Why did Labour Lose and How Do We Win Again? Rt Hon Liam Byrne MP

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1 Why did Labour Lose and How Do We Win Again? Rt Hon Liam Byrne MP

2 Progress is an organisation of Labour party members which aims to promote a radical and progressive politics for the 21st century. We seek to discuss, develop and advance the means to create a more free, equal and democratic Britain, which plays an active role in Europe and the wider the world. Diverse and inclusive, we work to improve the level and quality of debate both within the Labour party, and between the party and the wider progressive communnity. Honorary President Rt Hon Alan Milburn MP Chair Stephen Twigg MP Vice Chairs Rt Hon Andy Burnham MP, Chris Leslie MP, Rt Hon Ed Miliband MP, Baroness Morgan of Drefelin, Meg Munn MP Patrons Rt Hon Douglas Alexander MP, Wendy Alexander MSP, Ian Austin MP, Rt Hon Hazel Blears MP,Rt Hon Yvette Cooper MP, Rt Hon John Denham MP, Parmjit Dhanda, Natascha Engel MP, Lorna Fitzsimons, Rt Hon Peter Hain MP, Rt Hon John Healey MP, Rt Hon Margaret Hodge MP, Rt Hon Beverley Hughes, Rt Hon John Hutton, Rt Hon Baroness Jay, Baroness Jones, Rt Hon Sadiq Khan MP, Oona King, Rt Hon Baroness Kinnock, Rt Hon David Lammy MP, Cllr Richard Leese, Rt Hon Lord Mandelson, Rt Hon Pat McFadden MP, Rt Hon David Miliband MP, Trevor Phillips, Baroness Prosser, Rt Hon James Purnell, Jane Roberts, Lord Triesman, Kitty Ussher Secretary Cllr Patrick Diamond Director Robert Philpot Deputy Director Richard Angell Editorial and Website Manager Adam Harrison Events and Membership Manager Mark Harrison Published by Progress 83 Victoria Street, London SW1H 0HW Tel: Fax: office@progressives.org.uk

3 p. 1 Why did Labour Lose and How Do We Win Again? Rt Hon Liam Byrne MP

4 p. 2 Contents 1. Introduction 3 2. What happened? 6 3. What next? Conclusion 27 Appendix 30

5 p Introduction Why did Labour lose? What is the fastest path back to office? As Labour asks 4 million citizens to decide our next leader, candidates will need to prove they can work fast to learn the lessons of why we lost and what Labour must do next to win. In the election campaign, we said that we won on substance and lost on style. But the truth is on the doorstep it felt very different. Having talked to dozens of MPs who won and lost, a common theme is clear; our agenda was not good enough. The deep and wide Labour coalition of 1997 may not have crumbled. But it has cracked. For some, the Guardian said it all. We were too slow to transform Britain s creaking constitution. We let the Lib Dems steal our mantle of radical reform. But for me the real fracture was lit up with spotlights in the PM s brief encounter in Rochdale. Not for what Gordon Brown said to Mrs Duffy. But what Mrs Duffy said about Britain. When Gordon Brown and Tony Blair set out New Labour s principles, they put work, opportunity and aspiration centre-stage. We said: play by the rules and you ll get your reward. But today, too many families working in retail, manufacturing, the service sector and construction feel they re working as hard as ever and just not getting on. They re not wrong. My research shows workers on between 20-30,000 a year have now faced huge forces in our economy squeezing pay packets and the cost of living for at least five years. That s why so many are so frustrated with welfare reform and immigration.

6 p. 4 These voters are the bedrock of our coalition. But their support for Labour has fallen off a cliff. In 2005, 43 per cent of C2s were Labour. Now MORI says it s down 20 per cent to just 23 per cent. This loss cost us seats. The group marketeers call Blue Collar Enterprise makes up one in six of the residents in half the seats we lost. But, Labour also lost support amongst maturing families on mid-range incomes too. These are the voters that are vital to winning across southern and eastern England. Today, we confront a major challenge across the south of our country, redolent of the early 1990s. There are now just Today, we confront a major challenge across the south of our country, redolent of the early 1990s. 10 Labour MPs in the east, south east and south west. They are sustained in office by a combined majority of around 35,000 votes. So the new leader s first test is can he or she begin the job of pinpointing answers to how aspirational modest-income Britain gets ahead in life in the decade to come? Powerful forces in the global economy plus fiscal consolidation will mean it is harder than ever before. But without a plan that renews Labour as the party of aspiration, with a new approach to jobs, tax and benefits, the minimum wage, welfare reform, skills and higher education, university funding, child care, social care, social housing and pensions, we will not again become the party of the majority, of the many not the few. We should take a leaf out of President Obama s book. To tackle the same challenge for American workers, he created last year the Middle- Class taskforce to look, in the round, at the range of policy reforms needed to reconnect hard-working families better with economic growth. Labour needs something similar.

