This was a year in which the political dial was well and truly moved. At this point in 2016, Jeremy Corbyn was being written off, and Labour was supposedly destined for doom and destruction. Yet, a year on, the reverse is true. The snap general election in June allowed our party to renew itself and unite. A year ago, I wrote in these pages: “If we now focus on who our real political enemies and opponents are, just think what we can achieve.” To the credit of many in our party, that is exactly what we did. We united under the leadership of Jeremy Corbyn and, with our excellent manifesto and formidable activists, we took the fight to “our real political enemies”. Had the election campaign lasted another week, Jeremy would be prime minister today.
We cannot live on past events, however. We must be ready for the next election, whenever it comes. And we will be. It could be next year, or it could be in five years. I am under no illusion as to how desperate the Tories are to hold on to power. They know that the next Labour government will be the most transformative in a generation. Their feelings towards Jeremy Corbyn are reminiscent of the feelings of many in our party towards Margaret Thatcher at the end of the 1970s and beyond.
The Tories know that the next election is not the foregone conclusion that many in the liberal commentariat, who feel dispossessed by Jeremy’s leadership, are willing it to be. The UK electoral landscape has been emphatically rewritten.
To those who complain that we are not ahead of the Tories, I remind them that politics has been transformed by the EU referendum. And past polling shows that the double-digit leads we opened up over the Tories in the 1990s were only achieved because of the events of Black Wednesday (when the UK was forced out of the European Exchange Rate Mechanism at a cost of £3.4bn) and its aftermath.
Though we are level or just ahead of the Conservatives in most polls, we cannot be complacent. The next general election will be won on the battlefield of ideas. It is one that Labour has shown it is more than ready to compete on and win.
Fiscal Phil survives, for now
The Chancellor was able to survive his autumn Budget without getting sacked, largely thanks to some heavy expectation management. The Office for Budget Responsibility (OBR) revised down its forecasts for growth and wages while revising up its forecasts on debt and borrowing. Behind this lay the downgrades to productivity growth, which were, of course, entirely outside Philip Hammond’s control and in no way related to the Conservative policies of the past seven years!
In spite of this, because of some creative accounting – or “fiscal illusions”, as the OBR called the government’s rush to remove housing association debt from the balance sheet – the Chancellor was able to offer some giveaways. Hammond knew it was potentially his last chance.
His spending priorities owed more to the demands of Conservative backbenchers than to the needs of our economy: £3bn to prepare for Brexit but a pitiful sum to address the crisis in the NHS, and not a penny more for social care, children’s services or mental health.
And while there was no money for children in care, the Chancellor went ahead with George Osborne’s cuts to the bank levy (an annual tax on banks’ balance sheets): a handout of more than £4bn over the next few years.
Happy days for the bankers, then, but for the rest of us, in the words of the Institute for Fiscal Studies: it’s “not even nearly the end of austerity”.
Socialism with an iPad
At the heart of our economic malaise is the slump in productivity: the efficiency with which we work. The OBR has concluded that the woeful performance of the British economy over this decade will extend long into the future. Real wages are not forecast to regain their pre-crash levels until well into the 2020s, creating two lost decades for earnings.
Other economies similar to ours have also suffered since the financial crisis, but Britain’s productivity performance is an outlier among the G7. The major part of the blame for this lies squarely with successive Conservative chancellors, who, since 2010, have cut government investment in infrastructure – such as transport and communications – by £20bn.
This matters, because it is infrastructure that represents the backbone of a modern economy. Everything else – from new tech start-ups to the established factories – depends on it.
Since he arrived in No 11, Philip Hammond has at least recognised the problem. He has talked repeatedly about the productivity crisis, strangely failing to note his own role in supporting the decisions that helped cause it. Yet his solutions have been inadequate: minor increases in investment spending that will leave the UK government far below the OECD average will not undo the damage inflicted since 2010, still less prepare our economy for the technological future.
That is why the Labour Party has committed to investing £250bn over ten years: overhauling our crumbling infrastructure, installing new, low-carbon energy systems and putting in place the ultra-fast broadband that a modern economy demands. Every penny that is invested wisely in this manner produces a return in terms of jobs and growth: building a new economy – what I have called socialism with an iPad – that can work for the many, not the few.
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This article appears in the 08 Dec 2020 issue of the New Statesman, Christmas special