey like. According to Rawnsley, he, along with Hilary Benn and Ed Miliband emerges ”as acmes of frugality who make modest and entirely reasonable claims for performing their duties”.

James Forsyth argues that this increases the likeihood of Miliband “winning the leadership after the next election”. But the question will increasingly be asked whether, if this were to happen, this would make him the next leader of the Labour Party. Even before the expenses story broke The Mirror did not seem disinclined to the prospect of the frugal Johnson, who has recently appeared to indicate more of willingness to take on the top job than previously, replacing Brown before the election. That frugality must have been good for his conscience at the time and now also appears a smart career move.

 Matthew D’Ancona speculates that he ”may yet be the first person to become Labour leader by going on television and radio repeatedly to deny that he is either capable of the job or interested in it”. These denials mean that Johnson is considered to lack a steely, Michael Heseltine or Brown like determination to accede to the very top. Given this and past experience – the lack of any challenge to Brown either when he became leader or last summer – D’Ancona seems justified in his view that “for all the sound and fury we can expect over the summer”, in terms of plots against Brown, ”the PM will still survive and fight the general election”. But D’Ancona was writing prior to the expenses story. Is this story a game changer? And, if so, how will the game end?

Martin Bright is right think to that there is a “distinct possibility that (it may end with) the Labour Party (going) into terminal decline as a credible political force”. He argues that the best way to avert that outcome is for “the younger generation of Labour politicians … to take control now”. Who can he have in mind? I don’t think Johnson or Harriet Harman, another potential successor to Brown, can be considered part of the younger generation. But James Purnell and Jon Cruddas could. Allegra Stratton has them down as a ‘dream ticket’.

“Why don’t James and Jon grow some balls and get together and challenge GB”, a “Labour grandee” apparently recently told her. The “grandee” will presumably hope that the expenses story has made these balls grow. At this stage, however, I am not sure whether it is certain that Purnell, nor Ed Balls or Yvette Cooper, either of whom (but surely not both?) might well consider standing in any contest that featured Purnell, is out of the expenses wood - though, this is far from the only question that might be raised about the supposed dream ticket. They are usually considered, for one thing, to be on opposing wings of the party. David Miliband – another member of the younger generation with leadership ambitions – certainly hasn’t come out of the expenses story as well as his brother or Johnson.    

If Brown can be prised from Downing Street – and that definitely remains a big if – then the number of names discussed here (Johnson, Harman, Purnell, Cruddas, Balls, Cooper and both Milibands) would seem to open up the spectre of an unseemly scramble for Number 10 – if they all were to grow balls, as it were - at a time when we face challenges so grave that Frank Field has been talking about the need for a national unity government. Peter Mandelson may insist that Brown is focused on these challenges, not his cleaner, but polls of 23 percent cannot fail to darken Labour’s mood music. It may now be the Tories turn to hold the expenses spotlight but David Cameron senses enough weakness around Brown to be edging towards a confidence vote, via the Royal Mail vote.

The chances are that Brown will avoid a confidence vote by giving enough concessions to Labour backbenchers to win the Royal Mail vote with Labour votes, while losing Cameron’s support for his Royal Mail plans. But how many concessions can Brown give without losing the support of the responsible Minister, Mandelson, a potential Geoffrey Howe in this drama if ever there was one? It’s bizarre that Brown has ended up in a position of such dependence upon his old foe – The Sunday Telegraph speculates that Brown may reduce this dependence, in respect of the Royal Mail vote at least, by moving Mandelson to the Foreign Office, “a post he has long coveted”. How these once bitter rivals play their cards on the Royal Mail vote may go some way to determining whether everyone’s favourite ex-postie, Johnson, ends up as PM. The Sunday Telegraph also suggests that Brown may try to prevent this happening by making Johnson Chancellor and, thus, “binding him in” to Brown. This creates the risk, however, as Peter Hoskin notes, that Alistair Darling will play Howe.

All of this, however, is just fluff and hot air – or “sound and fury” to use D’Ancona’s term. Not only is it fluff and hot air, it is fluff and hot air at a time of crisis. Shuffling deckchairs on the Titantic is the right expression. Martin Bright correctly grasps the depth of the crisis facing Labour. The worst thing Labour could offer now (and I have stopped assuming that things can’t get any more desperate, as that assumption has proved sadly, too unrealistic) is more fluff and hot air. That is to say more talk of a challenge to Brown. Talking about challenging Brown but not actually challenging Brown, i.e. not growing balls but pretending to, is the worst of all Labour worlds. It is worse than growing balls and challenging Brown. It is also worse than not growing balls and supporting Brown.

This is a crisis of fluff and hot air in a deeper and more dangerous sense than this, however. Brown promised the country a vision but, frankly, this only came into view with the credit crunch. This gave his government a sense of purpose that it otherwise lacked. Once a government and a party becomes so lacking in purpose that it needs a global crisis to give it one, it is little surprise that the public have little sense of what the party’s purposes, motivations and convictions really amount to. I fear that those battle hardened Labour campaigners, who are newly nervous about door knocking, would struggle to give a convincing answer as to what the point of a fourth Labour term would be, if asked on the doorstep. These lions have again been let down by the donkeys that lead them. And just as badly let down as they have been in respect of expenses.

The Labour Party, whoever leads it, desperately needs a stronger sense of direction. Until the party rediscovers, re-imagines and revivifies its purposes, it cannot complain about these purposes being unclear to the electorate. The most encouraging thing about the latest ‘date‘ between the ‘dream ticket’ is that it occurred at the launch of an exciting new Demos pamphlet. The Liberal Republic is a great publication by Richard Reeves and Phil Collins, which is likely to appeal to Alan Milburn, a name sure to be mentioned among the plotters. The likes of Milburn, Purnell and Cruddas are intelligent and bright enough to think through the thoughts that will need to be thought through for Labour to really rediscover its sense of direction. They should have the balls to do so and not to get distracted by the fluff and hot air. Only one of these pursuits, ultimately, will make a real difference. We were promised vision and we were promised substance. That is still what is required, whoever leads Labour.