The mission of Radical Reform is to promote a fresh vision of a genuinely democratic, tolerant, egalitarian, just and outward-looking society and so create a credible alternative to the reactionary neo-conservative economic, social and educational policies, which have dominated British politics for the last four decades. The poverty and inequality that we see in Britain today are not inevitable. They do not result from “the laws of economics” but from failure to reform a corrupted political system, which has side-lined the electorate and handed control to lobbyists, party donors and billionaire newspaper proprietors.
The key issue is not that a few rich people have far more money than they need but that our laws permit them to avoid paying taxes which they ought to pay and to buy things that should not be up for sale: political influence, control of information, and privileged access to justice, education and jobs, which embed inequality and blight the lives of those who are less fortunate.
We reject both self-serving neo-conservative capitalism, and old-style socialism, which has kept the Right in power for most of the last sixty years. Far-reaching reforms are needed, but fantasies about a society which has no need for effective defence or border controls and where money is spent without consideration as to how it will be paid back have no traction with the public and can only lead to conflict and disappointment. What we stand for is much more realistic: creating an enduring basis for equality and prosperity through constitutional reform, evidence-based policy and a dynamic, plural, social market economy of the kind which has proved an enduring success in other Northern European democracies.
The public want fairness, good jobs, a strong NHS and excellent schools. But they also want security and understand that welfare demands sound public finance. We seek:
- a fresh vision focused on ending poverty and building a cohesive, dynamic, productive and more equal society by enabling people from all walks of life to play an active role in decision-taking;
- honest discussion of debt, migration, electoral reform, lobbying and party funding, Europe, defence, climate change and energy security;
- every-vote-counts elections; proper governance standards in Parliament; and evidence-based policy, to take power back from vested interests and lobbyists, whose covert influence perverts our democracy;
- sustainable economic management, with equity between regions and generations and recognition that public provision funded through general taxation is the only fair way to achieve excellent public services;
- a judicial and correctional system that is effective, egalitarian, evidence-based and humane;
- education, health, science and welfare of the highest quality, which meet the needs of all, and especially of the most vulnerable;
- the closest possible relationship with our neighbours in Europe;
- alongside international partners, a strong and commensurate response to climate change, defence and security threats.
These objectives can be achieved, but only through far-reaching changes to a system of government which serves the interests of the powerful at the expense of the public at large. All the great reforms: abolishing rotten boroughs and the slave trade; freedom of belief, and votes for women, were bitterly resisted and yet, when the public were mobilised, became irresistible. The time has come for a powerful new wave of reform to create a modern, responsive, outward looking democracy and so provide the basis for a society of justice and opportunity for all.
What Went Wrong?
Britain, the second most equal large European country in the 1970s, has become sharply more divided until it is now the second most unequal in Europe and the fourth most unequal of 24 OECD industrialised nations. The gap between rich and poor and between the most and the least prosperous regions is the worst in Northern Europe. While the share of the nation’s income taken by the very wealthy continues to rise, manufacturing declines; health, education and our system of justice are undermined; and young people are burdened by crippling debts.
As the welfare state is pared down, the United Nations reports that 14 million Britons, a third of them children, are living in poverty, while vulnerable people turn to food banks to nourish their families in what, overall, is still the sixth richest country in the World.
Advanced market economies can be divided into two groups. The first, laissez-faire, group epitomised by the United States, is characterised by minimal state involvement in welfare, low taxation and a highly unequal distribution of wealth and income. The second, social market, group includes northern European nations such as the Netherlands, Germany and the Nordic countries, which combine a strong role for the state in welfare and greater equality in income and wealth.
Both models have proved successful in terms of growth; but in different ways. The US model has encouraged extraordinary advances in technology and innovation which (with a huge, integrated home market) have delivered average incomes among the highest in the World. But it has failed to deliver welfare standards taken for granted in northern Europe, with poverty alongside enormous wealth, poor school outcomes and a profit-oriented health system, which fails a significant proportion of the population.
