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One Nation Labour

By Tristram Hunt MP

It is a great privilege to be here in Norwich. A city of contrasts. A city of two seasons: Winter and August. A city with one of the largest number of places of worship in the country; and the highest proportion of secularists. And a city with a proud history of radicalism surrounded by the deep, dark sea of true blue Norfolk.

It is a pleasure to be amongst friends and a tremendous honour to be giving this year’s John Garrett memorial lecture. John Garrett dedicated over 50 years of his life to serving the Labour Party, as a member, campaigner, councillor and parliamentary representative here in Norwich.

Save for a brief interlude after the 1983 election, he made the marginal seat of Norwich South his own, bucking the national trend of Labour’s ‘Southern Discomfort’. Indeed, in the early 90’s John was put in charge of a campaign to overcome our lack of representation in the South and the East, laying much of the groundwork for our success later that decade and providing a political message so essential for the Labour Party today, if we are to return to power.

For today we face a similar challenge. Not least here in Norwich, divided asunder between the coalition parties. But with Jessica Assato in Norwich North and Clive Lewis contesting John’s old seat in the South of the City, we have two outstanding candidates that I know can return the city to Labour and build on John’s legacy.

Perhaps however, John is best remembered as a reformer of Parliament and the structures of government. Such was his dedication to improving Parliament’s ability to hold power and the executive to account that his obituary in The Independent called him “the most effective parliamentary reformer of his generation. In an age when Government dominated Parliament to an even greater extent”, it continued, “John Garrett stood against the tide”.

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Alongside his reforming brother-in-arms, Lord Sheldon, then the Labour MP for Ashton-under-Lyme, and the Tory Grandee, Norman St. John-Stevas, Garrett was instrumental in the creation of Departmental Select Committees. In doing so, he struck a blow against the concentration of executive power that I think only now is Parliament truly beginning to harness to its full potential.

In 1983 he and Sheldon also liberated the National Audit Office from executive control thus lionising the doyen of Select Committees, the Public Accounts Committee. Without Garratt we might never have enjoyed the rarefied pleasure of watching Margaret Hodge skewer her corporate fat cat victims.

To some extent however, this technocratic, seemingly innocuous reform, captures the essence of Garrett’s political career. He had a rare ability to understand how the nuances of managerial techniques and fine-grained legislative tweaks could radically change the performance of government and the accountability of power. Not for nothing did Gerald Kaufmen - who it should be noted was not a natural ally of John’s during the Labour Party’s most internecine period - describe Garrett as ‘the man who knows more about managerial techniques for the control of public expenditure than anyone else of his generation’. To say the least, the Labour Party and indeed the country could benefit greatly from his expertise were he still with us today.

However, I want to focus today upon a forgotten part of John Garrett’s legacy. Because to trawl through the columns of Hansard is to discover that John was also a political prophet. Indeed it was John who, peering deep into the intellectual future of the Labour Party, first anticipated the very concept I have come to talk about tonight: One Nation Labour.

And so, in March 1978, discussing the Callaghan government’s industrial policy on the floor or the House of Commons, John told Parliament that “we need a new agency of government to research and analyse where we are going as a nation, a partnership between Government and big industry in attempting to achieve national objectives and the involvement of workers in planning their future livelihoods… There is in fact much in the old one-nation Conservative tradition which would support a systematic policy for creating jobs and involving workers in the decisions that affect their lives. But that old Conservative culture has, of course, been swamped by the new Right-wing Conservatism of the present leader of the Conservative Party.”

Since then little has changed in the Conservative Party. David Cameron continues to fight and lose a rear-guard battle against the Thatcherite, neo-liberal agitators on his backbenches (with UKIP nipping at their heels). And the

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task of uniting the nation has once more fallen upon the Labour Party. Like Garrett before him, Ed Miliband has realised that there are elements of the old ‘one nation’ conservatism that are not antithetical to our mission. I hope this evening to lay out some of his thinking.

