Why the European Elections will be painful to watch for some Remainers

In theory the forthcoming European Elections on 23rd May should be an opportunity for Remainers to translate the clear majority for staying in the EU that we see in the polls into actual votes. Remain has been ahead of Leave since the summer of 2017, and recent majorities have been above 5%. Indeed some in the smaller anti-Brexit parties have been suggesting exactly this: the EU elections should be about Remaining rather than Leaving. Unfortunately things are not that simple, as the following YouGov poll illustrates.

The smaller columns for the parties represent the data with ‘Would not vote’ and ‘Don’t know’ included.

The first point is that the anti-Brexit parties are polling at around half the level of the pro-Brexit, anti-People’s Vote parties. The key problem, as it has always been for the Remain cause, is that the Labour vote is mostly made up of Remainers. In this poll, 77% of Labour voters voted Remain in the 2016 referendum, and some of the other 23% may have changed their minds since then. Labour is an overwhelmingly Remain party in terms of who votes for it, but its leadership is in favour of its own form of Brexit and appears ambivalent towards a People’s Vote.

Some Remainers would love voters to desert Labour and vote for one of the three unambiguously anti-Brexit parties. But this is very unlikely to happen. Many voters, even though they might support Remain, want a Labour government above all else, and they will vote for Labour despite this being about elections to the European Parliament. This is of course exactly what happened in the 2017 general election. Voting left is hardly an irrational choice for these Remainers, because if we do not leave the EU the European Parliament does play a minor role in EU affairs and it is important to have left wing voices there.

The second point is that the elections for the European Parliament is actually about voting for MEPs, so seats matter as well as the popular vote. The D'Hondt voting system used in British elections for the European parliament combined with voting for MEPs on a regional basis does penalise smaller parties. The Liberal Democrats only received 1 seat out of 73 in 2014, even though they got nearly 7% of the overall vote. As a result, if the Remain vote splits badly it is conceivable that the total seat count for the Remain parties combined may only be a few seats, which will not look good compared to the double figures that Farage will get.

A very good question is why the anti-Brexit parties have not cooperated. It would be difficult to choose just one of the three parties to stand in each district, but it would not be impossible. Without this cooperation, tactical voting is unlikely to prevent the anti-Brexit vote being split three ways in each England region. It would seem these parties think it is more important to fight among themselves than unite in sending a clear message on Brexit. That will be sad if this failure leads to MEPs only being in the job for a few months. Remain can get a million on the streets and 6 million signatures, but it seems getting small parties to cooperate is a more difficult task.

Another possibility would have been for the People's Vote campaign to do as Nigel Farage has done, and put up candidates themselves on a pro-EU ticket. Unlike Farage, the People's Vote campaign would face problems in doing so. Electing individuals on a simple pro-EU ticket only makes sense if these MEPs only have a very short tenure. If the campaign is successful, you want proper MEPs representing different political perspectives. That is probably one of many reasons why the People's Vote campaign will not field candidates of its own, and is perhaps another reason why the smaller parties do not cooperate.

Given Labour's position and the lack of cooperation among the anti-Brexit parties, Remainers should not turn these European elections into a vote about being anti-Brexit, because they will lose badly. The combined vote for UKIP, the new Brexit party and the Conservatives is almost certain to exceed the combined vote for the LibDems, CHUK and the Greens. A smarter tactic would be, through the People’s Vote campaign, to make these elections into a vote about a People’s vote. The key difference of course is that Labour can potentially be counted as being in favour of a People’s Vote, and so making the European elections as a kind of referendum on a People’s Vote might succeed. Using the poll numbers above, the pro-People’s Vote parties have an overall majority.

In reality Labour’s position on a People’s Vote is nuanced, or perhaps just confused. It is in favour of a People’s Vote for a deal it does not like, but is rather ambivalent if the deal is its own. The leadership is divided on the issue. Apparently Keir Starmer was described by Tories in the joint government/Labour negotiations as the ‘ideologue’ for wanting a People’s Vote, while his colleagues were described as more reasonable! The European elections could force Labour’s hand on the issue. This is obviously what the People’s Vote campaign will hope for, but how much the Electoral Commission will allow it to campaign over the election is unclear.

If Labour did unambiguously commit to a People’s Vote in all circumstances it could take votes from the smaller parties, and this may well dominate any votes it my lose from Labour leavers. Labour has the opportunity for an overwhelming victory in these elections, as Brexit will take many votes away from the Conservatives to pro-No Deal parties. However that inducement may not be enough, in part because Labour are constantly thinking about the possibility of a General Election where they do not want to be painted as the anti-Brexit party. Remainers should also have the sense to see that a Labour victory in a general election would be a better option from a Remain point of view than a People’s Vote, for reasons I set out here.

Without a general election, the Brexit position has become a stalemate. Theresa May is set against holding a People’s Vote, and so are Brexiters. Behind all their guff about such a vote being an insult against democracy (“War is peace. Freedom is slavery. Ignorance is strength”), the real reason Brexiters hate the idea of a second referendum is that they think they will lose. Nor has parliament been able to force the government to hold a referendum, with the latest vote in parliament being 280 voting in favor of a People’s Vote and 292 against.

However no other option looks like getting over the line anytime soon either. Brexit has become a war of attrition. Brexiters are in no mood to accept May’s deal, and instead some have pinned their hopes on replacing her. Even if they succeed, it is unclear how this changes the parliamentary arithmetic. The Tories also fear a general election for the same reasons Brexiters fear a People’s Vote. Talks between Labour and the government are unlikely to get anywhere because a compromise that didn’t include a People’s Vote would be devastating for Labour, and any compromise by the government would pour oil on the fire of Tory divisions. Finally the new October deadline set by the EU is unlikely to force anyone to change their mind, because there is a belief in the UK that the EU will always allow another extension rather than risk an exit with no deal.

