What is THE alternative?

Tomorrow, tens of thousands of people will descend on London to “March for the Alternative” – an anti-cuts demonstration organised by the TUC, but which is likely to draw broad support amongst the left.

In my mind, the name of the event – “March for the Alternative” – encapsulates two strategic issues for the left when opposing the cuts.

1. What is THE alternative? Does it even exist?

I’d wager that there will be a multitude of different reasons for people attending the march – they are a public sector worker facing redundancy, their local library is being closed, an elderly relative is seeing their care reduced.

And it is entirely rational for these individuals to oppose cuts in government spending for these personal reasons.

But as Arrow’s Impossibility Theorem implies, you are unlikely to achieve a coherent macro-policy simply by aggregating individual preferences – if you agree that government spending will need to be reduced, then at some point you will have to make choices as to how this is achieved.

So I don’t agree there is one alternative – THE alternative. March for AN alternative might have been a better slogan.

This isn’t a trivial point, and links to a potentially more significant issue for the left and Labour in particular in opposing the government.

2. Focusing on THE (or AN) alternative is a strategic error.

By defining clearly what you stand for, you take the focus off what you are against. Opposition should, by definition, be primarily about opposition.

But if Labour pretends to be in government* by setting out specific alternatives, rather than general guiding principles, it will become a hostage to fortune; a lot will change between now and 2015.

*Something Ed Balls is more than a little guilty of. For example, in yesterday’s Commons debates he said:

“Under Labour’s plan, the economy was set to grow strongly, unemployment was falling, and we were on track to halve the deficit in four years.”

But Labour lost an election on their plan. So it’s probably time to reflect on alternatives, while opposing the only plan being implemented – the government’s.

Alex Baker is Secretary of the Young Fabians.

Why “too far, too fast” isn’t enough

In this member post, Stuart Clark argues that Labour needs to improve its strategy for opposing the Coalition’s economic policy.

The details of yesterday’s Budget are still being dissected, but the economic and political arguments are well under way. On the face of it the Chancellor’s measures seemed to offer help to the British public: increases in personal tax allowances and duty rate cuts amongst the most heavily publicised. Yet these measures pale into insignificance given the context of this budget – the weakness in the British economy and last autumn’s Comprehensive Spending Review.

Osborne’s “Budget for Growth” saw UK growth figures for current and future years revised downward. This is where the opposition should – and has – primarily focused: Ed Miliband’s response to the budget was barely three minutes old before we were hearing, yet again, how government cuts were risking the fragile recovery and were going “too far, too fast”.

But this sound-bite is inadequate in contesting the ideological basis of the government’s economic policy.

Ideology was all too apparent in yesterday’s Budget; the country’s economic problems were tackled in a market-orientated fashion by a government determined not to use the state to its full potential to help people.

Labour failed and is still failing to communicate effectively that the size of Britain’s deficit is not the result of overzealous public spending but a calculated economic decision taken to protect Britain’s economy from the loss of private sector demand and investment caused by a global financial crises and severe recession which followed.

Labour made a moral decision to use the power and resources of the state to shield the ordinary people of this country from the worst effects of the recession and in so doing accepted the need to run a deficit. As the private sector recovered, tax receipts would have risen and public spending could have been withdrawn – this was a viable strategy focused at preventing excessive unemployment.

The Chancellor’s rhetoric may be about growth, but if he really cared about it he would spare the country the cuts in public spending and increases in VAT, which will reduce demand and therefore harm our economy’s prospects.

Criticising deficit reduction as “too far, too fast” concedes the argument in favour of some sort of mandatory deficit reduction, something which Labour’s plan to halve the deficit in four years is also guilty of.

Reductions in public spending should be wholly conditional on growth.

Labour, by failing to articulate the success of the stimulus and the continued viability of UK borrowing in the short term, has made it far too easy for the Coalition to argue that cuts are necessary immediately.

And this makes it harder to expose the coalition policy as one of ideology rather than one of economics.

Budget – Webchat LIVE

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Labour and tax simplification

We’re told the budget will contain no new tax increases or spending cuts this week. Little wonder that the weekend’s papers were full of stories about duty tinkering, or reform of the tax system.

But the proposal to simplify personal taxes by merging National Insurance and Income Tax is a potentially significant reform in the long run, and poses some strategic questions for Labour.

