Britain’s Moment of Truth

December 12, 2019

In Friday morning voters across the UK will wake up to one of two scenarios. Either Boris Johnson will be re-elected Prime Minister after securing a Conservative majority in the House of Commons, or the Labour Party’s Jeremy Corbyn will lead a minority government.

For some commentators, this reality has been a bitter pill to swallow. Last week the Financial Times declared that it could not support either major party in the election because both had been “colonised by populists” and had “abandoned the centre.”

It’s clear to anyone who has been following British politics that the tectonic plates of British politics are shifting. But to attribute this shift to Boris Johnson and Jeremy Corbyn is to confuse cause and effect. The roots of the stark choice facing British voters this week can be found in a trio of deep, interconnected crises.

The first of these is Britain’s economic crisis. The 2008 financial crisis exposed major weaknesses in the UK’s finance-led economy. But rather than chart a new course, the Conservative-Liberal Democrat coalition opted to double down on a broken model. Aided by an obedient media, a crisis of finance capitalism was quietly transformed into a crisis of public spending.

A decade on, and the price of austerity is clear to see. Rough sleeping in England has increased by 165 per cent, while homeless deaths have more than doubled. The number of people using food banks in the UK has increased to 1.6 million – up from just 26,000 in 2009. 14 million people are living in poverty, while close to 40 per cent of children are predicted to be living in poverty by 2021. A steep decline in funding relative to GDP has left the NHS facing an unprecedented crisis, while many local authorities are on the verge of collapse. After visiting the UK earlier this year, the United Nations rapporteur on extreme poverty accused the government of the “systematic immiseration of a significant part of the British population”.

While Margaret Thatcher promised that her economic revolution would bring about a ‘share-owning democracy’, and with it broadly shared economic power, the reality has been a growing concentration of ownership among a small wealthy elite. Last year alone the UK’s richest 1,000 people saw their wealth increase by £48 billion, meaning that they now have more wealth than the poorest 40 per cent of households combined. By cutting taxes for corporations and high earners, successive governments have ensured that Britain’s status as a playground for the rich survived the financial crisis intact.

But Britain’s economy is not just failing at the extremes. Stagnating wages and cuts to working-age benefits have led to an unprecedented squeeze on living standards for ordinary households. Analysis from the New Economics Foundation has shown that the UK population is still 1.6 per cent poorer than it was more than a decade ago on average, equal to £128 per person – something that is entirely unprecedented in modern times. Never before has Britain’s economy failed to raise living standards for such an extended period of time.

In different ways, both Boris Johnson and Jeremy Corbyn are symptoms of Britain’s faltering economic model. Boris Johnson’s reign as prime minister is a direct product of the Brexit vote. While the reasons for Brexit are complex, evidence shows that geographic variations in living standards, industrial decline and exposure to austerity played a key role in determining how people voted. Meanwhile, Jeremy Corbyn’s leadership of the Labour Party has been powered by a grass roots movement that is committed to replacing Britain’s faltering economic system with a more democratic, equal and sustainable alternative.

The UK is far from alone in experiencing such revolts. The impact of the financial crisis, and the austerity policies that followed, fractured the political argument in many countries, leading to the rise of many new popular movements of both left and right. As economists struggle to make sense of the world we now live in, even organisations like the IMF to the OECD have started to question the basic tenets of the economic orthodoxy they have preached for decades.

The second crisis is the crisis of democracy. Much has been said about the constitutional complexities that have arisen from the UK’s botched departure from the European Union. But much less has been said about the UK’s own democratic crisis.

As my colleague Adam Ramsay has argued at length, Britain’s democratic structures are far from neutral, and have evolved over centuries to protect the interests of the powerful and guard against popular uprisings.

Whether it is our profoundly undemocratic House of Lords and monarchy; our highly centralised model of governance which concentrates power in London; our first-past-the-post electoral system which means that most votes make no difference; the lack of any formal constitution; or our Overseas Territories and Crown Protectorates that function as the planet’s most important network of tax havens – it is clear that the ancient institutions of the British state are well past their sell-by date.

Combined with an economic model that ensures people have no meaningful say over the decisions that affect their lives, it’s hardly surprising that people seized the opportunity to “take back control” with both hands.

Painful as it has been, the Brexit vote has provided a much needed wake up call. As well as increasing awareness about the European Union, the process of trying to leave it has shone a spotlight onto areas of the UK’s constitution that are rarely discussed – from the role of the courts and the Queen in politics, to the fragile state of the UK’s own union.

