Johnson’s economic populism

Bryn Jones finds the Tories’ adaptation to state intervention is an opportunity for a Labour counter-offensive

Following the Tories’ sweeping gains in Labour’s Northern and Midlands heartlands, Boris Johnson’s pledges to these ‘left-behind’ areas has become a major post-election focus – one that is also crucial to reverse Labour’s electoral fortunes, for it represents a major test of the new Tory paradigm. Put simplistically, this is akin to the challenge dogging Donald Trump’s similar form of economic populism: how to maintain a free-market neoliberal framework whilst simultaneously using state intervention and fiscal levers to raise incomes and standards for the economically – usually working class – disadvantaged.

Many believe that Trump repaid political debts to his finance capital backers by reinforcing the neoliberal dimension with tax cuts and deregulation ( health care) at the expense of measures that could reduce working class deprivation. Trump’s popularity partially endures because tax cuts have boosted general economic activity, for a while, and protectionist and anti-immigrant policies play well to many working class voters. With the UK as a supplicant in post-Brexit prospective trade talks with the USA, EU and others, such clout and tactics are not at Johnson’s disposal.

Some modest income tax relief did feature in Tory manifesto promises. However, it also promised to reverse a planned cut in corporation tax and to boost public spending on health and education services. Although these sums are relatively small they still need to be funded. Johnson’s post-election tour of his new, northern client constituencies re-iterated manifesto pledges for a ‘Northern Powerhouse Rail’ between Leeds and Manchester, followed by Newcastle, Tees Valley, Hull, Sheffield and Liverpool links. It also promised a ‘new deal for towns’, rebranding and slightly expanding the previously introduced £3.6bn Towns Fund to regenerate towns, “produce thriving high streets, give young people a future . . . safer streets, safer towns, new civic infrastructure, community ownership and community spirit”. Utopia awaits. Unfortunately it seems likely that this fund will actually be country-wide, rather than focussed solely on blighted ex-Labour constituencies.

Such capital may generate some jobs but it will do little to raise the abysmally low wage rates in these areas, where routine services, call centres and distribution depots are typical sources of employment. Conservative pledges promised to raise the national living wage – based on a two-thirds proportion of median wages – from £8.21 to £10.50 per hour for those aged over 21, theoretically putting another £90-odd pounds a week in full-time workers’ pockets and purses. But there are catches. Many low paid workers, especially women, are in part-time jobs with proportionately lower weekly earnings. Moreover the timetable for the higher rate stretches over five years; which would mean average, annual rises of only 47 p per hour, or £18.80 per week for full-time workers. There is no mention of inflation-proofing these rises and, as the TUC comments, if Brexit cost inflation hits the economy, the median rate for all workers will fall. In turn, this will reduce the rate of the living wage. Without the regularisation of gig economy work that Labour promised, many employers may also transfer workers into self-employment to evade wage regulation.

Johnson’s strategists see their conquered Labour strongholds in the North and Midlands as potentially permanent pillars of Tory rule. Yet this focus offers Labour considerable scope for a counter-offensive. If and when the planned capital investment arrives, it could take years to regenerate run-down areas while the bidding for ‘new towns’ funding could trigger new political rifts and conflicts. Labour needs to have alternative policies to promote through aggressive campaigns rooted in social movements and local communities.

One such counter-strategy could utilise the successful Preston Model that has grown and revitalised that area’s economy by focussing large anchor institutions’ spending on goods and services from local suppliers. If, as often follows a general election, the party in government loses control of councils in subsequent local elections, Labour’s national party organisation needs to be ready with beefed-up versions of the Preston Model, and similar policies, to expose the feebleness of Tory measures for run-down Northern and Midlands towns.

Tory attempts to ride the two horses of neoliberal free trade and publicly funded infrastructure development are highly likely to come unstuck. Their ‘escape’ from the EU into the sunny uplands of deregulated international free trade is essentially an attempt to breathe new life into neoliberal globalism. However, inherent socio-economic contradictions in this combination of economic populism and neoliberalism may undermine attempts to build a solid electoral base in ex-industrial Labour heartlands. They could instead provide sources for a more credible Labour alternative.

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