One Nation Labour By Stewart Wood

This is an edited version of Lord Woods speech opening the One Nation Labour Conference, held at Queen Mary, University of London on 18 th April 2013.

Margaret Thatchers death last week reminded me of the occasionally uncomfortable truth that she is an important reason why I am in politics. I grew up in the 1980s in an instinctively conservative but not very political family. But politics in the Thatcher era demanded attention. It felt inescapable, and forced you to inspect your values. Whether you hated or admired what she was trying to do, you couldnt help but be struck by Thatchers ambition to change the country in a fundamental way. I profoundly disagreed with much of what she did, even though (or perhaps partly because) my family were big fans of hers. But I was impressed by her belief that a political project based on ideas could be transformational and make our country a better place. I thought that was what politics at its best should be about. What Thatcher spotted was the exhaustion of the old settlement, the model for governing Britain that had enjoyed broad consensus since the Conservatives made their peace with the legacy of Attlees government. In place of consensus she demanded faith faith in a philosophy (economic

liberalism combined with philosophical individualism) that ultimately significantly damaged our country, and a faith that was shared by some and profoundly despised by many. This moment is like the late 1970s in one important way: it is a time that calls for spotting the exhaustion of an old settlement this time, the one established by the Thatcher government and for politicians who are bold enough to argue for big change. The One Nation Labour approach being developed under Ed Milibands leadership is a response to that challenge. It calls for a different way of organising our political and economic life. I believe that it can meet the challenge of building the solidarity that Britain needs to weather the storm in the tough times we are facing (and will continue to face in the years ahead), and of building a different kind of economy that will provide more prosperity as well as security over the longer term. And it points not just to building a different kind of economy, but a different kind of ethic underpinning the way we live together. The starting point for the One Nation approach is a rejection of a country characterised by division. Our economy, society and politics are damaged by division, and a country in which the interests of a few dominate the interests of the many is less economically successful, less socially united, and less selfconfident than we could and should be. Instead, the One Nation approach looks to build a country whose productivity, prosperity and common life are based on the many, not the few. It is a patriotic progressive idea a belief that our country is at its best when it attacks division, separation and exclusion.

