Piece for ShiftingGrounds on Ken Loach's new film

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Can we revive the spirit of 45?

Of the twentieth century it’s often remarked that “the left won the culture war, the right won the economic war”. If nothing else, Ken Loach’s Spirit of 45, out in cinemas last week, is a useful reminder that this did not always seem like being a foregone conclusion.

A great deal has changed since then, of course, as the film expends little subtlety in telling us. And indeed many have wasted no time in dismissing Loach as nostalgic or simplistic, something he probably leaves himself open to with his use of sepia tone and eventual descent into agitprop (Ms Thatcher emerges from nowhere to shatter the reverie, encouraging the audience in my showing to audibly hiss!).

But past its casual bursts of pantomime, The Spirit of 45 is a beautiful and inspiring movie. It leaves you, as I suppose it intends to, with the question of what we can revive of that time – of, as the late Tony Judt might put it, “what is living and what is dead?” What can be resuscitated and how?

The first – and the most striking thing about that era – was the sheer scale of ambition of the Labour government. They faced circumstance which make today’s problems seem meagre by comparison: a country decimated by war, fiscal deficits of 21.5%, national debt at nearly 250% of GDP. And yet they embarked on a programme of wholesale transformation of the British economy and society – not because it was romantic, but because it was the right way to solve those problems.

In many ways an experiment, this boldness is a salutary reminder to those of us on the left who at times have had our horizons narrowed by the last thirty years of free-market triumphalism, or even the austerity of the past few. Too often we content ourselves to talk big but fiddle at the edges; a tweak and a nudge here, a tax incentive there. Ownership and control matter, as do institutions; public and private interest are not synonymous – the former should always be a buffer to the latter, not a mere facilitator.

Simple truths but ones too often forgotten. And relevant when we look at our country today. What really is the case, for example, for continuing with the absurd public subsidy to train companies to run our railways, instead of just taking what is a natural monopoly back into public ownership? In energy and banking industries, we should at least be looking at national or regional ‘public options’ which could undercut profiteering from the cartels that dominate those industries.

What these institutions might look like brings us to what Loach pinpoints as the failure of the left in the late twentieth century. While the collectivism of the post-war years expressed itself through politics, that spirit largely stopped at the ballot box. Nationalised institutions eventually became sclerotic and bureaucratic; run in the interests of people but with little of their input.

The only way by which the left of today can take up the spirit of 1945, while not repeating its failures, is through a relentless focus on economic democracy.  Where institutions are state backed, they should be run equally by management and employees, ideally with third party input too. The plans for a ‘Peoples Port of Dover’ – controlled equally by employees, local residents and businesses – provides a good model.

This ethic also needs to be extended right across the economy, including to businesses. For example, Peter Tatchell and others have long argued for medium and large companies to be required to be run in this way, with shareholders and employees represented equally on boards, alongside an agreed (smaller) third group. This reflects the recommendations of the 1977 Bullock Report, never enacted in time before the tide of Thatcherism swept all such considerations away.

The dream of abolishing the profit motive has evaporated, and it is very unlikely to come back. Over a century social democracy (and even democratic socialism) has indeed sadly gone, as Dylan Riley puts it,“from a strategy for achieving socialism to a policy package for managing capitalism”. But if that’s to be the case, lets at least do it comprehensively.

Undoubtedly though, there are a some elements of the era Loach venerates which are dead – and to which it is less easy to reconcile. The working class still exists, but it is far more fractured, far less homogeneous than it was; the very nature of our cities have also changed. This all creates significant barriers to the important work of political and trade union organisation, particularly in the private sector.

As does the most pressing change of all: the way globalisation has transformed capital, making it more fluid and global, and far harder to regulate or tax. These problems are not insurmountable. But as Paul Mason has said, they do pose a dilemma for the left. Namely, this is whether we pursue a   programme of ‘deglobalisation’ (capital controls, anti-outsourcing measures etc.) or enter the far more untested and ambitious terrain of global governance. This debate has yet to even really get under way in mainstream left circles, nevermind reach a conclusion.

Nevertheless, we have enough to be getting on with. As Eric Hobsbawm told Juncture shortly before his death:

“Politics is the only aspect of the 21^st century world which globalisation [has] weakened but not transformed. It remains the only effective mechanism for social redistribution…It has its problems and abuses, but it remains the last bastion against the free market. And it needs politics – politics by collective action to move it.”

It is this which we can take forward as the true essence of the spirit 1945, linking that which can be rescued from that time to what we can bring to new challenges; the centrality of politics and collective action. This has never been more urgent than now, as we look back at the unquestioned inequity, inequality and unsustainability of the pre-crash years. Just as those post-war generations did, we too should vow never to go back to “that sort of peace”.