In these circumstances, a People’s Vote (PV) is going to be seen more and more as the only way out. In parliament it is already the option with most votes. It is just possible that the European Elections could change some minds if it was seen as an endorsement for holding a PV. But for this to happen the PV campaign needs to persuade the smaller parties to stop talking about this election as being about Brexit and instead start talking about a People’s Vote.

As far as the media is concerned, the European elections will be about the showing of the pro-No Deal parties. Indeed it could all be about Nigel Farage. His new Brexit party is well organised, well funded (from sources unknown), and is likely to get extensive publicity from the BBC at least. (To see the BBC choosing his “put the fear of god into MPs at Westminster” line as their headline quote illustrates all too well the themes of last week’s article on how the media encourages far right extremism.) The poll above, taken before his party was formally launched, indicates that his Brexit party could easily end up beating the Conservatives and coming second, as UKIP voters switch to his party. This will become the main new story.

That will be painful to watch for Remainers, but ironically it could indirectly help the People’s Vote cause. Moderate Conservative MPs will see the poor showing of their party in the European elections and begin to understand more clearly the bind they are in. For as long as Brexit is an issue, they will be in danger of hemorrhaging votes to pro-No Deal parties, but if they accept No Deal the Conservatives will not be in government for decades. A People’s Vote on May’s deal may be the only chance they have of changing that situation any time soon.

If the Tories lose an election before we leave, Brexit is unlikely to happen.

There is more talk of a general election, although of course that does not mean it will happen. In that context I frequently hear people say that a general election would do nothing to get the country out of the huge Brexit hole it has dug itself. I strongly disagree. If there is an election before we leave the EU and if Labour formed the next government, I think it would make a huge difference. Unless Labour win so many seats that it has a massive majority, I think the chances are that Brexit would just not happen at all.

Let us suppose that Jeremy Corbyn and Keir Starmer manage to negotiate some form of soft Brexit with the EU. The crucial question to then ask is what the attitude of the Conservative opposition would be. As a result of losing the election (if not before) they will have a new leader, and given the attitude of most Conservative members that leader is likely to be a Brexiter. As the Brexiters in the current party find it hard to accept the hard Brexit proposed by Theresa May, they will almost certainly oppose any soft Brexit negotiated by Labour. Brexiters are happiest when complaining, and so the line they will probably take about any Corbyn Brexit deal is that it represents a betrayal of the ‘will of the people’.

Another reason that they will oppose Labour’s soft Brexit is that they do not want Labour to be able to do something the Conservatives were unable to do. It would be the ultimate humiliation that a party that is increasingly defined as being the Brexit party could not negotiate Brexit, yet a Labour government could.

The Conservative party is increasingly looking like the Republican party in the US, with an activist and very right wing base fired up by Murdoch owned and other partisan media. The health care programme that Obama successfully introduced was very similar to something the Republican senator and presidential candidate Mitt Romney had passed in Massachusetts in 2006. Despite this the Republicans in opposition unequivocally rejected Obama’s similar reforms and fought them with all their might.

Some more moderate Conservative MPs might be tempted to support Labour because they themselves would be quite happy with a soft Brexit. They could quite plausibly argue that their aim should be to get Brexit over the line and a future Conservative government could distance the UK further from the EU. But something we have learnt over the last few years is that Tory Brexit policy has been strongly influenced by the Brexiters, and the rest of the party is extremely reluctant to break the party line. Furthermore many Tory Remainers may be happy to see Brexit fail. As a result, Corbyn cannot count on rebel Tories coming to his aid.

The final reason the Conservatives, and their supporters in the press, will not want to assist Labour in delivering Brexit is that they will scent the chance of embarrassing the new government. There are plenty of Labour MPs, backed up by many more Labour party members, who do not want to see Brexit at all, and they might vote against any agreement. In that situation the Liberal Democrats and SNP might also vote against. Shortly after an election where the Conservatives are still in shock they are extremely unlikely to help out a Labour government in difficulties.

With the Tories opposing any form of soft Brexit, Corbyn’s actions will be guided with what might happen if his Brexit plans were ever put to a referendum. Labour have now said they would hold a referendum on any deal they negotiated, and they would not be allowed to backtrack on this because a combination of Tories (yes, I know, but see above), smaller parties and Labour rebels would insist it be held. A People’s Vote under a Labour government will be a very different affair from anything held under the Tories. Tory politicians, and more importantly the Brexit press, would oppose it with all the vigour we have seen over the last few years. As so many Brexit supporters derive their devotion to the cause from the press they read, they are likely to follow that press in declaring Labour’s Brexit deal to be a betrayal. Of course Remainers would also oppose it. Labour would find both Remainers and many Brexiters campaigning against them. They would not have a chance, and Brexit would fail.

A Labour government trying to get a victory in a Brexit referendum looks like a lose lose option. They would fail to get a majority for their Brexit deal and be humiliated by the result. Once the Conservatives make their opposition clear, Labour should see this coming. But how do they avoid that outcome, as the clock will still be ticking on an extended Article 50? The issue cannot be kicked in to the long grass, and Labour will have a manifesto commitment to try and get a Brexit deal. One possibility is that after talking to other party leaders, Corbyn will announce that a Brexit deal is impossible because of Conservative and minor party intransigence and he will put to parliament that Article 50 should be revoked. That will be passed by a narrow majority (the Tories and perhaps a few Labour MPs would oppose). He will endure a day of negative headlines in the Brexit press, but just another day in a continuum of negative headlines is hardly a great cost. Most of the country will breath a large sigh of relief.

