‘The Conservative belief that there is some law of nature which prevents men from being employed, that it is ‘rash’ to employ men, and that it is financially ‘sound’ to maintain a tenth of the population in idleness for an indefinite period, is crazily improbable – the sort of thing which no man could believe who had not had his head fuddled with nonsense for years and years.’
It is perhaps lucky that John Maynard Keynes never had to witness this ‘miserable shower’ of a government – not least for the wanton capitulation to such befuddlement of his beloved Liberal party. What he would have made of Nick Clegg’s complicity in its divisive, ideological assault on the public realm is anyone’s guess. But one can be sure that its recent celebration of a marginal improvement in the unemployment rate is a far cry from his impassioned pleas for full employment made from the Liberal stump in the 1929 election.
Alas, the road to full employment wound longer than Keynes might have hoped, taking in the economic devastation and political extremism of the 1930s before arriving in the unimaginable horror of the second world war. And it was here, as the state leviathan channelled every ounce of its power into fighting the Nazi Total War machine, that the tools for the postwar consensus were finally forged. Because deep within the bowels of Whitehall, William Beveridge, himself a liberal, was using those enhanced levers of power to turn his dry-as-dust enquiry (officially entitled the ‘Report of the Inter-Departmental Committee on Social Insurance and Allied Services’) into a battering ram for social justice.
Its effect upon the political consciousness was dramatic – when it was published on 1 December 1942 it took less than a month to sell a remarkable 100,000 copies to the general public. Once the war was won, Beveridge told them, a rebuilt Britain would emerge free from the ‘five giant evils’ – squalor, ignorance, want, idleness and disease.
But it was beyond the party of Beveridge and Keynes to carry out this radical transformation. In 1944 Ernest Bevin, Labour’s wartime employment secretary, finally secured full employment as an objective of government. And having resisted Tory attempts to bury Beveridge’s report in wartime, Clement Attlee’s Labour government swept into power and turned it into a reality. The Family Allowances Act created child benefit while the National Insurance Act provided unemployment benefit and secure pension provision. Then, in 1948, came perhaps the greatest achievement of all: the National Health Service. With it, the modern welfare state, with that mission to protect ordinary working people ‘from the cradle to the grave’ was born. To be the heirs to such prodigious achievement, undertaken in the teeth of postwar austerity, is as inspiring as it is somewhat daunting.
Fortunately, however, my parliamentary colleague Liam Byrne, Labour’s shadow secretary of state for work and pensions, only sees one half of that equation. And in his new pamphlet, The Road to Full Employment published, appropriately enough, by the Fabian Society he tackles arguably the most important question facing the Labour party as we look to create a recovery that is made by the many. That is how, following an economic malaise every bit as deep-rooted as that of the 1930s and in a financial straitjacket akin to that of 1945, do we build a 21st century welfare state?
What is more, the political context lends this task even more urgency. After all, it is only through reform (and of welfare in particular) that Labour can demonstrate, in deeds not words, its suitability to govern in difficult economic circumstance. The answer Byrne offers – and the clue really is in the name – is to reconnect Beveridge with Bevin and rediscover one of the Labour party’s defining principles: full employment.
As one would expect from one of the party’s most talented fiscal operators, the economic case for full employment is impressively marshalled. Yet to present such data by way of tantalising international comparisons – for example, were we to raise our employment rate for the over-50s to the level of Japan’s it would raise £3bn in direct tax receipts – is a particularly shrewd move.
Furthermore, though the traditional Keynesian arguments around increased demand, high employment and the transformative power of wage-led growth may be familiar to most Labour ears, Byrne also alludes to less well-known lessons on full employment from the last Labour government. Indeed, the emerging academic consensus is that the unprecedented period of growth between 1997 and 2007 in the UK (and similarly in the US 1990s) was actually caused by a labour market displaying full employment-like conditions. Full employment is not an idea whose time as come. Rather, as Byrne shows, it is one that never went away and Labour’s full employment tradition is in fact Blair and Brown every much as it is Bevin.
Nevertheless, it is remains an idea that is fiendishly difficult to execute. And it is here that Byrne’s pamphlet really comes alive. A jobs guarantee for the long-term unemployed; a devolution of billions of pounds from the ineffective work programme to local authority-controlled local works programmes; an Australian-style comprehensive disability insurance scheme; a new training benefit; and the restoration of Beveridge’s contributory principle – this is a pamphlet fizzing with radical ideas to get Britain back into work.
As such it serves an impressive rejoinder to those critics who say that Labour currently lacks imagination. And deserves to find its way to the top of members’ conference reading lists.
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Tristram Hunt MP is a shadow education minister and a vice-chair of Progress