7 p. 5 The new leader s second test is not policy it is organisation. In Birmingham, we did well fending off a Tory attack. Gisela Stuart s extraordinary triumph in Edgbaston will be one of the great memories of election night. In my own seat, we managed to put up the Labour majority. These results were not delivered by direct mail from on high but by community campaigning on the ground. Not many of Gisela s or my volunteers were paid-up Labour members. But they delivered a Labour victory. So, we urgently need a style of campaigning-led politics in our communities, led by local Labour politicians. We should see this renewal not just as a re-invention of organisation but as a bold statement of our determination to be the party of community and responsibility in modern Britain. Success will demand reaching out to the civic activists and social entrepreneurs who share our appetite to make a difference on the ground. Canvassing is not enough any more. Community campaigning means bringing progressive people together to battle for local change, in some of the ways the Local Action Network ( is trying to showcase. That means going back to the organising traditions that gave birth to the Labour party over a century ago, where the ballot box was only one of the ways we made change happen. It is a recognition that stronger sinews of community life are essential not only to winning office, but to changing modern society for the better. Every MP I ve spoken to found no love for the Tories on the doorstep. Lots of people knew what Labour had done for them: low interest rates, tax credits, better pensions, decent schools and a transformed NHS. But voters want to know what s next. This country is immeasurably fairer and stronger for Gordon Brown s extraordinary political life. Our tribute must be to learn lessons fast and get back out there and win again.

8 p What Happened? The headline results in 2010 were sobering enough. We lost almost a million votes on our 2005 performance; 97 seats fell. Just 258 Labour MPs won 13 less than in Perhaps the bluntest way of inspecting the damage is to assess what happened to the wide and deep coalition that powered New Labour to victory in Southern Discomfort (1992); More Southern Discomfort: A Year On Taxing and Spending (1993); Any Southern Comfort (1994) 2. Giles Radice and Stephen Pollard, More Southern Discomfort, Fabian pamphlet 560, (1993), p Giles Radice, Southern Discomfort, Fabian Society pamphlet 555 (1992), p10 The 1997 coalition The coalition of 1997 was not easily assembled. It was a long time coming. In a series of pamphlets between called Southern Discomfort, Giles Radice and others, 1 set out just how much Labour needed to change after its fourth election defeat in The conclusions were stark; Labour, wrote Giles Radice in 1992, suffers from a crippling political weakness. Labour was behind amongst the critical C1 and C2 sections which made up 51 per cent of the population, who saw themselves as upwardly mobile and who, despite the growing recession, felt let down by the Tories but do not yet trust Labour 2 a party they felt didn t believe in go-getters and which, when asked, they associated with words like high tax, followed by extremism, NHS, working class, of the past and economic mismanagement. 3 The south east had become one

9 p. 7 huge Tory safe seat while in southern England 4 Labour held just 10 seats out of 177 outside London, of which just three were in the south east (compared to 80 in 1974). This, as Radice wrote, was a problem; not just in the south where Labour needed to transform its performance because of its huge bloc of 177 seats, but because winning the south would entail crafting an electoral appeal that would carry the key seats needed for victory across the country. By 1997, New Labour had met the challenge. We won the biggest majority since the National Government of The swing from Conservatives to Labour of 10 per cent was the largest two party shift since Labour increased its 1992 share of the vote by a third, just as the Tories lost a quarter. 5 Big gains were made amongst virtually all social groups but especially amongst women, C1s, home-owners, first time and young voters. The biggest increase in vote share came in Greater London and the south east. By 1997, New Labour had met the challenge. We won the biggest majority since the National Government of The 2005 election The 2005 election was much misunderstood at the time. The simple fact is, we won because the vast majority of the seats we won in 1997 including some of those like Hove and Crosby never previously held by Labour were retained, and only 15 per cent lost. Nine and a half million people backed us as we were re-elected with strong cross-class appeal, across all of the regions of Britain. We retained huge leads over the Tories amongst the under-35s and C2DEs together with 4. Giles Radice, Southern Discomfort, Fabian Society pamphlet 555 (1992), p1 5. D Butler & D Kavanagh, The British General Election of 1997 (1997), chapter 13

10 p. 8 solid leads amongst women (a six per cent lead in 2005 compared to 1992 when 45 per cent of women voted Conservative), and voters aged The margin of victory was created by retaining our new supporters acquired in The historic New Labour coalition forged during the 1992 parliament, and which propelled Labour into Government in 1997, was sustained in 2005 to carry Labour to victory once again. Support for Main Political Parties By Key Group, 2005 Lab Con Labour Lead Over Tories Women 38% 32% +6% Men 38% 33% +5% % 24% +18% % 24% +18% % 33% +5% Over 65 35% 42% -7% AB 32% 37% -5% C1 35% 34% +1% C2 43% 32% +11% DE 45% 28% +17% Source: ICM The 2010 election The 2010 election has now shaken our coalition with some force. At the first meeting of the new Parliamentary Labour Party the mood was defiant. We knew that the wide and winning coalition we put together had cracked but it had not crumbled. In six of the UK s regions including London we beat the Tories. In our great cities we fought well and defied the odds. We held seats like Edgbaston and Westminster North and won back

