Jonathan Todd

I had the piece below published on Comment is Free on 12 June 2010:

David Cameron has argued that our economic fortunes have become “hitched to a few industries in one corner of the country, while we let other sectors like manufacturing slide”. His business secretary, Vince Cable, has since bemoaned “deep-seated problems: a dysfunctional banking system; an economy that is seriously unbalanced”. The previous business secretary, Peter Mandelson, wanted “more real engineering and less financial engineering”. The political consensus seems clear: our economy should be rebalanced away from finance and in favour of manufacturing.

This seeming either/or approach to finance and manufacturing says nothing about business services, which fall into neither category. London’s streets remain, as the Economist notes, “thronged with lawyers, management consultants, accountants and ubiquitous marketing types”. Statistically, these “types” may be classified in our blossoming creative industries, not business services. Concluding that comparative advantage can only accrue to us in finance or manufacturing risks missed opportunities in other sectors. This will be increasingly detrimental as technological advances make ever more goods and services internationally tradable.

 Another problem with an either/or approach is that it presumes finance and manufacturing are substitutes. As we have more of one, it is thought, we must have less of another. The scale of the City of London supposedly explains the decline of British manufacturing. This thinking contains two kinds of misconceptions.

 First, that British manufacturing is in decline. It isn’t. We’re the world’s sixth largest manufacturer. This isn’t to say that performance can’t be improved. But this objective isn’t helped by a false narrative of decline.

 Second, that finance and manufacturing cannot be complements. It makes no more sense to argue that the sectors are inevitably complementary than to argue that they must be substitutes. What we should be asking is: what kind of financial sector would be most complementary to our manufacturing in particular and our wider economy in general? And how can public policy best encourage such a financial sector?

 The passions of political debate on the future of banking generate more heat than light when it comes to these questions. If this were not the case, perhaps, the consensus on rebalancing would give way to divergent views on the proper role of finance in developing manufacturing.

 Green manufacturing is heralded by politicians of all stripes as a manufacturing sector ripe for advancement. Blythe Masters, global head of commodities at JP Morgan, claims: “You can’t have a successful climate policy” – nor, by implication, a successful green manufacturing sector – “without the heavy, heavy involvement of financial institutions.”

 Precisely how heavy and in what form are debates that are being played out on both sides of the Atlantic, particularly in deliberations over carbon trading. Green manufacturers will require capital and ability to manage risk, especially around the price of carbon. These requirements create important roles for financial institutions; no matter what exact form these carbon trading mechanisms take.

 Given the significance of these mechanisms, the relative lack of protest and comment on the highly disappointing European Union emission trading scheme (EU-ETS) by British politicians is as depressing as it is deafening. We are more likely to be treated to glib remarks on the sexiness and potential of biosciences and such like. But, we are unlikely to be told that it is no coincidence the world’s most successful biosciences industry is found in the country – the USA – with the largest venture-capital industry. And we certainly shouldn’t hold out any expectation that the policy implications for British industry of this will be unpicked. Yet, it is this kind of thinking which needs to be spelt out if politicians are to move beyond broad-brush commitments to rebalance our economy.

 The failure, until now, of politicians to move beyond such commitments creates an opening for Labour leadership contenders. The Milibands et al could define this terrain and, in so doing, provide part of the answer to the biggest and most pressing of economic questions: how will we generate the economic growth that will make the deficit more manageable and spread jobs and hope to our communities? Rebalancing the economy sounds good, and in a basic sense is good, but it is an incomplete response to our economic growth challenge. In addition, we require the necessary policy means for the creation of a financial sector that will do most to aid our wider economy, particularly manufacturing.

 It’s easy for Labour politicians to feel good about the provisions of the Climate Change Act 2008 and for Labour activists to cheer wind farms and similar. But without the regulatory infrastructure that will allow manufacturers, through financial institutions, to adequately manage their carbon price risk, we won’t give ourselves the best chance of meeting the emission targets contained in that act, pioneering more advanced technologies than wind farms and really growing employment in green manufacturing. Labour would be best served by a leader who understands that if we want to help manufacturing, we shouldn’t simply bash bankers, but seek to create bankers best able to serve manufacturing – and who is able to convincingly tell their party and country how they would do this.