If this is the case, why would Labour promise to enact Brexit in their manifesto, if they could see it subsequently failing? For a start Labour could not be sure what the Conservative opposition would do, and it might hope to get a majority large enough to overcome its own rebel MPs. But the main reason is the same as it was in 2017. The party will want to avoid the election being about the merits or otherwise of Brexit. The Tories in an election will want to pin the blame for their failure to achieve Brexit on Labour, and if Labour switched to being a Remain party just before the election that tactic will probably be successful. Having come this far as a Brexit party, Labour will be on much firmer ground in an election if it continues to say it wants Brexit and has a better chance of succeeding than the Tories who have failed for three years.

Would it be ironic that a Labour government would fail to enact a form of Brexit because of Tory opposition? If you think about it, the Conservative government has failed to enact a form of Brexit laregely because of Tory opposition. The reason we are in this Brexit hole is that Brexiters who won a mandate for a soft Brexit then decided that only the hardest of Brexits would do. It would be poetic justice and good for the country if Brexit failed as a result.

Labour elections: a response to Chris Dillow

Chris Dillow’s post today is so concise, comprehensive and in my view largely correct that I cannot help responding to it.

The case against Corbyn

I only have two comments on this, which go in different directions

C1) A case can be made that Corbyn needs to stay in control for as long as it takes to change the voting procedures for leaders so the PLP can no longer block left candidates. He is, in that sense, a placeholder. That is why I suggested Smith commit to make similar changes, and he has not. The only caveat to that argument is that Corbyn’s popularity may mean he carries on too long: a placeholder who cannot give up his place.

C2) I am much less dismissive than Chris of the polling information we have on Corbyn. I have not found anyone who studies these things who gives Corbyn any chance at all, and they are not all politically biased when they say that. It is hardly a precise science, but there are regularities there that should not be dismissed. There is also for me the killer common sense point: why would anyone who is not a politics geek vote for a leader that 80% of his MPs had no confidence in.

The case against Smith

S1) I’m less worried about the ‘mis-speaking’: you cannot at the same time appear authentic and not do this, and the importance voters place on this is wildly exaggerated. It was trying to avoid this that got us Labour politicians who seem to speak in gaff proof platitudes. 

S2) I am more worried on the policy and judgement side. Alas, I see few politicians you do appreciate the big difference the financial crisis has made. I think the point about Corbyn and clocks is correct: part of the Owen Jones cri de coeur was about this. But equally I have seen little from Smith on any overarching political or economic vision. He has said nothing on the Economic Advisory Committee or fiscal rules: small things but so easy to do I wonder why he hasn’t done them. The one point I would make in Smith’s favour is he has Brexit right. Ironically it is here that Corbyn and his supporters sound like triangulators: we must not be too pro single market/freedom of movement because that will antagonise the traditional heartlands.

S3) The generational divide point is overrated. Also for the reasons I’ve already given Smith is likely to do much better in a general election than Corbyn.

Overall judgement

The way to look at this election is in terms of disaster avoidance. Corbyn risks a split left and a wipe out at the general election. I can see a path where a split is avoided and someone takes over from Corbyn in time and with the qualities required to bring the party back, but that will not happen until after 2020 so we are talking a Tory government for the next decade at least. But there are so many obstacles on this path, like boundary changes, or the absence of a strong successor in the Corbyn group, that I give it a very low probability. In other words a disaster of one kind or another is pretty likely. In short, so much of this is something I have already lived through once before.

One disaster with Smith is a return to triangulation and a drift back to the ways of 2010-2015. But it will not be the same as 2010-2015, mainly because the Conservatives will not put deficit reduction at the heart of their strategy. Brexit has changed that, which is something many Corbyn supporters fail to see. Brexit also stops appeasement on immigration. Partly as a result I think there is a good chance that the centre left have now learnt the right lesson from 2015. Another disaster will be more personal - he is just not up to the job, and Labour will do almost as badly at the polls as they will with Corbyn. Again possible but unlikely: he has passed the Today test. To sum up, I cannot by any stretch of the imagination get these two combined to come close to the likelihood of a disaster under Corbyn.

Which is basically it. If you think that something like the Blair/Brown government was little better than the Tories, and therefore want to shoot for the moon, it is clear what you do. If you do not think that, and want to avoid a disaster for the left, you do the opposite. Doing nothing, to be honest, is a cop out.

Labour: times change

For Labour party members

When it looked like Jeremy Corbyn might win the 2015 leadership election, I was asked to both endorse and condemn. I did neither. I criticised one of his proposed policies, but I was also highly critical of the way Labour had been run over the previous 5 years. It was a superficial focus group style of policy making that led to decisions like not defending the Labour government's fiscal record, which ultimately was an important part of the general election defeat.

For a Corbyn led Labour party to work, the new leadership had to bring on board the majority of its MPs. There would always be a minority - I called them the anti-Corbynistas - who would oppose Corbyn come what may, but it is a gross error to imagine all the MPs who did not vote for Corbyn were of this type. Some were prepared to work with him, and some were content to remain on the sidelines, pursuing their own particular interests.

I think many in the new leadership understood this, and attempted to involve MPs in key decisions. One successful example which I was involved in was the adoption of a new fiscal rule which would have avoided both 2010 and 2015 austerity. But ultimately this process failed. The rock that sank this ship was the Brexit vote: whether it could have succeeded otherwise is for another day.

There is a degree of unity between the Corbynistas and the anti-Corbynistas about the vote of no confidence: both agree that it was inevitable. But to concede this means that you think the Corbyn project was about remodelling the party over the long term, rather than trying to win the 2020 or 2025 elections. I do not believe most Labour party members would endorse such a project.