11 p. 9 a seat in East London. In traditional strong-holds like Scotland, our share went up by three per cent. Amongst the over-65s, our share fell by just three per cent. The 6 Regions Where Labour Lead The Tories Region Lab 2010 Con 2010 Lbr lead Scotland 42.00% 16.70% 25.30% North 42.50% 25.90% 16.60% Wales 36.20% 26.10% 10.10% North West 39.70% 31.20% 8.50% Yorkshire and The Humber 34.70% 32.50% 2.20% London 36.60% 34.50% 2.10% Crucially, we combined these traditional strengths with a sustained appeal to the better off in society the ABs a slice of society that makes up a third of voters. Between 1979 and 1992, just 18 per cent of this vital group voted Labour. This year, 30 per cent gave us their confidence the same share as in 1997, and amongst C1s our vote share polled 29 per cent - well above the long-term average of 25 per cent we captured before % Saying they support Labour: By Socio-Demographic Group % GE2010 Change AB C C DE

12 p. 10 But we cannot kid ourselves. Our coalition is now under serious strain. Nearly 70 of the seats won in 1997 fell and now two stark facts stare us in the face. Labour Winners in Southern-Eastern England # Region Seat Majority 1 East Anglia Luton North East Anglia Luton South South East Oxford East South East Slough South East Southampton, Itchen South East Southampton, Test South West Bristol East South West Bristol South South West Exeter South West Plymouth, Moor View 1588 Regional Breakdown of the fall in Labour s Votes Region Lab Change Lab 2010 Lab 2005 East % 19.60% 29.80% East Midlands -9.20% 29.80% 39.00% Yorkshire and The Humber -8.90% 34.70% 43.60% North -8.80% 42.50% 51.30% South East -8.20% 16.20% 24.40% West Midlands -8.10% 30.60% 38.70% South West -7.40% 15.40% 22.80% Wales -6.50% 36.20% 42.70% North West -5.60% 39.70% 45.30% London -2.30% 36.60% 38.90% Scotland 3.10% 42.00% 38.90%

13 p. 11 First, Labour now has a major southern-eastern challenge, redolent of the challenge set out by Giles Radice and others in the early 1990s. Seventy per cent of the 938,000 votes we lost were in the east, south east, and south west. Our share of the vote in the south east (outside London) fell be a third to just 16 per cent. Our share in the south west is 15 per cent and in the east of England totals 20 per cent. This election cost us the service of 30 Labour Members of Parliament across the three regions. Across the entire southern-eastern sweep of England there are just 10 Labour MPs, sustained by a combined majority of just 35,500 out of the 10 million votes cast by local residents. What appears critical to the result was a major fall in support amongst Motorway Man and Woman ; the residents of those six seats along the M4 like North and South Swindon; the seven seats in the M25 belt like Harlow, Watford and Stevenage; the four seats in Kent like Chatham and Dartford, and the 11 seats like Loughborough and Northampton North up along the M1 and into the East Midlands. These 28 seats almost a third of those we lost are all different, but generally they have a much higher proportion of families with children at school or university, with slightly higher incomes and big aspirations for the future. A Mosaic analysis of the seats we lost in each region reveals some important patterns. In East Anglia: three seats Watford, Bedford and Ipswich had a much higher than average numbers of residents from the Mosaic group known as Suburban Mindsets maturing families on mid-range incomes living a moderate lifestyle in suburban semis. Thurrock, Stevenage, Harlow, Thurrock and Waveney each had a large proportion of residents characterised as Ex-Council Community often lower skilled workers, but on reasonable incomes, living in Right to Buy homes; and Industrial Heritage

14 p. 12 those families and couples owning affordable older style housing in communities historically dependent on manufacturing. In the South east: Portsmouth North, Gillingham, Chatham & Aylesford, Dartford and Reading West all had massively higher than average numbers of voters in Mosaic s Suburban Mindset group, plus (apart from Reading) large numbers from Mosaic group Industrial Heritage. Crawley has a very large number of local residents in the Ex-Council Community group. In the South west: Kingswood, North Swindon, South Swindon and Gloucester all had much higher than average large numbers of Suburban Mindset residents. In Hove and Brighton Pavilion, there are quite different trends to other seats in the region. In both, Mosaic group Liberal Opinion make up 48 per cent and 59 per cent of local residents respectively. Stroud too is a slightly different seat, with a very high proportion of families (nearly 20 per cent) from the Mosaic Professional Rewards group experienced professionals in successful careers, enjoying a good degree of financial comfort. My second chief observation is that the 2010 election has punched a serious hole in the bedrock of our coalition those blue-collar workers employed in a range of modern jobs from retail and logistics to routine manufacturing. Often known in the jargon as the C2s, they make up a fifth of Britain s voters. Historically, they overwhelmingly voted Labour. Yet in 2010, our support fell a full 20 per cent, down from 43 per cent to just 23 per cent its biggest ever fall. In 2005, Labour led across most socio-demographic groups except ABs. We were one per cent ahead amongst C1s and 11 per cent ahead amongst C2s. At this election, things were turned around. We trailed the Tories by seven per cent amongst ABs, but by a huge 16 per cent