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]

The video of the Spectator/Threadneedle Awards is fun and worth watching. It features a classy speech from Politician of the Year, Peter Mandelson, who said that he shares with Boris Johnson, who presented him with the award, ”a driving ambition to do all we can to undermine David Cameron.” This brought roars of protest from Boris. Perhaps, as Lord Mandelson said, these protests were a little too loud, not least given what could be read into the sub-text of the speech which Mayor Johnson had earlier given on the same stage.

He referred to wisteria in the midst of a riff on MPs expenses. Now just as clearly as porno video equals Mr. Jacqui Smith, so wisteria brings to mind the leader of the opposition. May be, I’m just being paranoid on Dave’s behalf, but, quite possibly, Boris is doing his bit to try to keep alive this unfavourable image of Dave.

Should Boris fulfil what we are to take as his long term ambition, to succeed Dave as Tory leader, the bedrock of his support is likely to come from those Tory MPs who were annoyed by Cameron’s alleged double standards and poor handling of the MPs’ expenses scandal. So, Boris’ wisteria reference is a shout-out to those MPs; a not so subtle “I am your man.” Yes, somewhat less mega-phone and more subtle than the same such shout-out that Boris gave at Tory Party Conference with his remarks on the Lisbon Treaty. But a shout-out, nonetheless. And a rubber ring for himself; a rubber ring to carry his not inconsiderable girth from where he is now (City Hall) to where he wants to be (Number 10 or at least the Tory leadership). 

At the award ceremony, the Newcomer of the Year, Ken Clarke, described where Boris is now as “the world of buses and bus lanes.” When his current station is put like that, despite affording him the third largest personal mandate in Europe after the French and Portuguese presidents, it is easy to understand why Boris grasps for that rubber ring. After all, any man using a bus over the age of 25 is a failure.

The stage of Brixton Academy has been the pinnacle of many careers but on that stage last Monday night, for People’s Question Time, Boris didn’t cut the figure of someone who has achieved any kind of pinnacle. Indeed, it often seemed so much of a chore for the Mayor. Tony Blair and Ken Livingstone, unlike Boris and Dave, share little in terms of background and inclinations, but when Ken was Mayor they formed a great working relationship. This might be because Blair was confident throughout that Livingstone wasn’t after his job and had achieved his pinnacle. The same can’t be said of Boris and Dave.  Probably the battle of Waterloo was won on the playing-fields of Eton, but a war that began on those same fields has many more bus lanes and rubber rings to travel before it reaches its (inevitably bloody) conclusion.

Some political realities need to be acknowledged if Labour is to move forward. These are:

First, Gordon Brown will lead Labour into the next General Election. The reaction (or, at least, non-resignation) of other leading figures in the party - particularly, Peter Mandelson, Alan Johnson and David Miliband – to James Purnell’s resignation finally confirmed this.

Second, as I have previously said, Labour has three options: 1.) Back Brown, 2.) Replace him, 3.) Allow him to continue without backing him. The third of these is the worst for Labour and choices of Mandelson et al have closed off the second. Thus, the first must be genuinely embraced by the party.

Third, in yesterday’s Guardian ICM poll, Labour only out-scores the Tories on one issue – better protecting public services.

Fourth, as Liam Byrne’s press conference earlier this week illustrated, Labour’s current line on future spending is not the strongest in the world.

Fifth, this is recognised by people. A new poll  on Politics Home finds that only 16 per cent of voters think that Labour is being most honest on tax and spend, behind the Tories on 37 and the Lib Dems on 28. Not even a majority of Labour supporters think Labour is being straighter on this than other parties.

