Labour's First Hundred Days Fabian Tract 519 Labour's First Hundred Days Preface I. Introduction: Neil Kinnock's New Deal Ben Pimlott 2. How Labour can govern without a majority Peter Kellner 8 3. Economics and finance: forward planning and holding tight Paul Ormerod 12 4. Unions and economic management John Lloyd 17 5. Low cost: high benefit Bryan Gould 21 6. Coming in: Labour and the civil service David Lipsey 24 7. Advice at the centre Tessa Blackstone 27 8. Arms and the world Nick Butler 31 Tessa Blackstone is Special Rowntree Visiting Fellow, Policy Studies Institute and Master-elect, Birkbeck College, London University. Nick Butler is Prospective Parliamentary Candidate for Lincoln and a former Research Fellow at the Royal Institute of International Affairs. Bryan Gould is Member of Parliament for Dagenham, Shadow Chief Secretary to the Treasury and Labour Election Campaign Co-ordinator. Peter Kellner is Political Editor of the New Statesman and a columnist on the Independent. David Lipsey, political adviser to Anthony Crosland and James Callaghan under the last Labour government, is now editor of New Society. John Lloyd is editor of the New Statesman. Paul Ormerod is Director of Economics at the Henley Centre for Forecasting. Ben Pimlott is Professor of Politics and Contemporary History at Birkbeck College, London University. This pamphlet like all publications of the Fabian Society represents not the collective view of the Society but only the views of the individuals who prepared it. The responsibility of the Society is limited to approving the publications it issues as worthy for consideration within the labour movement. Photomontage: Peter Kennard April 1987 ISBN 0 7163 0519 4 ISSN 0307 7523 Typeset by Contemporary Graphics Ltd. Tel OI-2S3 3339 Printed by Blackrose Press (TU) 0 I 251 3043 Published by the Fabian Society, I I Dartmouth Street, London SW I H 9BN Preface If Labour wins the coming election, what use will it make of power during the critical first few months? A new government taking office in 1987-8 will face great pressures, but it will also have an exceptional opportunity. The defeat ofThatcherism by the voters will signal a national mood in favour of radical change. In personal terms, Labour will be well placed, with a young and fresh ministerial team and a parliamentary party mainly composed of Members elected since Labour last held power. Among leaders,in the Movement and in the country, there will be a strong desire for different policies. For the opportunity to be taken, it will be necessary to begin with a well-planned burst ofenergy: Labour's First Hundred Days.This pamphletis prompted by a belief in the importance ofusing this initial, hopeful period to maximum effect. Itis not a critique of party policy or a manifesto. Rather, it is an attempt to consider the domestic and international situation a Labour administration is likely to face and to suggest decisions that might be taken early in its life to help build up and maintain a radical momentum. Every minister and department will have a first hundred days. So will other individuals and organisations, as they adjust to the changedconditions of a Labour government. The pamphlet does not survey the whole field. It concentrates on choices to be made at the centre which are likely to have the widest consequences -concerning, in particular, Labour's parliamentary predicament, the machinery of government, the economy, foreign policy and some elements of a basic legislative programme.The exclusion ofother areas of policy does not, of course, imply that they are considered less important. Contributors have discussed each other's drafts and the helpful comments ofFabian readers have also been considered. The pamphlet does not, however, express any joint position and each contributor writes in a personal capacity. Ben Pimlott Aprill987 I. Introduction: Neil Kinnock's New Deal Ben Pimlott Labour's task in 1987-8 will be harder than after previous election victories. Hence the need to prepare for a flying start. The first hundred days is not just a timespan. Itis a symbol, with a powerful historical reference: the controlled hurricane of reform and innovation that occurred in the United States at the lowest point in the Depression, when unemployment stood at 17 million.It provided the start of the New Deal, an idea that gives every despairing democratic people hope. "This nation asks for action, and action now", declared Franklin Roosevelt at his inauguration. Over the next three months, the new President guided fifteen major laws to enactment, and turned a sleepy Southern town into the nerve centre of a social revolution. "By bringing to Washington a government determined to govern", wrote the hi storian Arthur Schlesinger, "Roosevelt unlocked new energies in a people who had lost faith ... The feeling of movement was irresistible". Neil Kinnock has spoken of his intention to provide a British, socialist, New Deal. It is a fitting, yet awesome, aspiration. In present conditions of widening social division and accumulated neglect, minor tinkerings will certainly not be enough. To set a British New Deal in motion, it will be necessary to turn Westminster and Whitehall upside down with as much determination and suddenness as the Democrats displayed at the White House in 1933. Labour will have to have its own hundred days. Precedents Much of the first hundred days cannot be planned. What matters most about the opening scene of Labour's play is will and style and intelligence, for which there can be no blueprint. Success will depend, above all, on the creation of an elan, an irresistible feeling of movement, that must await its moment. Yet some things can be prepared and some traps avoided. It