15 p. 13 amongst both C1s and C2s. Dig beneath the figures and some shocking conclusions emerge. Almost 50 per cent of C2 women voted Tory. 2010: Breakdown of Voting Intentions Lab Con Lab Lead Unweighted Total 28% 34% -6% Male 28% 37% -9% Female 32% 37% -5% % 31% 4% % 34% -5% % 36% -8% % 43% -12% AB 29% 36% -7% C1 26% 42% -16% C2 22% 39% -16% DE 44% 28% 16% Men by Class AB 26% 41% -16% C1 26% 42% -16% C2 26% 30% -4% DE 37% 27% 10% Women by Class AB 32% 30% 3% C1 27% 42% -15% C2 19% 49% -30% DE 50% 29% 21% Housing Tenure Owned 25% 46% -21% Mortgage 28% 37% -9% Social renter 49% 20% 30% Private renter 25% 35% -10% Source: Ipsos Mori, Eve of Election Poll

16 p. 14 This loss cost lots of seats, especially in the east and west Midlands, the north west and the north east. Indeed in over half the seats we lost, these voters make up one in six of local residents. The Mosaic group that best matches this slice of British society is known as Industrial Heritage, and across the west Midlands, the north west, Yorkshire and the north, many of the seats had large numbers of local residents in this Mosaic group; In the west Midlands: 14 out of the 16 seats lost have a higher than average number of residents in the Industrial Heritage group; around 10 of the lost seats have almost double the average number from this group. In the north west: five seats have twice the average number of residents from the Mosaic group, Industrial Heritage. A further four seats had higher than average numbers of residents in the Suburban Mindset group. In Yorkshire and Humberside: all the seats lost have a higher than average number of residents in the Industrial Heritage group; two Pudsey, and Elmet and Rothwell have much higher than average numbers of residents in Mosaic s Suburban Mindsets group. In the north: Labour lost both Stockton South and Redcar, both seats where arguably the terrible fall-out from the closure of Corus had a decisive effect. In Redcar, for example, there was a 22 per cent swing from Labour to the Lib Dems. Carlisle, on the other hand, is a seat with a high number of local residents from either the Mosaic Suburban Mindsets or Industrial Heritage groups. The challenge of the new The final observation is the advantage of incumbency and the small triumph of community-based politics.

17 p. 15 At this election a record number of MPs decided to stand down. It is quite clear that where Labour fielded new candidates they faced an uphill battle. By contrast, many MPs renowned for their style of community-based politics did exceptionally well. This pattern has been developing for a while. In the 2005 election, incumbency assumed an unprecedented importance; the swing in the 50 most marginal battleground seats where Labour s fight was focused was just 2.6 per cent compared with the national average of 3.2 per cent. In close-fought marginal seats such as Dumfries & Galloway, South Dorset, Oldham East & Saddleworth and Gloucester there was actually a swing to Labour. An analysis of seats across the party spectrum where either the candidate was stepping down or was defending the seat for the first time point to an incontrovertible pattern. In seats where MPs were being replaced by new candidates the overall performance of the defending party was demonstrably and significantly worse than average. But in seats where MPs defending their position for the first time they did much better than average. Comparison of Swings Lab No. Change in Lab share Swing to Con Swing to LD All seats -5.8% 3.2% 4.8% First-time defenders % 1.3% 3.2% MP standing down % 4.3% 7.5% In 2010, we may have seen the same effect. Of the 97 seats we lost, 44 saw new candidates. Some saw very marked swings against Labour. But, where Labour won tough fights such as against the

18 p. 16 Tories in Edgbaston or in Westminster North there appears to be something in common. Tough campaigns that mobilised not just local Labour party members, but big numbers of volunteers from across local life.

19 p What next? So much for what the numbers tell us. What about what voters said to us on the doorstep? What was said on the doorstep? Speaking to dozens of MPs and activists in the weeks since we lost, some very common themes are clear. Immigration and welfare reform came up on doorstep after doorstep. Many voters talked about their worries about jobs. Some had lost their jobs or had family who had. Of course, some voters talked about Gordon Brown. But in 2005, I remember a similar number talking about Tony Blair, in much the same tone. No political leader is going to be loved by all the people all the time. But what struck me hardest was the number of conversations I had with people that came back to a similar refrain: I work hard. I ve always paid in. I don t ask for much. But why is it that when I need help I can t get it, and yet I can take you round this estate and show you loads of people doing nothing and getting everything. These were the conversations I had with families like my constituent whose wife works 12-hour factory shifts while he took casual work driving cars around an auction house because he couldn t get the

20 p. 18 construction job he was trained for. Their children had left home, and now they earned just too much to win any state help. Or the security guard who lived at home with his ageing mother. He worked all hours but couldn t get the care his mother needed because he too earned just too much. Or the family in Tile Cross; during a long conversation with a lady on her doorstep, she told me that her family earned around 24,000 a year; but she and her husband could barely afford the cost of getting kids through university because the help with living costs for her son, even on a full grant, was just too low. Her daughter, just graduated, was doing temporary work at the local JobCentre because she couldn t find the kind of work she was trained for. Or the retired couple living in Shard End, who lived on a state pension plus some money they had put away. They both told me how they had saved hard all their life and put together a nest-egg of around 12,000. But now they found that things like free eye-tests were not available. The common sentiment was very simple. These families all felt they did the right thing, worked hard, had aspirations for the future. But when they needed it, they felt help was beyond reach while others, in their eyes, who did too little, scooped rewards they had not earned. They simply felt the deal on the table did not feel fair. Towards an explanation So what is going on? And what has gone wrong? I think the answer is simple to explain but very hard to fix. Research shows workers on between 20-30,000 a year have faced huge forces in our economy, squeezing pay packets and the cost of