1. The most obvious problem for Labour if National Insurance is abolished is that it removes the semantic tie between a form of personal taxation and the notion of the State as safety-net. National Insurance as a concept is probably more psychologically appealing to a plurality of the electorate than income tax; one is a safety net tied to a specific benefit, the other an imposition whose use is less tangible. Abolishing National Insurance will make it harder to sell tax increases for welfare reasons.
2. Yet it is questionable whether National Insurance is anything of the sort anymore – while government receipts are in theory hypothecated towards pension payments, other benefits and the National Health Service, the income in any given year is nowhere near enough to meet spending on the NHS, let alone other calls on the funds. In other words, there is already a blurring between general taxation and National Insurance in terms of what services they fund.
3. This goes to the heart of a broader issues which I think Labour needs to address – what should the role of the State be in Britain today, and in future? As I have argued previously, it is this question which should inform decisions about taxation and spending, not the other way round. When the National Insurance fund was established in 1948, there was a clear idea about its purpose. Today, Labour lacks a coherent vision as to how tax receipts should be disbursed.
4. A coherent vision as to why we need to tax in the first place will be increasingly necessary if the proposals are implemented. Tax simplification will mean taxation is more transparent. This probably implies something about the likely trajectory of effective tax rates in future – downwards. So, other things equal, Labour will find it harder in either opposition or government to generate revenues from personal taxation if this proposal is implemented. They’ll need better justification for increases as a consequence.
5. If Labour oppose the Budget move, then they are likely to be accused of two things by the coalition government: (a) being deceitful – Labour are likely to be portrayed as a party which would rather intentionally mislead voters as to the real level of taxation they face (this may stick, irrespective of its merits) and (b) being opposed to measures designed to boost growth, which this proposal is likely to be portrayed as. Neither of which will be comfortable ground for the party; it is the wrong time to look deceitful or anti-growth.
6. So Labour should not necessarily be afraid of tax simplification. In fact, if the Budget proposes a change solely to income tax and National Insurance, Labour might do worse than argue that the government combine all forms of personal taxation into one rate. Put another way, Labour should argue they levy the same tax rate on all forms of income – why is employment income fundamentally any different to capital gains, dividend income or inheritance? This might help flip the argument – if the coalition believes income tax and national insurance are equivalent, why do they believe capital gains tax or inheritance tax is fundamentally different to either? Are they trying to protect their (wealthier) constituents?
7. And why focus only on personal taxation? Surely it would be better to examine all taxation if this is a core part of a growth strategy. After all, businesses will be the driver of job creation.
8. Finally, all parties appeared to have largely ignored the substantive conclusions of the Mirrlees Review for the IFS which was published in November last year. This is a distinct shame, as the Review concluded with a sound set of recommendations for a more progressive, neutral and efficient taxation system. Labour could do worse than examine its proposals in detail – a simplified taxation system is not necessarily contrary to the party’s broader aims.

Given the above, Ed Ball’s response to the putative change to income tax and National Insurance was rather disappointing:

“Any sensible government that wants to win public support would see the advantages of keeping NI.”

That’s not wholly convincing, and doesn’t imply that Labour has given a great deal of thought to tax simplification.

In advance of Wednesday’s budget, they should.

Alex Baker is Secretary of the Young Fabians.

A ‘maxed out credit card’?

Ahead of the Chancellor’s Budget announcement this week, Young Fabian Member Mark Anderson takes the coalition government to task over its positioning of its austerity measures.

One argument given by the UK government for its vast programme of public sector cuts is that the UK has ‘maxed out its credit card’.  Such a crude and misleading analogy bears no resemblance to the reality of Britain’s financial situation, yet it goes largely uncontested in public debate and serves to legitimise the devastation that is being wreaked on public services, the welfare state and public and private sector jobs and working conditions.

Far from the UK being no longer able to borrow money on the international financial markets, the interest that the UK pays on its debt is currently at a historically low level, as is the UK’s debt-to-GDP ratio. UK ten year bond yields are marginally higher than those for the US and far healthier than those for Australia and New Zealand, for example. In the run up to last year’s General Election, amid scaremongering about a potential debt crisis and the dangers of a hung parliament, yields on government bonds remained stable.

In a September 2010 article entitled ‘Can bond yields fall even further from these historic lows?’, Ross Watson, portfolio manager with Securities and Trust of Scotland told the financial journal Investment Week that:

“For the taxpayer, it is excellent news that the Government can fund its deficit at such low returns.”

Such sentiment presumes against a country close to bankruptcy.