is useful to inspect the precedents. Alas, there is no easy British equivalent of Roosevelt's hundred days for today's Labour Party to copy -no government since the coming of universal suffrage that has used an electoral mandate to put the policies of its predecessor sharply in reverse. Labour has taken power from the Conservatives five times, in 1924, 1929, 1945, 1964 and February 1974. It has also won three other elections, in 1950, 1966 and October 1974, but on each of these occasions it was already in office and so experienced no transfer of power. In 1924 Labour entered government, briefly and experimentally, for the first time; heavily dependent on the Liberals, it had little opportunity for effective action. Two other minority administrations, in 1929 and 1974, achieved more, perhaps, than their later reputations would permit: but, even allowing for the cruelty of socialist hindsight, both appear today more as warnings than as models. From the list, therefore, two governments alone remain to provide material for comparison: those formed in 1945 and 1964, the first based on a huge parliamentary majority, the second on a small one. Nostalgia for 1945 is understandable. 2 • Fabian tract 519 -------------------------- The post-war Attlee administration was radical and innovative by any standards, laying the basis for the welfare state and health service, changing the structure oftaxation and death duties to reduce the gap between rich and poor, and nationalising the Bank of England, coal, civil aviation, electricity and the railways -all within the first two years, and despite a huge international debt and heavy overseas militarycommitment. The 1945 government is the only one of which Labour can be unequivocally proud, and there are many lessons to be learnt from it: in particular the advantages provided by unity within the labour movement, and by a bank balance of good ideas built up well in advance. Yet it should be obvious that 1945 offers only limited comparison with 1987-8. Attlee's first months were taken up by the traumatic ending of the Japanese war, and by the uncertain transition to peace -which involved the negotiation ofa large American loan on which the whole socialist enterprise depended. Whitehall, moreover, did not have to shift gear. Many of the new government's best policies developed wartime plans that had all-party approval. When Attlee took office as Prime Minister, following five years of coalition government in which Labour ministers had held key posts, the British revolution was already in progress. Moving target 1964 is more ambiguous. At the least, it needs to be considered faute de mieux: the 1964 election is the only one in peacetime at which Labour has ever defeated the Conservatives in office and obtained an overall majority. The first Wilson administration raised hopes that were not fulfilled. Yet the fashionable view (shared by left and right) that 1964-70 was a period ofabject failure is manifestly unjust. During Wilson's first premiership, major reforms protectingcivil liberties and citizens' rights were implemented; and the basis for a fairer and more open education system was also laid, though advances in this field were not followed through. The area of disappointment was economic policy. Here Labour's careful plans fell victim to a combination of bad luck, rigid expectations and early loss of nerve. One moral is apparent. In politics, nothing stands still. Any incoming government will find itselfshooting at a moving target. In his account of the 1964 administration (The Labour Government 1964-70, Weidenfield & Nicolson, 1971) Wilson vividly describes his own first experiences at No. 10: "I was greeted as 'Prime Minister' by Sir Alec Douglas-Rome's private secretary, as I still regarded him. Sir Alec. meanwhile, had disappeared through the back door, quietly. "Within minutes the private secretaries had converged upon me to work out the arrangements for forming the Government, to discuss with me urgent Foreign Office telegrams awaiting my attention, and to inform me about the economic situation. "It was a stormy welcome. The Chinese had, the previous day. exploded their first nuclear weapon. There was a Foreign Office draft of an immediate Government statement it was recommended I should issue . There was a telegram appraising the situation in the Soviet Union following the overthrow, less than twenty-four hours earlier, of Mr Khruschev and the appointment of Mr Kosygin ... There was a telephone call from President Johnson. There was omi nous news of the 'confrontation', the war between Indonesia and Malaysia "And, grimmest of all, there was the economic news. The monthly trade returns for September showing a serious continuing deficit had been published that morning... Worse, there was the Treasury's assessment of the forward balance-of-payments position ... Iwhich I showed a position still more serious ... than the last assessment prepared a month earlier for the Conservatives. "In the face ofall this, there could be _____________________________ Fabian tract 519 • 3 no question of 'low-profile govern ment' or of having a period of three months or more in which no decisions needed to be taken. "The pattern our first hundred days would have to take was set in the first hundred minutes." The last remark is significant. There had been hopes that Wilson might seek to emulate the 'New Frontier' approach ofJohn F. Kennedy, with whom he was sometimes compared, and have his own first hundred days. Instead, conscious of the highly precarious nature of his majority, Wilson seems to have decided to take problems as they came. In 1964·-5 the pattern was reactive, with a preference for the image-preserving response over the unpopular