21 p. 19 living for at least five years. That s why so many are so frustrated with welfare reform and immigration. When New Labour set out its principles, we put work, opportunity and aspiration centre-stage. We said: play by the rules and you ll get your reward. Britain is immeasurably fairer and stronger for 13 years of Labour; but we have to accept that for some, the deal has stopped delivering enough, fast enough. One of the fastest ways to judge the difference between a progressive government and a right-wing government is to compare the differences between the US and the UK over the last decade. When Time magazine was writing its review of America in the Noughties, it said it was the decade when the American Dream began to dim: We have accept that for some, the deal has stopped delivering enough, fast enough Bookended by 9/11 at the start and a financial wipeout at the end, the first 10 years of this century will very likely go down as the most dispiriting and disillusioning decade Americans have lived through in the post World War II era. We re still weeks away from the end of 09, but it s not too early to pass judgment. Call it the Decade from Hell, or the Reckoning, or the Decade of Broken Dreams, or the Lost Decade. Call it whatever you want just give thanks that it is nearly over. After progress in the Clinton-Gore years, American families have almost gone backwards since 2000, as real median household income actually fell by over $1,200/year, 6 and the link between

22 p. 20 rising productivity and rising wages was broken. America was getting richer but the wealth was not being shared amongst ordinary people. As Paul Krugman 7 put it: The value of output an average worker produces in an hour has risen almost 50 per cent since Yet the growing concentration of income in the hands of a small minority has proceeded so rapidly that we re not sure whether the typical American has gained anything from rising productivity. 6. Research from Centre for American Progress 7. Paul Krugman, Conscience of a Liberal The contrast with the UK is quite extraordinary. The first decade of the new millennium saw not only years of growth, but years when growth was shared in a fairer way than before. Between 1997 and 2008 our national income rose by over 600 billion. In the years before the crash, wages for workers in Britain rose for over a decade; indeed, between 2000 and 2005, the UK s average annual real wage growth was the highest in the G7. By 2007 UK average wages were some 59 per cent ahead of where they were in Only two other OECD countries could match this record Ireland and Australia. The UK s record was almost 20 points higher than the average for the Euro area. For a good part of the decade, the UK translated this rising wealth into a more equal society. The UK was one of the only countries in the OECD where income inequality declined and where median household income continued to rise. For the first time in three decades, evidence appeared to suggest that social mobility was finally on the move. But despite this, for the last five years, the pressures on families have multiplied as globalisation has accelerated with deregulation in India, the accession of China to the World Trade Organisation in 2001, and the accession of Eastern Europe to the EU in 2004.

23 p. 21 Although disposable income grew by an average of 22 per cent in the 12 years to 2008, as the Financial Times 8 reported in April: More recently, incomes have grown a paltry 1.2 per cent between 2005 and 2008 and hardly grew at all in 2006 and Add to that the fall in private sector earnings during the recession, and higher than average levels of inflation, plus a rise in unemployment for those at the bottom without qualifications dating to 2004, and it is no surprise that many families feel squeezed. What is vital for Labour to grapple with is why. The Tories have no analysis, never mind an answer to this. I think much is linked to the way our economy is beginning to divide into three: a very high value, internationally traded sector, with strong science-linked industries, advanced manufacturing and globallyleading services; a second specialising sector largely in manufacturing, and; third, a low-growth sector, employing around a third of UK workers and made up of construction, retail, hotels and catering. Two-thirds of social groups C2 and D work in these slower-growth sectors. Here, job growth has been good; but not skilled and not well-paid jobs. These sectors, like hotels and restaurants, and wholesale and retail, or indeed social and personal services are overwhelmingly dominated by lower wages. In wholesale and retail, 40 per cent are on low wages; in social and personal services, it is 30 per cent. In hotels and restaurants, nearly 70 per cent are on low wages. 8. Dan Pimlott, Disposable Income Growth Slows Under Labour, 1 April 2010