Another argument the coalition government gives for frontloading public sector cuts is that it is unfair to saddle future generations with a mountain of debt. This argument is a perversion of the realities of private sector-induced deficits on several counts.

Firstly, it fails to take account of the fact that over 70 per cent of interest payments on government debt remains within the UK, going into savings and pension schemes – yours and mine.

Secondly, it bypasses the fact that you can’t cut your way out of a private sector-created budget deficit. Trying to do so simply condemns an economy to years of low growth – as seen in Japan over the last decade (when the Japanese government cut its stimulus too soon after recession, before Japan’s private sector had had a chance to recover) or in the UK in the 1930s (the last time that a post-recession public sector cuts programme was implemented in the UK on such a scale). Economic slowdowns make it harder to address structural deficits and repay government debt.

Thirdly, taking demand out of the economy when the private sector has not fully recovered risks a double dip recession which would increase government debt, not decrease it. Despite the Coalition’s best efforts to mislead the public, the UK’s structural deficit is a product not of Labour overspending, but of the collapse in output of the private sector following the collapse of Lehman Brothers in 2008.

Fourthly, at a time when the economy is already on its knees, it leaves the economy ill-equipped to compete against its healthier, better educated and better connected, more meritocratic international competitors.

Ending the previous Labour government’s fiscal stimulus, public sector cuts, a contraction in UK GDP at the end of 2010 and increases in unemployment and associated welfare payments, combined with the damage that the prospect of deeper cuts to come has done to business confidence and investment, have exposed the continued weakness of the UK’s private sector and led to a rise in government bond yields, thus further increasing the amount that the UK has to pay to service its debt.

Austerity is doing the opposite of what we are told it is aimed at achieving, and all this before the cuts have really started to bite.

A version of this post has previously appeared on Left Foot Forward.

Are some wars better than others?

Is a civil war better than military intervention by other countries?

I ask because the Stop The War Coalition is tonight demonstrating against military intervention in Libya. On its website, the Stop The War coalition lists ten reasons against military intervention, which include:

• As soon as NATO starts to intervene, the Libyan people will start to lose control of their own country and future.
• Intervention can only prolong, not end the civil war.
• Intervention will lead to escalation.
• Respecting Libya’s sovereignty is the cause of peace, not is enemy.
• This is not Spain in 1936, it is more like Iraq in the 1990s. Or Kosovo and Bosnia.
• It is about oil.
• It is also about pressure on Egyptian revolution.
• NATO will only ever intervene to strangle genuine social revolution, never to support it.
• Liberal interventionism cannot be allowed to rise from the graves of Iraq and Afghanistan.

I’m not making these up, unfortunately.

Behind the assertion and the otherwise objectionable argumentation put forward by the Stop The War Coalition is a worrying underlying implication – that it is better to leave Colonel Gaddafi to use military force against his people, than risk shedding blood by intervening to oppose his brutality.

We’ve been here before.

Perhaps the Stop The War Coalition would like to believe there are moral absolutes – that killing is absolutely wrong. But the implications of taking a stance against military intervention to prevent civil war is that you might condemn people to die by other means. So much for your morals.

Or perhaps they are comfortable with military action in general, but object to the deployment of military force by a country in situations where there is no direct threat to its own people. But that is just as illogical – why oppose specific types of military action when you’re comfortable with the concept in general?

Or, more likely, perhaps the Stop The War Coalition long ago lost any coherence to its core aims.

The vexed issue of our involvement in military activity overseas did not resolve itself with the withdrawal of troops from Iraq. Bad people exist, and some of those do bad things to others. On the facts of each case, there may be merit in acting to stop them on humanitarian grounds. The bad people may die as a consequence. So too might some good. But they might have anyway.

But that cannot be the intention of countries acting to intervene – they act to prevent unnecessary loss of life, not to cause it. However, doing so is not without risks.

Moral relativism might be troubling, but being a moral absolutist about military intervention appears unsustainable.

Alex Baker is Secretary of the Young Fabians.

Put money where your mouth is, Mr Mitchell

In this Member Post, Lola Okolosie, writes about the challenges which remain for the gender equality agenda, despite the launch of UN Women.

UN Women. Never heard of it? Well, that is not altogether a surprise. News of its launch was lost amidst coverage of the North African political uprisings. In the month in which we celebrate 100 years of International Woman’s Day, it seems apt, then, to remind people of this little known organization.

