Gerry Hassan: Social democracy dying a slow death

Labour leader Ed Miliband repositioned the party on welfare this week. Picture: Jane Barlow

Ed Miliband and Labour have been busy this week making policy announcements, marking out political terrain, and, in the eyes of opponents, making unprincipled U-turns. Labour has announced it will not reverse the end of winter fuel payments for wealthy pensioners and child benefit for top-rate taxpayers, and it will impose an overall “cap” on welfare spending for the first three years of a future Labour government.

There are short-term factors at work. Labour is increasingly keen to reposition itself and challenge the widespread perception that it is “soft” on welfare. The party also has anxieties about the narrowness of its overall lead over the Tories, and its inability to close the economic credibility gap with the Conservatives, for all the problems of the coalition.

More long term, Miliband and his team have the goal of remaking social democracy, and with it the culture and ethos of British capitalism. This has been the rationale for “One Nation Labour” and Lord Glasman’s “Blue Labour”. But for all the intellectual pretensions (leaving aside that “One Nation Labour” doesn’t travel over the Border very well), both have remained sketchy aspirations and, at best, works in progress.

Miliband is trying to shift Labour away from the parameters and wreckage of New Labour. He has said he wants to “move the centre ground leftwards”, in the way Thatcher did the same rightwards, but so far Chancellor George Osborne’s observation that “in opposition you move to the centre; in government, you move the centre,” has been proved correct.

Putting this week’s changes in historical context provides a very different picture from that offered by the Labour leadership – one of a painful retreat that began many decades before New Labour and which contributed to the triumph of Blair and Brown.

From the close of the post-war Attlee government, Labour has continuously failed to make the political weather in a progressive direction and instead has engaged in playing political catch-up with right-wing reactionary ideas.

Several key moments have burst the hopes of British social democracy. In 1967, then prime minister Harold Wilson abandoned the central tenet of his government, the National Plan, which was focused on boosting long-term economic growth and challenging Treasury fiscal orthodoxy, as he belatedly and humiliatingly had to accept devaluation of the pound.

Nearly a decade later, in 1976, Labour was forced to embrace huge public spending cuts at the behest of the IMF. At the same time, Labour prime minister James Callaghan openly adopted monetarism and declared the post-war consensus dead. Many historians date the triumph of Thatcherism as a set of ideas, not to the 1979 election victory, but the capitulation of the Callaghan government in the summer and autumn of 1976.

Labour’s hollowed-out social democracy, due to the twin blows of 1967 and 1976, led directly to the creation of New Labour: a political project which made an explicit Faustian pact with globalisation, power and privilege that produced ten years of economic growth and public spending increases, before the train went off the rails. Miliband’s Labour has numerous challenges in its attempts to reinvent contemporary social democracy in hard times. It faces voter doubts about their credibility on the economy, welfare and immigration. There is a perception that Labour is retreating in the face of Osborne’s ideologically charged language of “strivers and shirkers” on welfare, and concerns about the appeal of UKIP to working class Labour voters.

There is a difficult debate for Labour about priorities in public spending and making the case for the welfare state. On the one hand, the GMB trade union savages shadow chancellor Ed Balls for advocating what it calls a “fake Tory argument” on welfare, while The Economist lauds the party for slaying its “sacred cows” of universalism, Keynesianism and the Fabian state. Tory strategists believe that the announcements of Balls and Miliband this week open up a major opportunity for them on welfare and making the case for a more targeted, selective welfare state. Alex Salmond believes this can be labelled as a further move towards the Johann Lamont “something for nothing” caricature of welfare.

Beyond the trade-offs between universality and selectivity, is the question of the philosophy and values of British social democracy. This is a political tradition which has given the world Anthony Crosland, Richard Tawney, George Orwell, the Webbs and many more thinkers and intellectuals.

They thought about the ethical basis for their socialism, the moral basis of government and public life, and how to make a society that challenged the undeserving rich and championed equality and fairness.

Where are British Labour’s intellectual drivers now? There are debates between Blue and Black Labour, the latter deficit hawks, and between the Compass radicals and Progress Blairites, but somehow none of it recognises the long retreat and emptying of the social democratic tradition over several decades.

It seems a tall order for Ed Miliband to redress this: the long-term progressive crisis, the post-New Labour disorientation of most of the party beyond the last true believers in “the project”, and the constraints and choices imposed by the coalition, austerity and the prospect of a decade of low to no growth.

Labour has a small membership base, admittedly now bigger than the Tories, and is reliant on union funding, making it vulnerable to Cameron’s opportune legislative attack on the party-union link, and exposing Labour to accepting any corporate offers that come along, such as John Mills of shopping channel JML, and the charge of hypocrisy on tax avoidance.

Ed Miliband has maybe made it a little easier this week to rebuff right-wing media attacks on him as irresponsible and the son of Gordon Brown. But in the long-term, he has contributed another piece to the complex, intricate jigsaw of the slow death of British social democracy.

Many acknowledge Miliband has good intentions, but this week’s repositioning of Labour has just narrowed the political choices and what passes for debate in the Westminster village, leaving those looking for a radical alternative to the economic, social and fiscal conformity that has a vice-like grip on British politics, with no home south of the Border.