After the global crisis, this is how the British centre-left should renew itselfby Gordon Brown / September 23, 2009 / Leave a comment
In the last year, we have lived through an economic crisis more profound than any since the great depression, and witnessed a parliamentary expenses scandal unprecedented in British history. The financial meltdown has profoundly challenged the international economic order, setting in train events that will shape the world economy for decades. At the same time, a new settlement in British politics is being born of the crisis of trust caused by public revulsion at events in Westminster.
I believe that the failure of self-regulation in finance and politics mean we are now living through a profoundly progressive moment in world politics. Events have shown the irresponsibility of those who called not for stronger, but less regulation. Today, it is the values and policies of centre-left movements that are shaping the global response to the economic crisis—whether through intervention in financial markets, global co-ordination of macro-economic policy, or the transition to a low-carbon economy. Everywhere, neoliberal thinking is in retreat, confronted by its catastrophic failure in the financial collapse of 2008. But if progressive ideas currently command the high ground in the global battle of ideas, that does not make the task of ideological renewal and rethinking on the centre-left in Britain any less urgent.
My starting point is that it would be a profound mistake to see the 21st century in the same way as the 20th: as principally a battle for territory between states and markets. We now know that where markets fail and banks collapse, active government is essential to provide regulation, manage demand management and steer a new path. Without such action by governments across the world the recent economic crisis would have been a catastrophe. Similarly, without a strong role for public services and welfare provision the recession would have brought widespread misery. In these circumstances, the enthusiasm for cutting back the state, so visible in contemporary Conservative thought, is a recipe for economic crisis and social injustice.
At the same time, this is not a Clause 4 moment in reverse. The economic crisis does not demand a return to nationalisation and central economic planning. Regulated markets and free trade remain the best means of stimulating enterprise, innovation and growth. The basic New Labour proposition—that economic dynamism and social justice go hand in hand, drawing the best of the public and private sectors into a partnership for prosperity and fairness—is sound.
The critical lesson from the past year is not that the state should retreat or markets should be abandoned, but that both must be held accountable to the people they serve. The turmoil of the banking crisis reminds us that without accountability markets can produce wildly unstable and unfair outcomes, as financiers become not stewards of people’s money but speculators with it. Simultaneously, the expenses scandal shows us that those who enter public service with a view to pursuing the common good can become disconnected from those they serve, because they are insufficiently accountable to them. In the new century the most powerful determinant of change should not be the commands of the state, or the incentives of the market, but the values of the British people—better still, the virtues of fairness and responsibility found in their best instincts.
The left has historically argued that freedom without the resources and power to take advantage of it is empty, a mere negative freedom. True freedom is only possible through the positive power of an enabling state, equipping individuals with the wherewithal to realise their potential. At its best, this meant advances in the life chances of millions; at its worst an unaccountable, stifling paternalism which saw public interest and state interest as the same. Now our mission is to support the active citizen, the empowering community, and the enabling state: to forge a nation of powerful citizens, not a powerful state.
Combining and transcending the positive and negative account of liberty is the idea of “capabilities” brilliantly articulated by the Nobel prize-winning economist, Amartya Sen. Sen’s account inspired many of the policies I pursued at the treasury, from Sure Start, which helps children in their earliest years, to the education maintenance allowances that help young people from poor homes to stay on at school.
The capabilities approach is about enabling individuals to realise their intrinsic talent, beyond the advantages arbitrarily acquired through background or birth. It is this synthesis of positive and negative freedom—in conjunction with fairness and community—that best captures the conception of the relationship between state, market and civil society that defines modern social democracy.
At the heart of my philosophy is a new understanding of the reciprocal relationship between the individual and the state. At every point governments and markets must be underpinned and tested by clear values that enshrine an ethos of responsibility and fairness, if they are to advance the common good.
What struck me when I first became an MP 26 years ago was that people from all walks of life would turn up at my surgery, looking for some support or a helping hand. And it’s precisely because I care about the squeezed middle that I have promoted mortgage support, childcare subsidies and tax credits, making Britain’s mainstream majority—and their values of fairness, responsibility and accountability—Labour’s number one priority. Because it is not just the poor and the vulnerable who want the security of decent public service, it’s the middle class, too.