The final crisis is the ecological crisis. The age of fossil fuels and mass production has generated an unprecedented amount of wealth, but this has come at an enormous cost to our natural ecosystems.

Scientists warn that without “rapid, far-reaching and unprecedented changes in all aspects of society”, the result will be devastating and irreversible damage to our climate and environment. This is not merely a future concern: from extreme flooding and rising seas to collapsing biodiversity and soil erosion, the effects are already devastating many communities, particularly in the Global South.

So far, politics has yet to step up to the challenge. But in the past twelve months, groups like Extinction Rebellion and the school strikers have heroically pushed the climate emergency to the top of the political agenda.

As a country that has played a disproportionate role contributing to environmental breakdown, and one that still enjoys the privileges of this position, the UK has a moral obligation to lead by example while also supporting a global just transition.

Whoever leads the next government, the priority must be to decarbonise the economy as fast as feasibly and fairly possible, and bring our environmental footprint within fair and sustainable limits. Doing so will require a wholesale transformation of our energy, transport, housing and agriculture sectors, and measures to rewire production, distribution and consumption patterns across the entire economy. Making the transition at the scale and speed required will require a mobilisation of resources on a scale not seen since the Second World War.

As such, the ecological crisis should not be viewed as a distinct crisis, but one that is irrevocably linked to our economic and democratic crises. We will either solve all three crises, or we will solve none.

How are Britain’s two major political parties responding to these crises?

The Conservative party has gambled that voters care most about the democratic crisis that has arisen from the failure to deliver the result of the 2016 EU referendum. By promising to “get Brexit done” by January 31st, Boris Johnson – a man of Eton, Oxford and the Telegraph – hopes to win people over as a “man of the people” standing up to an out of touch elite.

The problem with such a strategy is that, although it may prove capable of winning an election, it cannot survive contact with reality. In no possible universe will Brexit be “done” by 31st January. Brexit is a process, not an event ­– and it will likely be a very long process. Even if the government’s withdrawal agreement is approved and the UK leaves the EU on January 31st, this will simply move us onto the next, more consequential phase: negotiating our future relationship with Europe and the rest of the world. Experts believe these negotiations could last years.

And while the EU is far from perfect, the inconvenient truth for the Conservatives is that the real sources of Britain’s problems can be found much closer to home. But aside from “getting Brexit done”, the Conservative manifesto offers little in the way of solutions to Britain’s systemic problems. Devoid of original ideas, the manifesto is filled with empty rhetoric vague promises. Even the Institute for Fiscal Studies, usually reserved in its criticism of the Conservatives, remarked that the party’s “lack of significant policy action is remarkable.” Meanwhile, the party’s flagship pledges to increase spending on the NHS, policing and schools will do little more than reverse the cuts made by previous Conservative-led governments.

For the time being, Brexit may provide the Conservatives with the political ammunition they need to win the election. But it would be naïve to think they have simply given up on domestic policy. It is far more likely that the Tories have chosen to conceal the true extent of their policy intentions from the public in order to win an election – a tactic they have used in the past.

What might these intentions be? In recent years, Johnson and his allies haven’t exactly hidden their desire to dismantle labour and environmental standards, open up the NHS and to global competition and slash taxes for businesses and the wealthy. For many on the Tory front benches, this was always what Brexit was about: a once in a generation opportunity to bulldoze social and environmental protections and radically reshape the UK economy around free-market lines. Such “shock therapy” tactics have long been a key part of the disaster capitalist playbook, and corporations are already queuing up to get a share of the spoils.

Johnson’s hope is that by pledging to resolve the democratic crisis, he will win the political clout to drive forward his ulterior domestic agenda. But ironically, while leaving the EU might strengthen his hand within his own party, it would immediately open up new democratic fissures closer to home. Imposing a border in the Irish sea, which is what his revised withdrawal agreement will do, will deepen the already fraught divisions in Northern Ireland, at a time when support for a united Ireland is growing. Meanwhile in Scotland, the sight of a Tory government implementing a hard Brexit – neither of which people voted for – will fuel the demands of a growing and increasingly impatient Scottish independence movement.

In contrast, the Labour party is hoping that voters can be convinced that tackling Britain’s economic and environmental problems is more important than constitutional wrangling.

Labour’s manifesto is certainly not short of bold ideas. At the centre of the party’s plan is a Green New Deal, supported by a £250 billion Green Transformation Fund, to rapidly decarbonise the economy, restore the natural environment, and create a million green jobs. This in turn will be supported by a £150 billion Social Transformation Fund to invest in new schools, hospitals, council houses and infrastructure across the country.

