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Home , Jeremy Corbyn, Labour Party (UK), Liz Kendall

Jeremy Corbyn – A revolutionary leader? Westminster Advisers briefing on the election of as Leader of the Labour party

With Jeremy Corbyn now leader of the Labour party and Leader of Her Majesty's Most Loyal Opposition, we are facing a new political reality in Westminster. This note sets out our reflections on the result and the immediate and medium term implications. We have looked at the macro environment, the significance of the result for the Labour and Conservative parties and what it could mean for local government and outsourcing.

We hope this short note helps to provoke some thought about the political implications of the Labour leadership election result. If you have any questions about our reflections, or would like to discuss these issues further, please get in touch with Dominic , Managing Director, on [email protected], or 0207 222 9500.

Macro environment

Corbyn’s success in the Labour leadership election represents a significant leftward shift of the party’s position on several fundamental areas of UK government policy. In many cases this will mean a collapse of cross party consensus and heightened political risk on key ‘big ticket’ issues:

 Spending / Fiscal policy: The foundation of Corbyn’s economic policy is to eliminate the deficit via promoting growth rather than adhering to an austerity focussed approach. This is a significant shift away from Labour’s position under Brown and Miliband, which was broadly aligned with the that of the Conservatives – although differing on the pace of deficit reduction. Economic policy under Corbyn starts from the premise that “austerity is a political choice not an economic necessity”. In practical terms, this will see the party advocate removing the independence of the Bank of , ‘People’s ’ to fund a new national investment bank, nationalisation of the railways and energy sector, a higher , higher rates of personal taxation for the wealthiest and an additional £93bn collected in corporate taxes.

 EU referendum: Corbyn’s victory means the assumption that Labour would take a bipartisan approach supporting the campaign for the UK’s continuing membership of the EU is no longer certain. Despite new Shadow issuing assurances this morning, Corbyn has long held the view that the EU has weakened workers’ protections and throughout the campaign was less than clear about his support for the UK’s membership. How this will play out in the EU Referendum campaign itself could be crucial.

: Perhaps one of the most contentious of Corbyn’s views is his approach to the UK’s role on the world stage. He is opposed to membership of NATO, has stated support for , and is a vocal opponent of the use of drones and of almost every Western military intervention. If he takes a strong stand on any of these issues there is potential for the party to split.

 Infrastructure investment: Several areas of largescale planned infrastructure investment that have enjoyed greater or lesser cross party support are now facing a disintegration of that consensus. Nuclear energy, HS2, Heathrow Airport are all notable examples. More widely, the private sector’s role in owning and managing critical national infrastructure – energy generation, railways, and other utilities – will no longer be able to rely on the support of the Labour party, with a wholescale expansion of public investment and ownership key to Corbyn’s plans for stimulating .

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The Labour party

The election of Jeremy Corbyn will define the Labour party and how it operates for many years to come, even if he is ousted after a relatively short period.

The composition of the Labour party’s membership has changed dramatically in recent months. Labour had 187,000 fully paid up members prior to the general election; membership now stands at 292,973. There are over 112,000 registered supporters, who paid £3 to vote in the leadership election, and 148,000 affiliate supporters from trade unions. Corbyn’s campaign helped grow the numbers in each of these categories and he won convincingly in each section. There are rumours that Corbyn will attempt to convert registered supporters into fully paid up members to further enhance his support base within the party.

So what can we expect for the Labour party as a result of Corbyn’s victory?

 A reorientation of the party’s centre of gravity: There will be a significant leftward shift in the party’s policy prospectus. Many of Corbyn’s positions have not changed much since the 1980s when he first became a MP. Expect to see a return to policy debates about the nuclear deterrent, an end to the NHS internal market and other touchstone concerns.

 Marginalisation of the Blairites: The acolytes of have reached a low point and it remains to be seen to what extent they can recover. The Blairite standard bearer in the leadership election, , managed to garner only 4.5% of the vote. It’s a difficult to see a future for this party faction without a significant revision of their project.

 Movement politics will come to the fore: Corbyn was lifted to victory by a left wing force that is activist and campaigns based. This indicates that shadow ministers are more likely than ever before to be motivated and influenced by online activist campaigns on issues ranging from hospital closures to shale gas license applications.

