The recrudescence of New Labour

I had hoped that New Labour was a thing of the past, simply because today's problems are not those of the 1990s. I was wrong. It seems that the worst features of New Labour are still alive.

Ed Balls' advice to us to ask for receipts every time we pay £10 to get our hedge cut doesn't just tell us he has a very small hedge. If we read it alongside Tessa Jowell's piece in the Guardian, it reminds us that some features of the New Labour mindset are still with us - namely an attempt to change the character of ordinary people rather than challenge the structural forces that cause our economic problems.

Balls seems to be inviting us to believe that tax dodging by hedge-cutters is a big problem. Beermat maths tells us otherwise. According to latest figures from HMRC there are 5.5m self-employed who have an average declared income of £14654pa. Let's assume - heroically - that their undeclared income is as much again. This would mean they are dodging around £23.3bn of income tax and NICs. This is only around a quarter of this year's likely budget deficit - and rather less when we consider that if they paid this tax they'd cut their spending and so VAT revenues would fall. The deficit, then, isn't because we are paying cash to the self-employed.

Jowell's argument is similarly weakly rooted in facts. She attributes inequality to inequalities in education and in "cultural and personal capital that help some young people get on and leave others without the faintest idea of how they can." I agree that this is a problem. But it ignores an important fact. The income inequality that results from this is that between the unemployed and ordinary skilled workers or graduates. But this inequality - the sort that's captured by the Gini coefficient - hasn't changed since the early 90s. What has changed is the share of the 1%: this has risen from 9.8% to 12.9% since 1990. But this hasn't happened because the other 99% of us are unskilled or can't shake hands properly (her example - really): the skills of the top 1% aren't easily distinguished from those of the top 10%*.

Jowell and Balls are't just wrong. They are wrong in the same ways. Both are underplaying structural factors. In Balls' case, he's ignoring the fact that the deficit is due to a global savings glut and investment dearth - or, some say, to the fact that the rich have bought HMRC. And Jowell is blind to the fact that the rising share of the 1% is due to increased managerial rent-seeking, political power or winner-take-all markets. In this sense, they are making exactly the error of which Stuart Hall accused New Labour in 1998:

The Third Way is hot on the responsibilities of individuals, but those of business are passed over with a slippery evasiveness...The "Third Way" does observe accelerating inequality but refuses to acknowledge that there might be structural interests preventing our achieving a more equitable distribution of wealth.

Instead, both are doing what I accused New Labour of in my book. They believe that our economic problems can be solved by straightening out the crooked timber of humanity, apparently in the belief that if only we can become educated go-getters who are sticklers for the rules, the deficit and inequality will be eliminated; New Labour's illiberalism was an essential feature of its ideology. As Hall complained, New Labour "set about vigorously adapting society to the global economy's needs."

Twenty years of experience should have taught us that there are severe limits to this view. Balls and Jowell, however, look like French Royalists: they have learned nothing and forgotten nothing.

* Unless, of course, you define ability as the ability to be in the 1% - but this is wholly circular.

Comments

[Steven Clarke]

I had to look up what recrudescence meant. Guess I'll have to swot up a bit more before they let me into the 1%.

[Luis Enrique]

I think your main point is spot on, less so that tax evasion equivalent to 25% of the deficit cannot be considered a big problem. There are better critiques of Balls than claiming £23bn is a small number.

[e]

Jowell is surely lost to the defunct new labour cause. But to argue that in this instance “Balls seems to be inviting us” to do anything other than acknowledge, strictly speaking, the rules, is disingenuous. I prefer the notion that in his example case Balls deliberately chose a hedge trimmer to please his boss, to invite his boss to make the obvious comparison with hedge funds when asked about it – it’s not as if they wouldn’t have known that all broadcast journalism was prowling for opportunities to make irrelevant comparisons with the HSBC scandal.
And on the subject of being disingenuousness: IDS claimed on the BBC that working for cash was what you (the little people) do to get by. A competent, knowledgeable public service broadcaster would have asked him what consequences the DWP inflicts on the social security recipient (the scrounger) discovered getting by....

[Dave Timoney]

Forgive me for sounding cynical, but New Labour never went away. It obviously suits some to associate it with Blair & co, but Brown, Balls and Miliband are as much in thrall to neoliberalism (and the US Democrats) as Mandelson and Milburn ever were.

Consider yesterday's announcement of apprenticeships for every school-leaver who "gets the grades". This is part of a "middle-out" economic plan, inspired by Obama and lauded by Mandelson, which will shovel more government money towards big capital. New Labour is far from defunct.

