THE ECONOMIC CONSEQUENCES OF MR LAMONT

Tribune leader, 31 July 1992

Less than four months into their fourth term, the Tories are in an almighty mess on the economy. The re­covery they promised has foiled to mate­rialise. Every economic indicator shows that the recession is as deep as ever. Company failures are still growing. So is unemployment. A Confederation of British Industry survey published this week reports that 57 per cent of manufac­turers' order books are below normal and two-thirds of manufacturers are working below capacity.

True to form, the Chancellor, Norman Lamont, has responded by claiming yet again that recovery is imminent and ar­guing for patience while his anti-infla­tionary policies create the foundations for sustained growth. He has ignored crit­ics who have argued that sterling is over­valued, that the fight against inflation is not the main priority at the depth of a re­cession or that the reduction of public spending is idiotic in an economy suffer­ing a collapse in demand.

In such circumstances, and with its new Shadow Cabinet in place, there is no reason why Labour cannot have a field day baiting the Government over its performance – and indeed this week Gordon Brown, the new Shadow Chancellor, set to work with relish.

But it is one thing to attack the Govern­ment and another to come up with an altentative to its policies. And Labour is rather short of ideas about how it would do things differently.

It is true that the party has, since the election, made it clear that it would not be averse to devaluation of sterling, al­beit by way of a general realignment of currencies within the exchange rate mechanism of the European Monetary System involving, crucially, the revalua­tion upwards of the Deutschmark. It is true, too, that Labour has said that a re­cession is not the time to engage in public spending cuts, which will remove yet more demand from an already depressed economy. Then there are Labour's long­standing commitments to "supply-side” measures: extra spending on training, tax breaks for investment and so on.

All of this is most sensible. Sterling is over-valued, spending cuts are a bad idea and supply-side measures are essential. But it does not add up to a radical alter­native to the Tories* basic approach. De­valuation of the pound against the Deutschmark within the ERM would certainly ease the pressure on British ex­porters for a while, which is what makes it necessary. 

But it is no panacea. Be­cause of the import-reliance of the British economy, its most significant effect would be to cut real wages for a while - hardly die stuff of socialist dreams, even if it temporarily improved competitivity. Sim­ilarly, the spending cuts, effectively the downside of over-generous pledges in the run-up to the election, are not particular­ly significant in macroeconomic terms (although they could well be viciously shared out). And supply-side measures are not a short-term answer to recession. 

So what should Labour do? The traditional left response is to call for a reflationary alternative economic strategy for Britain. But any nation-state-based at­tempt to reflate would founder in the face of a massive flight of capital. Britain sim­ply is not big enough to cope with the mo­bility of capital in the contemporary glob­al economy. What would be possible, how­ever, is a co-ordinated Europe-wide reflationary strategy, organised either inter-governmentally or through new Euro­pean economic institutions. Labour should start work now with its European social democratic sister parties on pre­cisely such a programme, making the call for Europe-wide reflation the core of its assault on the Tories' miserable economic record.

PARTY NEEDS A CUTTING EDGE

Tribune leader, 24 July 1992

If the talk in the corridors of Westmin­ster is correct, two of the key posts in the new Shadow Cabinet, due to be an­nounced today (Friday), have been decid­ed for weeks. Unless John Smith decides at the last minute to change his mind, Gordon Brown will be the new Shadow Chancellor and Tony Blair will become Shadow Home Secretary.

Both are well fitted to their new jobs. Mr Brown has proved himself a capable trade and industry spokesman with a good grasp of the economic realities cur­rently facing Britain – not always hither­to a precondition for being given the post – and promotion should give him the au­thority and confidence to develop the Eu­rope-based strategy for redistribution, demilitarisation, environmentalism and growth that he knows Labour needs.

Mr Blair, taking over from a decent but unimaginative sixties social democrat, Roy Hattersley, has a chance, well within his capacity, to develop his brief as a nineties libertarian, more conversant than his predecessor with the politics of race, gender, electoral reform and rights that has energed at the centre of British radical politics in the past decade.

