A Social Democratic Future went live in September 2009 with the professed aim to offer a forum for those, regardless of party affiliation or of none, who want to contribute to a new politics, marked by social democratic values guiding strategic policy development, not tactical interventions geared to the short-term control of news agenda.
The political methodology that defined New Labour under Tony Blair and Gordon Brown was then rejected with a ringing warning that its continuing application risked becoming the death knell of Labour as a creative political force.
The contours of British politics, of course, have changed beyond recognition in the tumultuous times since.
Following the Great Financial Crash (GFC), a non-wartime coalition government in 2010 took office for the first time in nearly eighty years. Although not without some achievement, at least in the social policy sphere, it unleashed a fiscal austerity with lasting damaging economic and social consequences.
Most economists, albeit sometimes with the benefit of hindsight, now agree that cutting public investment, during a time of depressed demand, prolonged recession and reduced the potential future growth rate, essentially, as Keynes predicted.
On the current account, the brunt of the cuts bore on the lives of the vulnerable, and those least powerful in their public voice. The slashing of central government grants to local government caused adult social care services to be further rationed despite demand and need for them increasing, and led to the imposition of requirements on the poorest householders to pay a contribution to their council tax bill that their budgets hardly or did not allow, and the near-removal of discretionary local services, such as rural bus services. Expenditure on police and prisons were reduced to a point that endangered public safety, and prison conditions reduced to the near-inhuman across many institutions.
Yet its imposition met only tepid opposition from a Labour front-bench that struggled to project a compelling narrative how the post-GFC economy was to be piloted back onto a sustainable growth path and growing fiscal demands reconciled with fair and effective sources of taxation.
Not unrelated to that failure, a Conservative government was elected in 2015 with an unexpected working majority. Its leader, David Cameron, was then forced to honour his pre-election pledge, made for internal party management reasons, to hold a referendum on the UK’s continuing membership of the European Union (EU).
The June 2016 referendum that followed was both unnecessary and inappropriate. It prised-open generational and social-cultural fault-lines, previously latent. Cross-cutting traditional economic-based party divisions, Trumpian politics were thus unleashed into Britain, in the form of Faragism most recently in its the Brexit party incarnation, where privileged and well bank-rolled – albeit ‘outsider’ – elite leaders peddle populist slogans based often on fake facts to the indigenous working class whom they with little or nothing in common, nor possess any genuine interest in uplifting.
Much of this was and remains a symptom of the power, resource, and opportunity imbalance that has become entrenched between London and the south-east and much of the rest of the nation, between those with secure and well-paid jobs underpinned by high-level educational qualifications and those reliant on insecure and/or low paid work, and between established wealthy homeowners living in leafy suburbs and insecure tenants or marginal homeowners living often in unsettled neighbourhoods without access to good schools, with these imbalances associated with, and blamed on, the failure of the established and disconnected metropolitan, often Oxbridge-educated, elite.
The successor May government then failed to spell out the economic and political choices and trade-offs that Brexit intrinsically involved. It fostered the illusion instead that Britain could uncouple itself from long-established European customs union and single market institutional arrangements, all without national economic cost and without risk to the Union of the United Kingdom itself. In short, Brexit was not thought-through and was presented on a false prospectus.
Theresa May, in that light, went to the country in April 2017 with the intention to secure a majority large enough to get Brexit through Parliament without being beholden to either the hard-Brexit-faction within her party or the parliamentary opposition: instead she was shorn of her working majority.
A result that left Jeremy Corbyn within striking distance of 10 Downing Street, leading a party now committed to an avowedly radical socialist interventionalist agenda, involving, not only the banishing of fiscal austerity, but the re-nationalisation of the railways and the utilities.
That break with the post-1980 past instead of dominating political debate has been obscured and displaced, as have practically all the public policy challenges facing Britain, by the Brexit blind alley.
Those challenges abound. Lifting the deadweight legacy of Thatcherite neo-liberalism and its financialization of society, linked to the destructive and unproductive short-termism in corporate decision-making, and to the curse of inequality – stabilized, rather than reversed, from the early 90’s onwards.
All continue to retard the ethos of society, the motivations of individuals, as well as collective economic performance and social opportunity. For example, the premium put on financial engineering and the massaging of company accounts and results by short-termism has strangled the productivity-enhancing innovation and investment that the steady buildup of productive capacity, human capital, and profits, requires.
Unaffordable house prices for Generation Rent and excess super-profits to the benefit largely company chief executives and other company insiders, some of whom receive more than the capital budget for the affordable housing programme, are chips off a similar rent-seeking block.