long haul. Wilson's first three months were directed towards providing reassurance of Labour's 'fitness to govern' with a view to a second election, and towards survival. This limited mission achieved its objective. The government did not fall, and a second election less than eighteen months after the first produced a comfortable majority. But by then 1t was too late: the new Establishment had settled in, and mental habits were already fixed. Moral advantage The circumstances of 1964, both before and after the election, deserve close attention because they provide the closest parallel to 1987-8, should Labour be in sight of victory. But in one respect 1987-8 stands apart from 1964 as well as 1945. On both previous occasions there existed across the spectrum a wide measure of agreement on many social and economic issues. The post-war 'consensus' based on a commitment to full employment and the maintenance ofthe welfare state may have contained an elen:ent of myth: there were always w1de d1fferences of underlying philosophy. Conservatives, however, tacitly accepted some of Labour's aims. This modest accord ended abruptly in 1979 and eight years later the two parties no longer speak the same language. Hence many ofthe continuities between outgo- mg and incoming governments that eased the transfer of power in 1945 and 1964 will not apply. And even if Labour restricts itselfto its most basic domestic aim, a drastic reduction in unemployment, there will have to be a fundamental break with recent administrative practices and assumptions. The first hundred days will determine the nature of the break and, indeed, whether a real break occurs at all. The first hundred are more important than the second, or the fourth, because it is at the very beginning that relationships are forged, and people take the measure of their new masters. It is the honeymoon period, when critics lie low, when the popularity of the government and Prime Minister holds up, when the mandate retains its mystique. Nobody is likely to resign during this period, election promises are expected to be honoured and, even ifit is in a minority, the government faces little risk ofbeing forced out ofoffice. Hence it is a time for doing things which may be harder to achieve later on, and for setting expectations for what is to follow. But it is also a difficult time for making strategy. Wilson's record is a reminder that a new Cabinet, exhausted by the campaign, elated by success and burdened by unfamiliar new problems requiring instant decisions, is singularly ill-equipped to think ahead. It is vital, therefore, that the key steps to be taken after the election should be fully considered before it. Labour's programme is already known; the detailed manifesto will be decided when the election is imminent. What is required for the first hundred days is something in addition: an appreciation of the moves that should be made in the first flush of victory, before the full weight of sound, irrefutably cautious advice closes in. 4 • Fabian tract 519-------------------------- It would be wrong (as Tessa Blackstone, Nick Butler and David Lipsey point out) to assume that Labour will face automatic civil service hostility. On the contrary: it is reasonable to hope that the best officials will rise to the challenge. There may even be optimism in some departments, especially those where morale has fallen lowest in the face of Mrs Thatcher's contempt for public service activity. But there will also be hesitancy about some of Labour's plans. It will therefore be desirable to present to the Cabinet Secretary (who might need to be, as Blackstone suggests, a new appointment) the outline of a Queen's speech, worked out before the election on the basis of Labour's programme. At first, quite a-part from the natural advantage of any recent victor, Labour will have a particular moral advantage (as John Lloyd indicates) precisely because of the bitter private sector and mass media opposition it will have overcome. It will be well placed, therefore, to present to Whitehall and to Parliament a far-reaching legislative programme, and also a shopping-list of measures that do not require parliamentary sanction. A government that acted quickly could cancel Trident, launch extensive schemes to restore the social services and create jobs, provide a more egalitarian tax structure and implement long overdue, but low-cost, civil liberties reforms -without making itself vulnerable to House of Commons censure, even if it lacks an overall majority. A full majority would, of course, widen still further the range of possible action. Meanwhile, changes in the nature and organisation of advice to ministers and the Prime Minister (of a kind described by Blackstone and Lipsey) could be carried through instantly, without asking permission of anyone. No mothballing It was Sidney Webb who remarked, following MacDonald's decision as 'National' Prime Minister to reject an earlier orthodoxy and take Britain off the gold standard: "Nobody told us we could do that". Post-war Labour administrations have been chary of interfering with the bureaucratic machinery, apparently regarding it as sacrilegious or unsporting to make more than minor adjustments. Mrs Thatcher has changed the rules. At the very least, a Labour government will need to depoliticise the political appointments the present Prime Minister has made inside and outside the civil service. Whether or not Mr Kinnock should follow the Conservatives' example and promote to some offices on the basis of amenability or sympathy is a matter of debate: it has certainly become an option. Labour might conceivably go further, and fill a few key posts with outside administrators, in order to help give political