The Tribune Group has a long and proud history as the voice of the centre left of the Parliamentary Labour Party.
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The Labour Party has been at the heart of social change since its inception and this is a time for politicians of the left and those who share our values to come together in the best interests of our country.
It is more important than ever for our party to be a broad church that can reach out. Only the Labour Party has the broad reach across the diverse communities in the country that can address the fundamental divisions exposed by Brexit.
The Tribune Group of Labour MPs that represents over 90 MPs believes that this is the time for us to unite to bring about a Labour government that will deliver social justice and equality.
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The Tribune group of MPs want to focus debate in our party on how we grow and achieve government. To do so, we need to remember and cherish our values. Why we formed as a party. What binds us together – the values that underpin our party – and drive the focus for policy. This paper is a contribution to that debate.
The Labour Party has been a radical force for change. The centre-left represented by the Tribune group is critical in framing the arguments that will win over traditional Labour voters and in explaining our values to those who have not voted for us in the past or have stopped seeing us as their first choice. We need to convince these people that it is our core values that they want to see applied in government.
Many of the things that Labour has championed are the things that people expect as basic rights and expectations today – things that became integral to the British Promise. This means we need to re-establish our credentials as the party that is at the core of that British Promise:
- that wants to see everyone flourish and helps the next generation aspire to do better
- that wants everyone to live a life they have reason to value
- recognises the mutual benefits of public and private endeavour
- that the public interest must be expressed by a dynamic, supportive state in society and the economy
- that is fair and is seen to be fair – on taxation, on rights and is on your side
- which is outward looking in the world and puts security of its people at its heart
A substantial minority- especially on the political right- never accepted the 1975 referendum as a settlement. Supported by a large part of the print media, for 40 yearsBritish political life has been accustomed to seeing ‘Brussels’ and everything emanating from, or associated with Europe routinely criticised, mocked and abused. Boris Johnson’s record as aBrussels correspondent became a byword for mendacious reporting, with the sole purpose of undermining attitudes to the EU. With the passing of the World War 2 political generation, no high moral defence has been consistently made on internationalist grounds, and even the benefits of the Single Market, negotiated by Thatcher, had to be framed by intensely negative arguments about the rebate and more. ‘Up yours, Delors’ anyone?
Even the modern pro- Europeanism of 1990s/early 2000s New Labour was largely defensive in nature. No wonder, when it came to the referendum campaign, the case against wrote itself whilst pro-Europeans were left scrabbling for anything that might resonate with an electorate steeped in Euroscepticism.
We know quite a lot about the characteristics of ‘leave’ voters.Educational attainment was, according to Yougov analysis, the single factor associated with a leave or remain vote, with age a close second- 64% of over 65s voted leave- with under 25s voting remain by a the same proportion; 70% of voters with GCSE qualifications or below voted leave and 68% of graduates choosing remain. In looking at how voting patterns played out across the country, these elements can’t be ignored- but they still have to be understood in a context of place, identity and what Europe clearly came to mean in terms of explaining unhappiness with the present and a hope for a different future.
Britain has not been alone in struggling to come to terms with the cultural and social changes which have transformed the country over the last half century.We have seen long established patterns of working and civic life melt away, and the loss of the community elements of that life are acutely felt. Then there were large workplaces- factories, pits-with trade union organisations; churches, towns where most of the population worked where they lived; council housing and relatively low mobility. Now: whether in modern manufacturing, office, retain or leisure, work is certainly not-unionised, and is certainly less of a collective experience; worship has declined, commuting has increased, estates are multi-tenure and mobility usually greater. And whilst all this was happening, conglomerations- from banks and former building societies to familiar stores changed first the names on the high street and then saw many of them driven out of local communities altogether, whilst the scaling up of the public sector- away from the small District Hospital to the big regional centre, for example, may have made sense rationally, but not necessarily emotionally. If local identities felt increasingly undermined, a sense of national identity was also changing too. The collapse of the former Soviet Union in 1989 unfroze national identificationacross eastern Europe and beyond, whilst closer to home, devolution for Scotland and Waleswas one factor encouraging a renewed impetus to the debate about a distinctly English identity.
Big cities have their stresses, of course, but their relative economic and creative dynamism offset the losses, and a second wave of urban regeneration fostered new urban pride, even if by no means everyone shared in its benefits. For far too many towns and smaller communities the change and the loss has been highly visible and wholly inadequately offset. When some saw significant arrivals from the accession countries in the second half of the last decade, it was, for some, a further sense of a familiar world slipping further and further away. Time and prosperity would have softened that, but the crash and post-crash austerity put that out of reach.
