Labour Leadership Contest: Corbyn's year in charge has already changed Labour's policy debate, but will it be enough to heal the rift?

Corbyn speaking, just a month after his election, to a crowd of ten thousand people - inside and outside - at Manchester Cathedral, for a Communication Workers Union event.

The Labour leadership contest got under way in earnest on Thursday as Jeremy Corbyn launched his campaign. Evoking the memory of Beveridge, in his speech he promised to lead Labour towards ending the 'five greats evils' of our times (BBC, 2016): inequality, neglect, prejudice, insecurity and discrimination.

Having seen off Angela Eagle in the nominations race, Owen Smith has also stepped up his campaign (Asthana & Elgot, 2016). Unlike Corbyn, who has a - not really of his own making - hostile relationship with the media, Owen Smith is actively courting the media, making TV appearance after TV appearance to increase his exposure amongst audiences who probably don't know who he is.

Smith's key line through these appearances has been to try and present himself as able to be the intermediary between the radical membership and the more pragmatic party. He has promised to be as radical as Corbyn, but more competent at making the practical pitch to the wider country (BBC, 2016{2}).

Owen Smith, in the event of his campaign being victorious, has even pitched a job for Corbyn, offering him the position of Party President - though the proposition was rejected by Corbyn as being the equivalent to a 'Director of Football' (BBC, 2016{3}).

The launch of Corbyn's leadership defence had the appearance of an act of defiance (Sparrow, 2016). Affording no time to his detractors and opponents, he focussed instead on making a Beveridge-esque promise to combat the five great evils and called for Labour MPs to take the hand of friendship, get behind the party and work together.

In fact, the Labour leadership campaign may yet be beneficial for Corbyn. It might well give Corbyn the platform to calmly propose and discuss policy that his leadership so far failed to - conducted as it has been under a concessionless, constant barrage, of media negativity (Cammaert, 2016).

However, his support will be under strain, potentially squeezed by a candidate like Smith - if he can put his message across - with the polls showing trade union members have become less enthusiastic about Corbyn's leadership (MacAskill, 2016).

Smith has already made some promises. The set piece of which was a promise to boost public investment, with a £200bn New Deal for Britain (Edwards, 2016). The proposal has already enthused some Labour MPs, such as Louise Haigh who said she was excited to see anti-austerity turned into practical proposals.

There was a bit of oneupmanship to the campaign though, when a day later Shadow Chancellor John McDonnell announced a £500bn investment plan (Pope, 2016). McDonnell's plan included a National Investment Bank, to have regional sub-sects, for instance a Bank of the North, to manage investment to local needs.

Whatever the variations, both candidates are though confirming support for ending austerity with a big increase in public investment - a move that sits well with what the experts are arguing that the British economy sorely needs to move forward (Blanchflower, 2016; Elliott, 2016).

That alignment between Labour's Left and Right, with economists, is a good sign for the Left, signalling that thinking has shifted away from austerity - making conditions perhaps somewhat easier for those on the Left friendly to public spending.

It might also be a sign that Corbyn supporters, and those on the Left wing of the party that have long felt ignored, even an Owen Smith win in the leadership contest will be far from a defeat to the hated Blairites. Corbyn and his supporters have changed the party and Smith's approach has proved that - they can't ignore the Left anymore.

Contained within the pitch Owen Smith is making is an acknowledgement of the impact that Jeremy Corbyn and his supporters, who put him into the leadership, have had on the party. Their values cannot be ignored.

And yet, tensions remain high. Claims of abuse have come from both sides, of which there is plenty, but those valid claims are undermined at times by claims of abuse by thin-skinned public figures who, earnestly or cynically, mistake criticism for something less legitimate (BBC, 2016{4}).

The question that provokes is whether the breach had already been widened too much. Though concessions are being made in terms of tone and policy, if Corbyn doesn't retain the leadership - and even if he does - the hostility of the party's establishment to the Left still really doesn't make it look, however, like the long term future of the Corbynistas, and their well wishers, is in the Labour Party.

Proportional representation cannot come soon enough.

Chancellor quietly drops yet another target, but Labour infighting means chance to pitch positive alternative case will be missed

Under Chancellor George Osborne's stewardship, the Treasury is going to miss another of its fiscal targets. Photograph: Pound Coins from Pixabay (License) (Cropped)

On Friday, at the quiet end of the week and under the cover of the Labour and Conservative leadership wrangling, Chancellor George Osborne announced that he was relaxing the fiscal rules demanding that the government deliver a budget surplus by 2020 (Ahmed, 2016).

Paul Johnson of the Institute of Fiscal Studies immediately stressed that the measure, though it would allow for more borrowing and so less spending cuts or tax rises to cover the shortfall caused by the post-Brexit downturn, would not mean the end of austerity (BBC, 2016).