If this is true, then what these members need to resolve is whether it would be possible for Corbyn to successfully lead the party in 2020. One posibility after a 2016 Corbyn's victory is that those who expressed no confidence accept the verdict of members and start cooperating with the leadership. This is the possibility discussed here by Steve Richards, but it seems close to wishful thinking. The trust that is required to make that happen has disappeared. Again we can debate at length whose fault that is, but that debate should have no impact on how people vote. What is done is done.

What seems totally clear to me is that given recent events a Corbyn led party cannot win in 2020, or even come close. I was highly critical of the anti-Corbynistas who wanted to argue that their antics were having no impact on public opinion, so it would be absurd for me to pretend that people would elect to power a Labour party that had voted no confidence in its leader.

This has to be the bedrock on which voting decisions in the coming leadership contest should be based. Once you accept it, then various things follow almost automatically if Corbyn were to win again. One is that the likelihood of a split is strong. History tells us that it takes only a few to make this happen, and if a few think they will lose their seats anyway they have nothing to lose. Even if no split occurred, the constituency wanting to vote for a committed pro-European party of the centre-left is likely to remain strong while the Brexit negotiations continue. History also tells us that a divided left in a FPTP system cannot succeed, a fact that is built into the DNA of the Conservatives.

Another consequence of a bad defeat in 2020 is that the left within Labour will again lose its influence for a generation. Defeat and a divided party will not be the springboard on which a successor to Corbyn, such as those mentioned by Justin Lewis here, can win. Ironically their chances if Owen Smith wins in 2016, then reverts to the pre-2015 strategy and fails are much better. Keeping Corbyn until 2020 simply delays the date of his departure, with nothing achieved and much lost in the meantime.

The concern that most party members about Owen Smith is that, once elected, he will slip back into the disastrous form of right wing appeasement that led to Corbyn's election last year. Smith's support for Trident adds credence to that view. But there are important reasons why this may not happen.

The political landscape after the Brexit vote has changed substantially. May's cabinet appointments effectively put the Brexit side in charge of negotiations. That might be clever politics by May as far as her position in the Conservative party is concerned, but it is bad for the UK. Smith can provide a convincing pro-Europe opposition to that, which has to include headlining the benefits of immigration. This position will be supported by most of UK business, which cannot trust the Brixiters with looking after its interests. Labour will no longer feel tempted to temper policies to avoid offending 'business leaders'.

The other main area, besides immigration, where past Labour appeasement was so damaging was austerity. As I argued in the New Statesman, 2015 austerity - cutting public investment when interest rates are very low - has now been disowned by senior Conservatives. 2010 austerity - fiscal contraction rather than expansion in a recession where interest rates are at their lower bound - may still happen in a Brexit based recession. In these circumstances it is difficult to imagine that Smith would endorse this austerity, but he could confirm this by commiting to follow John McDonnell's fiscal credibility rule.

Those who voted for Corbyn only a year ago will naturally ask why they should, only a year later, change their minds. One important point is that the 2015 vote itself changed things: any leadership now knows it ignores its membership at its peril. But in addition the hopes of many of those who voted for Corbyn, which is that enough of the parliamentary could unite behind him to form an effective opposition and a potential government, have proved false. If that reality is ignored or wished away, the implications for those who oppose the current disastrous and incompetent Conservative government will be devastating.

The Corbyn Phenomenon

For readers not in the UK, some background. When Ed Miliband resigned as Labour leader after the 2015 election defeat, the election process for a new leader went like this. You needed 35 MPs (members of parliament) to nominate potential successors, and there would then be a contest over a few months before party members got to vote to choose one of the nominated candidates as leader. 3 people got the required number of MPs to nominate them, but the candidate from the left - Jeremy Corbyn - did not have enough MPs. Some MPs felt it would be good for balance to have someone from the left standing, so they switched their nominations in order that he too got the required 35.

From this you will gather that the left of the Labour party is pretty weak in parliament. It was also thought to be weak among Labour party members: the candidate of the left in the elections of 2010, Diane Abbott, received little support from the membership. So the general expectation was that Corbyn - who is not a particularly charismatic speaker - would also get little support this time. This expectation has proved completely wrong: polls put him in front, his meetings have been attracting growing audiences, and senior party figures are now panicking that he might actually win (in a similar manner to the reaction of Republican grandees to Trump winning their nomination).

Perhaps as a result, a few people have asked me to write about Corbyn’s macroeconomic policies - in some cases in the expectation that I would rubbish them, and in other cases in the hope that I would provide support. But the real question people should ask first is why is Corbyn proving to be so popular. It is nonsense to suggest that the Labour party membership has suddenly become markedly more left wing than it used to be. Corbyn’s popularity has much more to do with how the party in parliament has responded to both election defeats.

On issues like welfare, immigration, business or inequality, you can see Labour as having two impulses: one to go with its natural inclination, and another to try and woo the floating middle or working class voter whose views seem to be nearer those of the Daily Mail or Sun respectively (i.e. much more regressive). In terms of policy, this tended to produce either inoffensive emptiness, focusing on small differences from the government, or simple right wing appeasement. But perhaps more importantly, in terms of style it produced a kind of defensiveness where the chief goal of their leaders was to avoid anything that could be used against them by the right wing press. And not without reason: when Miliband gave a thoughtful speech where he talked about how you could have irresponsible capitalism that just went for the quick buck whatever the long term or social costs, he was forever after dubbed anti-business. This resulted in an opposition seemingly devoid of any clear policy message.