Sixth, the government genuinely is providing real help now, as the tag line goes, to prevent this recession producing the kind of build up of youth unemployment that recessions under the last Conservative government witnessed in the 1980s and 1990s. Martin Bright recently noted: “There are still some potentially promising ideas knocking about. The Future Jobs Fund, which provides a subsidy for employers willing to take a 14-18 year old at risk of long term unemployment, and the Young Person’s Guarantee, which promises to find work for young people unemployed for over a year, are both attempts to tackle the unemployment tsunami about to hit Britain. The Graduate Talent Pool proposed by DIUS to match graduates to internships is the seed of a good idea and the proposals from the Communities and Local Government department to fill empty high street businesses with creative ‘pop-up’ shops and could also help”.

Sixth, the good work  on youth unemployment lacks co-ordination. Bright goes on to say: “Without coordination, (these policies) risk becoming just another set of eye-catching initiatives … One of the most useful jobs to be carried out by Tessa Jowell in the Cabinet Office or Lord Mandelson in his new Department of Everything would be to coordinate all the work being done to stimulate employment and tackle the recession”.

Ninth, while the economy undoubted still faces major challenges, it has started to grow again. Labour’s activism on tax and spend must have contributed towards this improvement.

Tenth, the British public are far from sold on David Cameron, as Michael White notes.

So, where does this leave us?

The first and second points tell us that Labour has no sensible option but to unite behind the architect of the 2005 General Election campaign: Gordon Brown. A key theme of this campaign was Labour investment versus Tory cuts. The third point might suggest that this strategy should be deployed again but the fourth and fifth points imply that this would not be credible. Instead, the government should build out of the support that it enjoys for protecting public services – the third point – to create support for what can be achieved through public services.

Our story on public services shouldn’t be about how much we invest in public services but about what we can achieve through public services. Our politics and policies should be focused on outcomes, like reduced youth unemployment, not inputs, which discussions about investment always constrain us to. Let us make a make a mission of the outcomes that we prioritise and let us be defined in these terms. The spending choices that we make should reflect these priorities, re-enforcing them both in the minds of Whitehall and the public. Which of our missions, for example, is satisfied by persisting with ID cards? The spending commitments that are not central to our missions should be subjected to the strongest scrutiny.  

The upturn in the economy – the ninth point – is beginning to give a taste of the outcomes that might be achieved when government targets its resources and energies on well-defined objectives and makes missions of them. Youth unemployment must be a mission. Thinking of the other things that should be missions makes me think of something Neal Lawson said recently:

“The story of the last thirty years has been the transfer of risk from the collective, the social and the community to the individual”.  

The risk of being left on the scrap heap of unemployment is not a risk that anyone, least of all the young, should have to face alone. The risks of growing old in an ageing society will be far larger than they should be for far too many people unless we collectively decide to make a mission of improving health and social care for the elderly. The risks of climate change are massive for all of us and can only be tackled by any of us on a collective basis.

This is the stuff of a positive case for government. It is in setting out this positive case that Labour’s best hope for the next General Election resides. This is a different kind of strategy from the 2005 campaign but one which needs to be embraced. It wouldn’t pretend that government can provide the answers to all our problems – this country still needs to have a more mature conversation about what government can and cannot do and what the responsibilities of citizens are and are not - but it would provide a coherent basis for Labour building upon the success which the beginnings of a turn-around in the economy represents. 

The anti-government reaction of the Conservatives to the banking crisis (e.g. opposition to fiscal stimulus, etc) suggests that they may be wrong footed by a strategy predicated on a positive case for government. From George Osbourne’s economic policies to Iain Duncan-Smith’s social policies, they still see government as more problem than solution. Let’s start, however, by building a positive case for what we can use government to achieve, rather than erecting unconvincing dividing lines on spending. 

The trend detected by Lawson implies that the Conservatives’ anti-government tendency is out of kilter with the times. This may explain – the eighth point – the fact that the public remain to be sold on Cameron. Labour successfully presenting a positive case for government over the next year may make him more politically vulnerable than he now appears.

I departed the UK for a family holiday in the US the morning after the night of James Purnell’s resignation. I have been desperately trying to keep up with events in the UK, despite the time difference, family obligations and the lack of Adam Boulton. But, in effect, though the much anticipated meeting of the PLP is still to happen, my sense is that Labour’s fate was sealed before I boarded Virgin Atlantic. The Cabinet’s failure to follow Purnell’s lead means that Gordon Brown remains Labour’s destiny. 