The warning signs have been there for many years and politicians failed to take heed. They paid no attention to the growing support for UKIP among those communities that were falling behind and becoming increasingly dependent on the state for benefits, whether unemployed, or in low paid work. Eight out of ten of the areas where workers receive the lowest wages voted leave.
Globalisation creates winners and losers and if the welfare state stops looking after the losers then they are bound to feel justified resentment towards those who have let them down, namely the political elite. There is clear evidence of a link between those areas who have been left behind, and more recently, felt the full brunt of Tory austerity, and large majorities for voting leave.
The Gross Incomes of those with low skills fell consistently from 2001 and dropped dramatically as a consequence of Tory austerity. The Tory’s Welfare Reform Act ushered in ten different benefit changes intended to save £18.9Bn by 2015, including the roll out of Universal Credit, Bedroom Tax and the Benefit Cap among others. The average loss of income to each working age Briton was estimated to be £440; in the City of London that figure was £177 but in Blackpool it was £914. The average loss of income was 23.4%, in the poorest areas that rose to 46.3% and just 6% in the richest.
Low income areas also rely more heavily on public services that came under siege from cuts. Since 2010, spending on the NHS flat lined while demand grew while across the country education spend went down by 19% in real terms. Between 2010 and 2015 Blackpool suffered over twice rate of cuts to its local council expenditure than the national average. In the referendum it voted 68% leave while the City of London voted 75% remain.
Professor Thiemo Fetzer of Warwick University, argues in his paper ‘Did Austerity Cause Brexit?’ that the ‘austerity shock’ tipped the balance of the referendum in favour of leave. He highlights the fact that there was a 11.6 percentage increase in support for UKIP in elections prior to the referendum, in areas most exposed to Tory austerity.
Over the last 35 years the richest one percent have more than doubled their share of incomes. People are not blind to this scale of inequality. The reaction that things must change may not have been immediate, but the accumulated slow burn of resentment built up over many years and culminated in the most impoverished areas voting overwhelmingly for Brexit.
 Innes, D. and G. Tetlow (2015). Delivering Fiscal Squeeze by Cutting Local Government Spending.
 Professor Thiemo Fetzer of Warwick University https://warwick.ac.uk/fac/soc/economics/research/centres/cage/manage/publications/381-2018_fetzer.pdf
Healing the Brexit divide between cities and towns
Two and a half years on from the Brexit referendum, our country feels more divided than ever. The Government and Parliament are debating the Brexit deal. But too little time has been spent working out how to heal the divides or challenge the inequalities that underpinned the Brexit vote in the first place. Politics isn’t bringing people together, it is fracturing instead.
The divides aren’t just between people, they are between places. Cities were more likely to vote remain – the biggest cities voting 60% to remain.Towns, on the other hand, were more likely to vote leave – on average 55%. 22 of the top thirty Remain areas are cities. 27 of the top thirty Leave voting areas in the referendum are towns.
The gap in the Brexit vote between cities and towns is underpinned by a growing economic divide. Many towns across the country haven’t had a fair deal in recent years. In towns like ours in Yorkshire and across the country, we have seen investment and skilled jobs move into the cities, transport connections fail, town centres under pressure and public services withdrawn. Crucial decisions affecting our towns are too often being taken in cities far away so the promise of taking back control is an appealing one. Yet no matter what happens on Brexit itself, nothing is currently being done to tackle the frustration and widening gap facing towns, and the Conservative Government is making it worse. Labour has to build a strong plan to tackle the injustice and heal the divide.
Without action the urban economic divide will keep getting worse. Manufacturing and distribution jobs are disappearing from towns. Jobs in tech, services and culture are growing in cities. The number of jobs in English town constituencies has grown by just 5% in five years, compared with 11% in city constituencies. Overall, economic growth under the Tories has been only two-thirds the rate in towns as in cities.
Recent waves of technological change and globalisation have created amazing new opportunities that many cities have seized, however they have been much tougher on our towns. Big cities with their universities, diverse skills and sheer market size have proved best placed to seize new opportunities. However industrial towns have lost traditional industry through waves of automation and the trade shocks described by Liam Byrne. Seaside towns have lost their tourists as people find affordable holidays abroad. Market towns have lost their markets as shoppers move online or head to the cities and shopping centres instead. Big city centres still include new retail developments as well as quirky niche shops. But town centres are being hollowed out as shops, banks and post offices close, undermining people’s sense of community, identity and confidence. Future automation trends could make things worse.