direction. A case can be made against such a step: there is a risk that competitive inter-party bidding in the matter of appointments would undermine the principle, and the ethos, of a neutral civil service. On the other hand, it could be claimed that a complex modern bureaucracy needs closer political attention than a busy ministerial team is able to provide. Such considerations must be carefully weighed. Either way, Blackstone and Lipsey argue persuasively for the improvement and extension of alternative sources of advice to the Cabinet, collectively and individually, and especially to the Prime Minister himself. Such advice will be needed, notjust for day to day guidance, but also for forward planning. Forward planning can be an excuse for delay. So can some methods of enquiry. A Labour government will want to consult widely, and to involve interested groups and individuals in policy making. Machinery which postpones the taking of important decisions unnecessarily, however, must be avoided. Royal Commissions have been a favourite means of mothballing con ---------------------------Fabian tract 519 • 5 troversial issues in the past. They should not be employed by a new Labour administration on matters covered in the election programme. A minority government with an uncertain lifespan should be particularly wary of a process that may mean complete inaction. Where Commissions or similar forms of inquiry are considered essential, they must include among their members a sufficiently strong representation of people who share the government's outlook. The most difficult problem facing the new administration will be the economy. Experience shows (and 1964 is the prime examplel how disastrous can be the impact ofsudden financial pressures on the most careful plans. The best approach is to assume the worst and not allow the whole edifice of Labour's programme to depend on a favourable outcome. Instead of hoping that a crisis will not arise to blow a Labour government off course, it may be better to take for granted that crises will be a regular occurrence (as Paul Ormerod indicates, sterling crises have become annual events). What matters is that short- term measures to meet inevitable squalls should not be allowed to jeopardise long-term commitments to expand the economy and to redistribute income. The vital point, as Ormerod remarks, is not to panic. A key factor will be relationships between government, employers and trade unions. John Lloyd proposes, as a means of restoring the severed connections oftripartism, a 'National Economic Summit' to be set up early in the hundred days. Lloyd sees such a consensus- building forum moving towards a low-pay floor, a ceiling on wage rises close to the inflation rate, and a pledge from the government to honour its commitment to the creation of 1.3 million jobs during the first two years. Bold action One political problem entailed by any serious economic strategy is that the benefits will not be instantly apparent. A second problem is that the scale and nature of any increase in public expenditure must depend on financial circumstances which cannot be determined in advance. Hence it is important that a new government should distinguish between plans which are linked to its economic policy and those that are independent of it. The latter should include a stock of reforms involving little or no public expenditure, which could also be guaranteed an easy political passage. The largest group of such measures, Bryan Gould suggests, concerns civil liberties and citizens' rights. A second group involves the machinery of government and new institutions for co-ordinating policy. A third group includes policies to provide democratic representation and accountability. Internationally, Britain is less important than in 1964. Nevertheless foreign and defence policy will feature prominently during the first hundred days. Much will be made of the new administration's most widely publicised proposals. Labour's ability to carry out its programme in this field will depend, more than in any other, on its parliamentary strength. However, as Nick Butler indicates, important steps could be taken quickly in any case. Thus a new administration will be able to move swiftly to cancel Trident and institute a full Defence Review, reopen discussions with Argentina over the Falklands, take strong measures against the pro- apartheid regime in South Africa, and develop overseas aid. If, because of its slender plurality, the government seems destined to remain in office only for a short period, the case for carrying out these and other policies rapidly, becomes the stronger. As Peter Kellner points out, it will be necessary to decide early whether to aim to maximise electoral support for a quick dash to the polls in the hope of winning more seats, or to try to stay in office for as long as possible without compromis 6 • Fabian tract 519-------------------------- ing principles. Each decision will have different implications. Both, however, require the government to make an immediate impact on public opinion. A minority administration, as Kellner shows, could mean several different things. Almost every imaginable situation, however, will give Labour considerable room for manoeuvre at the outset and there will be no advantage to be gained from a coalition or even an informal pact. Above all, the notion that Labour's ability to survive may depend on its timidity is certainly wrong. The key determinant will be achievement. The Opposition will be tempted to combine against an ailing regime but will not pull down one that is riding high in public esteem. There is no guaranteed road to popularity. But a bold government, honestly and selflessly seeking solutions, stands