The issue of austerity is indicative. Labour have never adopted a clear anti-austerity line, even during the 2010-11 period of acute cuts. This is because they knew that much of the press would label this as fiscal irresponsibility, and that the BBC follows the lead of the press and the financial markets on these things. Their actual proposals in the 2015 elections involved far fewer cuts than Osborne promised, but because they were desperate to appear to be ‘tough on the deficit’, they either gave out a confused message or tried to talk about other things. Crucially, they failed to defend their record in government. As a result of their 2015 defeat, many senior party figures are now suggesting it is best for Labour to essentially follow Osborne’s macro plans.

The reaction of most of the parliamentary party to the 2015 defeat seems to be that the pre-2015 strategy was right in principle but had just not focused enough in placating the marginal English voter, which they believe means more appeasement and shifting further to the right. The party membership seems to have reacted very differently to the 2015 defeat. The membership appears to believe that the pre-2015 strategy has clearly failed, and it is time to start talking with conviction about the issues you believe in. This is exactly what Jeremy Corbyn does: he is a conviction politician, who is not prepared to try and be someone else to win votes.

Does that mean the choice is between arguing for your convictions and losing or trying to appease the right wing press and maybe winning? No, there is a way through this dilemma, but it is a way that is alien to most of those in the Labour party, and that is to spend much more time thinking about political spin. Labour lost the election because they lost the battle of spin. Labour did not lose in 2015 because they were anti-business, but because they were perceived as anti-business. They did not lose in 2015 because they had been fiscally irresponsible in government, but because they were perceived to be. They did not lose Scotland because their policies were damaging to Scotland, but because they were perceived to be.

Again, lets use fiscal policy as an indicative example. Labour lost because they were perceived to have been, and perceived to continue to be, fiscally irresponsible. That perception did not just arise because of a biased press or bad luck, but also because of good political judgement by Osborne and bad judgement by Miliband and Balls. Before the financial crisis it was generally thought popular support for a higher level of public spending was too strong, which is why the Conservatives had pledged to match Labour’s spending plans. But Osborne was quick to see that the recession changed things, because he could attempt to blame Labour for the deficit that was bound to arise as a result of the recession, and use deficit reduction to achieve their political goal of a smaller state. Labour’s counter to this in the first few years of the coalition government was to focus on the stalled recovery, but that in contrast was poor political judgement because eventually the economy was bound to recover, and at that point Labour appeared weak. In addition by failing to effectively challenge the Osborne narrative about the past, Labour lost a crucial battle of political spin.

As I tried to argue here, if Labour is to have any hope in 2020 it has to start attacking Osborne’s unnecessary and obsessive austerity, as well as getting the past history straight. There are also reasons for thinking that the power of deficit fetishism for voters will steadily decline. In that sense, on this issue and perhaps others, Corbyn seems to have an advantage.

But, and it is a huge but, as I have also argued on the deficit, you can only successfully run an anti-austerity line if you have a clear and robust counter to the irresponsible borrowing charge. You do have to reassure enough marginal voters, and as a means to that the non-partisan political pundits that determine the political tone in a lot of the media. It is not clear that Corbyn will be able to do this. Firing up the base, as Corbyn clearly does, is only part of a successful winning strategy. There is a strong danger that he will lose credibility on the budget through overoptimistic claims on tax avoidance or misguided ideas about monetary financing. You will not shift the Overton window on austerity and other issues if your position is too easily discredited. Blair and Brown won in 1997 partly by imposing strong discipline on the party, which collectively gave out a clear set of messages to the electorate.

Part of Corbyn’s problem is not of his making (unless you take a long historical view), and that is his fellow MPs. It was their majority that chose not to oppose Osborne’s welfare bill, which epitomised the disastrous strategy that I have described above. It is very regrettable that two of the three other leadership candidates have refused to serve under him. If, following a Corbyn win, the party united around him in exchange for Corbyn parking some of his less popular policy positions, Labour could once again become an effective opposition. If instead his leadership is accompanied by constant public division within the party, there is a danger that this will overshadow everything else.

It seems very unlikely that Corbyn as leader could win the 2020 election. Perhaps the most optimistic yet still plausible outcome is that the period of a brief Corbyn leadership will be sufficient to shift the centre of political debate (the Overton window) to the left on a sufficient number of issues like austerity. He would then step down to allow a new candidate from the centre left to take over before 2020, and win enough popular support by appearing to be less of a risk and a more natural leader, while retaining key Corbyn positions like a strong anti-austerity line. Whether that would happen I have no idea. 

Whether Corbyn wins or loses, Labour MPs and associated politicos have to recognise that his popularity is not the result of entryism, or some strange flight of fancy by Labour’s quarter of a million plus members, but a consequence of the political strategy and style that lost the 2015 election. They should reflect that if they are so sure they know what will win elections, how come they failed to predict the Corbyn phenomenon. A large proportion of the membership believe that Labour will not win again by accepting the current political narrative on austerity or immigration or welfare or inequality and offering only marginal changes to current government policy. On economic policy in particular they need to offer reasons for voters to believe that there are alternatives to the current status quo of poor quality jobs, deteriorating public services and infrastructure, and growing poverty alongside gross inequality at the top. That means, whether he wins or loses, working with the Corbyn phenomenon rather than dismissing it.

Corbyn's popularity and relativistic politics

This is just a short gripe about some of the commentary around the Labour leadership contest. So many who write about this express their puzzlement about how someone from the left of the party can suddenly appear to be so popular. This can only mean, they suggest, that the Labour party membership must have moved to the left. (For example this, from the FTs Jim Pickard.)

This mistake reflects something that Paul Krugman has remarked upon in the US: the tendency of commentators to define the centre as simply today’s mid-point between the two main parties. So as Labour moves towards the Conservatives, according to this way of looking at it the centre also moves to the right.