Some critics, including the Institute for Fiscal Studies (IFS), have expressed doubts over Labour’s ability to deliver such a rapid increase in public investment. While it is true that Labour’s investment plans represent a decisive break from the recent past, many successful economies around the world sustain similar or higher levels of investment. Moreover, in the face of a climate crisis and a failing economy, the question should not be whether we can afford to increase public investment, but whether we can afford not to.

But it would be wrong to view Labour’s manifesto as another return to tax and spend. Instead, the party has embraced what has been described as an ‘institutional turn’ – a strategy focused on rebalancing economic power through a reordering of the basic institutions of the economy.

This goes far beyond the party’s plans to bring rail, mail, water, energy and broadband into public ownership. New ‘Inclusive Ownership Funds’ would transfer 10 per cent of company shares into trusts that are collectively owned by employees, while a new Co-operative Development Agency would be tasked with doubling the size of the co-operative sector. A new Sustainable Investment Board would bring together the Chancellor, Business Secretary and Bank of England Governor to co-ordinate strategic investment, along with businesses and trade unions. A new National Investment Bank, backed up by a network of Regional Development Banks, would be tasked with financing £250 billion of investment across the economy, while a new Post Bank, operated through the Post Office network, would aim to breathe new life into communities that have long been neglected.

The spirit of Universal Basic Services (UBS) is clearly present in the party’s plan to establish a new National Care Service to provide free social care for the elderly, and a new National Education Service to provide free lifelong technical, vocational, academic and creative education to all. Plans to create a new Ministry for Employment Rights, roll out sectoral collective bargaining, and reduce the average full-time weekly working hours to 32 with no loss of pay show that the party is serious about redressing the balance of power in the workplace.

Taken together, Labour’s agenda amounts to the most radical political-economic transformation for a generation. Crucially, it is also popular.

Polling shows that 75 per cent of the British public support back a four-day working week, 63 per cent support a Green New Deal, and 60 per cent are in favour of the next government making major changes to the way the British economy is run.

While in 2010 only 31 per cent of people supported higher taxes and government spending, today this has increased to 60 per cent. Meanwhile, Labour’s plans to take key utilities back into public ownership enjoy vast public support, ranging from 83 per cent for water to 64 per cent for rail.

But getting Jeremy Corbyn into 10 Downing Street is only the first hurdle for Labour. Once in power, a Corbyn government would likely face hostility to its programme on many fronts, including from opposition parties, foreign governments, the fossil fuel industry and the City of London.

Resistance would also likely come from the state itself. Many on the left have long expressed scepticism about the prospect of building any kind of socialism using the ancient institutions of the British state. The Scottish writer Neal Ascherson famously wrote that it is not possible “in the way that it is not possible to induce a vulture to give milk.”

A blindness to such constitutional confines has long been Labour’s Achilles heel. In its manifesto, the party states that in government it will initiate a UK-wide Constitutional Convention, led by a citizens’ assembly, to “answer crucial questions on how power is distributed in the UK today, how nations and regions can best relate to each other and how a Labour government can best put power in the hands of the people.” Although a noble aim, this would take time, and sceptics may contend that we have been round this street before.

Ultimately, whether a Labour government will be able to deliver radical socio-economic change through the apparatus of the British state while fending off domestic hostility, walking a tightrope on Brexit, and keeping the nations of the United Kingdom together, is a question that can only be answered in hindsight.

Political economic paradigms do not last forever. Over the last hundred years, Britain has experienced two major episodes of transition from one paradigm to another: firstly from laissez-faire to the Keynesian post-war consensus after the Great Depression of the 1930s, and secondly from the post-war consensus to Thatcher’s neoliberal revolution in the 1980s.

Now, a trio of economic, democratic and ecological crises have led us to the brink of another major shift. Britain stands at a crossroads. On one side is Boris Johnson’s tried and tested disaster capitalism, on the other is Jeremy Corbyn’s as-of-yet untested democratic, green socialism.

Whichever path the country chooses, the consequences will be felt for many decades to come.

Laurie Macfarlane

Laurie Macfarlane is currently economics editor for openDemocracyUK. Formerly senior economist at the New Economics Foundation, he focused his work on reforming the financial sector and the economy to align with the long-term interests of society. Macfarlane is co-author of the critically acclaimed book ‘Rethinking the economics of land and housing’ (February 2017), described by the Financial Times as “a lucid exposition of the dysfunctional British housing market”.

Tags: Brexit, building resilient societies, E4 crises, UK politics