So what needs to be done? Where should we focus our energies, and what principles should be used to guide the policies that we are developing in the run-up to the 2015 election? In my view there are five core ideas that underpin the agenda of a One Nation Labour Party. The first idea is a commitment to building a different kind of economy. We need to find a way to grow, compete and succeed: one that demands what Ive called a supply-side revolution from the left. Why? Firstly, because Thatchers free market fundamentalism the heroic faith in maximally free markets, deregulation, minimal taxation for the wealthiest & trickle-down economics was not just a problem on grounds of solidarity and social justice. It was a problem because it didnt work. While many of the aspects of what Thatchers governments did were necessary correctives to the period that came before (on public ownership of lame-duck industries and aspects of industrial relations for example) the rules that were hardwired into economic policy did not bear the fruit that its advocates promised. Indeed Stewart Lansley has shown that on each of the measures of growth, productivity, unemployment and volatility, the period from 1945-79 outperforms the period from 1979 to now. But there is a second reason other than the failure of the old settlement that demands a new one: the need to find a different model of how we pay our way in the world in the future. David Cameron and George Osborne like to revive the language of there is no alternative (TINA) to justify their commitment to austerity in a time of recession. They are right, but for exactly the wrong reasons. The truth is we have no alternative to competing on the basis of higher skill, higher productivity & higher wages. Given the extraordinarily rapid emergence of China, India, Brazil & many African countries into the
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global economy, there is no route to economic success for our country on the basis of a deregulatory, race-to-the-bottom approach to global competition. If we are to raise our game on the productivity front, we need to have a different approach to wealth creation at home. We have to kill off the wrongheaded theory of trickle-down once and for all, as well as the accompanying and mistaken prejudices that the only real wealth creators are those with the most wealth, and that everyone with wealth is automatically a wealth-creator. It is pro-wealth creation, not anti-wealth creation, to insist that wealth is generated by the many not the few. Building an economy that is made by the many requires change, and this is where a supply-side revolution comes in. It means working with employers to build a technical education & apprenticeship system we can proud of. It means reforming our banks (and promoting greater competition in the market for banks) so that they compete with each other to provide capital for innovation, rather than seeing their role as making profits through speculation. It means supporting our leading industries from pharma to advanced manufacturing to creative industries and business services that compete through building skills and hence higher wages throughout their workforce. It means filling out the middle of the hourglass economy, based on a hardheaded realisation that we will not be able to compete without a radically different approach to competing in the global economy. Building an economy made by the many ties in to the second element underlying One Nation Labour: a determination to address inequality. In the 1980s, Britain was told not to be so squeamish about growing inequality. On the left, there was a tendency to think that taking steps to address inequality
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would question our commitment to business & a thriving market economy. But we now know inequality was a symptom of deeper failure of the post-1979 economy. For one thing, growing inequality showed that trickle-down was not working as it should. In 1979, the top 1% received under 6% of Britain's personal income; in 2005 they received over 14 per cent. From 1980-2010, 22% of every extra pound earned in the UK has gone into the pockets of the top 1%. This scale of growing inequality went to the heart of the legitimacy of the post-79 settlement: that freeing up the top would ultimately be to the benefit of all, not just the few. It wasnt. What rising inequality revealed was that there was a crisis of wages in the post-79 settlement. In the 30 years after 1978, households in the middle 10% of the income distribution captured about 6% of all income growth in Britain, while those in the top 10% captured 38% - over six times as much. The share of UK GDP going to wages rather than profits has fallen by 10% in the last 40 years. The consequences for our standards of living have been bad enough, but the damaging effects have rippled out much further to the wider economy. Middle & lower income families responded to leaner earnings by taking out more debt. Governments role became more and more to support incomes at the bottom to compensate for the failure of the labour market. And the combination of an asset bubble at the top and overleveraging by the middle (as Tim Lancaster and others have argued) increased the fragility of the financial markets in the run-up the 2008 crash. These are all failures we must learn from. Combating inequality is about the stability & health of our economy, as much as it is about social justice. How do we combat it? Of course through redistribution that will remain a key part of the armoury of a progressive government. But it is too much of a burden on
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taxpayers to expect governments tax and spending activity to bear the whole weight of correcting gross and growing inequality. A One Nation approach to inequality is one that looks to change the rules of markets so that we get to a more equal distribution of economic power and rewards even before government starts collecting taxes or paying out benefits. We want an economy where greater equality is baked in more, not bolted on. That wont be easy, and it will take time. But that is why we are looking at policies on incentivising the living wage, & supporting ways to enable companies to exercise stronger wage and bonus restraint at the top. It is why we want a revolution in technical education in our schools so that there are alternative routes to higher earning potential other than the academic route. And its why weve committed to a mansion tax to fund tax relief for lower income earners. The third element of One Nation Labour is an emphasis on responsibility. Of course, everyone supports responsibility. But when politicians of the Right talk about greater responsibility, they invariably mean it as a demand on one group: those who rely on state support. The Tories believe in responsibility for those on benefits: the One Nation approach is to demand responsibility for all. But the difference goes further. The Post-Thatcher Tory view of responsibility depicts the relationship between people in society in transactional terms. But the One Nation view of responsibility is more substantial and more demanding. It is an ethic that binds people together across differences in age, income, ethnicity and place. We expect reciprocity and mutual obligation of all to all to be the hallmark of our country. We should be intolerant of the small minority who abuse our welfare system. But responsibility equally demands that those with more bear a greater share of the load when times are tough, and be
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accountable to others in society when their actions have such a large effect on the public interest. Responsibility should also be at the heart of our social security system. Thats why Ed Miliband, Jon Cruddas, Liam Byrne and others have talked about ways in which we can strengthen the contributory principle. Our welfare state has always been a mixed ecology of means-testing, contributory-based and universal principles, and it will remain so. But the prominence of the contributory element has declined since the era of the Attlee government. Restoring it is both fair and good politics. The legitimacy of welfare support will be strengthened by thinking imaginatively about ways to restore a link between what people put in over their working lives and what they get out in times of need. The fourth core idea of One Nation, often associated with the Blue Labour tradition which Maurice Glasman and others have written about, is protecting the elements of our common life. This has different elements to it. For one thing, it means building institutions and spaces that bring people together across classes, ethnic groups and other divides. When the riots happened in Tottenham in 2011, I was struck as many people were by how communities who lived hundreds of yards from each other never could live entirely separate lives from one another: how they lived in the same neighbourhoods, but in parallel worlds. We need to think how our approach to public spaces, schools, arts and culture and other areas of public policy can start to address that. Protecting our common life also means looking at our country with humility and asking: what is it that people value, and how can we protect it, rather than telling them what they should value. And it means finding ways to increase communities ability to have more control over the places in which they live &
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ways of life. Thats why we support stronger local control over what your local high street looks like. The commitment to protecting a common life is a challenge for Labour. Not simply because it is traditionally seen as a conservative idea. But because it means we must be prepared to tolerate diversity if it reflects what people value. The final core idea of One Nation is to challenge the ethic of the post-79 settlement. In a way this is the most nebulous part, but also the most challenging part. Margaret Thatcher famously said: Economics is the method. The object is to change the soul. Im not sure souls can be changed, but the rules that an economy operates under can be changed. Those rules are based on norms & ethics, and One Nation is in part a fight for a new consensus on a different set of norms and ethics underlying our political economy. So a One Nation approach embraces the importance of individual freedom, but rejects the idea that individualism pursued by each magically meets the interests of all. A One Nation approach is not naive or utopian about difficult choices or disagreement, but rejects a politics based on pitting people against one another rich vs. poor, town vs. country, old vs. young. A One Nation approach rejects the idea that obligations to others are limited only to those on benefits, and demands reciprocity across society. And a One Nation approach rejects the idea that the ethics on which our society works should be a world apart from the ones according to which our economy works. These are the five core ideas that I see underlying the One Nation Labour approach. It is a radical ambition to change and unite our country. But it is a challenging approach for Labour, because it forces us to think in ways that may not have been familiar to us in the past.