THE ONE NATION CONTEXT

There can be little doubt now that Ed’s conference speech in Manchester last autumn galvanised the party and stimulated thinking. With that single phrase ‘One Nation’, he was able to offer a critique of the existing social order under the Tories, whilst simultaneously offering the hope of a better one under Labour. Yet to truly grasp the nature of this argument we need to place it and Ed’s speech into context.

In particular, it must be understood in relation to three very important prior interventions of his.

First, there is the concept of the ‘Squeezed Middle’, which articulates the problem that will define the next election: arresting the decline in living standards for low and middle earners. This is not a sudden difficulty. Median wages for this group have been flat from 2003 right through to the recession.

Second, there is his persistent and determined call for a more ‘Responsible Capitalism’. This provides our aspiration and our destination, describing the vision of the fairer, more equal society we wish to build.

Finally, there is the idea of ‘predistribution’, which outlines the Labour Party’s new political methodology: our process of moving from Squeezed Middle to Responsible Capitalism.

Predistribution is, in the words of Joseph S Hacker, the Yale Professor of political science who first coined the term, ‘the way in which the market distributes its rewards in the first place’.

I will say a little about all each of these ideas and how they relate to ‘One Nation’ later.

But first let us begin with perhaps the most important context of all: the historic one.

CATCHING THE TORIES BATHING

The phrase ‘One Nation’ is stolen, as Ed generously acknowledged at conference, from Benjamin Disraeli, arguably the Conservative Party’s most

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celebrated champion of the aspirant class. It was first expressed not, as is sometimes thought, during his infamous 1872 brandy-soaked marathon speech at Manchester Free Trade Hall, but when, as an out-of favour young politician and jobbing author, he published his 1845 manifesto-cum-novel Sybil or the Two Nations.

By then Disraeli was the de facto leader of the fledging Tory ‘Young England’ movement, which argued for a return to the social conservatism and duty of pre-industrial England. Sybil became a distillation of his and their political philosophy.

In it he lambasts the greed and division of the great 19th century industrial cities, such as Manchester, Birmingham and the first industrial city of them all, Stoke-on-Trent. There could now exist, he protested, within one city two entirely different nations, ‘between whom there is no intercourse and no sympathy; who are ignorant of each other’s habits, thoughts and feelings, as if they were dwellers in different zones, or inhabitants of different planets’.

These two nations were ‘formed by different breeding’, fed by different food, and governed by different laws. They were ‘the Rich and the Poor’.

Of course Disraeli’s indictment was far from a lone voice. Plenty of other writers in the mid-19th century took up similar themes of inequality and urban division.

In Elizabeth Gaskell’s Mary Barton, the anti-hero John Barton was similarly perplexed by the gulf between ‘rich and poor’. ‘Why are they so separate, so distinct, when God has made them all? Is it not his will that their interests are so far apart? Whose doing is it?’

The Canon of Manchester, Richard Parkinson, wrote of his parish that ‘there was no town in the world where the distance between the rich and the poor is so great’. Indeed, there was far less personal communication between the master cotton spinner and his workmen than between the Duke of Wellington and the humblest labourer on his estate’.

Then of course there was the somewhat more scathing critique of Marx and Engels’s ‘spectre’, stealthily haunting Europe and decrying how mass industrialisation ‘left no other nexus between man and man than naked self-interest, and callous “cash payment”.

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This was an era rich in intellectual ferment, when Gothicism, Romanticism, Socialism, Liberalism, Non-conformity and a host of competing ideas carved out the perimeters of the Victorian civic tradition.

And as we approach Victorian levels of inequity today, perhaps it is unsurprising that we look to this era for political inspiration.

But the question remains why Disraeli? Why One Nation? Why, given the intellectual riches on offer, should Ed choose, as Disraeli himself might have put it, to catch the Tories bathing and walk away with their clothes?

