Progress | Centre-left Labour politics

Social democracy in an age of austerity

I have been reading George Orwell recently, to prepare for my role as a judge of the Orwell prize for political writing. I’ve been told you can’t go wrong with Progress by mentioning Blair. So I thought it might work with Eric as well as Tony.

In his essay ‘Politics and the English Language’, Orwell advises political writers that ‘It is better to put off using words … and get one’s meanings as clear as one can through pictures’.

I found this advice rather helpful when struggling how to answer the question we’ve been set.

So what social democracy should look like in an age of austerity? The image that came to mind was – Warren Buffett. I think social democracy should look like the fabulously successful investor for the long term, with a social conscience, who is a billionaire many times over, but pays his share of tax, invests for the long term, and wants his staff to live well too.

Unfortunately, I suspect what social democracy looks like in an age of austerity is a cross between Wolfie Smith and Student Grant. So how can we make ourselves look a little more like Warren, a little less like Wolfie?

1.    Knowing the value of a penny

In an age of austerity the left has to demonstrate it cares about every penny it chooses to spend on the behalf of all of us. We must hate waste, seek out improvements, and make people feel that if we were spending their money we would always be on the lookout for the best deal for them. But we have to go further than that – it’s also about embracing different ways of delivering services, ones that are difficult for us, because it is vital that every penny of public money is spent wisely.

2.    Caution and carefulness

That general tone of knowing the value of money has to be matched by a sense of real caution in the overall fiscal sphere.

I call myself a fiscal conservative, not just because I am one, though I am, but because I want to reclaim for the left a reputation for caution and carefulness that is currently the property of small ‘c’ conservatives. I could just call myself a ‘good Keynesian’, but it wouldn’t have the same pleasurable sense of making my Tory friends feel I’m stealing their best lines.

Cautious fiscal conservatism is important for three reasons:

First, over the medium term, running completely sustainable budgets is just the right thing to do. It’s that basic, and that obvious.

Second, because avoiding fiscal crisis is the number one top tip for a centre-left government to stay in power.

Finally, I think it’s right because it fits with the mood of the times.

Someone said yesterday that people feel shell-shocked at the moment. I think that’s dead right. I think people also feel profoundly risk-averse. It’s not that people don’t want a better, fairer nation, but that they are more likely to respond if change is rooted in cautious, practical, careful steps. So we need to re-establish our position as sound guardians of the people’s money.

The government is committed to achieve structural balance at the end of a rolling five-year period. We should embrace a smarter but even tighter straitjacket. I like the ambition of the Chilean left’s rule of running a structural budget surplus by the end of our first term, and sticking to that for good. Or we might commit to running a current spending surplus if growth is projected to be above a certain level. We do all this to show that we really are going to be careful with money, and cautious about the risks in the world economy.

The counter-argument to this emphasis on caution is, of course, that we need stimulus now, need demand now, and so, to adapt St Augustine, should be austere, but not yet. My answer to that is the third quality we need on the left in age of austerity.

3. Thinking for the long term

I think we have to level with people, and with ourselves. The next few years are going to be tough.

I can argue till I am blue in the face that our-five point plan is a piece of economic genius on a par with the Bretton Woods agreement, and would prevent much of the pain ahead by investing wisely now, but sadly it is not going to happen.

Even after 2015, there will still be huge restraint needed in the public finances.  Living standards are going to be low for a long time – as we heard yesterday.

Yes, if we were in office, we could slow the pace of cuts, encourage growth faster.  But we are not, and even if we were, slowing the pace, or lessening the depth, does not remove the underlying pressures.

The choice for the left isn’t restraint or not, austerity or not. It’s not even austerity versus austerity-lite. Our real choice is whether we simply use an age of austerity to cut down many of the institutions we value as a nation in order to get back to ‘normal’, as the Tories would, or if we use a commitment to fiscal restraint as a tool to develop policies that are in tune with our values.

Because it’s here, on the battleground of what to support when funds are tight, on what is needed to rebuild our country, on what kind of nation we want to be, that Labour values can win.

4. Belief in the power of preparation, hard work, and being smart

Because if you want to build for the long term, you need to focus on the people and institutions that are going to support growth. That means a real belief in the value of employment, and in decent wages. It means a belief in making our education system outstanding, so our children are able to compete. It means increasing how much we spend on R&D – in the public and private sector alike. It means knowing that a successful economy needs a strong infra- and super-structure.

None of this is going to be easy. In an environment of fiscal tightening, a programme of investment for national renewal means even more severe pressures elsewhere. But I think it can be an ambition people might be willing to share in. They’ll do this if we embrace one final value.

5. You need successful capitalism for successful redistribution.

Britain desperately needs business to succeed. We need it to create jobs, we need them to raise wages, we need them to export. A successful private sector is like a city’s water supply. You hate it when it’s polluted, you want it to be a clean as possible. On a bad day, it can really stink. If it’s run really badly, people even die. But without it, the whole city dies.

We have to be a party that looks like it really cares about business success.T his is by the way, an area where we can actually offer something constructive to unions, because if we’re trying to help business, then trade unionism should be part of the compact we make with business.

Fundamentally, I believe a left-of-centre ambition of supporting private sector jobs and wages with a public sector that provides the skills and infrastructure to help business expand, and does so in a way that benefits all, not just a few – is a far more attractive agenda than the warmed-over laissez-fairism of the Tories.

But it will only work if we are just as passionate about holding down the costs of the state, and helping business flourish as we are about protecting the vital contribution of the public sector to our national life.

So: Knowing the value of money, being careful and cautious, thinking for the long term, valuing smarts and hard work, and helping business succeed.

A programme of fiscal conservatism for national ambition. I believe intelligent fiscal conservatism and a national ambition for recovery will be the two keystones for success for the left in the tough decade ahead. Labour can, and must, be the party of both.


Hopi Sen is a commissioning editor to Progress magazine and a Labour blogger. He blogs here and tweets @HopiSen

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Hopi Sen

is a contributing editor to Progress

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