The myth of the millionaires' exodus over the 50p tax rate

Blog for HuffPost
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The myth of the millionaires' exodus 

This week the Treasury spin machine went into overdrive in response to Labour's push to highlight the cut in the 50p top rate of tax.

The centrepiece of their case was that the 50p tax had reduced the number of millionaires paying tax in the UK by 10,000 from 16,000 to just 6,000. The Telegraph faithfully reported their argument, informing us that "two thirds of millionaires left the UK to avoid 50p tax". The Mail did likewise, publishing unquestioningly Harriet Baldwin's extrapolation that this cost the UK "£7 billion in lost tax revenue".

This narrative has been accepted by the right - of proof of the age-old maxim that taxing the rich proves counter-productive - and even by the left, as a cause for despair. It's also reached the other side of the Atlantic, giving succour to the Republican blogosphere in their argument against Obama's case on the 'fiscal cliff'.

The trouble is, it isn't true. Or at least there is no credible proof that it is.

The figures used have been worked up on the same basis as the HMRC's report on the 50p tax back in the Spring - and they're disingenuous for that same reason.

As I argued in a piece for LibCon back in March, this report was fatally - and probably intentionally - flawed, seemingly fixed to reach the conclusion George Osborne wanted it to. Primarily, this was done by isolating the top rate tax yield for tax year 2010/2011 - the year the 50p tax was introduced. The report showed a significant drop in top rate revenue for 2010/2011 from 2009/2010, and this was the main basis of the argument that the 50p tax 'raised no money' which justified it's abolition.

A gaping hole in this argument is that by the HMRC's own admission, a great deal of this drop was accounted for by (the non-PAYE paying) super-rich bringing bringing forward their income ('forestalling') and declaring it in 2009/2010 tax year instead, ahead of the pre-announced 50p tax rise. The key point is, by its nature forestalling can only happen once - those who did so could not have kept doing it in the years after; they would have had to have paid up. The 2010/2011 yield was thus artificially deflated; totally anomalous, and unreliable as a baseline. There may have been other more permanent forms of evasion in the mix, but the only way of knowing this - and the true effectiveness of the 50p tax - for sure would have been to wait for 2011/2012 returns. Which is presumably by Osborne avoided doing just that (given there was good evidence it raised a significant sum of money).

And so to yesterday's numbers. They too take 2010 figures, on the number of people declaring an income above £ 1 million, compare it to 2009 and note a drop - leaving the Telegraph and Mail to argue without evidence that they have all moved abroad. But just as with the tax yield, these figures are highly distorted and unreliable, given we know many top rate payers moved their income for 2010 forward to 2009 (this is especially likely to be the case with millionaires, as few would be on PAYE).

Treasury sources go on to state that the number of millionaires is now 10,000 - and shamelessly attribute this to Osborne's announcement of his intention to cut the 50p tax. In reality, it's much more likely that this increase is simply those who forestalled in 2010 returning, as they inevitably have to (a large part of the remaining gap between this figure and the mid-to-late 2000s numbers is likely explained by the financial crisis).

There remains little to no evidence that high earners have, or are planning to, move abroad in response to high tax regimes. For people on the right and left to take such blatantly skewed figures at face value does a real disservice to the level of debate an area as totemic as tax policy should demand. Sadly, I doubt the sleight of hand will stop here. My guess is the next trick will likely come a year before the election. Given the cut in the 50p tax has been pre-announced, it's possible that some income will be delayed being declared until after the cut - some chartered accountants are already advising the super-rich on just that. This will artificially inflate the 45p rate 2013/2014 revenue, allowing Osborne to compare it to 2010/2011 and announce the top rate cut a great success in getting the rich to pay more. If the debate on this issue so far is anything to go by, it's likely he will go unchallenged.

There are evidently parts of the Government intent on fighting a war on behalf of the richest 1% in our society. The first casualty of that war looks to be the truth about the 50p tax.

Success for Hollande could change the terms of the debate

Piece for Shifting Grounds blog



It’s fair to say that the fallout from the 2008 financial crisis has not been kind to the left. A favourite talking point of those writing obituaries for social democracy is that right-of-centre governments have come to dominate the continent, holding power in 22 of 27 EU countries. So as the French presidential election reaches its crescendo this week, the prospect of an Hollande presidency could prove a decisive moment in recent history.

