The referendum decision to leave the EU has created the greatest period of economic uncertainty for Britain since the 1947 Sterling crisis. The UK weathered that storm mainly due to the decisive political leadership of Sir Stafford Cripps as Chancellor, and a political context where a Labour government had accumulated significant goodwill, not only through its welfare and housing policies, but also due to an industrial policy that was seen to benefit Labour’s core, working class voters:
The government  effectively used the Distribution of Industry Act of 1945 to promote employment. A staggering four million men and women were demobilised from the armed forces by the end of 1946, yet the Board of Trade, first under Cripps, and later under Harold Wilson made aggressive use of Industrial development Certificates to force modern, new industry into area of unemployment, like the North East, South Wales and Central Scotland, and then provide these new industries with remission of rents, zero rates, and interest free loans.
The North East of England had unemployment of 38% in 1932, by 1948 this stood at 2%; over the same period Scotland saw unemployment fall from 35% to 4.5%, and Wales saw unemployment fall from 41% to 5.5%. The UK national average unemployment by 1951 was just 1.8%. Although there was only limited forward planning, government direction effectively produced full employment, and intervention against the market’s bias towards the South East of England spread the benefits across the UK.
Indeed, the feeling that the Labour government was on the side of ordinary working people was so tangible, that when Cripps cut the food ration to below wartime levels in 1947 to address the Sterling crisis, this was supported by Labour voters.
How very different from the drift of the economy towards the South East in the Blair/Brown years, and the growing feeling of being “left behind” from Wales, Scotland and the English Regions. As Kevin Morgan from Cardiff university noted some years ago:
“As the UK’s most over-developed region, the south east is the chief source of inflationary pressures, hence UK monetary policy tends to be calibrated to the over-heated conditions in this core region rather than the ‘under-heated’ conditions in the less developed regions of the north and the west. In a celebrated public relations gaffe the Governor of the Bank of England, Eddie George, actually conceded this point when, asked if job loss in the north was an acceptable price to pay for the control of inflation in the south, he was reported to have said ‘yes, I suppose in a sense I am’. ”
The Sterling crisis in 1947 did not cause a political crisis, and because there was no political crisis its historical significance has been underestimated. Significantly, the Labour Party stood together in the national interest, despite bitter divisions in the Cabinet over Cripps’s response.
Coming to the modern day, the Labour Party in opposition needs to present itself as an alternative government, but just as importantly the role of the main opposition party in a parliamentary democracy is to seek to influence the decisions of government, and shape the political debate.
Given the potentially economically catastrophic vote to leave the EU last Thursday, an outcome that most Labour Party members, and most Labour voters opposed; and which was opposed by the overwhelming majority of affiliated trade unions; then it is essential that the Labour Party quickly develops a policy of how to deal with the fall out.
It should have been obvious that the task for the Labour Party was to keep the media focus on the lies and false promises from the leading Brexit campaigners; and it should have been obvious that the task for the Labour Party was to exploit the division in the Conservative Party and the paralysis of the lame-duck Cameron administration. It should also have been obvious that it was necessary to keep the party unified behind those tasks.
The meeting of the Parliamentary Labour Party on Monday 27th June should have been an opportunity to develop a strategy to deal with the Brexit crisis, and to speak up for the interests of the millions of those that the Labour Party exists to represent whose economic prospects are now less secure.
Instead, we saw an exercise of self-indulgent narcissism, with the Westminster bubble concerns of professional politicians trumping the very real fear and anxiety that ordinary people are feeling.
As GMB General Secretary, Tim Roache, said in the immediate aftermath of the Brexit vote:
We’re in uncharted waters. The government needs to act straight away to secure jobs and keep the economy moving – too many working people are still carrying the can for the last economic crash, they can ill afford another one.
What happens next cannot be the preserve of a government elected with 37% of the vote or potentially a Prime Minister who was never elected at all. The British people have spoken, many of them frustrated with business as usual, choosing to leave the EU because of the impacts of the flexible labour market and the pursuit of free trade above all else.
Our place in the world cannot be one based on a Tory Party free-for-all, free market philosophy. A race to the bottom which prioritises the removal of trade barriers and the flexible labour market above all else will fail working people and the very voters who made their decision yesterday.
