Throughout its history the divisions between Labour’s left and right – over issues ranging from nationalisation and public ownership to the market economy, Europe, and defence – have served to disguise a subtler, but no less important, fissure: that between what the writer GDH Cole termed ‘federalists and centralisers’.
It is a centuries-old tension deep in the British left. The historian David Marquand highlighted the distinction between ‘democratic republicanism’ on the one hand and ‘democratic collectivism’ on the other. The latter ‘were content with the existing state, but for them it was the agent of social transformation, guided by science, reason and their own grasp of the dynamics of historical change’. The former, according to Marquand, advocated ‘civic activity versus slothful apathy; and, most of all, government by vigorous discussion and mutual learning versus passive deference to monarch, capitalist and state’.
In 1945, Labour’s centralisers took the old Clause IV of the party’s constitution as a green light for central planning, nationalisation and state control. But the 1918 conference which adopted Clause IV passed another resolution pointing in an altogether different direction. It urged Labour to avoid ‘the evils of centralisation and the drawbacks of bureaucracy’ by giving ‘the fullest scope … to the democratically elected local governing bodies’. ‘Local authorities,’ it concluded, ‘should be given a free hand to develop their own services in whatever way they choose.’
One hundred years on, while Labour has long since jettisoned its attachment to central planning and nationalisation, its attachment to centralisation remains. New Labour took steps to loosen it with devolution to Scotland, Wales and Northern Ireland, together with the restoration of city-wide government in London. In public services, the creation of state-funded but self-governing local institutions – such as foundation hospitals and academy schools – and the introduction of patient choice in the NHS were important strikes against centralisation. But there was no concerted attempt to place public services under local control and ownership, and, in the economy, measures such as encouraging greater employee ownership were barely attempted. Wealth and opportunity may have been spread by New Labour, but the new Clause IV’s injunction to place power in the hands of the ‘many not the few’ faltered.
Over the last two years Ed Miliband has told us often about the new kind of capitalism he wants to create. But we have heard less from him about his vision for the state. Last month, his Hugo Young lecture began to redress this. ‘We should always be seeking to put more power in the hands of patients, parents and all the users of services,’ he suggested. ‘Unaccountable concentrations of power wherever we find them don’t serve the public interest and need to be held to account.’
Miliband is right that public trust in the banks and energy companies is at rock bottom, but, as his lecture recognised, voters’ faith in government is not much higher, either. ‘I meet as many people frustrated by the unresponsive state as the untamed market,’ he remarked. The Labour leader knows that this poses a particular challenge and responsibility for the left. As The Purple Book argued in 2011, there is strong evidence to show that public concern about concentrations of power in the economy is mirrored by a lack of belief that the state can operate as a counterweight. Thus, for Labour to win its argument about reforming the market, it first needs to prove that it is capable of reforming the state.
For the right, of course, this poses no such problem: suspicion of the efficacy of state action merely serves its ideological ends. For Labour, therefore, the solution is that outlined by Bill Clinton in the early 1990s after the Democrats had been defeated in three successive presidential elections: ‘those who believe in government have an obligation to reinvent government to make it work.’
Miliband is moving Labour into the right territory philosophically, and he provided some important signposts as to how he would govern: there should be greater access to information (‘because information is power’), more powers for local government and users of public services, and a right for those in similar circumstances – for instance, parents of children with special needs – to link up together.
Labour’s policy review – headed by radical decentraliser Jon Cruddas – will be the critical test as to whether this new direction can be turned into concrete reality. There is much to do. Miliband wants to see town halls empowered. But, if Labour is serious about giving local authorities more power, ways need to be found to ensure that more of what they spend is raised locally; in short, a shift in the balance of taxation from national government to local government.
The Labour leader is right that there are limits to the principle of choice in public services. Most parents with children in a failing school simply want a mechanism to improve it, not to leave it. However, they also need tougher back-up powers: the right to trigger a competition to bring in new providers if a school fails to meet minimum attainment standards for three successive years, or arming them with an education credit worth 150 per cent of the cost of educating their child in their current school which they can take to another school.
Nor should we forget the positive impact of patient choice and managed competition. Studying the effect of Labour’s policies, Zack Cooper of the London School of Economics concluded: ‘Publishing data on how hospitals are performing, and allowing every patient in England to go to the best hospitals in the country, improves standards across the NHS.’ Moreover, research by the University of York showed Labour’s approach had not harmed the vital principle of equity, either.
Miliband has set the right course. Now is the moment for Labour’s ‘federalisers’ to encourage him to go further and faster.
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