But instead of responding to this widening opportunity gap between city and town, Conservative Government policies have made things worse. Ministers focus on cities and city regions, assuming wealth and opportunities will trickle down and trickle out. Instead of trying to shape the impact of technology or globalisation on communities, or helping towns respond, Whitehall has made it harder. Economic investment reinforces inequalities rather than narrowing them.Transport investment is concentrated in cities and particularly in London. The big infrastructure investment like Crossrail or HS2 is either within or between cities. Meanwhile miles of bus routes have been cut from our towns. Each wave of broadband and mobile communications upgrade starts with the cities giving their businesses the first opportunities, before spreading more gradually to towns.
At the same time towns have been harder hit by Tory austerity and the loss of public sector jobs. As public services shrink back to fewer, bigger centres to save money, many towns have lost services altogether - the A&E, the maternity unit, the police station, magistrates courts, solicitors practices and swimming pools. Too often big public services such as the NHS or the Court Service make decisions that are completely out of touch with towns like ours – focusing only on the quality of the service once someone finally makes it in through the city door, not on the hassle and barriers that patients, families, crime victims or witnesses from our towns might all face struggling to get to them. Nor do they consider the cumulative impact of austerity and different public service cuts on the places that depend on them. So town institutions are disappearing and so are the professional jobs within them.
I fear these deep divides are going to get worse whatever happens on Brexit unless we start standing up for our towns. Many of the ideas in other chapters on work, skills, public services and identity are important to our towns. But healing the divide requires changing the way we think about places too. Action is needed across the board but here are three areas where we could start.
First, we need a fundamental change of approach, away from trickle down and trickle out economics. The Government seems to think if you only support cities, everything will just trickle down and out to the towns, but it hasn’t worked. Cities will always be a vital source of growth and wealth generation across the regions, but Britain needs both our towns and our cities to prosper because the growing economic gap is bad for all of us.
Government needs a proper industrial strategy for towns. It needs to shape the impact of technology and globalisation so towns can benefit, and to empower towns to seize new opportunities and benefits rather than repeatedly losing out. That means giving much greater support and priority to investment in towns, as well as supporting local councils and combined authorities to develop clear strategic plans about towns’ economic purposeand connectivity. Instead of rolling out new broadband or 5G infrastructure in cities first, why not start in nearby towns? Instead of always using all the transport money on overruns for big city projects like HS2 or Crossrail, why not start by improving local trains and buses to connect towns? Towns need better education, retrainingand apprenticeship opportunities so young people aren’t all forced to move away to get on, and older workers can reskill.
Every town has a story, a unique combination of history, geography, skills and culture that can give it economic purpose or community pride, that can help it punch above its weight. But towns need strong, locally driven plans to make the most of their strengths and restore their sense of purposein a changing economy too.
Second, towns should get universal service guarantees to cover public services that townsneed and should expect – NHS services, buses, libraries, community centres, post offices, banking services, parks, leisure and sports facilities. These services support the local economy but even more importantly they make it possible for communitiesto gather and thrive.
And third, we need to give towns more power andmore respect. Devolution deals have concentrated on the cities, but there is still too little power or control in towns, and too little support for local government even though there are fantastic innovative ideas coming from local councils across the country. Key planning and investment decisions with huge local impact on towns are usually taken far, far away. Its time we did more to support local creativity and celebrate the pride people have in local culture too. Arts Council funding is more than four times higher on average in city constituencies than it is in town constituencies. That’s why the Labour Towns group of MPs is calling on the Government to establish a yearly Town of Culture award, to generate new investment, footfall and national recognition for the towns involved, and toempower communities to be creative and ambitious.
Most of all we should value our towns as the back bone of Britain. We should be proud of our towns – with strong communities, unique histories, local skills and industry.
Whatever the Brexit outcome, if we want the urban divide to heal rather than grow, then towns need renewed purpose and regeneration, including their fair share of investment and opportunities so they can flourish in the changing economy. I don’t believe the Conservatives have the values or the policies to ever heal this divide. Only Labour can. But it means the responsibility on Labour is even greater than ever to be able to reach out as a broad church into cities and towns, across the Remain and Leave divides, to pull people together and make our country fairer and stronger, true to the values that have always been at the heart of our movement.
