We need to talk about Tony – why Labour shouldn’t rush back to the right

Labour shouldn’t lurch back to the Blairite camp. EPA/Richard Lewis

Ed Miliband’s failure to win the 2015 election, or even to increase Labour’s share of seats, has been seized upon by the Blairite wing of the party to push its own centrist agenda. Peter Mandelson, one of the architects of New Labour, accused Miliband of making a “terrible mistake” in abandoning Blair’s focus on aspirational John Lewis voters.

Chuka Umunna claimed that Labour was punished by voters for running a budget deficit before the financial crisis. Tony Blair weighed in too, claiming that a more “left-wing” or “Scottish” approach would not help win back the voters lost north of the border.

There is no doubt that Labour’s failure to win over enough voters in Middle England marginal constituencies cost it the election, and it is equally true that Tony Blair’s New Labour project was successful in this regard in the 1990s and 2000s. But a similar centrist strategy would not work again for Labour. Another look at the reasons for Labour’s defeat shows why.

Financial crisis fallout

There is strong evidence that Labour is still carrying the burden of being in office when the financial crisis struck, fatally damaging its hard won reputation for economic competence. IPSOS Mori data shows that Labour held a substantial advantage over the Conservatives on economic policy throughout its period of government until 2008.

This advantage was lost when the financial crisis began, and has not yet been recovered: coming into the election, the Conservatives led by 41% to 23% when voters were asked which party had the best policies for the economy. Labour took the blame for the crisis, just in the same way the Conservatives lost their reputation for economic competence on Black Wednesday in 1992, when the pound was ejected from the European Exchange Rate Mechanism. In key constituencies, the perceived risks of a Labour government to economic stability undoubtedly shored up the Conservative vote.

New Labour cosied up to business. www.shutterstock.com

Lest it be forgotten, Tony Blair was prime minister in the pre-crisis period, when Labour purportedly overspent and allowed deficits to rise too high. The danger for Labour is in failing to recognise that the crisis was not caused by its supposed excessive spending when in government, but instead by the risky behaviour of the financial industry – and that the New Labour strategy of cosying up to business was directly responsible for the failures of regulation that allowed this to happen. Blair and Brown’s admiration for the wealth creators of the City of London and belief in flawed theories of efficient markets were, it is now clear, the wrong policies.

Ed Miliband’s critique of Britain’s over-financialised and rentier-centric form of capitalism was intellectually far more consistent with the views of economic policy elites than anything the Blairite camp has come up with.

Although Labour’s manifesto only hinted at reforming British capitalism – with timid measures on property taxation and house-building, a rise in the minimum wage and attempts to tax super-wealthy London-based oligarchs – it did address some of the fundamental imbalances of the British economy.

Failings of style not substance

Miliband’s failure lay in his inability to communicate these ideas and to combat Conservative arguments about economic management. Although his performance during the election campaign improved voter perceptions somewhat, he still lagged way behind David Cameron, who, unlike the Labour leader, is more popular than his party. The courageous decision to stand up to the right-wing press over the phone-tapping scandal did not pay off, but it is unlikely in any case that Labour would have won the endorsement of many newspapers.

Ed Miliband’s successor should follow his lead in terms of progressive policies. EPA/Kerim Okten

There is no reason why a progressive political programme should be unpopular. The aims of shoring up the spending power of large sections of the labour force, making housing available to younger generations and getting the wealthiest to pay a higher share of the costs of government are widely shared. A more charismatic leadership would certainly have helped. But so would a coherent account of where New Labour had failed, and why the current leadership of the party would not make the same costly mistakes again.

For Labour to win again, it will certainly have to win some votes in Middle England. But it is equally important to win support from SNP voters in Scotland and UKIP supporters in working class parts of England. Perhaps most important of all, will be mobilising social groups with low electoral turnout but which are likely to favour centre-left policies, such as the poor and the young. Signing up to stringent and probably unnecessary spending cuts and a deferential attitude to business leaders will be of little help in achieving this.

The Conservatives’ economic policies have failed even on their own terms and have imposed unnecessary costs on large swathes of the electorate. For Labour to concede the economic argument in these circumstances makes no political sense. Instead, it needs to try harder to win the argument and persuade the voters of the value of its agenda for making capitalism both fairer and more efficient.