[Jamie]

I disagree. I think that this story illustrates two broader problems for the left.

The first problem arises because the most powerful aspects of the left’s appeal are moral integrity and a sense of fairness. That means that everyone should pay their fair share of taxes, including hedge cutters. The left argues, correctly, that the rich can avoid income tax primarily because they are not on PAYE and so can hide income from the tax man. However, that is also true for a self-employed hedge cutter. There is no moral integrity in an argument that says that Balls is attempting to “change the character of ordinary people” in suggesting that hedge cutters’ income should be declared, while at the same time arguing that it’s essential to change the character of other people who don’t pay their taxes. Of course, tax from hedge cutters won’t make much of a dent in the deficit. However, that’s not the point.

The second problem is the more fundamental question of whose side the left is on. When we had a manufacturing based economy it was easy to be on the side of “the workers” who were exploited by the evil capitalist factory owners. However, we now have a large service economy, so it’s more complicated and I don’t think that the left has thought this through.

Whose side is Balls on? It’s not “the worker” who has his hedge cut. He will probably have to pay more if the hedge cutter has to pay tax. It’s not “the worker” who cuts the hedge who, at minimum faces increased bureaucracy. Also, he either earns less due to paying tax or he has to raise his prices (risking a loss of customers) or he has to work harder and cut more hedges. Rather, Balls is on the side of “the system” which, in this case, represents all the other “the workers” in the economy who do pay their tax. However, there are many other examples which provide different service industry dilemmas.

When London tube drivers strike, should the left sympathise with “the workers” who are on strike or the much larger number of “the workers” who can’t get to work, and lose pay, because of the strike? Whose side is the left on?

When “the worker” joins British Gas and trains to install central heating, “the worker” might observe that British Gas is an inefficient bureaucracy which offers only mediocre service to its customers and then charges them a high price. If that “the worker” has enough initiative, he might then leave British Gas, set up his own business, and offer the customers a better and cheaper service than British Gas while, at the same time, earning more himself. The left has nothing at all to offer this “the worker” even though both “the worker” and his customers who are also “the workers” are better off. It’s not the lack of capital that prevents “the workers” from getting on in a service economy. Rather, it’s a lack of initiative. Whose side is the left on?

The left often objects to bureaucratic hierarchies and centralised management by remote bureaucracies which leave “the workers” feeling disempowered. Fair enough. However, if I were to look for the most glaring example of this in the UK today, I would nominate the state education system whose “the workers” are always on television telling us how miserable their lives are. However, it is the right (and New Labour) which wants to empower these “the workers” and break up the bureaucracy. It’s the right that wants to allow “the workers” who are parents more choice in where and how their children are educated. Whose side is the left on?

I don’t think that the left has come to terms with a service economy. It’s not Ed Balls just who needs to do more thinking.

[e]

@ from A to E

The art of the possible: forgive me my world weariness but isn’t it the case that entrenched beliefs (particularly self-serving ones) don’t just go away. They get pushed. Miliband and Balls can’t be heroes and don’t try, which is just as well IMHO.

[An Alien Visitor]

"I would nominate the state education system whose “the workers” are always on television telling us how miserable their lives are."

This is the sort of garbage that the News of the World would defecate out now and again.

"However, it is the right (and New Labour) which wants to empower these “the workers” and break up the bureaucracy."

That is funny because schools are poaching those so called bureaucrats at an alarming rate!

"the right that wants to allow “the workers” who are parents more choice"

Everyone has a choice but some have more choices than others, and some have only one choice! So much for that vision! But what are these choices you speak of? The choice for your kid to have a really good education or a really shit one?! Erm, let me think about that for a minute!

[Phil]

Jowell's handshake example is really appalling. At best she's saying there's insufficient upward social mobility into the top 10% - and blaming it on the 90%, for being too thick and graceless to pass the tests which were introduced by the current occupants to keep them out.

[Dipper]

In true Animal Farm style, what started out as evasion of tax by the rich has turned into an assault on ordinary people buying services in cash.

[Dipper]

... and the left should forget about fairness. It's a trap. The left's job is top represent working class interests.

[aragon]

The Fleet Street Fox, beat you to this issue. (via Guido Fawkes)

http://www.mirror.co.uk/news/uk-news/dear-labour-party---youve-5172433

"The problem is that you're so stupid when someone told you hedge funds were a major problem you launched an attack on gardeners."

You really can't help some people!

The Crooked Timber is at the top, and the corruption and bias is systemic.

[gastro george]

"I had to look up what recrudescence meant."

My initial thought was that it related to Jon Cruddas.