Because, I think, on many levels, Disraeli’s analysis chimes with our own. Not least when, responding to Queen Victoria’s 1851 gracious address, he famously said “This too I know. That England does not love coalitions.”

Indeed, a proper understanding of Disraeli shows that in certain extreme epochs it is possible to be both conservative and radical. We are currently enduring one such epoch.

RADICAL AND CONSERVATIVE

Despite finally clambering out of recession, we remain in the eye of a volatile and unpredictable economic storm, brought about by excessive faith in the economic orthodoxies of neoliberalism. It is natural therefore to look to Disraeli, who was also motivated by contempt for what he saw as a dangerously skewed political economy.

In both Sybil and his earlier novel Coningsby, the target of his ire was the laissez-faire, night watchman state propagated by the ‘Manchester School’ of liberal conservatives. Rather than the barren exchange of the cash-nexus, Disraeli stressed the ties that bind; he believed in a moral conception of society beyond the narrow confines of the marketplace.

This attitude is typified by Stephen Morley, the radical agitator in Sybil, who roundly condemns the ‘great cities’ where “men are brought together by the desire of gain. They are not in a state of co-operation, but of isolation, as to making of fortunes; and for all the rest they are careless of neighbours.”

The ‘Two nations’ and the ruinous condition of the urban poor of industrial England were the social costs of this excessive desire. But they were a symptom of an entire model of capitalism that was failing.

Though he does not – at least I think - intend to replace Neoliberalism with a full ‘Young England’ vision, nor aim to restore the lost ordered world of pre-

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Reformation England, Ed Miliband does share this one vital insight with Disraeli.

Indeed, it is one of the fundamental lessons we must learn from our recent experience of Government.

That is, that there is only so much you can do to improve the conditions of the poor without also changing the underlying structure of the economic model itself.

Yet there is another reason why it is possible to be both radical and conservative in today’s political context. Moreover, it is an insight that united Disraeli with his own leftist contemporaries, such as that irrepressible proto-socialist, John Ruskin. That is a revival of the old left-wing argument that everything of value is not reducible to price, nor measurable in pounds and pence.

As Ruskin wrote in his 1860’s essay ‘Unto the Last’: ‘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 depend 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.’

Ruskin’s critique was one that Disraeli, with his deep scepticism towards the utilitarianism of 19th century liberalism and his kindred distaste for the Manchester School, would have rallied around.

But even now it has lost none of its force. Today the pace of change wrought by globalisation has created a sense of loss, of dislocation, and even of anguish in many of our poorest communities.

Yet as Jon Cruddas, heading up Labour’s policy review has been arguing, the last Labour government failed to understand this sense of loss beyond the most urgent economic terms. Therefore it put itself at risk of collapsing the entire Labour project into an exercise in fiscal transfers.

And arguably at times this was borne out. We appeared to belittle the concerns of those fearful of change, occasionally betraying a contempt for

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their desire for stability, order and security within their lives. We must learn from this experience; learn the lessons of Ruskin and Disraeli.

Because they are not lessons that the Coalition, eagerly privatising every public good for which they can find a buyer, are capable of learning. The principles of the Beveridge Welfare Settlement are being slowly eroded. And the public realm, which the last Labour government spent 13 years rebuilding, is being dismantled.

In such a context, a commitment to preservation, to conserving that which we already have can also become one of radical resistance. It is this terrain I believe the ‘One Nation’ rhetoric boldly seeks to capture.

LABOUR’S ONE NATION

But there is one final important reason why the ‘One Nation’ idea can be both conservative and radical. That is, despite its long lineage as a phrase in the popular political lexicon, this is the first time it is being spoken by Labour lips – save of course, for those of John Garrett.

Because when Ed gave his speech in Manchester he also offered a clear and renewed commitment to the party’s historic crusade of lifting the life chances of the poor. On this he was absolutely unequivocal: inequality matters. Too great a distance between the two nations harms social cohesion and undermines our sense of solidarity, impoverishing us all.