On Sunday that was confirmed when the Chancellor announced his intention to further accelerate the reduction of the Corporation Tax rate down to a new low of just 15% (Monaghan, 2016) -  a move entirely consistent with Chancellor's M.O. of managing the economy by creating seductive conditions for major firms.

With targets being quietly missed and dropped, and sweetened tax deals for major corporations being announced, it is disappointing that Labour MPs are too busy completely embroiled in their own mess to take the opportunity for a big public 'We Told You So'.

Labour are also in no position at present to step up the argument for seizing this opportunity to push for the much needed public investment plan that Shadow Chancellor John McDonnell has argued the Chancellor's fiscal rule did not allow for (Treanor & Allen, 2016).

While the first announcement was buried beneath other news on a Friday, where missed targets are often hidden, it was a move that brought the policies of Osborne and Tory leadership candidate Theresa May into alignment - as May said in her campaign announcement that she would put aside the aim to get a surplus by 2020 so as to avoid disruptive tax rises (The Independent, 2016).

While suspending the fiscal rule aligns with May's position, the decision to cut Corporation Tax may have a more complicated effect on the Tory leadership contest. Brexiter candidates have been keen to downplay the negative economic impact of the vote to leave and will seize upon any sign that life goes on as usual.

The Chancellor using the new freedom for a tax cut rather than as the first in a package of measures that include the rise in taxes that he previously warned might follow a vote to leave, could play into the hands of the Brexiter candidates. The idea that Britain still has room to manoeuvre, to make a pitch to international businesses that it is still a place to invest, will likely embolden Brexiters who accused the Remain camp of 'Project Fear'.

However, the reality is that public revenue in the UK is already tight and suspending fiscal rule only confirms the fact. Public spending is still in deficit and key benefactors like the NHS still suffer from shortfalls. Abandoning the rule means an admission by the government that only by borrowing more can it now keep up with spending demands - for now.

The big question remains as to whether borrowing, for public investment, or limiting and even eliminating borrowing, cutting public outlays and seeking private investment to cover instead - ie austerity, represents the sounder fiscal policy. Which will help produce growth and revenue?

From the OECD to the IMF (Elliott, 2016; Summers, 2014), the argument that the UK needs to borrow and increase public investment, because boosting public investment can drive the growth that delivers the tax receipts (Stewart & Asthana, 2016), has strong support. The economists who have joined John McDonnell on his New Economics tour have also made broadly the same case.

The argument from the Left is that the Chancellor's focus is on entirely the wrong part of the economy with his tax cuts, benefiting the richest in the hope that they see past their short-termist to invest with a longer view (Sikka, 2016). They also warn against the short term focus of austerity, which looks for gains by selling off parts of the government to would be rentiers, as flawed and likely to only increase problems in the longer run (Mazzucato, 2016).

The alternative is to instead start directing investment into ordinary people - whether that be through education, in skills through apprenticeships and training, through jobs repairing roads and other transport infrastructure or building thousands of much needed new homes - with every penny spent multiplying in value as it boosts the economy.

These are all long term projects, aimed at providing a stable and prosperous future. A progressive economic alternative needs to do more - from reforming welfare towards a compassionate Basic Income and improving workers' say and stake in the work they do - but public investment is the starting point.

The Chancellor has taken a step back but the pressures of austerity are not yet relieved. Progressives have to overcome their divisions so they can start building the arguments for a more prosperous future with the common good at its heart.

Alternative political thinking is alive and well, but Britain's political system makes that hard to believe

Paul Mason gives a lecture in Manchester on the economic downturn, as part of Labour Party Shadow Chancellor John McDonnell's New Economics tour.

Last night in Manchester, John McDonnell's New Economics tour came to town with Paul Mason to discuss the global downturn and how to solve the problems that austerity is not and can not. What that lecture showed, as the others on McDonnell's tour - including economists such as Mariana Mazzucato, Yanis Varoufakis and Joseph Stiglitz - is that alternative thinking is alive and well.

Yet Britain's political system makes that hard to believe. When, last month, Caroline Lucas attempted to put forward a bill from the backbenches aimed at putting the opposition views on the NHS before Parliament, a Conservative filibuster ensured she didn't have time (Stone, 2016).

Lucas' NHS Bill was scheduled for a return to Parliament on Friday for another day of backbench, non-governmental, business. During the course of this week, the Commons will have only debated two bills, for short periods of two days - the third reading of Harriet Baldwin's "Bank of England and Financial Services Bill [HL]" and the consideration of Lords amendments to Amber Rudd's "Energy Bill [HL]".

