From the TUC

Labour needs to understand the electorate again

22 May 2010, by Guest in Politics

This post is taken from my speech to Progress‘ annual conference today. You can read a full copy of my speech on the TUC website.

Elections should be great debates about competing visions and priorities, when parties show they understand peoples’ real lives and are on their side, both in their daily struggles and long term dreams. But at times during this campaign, Labour seemed to have lost confidence in its core values, with its passion for change worn down by the cares of office.

I’ve always been a great admirer of the way that, in the run up to 1997, the Party put together a winning electoral coalition. It clearly understood the country better than the outgoing Government and had policies that spoke to peoples’ concerns. That landslide was a huge historic achievement.

The problem is that what went wrong for Labour in the run up to this election was completely different to what kept it out of office in the 1980s and 1990s.

While Gordon Brown in particular deserves huge credit for his global leadership and decisive action to deal with the crash, the downturn posed fundamentally new questions about how our economy can deliver both prosperity and social justice. The Party failed to develop a compelling new vision.

It was unable to rethink decisively its approach to the City, leading one bank to say that Labour was the Party that would do the least to regulate finance if it won the election. It was too timid with takeovers at a time when the stark difference between financial engineering and industrial sense had become clear and threatened jobs.

Despite increasing public anger at the gap between top pay and the rest, other parties looked tougher on executive pay and more interested in a living wage – and it’s the new Government that has asked Will Hutton to look at limiting the ratio between pay at the top and bottom, if only in the public sector.

While the most recent Pre-Budget Report and Budget were progressive, no-one put them into a coherent package of moving to a permanent fairer tax system – instead the increased top rate tax was seen as rather unfortunate, and probably temporary. Rethinking the approach to Capital Gains Tax, overwhelmingly used as a tax break by the most wealthy, was left to other parties.

And what links all those policies is that while you could argue they may not have sent the right signals in 1997, they’re all popular today. Boldness and radicalism would not only have been right but arguably would also have paid real electoral dividends.

This is not to say that the Labour Government did not have tremendous achievements to their credit. On diversity and social issues they’ve a fantastic record – and what’s more moved the centre ground so that the new Government will do little or nothing to challenge them.

But self-imposed constraints meant that ministers ended up keeping quiet about popular policies that resonated with voters but which did not fit with that 1997 narrative. To take just one example, voters saw tax credits as a present from the taxman, not the act of a reforming government, because Labour was still nervous talking about reducing inequality.

It is becoming commonplace to say that Labour had stopped listening. But that’s wrong. It is not that it wasn’t listening – it was that it didn’t know what to do with some of the things that it heard. And it also meant that Labour had stopped talking – at least in language that made much sense to ordinary people.

The Party was right to say that it needed a new appeal to middle Britain in 1997. But since then it has allowed its opponents to redefine middle Britain not as what the Americans call the middle class – i.e. those on middling incomes, and that’s about £22,000 a year today – but as the professional middle classes.

But the real middle Britain – middle-income Britain – has had a tough time. Their pay has not kept up with rising prosperity. Their jobs are less secure. They think they have lower status then their parents. Many of their pensions have disappeared. They feel ignored and left out.

They are not poor, so much of the talk of relieving child poverty passes them by, but they are struggling. They often kept up their living standards by borrowing, and are now suffering from the credit crunch. Many get tax credits, yet probably don’t know why.

It is not surprising that many in this group – and those below them who are having an even tougher time – complain about immigration. But immigrants haven’t taken all the council houses – the problem is that there isn’t enough social housing. The statistics show that migration has had a minimal effect on wages, but the growth of agency working and outsourcing has.

So yes, we should talk about immigration and acknowledge peoples’ fears, but we need to understand the root causes of the complaints that lie in the changes in the workplace, the failure to build social housing and the growing gap between middle earners and those at the top.

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