As OECD surveys show, the social market countries consistently top international rankings in terms of happiness, outperforming the United States by a wide margin. Poverty causes unhappiness but wealth above a modest level has diminishing effect, while personal safety, secure employment, good health care and the prospect of well-being in old age are essential to happiness at all income levels.
Britain Abandons the Social Market
When Labour came to power with an overwhelming majority in 1945, Britain adopted elements of the northern European social market economy model and a consensus developed around full employment, decent housing for all and an NHS which provided proper healthcare irrespective of income as a matter of right. But the post-war Labour government failed to create a fully developed social market and its home-grown model differed in important respects from those being created in Scandinavia, the Netherlands and Germany.
First, Labour nationalised a large number of strategically important companies, which had previously been in private hands; second, like France and Italy, it retained a conflict-based model of industrial relations rather than building a law-based, partnership approach of the kind adopted in other parts of northern Europe; and, third, (apart from the NHS) the welfare system provided by the state was relatively ungenerous compared with those in other northern European countries.
Handicapped by a highly regulated manufacturing sector, industrial conflict and a small home market, Britain was soon slipping behind the countries of the European Economic Community. After unsuccessful bids in 1963 and 1967, it joined the EEC in 1973. But efforts to re-mould labour relations led to the defeat of Labour in 1970, the Conservatives in 1974 and Labour again at the end of the decade.
The failure of the Labour Government after the war to create a fully developed social market economy, with proper state pensions and maternity benefits and strong employment laws opened the door to Mrs Thatcher in 1979. She brought with her a ready-made alternative model of society developed by neo-conservatives in the United States based on privatisation, cuts in tax and welfare and abandoning the aim of secure, well-paid employment for all.
The Labour Party initially defended the post-war model but, after three successive election defeats under leaders seen as weak on defence and dominated by left-wing trade unions, to escape the political wilderness, selected Tony Blair, who adopted much of Mrs Thatcher’s neo-conservative philosophy. While successful in electoral terms, this undermined Labour’s claim to champion morality-based social policies and deprived the country of any clear alternative vision of society.
The neo-Conservative illusion
This new consensus was justified by two contentions: first, that reducing the role of the state was essential for faster growth; and, second, that cutting taxes on the wealthy would benefit poor people through the so-called trickle-down effect. But in fact, neither of these claims has been borne out by experience. The European social market economy model has actually proved very successful at promoting long-term growth: average incomes in Denmark, Finland and Germany are among the highest anywhere. The trickle-down effect has also proved an illusion, with the US and the UK experiencing the greatest concentration of wealth in the hands of the very wealthy alongside shocking levels of poverty.
Wealth follows power and, with an electoral system that side-lined most of the population, politicians convinced themselves that it was in the national interest to manage affairs in ways that benefited party funders and better off people who could be expected to vote. This ultimately led to the referendum campaign of June 2016 and the threat of abandoning the Single Market and, with it, the legal underpinning of much of the social progress achieved over the previous forty years.
An Experiment that Failed
International experience shows that gross inequality in the UK is not an inevitable consequence of globalisation or technological change but of political decisions and of our fossilised first-past-the-post political system. Once the Mother of Parliaments, Britain today is in urgent need of democratic renewal with low turnout, governments regularly returned against the wishes of a majority and pervasive contempt for politicians and the political process.
Without any coherent alternative long-term vision, successive Labour, Coalition and Conservative Governments turned Britain into a laboratory for a menagerie of right-wing pet causes (private prisons, academies, foundation hospitals, debt-based tuition fees, police commissioners and executive mayors) inspired by think tanks linked to the US Republican Party, which have generally made matters not better but much worse.
