Positive vision

Across Europe, social democracy is in crisis. Traditional social democratic parties have haemorrhaged support in France, Italy, Greece and the Netherlands. In Germany – the birthplace of social democracy – the once mighty SPD fell to just over 20 per cent of the vote in last year’s general election; its worst result since the second world war. Even the Swedish social democrats are not immune to this turmoil: a few months ago they had their worst result in a century.

At the same time, Europe has seen the rise of populist, anti-establishment parties on the far right and left – from Geert Wilders Freedom Party in the Netherlands, the AfD in Germany and the League and Five Star in Italy to Jean Luc Mélenchon’s Left Party in France.

Here in the UK, the Labour party has so far avoided a similar fate. Many believe this is because Jeremy Corbyn has moved Labour decisively to the left, distancing the party from its social democratic predecessors. The UK’s first-past-the-post system, combined with the political fallout from Brexit, have arguably also contributed to Labour’s improved standing compared to our sister parties in Europe.

Whatever the different factors are that have played a part in the fortunes of European social democratic parties, all face the same underlying challenge: the profound economic, social and cultural changes that are eroding the foundations on which Europe’s post-war social democracy was built.

Globalisation and technological change, the decline of heavy industry and a large unionised working class, mass migration, the end of deference and a growing individualisation are all destroying the class, cultural and political loyalties that were once the bedrock of social democratic support.

Despite the existential crisis facing social democracy, too little time has been spent defining these challenges and how they should be met. Too often, we have also focused far more on what we are against, than setting out a positive and optimistic vision of what we are for.

Progressive politics will only thrive, and arguably survive, when we provide a clear analysis of the forces shaping our country and an agenda for change that creates a better future for all – just as Labour’s great reforming governments have done in the past.

Three priorities are now clear. First, achieving our fundamental goal of social justice and a more equal society means tackling wealth inequality should move to the top of the agenda.

Britain is a wealthy nation, but that wealth is very unevenly distributed. The top 10 per cent of households own 44 per cent of the nation’s wealth, and the bottom 50 per cent own just 9 per cent. Wealth is also growing much faster than income. The Resolution Foundation has found that whilst wealth was steady, representing 2.5 per cent of national income between 1955 and 1980, now it stands closer to seven.

The returns to capital are increasing exponentially, but the returns to labour are decreasing. This matters to social democrats because wealth, and its unequal distribution, is having an increasing effect on individuals, society and our economy.

It is no longer possible to earn your way into wealth: you have to be born into it or marry it. If you don’t have any savings or assets you are less likely to be able to cope with unexpected life events, like losing your job or getting a divorce. You are also less able to take risks or grasp opportunities, like setting up your own business.

Property wealth is becoming increasingly unequally distributed by generation and by region. Half of millennials will not be able to own their own home until they are at least 45 years old. This means instead of building up their own assets – buying their own house or saving for a pension – they end up boosting other people’s wealth in the private rented sector. This will create substantial problems for the future.

The total value of the housing stock in London is bigger than the combined value of housing in Wales, Scotland, Northern Ireland and all of the north.  This contributes to our unbalanced nature of our economy and the unequal opportunities in different parts of the country.

Building more affordable homes, introducing strong incentives to increase employee ownership, and reviving asset-based welfare would all help those on  low and middle income to build up their assets.

More fundamentally, we need to ensure a fairer system of wealth taxation. Current taxes on wealth and the income that derives from it are lower than those on income from work. As the IPPR has argued, this is unfair as it significantly benefits the wealthy. Any changes in areas like capital gains tax will be hugely challenging, but they are vital to breaking down the barriers to individual success and creating a fairer society as a whole.

The second priority for social democracy must be to empower individuals, communities and neighbourhoods through a more radical decentralisation of power than has ever been envisaged in Labour’s past.

Delivering social justice and a fairer society is not only about ensuring the more equal distribution of particular goods, such as income, wealth, or skills – essential though these are. It is also about securing equal power and standing between citizens.

Ensuring people have more power and control over the issues that matter most in their lives is vital to addressing the disconnection and disillusionment many people feel with our democracy and politics.

It is also crucial to making better decisions. As the commission on the future of localism has argued, many of the most significant problems we face – from economic inequalities to the long-term sustainability of our public services – cannot be addressed by Westminster or city regions alone.

There are countless examples which show that local people are often best placed to know what works to improve their neighbourhood, and that the users of public services often know best how to shape these services in ways that better meet their needs.

So social democrats should reject a top-down, centralised approach which suggests everything should be done ‘to people’ at the national level. We should also look beyond devolving decisions to city regions, or even local councils, and towards building power in local communities and neighbourhoods.

Our starting point must be that power doesn’t belong to politicians or civil servants – it belongs with the people. The task of political leaders is to work with communities and provide the resources, support and space so they can be genuine partners for change.

That means strengthening community rights, encouraging more forms of deliberative democracy, supporting community development and working with users to co-produce the design and delivery of public services.

Social democrats must reject the old-style politics rooted in the desire to take decisions about and for people and instead champion the new politics of empowerment to transform lives and restore trust in politics. Put simply, social democrats should seek to win power in order to give it away.

The third priority for social democracy is to champion internationalism and ensure the institutions that underpin it are fit for the future.

Progressives reject the narrow isolationism of nationalist politics, because we understand global problems require global solutions.

Whereas populist politicians tell people they can turn the clock back on globalisation, or pull up the drawbridge (or build a wall) to keep the world out, social democrats know the only way we will successfully deal with issues from climate change to immigration and globalisation is by working with other countries. We believe Britain gains power and control by working with others; we don’t lose it.

In particular, social democrats must remain proudly pro-European. Whatever happens to Theresa May’s agreement, Brexit and Britain’s relationship with the EU is not going to go away any time soon. Rather it is is set to  be the defining issue of our generation. Our mission must be to make the case for Britain being part of Europe, and for Europe to reform itself so it better meets the needs of its citizens.

The stark reality is we face not just a crisis in social democracy but a crisis in the post-war international rules based order. Progressives need to inspire people to believe that now, and in future, their peace and prosperity depends on working together internationally, not attempting to turn back the clock or turn our backs on the world and hope it just goes away.

Social democrats cannot shape the future if we are trapped by assumptions of the past. Instead, we must believe in our enduring values, provide a credible analysis of the underlying forces that will shape tomorrow, and offer a compelling agenda for change.

This will not be easy, but it is the only way to renew social democracy and build a better future for the people we are in politics to represent.