The Prime Minister must act now, on a cross party basis, to heal and represent the whole county. Not just the rifts in his Party. That means an urgent plan to protect jobs and a guarantee that no workplace rights will face the axe.
Tim is undoubtedly right to say that an urgent plan is needed to protect jobs, resolve uncertainty over workplace rights. It is an entirely reasonable expectation from the trade unions that the parliamentary party should also have understood that those were the urgent priorities.
I think it is no secret that many in the trade unions are not uncritical supporters of Corbyn. There is a very real question mark over whether Corbyn’s undoubted appeal to a politically engaged minority can translate into the mass electoral appeal that can win a general election. Both Jeremy Corbyn and Emily Thornberry have failed to engage substantively with the question of how tens of thousands of skilled, well paid and organized jobs in manufacturing and shipbuilding could be protected were the Trident successor programme to be cancelled, as they desire. But clearly even for those who may be more critical friends of Corbyn, now was the time for the party to unite behind him.
The disdain with which rebels in the Parliamentary Labour Party disregarded the statement from General Secretaries of 12 of the 14 affiliated trade unions, indicates turning their backs on the ethos and traditions of the Party. The General Secretaries, speaking in the interests of some 3 million working people, said:
The Prime Minister’s resignation has triggered a Tory leadership crisis. At the very time we need politicians to come together for the common good, the Tory party is plunging into a period of argument and infighting. In the absence of a government that puts the people first Labour must unite as a source of national stability and unity.
It should focus on speaking up for jobs and workers’ rights under threat, and on challenging any attempt to use the referendum result to introduce a more right-wing Tory government by the backdoor.
The last thing Labour needs is a manufactured leadership row of its own in the midst of this crisis and we call upon all Labour MPs not to engage in any such indulgence.
Let us be clear, whatever failing there may have been with Labour’s campaign to stay in the EU, the party under Jeremy Corbyn’s leadership saw most Labour voters backing remain – a figure between 63% and 70% depending upon the polling. The inchoate expression of alienation against the political class that led to so many voting Leave, against what objectively are their own best interests, did not grip working class communities in the last 9 months of Corbyn’s stewardship of the party.
The wounds go deeper, and further back. The bond of trust between the Labour Party and much of the electorate was broken by the deceit that led the UK to participate in a criminally irresponsible war in Iraq. The economic policies that led to a million manufacturing jobs lost since 1997 undermined Labour’s credibility to speak for many communities in the English regions, and the other nations of the UK.
The triangulation and spin meant that Labour’s message was increasingly attuned to swing voters in marginal constituencies. This was particularly damaging over the issue of immigration, where de facto the last Labour government encouraged migrants due to the economic benefits, while simultaneously some figures in the Labour party indulged in dog-whistle collusion in anti-migrant sentiment. The failure by Blair and Brown to deal with the UK’s growing housing crisis, and their unwillingness to ensure that Employment Law was strong enough to prevent unscrupulous bosses abusing migrants to push down wages in entry level jobs, meant that many working class people have real-life, negative experiences associated with migration. There are many areas where increased population has not seen the necessary, corresponding increase in housing, schooling and health capacity. There are many areas where increased population has not seen the necessary. corresponding increase in housing, schooling and health capacity
These are just some of the reasons why Labour lost the elections of 2010, and 2015. Long before Jeremy Corbyn even thought he might one day be leader of the party.
The Labour Party now has a challenging landscape to confront. The type of message and the type of party that plays well in Scotland or Wales is different from the North of England, which is again different from London, and different from the pockets of Labour support in the rest of the South of England.
Not only are those Labour MPs indulging in the circus of destabilizing Corbyn letting down people in the constituencies they were elected to serve, and failing to act to promote stability which is their duty in the national interest; they are utterly deluded that there is any alternative leader waiting in the wings that has the stature or appeal to solve Labour’s problems. They are deluded if they think that a Labour leader who had been more enthusiastic about the EU would have been better able to reach out to skeptical and disengaged voters.
They are also deluded if they think that their exercise of fiddling while Rome burns is the way to appeal to voters of any stripe. They are risking blowing the Labour Party up into civil war at exactly the time when the people that the Labour Party was established to represent more than ever need the Party to be strong and united.