And yet, the NHS Bill sits on a list of more than two dozen backbench bills - including Norman Lamb's "National Health Service and Social Care (Commission) Bill", calling for an independent review into the future of the NHS, and a second by Caroline Lucas, the "Public Services (Ownership and User Involvement) Bill", that promotes "accountability, transparency and public control" over public services - which will not even be debated as Parliament isn't even scheduled to sit on Friday.

Time is monopolised by the government, which receives extraordinarily stacked advantages for 'winning' elections. This smothers alternative thinking, squashes legitimate debate, and keeps Parliament firmly stuck to the narrative set by central government.

But legislatures elsewhere in the UK show that politics doesn't have to function quite so dramatically this way. In Wales and Scotland, the more pluralistic assemblies have allowed for coalition and minority governments, and for a broader kind of party representation.

In these legislatures, under those conditions, alternative voices can make themselves heard. In particular, the Liberal Democrats have shown that a small party can punch above its weight, and make policy achievements (Masters, 2016). These have included securing major investment in education, in the Welsh budget, by working with the Welsh government (Coles, 2016), and speaking up for citizens' civil liberties against increased police powers and identity cards in Scotland (Macwhirter, 2015).

It is the mark of a vibrant and mature democracy that small parties can give voice to citizens' rights, to hold the government to account on matters like civil liberties or the environment and present a narrative counter to that set by the governing administration.

In Manchester, Paul Mason argued that the times may determine that the next government will be a coalition government, a progressive alliance in which, not least the Labour Party, will have to learn to embrace pluralism, cooperation and compromise. But in that necessity, lies an opportunity - a chance to push for a more grown up, more inclusive political system.

Budget 2016 Preview: Will the Chancellor again produce an ace in the hole that lets him to put off unpopular cuts?

George Osborne's Autumn Budget Statement promised the UK a bright future. Osborne took the chance offered by predictions of an economy looking more healthy to be a little less conservative with the national finances and drop controversial cuts to the police budget and to tax credits (ITV, 2015).

This time around Osborne is warning of dark clouds and the need to prepare for the worst (BBC, 2016). The Chancellor has been at pains to stress that there will be cuts in order to meet his fiscal targets. There might be some sugar coatings, but the medicine is still predicted to be sour.

However, the Chancellor will surely be hoping to be able, once again, to defy all expectations and match his Autumn reprieves. Yet those reprieves were themselves only temporary. They could only be delays of self-imposed hard choices that Osborne had undertaken to make.

Theresa May stressed that the police would still be expected to find efficiency savings (Travis, 2015) and the dropping of Tax Credit cuts were a diversion, as they were still set to come in later with the Universal Credit (Kuenssberg, 2015). They were also a gamble.

Osborne's Autumn Statement took positive forecasts as an opportunity to not make the unpopular choices, while still working on closing the deficit - betting on the forecasts panning out and with slight tax increases, around the fringes. Attempts were also made to temporarily ease the way for the middle class with the Conservatives' colourfully branded array of saving and house buying assistance - that buys time for much delayed house building (Wright, 2016) by siphoning homes from housing associations, depended on by the least well off, to increase competition in the private markets.

Wednesday's budget might reasonably be expected, by the opposition, to be the overdue reality check for those who voted Conservative last May, with the implementation of all of the delayed austerity measures. All of Osborne's public comments certainly seem to be preparing the ground for the further cuts - 50p in every £100 of government spending as he put it to Andrew Marr on Sunday (BBC, 2016).

Yet its hard to ever be too sure what the Chancellor is planning. Osborne managed expectations in the Autumn towards his plans for cuts to tax credits (Kuenssberg et al, 2015). Yet when the time came, he still found a way to avoid what would have proven a deeply unpopular cut.

This time around, with so much riding on the EU referendum including his own chances of succeeding Cameron as Conservative leader, Osborne is again unlikely to go antagonising voters if it can be avoided. Yet time is undeniably running out to meet his own deadline for eliminating the deficit (Verity, 2016), and small shifts in forecasts could lead to the need for drastically larger cuts to meet those goals.

Hints being dropped about new policies, to be announced on Wednesday, at the least suggest a wish to dampen the impact of announcing cuts. Yet the proposed new savings top-up scheme for the least well off seems to be little but a thin veneer (Mason, 2016) - as it's only likely to help a sixth of those who are supposed to be eligible, with Labour criticising the policy for its unrealistic appraisal of what people can actually afford to save.

Across the floor, Labour's Shadow Chancellor John McDonnell has said he wants to see more investment (BBC, 2016{2}) - putting money into building up domestic industry as a way to rebalance the economy. McDonnell's advisors, like Mazzucato and Stiglitz, have certainly been making the argument that the state has a role to play in rebuilding the economy.