And there is a marked difference here between our motivation and that of Disraeli. His was an entirely instrumental argument about the damage inequality was causing his society. In this sense his argument is similar to that put forward by the best-selling work, The Spirit Level – it is an argument that a more equal society would be a better functioning society. It is not a political or moral argument for the inherent value of equality.

But our mission is not one born of paternalistic duty or out of a sense of noblesse oblige. Long debates about abstract political values can often be unhelpful and distracting - none less so than defining equality, one of the most enduring questions in the history of political thought. Yet suffice to say that the Labour movement has a far deeper connection to the importance of equality as an idea with some value in and of itself.

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This may matter less in the profoundly unequal society in which we find ourselves today. Nevertheless embedding ‘One Nation’ firmly within the historical rhythms and more equal traditions of the Labour movement profoundly radicalises the idea.

Whilst they lie, discarded by bathing Tories, the ‘One Nation’ clothes may be conservative. But after Ed has walked away with them, they are authentically Labour.

A ONE NATION POLITICAL ECONOMY

Since his 1956 magnum opus The Future of Socialism grounded the concerns of democratic socialism primarily in equality as opposed to public ownership, it has been fair to label the dominant strand of Labour political economy after Anthony Crossland.

This ‘Crosslandite’ model asserted that the best way of advancing social justice is through accepting a relatively untrammelled version of free market capitalism and redistributing the proceeds of its ‘perpetual growth’ to fight injustice.

Following the 2008 crash, its central claim, 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. I think we all know now that ‘boom and bust’ has not been ended. Across Europe and the world social democrats now face the same question. What do we do now that the money has run out?

But this political economy, stretched to its limits in the New Labour years, had run its course long before 2008. Because the truth is that the structural problems within our economy are not confined to the deficit. The wealth generated by the unprecedented growth prior to the crash simply did not trickle down to ordinary people. Living standards began to stagnate from around 2003.

Furthermore, as the Resolution Foundation has revealed in its Commission on Living Standards, given the depth and length of this recession, living standards will not reach their 2001 levels until 2015. The ‘Squeezed Middle’ is a political reality and it is one that is here to stay for the foreseeable future.

Our old economic model had already begun to let this group down. Therefore, it will be similarly inadequate in addressing the problem in 2015.

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The ‘Croslandite’ model is insufficient too in delivering on our promise to build a fairer, more responsible capitalism. It lacked and continues to lack the ability to stand in a critical relationship with the way in which the market concentrates existing distributions of power and inequality.

Put simply, it prevented us from distinguishing between different types of capitalism and growth, unable to make the kind of economic moral judgements demanded by Ed Miliband’s ‘One Nation’. Not all capitalisms are the same. And not all growth is good. We need a new ‘One Nation’ political economy.

It is particularly important that we are explicit about growth. A return to growth – where we mean the same growth that became disconnected from rising living standards – simply will not suffice. We need growth that is socially fairer, reduces inequality, delivers securer work, is more environmentally sustainable and, above all benefits all regions not just the City of London.

This regional dimension to a One Nation Economy cannot, I think, be understated.

Between 2003 and 2008 disposable income fell in every UK region outside of London. Meanwhile, though we are used to hearing how the North and the Midlands have become overreliant on the public sector for economic growth, what is all too frequently forgotten is just how much London and the South East are locked into a dependency on state infrastructure spending, masking the true cost of doing business. Latest figures show that the South-East region absorbs over 87% of capital spending on transport with £27.3bn committed to London alone. This comes at a cost to other parts of the UK: figures show that transport spending is £2,731 per head in London compared to just £43 here in East Anglia. Uniting these two nations will be every bit as challenging as uniting ‘rich and ‘poor’.

That is why Ed’s recent announcement on creating a network of regional banks around the country, responsible for providing capital to businesses in their area is so important. Such institutions have proven extremely influential in driving regional growth in Germany and could help provide the solution to one of the most pressing structural problems within our economy.