It is this insight that now informs my thinking right across my government’s policy agenda. As I see it, there are five major challenges for a modernised social democracy in Britain today and the priorities of the mainstream majority run through our response to each. First, the scandal over MPs expenses shows that, in the information age, people want a greater say over how they are governed. Unless we reconnect people to politics, we will never realise our ambitions. So we need more political reform, not less. I continue to believe in a written constitution that would embed all of the constitutional changes of the past decade, and the rights and obligations that apply to every citizen. Further reform must reach into all our institutions, from local government to the House of Lords.
Our second task is to secure sustainable economic growth. The challenge is to devise a new policy framework that places a premium on skills, productivity growth and investment in research and development. But we will also need to rebalance our economy, building new strengths in high value-added modern manufacturing and green economy jobs, alongside a properly regulated, but less dominant, financial services sector. Industrial policy must be used to support businesses in key sectors in new ways, not by returning to a 1970s approach of picking winners, but by focused and intelligent intervention.
On the public finances, British debt levels are relatively lower than many G7 and G20 countries, yet we are committed to halving our fiscal deficit over the next four years. To achieve this we have already pre-announced specific tax increases on those on highest incomes, including raising the top rate of income tax and reducing reliefs. And on public spending, we will put the front line first: redirecting resources from areas where we can achieve greater efficiency, reducing costs where we can and selling assets we no longer need.
Third, we need to strengthen family and community life. At the heart of this challenge is the rising need for care—of children and the elderly—in modern families, as society ages and employment rates rise. Good childcare provides a double win: it closes equality gaps and supports parents to balance work and family, helping to lift households out of poverty. Social care, on the other hand, is a risk for which collective insurance best applies: none of us can know whether we will need long-term care, so pooling that risk lowers costs and ensures decency and fairness. Likewise, continuing to drive down crime and anti-social behaviour must remain at the centre of efforts to strengthen communities. This benefits the mainstream majority while also tackling the sharp inequalities in victimhood we experience in Britain.
Fourth, we must make tackling climate change a great national mission. The transition to a low-carbon economy offers us the opportunity, not just to avoid catastrophic temperature rises, but to improve our energy security and enjoy a better quality of life through new low-carbon transport infrastructure from high-speed rail to electric cars.
The final challenge is to match sustainable growth with a drive for increased social mobility. I come from a family for which a government on your side really matters—where nothing came easy, and you had to work for everything you got. While my family was never so poor that we went without, we were also never well enough off to not have to worry about every penny—the same condition faces millions of British families today. It is for them that we need an active government dedicated to delivering fairer life chances.
We have made an enormous difference since 1997, lifting more than half a million children and 900,000 pensioners out of poverty, closing social class gaps in education attainment, and constraining the rise in income inequality. We have demonstrated that inequality is not inevitable and that governments can make real changes in the economy and society.
But it has been a hard journey to reverse the damaging decline in social mobility that occurred in the previous 20 years. And change takes time: the first children to benefit from Sure Start will only reach 18 in 2017. Globalisation also tends to polarise incomes and widen inequalities. And there are cultural problems—for some families, disadvantage is so entrenched that only intensive intervention can rescue children from a lifetime of poverty. So we need new tools, as well as old ones, to drive forward an expansion of social mobility. Reformed public services must be central to this agenda. A New Labour government must always be restless in its determination to reform and modernise the NHS, schools and police services on which citizens depend for the realisation of their ambitions, as well as the security of their communities.
In each of these areas, my starting point is one-nation, rooted in a commitment to common democratic citizenship. It is unashamedly majoritarian, focusing on the concerns of the hard working majority. It is reformist, starting with the needs of the citizen rather than the producer—setting clear standards for services that must be achieved for all citizens, extending choice and guaranteeing that everyone is entitled to the same core outcomes. And it is responsible, ensuring fiscal sustainability in the future.