24 p. 22 The national minimum wage has put a floor beneath very minimum wages, but its current level is still a good distance behind the low-wage level, set at 60 per cent of median full-time hourly pay ( 6.67 in April 2006). Today, we still have around 17 per cent of workers on low wages just one per cent less than And 5.3 million people now earn less that 60 per cent of full-time median hourly pay. Labour s creation of the national minimum wage and Working Families Tax Credit in 1999 followed by new tax credits in 2003 have been absolutely crucial for these families but, of course, those without children, either single or couples, have seen gains that have been much more modest. So, it s no surprise, there is a huge appetite across Britain for a new deal for hard work; not just a deal that pays the way. But a deal that paves the way to a better standard of living. Three lessons I think there are three lessons we can learn from the 2010 result, and what it tells us about the way Britain is feeling. Our core objective must be to once again become the party of the majority. First, we have to transform the politics of aspiration once again. If we want to revitalise the coalition that took us to power in 1997, we have to set out with a new crispness how the power of government is going to help modern families get on in life in 21st-century Britain. In 2005, Labour was 18 per cent ahead of the Tories amongst year-olds. At this election, we were five per cent behind. It was the age group where our vote fell sharpest. Aspiration and opportunity have always been the uniting idea that bonds our coalition together and education has always been its symbol. At

25 p. 23 the last budget, we boosted education spending, even amidst the budget challenges we confronted. We were the only party that did. But we couldn t find a way to punch this through a hostile media. We should redouble our efforts. Second, let s agree that now is no time for a modest renewal. A wide sweep of policy needs to change. Britain has extraordinary chances to flourish in the decade ahead. But modern markets will not ensure that national prosperity means prosperity for all Britain s families. We are not going to assuage frustrations with welfare reform and immigration unless we tackle the reasons why people feel their livelihoods are stuck in limbo, when what they want is lift-off. This is going to be hard. Broadly speaking, the UK economy in the long run grows at a little over two per cent. On average, growth in earnings moves up at the same pace. But in the slow-growth part of our economy, earnings have been rising at 1.3 per cent a year. Over time, we risk the bottom third of workers falling behind year on year to the tune of around 2 billion a year as the rest of the country gets richer. Growth does not automatically become growth shared. It never has. That is why we need a plan that renews our approach to jobs, tax and benefits, the minimum wage, welfare reform, skills and higher education, university funding, child care, social care, social housing and pensions. Otherwise, we will be left without an offer for aspirational families. We should take a lesson from President Obama s Middle-Class Taskforce. In Washington last October, I met Jared Bernstein, chief economist to Vice President Biden and author of Crunch, the story of just what has happened to the great American middle-class over

26 p. 24 the last decade. He is one of the driving forces behind the taskforce and puts its mission in simple terms: It s the thinking about the policy glue you need to reattach the middle classes to growth. The key is not to take a narrow focus. If the worst paid third of British workers are to keep up, we need a fundamental change in the productivity of the industries they work in, a change in the pace of wage rises, a new look at the tax and benefit system, and new kinds of help from child care to social care to let people work the hours they might like to for a better standard of living. Third, we must put community politics at the centre of our party work. In Birmingham, we did well fending off a Tory attack. Gisela Stuart s extraordinary triumph in Edgbaston will be one of the great memories of election night. In my own seat, we managed to put up the Labour majority. These results were not delivered by direct mail from on high but by community campaigning on the ground. Not many of Gisela s or my volunteers were paid-up Labour members. But they delivered a Labour victory. So, we urgently need a style of campaigning-led politics in our communities led by local Labour politicians. That does not mean politicians that focus on just fixing the potholes in the road. As Caroline Badley, the key organiser in Edgbaston, wrote in last month s issue of Progress, you need to show you can punch some weight on the national stage, or show you can get local projects on the move. Learning the lessons from the US, Edgbaston tripled the size of its activist base by adopting a philosophy that organisation [is]

27 p. 25 built on the belief of the power of the individual to bring about change in their community. This is not about CLPs discussing the minutes of the last meeting. This is about political leadership building a community coalition focused on changing things locally. Success will demand reaching out to the civic activists and social entrepreneurs who share our appetite to make a difference on the ground. Canvassing is not enough any more. Community campaigning means bringing progressive people together to battle for local change. But this is about more than the renewal of the party s ability to win elections. This ethos should become part of re-asserting Labour as the party of responsibility and community. The speed with which the world and our country is changing is unsettling. And people want to live in a country that still feels like home. But this is a challenge that our nation has faced before. In the 19th century, as the Industrial Revolution took hold and our great cities were born, we cut a new social and culture fabric for ourselves that spanned civic and cultural life. Our response was not reactionary or timid. It was bold and vivid. In cities like my own in Birmingham we created the most extraordinary new civic fabric. The Labour party should lead our national response to this challenge again. The notion of community, has always been part and parcel of our DNA although at times we have found it hard to define. But it demands we think and act - locally with a renewed sense of purpose. That is where the links in the chain need tighter connection. It demands that we think about the way the new fabric of community institutions in our country Sure Starts, neighbourhood

28 p. 26 police teams, the new infrastructure of schools act to weave a tighter knit of community life around their frame. So that centres of local services become centres of local society. It demands we explore thoroughly, not in a cursory way, the potential for mobilising communities to help deliver aspects of public services. It demands we do more on the national stage to raise our moral voice about the responsibilities of good citizenship and parenting. It demands a party or two I have argued elsewhere for a national day to celebrate what we like best in our country. It demands reform of citizenship for newcomers, so there is a clearer sign-up to the basics of life here. Where we run local councils, it demands we ask communities to co-design and help shape local investment in new homes, health centres, new schools and nurseries, and not simply parachute in designs from on high. It demands the Labour party as a party does more in local communities to support, mentor and inspire the change-makers who want to make a difference to what is going on outside their front door, but do not know where to start. In other words it demands a constant exercise in imagination in every aspect of our work in government and out on the streets of our communities, to put community life first. That means going back to the organising traditions that gave birth to the Labour party over a century ago, where the ballot box was only one of the ways we made change happen. But the reality is that today s Labour party is hardly set-up, or indeed, resourced to help.