Throughout the debates about Brown’s leadership, I have always maintained that Labour has three options: 1.) Back him, 2.) Replace him, 3.) Allow him to continue without backing him. The third of these options is the worst for Labour but the choices made by key figures in the Party over recent days have placed us definitively with this option, while effectively closing off the first of these options and not quite reaching the second. So, the transatlantic view from Virginia Beach is that of a “wounded elephant” – as a Labour MP described Brown to the Guardian – continuing to lead Labour.

The Conservative performance in the local and European elections wasn’t awfully impressive – less than 30 percent of the national vote in the Europeans. Yet, David Cameron will delight at facing off against this “wounded elephant”. Labour’s Cabinet might lack a killer instinct but Cameron certainly doesn’t. He will relish the prospect of savaging a beast now wounded by blows inflicted by his own comrades.

Labour’s weakness, more than Cameron’s or the Conservative’s strength, opens up the possibility of a victory at the next General Election that will keep the Conservatives in government for a generation. Given this, why have senior members of the Labour tribe chosen to leave us in the third of the worlds described above?

We are told that this is a Blairite resurrection. Ken Livingstone has obliged Number 10 by beating this drum. But it is a funny kind of Blairite resurrection that is beaten off by Peter Mandelson – and how curious it is that Livingstone and Mandelson, once great foes of Brown, should join ranks with an ex-Tory MP, Shaun Woodward, in being Brown’s most reliable defenders. The terms Blairite and Brownite are now as hackneyed as they are meaningless and do not help us understand the events of recent days.

There is no ideological or policy divide between those called Blairites and those called Brownites, as Europe divided the Tories in the 1980s or nationalisation separated Bevanites from Gatskellites in the Labour Party of the 1950s. There are, however, those that doubt Gordon Brown’s capacities as a leader and communicator – in various senses, this was the message of resignation statements not just from Purnell but also from Caroline Flint and Jane Kennedy – and those that do not.

To these resignations Jon Cruddas has retorted: “What I don’t understand is that there are all these resignations and yet there is no difference in policy. Everybody is taking their bat home with them, but they are not staking out different ideological or policy-based ground”. John Harris has dubbed it a “confused rebellion” for the same reason.

But when Labour has suffered its worst result in a national election for 99 years, is it necessary to have a policy difference with the leadership to call into question its effectiveness? Isn’t it enough to say that our message is being lost by the messenger? 

Cruddas and Harris want to say that policy changes are required because they desire policy changes. But, while there are certainly important policy debates to be had within the Labour Party, it seems easier to find evidence in the local and European elections for deficiencies in our ability to communicate our message than in the content of the message itself. 

Slogans that are redolent of past General Elections – Labour investment versus Tory cuts, etc – no longer cut any ice in a much changed fiscal and economic context. The public may not understand the full details of this context. (Who does?) But they sense – and they sense rightly – that the real debate isn’t about investment or cuts but about how much cutting and what kind of cutting. The wisdom of the crowds is too great for the wool to be pulled over their eyes for long. 

We need to be more imaginative in our policies – as I said, there is certainly much room for debate about Labour Party policy. But, even more crucial than this in averting complete and utter disaster at the next General Election is an increased capacity to be more straight-forward, empathetic and emotionally intelligent in how we communicate these policies. Peter Kellner sees in the local and European elections an indication that Labour has lost the ability to persuade ordinary voters that we are on their side. This is both the tragedy of these elections and the challenge that they pose for the next general election. 

John Prescott was scathing about the European campaign. It seemed to me like a sorry hangover from the 2005 general election campaign, which was itself a little brother to the 2001 general election campaign. Massively improving upon this seems more important than policy revisions, irrespective of who is our leader, though my instinct now is that our leader will remain the architect of the 2005 general election campaign: Gordon Brown. However, what worked in 2005 will not work now.