Labour Conference was totally dominated by the election of Ed Miliband has new leader. Here I look at his leader’s speech on Tuesday and the implications for business and banking in particular.
New Leader, New Generation...New Direction?
David Miliband’s graceful shuffling off the stage of front-line politics is the defining image of the Labour Conference and symbolises a number of dilemmas for both party and country. Does David’s political demise symbolise the death of New Labour? Does this represent a necessary break with the past and new beginning infused with the optimism of a New Generation able to chart a more progressive course, redefine the centre ground and defeat the ConDems? Or does Ed Miliband’s rise to the throne represent the recapturing of the party by the trade union movement and an imminent lurch to the left leading inexorably to the electoral wastelands?
A new ‘centre-ground in politics?
For many Labour members, the answer to these questions is dependent on where they stand in the internal political spectrum of Labour politics. While the two Milibands and their followers are not as far apart in policy terms as many commentators have claimed, they have a different view of the location of the fabled ‘centre-ground’ of politics and more importantly, how it should be reshaped. This is crucial, as Labour under Ed’s leadership will “fight for the centre-ground and not let it be dominated or defined by our opponents”.
David largely took the Blairite view that the over-riding priority being the need to listen to, understand, at best to attract and at worst not terrify the aspiring middle classes on whose support electoral victory is normally dependent. The basic premise of this approach is that ‘Middle England’ is a conservative place and hence seeking incremental progressive change is the best tactic. He was seen as a leader who would speak more to the national interest, avoiding being in hock to the trade unions or even to the demands of Labour’s more radical activist base – as such he was the leader the Tories most feared.
Ed’s stance is markedly different. He believes that there is a natural constituency of people who either agree with currently, or who are philosophically predisposed to more radical positions, be they on social policy, political reform and the economy. He also seeks to redefine the ‘centre-ground’ in the image of his own political philosophy and hopes that through rhetorical power the doubters will be won over. Aside from the obvious concerns of many in the business community that the support of union members in securing his victory makes him in hock to organised labour, external observers in business will be interested in key trends that are already emerging, particularly with regard to his approach to business and employee rights.
A radical, idealistic, change-making leader of the New Generation
His speech begun with the declaration that a “new generation” leads Labour – a clear pointer that New Labour was dead. His method of burial was as respectful as possible, diplomatically praising its scions Blair and Brown as having been at their best when showing “the courage to take on established attitudes and institutions” and when being “reforming, restless and radical”. In a nutshell, these will be some of the key attributes of his leadership. In addition to its radical zeal, his speech was suffused with idealism. From the references to his family’s past fleeing Nazi persecution to find sanctuary in the “freedom and opportunity” of Britain, to the insistence that rather than “accept the world as we find it”, we have “a responsibility to leave our world a better place and never walk by on the other side of injustice” this is a leader who is unashamed in infusing his politics with a sense of moral purpose. Change was also a key theme – the new generation he leads “thirsts for change” and the speech sets out a “direction for change”. The break from New Labour orthodoxy was summarised by his statement that the new generation would not be “bound by the fear or the ghosts of the past.”
Implications for business
He moves from praising New Labour’s reforming zeal to criticising it for ending up looking like the “new establishment” with wrong-headed positions on immigration, regulation of the City, tuition fees and MPs’ expenses. It is interesting that when he begins setting out the “direction for change” his first target for reform is the economy, which he says should be changed so that “it works better for working people and doesn't just serve the needs of the few at the top”. This is the first of a series of broad philosophical statements which can either be regarded as hostile to business or merely sympathetic to the “mainstream majority”. He does tip his hat towards the business community, but note that he is “determined to make Labour the party of enterprise and small business again” – that’s small businesses. He promises to “support the small businesses and entrepreneurs who are the lifeblood of this economy”. Almost everything he says about large businesses is less than favourable.