Finally, for its remarkable capacity to drive productivity growth through innovation; its ability to boost exports that can reduce our enormous trade deficit; and its ability to produce sustainable growth in areas where we most need to spread wealth, I think it is inevitable that a ‘One Nation’ political

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economy must involve a shift in focus away from financial services and back towards manufacturing.

However, there is a third and final way in which our old political economy is lacking. It is unable to offer the basic question that must guide the direction of Labour Party policy through these tough times. That is: ‘How do we change society in a restricted economic climate?’

PREDISTRIBUTION

It is this question that makes the last idea in Ed’s trilogy, predistribution, perhaps the most important for us all to grasp.

Any political party that fails to answer this question can forget about winning the next election. Indeed, such is the scale of the economic challenge we face in the next ten to twenty years, that I do not think it is an exaggeration to portray answering this question as an existential challenge – for all political parties.

But perhaps it is when we begin to look at a tax and benefit system that the fundamental flaws in our old political economy are most starkly revealed.

Because whilst our current society is scarred by inequality this is certainly not because insufficient concern was shown towards it in the New Labour years. Far from it.

Indeed, as OECD statistics show, New Labour’s legacy is a tax and benefit system that redistributes at least as much as the famously egalitarian social democracies of Scandinavia.

Rather, the reason why the UK still has the seventh highest levels of income equality out of 34 OECD countries is that it begins from the fourth most unequal starting point. Its levels of redistribution cannot overcome its predistribution, or the way the market distributes its rewards in the first place. Put bluntly, we redistribute more but the underlying structure of our economy is more unequal and unfair. The reason for this is clear. As Hacker puts it: ‘Policies governing financial markets, the rights of unions and the pay of top executives have all shifted decisively in favour of those at the top.’ Not only is this reflected in levels of inequality, but also in the percentage of wages as a share of national income, which we have seen steadily decline over the last few decades. This trend must

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be reversed if the squeezed middle are to see their living standards rise once more. Of course we should be proud of our redistributive legacy and the fact that tax credits helped to take a million children out of poverty. And redistribution will obviously remain part of the Labour way of delivering fairness. But we need predistribution too. We need to ensure that economic power and the proceeds of growth are more evenly spread throughout the economy before redistribution, reforming the underlying structure of the economy rather than just ameliorating its inherent inequality. It is about removing the need to top up low wages with tax credits in the first place. Furthermore, strategies that rely too heavily on redistribution often fail to capture the central importance of power: that without the power to use them, resources are useless. To characterise, crudely, there is no point increasing peoples’ entitlements if they lack the capability to access basic services or feel marginalised by society. However, the history of our movement is that once it acquires access to the levers of state, it often forgets about all other apparatus of engendering change. In 2015, a comprehensive statist approach, in terms of redistribution and public sector investment, will neither be fiscally possible nor politically credible.

This certainly does not mean that state action has no place on the predistribution policy menu – far from it. However, it must be focused on smart, inexpensive interventions that have the power to reshape the existing rules of the market, rather than flashy new ways of spending money. This is what the Labour policy review is currently focused on delivering.

It is a task that John Garrett – with his surgical approach to public expenditure - would have been perfectly equipped for. And who knows, perhaps had he lived in different times, the plaque on Princes Street here in Norwich, commemorating John as a ‘Member of Parliament REFORMER’, may also have commended him as a leading ‘PREDISTRIBUTOR’.

THE JOURNEY BEGINS

Britain under the Tories is divided, particularly now that they have retreated into their traditional ‘divide and rule’ modus operandi. As they pit North v South, public v private, and the deserving v the undeserving poor, the task of

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providing unity and offering a story of national renewal falls to us in the Labour movement.

And that is before we even begin to consider the potential divisions between the nations of Scotland, England and Wales.

Building ‘One Nation’ and offering an authentic story of national renewal, at a time of fragmenting identities, political apathy and where the political challenge – for us, bluntly the South – diverges from the main public policy challenge of rebalancing the economy and spreading wealth more evenly will be extremely difficult. Perhaps we saw the tensions of this situation in the by-election campaign in Eastleigh.