the best chance of gaining the nation's respect. ---------------------------Fabian tract 519 • 7 2. How Labour can govern without a majority Peter Kellner Labour aims to win an overall majority, but a hung Parliament is a strong possibility. If this should occur Mr Kinnock may have more power than Alliance leaders at present concede. In public Labour politicians insist that the party will win an outright victory at the next election. In private, however, many believe that the party will do well to secure a hung Parliament. What then? The first point ought to be the most obvious, but seems to evade those who talk as if a hung Parliament is a single concept. It depends on the precise distribution of seats in the Commons. Neil Kinnock could lead any one of the three distinct kinds of minority government. Each may be illustrated by an example: 1. Labour 320 seats, Conservatives 270, Alliance 37, others (Welsh and Scottish nationalists and Ulster MPs) 23. Labour would be six seats short of an overall majority, but it could outvote the combined forces of the Conservatives and the Alliance. Only ifthe Ulster Unionists joined in a vote against the government, and if all the opposition parties managed a full turnout in the division lobbies, would Labour be defeated. 2. Labour 310 seats, Conservatives 285, Alliance 32, others 23. Labour is the largest party, but now cannot outvote the Tories plus the Alliance. This, in essence, was the positionHarold Wilson faced in March 1974. He was saved by the decision of the Tories to abstain in all the importantearly divisions. The Liberals also frequently abstained: Wilson's Queen's Speech was approved by one of the largest majorities in parliamentary history, as only the Scottish Nationalists voted againstit. 3. Labour 295 seats, Conservatives 300, Alliance 32, others 23. In some ways this presents the most intriguing scenario of all. Unless Mrs Thatcher (or some swiftly-chosen successor) managed to make a deal with the Alliance, the Tories would be unable to continue governing. If they tried, their Queen's Speechwould probably be opposed by both Labour and the Alliance and would therefore be defeated. Mrs Thatcher would be forced to resign, either in anticipation of the defeat or following it. The Queen would then be bound to ask Mr Kinnock to form a government. However, Labour could only govern as long as the Tones let it -unless Labour gained the positive support of the Alliance (abstentions would not be enough). Queen's role In all three cases, Mr Kinnock's strongest card would be his power of dissolution. Whenever his minority government were defeated in a majorvote in the Commons he could go to the Queen, ask for a dissolution and secure a fresh election. As far as it is possible to map out these uncharted waters, this power is ab 8 • Fabian tract 519-------------------------- solute. That is, any Prime Minister coming to power from opposition is entitled to a dissolution at any time. Mrs Thatcher, on the other hand, could not force a re-run of the election if her Queen's Speech were defeated (for example, in case 3 above): she had called the election that had produced this result and had used up her entitlement for the time being to dissolve Parliament. In other words, in a hung Parliament the tactical advantage lies with the party leader coming tp power from the opposition. If Mrs Thatcher were unable to construct a majority for her Queen's Speech, she would have to resign; if Mr Kinnock were defeated on his, he could hold a fresh election, and fight it as the incumbent Prime Minister. Because the power of dissolution is so important, not least in the way it is likely to govern the tactics ofeach party, it is worth disposing ofone specific point. Some Alliance politicians argue that if Mr Kinnock's Queen's Speech were defeated, he would not have an automatic power to dissolve Parliament. Their case is that Mr Kinnock would not become a 'real' Prime Minister until and unless he received some form of affirmative vote from the Commons. If he were to be defeated on the very first vote, therefore, the Queen would be bound to call on someone else -a post-Thatcher Tory leader, say-to try and form a government. No British (or Commonwealth parliamentary) precedents are available on this precise point. However, in March 1974 Harold Wilson's office held informal talks with Buckingham Palace officials, who indicated that if Wilson was defeated on the Queen's Speech he would be granted a dissolution. Lord Blake, whose constitutional views are known to weigh heavily with the Palace, was asked on Channel Four's A Week in Politics in October 1985 whether Mr Kinnock would be granted a dissolution if his Queen's Speech were defeated. Lord Blake replied: "I think the Queen would have a genuine option, but I think in practice the high probability is that rather than get imbroiled in a rather controversial decision, she would in fact grant a dissolution to Mr Kinnock in such circumstances, and she certainly wouldn't be wrong to do that." So in each of the three types of hung Parliament, once Mr Kinnock has become Prime Minister, he can remain in Downing Street until the following election, which he can call either when he chooses or when he i defeated in a Commons vote. That fact alone is likely to be enough to save Mr Kinnock from the need to conclude any formal deal with the Alliance. In hung local councils, coalition- type deals are commonplace: but they have fixed-term elections which force councillors to rub along together as best they can. The power of dissolution at Westminster means that hung Parliaments have historically produced minority governments rather than coalitions. There is no reason to expect anything different next time.