Now if that is how you want to define the centre, so be it. Such is relativistic view is very post-modern, I guess. But when that idea is then used to say that Labour party members must have moved to the left, its limitations become self-evident. In reality all that might be going on is that the views of Labour party members have not moved at all, but they have become left behind as Labour MPs and other prospective leaders have moved to the right. I think we have clear evidence that this is more likely to be what is happening. [1]

The most obvious example is the welfare bill, and Labour’s shameful decision to abstain on this. But another that is close to my heart is austerity. Talk to some, and being anti-austerity has become synonymous with being well to the left. Of course in reality it is just textbook macroeconomics, but if we stick to measuring everything on a left right axis, then remember that it was only as far back as 2009 that the need for fiscal stimulus rather than deficit reduction was the position advocated by a centre/left Labour party in the UK, and the Democrats in the US. It cannot be surprising, therefore, that among a relatively well informed electorate that is the Labour party membership an anti-austerity position is still seen as a sensible policy. With an extreme relativistic view you could say that by sticking to this position these people have moved to the left, but please don’t appear surprised that this has happened.

[1] It is equally fallacious to think that those who vote for Corbyn agree with every one of his policies. Some of his popularity may be a form of protest not just at the policies of his competitors, but also their style: see the clip in the middle of this typically amusing article by Mark Steel.

When Labour lost its soul, and the next election

Even the seasoned political commentators who are sympathetic to Labour cannot understand the reported popularity of Jeremy Corbyn, the left wing candidate for the Labour Party leadership. Perhaps those party members with more centrist views have left during Miliband’s leadership, they muse, leaving constituency parties dominated by the far left. These commentators may be right that if Corbyn was elected it would be electorally disastrous for Labour, but in failing to correctly understand his relative popularity they show how dangerous the Westminster bubble has become. It is not Labour party members who have changed, but the position of most of their potential leaders. 

If you want to see the tragedy of what is currently happening to Labour, you just need to look at the Welfare Bill that was debated in parliament yesterday. This bill

●     repeals most of the Child Poverty Act, and in particular abandons poverty reduction targets

●     tightens the ‘benefits cap’, the total amount a family can receive in benefits

●     extends the freeze on working age benefits for the next four years

●     limits child tax credits (subsidies for the low paid) to the first two children

Although Labour tabled amendments to this bill, after those were inevitably defeated it abstained rather than voting against. Of the four leadership candidates, only Corbyn defied this party line.

Labour did not vote against this bill despite the inevitable result that it will increase child poverty. Indeed, an apt title for this bill would be the ‘Increasing Child Poverty’ bill. One of the great achievements of the last Labour government was to reduce child poverty, largely through the system of tax credits, and today’s Labour party has abstained on a bill that will set about dismantling and reversing that.

I doubt if any Labour Party members think now is the time to start increasing child poverty. They wanted child poverty reduced under the last Labour government, and with the number using foodbanks in the UK rocketing, they hardly think now is the time to reverse that. For many party members reducing poverty is a core Labour value - it is one of the reasons they joined.

So why on earth did Labour not vote against this bill? The main reason Labour gives is that they must ‘listen to the electorate’. Measures to ‘reduce welfare’ are popular among voters. It is popular because voters constantly see stories in the press and TV about people living the ‘benefits lifestyle’, and justifiably resent that. This is what people mean by ‘reducing welfare’. But if you ask people about child poverty, they overwhelmingly believe that it should be a government priority to reduce it. There are not stories about the hardship that poverty causes every day in the media, and how the welfare system is vital in preventing even worse. So welfare is associated with supporting scroungers rather than reducing poverty.

The other excuse often given by Labour MPs for supporting measures of this kind is that they need to show they are competent to run the economy, which alas nowadays means reducing the deficit. Yet we know there is no macroeconomic logic in reducing the deficit as rapidly and as far as Osborne plans. Again Labour appeal to what voters believe, never mind the reality. In addition, this government is cutting inheritance tax for the better off. So not opposing this welfare bill is equivalent to saying that the children of the poor must pay so that the rich can pass on more of their wealth.

This electoral strategy of moving the party to the right by abandoning its core values seems doomed to failure. Unless the plan is to outdo the Conservatives in dismantling the welfare state, Labour will always be seen as ‘soft on welfare’ by the electorate. Even if they voted with the government on every single deficit reduction measure, the Conservatives will still argue that Labour’s claims to be competent at running the economy are not credible, and use the unchallenged assertion that Labour caused austerity as evidence. In addition, following the Conservatives to the right is potentially suicidal because it takes for granted that those on the left will continue to vote for them.

If you want to know the disaster that can befall those who follow this ‘a bit to the left of the Conservatives’ strategy, look at what happened in Scotland, and look at what happened to the Liberal Democrats. However it would be very foolish to think that the LibDems are no longer important in UK politics. Their new leader, Tim Farron, will undoubtedly try and fill the void that Labour leaves on the centre left, and I think he has every chance of succeeding. His party voted against the ‘Increasing Child Poverty’ bill. He said

“The truth is the Tories do not have to cut £12bn from welfare: they are choosing to. The Liberal Democrats will always stand up for families. We will not let the Conservatives, through choice, and the Labour party, through silence, unpick our welfare system."

I’ve also seen it reported that he said he would have attended the recent anti-austerity march. If he campaigns against what he could call Osborne’s ‘excessive and obsessive austerity’, his eclipse of Labour on the left is assured. For those who think that poverty should be reduced and the rise in food banks is an indication of social failure, it will be pretty obvious who to vote for in 2020.

Delusions on the UK left

Syriza has won the Greek election, which is the result I hoped for. For some this heralds the death of neoliberalism. To celebrate, George Monbiot - whose journalism consistently tells me more than most other journalists - says that here in the UK we should no longer vote tactically, but instead vote for what we want. What dangerous nonsense!