Beyond these two, however, the picture is hazy - and for good reason. The result of the Shadow Cabinet ballot was not known when Tribune went to press. With more than 50 contenders for the 18 or so places up for election by the Parliamen­tary Labour Party and the likelihood of several surprises, everything was up for grabs.

Mr Smith has indicated that he will ap­point a Shadow Cabinet of all the talents, and that those who opposed him and Margaret Beckett in the leadership and deputy leadership contests will be consid­ered fairly for posts in the new line-up. He has also promised a welcome promo­tion to senior positions of some of Labour's most able women politicians. But much remains vague. In particular, the third "big" job in the Shadow Cabinet, Shadow Foreign Secretary, is apparently a contest between Jack Cunningham and Robin Cook, with the "loser" being given trade and industry.

Mr Cook is the man to go for. Unlike Mr Cunningham, he has shown a sustained interest in, and engagement with, the world outside Britain, and he is unencumbered with the old cold-war Atlanticist baggage that has debilitated Labour thinking on foreign policy for too long. Mr Cunningham has given no indication that he sees the future of foreign policy as anything but business as usual. Mr Smith should appoint the man who might be prepared to break the old mould.

Perhaps, though, the old hierarchy of tasks is no longer what it was. There is no reason, for example, to consider that the defence or environment portfolios are any leas important these days than the "big three". On one hand, there is no more important question facing Britain or the world than the burgeoning ecologi­cal crisis; on the other, whoever takes the defence spokesperson's job will have to preside over Labour's response to the massive cut-back in war preparations that is attending the end of the cold war.

Yet there has been no speculation about who gets either defence or environ­ment. For Tribune, the best bet would be to keep Bryan Gould where he is at envi­ronment - for him to shadow William Waldegrave on the Citizen's Charter would be a waste of one of Labour's best talents on one of the Tories' least con­vincing initiatives. On defence, the im­portant thing is that whoever is appoint­ed must be given the autonomy to push the case for reducing the role in the coun­try's affairs of the military-industrial complex. As with Shadow Foreign Secre­tary, it would be best to appoint someone who is not a cold-war Atlanticist. Mr Smith has a chance to give the Shadow Cabinet a radical cutting edge. With the leadership and deputy leader­ship in such safe hands, he should reward imagination and flair rather than seniori­ty and solidity.

NOW TO OPEN UP A PROPER DEBATE

Tribune leader, 17 July 1992

The election of John Smith to the Labour leadership has been so certain for so long that this weekend's special Labour conference will be something of a non-event. After the initial outrageous behaviour of the union bosses in bounc­ing Labour into an early election which only Mr Smith had a hope of winning, the leadership and deputy leadership con­tests have been dull in the extreme. Despite the best efforts of Bryan Gould to raise issues of substance, there has been little intelligent discussion either of why Labour lost on April 9 or of what its di­rection should be in the next four or five years. Since it became obvious, a month or so ago, that Margaret Beckett was clear favourite for the deputy leadership, observing the contest has been worse than watching paint dry.

Mr Smith faces a daunting task as lead­er. Although since April 9 Labour has seen little of the back-biting that charac­terised the aftermath of the 1979 defeat, and despite the likely size of his majority on Saturday, the party is deeply divided over the most important questions cur­rently facing it: Europe, electoral reform and its links with the trade unions. Hav­ing expected to win on April 9, moreover, the party faces a severe crisis of morale, worse even than after the 1983 debacle. Forget about the electoral mountain that Mr Smith will have to climb if he is to be­come Prime Minister – first he has to act to bring the party together and give its worn-out, disillusioned members a renewed sense of purpose.

He will not be able to do either if, when he dishes out positions in the Shadow Cabinet next week, he is seen to reward his supporters and punish the losers. Even though Mr Gould and Mr Prescott have proved unable to win sufficient sup­port among Labour Party members and affiliated trade unionists to come close to winning on Saturday, they remain repre­sentatives of strong currents of opinion in the party, particularly among activists, and their records as front-bench spokes­men in recent years, on the environment and transport respectively, should be enough to secure them places in the top rank of the Labour leadership. At very least, they should keep their current jobs in the reshuffle.