The Thatcherite consensus became a political straight jacket, impervious to the evidence of bulging prisons, mounting household debt and growing numbers of homeless people on the streets. After three decades, research suggests that while the agenda did encourage labour market flexibility and attract foreign investment, on balance, comparing Britain with Germany, Canada and Scandinavia, it is clear that the experiment as a whole has failed disastrously to deliver what was promised.
The rich have got dramatically richer but the quid pro quo, that wealth would trickle down to the less well-off, has simply not happened. The need for a welfare system safety net is greater than ever. Growth has been slower, not faster, since Mrs Thatcher came to power. And tireless efforts to transfer control of publicly funded schools from local authorities and parents to private sector and religious organisations have left the UK second to bottom of the OECD countries in terms of key educational indicators.
The marketisation of health provision in England has fed an army of private contractors but has left the Health Service performing no better in England than in Scotland, where care continues to be delivered free from the burden of obligatory tendering. For a nation which built the NHS, the BBC, a vibrant manufacturing sector and the best university system in the World to put health care up for auction, prevent local authorities from providing social housing and education and leave the nation dependent on a Chinese state company to keep the lights on has nothing to do with good economics – it is folly.
Embedding Poverty and Disadvantage
Forty years ago, Mrs Thatcher, backed by half a dozen newspaper proprietors, launched a crusade to roll back the State and create a Britain where, in her words, there was “no such thing as society” and “only the failures travel by bus”. She set about dismantling the welfare state through bacon-slicer changes, making private profit the engine of social change and replacing elected representatives by contractors and appointees.
These changes mainly hit the 35% of the population who don’t vote. Though widely unpopular, no single one was so large as to provoke concerted opposition from the 65% who did, but step by step, they profoundly altered British society. Taken up by “New Labour” after 1990 and carried forward with the support of Liberal Democrat Treasury ministers through the Coalition’s austerity policy, and through Labour’s support for abandoning the jurisdiction of the European Court, Mrs Thatcher’s counter-revolution marches on, while the electorate is offered no credible alternative to a mean and divided future.
Turning the Tide
Echoing Lenin, Mrs Thatcher said: “There is no alternative”, but looking at experience around the world, it is clear that there is nothing inevitable about wasteful extravagance alongside food banks and debt, and a prison system full of young people who cannot read or write. Talent, effort and risk-taking are crucial to our prosperity and should be rewarded, but differences in wealth must not determine political influence or access to health, education and justice.
If we are to create a society which is both economically successful and socially inclusive, we must break free from the dogmas of the 1980s, left and right, and build a new progressive model which combines real democracy with sound economic management, equality of opportunity and a strong welfare state. As the Institute of Fiscal Studies demonstrated, both the Conservative and the Labour 2017 manifesto promises were dishonest. It is simply not possible to fund tax cuts by cutting public services without causing great hardship. At the same time, urgently needed increases in spending on health, schools, nursery education and university tuition cannot be paid for just by taxing the very wealthy and increasing debt.
The Way Forward
The Radical Reform, therefore, makes democracy the key to creating a fairer society. It campaigns for a fresh model based not on US-style capitalism nor on back-to-the-future socialism, but on a modern vision of the social market, which has proved so successful in other northern democracies.
The mission to build a just, prosperous, cohesive and outward-looking Britain by giving real power back to the electorate, involves many elements. We aim, by reforming our devalued political system, to restore democratic choice to the central role in creating a strong basis for social justice and prosperity. This objective, which we share with millions of fellow citizens, can be achieved, but only by mapping out the kind of society we aim to build and by far-reaching revision of a system of government which has been hijacked to serve the interests of a tiny minority.
The objectives that follow are pointers to the direction of travel, to be developed and strengthened through consultation and debate. Objectives One and Two propose an agenda for empowering the electorate. And Objectives Three to Twelve set out our priorities for turning the tide and creating an efficient, plural economy and a humane, egalitarian and inclusive society.
RADICAL REFORM PROPOSES a fresh social market vision to point the way to an outward-looking society of equality, prosperity, social justice and individual empowerment.