At least he is honest in what such an approach implies. Anyone who votes Green in any seat where Labour has a chance to win, aside from maybe a few seats where the Greens have a chance (more realistically one or two), is voting for a Conservative government. They will be in small part responsible for what happens under that government. (Not voting in a seat Labour has a chance to win is almost as bad.) This is going to be a tight election, so it matters. [1]

Monbiot says “If Labour wins in May, it is likely to destroy itself faster and more surely than if it loses, through the continued implementation of austerity.” His normal high standards of journalism based on solid research go out of the window. I have, along with the IFS and Resolution Foundation and many others, repeatedly pointed out that there is a huge difference between Labour and Conservative fiscal plans beyond 2015. It is quite possible that we will see very little additional fiscal tightening under Labour, and a lot more public investment.

But with Monbiot in this mood, all this means nothing. The additional hardship that those that depend on the state will undoubtedly suffer if Labour do not win: collateral damage for the eventual triumph of the left. The disintegration of the NHS starved of funds: it will happen anyway  - but the last Labour government raised taxes to increase NHS spending! This is not a strategy based on any kind of analysis, but wishful thinking because he finds it distasteful to vote tactically. (The British people had a chance to change their electoral system, and they chose not to.)

In looking at Labour, he sees only their departures from his own vision, and ignores their virtues and the realities of gaining power in today’s environment. He thinks Labour is currently silent on the evils of austerity because they believe in its virtues, whereas in reality they have been forced into this position by mediamacro’s obsession with the deficit. That is why they do not publicise their very different fiscal plans, but good journalism should see through that. Wouldn’t it be nice to have a prime minister who was prepared to stand up to the Murdoch press - oh wait. Wouldn’t it be nice to have a prime minister who said: “This country is too unequal. And we need to change it." - oh wait again (see postscript).

To say that Monbiot’s analysis represents a profound misreading of history seems trivially obvious, but not for left utopianism. Monbiot says “Fearful voting shifts the whole polity to the right.” Where is the evidence for that? Neoliberalism did not triumph because the left decided to compromise. Yes Greece voted for Syriza, but only when half of its young people were stuck in unemployment. Is that the future that he hopes for by abandoning tactical voting?

Parts of the radical left has always suffered from this misty eyed idealism, where through blurred vision everyone else looks the same. I remember being told by otherwise very intelligent people on the left that there was no real difference between George Bush and Al Gore. Monbiot described voting No in the Scottish referendum as “an astonishing act of self-harm”: no matter that the SNP tried to deceive the electorate that they would at all times be better off independent; a sorry claim given what has subsequently happened to the oil price. No doubt some said in 2010 that a future Labour government would be much the same as a Conservative government. Please, just look at the evidence.  

So, to repeat, anyone voting Green (or failing to vote) in a seat that Labour can win but the Greens cannot will in part be responsible for the consequences of a future Conservative government.

Postscript (19/2/15): Here is a link to those seats where this might apply. 

[1] An interesting question, from an academic point of view, is whether this argument is symmetrical, applying to UKIP and the Conservatives. Perhaps not in one sense. If Labour loses because of votes lost to the Greens, the reaction within the party will simply be to look for a more telegenic leader. If the Conservatives lose because of votes lost to UKIP, perhaps there is a chance that the Conservative Party will merge with UKIP, and adopt leaving the EU as policy.

Let us hope for a Syriza victory

If you think this sentiment is dangerous, because you have read that if this left wing party formed a government after the forthcoming Greek elections the Eurozone would be plunged into crisis, I suspect you should reconsider where you get your information from.[1] Here is why.

Syriza wants to reduce the burden of Greek government debt by various means, which would clearly benefit Greece and mean losses for its creditors. Its bargaining position is strong because the government is running a primary surplus. This means that if all debt was written off and the Greek government was unable to borrowing anything more, it would be immediately better off because taxes exceed government spending. In contrast the creditors’ position in such a situation is normally very weak, which is why some kind of deal is usually done to reduce the debt burden. Creditors take a hit, but not as bad a hit as they would if all debt was written off.

It might appear as if the creditors have an extra card in this particular case - they can throw Greece out of the Eurozone. Be absolutely clear, that is a threat being made by the creditors. Greece under Syriza has no intention of leaving the Euro, even if they defaulted on all their debt, so they would have to be forced out. I have never seen it set out clearly how the rest of the Eurozone would force Greece to leave without compromising the independence of the ECB, but let’s assume that they have the power to do so. Would the Eurozone ever carry out this threat?

Expelling Greece from the Eurozone because they wanted to renegotiate their debts would be an incredibly stupid thing to do. For a start, the creditors would lose everything, because obviously Greece would go for complete default in those circumstances. In addition, individuals and markets would immediately worry that the same fate might befall other periphery countries. (The story that Dani Rodrik tells is all too plausible.) What would be the gain?

The standard answer is that by exercising this threat you prevent other periphery countries trying to follow Greece’s example. Moral hazard - the sins that have been committed in your name! In reality the interest rate on part of Greek debt has already been reduced in earlier negotiations (see also Andrew Watt here). There is nothing compelling the core countries to treat each periphery country equally - as Ireland has found out to its cost. Peter Spiegel puts it clearly in the FT:

“How radical is Mr Tsipras’ idea of a Paris Club-style debt restructuring? So radical that, according to three officials involved in the discussions, eurozone officials actively considered such a plan in late 2012. The French-led initiative would have led to Greece’s debt obligations being cut in tranches — much the same way bailout aid is granted — after meeting a series of economic reform commitments.”