The Shadow Cabinet is only the first of many challenges that Mr Smith must face, however, and it is by no means the most important. Once the new front bench is in place, he and his colleagues will have to address the far bigger prob­lem of the party's woeful shortage of ideas and hick of confidence about its raison d'etre.

In the nine years of Neil Kinnock's lead­ership, Labour threw out a large amount of ideological baggage, much (but not all) of which was undoubtedly outmoded. But, with the exception of Roy Hattersley's vague and arid redefinition of the philosophical basis of social democracy, in all that time Labour never came up with anything to replace the old baggage. Iconoclasm and argument were discour­aged in the interests of unity and market­ing men made all the key decisions.

Labour now desperately needs to think through its political project – not its de­tailed policies or its core values, but what it wants to achieve in the next 20 or 30 years. To do that it has to have at least two years of open, wide-ranging discus­sion, in which heterodoxy, experimenta­tion and participation by people outside the narrow confines of the Labour leader­ship are positively encouraged by the party at every level.

That does not mean opening up the par­ty again to Leninist parasites. But it does mean the creation of an atmosphere of tolerance and pluralism. One of Mr Smith's first acts should be to declare that, for a little while at least, he will play the role of gardener while a thousand flowers bloom.

TO SAVE INDUSTRY, GET OUT OF DEFENCE

Tribune leader, 10 July 1992

“We are not a global power, nor do we have aspirations to be a global power. We are primarily a middle-ranking European power.”

So said Malcolm Rifkind, the Secretary of State for Defence, on Tuesday, the day he published the Government's 1992 de­fence White Paper, and it is difficult to disagree with the sentiments. Britain's world empire is long gone, its economy is only the fourth biggest in Europe (and sixth biggest in the world) and its influ­ence in world affairs is minimal.

Yet the practice of Mr Rifldnd's Min­istry of Defence does not match his mod-eat rhetoric. For all the talk of a new de­fence strategy in the White Paper and for all the spending cuts planned in the next five years, British military procurement decisions are still being made as if the cold war were in full swing.

The most obvious sign of this is the MoD's decision to place the long-delayed order for the fourth Trident nuclear sub­marine with the VSEL shipyard in Bar­row. That decision will be widely wel­comed there because it will save the yard from closure for a few more years. But there is absolutely no rationale for the fourth Trident boat except as a job-creation scheme. In the absence of a Soviet nuclear threat, precisely whom is Trident supposed to deter? Is it really worth spending £33,000 million or so over the next 30 years to provide insurance against the unlikely eventuality of a rogue Third World state acquiring not just nuclear weapons but also the ability and desire to threaten Britain with them?

But Trident is not the only evidence of continuing MoD delusions of grandeur. Almost as telling is its response to the German government's decision last week to pull out of the production phase of the four-nation European Fighter Aircraft. The Germans, after more than two years of weighing up the options, have decided that EFA is not the sort of fighter that they will need at the turn of the century. Because it is designed to counter the very best Soviet aircraft, it is extremely com­plex and therefore expensive. But because the cold war has ended, there is no need to counter the very best Soviet air­craft. The Germans believe that they can make do with a cheaper fighter.

There is no reason that Britain cannot do the same. Indeed, as with Trident, the only rationale for continuing with EFA in its current form is as a job-creation scheme. There is no military reason for producing such a high-tech aircraft and the export market for EFA is shrinking by the month.

Labour has responded to all this by ex­pressing concern about jobs and the preservation of Britain's manufacturing base, which is fine as far as it goes. In the long run, however, the fact is that Britain cannot remain reliant on military indus­try if it is going to compete in the interna­tional markets of the next century. Labour must make it clear that, rather than paying billions to keep the shipyard workers of Barrow employed on Trident and the British Aerospace workforce beavering away on EFA, the answer is to switch that expenditure to civilian projects, particularly retraining and research and development, to give British high-tech manufacturing a chance to prosper beyond the end of the decade.