Deficit reduction – Keynsianism on the march
On the deficit, he disappointed Ed Balls’ supporters by reaffirming the Darling plan to reduce the deficit by half during one parliament, while emphasising his Keynesian credentials by referencing the previous government’s now-cancelled loan to Sheffield Forgemasters and the cancellation of the Building Schools for the Future programme against the backdrop of the Atlee government which paid down debt while simultaneously creating the NHS and modern welfare state. Here he praises the role of government in creating “the good society”. His view can be summarised in his insistence that the Coalition’s emphasis on rapid and deep deficit reduction risks growth – “no plan for growth means no credible plan for deficit reduction.”
Bank-bashing and banking reform
Much of the commentary has referred to the question of whether Ed Miliband is in hock to the unions, it is entirely clear that he will not show deference to the banking world. The last two Labour leaders would not have said: “What does it say about the values of our society, what have we become, that a banker can earn in a day what the care worker earns in a year? It’s wrong.”
The conclusions he draws from the global economic crisis are not flattering to bankers. He suggests that we need to avoid the “same old thinking that will lead to the same old results” of “an economy too dependent on financial services” which he describes in the same breath as “too many people stuck in low pay and growing inequality”.
Morality, in the guise of “fairness” is a key backdrop to his views on the banking crisis. In saying that “the people who caused the crisis and can afford to do more should do more”, before specifically linking his policy of a “higher” bank levy public services, allow us “to do more to protect the services and entitlements on which families depend” comes very close to explicitly punishing ‘the bankers’.
Although entirely vague on details, he does state that this all requires a “plan for change”, central to which is “a plan to reform the banks”.
A philosophical stance on business
His socially progressive views clearly inform his emerging thinking on the business world in general and his comments about it reflect his broader concerns about the quality of life of “mainstream majority”. Hence, the importance of changing “our society so that it values community and family, not just work, because we understand there is more to life than the bottom line”. A throwaway piece of sentimental posturing designed for the audience in the conference hall, or a bold statement of intent to the public at large about rolling back some of the excesses of 21st century capitalism?
His views on the business world and the economy cannot be seen in isolation from his view of the impact of economic factors on broader society, quality of life and communities. While an emphasis on community, family and individual volunteering lies at the heart of the Coalition’s Big Society ideas, Miliband’s critique takes him into completely new territory more akin to the thinking of ‘Red Tory’ Phillip Blond, where the traditional obsession of the political class with business interests and economic growth is turned on its head and the question is asked of the status quo, “conventional thinking” or “old thinking” as Ed puts it, as to whether it acts in the broad interests of the “mainstream majority”. Hence his assertion that work is a “central part of life”, but “not all that matters”. Or that “we all care about making a living, but we don't just care about that”. He describes as our generation’s paradox as being the “biggest ever consumers of goods and services” who yearn “for the things that business cannot provide”. The specific things which he believes business cannot provide are revealing: “strong families; time with your children; green spaces; community life; love and compassion”. These are not the sentiments of a man who holds much hope for the transformative abilities of dynamic businesses with their glossy CSR plans. These are sentiments which are likely to lead to a far more interventionist policy towards business with regards to employee rights (to paternity/maternity leave; pensions; pay and conditions; work/life balance).
Bashing business or speaking to the “centre-ground”?
Peppered throughout the speech is evidence that this is a leader who fundamentally NOT “intensely relaxed about people getting filthy rich” as was his erstwhile colleague Peter Mandelson in New Labour’s heyday. There is an almost derogatory reference to the “company we kept”, perhaps bankers, when describing how New Labour came to look like the new establishment. Elsewhere he says responsibility must be shown at “the top of society too”, that the gap between rich and poor does matter because it harms us all, not just the poor. Neither would any New Labour minister with an intention to remain in post said: “responsibility in this country shouldn't just be about what you can get away with. And that applies to every chief executive of every major company in this country. And, just as businesses have responsibility to ensure fair pay...”
He is critical of the conventional wisdom of the “old thinking” which held that “flexible labour markets are always the answer”. He also criticised businesses which exploit migrant labour to undercut wages. In criticising New Labour for being naive about markets, he gave a rhetorical sideswipe against the forces of capitalism, stating that: “we must never again give the impression that we know the price of everything and the value of nothing”.