It is certainly hard to see a way forward without a lot of investment from somewhere. Osborne's own hope has been for investment in Britain to come from 'emerging markets', like India and particularly China (The Economist, 2015). For these private and foreign state investments to take the slack and pump money into sectors of the UK economy and infrastructure, according to market needs, so that the Chancellor can cut government spending.

Considering that, while defending the European Union, Osborne argued it was the UK, not the EU, that was responsible for the 'red tape' that puts off investment (Bloom, 2016) - and the Chancellor's desire to stimulate these private and foreign state investments - it might not be a long shot to suggest some sort of deregulation will be included in the budget. It would certainly offer some 'efficiency' cuts in terms of reduced bureaucracy.

If George Osborne has an ace up his sleeve, he has yet to let slip what it will be. The implementation of the National Living Wage (a higher minimum wage for over 25s), very limited savings assistance and the regular increase in the Personal Income Tax Allowance (introduced by the Liberal Democrats), do not amount to much of an offset to the expected large departmental cuts.

Will the Chancellor play some hidden card, or will the full weight of his targets finally begin to fall? He doesn't have much room for manoeuvre. His fiscal deadline is approaching, neither deficit nor debt are under control and his own outlook sees global economic struggles. And yet, after so many other sleights of hand, it would be foolish to rule out the possibility of one more gamble.

Labour need to start winning battles on the airwaves if their anti-austerity policies are going to win on the ground

At some point John McDonnell has to turn his academic focussed New Economics tour into well publicised campaign events, for audiences both live in the flesh and live online, if his counter-narrative is going to take hold. Photograph: John McDonnell MP with Grow Heathrow in London in 2012, by Jonathan Goldberg/Transition Heathrow (License) (Cropped)

Yesterday evening, Labour Shadow Chancellor John McDonnell made the latest stop on his New Economics tour at the London School of Economics (Kirton, 2016). As with previous events, the audience was packed out to hear his arguments, not just against austerity but for an alternative.

The first New Economics tour stop saw Mariana Mazzucato argue, at the Royal Society, for a smarter state (Mazzucato, 2016) - defending the state as an often abused innovator that takes the risks that the private sector won't, but which shares little of the rewards. The second saw several speakers tackle how technology will affect work in the future (Srnicek et al, 2016).

At the LSE event, McDonnell spoke directly against austerity as an ideologically motivated policy - as a choice made by Conservative politicians in pursuit of a their own political goals (Kirton, 2016). The Labour Shadow Chancellor said that his priorities were to put democracy and decentralisation at the heart of his economic approach (Sheffield, 2016) - and positive statements that Labour were giving serious consideration to backing a basic income (Sheffield, 2016{2}).

What has been missing, however, is promotion. Beyond those in the loop or paying close attention, there has been little pomp and ceremony to draw attention to the Shadow Chancellor's efforts. In the face of apparent media hostility to the Corbyn-McDonnell project, the low key approach might well be understandable.

The trouble is that these are precisely the battles that Ed Miliband lost as Labour leader. Labour lost control of their own message, of their own identity, and left it to others to define them.

Economics has been the outstanding issue. The key to getting Labour back in power, according to many commentators both internal and external over the last six years (Umunna, 2015; Eaton, 2015), is to rebuild Labour's reputation as an effective and reliable manager of the economy - to regain their economic credibility. The Shadow Chancellor himself has acknowledged that reality (The Herald Scotland, 2016).

John McDonnell's idea of bringing on the world's most famous, rockstar, anti-austerity economists as advisors was a bold move. Taking them on tour to make their arguments, to build a counter-narrative in opposition to austerity, was bolder still. But the low key, low profile, approach can only reach so far.

Right now, the Corbyn-McDonnell team is fighting battles within small circles of onlookers. Scrapping for party policy positions, introducing an alternative narrative by increments to interested and sympathetic audiences at cosy events. Yet, sooner or later, the boots of campaigners will have to hit the ground and bring them face to face with the voters who live far outside of those circles.

The Corbyn-McDonnell team have shown that, within their own party, they have a pitch that appeals to a broad cross-section of society - from young to old, from poor to wealthy (Sayers, 2016). As with Bernie Sanders in the United States, there is the potential for a winning coalition. But that won't automatically translate into public sympathy.

To reach those people, New Economics will have to start winning battles on the airwaves. Promotional ideas like the New Economics tour will have to be prepared to put a spotlight on its rockstars, promote them and get them playing to bigger crowds - crowds that are maybe more sceptical and who need the grand ideas distilled and condensed.

John McDonnell and his advisors are presenting a compelling vision of a very different, more humane, economy and society - not least in their acknowledgement of the basic income. The next step is to turn up the volume and stop conceding control over the airwaves.