How Labour messed up 1998-model devolution

It’s intriguing to see various senior figures from the New Labour era call for a return to something much more like new Labour to revive the Labour Party. Those figures seem to overlook how responsible New Labour’s politics and legacy are for the mess Labour now finds itself in. (On the nature of that mess, I agree with quite a lot of what Paul Mason says here; it is very clearly a structural problem caused by the collapse of an electoral coalition, not just a question of policy detail or leadership.)
New Labour helped create the mess, at least in its territorial dimension, in two particular ways. First, its political economy depended on getting London to generate large tax revenues to pay for redistributive benefits and much of public services in the rest of the UK, and satisfying those already owning property in London through a property boom. This has left a lasting and damaging legacy by creating or at least magnifying huge inequalities and resentments arising from different regional economies and levels of prosperity.  (In technical terms, it sought to use a huge vertical fiscal imbalance to redress horizontal inequalities.  What actually happened was that those horizontal inequalities increased.)
Second, new Labour treated devolution as an event not a process. What was done in 1998-9 for Scotland, Wales and Northern Ireland was itself always unstable, a reform half-completed.  For it to work as a durable constitutional settlement, it needed to form the first step in a wider programme, addressing regional issues for England, the West Lothian question, the working of the Barnett formula and the inequities in spending on public services that generated, and issues of tax devolution to complement that of service delivery.  But Labour largely stopped there.  Leaving these matters un-addressed generated or fuelled tensions between different parts of the UK. Moreover, to maintain its position in Scotland and Wales, it needed to understand the new political dynamics that arose once there were devolved electoral arenas that were also sub-state nations, but did so very poorly (although Welsh Labour appears to have learned that lesson rather better than Scottish Labour).
In office in Westminster, Labour not only failed to act on these issues. It positively sought to squelch any serious discussion of them (note the utter silence on the question of the Barnett formula after 1999 until 2008 and the establishment of the Holtham Commission in Wales, itself at Plaid Cymru’s insistence).   Labour could have addressed them during the decade after devolution, from 1999 to 2010, while it was in government in Westminster.  If it had done so, it would have been able to do so on comparatively favourable terms and with less serious consequences than now. It positively refused, despite repeated private urgings (to some of which I was party). It failed to change anything for fear it might lose something – and now it has suffered a grave electoral defeat and lost any meaningful influence over events, particularly in its former powerbase in Scotland. These are bitter lessons for Labour, but it has only itself to blame for learning them now and not addressing them sooner.

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1 Comment

Filed under Devolution finance, Elections, English questions, Labour, Scotland, Wales

One response to “How Labour messed up 1998-model devolution

  1. Good analysis. It’s all too late now as the Conservatives are setting the constitutional weather – the harmonisation of constituencies giving the Tories a 20 seat advantage & English/Welsh Votes, which again gives the Tories a huge advantage in England. Once the greater English influence over legislation and taxation is let out of the bottle (and rightly so in my view) it is impossible for Labour to turn back the clock. Only a full federal system will restore continuity & stability to the constitution & UK governance but Labour nor the Tories favour it, so the UK will muddle a lot as per usual.

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