Set up to ‘champion’ equality for women on the global stage, its remit encompasses tackling violence against women; advocating for female involvement in politics and making the economic argument for women’s equality. In the Asia Pacific region alone, it is estimated $40 billion is lost each year as a result of women’s limited access to employment. These statistics remind us of the urgency with which the issues linked to gender equality, in an age of ever increasing globalization, are a serious concern for all.

UN Women replaces four smaller organizations, themselves hindered by poor funding. A lack of adequate financial support threatens to render this new body as ineffectual as its predecessors. Only a handful of the UN’s member nations have made core-funding commitments, both the UK and US governments remain conspicuous in their absence. Such inaction threatens to make the organization and its director, Michelle Bachelet, toothless lions, merely existing as representational mascots to gender equality.

In July 2010 International Development Secretary, Andrew Mitchell, supported the setting up of the organization. Indeed, he was “relishing the opportunity to work with the single powerful agency which will have responsibility for promoting the rights of women across the world, and ensuring gender equality.” He qualified this by urging ‘UN [Women] to get started with delivering real change on the ground quickly.’

The question is, how can this be done when it faces a funding shortfall of £312 million?

Kathy Peach, Head of External Affairs at VSO UK welcomes Mitchell’s enthusiasm. However, for many gender equality campaigners, empty support is not enough. Peach argues that “it is now time for the Government to put funding behind its words and commit a minimum of £21 million in core annual funding to UN Women so it can start to deliver real change for millions of women.”

Over 400 events were held to mark the centenary of International Women’s Day and to celebrate what has been achieved in that time. The congratulatory tones of the last week must not lead us to forget one key fact: we are still a long way from winning the battle for women’s equality.

It’s time to put money where your mouth is, Mr Mitchell.

Listen to a podcast of a Young Fabian Women/One World Action joint panel discussion on UN Women by clicking here.

Is the London-centric media blogosphere stifling opportunity?

There is a fundamental problem at the heart of politics: inequality of opportunity.

With youth unemployment at record levels, a retracting public sector (with the public sector being key to graduate retention outside London) and an economy still struggling to achieve and maintain growth, many young people find themselves having to fight like never before to gain any sort of recognition or opportunities.

This is a significant problem for all young people, regardless of their chosen career path or geographical location. However, for young people seeking a career in politics, these factors are compounded by one enormous obstacle: Westminster.

There has been significant controversy recently around the practice of using unpaid interns in Westminster and, without getting into the morals of the issue, there is an underlying problem that would not be solved even if all interns were paid – namely, that it is still felt the route to a full-time job in politics is by being in London and working in Parliament.

Why, when the argument is currently about how to ensure these opportunities are open to all and not exploitative, are we so comfortable with the idea that the only path to having real influence or impact on politics is by living in one specific city in a country of 60 million plus?

Surely the Labour Party, as a party that believes in unanimous equality and has spent such a long time trying to rebalance geographical economic disparities, should be deeply uncomfortable with a reality in which the only way to ‘get on’ in politics – if you live outside London – is by moving there.

As Regions Officer for the Young Fabians, I find this deeply problematic. With a current system where opportunity and influence is so heavily centralised, no matter how well-paid internships may be, if they always require people to be based in London then they close the door to a large number of people who can not/do not want to move to the South East.

As a party, the Labour Party should have a problem with the idea that ‘the only way is London’, especially as this problem is not confined to Politics. The BBC should be lauded for its attempt to move significant numbers of jobs out of London; Manchester is a modern, cosmopolitan, internationally-competitive city, yet the way a large number of BBC executives have reacted to the move you would think they were being exiled to the furthest reaches of the globe.

But attempts remain to address this incredible imbalance in prospects and to give people the opportunity to make an impact and make a career for themselves outside of London.

Conferences like Netroots, though inaugurally based in London (let’s hope for somewhere north of Watford next year, eh?) are an important step to developing a UK-wide political system because they enable activists, bloggers (a non-geographically bounded activity) and campaigners to learn important skills that they can take back with them to their own areas of the country and use to make a difference and an impact in their own communities and in turn develop their own career and profile.

Experts have previously written on how activists can develop a significant online presence for little cost, such as Luke Bozier on Left Foot Forward, and this is clearly something that can be done anywhere in the UK. In a similar vein, this year’s Young Fabian executive is keen to ensure members from across the country are valued and supported in their work, and as such has arranged a number of workshops to help individuals develop their skills and abilities.