A FINE MESS OVER MAASTRICHT

Tribune, 10 July 1992

Paul Anderson explains why Labour MPs and MEPs are arguing over Europe

The first big policy question that John Smith will confront when he becomes Labour leader next week has vexed the party for three decades: Europe.

Since last month's rejection of the Maastricht treaty in the Dan­ish referendum, Labour's fragile consensus on the European Com­munity, carefully constructed to minimise argument in the run-up to the election, has all but col­lapsed. However the 12 EC gov­ernments eventually decide to deal with the Danish rejection of the treaty, Smith is going to have to work hard to prevent a Labour split over the British govern­ment's Maastricht bill.

Smith recognises the difficulties ahead and has taken care to rule out nothing in the way of tactics. Last weekend, he made it clear that he expects dissent among Labour MPs and MEPs whatever line the leadership eventually agrees, telling a television inter­viewer that "it is just impossible to expect on an issue of this kind that they will all vote in the same way and there has to be some respect for differing opinions".

The problem is not really that either the Parliamentary Labour Party or the European Parliamen­tary Labour Party are particularly divided in their opinions of the treaty. With the exception of a small group of Euro-fanatics (30-strong at most among MPs) who want to vote for Maastricht, there is a consensus that the terms of the treaty are far from perfect.

On economic and monetary union, there is a widespread belief in both the PLP and EPLP that the treaty is too deflationary and that its criteria for convergence be­fore the creation of a single Euro­pean currency are too narrowly fo­cused on interest rates, inflation and state spending. There is a sim­ilar agreement that the British government's "opt-out” on the so­cial provisions agreed by the other 11 signatories is indefensible. On political union, there is near-con­sensus that the Maastricht deal does not give enough extra power to the European Parliament.

But none of this makes for agreement on how the party should respond to the govern­ment's Maastricht Bill. Just about everyone apart from a handful of anti-EC diehards reckons that Labour should vote for the Maas­tricht bill if it can secure an end to the social chapter opt-out - but no one really believes that Labour can force the Tories to climb down on this. So Labour is heading for a show-down between those who think that Maastricht without the social chapter should be opposed and those who believe that the party cannot in the end oppose Maastricht because the only con­ceivable alternative is worse: no progress at all towards European union. The depth of disagreement already suggests that Labour would split down the middle if it came to a referendum on the bill.

The most articulate of the anti-Maastricht pro-Europeans is Peter Hain, MP for Neath and secretary of the "soft left" Tribune Group of MPs, who was the author of a Tri­bune Group motion calling for op­position to the Bill put to the PLF last month. His move, which has the support of perhaps one-third of Labour MPs, has caused ructions in the PLP, which agreed to post­pone coming to a decision on Maastricht bill tactics, and Tri­bune Group MEPs are now threat­ening to split with their Westmin­ster colleagues because they were not consulted about it.

Hain is unrepentant. "It's not a factional issue," he says. "It's about establishing a socialist cri­tique of Maastricht."

For him, the Tories' disarray on Europe is something for Labour ruthlessly to exploit. Labour has nothing to lose by making it clear that it will vote against the Maastricht Bill unless the Government changes its line on the social chap­ter. With a little help from Tory rebels, Labour could ensure that Britain did not ratify Maastricht, killing the treaty for good whatev­er happens with Denmark and forcing the 12 to negotiate a new, more democratic, growth-oriented European union agreement.

Some critics of this position, no­tably Neil Kinnock in the PLP meeting at which it was discussed, have argued that Labour would destroy its credibility with its con­tinental sister parties if it decided to vote against Maastricht. Accord­ing to Giles Radice, MP for Durham and a long-time pro-Euro­pean whose book Offshore: Britain and the European Idea has just been published, “There is little doubt that a U-turn on Maastricht would cut Labour off from the con­structive dialogue with continental socialist parties which has been such a feature of the last five years."

