Labour needs to plan now for the Britain of 2020, writes Parmjit Dhanda
Five years ago, when we lost the general election, including my bellwether seat of Gloucester, our kids were very young. Zac was four, Max had just turned one. Our infants’ experience of five years ago was not one of being born in to a nirvana; it was two years after the financial crash, after all. Yet the trickledown of investment to local communities and public services had not ended. Theirs was not a time of austerity; they and their cohort were brought into this world in one of Labour’s 100 rebuilt hospitals; there was a growing savings culture through child trust funds; mothers received universal child benefit at record levels; they were nurtured in new Sure Start facilities and they would be destined for schools that were rising in international league tables in facilities that were brand new. Yet Labour lost.
Five years on and the hospital is still gleaming but short of staff and missing targets; child trust funds are gone, child benefit rationed, and Sure Start hollowed out; schools are short of capital for their buildings.
Let’s face it: if the world has changed for infants, those of working age who provide for them have faced greater challenges than any other group over the last five years. Their job insecurity, wages, level of household debt and inability to plan for security in old age has left them as the first generation to be poorer than their parents’ generation.
The challenge for an incoming Labour government in 2015 has rarely been greater. But, despite the coalition’s terrible legacy and another five years of constrained public spending ahead, Labour’s record of building a better nation through tough times should not be underestimated, most notably in the first postwar Labour government. The 1945 government recognised that it would be wrong to reproduce old solutions, but instead looked to the future, to the type of Britain we needed to become for the challenges we were about to face. We will need to reawaken that spirit in the years ahead. The challenges to come will be very different to those of the last decade.
Come 2020, the scheduled end of the next parliament, our population will be getting close to 68 million, and still rising. This will not just be due to inward migration but due to the fact we are living longer too. One in six of us are over 65. That gradient rises steeply in the years to come; a quarter of our population will be over 65 by 2050. The nation’s housing need will become greater and more complex. As a nation we currently build around 100,000 homes a year. Even if we meet our pledge to increase this to 200,000 new homes a year by 2020, the Future Homes Commission says we will need to be building 300,000 homes annually right now to be keeping up with demand. If the National House Building Council is correct there will be a shortfall of two million homes by 2020.
Simply building new houses or blocking people from coming to live in the United Kingdom will not solve the country’s problems. Labour will need to become more nuanced in its policy outlook and will need to do much more to persuade the electorate that life is more complicated, and so are the solutions. Part of the housing solution will have to involve imaginative equity solutions that allow older people to downsize, maintain property wealth to pass on and yet free up their family homes for younger families. People living in to their ‘extended middle age’ are soon to play a bigger role in our political lives than ever, as they represent a larger growing part of the electorate.
We will need to find a way to engage with society in a more educative process about globalisation that raises the game beyond the kneejerk politics that has benefitted the United Kingdom Independence party and other fringe parties. In our next decade, as we head closer to a demographic cliff-edge, Labour must not allow the debate about immigration to be decoupled from the debate about economic growth and the nation’s ageing population.
And while we are on this topic of our ageing society, Labour’s theme of predistribution received a lot of flak for being too highfalutin. But it was ultimately right. The best way to prepare for a new demographic outcome is to make it easier for older citizens to prepare for their retirement. In the next decade we should champion predistribution for older people through defined benefit pension schemes to enable tomorrow’s pensioners to plan and to save the state from having to step in to bail them out. The opposite, of course, is what we are seeing presently. You cannot plan for your old age with a defined contribution scheme.
So many of the policy levers I described at the outset of this article, during that momentous decade at the start of the century that made a difference to my children’s generation, came from central government, big money that was controlled by the big state. As the state shrinks, those levers have shrunk too. Policy changes in the 2020s will require more local levers. We have seen local authorities come together to become more than the sum of their parts – they have had to as central government budgets have shrunk. Partnerships between councils and partnerships with the private sector have opened up new revenue streams for innovative local authorities. And, while what we are beginning to see in London and Greater Manchester is truly exciting, Labour will need to find a way to ensure parts of the country are not left behind. Labour, at its best, is both the party of the urban and rural community.
I have probably posed more questions than solutions – but therein lies the point. To own the future we need to put our minds, today, to the challenges of 2020.
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Parmjit Dhanda is former member of parliament for Gloucester. He tweets @ParmjitDhanda
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Read Naushabah Khan’s and Ben Shimshon’s responses to Parmjit Dhanda. Articles in the Britain 2020 series are all available to read on the Progress website.
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Was there “a growing savings culture through child trust funds” or is that a case of Labour believing it’s own hype? I would argue that far from it, and even despite the property crash two years earlier, the belief still persisted that quite apart from the obvious merits of having the security of one’s own home, the bubble still had not burst on property ownership being the best long term investment and one worth gearing up for to a massive extent. True you could no longer get a 100% mortgage and might struggle even to get a 90% one, but the income multiples were still higher than in the 1970s when it was relevant to me. Saving of itself is very hard to promote when interest rates care at their floor, but I would argue that Britain’s weakness over the last 100 years, never mind since 1945, has been the disinterest in entrepreneurial investment. I am not exactly of the era which encouraged young people to go into the civil service or local government because it was a safe job (in contrast to industry which in the 1920s and 1930s so manifestly wasn’t, but many in the post-1945 world eschewed putting their savings into a cousin’s or uncle’s or brother’s nascent business preferring the safety of premium bonds or unit trusts et cetera, to say nothing of the building society or bank deposit account. Thus fear crushed enterprise (and not taxation or excessive regulation as the Tories would have you believe). We won’t get that risk-taking spirit back until there’s a level playing field between putting your money into the house you own (albeit on mortgage) and putting it into a risk enterprise. The Tories would like nil capital gains tax on the latter and have gone some way in that direction, but I would prefer equalising the tax upwards by ending the CGT exemption on owner-occupied housing. Of course this would produce such screams of protest no baby in the land would ever sleep, but I have seen it obliquely hinted at by no less than a Director of the Bank of England (not that their economic judgement is perfect by any means). We want a brave Labour government and I suspect that its in the sphere of economic strategy where caution is strongest and should be resisted more.
Incidentally the “exciting” Manchester experiment could be the end of a NATIONAL Health Service, replaced by a local one. If the resources come through, it may go fine. Otherwise, one fears for tears at bedtime.
New Labour’s investment in public services undoubtedly made life better in different ways for many of us, but its economic policies were a mixed blessing. Even under the refreshing leadership of Ed Miliband, Labour has never come to terms with its neo-liberal economic failings in government.
We fell in love with free trade and the free market when we should have been intervening more in the economy to protect good firms buffeted by exchange rate uncertainty and to create the infrastructure for innovation and production.
In 2007, business friends of mine were warning me that we were in recession and that only public expenditure – much of it corporate welfare that increased the competitive disadvantage of SMEs – was keeping the economy afloat. If Labour supporting entrepreneurs knew something was afoot then, why didn’t Brown and Balls twig?
Remember ‘no more boom and bust’ because everybody else does?!
Also the ‘growing savings culture’ comment is a bit of a laugh: who introduced tuition fees and more or less abolished student grants? Who let property inflation go haywire? New Labour did some great things – sometimes tackling poverty in a subtle, co-ordinated and imaginative way (whilst letting the super rich become more powerful) – but it made some huge mistakes and tarnished the Labour ‘brand’.