We’ve already held a blog and magazine writing workshop in January, led by Paul Richards and Hopi Sen. This gave attendees a chance to gain skills that can they can use no matter where they are in the country. On Saturday 12th March, the Young Fabians will continue this theme with ‘Getting Noticed in the North’, at the Friends Meeting House in Manchester.

Full details of the event, which will be addressed by Shadow Culture Secretary Ivan Lewis, can be found here. Topics covered will include making an impact on Social Media; getting your local campaign noticed on the national stage; what makes a good political website; and what national editors are looking for from regional writers.

Sam Bacon is Regions Officer of the Young Fabians. This blog was originally posted on Left Foot Forward.

Libya: The End Game

In this member post, Martin Edobor, a member of the Young Fabian Science and Society Network, discusses the current situation in Libya.

In the past few weeks we have seen a wind of change sweep through the Arab nations; a roaring voice calling for change. The first to fall was Ben Ali in Tunisia, and then Mubarak in Egypt and now on the brink is Libya’s Muammar Gadaffi.

Yet despite Tunisia and Egypt’s relatively peaceful uprisings, the Libyan revolution is proving to be both bloody and horrific. More than 200 people have been killed in Benghazi following protest, the use of mercenaries has been reported and a media blackout enforced.

International criticism from the west is intensifying. Gadaffi has defied calls from the world leaders to stand down and halt his act of aggression against the people of Libya. Political leaders in Europe and the US began are beginning to raise the pressure, pushing for a more concrete plan of action against Gaddafi, including a possible no-fly Zone. David Cameron has even talked up the possibility of military intervention. He made the strong statement: “We do not in any way rule out the use of military assets”, echoed by Italy Foreign minister Franco Frattini who has offered their Mediterranean military bases if the plan for military action were to go ahead.

What’s apparent is that there is a stalemate in Libya: a standoff between the rebel army and Gadaffi loyalists. The options being weighed are whether the West should militarily intervene, and support attempts by rebel leaders to oust Gadaffi, or to stand back and indirectly facilitate the current rebel movement (possibly by imposing a no-fly zone), which may risk a bloody and drawn-out revolution.

This is a tricky dilemma, with both options filled with pitfalls and drawbacks. The question now is what will Obama, Cameron and other western leaders choose to do?

Cameron is right to not completely rule out military intervention – when it comes to a tyrant like Gadaffi all options should be kept open. Yet Western leaders should tread carefully, as military intervention carries risk.

This is an Arab revolution, formed from the cries of freedom and the blood of the Libyan people. If the West intervenes militarily the movement may be jeopardised, changing it from revolution to war.

What next for Irish Labour?

In this member post, Young Fabian member Patrick Doyle reflects on the results of last week’s Irish Election, and what it means for Irish Labour.

Despite talk at the end of 2010 about the Irish election creating an opportunity for an unprecedented breakthrough for Labour, the clear winner has been Fine Gael – one of the two traditionally dominant parties. However, Irish Labour have had their most successful electoral showing, and they could be on the verge of a hugely significant decision over their role in the life of the next Dáil.

The most important election since the establishment of the modern Irish state has been one in which Labour emerged with a creditable performance. But, ultimately, one that may not signal a bright long-term future for the party. Undoubtedly Fine Gael have managed to secure their most impressive results since the formation of that party, but one can’t help feeling that the real story is the collapse in support for Fianna Fáil.  With coalition talks under way between Fine Gael and Labour, the latter should be aware of the risks of entering government.

If they accept the offer of power-sharing they will become the junior partner in government.  This is clearly not the first time this situation has arisen in Ireland, but given the context in which the election was held, could set the party back by years. The next Irish government is not going to be a popular one when the extent of their austerity measures becomes clear to the Irish population. Anger at Fianna Fáil is not going to sustain a Fine Gael/Labour coalition for the next few years. (As demonstrated in the UK, it is not always the most significant partner in power who takes the full brunt of public anger.)

Secondly, and perhaps most importantly, a Fine Gael/Labour government is likely to resemble a national government given their combined, dominant share of seats in the Dáil.  Despite their poor showing in the poll, Fianna Fáil could present themselves as the main opposition to the new government.  Micheál Martin would quite rightly sense an opportunity to regroup and re-establish his party’s traditional support if presented with such an outcome.

Labour must be aware of what is at stake, but in order for this to mark a true game-changer in Irish politics, they should be bold and reject the offer of government.

Otherwise, the outcome of this general election may merely represent a blip in the Fine Gael/Fianna Fáil consensus that has characterised the political history of the state.