Third Way, Old Hat

The departure of Frank Field, the enthusiastic reception by the Parliamentary Labour Party of Gordon Brown’s spending plans, together with the increasingly desperate attempts by the Government’s leading members, particularly the Prime Minister himself, to discover a Third Way, represent an important moment in the history of New Labour. The hunt for the Third Way, which has been going on more or less since Blair announced the birth of New Labour, is in many respects paradoxical. It is not obvious why a government which prides itself on its pragmatism and freedom from ideological baggage should spend so much of its time trying to acquire a new ideological encumbrance. Furthermore, the Government is at the moment under no electoral pressure: on the contrary, its lead in the opinion polls remains formidable – without precedent in our modern history. The Prime Minister continues to be enormously popular. In these circumstances, it seems surprising that he should wish to tamper with a winning formula. The departing Field and the spending Brown are, as we shall see, two of the reasons why.

What is most curious about the search for the Third Way and the debate about the policies which are supposed to constitute it is how unhistorical they are. Few of the participants seem to have much sense of the history either of the Labour Party or of the country it now governs. The rhetoric of the Third Way is, in fact, very misleading in its assumptions. It seems to suggest that the Third Way is a via media between two polar opposites – an uninhibited free market at one pole and ‘socialism’ at the other – and that these opposites themselves are complete entities which occupy all the space at each pole. But this has never been the case, at one pole or the other. In Britain there have this century been few defenders of the uninhibited free market as a basis of social policy and there has certainly been no such thing as ‘Old Labour’, if by that we mean a political party whose ideology was set in stone and therefore unquestionable. The history of the Labour Party has been one of almost constant ideological and political adaptation. In this sense there are many ‘Old Labours’. The Old Labour Party which Mr Blair inherited, which we might call the Kinnock-Smith Party, was one variety, and it differed from Tony Benn’s variety as it did from the Wilson-Callaghan variety. That Party in turn differed significantly from Attlee’s, which differed even more from Ramsay MacDonald’s. And so on. We could argue, indeed, that Tony Crosland’s The Future of Socialism presented as much of a challenge to the ideological status quo within the Labour Party as the proponents of New Labour have done; yet Crosland never imagined that he was re-creating the Labour Party. We should, therefore, at least in part, see New Labour – both as practice, what it does in government, and as ideology, what it says it stands for – as one strand in the Labour Party’s traditions.

Immediately before the last election I suggested here that in a number of important respects New Labour, far from being new, looked remarkably like the Labour Party of the Twenties. In perhaps the most important of the Government’s policies this proved to be true. As soon as the Government was formed – and without much consultation so far as one can see – Gordon Brown handed over to the Monetary Policy Committee of the Bank of England sole right to determine interest rates and himself decreed that in determining these rates the Committee should have regard only to the rate of inflation. This, in effect, was the policy the Labour Party followed before 1931 and is open to exactly the same kind of criticism. One is that inflation is not ‘neutral’. It is simply not the case that everyone benefits from low or no inflation. Some benefit much more than others; just as anti-inflationary or deflationary policies benefit some more than others. Brown has chosen to subordinate employment levels to monetary considerations – as did British Governments in the Twenties – and thus to ensure that the beneficiaries of his policies are those who do not vote for his party. It also seems inconceivable that once again a British Government should allow itself no other economic tool than the rate of interest, then hand that tool to others, then behave as if the consequent exchange rate of the pound (high) was nothing to do with the Government and then dismiss the complaints of exporters as merely a cloak for their own inefficiency. But so it has done, and in the same insouciant way it was done in the Twenties. This is extraordinarily reckless behaviour. There is no use pretending that Britain is somewhere else. You have to take a society as you find it and the fact is the British managerial class, though not exactly uncompetitive, needs all the help it can get. What is most depressing is that the lessons of the Twenties need to be learned all over again. To anyone who has read, for example, the minutes and reports of the Macmillan Committee on the financing of trade and industry (1929-31), the comments of Brown and those who think like him are deeply depressing. But the difference between now and the Twenties is that we know what happened: those who made policy then had yet to find out.

The Government’s very equivocal attitude to poverty follows almost inevitably from these same decisions. It cannot (will not) raise taxes; cannot (will not) borrow; expenditure, even that announced for the last three years of this Parliament, has to be held down; there cannot be any significant redistribution. It must therefore deny, or depreciate, the primary significance of poverty in ‘social exclusion’. This view, again, is not unknown in the Labour Party, though few in the past have expressed it as brazenly as some members of the present government. Again, there are a few simple lessons we should not have to relearn. It need not surprise anyone, for instance, that the Government’s school league tables should correlate so well with the proportion of pupils’ parents who are on income support; or, if one prefers, with the proportion of pupils who are entitled to free school meals. But ministers, not to speak of the Chief Inspector of Schools, are very reluctant to admit it. Poverty is not, of course, the only variable, but in educational performance, health, the social attitudes of the unemployed, life achievement in general, poverty is the most important variable. And hardly anyone now believes what seems to me historically self-evident: that the best way of solving a social problem is to throw money at it. What is important here is not that New Labour denies something self-evident, but that the Labour Party, individual exceptions apart, has nearly always denied it.