In my darkest hours I fear it will become the image of the century; a mythic symbol of the chaos shaking the West. High up in the lush marbled lobby of Trump Tower before a vast golden door, President-elect Trump poses gleefully with Nigel Farage and the leaders of the British Brexit movement, each delighted with themselves.
It wasn’t supposed to be like this. Thirty years ago this year, I was sitting in a student common room in Manchester, watching in awe as students, workers, citizens defied the soldiers, took out their hammers and battered the Berlin Wall into history.
What followed was what economists call the Great Moderation; a golden era of extraordinary growth around the world, as politicians, New Labour amongst them, stitched together what Bill Clinton liked to call, a ‘world without walls’. Trade deal after trade deal fell into place; NAFTA; China’s admission to the World Trade Organisation; the doubling of the size of Europe. It was quite a fin de siecle. And then it crashed. And the surge of populism that followed now threatens the post-war order.
So what has happened?
Let’s tease apart the short run from the long run. In the short run, financial crisis are often good news for extremists. In a study of over 800 elections over the last 140 years, the far-right increased their vote share by 30% after a financial collapse. And this crisis was no different. Across Europe, the populist vote (on left and right) has soared from 9.1% in the 1960’s, to over 26% in the 2010’s. In countries like Italy, France, Greece, Spain, Hungary and the UK, the surge in populist parties like the Five Star Movement, Front Nationale, Syriza, Podermos and UKIP were extraordinary.
But the long run change in politics and economics is even more important. Thirty years on from the fall of the Berlin Wall, we can now stand back and see in plain sight just how our economic model for the last thirty years of globalisation has helped fuel the chaos.
Our method of globalisation has produced profound new inequalities; indeed, just twenty six people now own as much wealth as the poorest 3.7 billion people. These inequalities help foster a disgust with elites that is the rocket-fuel for populism. As a recent paper confirmed; “more unequal countries do indeed exhibit stronger populist support.’
Beneath the seething outrage we can now divine just how globalisation created losers who we simply did not compensate - and who have responded by voting to wreck the status quo.
Economists have long known that trade is good for growth. In one of the most cited studies of nations that globalised after 1980, David Dollar and Aart Kraay found “a statistically significant and economically meaningful effect of trade on growth: an increase in trade as a share of GDP of 20 percentage points increases growth by between 0.5 and 1 percentage point a year.”
But the question then remains: who gets the gains? And the answer is: not ordinary working people. As Dani Rodrik recently put it: ‘[T]rade generically produces losers…No pain, no gain.” These studies are now well-advanced in America:
- A study of NAFTA for example, found that blue collar workers in industries exposed to imports, saw real wages fall. Between 1990 and 2000, affected workers saw pay-packets grow 8% more slowly than workers in unaffected industries, while general welfare gains totalled an under-whelming 0-0.08%.
- China’s accession to the WTO, on the other hand, created huge gains for firms like Wal-Mart, which made its owners, the Walton family, amongst the richest on the planet. But the ‘China Shock’ cost perhaps as many as 2 million manufacturing jobs between 1999-2011.
This seismic change showed up on election day. Amongst the states hit hardest by the China Shock - Ohio, Pennsylvania and Michigan - voters flipped to Donald Trump.
But we can now see a similar effect at work fuelling in the Brexit vote.
Even though the UK was a very open economy before the latest era of globalisation, much changed. Between 2000 and 2015, UK imports (by value) nearly doubled. This had a huge impact on the manufacturing industry that was once the heart and soul of the towns and cities created around the factories of the industrial revolution, and which once provided so many jobs to lower-skilled, less trained workers. Between 1997 and 2015, manufacturing jobs fell by almost a third - that’s 1.4 million workers - and the import shock from China and the A8 proved to be the biggest shock of all; imports from China, between 2000 and 2015, rose five-fold, and imports from the A8 rose by a factor of six.
This huge rip-tide in our economy created massive waves for some workers. As one study found that ‘the combined effect of import competition from China and the A8 accounts for between 22 and 35 per cent of the reduction in the manufacturing share between 2000 and 2015’. This hit workers hard. In fact, between 2000 and 2007, ‘UK workers initially employed in industries that suffered from high levels of import exposure to Chinese products earned less and spent more time out of employment compared with individuals that were in industries less affected by imports from China’.
Overwhelmingly, these voters voted to Leave the EU, not least because those hit hardest by the import shock of globalisation, went on to suffer ‘globalisation without compensation’.