The parallel and related reversal of the post-war trend towards greater social mobility and equality over recent decades – including the New Labour period – means that the children of the baby-boomer generation are now, and their children, in turn, can look forward to being, poorer, enjoying less economic and social opportunities than did their parents: a generational inequality superimposed on worsening class and racial inequalities, with the children of families lacking educational and housing capital and savings, of course, put even further back in the queue for the good things in life that we all aspire to.
The need for social democratic values and political agency
Policy development and choices need to be driven by, and assessed against, the primary social democratic yardstick: expanding lifetime opportunities for low and middle-income households, particularly the poor and disadvantaged, in a fair, efficient, and democratically sustainable and inclusive manner, combining economic efficiency and social justice.
‘For the Many, Rather than the Few’, is an, inevitably, over-simplified slogan. It, nevertheless, catches that social democratic essence, with the rider that the focus must always be on levelling-up, rather than levelling-down, in a determined, effective, but sensitive way.
To change the political parameters of feasible action on a sustainable basis towards such strategic social democratic ends, a radical reforming government, first, needs to be elected, then implement key policies that support its overarching transformational agenda, such that its successors continue along the tramlines that it set during its term (s) of office.
Neither old-fashioned social democratic moral rhetoric nor ‘socialist’ political sloganizing will do. Distractions born of self-righteousness and blinkered and partial world views, bolstered by the comfort zone of appealing to the converted or the prejudiced, inevitably, but avoidably, will hinder or, more likely, torpedo progress.
The hearts and minds of swathes of much of ‘Middle England’ must rather be won and then kept on board, with appeals based on enlightened general self-interest, not simply to altruism, or narrowly- or opportunistically-defined beneficiary groups.
In short, radical change upsetting the status quo, not re-packaged more of the same, must also go with the grain of wider society preferences and expectations.
Building an overlapping and sustainable technical and political consensus, albeit often implicit, that can advance such social democratic values, meshing them demonstrably with an understood and recognised national interest, must supplement and complement, a committed and determined, but clear-eyed and tolerant, political party agency.
Social democrats, in short, must work within and without the existing party structure, in accord with not only their preferences and circumstances, but as political exigencies and contingencies require.
The core guiding values of A Social Democratic Future remain focused on a political future set by such realities and imperatives.
What about the here and now? A Conservative Party, almost certainly led by yet another old Etonian, a man born to privilege and entitlement, who demonstrably plays fast and loose with the facts, lacks integrity, whose word is light to touch, captured by the Hard-Brexiteers of the European Reform Group, themselves the bedfellows of the Faragists, eschewing evidence and common-sense in favour of their fetish: one which practically all the evidence indicates will damage the economy, the public finances, and the Union itself as well as the roots, values, and general appeal of their own party.
A Labour Party confused and conflicted on Brexit, split by accusations of anti-semitism against its leader, which appears quite willing to throw away the opportunity to implement in government a domestic agenda that as a March 2018 post noted provided with strategic leadership from a chancellor with a bit of social democratic flexibility and pragmatism could actually tackle the challenges facing Britain.
The Liberal Democrats struggle to escape being a one-trick Remain pony, preaching to the converted, needing a comfort zone to recover from its post-Coalition electoral debacle. Any potential success in securing Remain votes may well, under our first-past the post electoral system, simply allow a Boris Johnson-led Conservative government to snatch victory from the jaws of defeat during the next election, likely to come sooner than later.
This is terribly frustrating, when the shortcomings of neo-liberalism have been laid bare by its practice over recent decades. Detailed and evidenced-backed social democratic policy programmes often commanding often wide and general support transcending party political labels, have been worked up by, for example, the Institute of Public Policy (IPPR)’s Commission on Economic Justice.
The need for increased levels of public investment to underpin a pattern of more balanced and sustainable economic growth, the economic and as well as the moral desirability of greater equality, underpinned by a rising minimum and living wage, the nexus between rent-seeking and current models of corporate governance, that many markets when left to their own devices or when supported by crony capitalism suffer capture by self-serving oligopolies and systemic failure, on top of a refreshed realization of the utility and justice of high quality education and health universal services, have become increasingly mainstream conclusions.
A sufficiently strong and focused political agency must match that technical and political overlapping realization.
What can this website contribute?
A Social Democratic Future is not bound by any party or organizational affiliation nor dependence on external funders. It can link the technical and the political.
Its focus is on strategic policy development in the real-time political real-world environment best able to secure core social democratic goals, including:
- A balanced employment-creating economy re-balanced towards productive investment and output, compressing inequalities in income, wealth, and opportunity;
- Universal core public services provided at high quality and at sustainable cost;
- A housing system that contributes to sustainable growth not boom-bust, delivering affordable housing to the young and those of moderate means, rather than windfall gains to the established, pricing-out the aspiring in the process.