29 p Conclusion The Labour party is not an organisation renowned for adapting to opposition quickly and well. Throughout our history we have often fallen into the habit of deconstructing the past rather than focusing on the future. In the 1980s, we had our internal debate about whether the right had sold out the left in Jim Callaghan s time. In the 1970s, we debated Harold Wilson s devaluation ad naseum. In the 1950s, we argued endlessly about whether the Attlee government nationalised quite enough of the economy. I do not think an endless post-mortem of what we got right and what we didn t in the last 13 years, is going to help us return to office. And nor do I think a rejection of the outlook that won us office in 1997 is so wise either. When the New Democrats were born around an agenda that took Bill Clinton to office, Stan Greenberg argued that the left could only win through modernised parties reclaiming values that many [hitherto] believed were owned by the right, and most important of all rooted in the hopes and aspirations or ordinary working people. 9 This was the middle-class project, which connected three principles: work, reward for work and restraint. It tapped into the public s natural sense of opportunity, ambition and responsibility. 9. Stan Greenberg, Reconstructing the Democractic Vision, American Prospect, 1990

30 p. 28 It was not anti-poor, as some casually accused it: the lower paid and the worse off were just as ambitious for a better life, and just as determined to see responsible behaviour as anyone else. As Philip Gould once put it: 10 What most voters want is over time, and without greed, to advance and improve their lives. In short, to become better off. These are the values we need to couple with a new understanding of the challenges of the decade ahead. When the world met at Bretton Woods to plan the post-war economic order, John Maynard Keynes said: We have had to perform at one and the same time the tasks appropriate to the economist, to the financier, to the politician, to the journalist, to the propagandist, to the lawyer, to the statesman - even, I think, to the prophet and to the soothsayer. 10. Philip Gould, The Unfinished Revolution, p212 It would have surely taken the power of a prophet and soothsayer to forecast the sheer scale and sweep of the interdependence that has emerged from the last decade the fastest decade of global economic growth since the second world war. It has brought what Fareed Zacharia, the editor of Newsweek, calls the rise of the rest, a new wealth that is changing the balance of power in the world commercially, culturally and politically. Yet we are probably in the foothills of the change that is to come. Today we trade more with the Republic of Ireland, than we do with Brazil, Russia, India and China combined. Every country in the West is struggling to create a new settlement from this new order that works for its citizens. Even in the US, the

31 p. 29 home of the free market, the Pew Global Attitudes found that just 59 per cent agreed that trade is good for their country; the lowest level of support in the 47 country study. Labour s challenge is to create a country of powerful people in charge of change in their communities; in their care; in their selfdevelopment; and the unlocking of their future. We have to listen to what the public said to us in this election, dust down the principles that worked so well for us in the past, and get on with the business of applying them to the future. We should take comfort in the words of one of Labour s greatest statesman and poets Nye Bevan. In the only book he wrote, he put the matter rather well on the penultimate page: Progress is not the elimination of struggle, but rather a change in its terms. The terms for our debate are changing. We need to change our party to win again. Labour s challenge is to create a country of powerful people in charge of change.

32 p. 30 Appendix Labour Losses in East Anglia: Mosaic Analysis of Seats Constituency Winner Winner s Swing Swing Suburban Ex-Council Industrial Majority Lab to Con Lab to LD Mindsets Community Heritage Watford Con 1, % +4.0% 22.0% 7.7% 2.2% Bedford Con 1, % +2.0% 19.2% 6.5% 7.8% Ipswich Con 2, % +3.3% 16.1% 10.5% 12.8% Thurrock Con % +5.3% 13.0% 17.7% 9.5% Norwich North Con 3, % +8.5% 11.4% 9.5% 13.3% Stevenage Con 3, % +4.1% 11.3% 19.2% 16.2% Harlow Con 4, % +4.3% 10.1% 20.8% 11.6% Great Yarmouth Con 4, % +7.8% 5.6% 8.4% 9.6% Waveney Con % +2.4% 5.3% 11.5% 14.3% Norwich South LD % +5.0% 2.5% 9.8% 4.0% Labour Losses in the South East: Mosaic Analysis of Seats Constituency Winner Winner s Swing Swing Suburban Ex-Council Industrial Majority Lab to Con Lab to LD Mindsets Community Heritage Portsmouth North Con 7, % +5.9% 23.5% 13.8% 15.4% Dover Con 5, % +5.8% 9.1% 11.6% 12.8% Crawley Con 5, % +2.9% 13.2% 18.1% 12.0% Gillingham and Rainham Con 8, % +8.4% 23.5% 7.8% 11.4% Chatham and Aylesford Con 6, % +6.2% 24.1% 9.7% 11.1% Dartford Con 10, % +9.4% 24.0% 13.5% 7.6% Hastings and Rye Con 1, % +1.5% 5.7% 7.0% 7.2% Brighton, Kemptown Con 1, % +3.5% 6.9% 7.3% 3.2% Milton Keynes South Con 5, % +4.8% 11.1% 7.4% 6.7% Reading West Con 6, % +9.2% 23.2% 8.7% 5.4% Hove Con 1, % +4.6% 11.2% 4.6% 3.6% Brighton, Pavilion Grn 1, % +1.8% 8.6% 1.7% 1.5%

