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The Labour Party is in fine shape

There, I said it.

I may be the only person who thinks this. The debate happening now is raging between people who think that Labour needs to move to its left, and abandon its partial endorsement of austerity at this election, and people who think it needs to move right, back to the Blairite New Labour centre.

It seems to me that the New Labour camp is winning this fight. But the whole fight is driven by a peculiar version of the pundit's fallacy. People who think Labour should be more centrist also think this is the key to electoral success. People who think it should be more left-wing also think that is its only path to victory.

Among actual pundits, a slightly more nuanced story is taking shape, in which Labour is in deep trouble because it needs to tack left to regain seats in Scotland, and right to win more seats in England. This story is also wrong.

Start in Scotland. This is a big myth. Scottish voters are barely distinguishable from English voters on their preferences about government taxation and spending, redistribution, or even university tuition fees. Before the recent influx from Labour, SNP voters were closer to Tory voters than Labour ones on many issues: in line with the fact that, as I mentioned the other day, SNP voters are often ex-Tory voters. So why did so many of Labour's voters flee to the SNP in the last nine months? Well, because forty years of dominance have made Scottish Labour - especially its Westminster contingent - into a machine which has lost contact with its urban working-class base. They left Labour because they became convinced that Westminster politics just wasn't delivering for them.

This is actually much like what happen to the once-dominant Scottish Conservatives: they went into decline when the Unionist Party was merged into the national Conservative Party and Scottish interests started to be treated as subservient to the centralised party's needs. It's exactly what Johann Lamont talked about when she resigned as Scottish Labour leader last year. But this is not essentially a story about being too right-wing. The party in Scotland needs to be given significantly more freedom and independence if it's going to fight back against the perceptions that have driven SNP success. But that should be something the party that created the Scottish Parliament is willing to do. And remember: for all its total dominance in seat terms, only about half the Scottish electorate voted for the SNP. This is not an unbreakable stranglehold - especially since the SNP now has the job of holding together a much larger and more disparate coalition than at any point in its electoral history. The most obvious tool for keeping that coalition together is nationalism, but the country just rejected independence and Nicola Sturgeon has promised not to push for a new referendum in the imminent future, so the nationalists are not going to have an easy time.

So okay, "fine shape" is a bit optimistic as far as the Scottish situation goes. But the trouble is about structural party reform, not really the policy platform, which is probably roughly alright, especially with its broad church making it difficult for the nationalists to pitch too far to Labour's left. Next year's elections to the Scottish Parliament will be an important test. It's quite likely that Sturgeon will remain a dominant figure and that Labour won't be able to reform in time to heal itself. But it's also possible that the SNP will battle to keep all its voters in one tent, and its vote will bleed, both back to Labour and to the Tories, if those parties aren't too dysfunctional.

If the Scottish party becomes more autonomous, and anyway doesn't need to move left much if at all, then that's good news for the English party, which can move right if needed without demanding that Scottish Labour follow it 100% or even being too far from the ideal Scottish platform. But I am equally unconvinced that Labour needs to tack right to win in England.

In England and Wales, Labour won fourteen extra seats, the Conservatives won twenty-seven extra, and the Liberal Democrats lost thirty-eight. It's a bit hard to interpret these results because of the scale of the Lib Dem collapse: Labour made gains, but so many Lib Dem seats went to Tories that they ended up falling further behind overall. How you read this depends on whether you think more of the disappearing Lib Dem seats should have been won by Labour. If you count Conservatives and Lib Dems as a government bloc, then Labour won twenty-two seats from the government, which is decent. If you think that lots of Lib Dem voters were ex-Labour voters, then you'd expect them to come back to Labour, and the fact that the Tories were the main beneficiary of the Lib Dem collapse suggests a not-so-decent performance.

But basically my view is that if Labour underperformed in England and Wales, it didn't do so by much. The fundamentals always suggested that big Labour gains were unlikely: first-term governments rarely lose their re-election bids, the economy is growing at its fastest since 2007, inflation is low. These are conditions in which you'd expect an incumbent government to be returned. Perhaps Labour could have done a bit better with a more charismatic candidate, a better-run campaign and no scare tactics about the SNP plaguing it. Not vastly better, though. The air of extreme underperformance comes from the gap between the results and pre-election polling. It's very clear, though, that those polls were just wrong - they systematically failed to account for a much larger than expected 'shy Tory' group.

Who are the 'shy Tories'? It's hard to say. A very broad-brush picture is this: these are the people who think Labour is better on issues like the NHS and looking after the vulnerable, but the Conservatives are better on the economy. Issue polling suggests that's a very consistent pattern. If Labour had done better at this election, it would have been because these people either decided that they were willing to deprioritise the economy, or changed their mind about Labour's economic management. It's never surprising when the first thing doesn't happen. And it's not surprising that the second didn't happen - I hate to harp - one election after a long-term Labour government presided over a huge crash.

Which brings us to the various proposed solutions. Would a platform closer to New Labour have convinced people that Labour was capable of managing the economy? The answer just has to be no. The issues on which Miliband was most clearly divergent from the Blairite centre were things like the energy price freeze, rent regulation, and lessening private involvement in the NHS. Those are all very popular policies. They make leader-writers at The Economist and the FT dubious about the party's economic approach, but they don't really determine electoral perceptions of it. The key is that people just weren't ready to believe that Labour is economically competent, or that Miliband meant what he said about cutting the deficit. Being more pro-market and 'aspirational' is not what's needed to get them to believe that: what's needed is a bit more time to let the scars of the 2008 crash fade, and maybe slightly better rhetorical packaging.

Politically speaking, at least, the platform is in fine shape. The problem it had on some of its key elements - most notably, deficit spending, which people still believe caused the crash - was not that people didn't like it, but they didn't believe it. Should Labour have been more firm in refuting the idea that New Labour caused the crash? Definitely. But that argument is now comprehensively lost and there's no point relitigating it - which people like Chuka Umunna have recognised - and the point where defending New Labour's economic record was relevant is over. By the next election people won't care. At the next election, with Gordon Brown a distant memory and people tiring (as they, cyclically, do) of Conservative government, Ed Miliband could have won, and (assuming Labour can recover to at least 30 seats in Scotland) someone running on a very similar platform could win.

I don't think that's going to happen, because internal party debate is inevitably driven as much by what people like Peter Mandelson want the Labour Party to be like as it is by accurate diagnosis of the problems it's facing. New Labour is still a strong current in the party, and with affiliated unions having less power in the leadership contest, it's extremely likely that the winning candidate will be from this 'New New Labour' school. And they might very well win on that platform! But insisting that's the only path to victory, or that this election proves Miliband's platform was unacceptable, is just blinkered.