A strong attack on a flawed privatisation

Labour’s front bench deserve a pat on the back for their assault on the privatisation of the royal mail.

After what has been a rough week, attacking the way Royal Mail shares were sold off at what seems a low price shows Labour caring about the public purse, forces the government to defend favourable treatment to profiteering traders, and allows some a clear distinction to be drawn between a government that will talk tough on benefit cheats, but act soft on spivs.

From the Royal Mail to floods, from tax cuts for the few to tuition fees, from the work programme to Universal credit; waste, profligacy and long term expense through short term neglect  are major vulnerabilities for the Tories.

A Labour party standing up for the taxpayer against these failings places itself in favour of fiscal discipline, the taxpayer, and government working effectively for all who work hard, not making life easy for a few with the right friends.

Naturally, a Tory will argue that Labour can’t be taken seriously on this, considering the perceived waste of the last government. Some on the left too will feel uncomfortable with a Labour party that is willing to directly attack state failure, even when the failure is of our opponents.

Two points in return. First, the left will only be able to make the case for an active state if it is blunt about the need for a lean state. There is no progressive case for government inefficiency, or for foregoing vital revenue. Second, for the Tories, the ideal choice to force on the electorate is between a party that presses down on inefficiency unevenly and unfairly but does control costs, and a party that shows little interest in cost control and income maximisation at all (except, perhaps to increase tax take on the rich).

This means the attack on the Royal Mail privatisation, if it is to be something more than a Labour version of ‘who sold all the gold’ comforting, true enough but also somehow irrelevant, has to be part of a wider Labour message of fiscal discipline, long termism, spending restraint and income maximisation. You can see the outlines of this message – the Royal Mail money above the baseline could have gone to the industrial bank, for example, where it would have helped growth for all, not lined the pockets of a few in the city.

However, there is a issue to address. This argument cannot be made if you set yourself against all such reforms. You can’t say that we need more asset sale revenue to build a better economy if you are opposed to raising the money in the first place. Sure, you can fill some of the gap by raising more from existing taxes, but historically that’s been less easy than it’s sometimes portrayed. Tax avoidance goes all the way to the new testament, after all!

A Labour attack on waste, profligacy and inefficiency needs to be grounded in too truths, then. First, that yes, when were in government we did sometimes spend unwisely and we care deeply about not repeating those mistakes in future. There’s no harm in admitting this as it is what people already believe. They will be impressed if they think we’re trying to change.  As Phil Collins says, it’s worth admitting the small mistakes you did make in order to make the case for the big issues people back you on.

The second truth is that we too would be forced to scour government for resources to realise funds for our big priorities. The Labour manifesto was vague about where future investment in a public Royal Mail would have come from, but we’re not seriously arguing it should have some from the state deficit. Our efforts to secure private investment would have kept the Mail firmly in the state Sector, but with significant private involvement.

We wouldn’t have footed the bill ourselves because there are dozens of things that money could be better used for, from housing to school buildings. Frankly the Royal Mail would have rightly been a low fiscal priority for a reelected Labour government. Let’s not allow ourselves to enjoy the pleasant fantasy it would have been otherwise. Recognising this means it really matters to us that the sale worked, and got good value, and rewarded workers and consumers, not a very few.

Indeed, rather than undercutting our critique of the government, stressing the need to get the best deal for the many would actually make our argument more pointed.

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