For one thing, if Hollande makes it to the Elysee he will have been propelled there by a revival of the far left. The Left Front, led by Jean-Luc Melenchon, has assumed a place and importance in this election that must seem a distant dream to their UK counterparts. Working as a coherent counter-veiling force to Sarkozy and Le Pen, they have dragged the debate leftwards and re-connected with working class voters long since thought lost to apathy or worse, the Front National. Here we should at least allow ourselves optimism at what the broad left can achieve with a few charismatic or competent leaders, and with Pythonesque splits and sectarianism left in the past. (Not losing sight of the shared enemy, Melenchon has long urged his voters to transfer to Hollande in the second round.)

But we kid ourselves if we think what we are seeing in itself represents a ‘uniform swing’ to the left acrossEurope. The French system is distinct, and the left there work on far more fertile territory than in other states: France’s political discourse (if not electoral history) traditionally leans their way. What is of more importance is if Hollande both wins and is able to implement his policy platform in the face of vested interests.

The austerity economics of the past few years has brought into focus a phenomenon that’s defined the past three decades – that is, economic policy (and debate) largely framed by the prevailing wisdom among financial elites. The most potent embodiment of this in recent times has been the almighty position assumed by the international bond markets. Although treated as neutral, these have demanded a highly prescriptive form of right-wing economics in exchange for low interest rates – with particular focus on deep spending cuts and tax rises (on all but the rich) as the best means to reduce debt, deficits and increase growth. Any alternative is deemed ‘unworkable’ or ‘unrealistic’ at best, and haunted by the threat of punishment. This trumping of sovereign governments of whatever stripe, mostly derived from unchecked de-regulation and globalisation, forms part of what Zygmunt Bauman has called a ‘disconnect between power and politics’.

Hollande at least poses a challenge to this order. His manifesto proposes deficit reduction via stimulus and growth, and represents the first coherent alternative to austerity inEuropesince the collapse of Lehmans. It promises to boost state spending by €20 billion over 5 years, create 60,000 new teaching posts, fund new jobs for the young unemployed and invest in social housing. Alongside this is a new 75% tax on incomes over €1 million, taxes on banks and financial transactions, a ban on stock options and the promise of significant banking reform. Significantly, Hollande has also pledged to re-negotiate the EU fiscal treaty to give greater emphasis to growth over cuts, and to push for a more active role for the ECB.

While this is by no means revolutionary, it is far outside what is deemed acceptable in the pages of the Wall Street Journal. Sensing the threat, Hollande’s opponents at home and abroad have begun the scaremongering that will be familiar to anyone who’s followed the economic debate in the UK. Openly inviting speculation, Sarkozy has said the Hollande’s plan will turn France into a ‘new Greece’, while transnational financial ‘leaders’ have been summoned to warn of a ‘bloodbath’ in the markets – a ‘new wave of instability’ – should voters vote the wrong way, or Hollande have the cheek to act on his mandate. Echoing this, The Economist – which has long viewed the belligerence of France’s social model as a sort of childish impudence defying ‘inevitable’ liberalisation – has spent much time fretting that candidates ‘may actually mean what they say’! Deep spending cuts are presented as unavoidable, and a country whose underlying economic position is sound has suddenly been talked up to be on the brink of collapse.

Whether Hollande, if victorious, can face down such threats and intimidation and push ahead with his programme will tell us a great deal about politics in 2012. It will give us a clear picture of where the balance of power really lies between markets and democracy, and the real scope for change. If he avoids Mitterrand’s fate, and France emerges unscathed, he may help break the hoodoo that market reprisal has thus far held over Europe’s centre-left parties and their electorate, particularly in the UK. If no ‘bloodbath’ is forthcoming, and austerity’s ‘leading lights’ are exposed to have cried wolf over the French Socialists, then centre-left parties will have the beacon of a bold, workable alternative at the heart of Europe.

Of course, there is no guarantee that Hollande will stay the course – he is, ultimately, a pragmatist – nor that he will successfully pursue his argument at an EU level. So far, though, he has shown no signs of back-tracking. No doubt the resurgence of the far left, whose presence at least partially accounts for the scale of Hollande’s manifesto, helps to explain this – and should they remain united, they may yet have a key role to play in holding his feet to the fire.

Either way, the stakes are huge. Mark Fisher has defined the ‘No Alternative’ fatalism that has underpinned the neo-liberal era as ‘capitalist realism’. In his seminal book on the subject, he writes:

"The long, dark night of the end of history has to be grasped as an enormous opportunity. The very oppressive pervasiveness of capitalist realism means that even glimmers of alternative political and economic possibilities can have a disproportionately great effect. The tiniest event can tear a hole in the grey curtain of reaction which has marked the horizons of possibility."

Francois Hollande is no messiah, and his platform is no panacea, but it may yet prove to be that tear in the curtain that social democracy has so long been waiting for.