How did Labour get out of kilter?

Of the 9.3m people who voted Labour in the 2015 general election, just under 40% - nearly 3.5m of them – voted Leave in the June 2016 EU referendum. Although it was official Labour policy to support Remain, 70% of the parliamentary seats held by Labour – and a much higher proportion if London and some other metropolitan areas are excluded – had Leave majorities. How did this happen? How did not only Labour MPs but also the Party as a whole get so much out of kilter with so many of its supporters? 

Part of the reason is that the composition of the Party has changed. Labour has always been a rather uneasy coalition between bien pensant intellectuals and the industrial working class but recently the split has widened as the Party has become more metropolitan, more middle class, more public sector orientated, more highly educated and more likely to be employed in relatively high quality service sector jobs. It has also become more internationalist rather than patriotic, younger, more orientated towards IT and social media, generally unsympathetic to the business world and – in particular - well out of touch with the world of manufacturing. As these trends have become increasingly pronounced, a larger and larger gulf has opened up between the tens of thousands of people flocking to join the Party recently and its erstwhile supporters outside London.

In addition, globalisation has played a key role in driving a wedge between those who have done well out of recent economic developments and those who have not. As London and some other metropolitan areas have flourished on the provision of services to both the domestic and the world economy, many others have lost their good quality blue collar jobs in manufacturing and found themselves instead dependent on low grade often insecure service sector employment. The result is increasing distrust of our political leaders, mounting anger at stagnant living standards, poor prospects and rising inequality. As a result of these developments, if Labour is not very careful, it is going to lose much of the North of England and the Midlands in the same way that it has already lost Scotland. 

What can Labour do to reconnect with its eroding support?  Perhaps the referendum suggests some remedies as well as unhappy portents for the future.  The most important reason why Leave votes went the way they did was not to do with immigration but to loss of control over the future, although immigration was also important, as were the cost of the EU and the direction in which it is moving towards tighter and tighter integration, to save the euro.  Labour needs to recognise these concerns and to develop more of a critical but constructive attitude to the post-referendum negotiations that are taking place rather than trying to turn the clock back by obstructing the referendum result.   

Labour also needs to rethink its policies on the economy and the provision of jobs which can revive our erstwhile industrial heartlands and provide hope and satisfying work again. This means reviving manufacturing – which we desperately need to do anyway to plug the gap in the gaping hole in our foreign payment balance, now running at about 7% of GDP. To do this, we need to get the UK as a place for light manufacturing back on the map again by rethinking what our competitiveness policies should be and – in particular- what we should do about the exchange rate. We are never going to see a manufacturing revival unless light industry is profitable again. The reason why it has collapsed is because, with the pound where it is at the moment even after the post-referendum fall, no-one can make any money out of producing the often relatively simple products which crowd the shelves in our stores because the UK cost base is still much too high.   

The key issue, then is whether Labour can develop an economic and industrial policy which will actually work in practice, rebalancing the economy through competitiveness towards manufacturing and good jobs outside London– and sell it successfully to the public – or whether it will relapse into initiatives which sound popular but which don’t add up to being a coherent proposition. Time will tell. 

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