Tribune, 19 June 1992
Paul Anderson talks to the man almost certain to lead the Labour Party
"I've yet to be persuaded of the merits of a referendum on Maastricht," says John Smith. "It was not our view that there should be a referendum prior to the Danish vote and I don't think the Danish vote changes that as a matter of principle."
The 53-year-old MP for Monklands East is treading delicately, and with good reason. The Danes' rejection of the Maastricht treaty on European union has left its future uncertain and has blown open the debate on the future of Europe throughout the European Community.
Smith's first task as leader of the Labour Party, which he is almost certain to be within a month, will be the difficult one of working out an approach to Maastricht that does maximum damage to the divided Tories at the same time as keeping Labour together. With signs of a potential split inside the Parliamentary Labour Party already apparent, he is understandably keen to keep all options open on parliamentary tactics.
He carefully emphasises both his enthusiasm for greater European integration and his criticisms of the Maastricht agreement.
On economic and monetary union, he favours creation of a single currency and a European central bank. But, aware of criticism of the deflationary effects of an over-valued Deutschmark, he does not rule out a realignment of currencies before monetary union. And he wants the central bank to be subject to stricter political control.
"The exchange rate mechanism of the European Monetary System is not a fixed-exchangerate system," he says. "It's adjustable. A general realignment could occur. Indeed, I rather anticipate there will be a realignment of some kind before we reach the point of decision on economic and monetary union.
"We would have preferred there to have been a more directly politically accountable regime for the central bank," he goes on. "There was a contest between the Bundesbank tradition and the Franco-British tradition, and the Bundesbank model was the decision of the majority "However, there is a way in which we can strengthen democratic accountability and that is by giving Ecofin [the Council of Economic and Finance Ministers of the EC] a much more powerful role in carrying forward the economic policy of the Community. Article Two of the Maastricht treaty includes the objectives of social cohesion, solidarity, full employment and growth. Ecofin should assert an influence in favour of these wider economic objectives.
"Labour is very close to the French socialist government on this. Together with our socialist colleagues, we should be arguing for stronger democratic accountability and for wider aims of economic policy than the bankers would like to see. It's a matter of building up the mechanisms of democratic political accountability as the system evolves." On political union, Smith tempers his belief in closer EC integration with the assertion that he is not a European federalist.
"Federalism is a word that is charged with non-meaning in the European Community I've never been in favour of a European super-state. What we are building in the European Community is not something that's analogous to any existing nation-state."
Europe is not, of course, the only problem that will face Smith as Labour leader, nor is it the biggest. The party has just suffered its fourth general election defeat in a row and its morale is at an all-time low.
Perhaps predictably, Smith argues that there is "no reason for the party to be defeatist at the moment", pointing to the substantial gains made on April 9 and the high calibre of Labour's Shadow Cabinet and its new MPs. But, stung by criticism that he is the "business as usual" candidate, short of ideas and over-cautious, he is equally at pains to emphasise the need for "changes to broaden our appeal". He promises a radical new approach to constitutional reform, a fundamental re-examination of Labour's approach to the welfare state (overseen by a crossparty commission) and, perhaps most important, a reassertion of Labour's claim to the moral and intellectual high ground.
"I'm going to be paying more attention to the philosophy of the party," he says. "I'm a bit of an unashamed intellectual in that respect. I really do think that we've got to win the battle of ideas and take on the Right. We lost out badly in the seventies because we started losing the arguments. I start my politics with a set of moral propositions and I'm not going to hide that in the slightest. The party has got to speak very confidently on this.
The altruism has got to shine through." In line with this, Smith rejects the argument that his redistributionist tax policies cost the party dear on April 9. "I don't retreat an inch from the shadow budget," he says. "I'm slightly puzzled by some of the criticism, especially when it has come from people allegedly on the left. rd like them to tell me how they would have done it differently. I've seen one or two contributions on this subject in Tribune which have caused me to raise my eyebrows slightly.
"I'm deeply troubled about the way in which western societies are developing. John Kenneth Galbraith , writes about it clearly in The Culture of Contentment: two-thirds of the people are not doing too badly thank you, but there's one-third knocked out. The Labour Party cannot in good conscience turn away from that. But I want to get a wider consensus: there are decent people who don't vote Labour yet who are troubled about it too. I want to reach out to them."
Not all critics of Smith's role as shadow chancellor in the run-up to the election have focused on his shadow budget: some have argued that his major failing was as one of the main architects of Labour's industrial and employment policies. After Labour dropped its traditional interventionism in favour of a "supply-side" approach which emphasised education and training, the argument goes, the party appeared to have no way of getting Britain out of recession.
Smith says that the charge is unfair: Labour was interventionist, although "perhaps we undersold it a bit", and he intends to keep things that way. "I would strongly dispute the idea that I am not an interventionist. The idea that the British economy, in particular its manufacturing side, is going to recover on its own, is misplaced.
"I'm a very strong supporter of development agencies because I think they can have a catalytic effect on a region. That is not command-economy-style intervention, directing from the top, but it's nonetheless intervention. Similarly, a strong technology policy, in which we co-ordinate the activities of our science and technology institutes together with industry is vital."
This said, education and training remain at the heart of his conception of industrial policy. "I see education as the great enabling instrument. I am shocked at the notion of youngsters not having training and stimulus. I see them leaving school at 16 and I see them a year later pushing trolleys round an Asda supermarket. That's not good enough.
"Young Germans are getting the chance for proper training. We neglect it. I'm a missionary about this." Smith is also concerned about the state of the British constitution. "It's antiquated," he says.
"We're heading for a new century with a medieval House of Lords, for example, which is really intolerable. "I'm unhappy about the power of the legislature against the executive. I find myself not understanding what some of the people who talk a lot about parliamentary sovereignty in our European debates are actually talking about because it's not as strong as it should be.
"I'm also worried about over-centralised government, the way that local government has been undermined, and I'm strongly committed to devolution. It's not just a question of Scotland and Wales, it's also the English regions. People want to touch power more closely, they want to be involved. Socialism for me is a decentralising and liberating philosophy.
"Finally, I'm in favour of a Bill of Rights. Labour should be a bastion of the individual against big government and big business. One of the ways of being that is to give people known legal rights which cannot be trampled upon."
Electoral reform, however, "is more complicated". "There's a good and healthy debate going on within the party and I don't want to prejudge it," says Smith, although he praises the ,work of Labour's commission on electoral systems, chaired by Raymond Plant, for writing "the best explanation of the issues that I've ever seen".
Smith sounds similarly cautious on internal party affairs — partly, no doubt, because he knows he will soon have the unenviable job of getting the party and unions to agree to a new relationship. "We're at a very interesting time in the development of the party internally," he says enigmatically. "We've made great progress on one member one vote. Ordinary members are absolutely delighted that they're able to cast an individual vote in the ballot for the leadership and deputy leadership. They will not wish to surrender these rights now, and they're right. It's a healthy and happy thing." Would that everyone else agreed.