The most obvious challenge is over spending. Of course using tax and spend policies wisely will continue to be part of what Labour does in government to achieve our goals. But we will govern in tough times. More fundamentally, a new settlement, and especially an economy based on growing from the middle out, will not be achieved by more and more spending, but by rewriting the rules. This is a very strong progressive ambition, but one that is more familiar to social democratic parties in Western Europe than it has been to the Labour Party in Britain. It is also a challenge because the One Nation approach forces us to think about how to build new institutions: in training, in banking, in the workplace, to strengthen local democracy, and with regard to the Labour party itself. Building new institutions between the market and the central state is not easy, nor is it familiar, but it is crucial to making all this possible. Lastly, it is challenging because to build One Nation, we are going to have to restore faith in politics. Ed Miliband has said that when he goes round the country, the reaction that concerns him most is not from those who attack Labour, but the attitude that Youre all the same and No-one can really change anything. The belief that nothing can be changed is far more the enemy of progressives on the centre-left than it is for those conservatives on the right. Conservatives thrive on pessimism about the possibility of change; the centre-left is starved of oxygen by it. That is why both the starting point and the indispensible condition for One Nation to succeed is a determination to show that change is possible, and a relentless optimism that politics can transform lives for the better.

Stewart Wood is a member of the House of Lords, the Labour Shadow Cabinet as shadow minister without portfolio and adviser to Ed Miliband. This is an edited version of Lord Woods opening remarks to the One Nation Conference, held at Queen Mary, University of London on 18th April 2013. Political notes are published by One Nation Register. They are a monthly contribution to the debates shaping Labours political renewal. The articles published do not represent Labours policy positions. To contact political notes, email onenationregister@gmail.com

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