Labour needs an alternative to austerity

Labour Assembly Against Austerity

By Paul Roberts

Since using Party conference to shift the campaign agenda to defending ordinary peoples’ living standards, Labour’s support has risen in the polls, party activists have been invigorated and within sections of Labour’s ranks a discussion on alternatives to austerity has opened up.

The recent Labour Assembly Against Austerity tapped into this mood. Bringing together over 200 Labour Party activists, the event was upbeat about the possibilities to take forward the argument against austerity, both in the Party and in the population. This Labour meeting was possible following the success of June’s Peoples Assembly Against Austerity which created a new and effective framework to discuss how to defend the population’s living standards from the current offensive.

The policies Labour’s leadership have announced defending living standards, particularly the energy price freeze, are popular and have forced the Tories on to the back foot.

Labour’s new focus on living standards rapidly began to reverse its preceding decline in support, as discussed earlier here, and this rise has been sustained.

Labour support has gone back up by roughly 3 per cent, recovering half the ground lost between March and its September conference, which had seen a 6 per cent fall, according to YouGov.

The ‘cost of living crisis’ agenda has dominated political debate since September. Labour’s key proposal is for a 20 month energy price freeze, which addresses very deep popular concerns about rising prices and falling real wages. Other announcements, such as scrapping the ‘bedroom tax’, removing ATOS from ‘fitness-for-work’ tests and offering companies one-year tax rebates to pay the living wage, particularly enthuse party activists, as they highlight Labour’s difference with Cameron’s ‘nasty party’.

The fight against the Tories and Liberal Democrats has now moved on to the most advantageous agenda for Labour.

However, the content of these proposals remains extremely modest. And at the same time the commitment to Tory spending limits and wage freezes is unchanged, meaning that austerity will continue and living standards go on being driven down.

The price freeze proposal is not remotely the anti-capitalist threat the Tories wildly claim. Margaret

Thatcher’s 1980’s government regulated gas prices and subjected them to real reductions for several years. Labour estimates the price freeze will only save families an average of £120, small in comparison with the scale of attack people have experienced so far.

Median real incomes stagnated under the last Labour government, which contributed to its ejection from office in 2010. Since they have significantly fallen and in 2011-12 were 5 per cent below 2008-9 levels.

Labour itself points out that since the Coalition took office average annual earnings after inflation have fallen by £1,350. Whilst correctly identifying the scale of problem to be tackled no solutions are on offer. This will be an important issue for a Labour government. Growth returning to the economy is not enough for electoral success. The population is not fundamentally interested in whether there is 0.5% or 2% growth in GDP, they are interested in what is happening to their living standards. As with the current Coalition, Labour will rapidly lose support if it fails to halt declining living standards.

Maintenance of current economic policies will at best secure sluggish growth and living standards will fall further as real pay, benefit and public services continue to be cut. The alternative requires that the government directly increase investment to stimulate the level of growth necessary. Public intervention is required because the private sector is unwilling to re-invest its huge profits.

As confirmed by the recent Centre for Labour and Social Studies (Class) polling, the population supports the types of solution that need considering,

The Class/YouGov poll revealed people are overwhelmingly aware of their declining living standards; 77 per cent do not think they are benefitting from any economic recovery (for Labour voters it is 83 per cent, Tory voters 67 per cent, and Lib Dem voters 74 per cent).

There is also wide support for price regulation and for services and utilities to be run from the public, not private, sector.

The poll found that: 74 per cent think the government should have the power to control energy prices (86 per cent of Labour voters, 60 per cent Tory, 65 per cent Lib Dem); and 72 per cent the power to control transport fares (80 per cent Labour, 63 per cent Tory, 72 per cent Lib Dem).

On public ownership – which has not been very popular with the mass of the population for decades – 68 per cent think energy companies should be public (82 per cent of Labour voters, 52 per cent Tory, 62 per cent Lib Dem); 66 per cent think rail should be in the public sector (79 per cent of Labour voters, 52 per cent Tory, 64 per cent Lib Dem); 67 per cent think the Royal Mail should remain public (84 per cent of Labour voters, 48 per cent Tory, 64 per cent Lib Dem); and 84 per cent think the NHS should not be privatised (92 per cent of Labour voters, 77 per cent Tory, 82 per cent Lib Dem).

Any sign of economic recovery tends to renew workers’ confidence in defending their conditions. In the three months to September it has been reported that growth slightly increased to 0.8 per cent, up from 0.7 per cent in the previous quarter. This past month there has been a slight increase in industrial action across the public sector, with teachers, fire-fighters, lecturers and post office staff all taking one day strike actions.

Private sector employers are determined to continue slashing real wages and block any union revival. The owner of INEOS’ Grangemouth refinery last month showed how ruthless that fight can be, locking out the workforce till it agreed to the slashing of pay and pensions. Unite tried its utmost to defend its members, but fearful of unemployment the draconian terms were accepted. INEOS was fully backed by the Coalition and even the Labour party attacked the local Unite leadership with trumped up allegations of unlawful engagement in the Falkirk parliamentary selection.

By focusing on living standards Labour has exposed how unpopular the Coalition’s austerity policies are. The Tories are now scrambling around to come up with their own counter proposals and their internal discussion has heated up.

Cameron and Osborne are searching for minor initiatives on household bills (mobile phones, water, banks and fares etc) to announce in the Autumn Statement. Former Prime Minister John Major proposes a windfall tax on energy companies. A more fundamental debate about the Tory party’s orientation has also broken out, with Major and junior minister Nick Boles attacking its elitism and identification with the rich.

Within Labour the right-wing still insists there is no alternative to austerity. The Fabian Society has based its ‘Commission on Future Spending Choices’ on the Coalition’s economic plans to which it suggests just minor tinkering. Its least austere ‘spending choice’ requires huge cuts to local government and welfare, including for pensioners, plus the freezing of education, NHS and social care spending, whilst increasing taxes.

Labour’s welfare spokesperson Rachel Reeves announced that Labour intends to be ‘tougher’ than the Tories on benefits, i.e. cut them further.

This is all backed up with a barrage of propaganda.

For example, a tack from Progress is to wildly exaggerate the possibility of a Tory victory in 2015. It claims if Labour wins it would ‘defy history’, plucking out the spurious fact that in the past 80 years the opposition has only once returned to office after a single parliament out of power, and therefore any left policies would inevitably lose Labour the election. But they do not mention that Tory support over that period has suffered an immense and still continuing decline. And given Labour’s polling lead since 2010 the least likely outcome at the next election is the Tories being the largest party.

Evidence of the electoral popularity of more radical policies is rubbished. So for example it is claimed that no lessons could be drawn from the spectacular victory of Bill de Blasio, the Democrat candidate for Mayor of New York, who won 73 per cent of the vote on 5 November campaigning against austerity and police racism in a broadly similar economic situation to here

Other parts of Labour’s right are trying to shift the party towards the Tory/UKIP agenda on race and immigration, with former ministers Blunket and Straw making the most recent interventions along these reactionary lines.

A neo-liberal framework does not command a majority within Labour, in fact opposition to austerity is widespread. With the party’s campaign focus now on living standards, support for a real alternative can be built. The Labour Assembly Against Austerity’s efforts to help advance that campaign should be supported.