With the new Technical Baccalaureate for vocational education, the British Investment Bank, and a regional banking system, I believe we already have some strong signature ‘One Nation’ policies. This year will also see policy review announcements on banking reform, infrastructure, housing, transport, Europe and reform of the energy market. And with the amplified campaign for a Living Wage we are beginning to see the predistribution mindset filter through.

It would be wrong of me to short-circuit the policy review process. But there is much that we can still discuss and consider. For example measures such as putting employees on remuneration committees, establishing a new national body to monitor high pay, and compulsory publishing of executive pay, corporate tax arrangements and company pay ratios, might help us to find new ways of holding unchecked corporate power to account in the same way that Garrett tackled executive power.

Certainly there is a case for a comprehensive investigation into Corporate Governance, to see where we can tweak legislation so that it helps to build what we might call ‘the moral economy’, borrowing historian E.P Thompson’s famous term. For example, there is statutory regulation in Australian Consumer Law to the effect that a person must not, in trade or commerce, engage in conduct that is ‘unconscionable within the meaning of the ‘unwritten law’. We could draw on the best of consumer protection legislation, from the US, Germany, or Australia and feed it into an investigation similar in scope to the 2010 Dodd-Frank act in America.

Clearly, whether it be in strengthening trade unions or moving towards German style co-determination - where managers, shareholders, workers and

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unions, all sit on delicately balanced boards – something that exerts upward pressure on wages must also form part of any predistribution approach.

And a few weeks ago we saw the publication of a very important document in Sir George Cox’s independent review on overcoming short-termism within British Business, commissioned by the Labour Party.

That report contains many interesting recommendations including a commitment to increase the state funding of research; the encouragement of employee share ownership through the expansion of the Share Incentive Plan; and taxation incentives for long-term investment – such as tapered Capital Gains Tax relief – that might begin to strengthen equity markets. Our horrendous reliance on commercial banks for small business lending is a problem that must be overcome.

And certainly our corporate culture is imbalanced towards providing fat dividends to shareholders and excessive executive pay often at the expense of the long-term interests of the business. Anything that we can do to correct this will prove essential in rebalancing our economy.

A ONE NATION MOVEMENT

However, this is only the beginning of the journey. We have a long way to go if we are to realise the vision of a fairer more responsible capitalism and One Nation Britain. And yet I want to finish on a point of qualified optimism.

Because many of the answers to the challenges of our current political context – of globalisation, of fiscally responsible change and of rejuvenating our political culture – can be found within the uniquely Labour contribution to social democracy.

The answer is the movement itself. Because in becoming too reliant on the state as the only means of resisting market outcomes, we have neglected our associationalist heritage as a movement of democratic grassroots activists: our history of co-operatives, mutual societies and trade unions. It is time to rediscover this heritage. This begins with strong local Labour Parties and responsible Labour councillors where we are in power. And where we are not in power we need to select Parliamentary candidates early to give local campaigning a focus. In Norwich I am pleased to see that this has already happened. In Jessica Assato we have one of the Labour Party’s most formidable on-the-ground campaigners and in Clive Lewis we have somebody with unrivalled knowledge of the local political

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topography. They have every chance of returning this city to Labour and contributing to the building of One Nation Britain. So whilst we are deeply indebted to Benjamin Disraeli for the lucidity of his analysis and can find a common cause with his dream of a Britain united, the energy to realise this vision and transform our communities from the bottom- up is all our own. Tristram Hunt is MP for Stoke-on-Trent Central. His Lecture in honour of John Garrett, MP for Norwich South was given at the University of East Anglia, Norwich, 2013. Political notes are published by One Nation Register. They are a monthly contribution to the debates shaping Labour’s political renewal. The articles published do not represent Labour’s policy positions. To contact political notes, email onenationregister@gmail.com