In any policy debate, we have a question of scale and speed of a solution. And we can now conclude that governments of both left and right, radically underestimated the speed and scale of the redistribution needed to compensate the ‘losers’ from the ‘import shock’ of globalisation.
To explore this, we married together a rough analysis of data on the ‘import shock’ calculated by academics Pierro Stannig and Italo Caltone, with data on public expenditure prepared by the Centre for Cities.
Let’s imagine for a moment that over the last decade, the UK successfully redistributed the gains of trade to those areas hit hardest by the import shock. In this case, we would see a rise in public spending in the areas hit hardest by globalisation.
In fact we see the opposite. The big towns and cities hit hardest by the ‘import shock’ actually see the bigger cuts in public spending - and this appears to be correlated to the Brexit vote.
So, if we take the big towns and cities that voted to ‘leave’ the EU, we can see that most suffered a big import shock over recent decades. But rather than benefit from any kind of compensation in the form of higher public spending, these areas all saw big cuts in public spending.
In fact, the correlations show that the places with the worst import shocks actually suffered the deepest pubic spending cuts. So, Blackburn, for example with an import shock score of 0.7, suffered a 27% cut in local spending. With some exceptions (like Blackpool), areas with a very high leave vote suffered not only big import shocks, but big public spending cuts as well.
It is now vital for us to learn the lessons of what went right and what went wrong for the years ahead because the disruption of globalisation will be put in the shade by what lies ahead in the fourth industrial revolution when AI and automation risks a wipe-out of perhaps 1.1 billion of the world’s 3.2 billion jobs. We know these profound shifts will demand a new social contract for the 21st century; for workers; for families and places. So we had better get on with designing what it looks like.
That means radical reform to the three major systems at the heart of any political economy; the tax system, social security - and the financial markets.
The tax system will inevitably have to shift and rebalance to tax wealth more effectively. And international cooperation will have to be patiently advanced, step by step, to bring more and more of the wealth created by Technopolies but hidden tax-free, into the tax system.
Second, social security will have to change as the public demands a very different kind of social security system; a system which not only retrains workers as technology wipes out old jobs, but which helps families both replace income in times of misfortune, and build up wealth of their own over the course of their working lives.
Reform of financial markets will, I suspect, need be more radical.
Bluntly, finance needs returning to its original purpose. The history of finance demonstrates that early financial pioneers often saw themselves as social reformers. Henry Duncan in Scotland who opened one of the first savings banks, or Friedrich Raiffeisen in Germany who created the first agricultural credit union, saw their activities as having social purpose, in much the same way as Nobel Peace prize winner Mohamed Yunus does today in Bangladesh. Their activities are critical to the improvement of the lives of poor people, and critical to creating inclusive growth. But there’s not many in the finance industry who see the business in that way. Yet the ‘purpose of finance’ is not a question simply for experts. It is a question for all of us. And unless this debate begins to define the hallmarks of a successful, inclusive, financial system, it will prove impossible to re-regulate the industry at the very hard to today’s capitalist system. There can be no reform of capitalism, without radical reform of financial markets.
‘Progress’ wrote Nye Bevan in the only book he ever penned, ‘is not the elimination of struggle - but rather a change in its terms’. Brexit has changed the terms of our struggle. Its time for a new agenda to match.
 Quoted, Nat O Connor, Three Connections Between Rising Economic Inequality and the Rise of Populism, Irish Studies in International Affairs, Vol 28 (2017), pp29-43, p.33
 L Pastor And P Veronesi, Inequality Aversion, Populism And The Backlash Against Globalisation, Working Paper Number 20 18–53, August 1, 2018 Becker Friedman Institute
 See: David Dollar and Aart Kraay, Trade, Growth, and Poverty,
 D Rodrik, Populism And The Economics Of Globalisation, Journal Of International Business Policy, 2018
 Hakobyan And Mclaren, 2016
 Calienda And Perro
 Francesca Foliano* and Rebecca Riley, INTERNATIONAL TRADE AND UK DE-INDUSTRIALISATION, NIESR, 2018
 Francesca Foliano* and Rebecca Riley, ibid.
 ‘International Competition and Labor Market Adjustment’ by João Paulo Pessoa, CEP Discussion Paper No. 1411 (http://cep.lse.ac.uk/pubs/ download/dp1411.pdf)
 See https://blogs.lse.ac.uk/brexit/2016/11/23/globalisation-and-brexit-areas-that-voted-to-leave-were-most-affected-by-the-chinese-import-shock/