UK 

Labour in crisis must change direction

HubMP2012

DECEMBER 30, 2024

By Dave Levy

More in Common have run a poll on behalf of the Times, reporting that if there were an election tomorrow, Labour would lose 200 seats, including those of Angela Rayner, Yvette Cooper and Wes Streeting. The Independent reports that they would be joined by Ed Miliband, John Healey and Briget Phillipson.

There can be little doubt that this government has had a poor start. Its decisions to cut pensioners’ winter fuel allowance, and to fail to pay compensation to the WASPI women have not gone down well. While the changes to Inheritance Tax (IHT) have provoked massive resistance from rich land owners, pensioners and contributors to private defined contribution schemes have not yet cottoned on to the impact of the IHT changes proposed in the budget.

Labour’s plan is as it’s always been, to grow the economy and use that growth to fund improvements in services. There are huge questions about whether Labour’s growth plan is sufficient, particularly while they seek to remain outside the European Union’s customs union and single market. It can also be questioned whether construction and financial services can really be the engines for growth that can or will be shared with the population at large. While the budget was better than expected, and better than threatened, the failure to alleviate the financial crises in local government and higher education is storing up a problem for the future.

One of the reasons the Democrats lost in the United States earlier this year, is that while, they pursued policies that led the economy to grow, they took their eye off the ball on the questions of inflation. Many voters were poorer due to a stagnation in real earnings. The lesson to be learned is that growth is not enough, it has to be evenly shared and real wages/earnings need to rise. This means the government needs to regulate and tax profits, rigorously pursue the New Deal for workers and increase expenditure on income transfer programmes targeted at increasing the real incomes of poor families, that is, state pensions, income support allowance, child benefit, and the so-called welfare cap should be removed. This will also have the macro-economic benefit that consumption, that is, aggregate demand will rise.

Politically, the UK and Labour have the frightening example of Germany, where a timid Social Democratic party, forced into a coalition with an ultra-neoliberal Liberal Party, failed to deliver a better life to the German electorate, partly because they didn’t try. They are likely to lose the coming election, although that does not mean they will necessarily be out of Government. In Germany, the AfD are currently polling in second position, with the SPD third. The MiC poll suggests that Reform UK will come third, replacing the Lib Dems. Also across Europe, we see a decline in support for the Greens as combating climate change is seen as a further cause of the cost of living crisis.

The current Labour leadership are completely unequipped to combat the growth of ethno-populism and also underestimate its organisational capability and internet presence, as shown by their ridiculous and cowardly position on the threat of foreign funding of Reform. Its strategy of appealing to Tory voters to switch to Labour did not succeed; dissatisfied Tories on the whole voted Reform or in even larger numbers stayed at home.

The big problem Labour faces is it designed its manifesto to win the election, not run the country. It’s still triangulating and refuses to recognise that triangulation reinforces and legitimises the politics of their opponents. This is particularly so on the issues of immigration and racism.

Some are suggesting that a change of leader is needed. What’s needed is a change of direction that genuinely puts the country first. It remains ‘the economy stupid’, but the economy is real wages/incomes for the majority of people. We have been waiting a long time.

https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/averageweeklyearningsingreatbritain/february2024. Contains public sector information licensed under the Open Government Licence v3.0.