So even if some in Germany were stupid and cruel enough to suggest throwing Greece out, it seems inconceivable that the rest of the Eurozone (or the IMF) would allow it. In reality reducing the debt burden in Greece (and probably elsewhere [2]) would do the Eurozone a lot of collective good. Greece would be able to relax the crippling austerity that has had disastrous economic and social consequences. The core countries and the IMF could at least partially undo the mistakes they made from 2010 to 2012 in first delaying default, and then failing to impose a complete default, mistakes IMF staff [4] at least now recognise. German taxpayers might be encouraged to understand that the problem since 2010 has not been Greek intransigence but the actions of their own governments in trying to protect their own banks and in dispensing unrealistic degrees of austerity. Philippe Legrain argues the case in detail here. As Thomas Piketty succinctly puts it, Syriza “want to build a democratic Europe, which is what we all need”.  

Following a post like this I invariably get comments that tell me about all the terrible things that still go on in Greece. I want to make two final points here. First, if things have not changed following years of acute austerity in Greece, might this mean that we need something else besides more acute austerity? Might it mean we need a move away from the traditional governing elites? [3] Second, a widely recognised measure of fiscal stance is the underlying (cyclically corrected) primary balance (the deficit less debt interest). Here is the OECD’s latest estimate for 2014. Do not complain that Greece is backsliding on austerity! And before you tell me that the law must be followed, read a post I am proud I wrote.

Underlying government primary balances 2014, OECD estimates

[1] The preliminary decision of the ECJ today might have been much more dangerous. For an excellent discussion prior to the judgement see Ashoka Mody.

[2] Barry Eichengreen and Ugo Panizza doubt whether the primary surpluses that some countries would need to run without more debt relief are politically feasible. I’m a little more optimistic, but that is different from saying that some debt renegotiation would not be beneficial in the longer term.

[3] There would be the added bonus of seeing a well known economic blogger become a politician!

[4] My initial version just said IMF, but as Peter Doyle reminds me, this staff critique was not endorsed by IMF management. 

Inequality, inheritance tax and the UK election battleground

In an earlier post I sketched out what I thought would be the essential macroeconomic battleground for the forthcoming (2015) general election.

●    The Conservatives would lead on austerity and growth. In May 2012 I suggested the line: “Austerity laid the foundation for our current growth, so we need to stick with it to ensure growth continues”, and the Chancellor has certainly followed my advice! Having linked austerity and growth, the Conservatives will go on to claim that only they can be trusted to deliver more austerity, and therefore continued growth.

●    Labour, on the other hand, will lead on how living standards have stagnated over the last five years, which current growth is unlikely to change before the election. Having offered the Chancellor some spin in May 2012, in that post I thought it was only fair to offer something to the opposition, which was this chart.

This is all nonsense of course. Osborne’s claim is Orwellian: austerity was not necessary for achieving growth, but actually delayed it. In Labour’s case we have no idea what lies behind the productivity collapse which is the main factor behind the chart above, so ascribing it all to government policy is a bit heroic. Having said that, the more the Chancellor tries to claim credit for employment growth, the more he opens the government up to the idea that they are responsible for the decline in living standards.

For those who are tired of this focus on traditional macroeconomics, there may be some better news. One additional element in the battleground to come might be the issue of inequality, but only if Labour chooses to fight on this ground. The reason is that the Conservatives have signalled that they will reprise their ambition to raise the exemption threshold for inheritance tax from £325,000 up to £1m.

President Obama has said that inequality is the “defining challenge of our time”. Thomas Piketty's “Capital in the Twenty-first Century” emphasises the importance that concentrated wealth is likely to play in increasing this inequality if it is allowed to be transmitted across generations. Inheritance taxes are clearly central to all that. So the Conservative proposal to raise the inheritance tax threshold is in effect saying that they do not regard increasing inequality as a problem.

Will Labour respond by raising the issue of inequality? They have been reluctant to do this in the past, which seems paradoxical. One of the reasons for this paradox that I speculated on here was a view that to be elected Labour has to have some backing from the business sector. This position was recently outlined by Alan Milburn (former Labour cabinet minister) in this FT article. “Labour cannot afford a rerun of the 2010 election campaign, when not a single major corporation was prepared to endorse it. Overcoming that …. will need Labour to embrace a more avowedly pro-business agenda and match it with a more overtly pro-business tone.” He goes on: “Being a “One Nation” party means governing in the interests of all sections of society, better and worse-off alike. Reintroducing a 50p higher income tax rate does not match that objective.” There we have Labour’s dilemma in a nutshell. Taking action to reduce inequality is seen as anti-business, and it is argued that Labour cannot win without some business sector support.

So I read with interest a piece by Ed Balls in the Guardian today. There he majors on the cost of living, but there is just a hint of something more: “the ongoing cost of living crisis is deeper and broader than one or two sets of figures. It's about whether most people on middle and lower incomes see their real earnings grow in line with the growth in the economy.” But inequality is not mentioned once, and fairness is only mentioned in the context of “balancing the books”.

This is hardly raising inequality as a “defining challenge of our time”. Does this reflect a genuine difference between the left on either side of the pond, or simply that Obama is in power and Ed Balls is not? If it is the latter, is Labour right to fear that going strong on inequality would lose them the election? Let me end with some encouragement from an unlikely source. A recent Financial Times leader argued that

“ratcheting up the IHT threshold to £1m cannot be justified at present. Making this promise is good pre-election Conservative politics. Implementing it in these austere times would be socially unjust.”

They make a number of important points. Even if thresholds remain unchanged, and despite high house prices, the OBR estimate that just 10% of estates will be liable to pay any tax at all. Implementing the £1 million threshold would cost the Treasury more than £3bn, which in times of austerity is money that could be better used elsewhere. And finally they say that redistribution is vital if inequality is not to be exacerbated. When the FT starts worrying about inequality, perhaps this is after all a battle that Labour can win.