Nor should we think that Brown’s attitude to public sector pay is original. It would be interesting to know who told him that an efficacious way of managing the national economy is to hold down public sector pay (below the rate of inflation if you can get away with it). This notion is unfounded; but certainly not unknown in the history of Labour Governments and proceeds from a vague belief that if you treat your own supporters worse than you treat those of your opponents you will get credit for it. Blair and Brown might ponder the fact that the last Labour Chancellor to do it was Denis Healey, and that led directly to the Winter of Discontent.

Which brings us back to Frank Field and Gordon Brown’s money. Field’s departure from the Government did not cause a peep; not one minister or backbench MP defended him. This is very surprising since he was put in the Department of Social Security precisely to devise New Labour’s welfare policy – ‘to think me unthinkable’. Ministers put it about that he was allowed to resign because he was not actually very good at thinking. A more likely explanation is that he did think the unthinkable; and, when it came to the point, the Labour Party did not like what he thought, which is, presumably, one of the reasons Harriet Harman was dismissed since she also was associated in the public mind with unthinkable policies. How far Field’s resignation means the end of the policies he was known to favour is uncertain, but it cannot have advanced them, or what purport to be specifically New Labour welfare policies. And there is no doubt that Brown’s expenditure proposals, highly contingent though they are and less impressive than they seem, were better received by Labour MPs than anything else announced in this Parliament. And that includes by the Prime Minister, who looked more than happy defending them. Labour ministers seem entirely unembarrassed when they attack ‘fat cats’ even though this is supposed to be a businessman’s government. Indeed, as a general rule, the more the Government’s policies approach Old Labour the more popular they are with Labour MPs and party members.

The apparent passivity of backbench Labour MPs, their unwillingness to rock the boat, is probably not a good guide to their preferences. Many of them feel they owe their seats to Tony Blair, are fearful of appearing too ‘left-wing’, are ambitious (and the Prime Minister has a huge swag of patronage to tempt the ambitious) and are very much under the thumb of the Chief Whip. A more important explanation for their passivity is the institutional weakness of the Parliamentary Labour Party. Probably no other social democratic party (or ex-social democratic party) is so weak in relation to its executive. The Parliamentary Party does not elect the members of the Cabinet, is not required to approve policy and is not consulted about the timing or content of the Government’s programme. The recent change to the way the leader is elected further weakened the Parliamentary Party. Once elected, the leader is now there for life: the admittedly small possibility that a party revolt in Parliament might remove him or her has disappeared. Furthermore, the traditional procedures of the Parliamentary Party do not permit the kind of well-staged coups the threat of which keeps a leader on his or her toes. In Australia the right to ‘spill offices’, to elect a new leader, at more or less any time, is a powerful weapon in the hands of a Parliamentary party. In Britain the weakness of the Parliamentary Party in relation to the leadership is, of course, analogous to the weakness of the House of Commons in relation to the Cabinet. And both are deeply embedded in the country’s political structure: something the present Labour leadership, like the Labour leadership of the past, finds very much to its taste. As a result, the Parliamentary Labour Party, as in the past, finds it difficult to express its opposition or its inclinations – it has neither the means nor the tradition of doing so.

The Labour Party only stands to gain if the quest for the Third Way is abandoned, and there are three reasons why it should be. The first is that there is no such thing as one Old Labour to which New Labour can be opposed. There are, rather, a number of Old Labours, of which New Labour is one, and these various forms of social democracy have always been in competition. New Labour has a long history and its various bits and pieces are very familiar to the historian. The director of the LSE, Anthony Giddens, is quoted as saying that the ‘ideas of old-style social democracy’ no longer work. But which old-style social democracy is he talking about, and which ideas? Some ideas clearly no longer work: but others do – as has always been the case in the history of social democracy. Furthermore, historical competition has had an outcome: the policies which are thought to be unique to New Labour are those which in the history of the Labour Party have been the ones most prone to fail.

The second reason is that the quest has been very disorientating, particularly to those whose roots within the Labour Movement are deep enough for them to feel that its policies should be grounded in an organised body of principles. It would have been much better had the Labour leadership stuck to the Kinnock-Smith Party – if the Party wants a Third Way that is it. The most successful policies of the Government – devolution, for example – were those it inherited from Smith and which it carried forward, not always enthusiastically. Much angst (and discredit) would have been avoided had the Government adopted the recommendations, in whole or in part, of the Commission on Social Justice, appointed by John Smith and chaired by Sir Gordon Borrie, instead of trying to think the unthinkable.

The third reason is that a Third Way, as an organised body of principles, is really not possible. No political theorist, however distinguished, can act as though the country has no history, as though we can simply start afresh. The fact that we have a history and that Old Labour is so deeply a part of it is largely why the quest has been fruitless. Everything we know of popular opinion in Britain suggests that most people still hold to the two basic propositions of all strands of Old Labour: that society should be based on some notion of fairness but that the rich and the powerful can only be made to acknowledge this by political action. The British hold to these propositions rather loosely – more loosely than in many other democracies – but they do hold to them, as any Conservative candidate at the last General Election can confirm. If, however, the Third Way has any distinguishing characteristic it is the premise that everyone can agree on everything. Unfortunately for its proponents that premise flies in the face of both social and political reality – a reality instinctively acknowledged by Labour MPs when they bade farewell to Field and welcomed the spending Brown, or when Labour ministers, almost in spite of themselves, attack fat cats or the record of the privatised utilities. New Labour has a past and members of the Government cannot escape it. And they will be much happier if they do not try.