Brexit posts charted the unfolding story during 2018 and 2019, and will continue to provide contingent commentary on how political and economic damage can be best avoided or mitigated.
Macro-economic policy reform
Financialization of the economy and excess credit availability, an inadequate supply of affordable rented accommodation within a lop-sided tenure system that in structure and process favours established homeowners to the detriment of first-time buyers combined with other structural trends has forced the macro-economy to progressively become over-dependent on consumption underpinned by debt, rather than investment- and productivity-led output and income growth.
This has bequeathed an economic Hobson’s Choice for the UK: either stagnant or sluggish household income growth based on insecure but flexible labour markets, or, a recovery based on housing-based debt and a resurgent house price boom, but one that sooner or later will implode into another future bust, with its attendant long-term adverse economic and social consequences, or a mixture of both.
The economy’s potential annual growth rate seems to have reduced to about 1.5%, largely as a result of static productivity and insufficient productive public and private investment. If such limited growth is distributed, as it has been over recent decades, its benefits will be concentrated in London and the South-east, and across the higher income deciles. Large segments of the population will be left with static or falling real incomes, especially if in-work benefits continue to be cut.
While employment has reached at record levels and is distributed in gender-terms more evenly than it was during the post-war full employment period, and recorded unemployment is at the lowest recorded level since the seventies, this has come at the cost of greater insecurity and reduced wages, across many sectors.
A structural shift in power away from labour in favour of capital has led, in technical economic parlance, to a fall in the rate of unemployment associated with steady and low inflation.
If that fall was the product of a productivity revolution and other positive structural economic changes that would be fine, but its relationship to an insecure and low paid segmented labour force defines continued stagnation, which could easily be tipped into another prolonged recession by an internal or external shock.
Interest rates remain abnormally at or near their lower effective rate – barely above zero – during a period of record low unemployment, even when the output gap (measuring excess or deficient demand) is deemed positive by the Office of Budget Responsibility.
The key economic challenge is thus how best to untie that bind.
Back in 2017, Wider Housing Ends set out an initial overarching model linking the wider economy and the housing and public expenditure systems.
Most recently, Making Public Investment Smart, highlighted that continuing under-investment in both productive economic and social infrastructure will retard the achievement of the step-increase in growth and productivity that is required to escape continuing stagnation.
This means fostering and reaping the potential productivity gains that follow the agglomeration of specialized economic activities in the largest urban areas and other concentrated clusters, including improved matches of jobs and people, the sharing of information, knowledge and innovation, as well as facilitated market access.
Bigger and more people-dense high-productivity cities, in turn, will depend upon high quality transport, digital, and social infrastructure in housing, education, and, to a degree, cultural services.
In the UK context, that means supporting primarily the densification of London, and other high-productivity clusters that could potentially conflict with regional spatial and social equity and cohesion aims, and, certainly, is in tension with them.
The post-Brexit referendum environment exposed the economic and social imperative to support and foster the recovery and rejuvenation of ‘left-behind (or neglected) Britain’ – for choice of a better descriptive phrase.
Coastal and smaller cities and towns, especially in sub-regions located north of a line drawn between the Humber and Wash and in Cornwall, spring to mind. They have borne the brunt of decades of de-industrialisation and/or relatively stagnant or declining service sectors – the same areas that tend to the most exposed to the future loss of EU Structural Funds.
In that light, it set out 19 Recommendations to make the institutional arrangements for the planning, selection, and execution of infrastructural investment more consistent with the productivity-uplift that needs to accompany balanced and sustainable growth.
The current macro-economic policy framework based on the established consensus that the role of monetary policy is to secure the primary and over-riding objective of low and stable inflation with fiscal policy confined to the management of public deficits and debt, is no longer fit for purpose.
As was discussed in Reforming the Macro-economic framework, less clear is its replacement. Proposals abound to provide the Bank of England (BoE) with remits additional to its core monetary policy mandate; many appear, however, to over-estimate or misjudge the Bank’s ability to determine productivity, house price, and distributional outcomes, not within its direct control.
Most of these should surely be subject to political decision and direction rather than delegated to a central bank, tending to undermine its independence.
A detailed July 2018 post on the process and impact of quantitative easing (QE) found that the BoE faces a monetary policy double bind related to the economic Hobson’s Choice defined above, where interest rates need to rise to provide it with some reserve power to respond to a future recession or shock, but given the reliance of the UK economy on debt-financed consumption and high and rising house prices – at least in London and the South-East – and the current context of Brexit uncertainty, such rises could risk precipitating a downturn turning stagnation into actual recession, which may or may not be followed by either depression or by a new process of creative destruction and rejuvenation; or rather, by much the same. Who knows?
The macro-economic framework is in a state of limbo, therefore, where the BoE is unable to achieve its remit in an economically, socially, and, thus over time, a politically acceptable way, but alternatives are stillborn. Something sooner or later will need to give.