Again he positions himself as on the side of “communities” rather than big business. Examples include over post office closures; people trying to protect their high street from looking like every other high street and even supermarkets selling cut price alcohol to the detriment of the “local pub”. Those in favour of the dominance of high streets by shop chains are wrong to imply that this is the “force of progress”. Many would agree with him, but many in the business community and City would not and such a line is a clear statement of intent.
From idealistic rhetoric to reality
He chooses not to get into specifics, but the lack of detail here and elsewhere in the speech should not lead business leaders to the conclusion that there is a lack of risk? The area where he came closest to a detailed policy commitment, the living wage, indicates that the direction of travel indicated above will result in costs to business. In an emotive section about a care worker he’d met on the campaign trail, he should become a “living wage” of around £7 per hour. He also called for “real protection for agency workers”.
On tax he chooses not to talk about the business interest of creating a competitive environment, rather one which will “reward responsibility” so that businesses pay the living wage, provide high quality apprenticeships and provide “family-friendly employment”.
Ed’s stance on unions is also crucial to our understanding of the direction of travel under his leadership. To counter the perception that the crucial role of union members’ support in his winning the leadership, he was careful to caution against “alienating the public” and “adding to the book of historic union failures”. He held “no truck” with “overblown rhetoric about waves of irresponsible strikes”.
However, in a powerful section based on his experience talking to dinner ladies, he lists their grievances such as having to buy their own uniforms and having their shift patterns changed at short notice to bolster the sense that he understands the importance of unions. He described their treatment as exploitation and said that union support helped them get “basic standards of decency and fairness”.
Miliband stated his view that the change he envisages for the country (to the state, the economy, society and foreign policy) cannot be achieved without changing “our politics”. For him, the “practice”, “reputation” and “institutions” of politics are “basically broken”. He therefore supports and will vote yes in a referendum on the Alternative Vote system. He also supports a fully elected House of Lords. He also supports the devolution of power to local councillors so that local democracy is “free of the constraints we have placed on it”.
He held out an olive branch to the Lib Dems by admitting that “wisdom is not the preserve of any one party” and saying that “the political establishment too often conducts debate in a way that insults the intelligence of the public”.
He also rejected his predecessors’ perceived reliance on focus groups, suggesting that “we can’t be imprisoned by focus groups”.
In short, he slayed some New Labour demons (particularly on Iraq); portrayed New Labour as having failed because it lost its radical edge of challenging conventional wisdom; moved in rhetorical terms from New Lab to the new generation (it is important to note that he does not view David Cameron as part of this generation); set out this new generation as being one of values and attitude not age – i.e. sought to rally all to his common cause; set out his ideals of fairness and change - changing the economy, state, political system; begun to define the “good society”, emphasising the need to create better conditions for family life; and set out a far more radical and ideological approach to business and economic policy.
All of this points to a radical departure from the leadership of both Brown and Blair. It began the task of redefining the centre-ground, or what all leaders view to be the ‘winning territory’ of politics. He certainly impressed the conference hall, and many of his detractors who supported his brother in the leadership campaign, with his confidence, with the quality of his rhetoric and with the more ideological, radical content. The key question that remains as to whether his overall strategy is correct: is it the case that there is a large and growing constituency of voters who share his vision or who will be attracted to it? Or will what can only be viewed as a move to a more left-wing, pro-union and radical stance regarding the economy, business, politics and society, provide the perfect ammunition for a narrative already developing in the right-wing press and amongst Government ranks of a new, ill-experienced, dangerously radical leader who is in hock to the unions at a time of growing union militancy and believes in more progressive and left-wing approaches to society’s problems.
The significance for the business community is that a resurgent Labour party under Miliband’s leadership is by no means out of the running to win power at the next General Election, whenever that may come (and it could be sooner than many anticipate). Miliband’s Labour Party is undoubtedly more hostile to business and more interventionist in the economy than was the party of his recent predecessors. It is early days yet, and he has only just taken office and started to flesh out “the direction of change”, but Labour has changed tack and is charting a different course.