 Energy expended on party management: Party disunity is likely to be a major drain on the Opposition’s energy and attention in the coming years. There was serious discussion prior to the leadership election result on how to remove Corbyn from the leadership. There were even suggestions he could be removed as early as next year. He has very little support within the Parliamentary Labour Party with very few MPs positively supporting his nomination for the leadership. However, the sheer scale of his victory has led many to conclude that he could be in place for a longer haul and even stay to fight the general election in 2020. Even so, if he remains leader in 2020 it is unlikely he will do so without having to face down at least one major coup attempt.

The Conservatives

Out of the four possible outcomes, Corbyn’s victory is likely to have been seen by the Conservative leadership as the most preferable. As has been indicated by the Conservatives’ initial response, the party is likely to focus, in part, on the leader’s foreign policy views (for example, regarding NATO) to paint a picture of Corbyn as a ‘threat to security’. We can expect senior figures within the government to seek to juxtapose Corbyn’s (as well as that of John McDonnell) with their own legislative programme – aiming to present the Conservatives as the responsible party of government.

 In the short-term at least, Corbyn’s victory could leave the Labour Party focusing on a range of internal issues (for example, managing splits within the Parliamentary party). This could well have an

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impact on Labour’s ability to provide effective opposition to the government – particularly as the new leadership finds its feet. We can expect the Conservatives to look to capitalise on this forthcoming period to push with the more contentious elements of their legislative programme.

 Whilst the government will be keen to press ahead with its legislative agenda, there is also the potential that a weaker opposition could create party management problems for Cameron. In the face of a potentially disunited Labour party, many of Cameron’s may find themselves emboldened – looking to use this window of opportunity to pressure the government to push through a distinctly right-wing agenda. On Europe, on human rights reform and on English votes for English laws, we could see Conservative backbenchers agitating for stronger measures to meet their demands.

 More widely, Conservative strategists will be giving consideration to how the party can best position itself to capitalise electorally over the coming period. Given Labour’s shift to the left as a result of Corbyn’s victory (coupled with looking to take the Liberal Democrats in a more left-wing direction than his predecessor), space has opened up in the centre of British politics, which Conservative advisers will want to . Already, senior centre-right commentators, such as Tim Montgomerie of , have begun urging the Conservatives to develop a policy platform that effectively captures this centre-ground, forcing Labour to remain on the ‘harder’-left. Osborne’s Summer Budget – with its announcement on – highlighted that the Conservatives were capable of shifting to the centre; we can expect additional measures to reinforce this.

Local government

Corbyn’s government command and control ideology sits in stark contrast to the Tory local government reforms that aim to deliver greater and across the UK’s regions and cities. Unsurprisingly, Corbyn voted against several aspects of the Localism Bill in the last parliament, including the devolution of more powers to local councils in relation to social housing and planning. Corbyn has also been sceptical of the Northern Powerhouse, seeing it as tokenistic and gimmicky. It’s likely that he’ll resist much of the de-centralisation of power within the Cities and Devolution Bill, although could find alignment in areas of transport policy and more power to local authorities to increase social housing stock.

In terms of policy priorities for the newly appointed Secretary of State, John Trickett MP, a Corbyn administration would seek to;

 Reverse the cuts in local authority adult social care and invest in a national carers strategy, under a combined National Health & Care Service.  Create regional home building strategies, suspend in areas of “high housing stress” and increase tenant’s power over landlords.  Would consider banning property ownership by non UK based entities or companies and offshore trusts.  Make the case for abolishing academies and free schools and bring them back into local authority control.

In terms of the local government elections which will take place next year, Corbyn will be hopeful that he can use his position to attract more left leaning candidates. He will aim to shape the candidate selection processes for the new directly-elected Mayors which could hark back to the days of having far left Labour local authority administrations.

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Outsourcing

Outsourcing public services is not popular among Labour’s hard left. Corbyn’s inner circle believe in the state continuing to provide public services rather than commissioning private companies or charities. This is seen as privatisation of public services.

 Corbyn’s victory is unlikely to lead to the Conservatives shelving their public service reform plans. In a keynote speech last week the Prime Minister described a role for non-state providers in modern, less centralised and more efficient public services. The government will press ahead. The question is how the opposition will scrutinise government’s performance on public service reform.

 Businesses will have to consider carefully how to engage with Labour. Opposition may have reservations about being associated with industry-backed initiatives that hold government to account or contribute to policymakers’ thinking. Providers should prepare for opposition campaigns targeting private sector involvement in particular public services or government programmes.

Westminster Advisers, 14 September 2015

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