The essential conundrum is how to increase the potential growth rate of the economy to an output equilibrium providing a mix of more secure and sustainable higher paid work to more of the workforce without permanent accelerating inflation. Whether that can be accommodated within the Bank’s current mandate and with what set combination of economic and social policies, is a subject that will be returned to.
Making housing choice and opportunity a reality
Politicians across the parties proclaim that annual new supply, in England, should increase to 300,000, that a greater proportion supplied should be affordable, and, as the then Prime Minister May put it in her foreword to the February 2017 Housing White Paper (HWP), that the current house market is ‘broken’.
But, unless both the private and public housing systems are recast and integrated, that target will remain purely aspirational. The public sector needs to be enabled to ensure that affordable housing accounts for a higher and more constant share of the total supply total, with affordable housing mainstreamed within private sector business models.
Far better a steady state total level of new supply, freed from the instability and vagaries of the economic and housing cycle, is achieved that takes more account of quality, responsiveness to local needs and circumstances, and the affordability requirements of new households, with maximum impact on construction productivity and working arrangements.
The focus of this website will be on advancing its recommended mechanism of housing partnership planning (HPP). The costs of providing infrastructural investment have escalated much faster than general inflation: the public investment relative price effect. The escalating cost of land as a component of housing investment since 1955 is a striking instance of its operation and effect: it provides the root of the current crisis of housing affordability.
In that light, HPP is designed to deflate the land cost component of new housing by the prescribed and general application of an affordable housing requirement across all new housing developments above a minimum threshold where the land cost of each development will be limited to existing use value plus a maximum 30% premium.
Tax and Welfare: recognising the true fiscal crisis of the state
The true fiscal crisis should also be recognized: the demand and need for productive public expenditures across both current and capital budgets will inevitably outstrip public willingness to pay through efficient and salient sources of taxation, at least within the current competitive political system focused mainly on the electoral short-term.
The increased medical and social care demands of an ageing population is a case in point. Recent proposals for reform generally invoke a revenue-neutral assumption. This possesses the advantage of highlighting the often crass distributional unfairness of some taxes, most notably council tax. But reversing fiscal austerity and matching tax revenues with increased spending needs in the future requires the level of taxation to increase, as well as its incidence to be fairer, underscoring the need for the growth rate to increase for this to be made more electoral palatable.
In that light, taxation reform must be meshed more closely to identified areas of needed spending increase, matching contribution and benefit wherever possible.
The website will begin to publish detailed posts and papers on this area during the autumn.
The privately educated, particularly those attending elite public schools, disproportionately gain access to Oxbridge, the professions, and positions of power.
It clearly cannot be economically desirable or socially just for this situation to be continued and perpetrated.
Most parents sending their children to private schools do so to accord an advantage to their offspring in their adult life. This, of course, is quite understandable and, to some extent, commendable, especially where the local state schools are not up to scratch, or even safe.
Such decisions, hover, rob the state sector of potential ‘voice’ power that otherwise would have been deployed to improve the local public educational offer, in turn, encouraging middle-class parents, not necessarily rich, to strain their budgets to follow, further repeating the cycle.
We do not tolerate access to life-significant health resources being determined by ability-to-pay; nor should we with respect to access to quality education, impacting on future life-chances.
Yet banning private education altogether would be a constraint on liberty too far, relative to the problem caused.
Requiring private schools to share resources and facilities with partner state schools tends to be cosmetic. Relying on an extension of compulsory scholarships and bursaries funded by the private sector would legitimize differential educational access, rather akin to private medical care providers financing lottery prizes funding private health insurance for the winners.
Restricting tax reliefs and, perhaps, imposing VAT on school fees, could raise revenue that could then be used to improve state schools. That, however, would still fail to get to the nub of the problem: the differential access provided by private education to better-rewarded, higher status occupations and positions that exercise the most power in society – positions once gained that then provide the resources for the process to be reproduced and perpetuated across successive generations.
Capping access to elite universities from the most elite public schools appears to offer a more effective response to that, particularly if allied to effective outreach to potential state school pupils capable of benefiting from such education. After all, if the ultimate purpose of an elite education is to accord pathways to such differential access, reducing its likelihood would reduce both its monetary and social benefit, and, at, the very least, loosen its hold.
Of course, the best antidote to provision based on ability-to-pay is a universal high-quality local school system, where opportunity is tailored to the needs of the individual pupil, whether academic, vocational, practical, or personal.
That, indeed, should be the prime aim of educational policy, but overcoming the obstacles of catchment areas of varying socio-economic composition, divergent starting-points and expectations, present complex problems that will require dedicated but sensitive action at both central and local levels.