33 p. 31 Labour Losses in South West: Mosaic Analysis of Seats Constituency Winner Winner s Swing Swing Suburban Industrial Majority Lab to Con Lab to LD Mindsets Heritage Kingswood Con 2, % +5.2% 29.2% 17.9% North Swindon Con 7, % +7.8% 19.5% 10.3% Gloucester Con 2, % +7.3% 16.9% 13.0% South Swindon Con 3, % +3.5% 14.4% 4.0% Bristol North West Con 3, % +9.6% 10.3% 8.6% Stroud Con 1, % +1.4% 9.1% 10.7% Plymouth, Sutton and Devonport Con 1, % +5.7% 7.0% 9.2% South Dorset Con 7, % +7.3% 6.0% 11.4% Filton and Bradley Stoke Con 6, % +1.3% North East Somerset Con 4, % +3.2% Stroud Con 1, % +1.4% 9.1% 10.7% Labour Losses in the West Midlands: Mosaic Analysis of Seats Constituency Winner Winner s Swing Suburban Industrial Majority Lab to Con Mindsets Heritage North Warwickshire Con % 11.6% 19.3% Cannock Chase Con 3, % 15.1% 16.5% Burton Con 6, % 9.2% 15.8% Halesowen and Rowley Regis Con 2, % 19.6% 15.7% Stourbridge Con 5, % 17.3% 15.0% Tamworth Con 6, % 15.3% 15.0% Dudley South Con 3, % 16.4% 14.8% Worcester Con 2, % 13.5% 13.5% Nuneaton Con 2, % 16.4% 13.5% Wyre Forest Con 2, % 10.0% 12.7% Hereford and South Herefordshire Con 2, % 7.3% 10.1% Rugby Con 6, % 12.9% 10.0% Wolverhampton South West Con % 20.6% 6.2% Warwick and Leamington Con 3, % 15.2% 5.0% Redditch Con 5, % 12.9% 9.8% Stafford Con 5, % 12.6% 9.5%

34 p. 32 Labour Losses in Yorkshire & Humber: Mosaic Analysis of Seats Constituency Winner Winner s Swing Swing Profesional Suburban Industrial Terraced Majority Lab to Con Lab to LD Rewards Mindsets Heritage Melting pot Pudsey Con 1, % +5.9% 11.1% 21.1% 16.9% 1.7% Colne Valley Con 4, % +7.0% 13.6% 13.0% 16.4% 13.7% Cleethorpes Con 4, % +7.1% 7.4% 11.8% 15.6% 13.1% Calder Valley Con 6, % +8.9% 12.5% 11.4% 15.5% 9.3% Keighley Con 2, % +6.0% 11.2% 12.5% 15.1% 15.5% Brigg & Goole Con 5, % +6.8% 10.4% 7.4% 14.9% 6.4% Elmet & Rothwell Con 4, % +6.4% 16.4% 19.4% 11.0% 2.1% Dewsbury Con 1, % +4.3% 12.8% 12.3% 10.6% 15.9% Bradford East LD % +7.4% 1.1% 12.3% 8.9% 39.8% Labour Losses in the North West: Mosaic Analysis of Seats Constituency Winner Winner s Swing Swing Profesional Suburban Industrial Terraced Majority Lab to Con Lab to LD Rewards Mindsets Heritage Melting pot Blackpool Nth & Cleveleys Con 2, % +5.0% 4.0% 12.9% 17.9% 8.2% Pendle Con 3, % +1.6% 7.8% 6.3% 16.8% 31.8% Rossendale & Darwen Con 4, % +6.8% 9.5% 9.7% 14.5% 18.5% Morecambe & Lunesdale Con % +4.5% 7.7% 14.3% 14.3% 7.8% Crewe & Nantwich Con 6, % +5.4% 10.0% 12.7% 12.5% 13.1% Bury North Con 2, % +5.5% 11.9% 13.7% 11.1% 18.3% Burnley LD 1, % +9.6% 5.3% 12.2% 11.0% 29.3% South Ribble Con 5, % +2.9% 17.7% 20.7% 10.7% 2.8% Warrington South Con 1, % +6.0% 12.2% 20.6% 9.6% 6.9% City of Chester Con 2, % +0.6% 9.2% 15.0% 4.5% 2.3% Weaver Vale Con % +4.2% 15.9% 15.0% 6.1% 6.1% Lancaster & Fleetwood Con % +5.4% 4.9% 8.1% 9.0% 8.1% Wirral West Con 2, % 3.10%

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