The So-Called ‘New Deal’ Under Scrutiny

Mark Whittaker discusses Boris Johnson's "New Deal" for the economic recovery of the UK post Covid-19.

In February 2020, politicos were left stunned as the cautious free-marketeer Chancellor, Sajid Javid, was pushed out. His successor announced that he would spend big to ‘level up’ Britain, and then to prop up an imperilled British economy. Now, new Conservative MPs talk about industrial strategy and burnish their anti-austerity credentials as Boris Johnson promises a “New Deal” to “rebuild” the economy after the pandemic.

When the fiscal rescue package was launched in March, it became apparent that a new economic paradigm had started. From broadsheet columnists to meme makers, some even suggested that a shell-shocked Tory leadership was embracing socialism to get Britain through 2020.

Many in the Labour movement have exposed the paucity of Number 10’s ‘New Deal’ compared with its American successor. Britain’s version seems to have fallen prey to the PM’s hobby of repackaging old pledges as new announcements. Despite this, it’s good that Conservatives are publicly rejecting austerity: this will make it easier for Labour to win support for our narratives on strong public services and a green new deal.

Even so, it’s time to remember that spending big with taxpayers’ money is not necessarily the same thing as democratic socialism, or even social democracy. These ideologies aim to promote equalities, social justice and democracy: whereas the much-needed furlough and business bailout schemes have simply frozen our economic structures in place while unemployment steadily grows. Inequalities have been exacerbated during the devastating pandemic, and even the limited environmental gains are likely to be erased without further action.

State intervention doesn’t always support left-wing objectives. Singapore has long had one of the world’s biggest sovereign wealth funds, and state ownership of more than 3 in 4 homes: yet it’s run by a conservative administration which is a poster child for many right-wing ideologues in Britain. Before democratising in recent decades, the South Korean government intervened heavily in the economy while harshly repressing trade unions, and holding down workers’ wages.

In the USA, Trump surged to power promising an infrastructural revolution, then directed much of the federal government’s energy into ripping up democratic safeguards against environmentally harmful fossil fuel projects. And in many countries which are currently back-sliding from democracy, government grants and contracts are used to entrench the power of ‘populists’ across the political spectrum, and reward their cronies.

The Left’s expectations have been dashed many times in the last 40 years, when free-market dogma was dominant. But we mustn’t be dazzled in the headlights as the Right takes a statist turn. There are questions we must ask as left-wingers, as we scrutinise the new ‘big spenders’ in the 2020s:

  1. Who decides where and how state funding is spent? Trade unions and other workers’ representatives must have a voice at the table, as they did during the design of Britain’s initially generous furlough scheme. Local governments must be empowered to work with citizens to determine spending plans that make sense for their communities. Crucially, we must make sure investment is directed transparently to where it’s needed: not just channelled into marginal constituencies as a party-political project.
  2. Who gets the money, and permission to proceed with their projects? Will the government prioritise democratically-run public services, and give SMEs and social enterprises a look-in? Or will a small group of big corporate contractors and party donors dominate?
  3. What strings are attached? Across Western Europe, activists have demanded that state bailouts come with conditions on decarbonisation to support a green recovery. In Wales, the Labour-led government has excluded companies based in tax havens from bailouts. This is a good start: and leaders at every level should build these objectives into public sector financing and commissioning more widely.
  4. Who benefits, and who pays? The fruits of the ‘money tree’ must be shared fairly. In the short-term, Labour must keep pushing for a recovery which creates good sustainable jobs in the real economy, and gives frontline workers a much-deserved pay rise (especially in caring professions). In the long-term, if the state’s debts must rise, we must demand that those with the broadest shoulders contribute the most to repayments, especially through wealth taxes. We should resist rises in regressive taxation, and further rounds of cuts to welfare and services.
  5. Is this strengthening democracy and workers’ rights? In Owning the Recovery, the Co-operative Party have outlined the path to an economic recovery that could boost community wealth-building and workplace democracy in every sector. Let’s take it.
  6. Is this helping or harming the fight against climate change? In Britain, will the ‘Build Build Build’ agenda be an excuse to rip up environmental protections, and resurrect harmful practices like fracking? Or will governments at every level maintain high standards, and focus on shovel-ready renewable projects like onshore wind and tidal energy: to help us Build Back Better?

Mark Whittaker is Networks Coordinator on the Young Fabian Executive Committee, and a former Chair of the YF Economy & Finance Network. He’s a Labour and Co-operative Party activist, who writes in a personal capacity.

For more on this topic, Mark’s hosting a YF event with the authors of the Co-operative Party’s new report ‘Owning the Future: The Co-operative Plan for Recovery’ on 21 July. You can find out more and sign up here.

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