Bewildered in Brighton: Five observations on the Labour conference

This week I had an essay in the Labour conference edition of the New Statesman, on the decline of social democracy. The title gives a clue as to the content: ‘In the valley of death’. Nothing happened at the Labour conference to change my mind that the Labour party, like many other European social democratic parties, is in a very bad state. But there were some developments worth registering.

1. Labour will become more interesting, if not electable, on the economy. John McDonnell, the new shadow chancellor, gave a well-constructed and thoughtful speech. I doubt his shift to a vocal anti-austerity position will do much to improve Labour’s reputation for economic competence, and his policy preferences are clearly largely statist. But his focus on the big challenges to the UK economic model – an historically large current account deficit, household debt dependency, weak productivity and low investment – opened up new territory for the party on economic questions, which has been noted with approval by the likes of Martin Wolf.

McDonnell confused people by saying that he would sign up to the government’s fiscal charter, which he can’t do if he wants to borrow more to invest in capital works. But nevertheless the political shift he has made is clear: cut the deficit through growth and tax rises on corporations and the wealthy, and focus on boosting investment rather than consumption. This is what allows him to say that Britain must live within its means. It should grow through state investment, but not borrow to consume. The underpinning intellectual source for McDonnell’s thinking appears to be the Socialist Economic Bulletin, published by Ken Livingstone for many years.

2. If this year’s conference was chaotic and amateur, next year’s will be warlike. Open disagreement between a party leader, his shadow cabinet and the party members is not sustainable. It can be dressed up as discussion and debate for a brief period, but it will not last. The different wings of the Labour party will now gear up for decisive battles at next year’s conference. In the meantime, the leadership may seek to strengthen its hand through plebiscites on policy and reforms to the National Policy Forum. But the unions showed on Trident this week that they cannot be relied upon to fight in the left’s corner.

3. The Labour brand still has pulling power. McDonnell announced an economics advisory group with very credible, if perhaps predictable, figures on it. The highly respected former head of the Civil Service, Lord Sir Bob Kerslake, agreed to lead a review of the Treasury. And John Healey, the shadow housing secretary, announced that the CEO of Taylor Wimpey, Pete Redfern, would lead a review of homeownership policy.

4. Labour’s moderates don’t yet know to regroup. There were straws in the wind – the packed out meeting of Labour First spilled onto the street – and plenty of chatter on the fringe and in the bars. But intellectually and organisationally, the mainstream of the party is still pretty bewildered.

5. When it comes to the exercise of real power, look to Labour in local government. Some big figures in municipal Labour were not to be seen at the conference because they were busy finalising devolution deals with George Osborne. The first of these – covering the Sheffield city-region – was announced today. Expect more to follow. The future is metro.

In a podcast from IPPR's conference fringe programme, electoral guru John Curtice discusses the mountain the party has to climb. The key question Labour needs to address, he says, is why it failed to woo those voters they were counting on winning back on election day.

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