Others say that the main prob­lem with the Hain position is that it implies that if Maastricht falls a better treaty on European union could be negotiated, when in fact it couldn't. Maastricht was the prod­uct of intensive negotiations among EC governments, they say, and it is difficult to see how they could reach agreement on a differ­ent compromise if negotiations were reopened. Wayne David, MEP for South Wales, is typical. "It's Maastricht or nothing," he says. "We should stop kidding our­selves."

He could well be right. The cen­tre-right German government will not budge in its insistence that the Bundesbank should be the model for the European central bank and, for reasons deeply root­ed in German history, will not sanction any attempt to downplay the centrality of price stability in the criteria for convergence and as a goal of EMU.

If it came to renegotiation, it is hard to conceive of French president Mitterrand extracting any more concessions from the Ger­mans than he got first time around: the role of Ecofin, the Council of Economic and Finance Ministers of the EC countries, in overseeing the central bank, and the rather vague commitments to goals of growth and social cohesion. There would also be very little likelihood of renegotiation removing the British opt-out on the social chapter.

On political union, there seems to be just as little room for ma­noeuvre. Kohl has suggested that a way out of the impasse created by the Danish referendum might be to bring forward negotiations, scheduled to begin in 1996, on in­creasing the powers of the Euro­pean Parliament. But this is anathema to the British govern­ment, which is committed to the principle that intergovernmentalism should be the foundation of EC decision-making, with the Council of Ministers playing the key role. John Major has suggested that the way to get the Danes back on board is to emphasise the impor­tance of "subsidiarity", the doc­trine that decisions should be made at the lowest level possible, interpreted by his government as meaning "the level of the nation-state".

Of course, the 12 might have no option but to start again if no way is found of getting the Danes to change their minds, which would mean the end of the British Maas­tricht bill regardless of what Labour does. While that remains a strong possibility, it is perhaps un­derstandable that the Labour lead­ership sees the value of making soothing noises and keeping its op­tions open. Eventually, however, Labour is going to have to make up its mind about what it wants from Europe.

AGREEMENT TO DISAGREE

Tribune leader, 3 July 1992

If there was any consensus at last weekend's conference of Labour's democratic left, organised by Tri­bune and the Labour Co-ordinating Committee, it was that Labour desper­ately needs a period of free debate about its direction and organisation.

After its fourth consecutive election defeat, the Labour Party cannot re­spond simply by giving support to its new leadership, changing a handful of policies and waiting in hope for the To­ries to hoist themselves with their own petard. The last thing that anyone needs is an immediate return to the at­mosphere which existed in the party from 1989-92, when open discussion was sacrificed in the interests of party unity in the run-up to the election.

But, contrary to the fears of certain of John Smith's supporters, there is no general enthusiasm on the democratic left for a return to the bad old opposi­tionist days of the early eighties. Nor is there any basis for any such thing.

The democratic left is united by its radical environmental ism and, most importantly, by a strong sense that the empowerment of ordinary people in their everyday lives should be at the centre of Labour's politics. In line with this, there is agreement that both the European Community and the British state need to be radically democratised.

But there were few signs last week­end of consensus about precisely how this democratic agenda should be translated into political practice.

The voices arguing for a massive in­crease in the powers of the European Parliament and for the introduction of the additional member system for West­minster are more numerous and more insistent than they were five years ago, but they are by no means uncontested.

The differences within the democratic left are even more marked on eco­nomic policy and on the best ways of countering the Tories’ plans for the wel­fare state and local government. On the most immediate issues facing Labour – how it should respond to the Maas­tricht treaty and how, if at all, it should change its relationship with the trade unions – there is no consensus at all.

This does not mean, however, that the democratic left is in a bad way: quite the reverse. Despite the universal dis­appointment over the April 9 defeat, last weekend's gathering was enthusi­astic and upbeat, brimming with ideas, and the arguments were conducted in a constructive and friendly spirit.

If we can maintain the momentum, particularly in the pages of Tribune and through the network of local Tribune Groups that the parliamentary Tribune Group is planning to encourage, there is a real possibility, with Labour's hard left a spent force and Leninism utterly discredited, that the democratic left can once again act as the main creative element of British radical politics.