An Open Letter to Jeremy Corbyn: Labour needs to act fast

This article is co-authored by Ann Pettifor and Jeremy Smith

After an exhausting and successful national campaign, it is hard for campaign strategists to think of next steps. But we are at a critical historical juncture, and a range of opportunities present themselves. Choosing the right political and economic strategy now is vital. 

Here’s a proposal. 

Labour should pursue two major complementary policy goals. The first: to end austerity, and implement a Green New Deal across Britain. 

The second major policy goal: to reset the framework and relations with our European partners; and to gain policy space and Treaty reforms which benefit British citizens as well as all Europeans. 

To achieve the first goal, the task is to assemble a progressive alliance of British MPs, including the Greens, the SNP,  the Lib Dems – and even some Conservatives -  to back an end-to-austerity alliance. There should be a singular goal: to demand that government – and the Treasury in particular – end austerity immediately, and begin to invest in the creation of skilled, well-paid employment in areas of the economy vital to both economic, but also energy security. The latter goal – of greater energy security - is particularly important at a time when nearly a third of the UK’s liquefied gas imports are from a Gulf state, currently at the centre of a potentially ugly middle eastern conflict – Qatar. 

In other words, Labour should call for a Green New Deal

This will lead to investment in infrastructure and the creation of skilled and unskilled jobs locally, especially targeted toward areas of low-paid, insecure employment. Greater energy efficiency will lower bills, but above all a Green New Deal will begin to build Britain’s defences against the threat of climate change; a threat only too real to the agriculture sector, and to those individuals and firms living and working in for example, areas vulnerable to flooding. 

Given that BREXIT negotiations with EU partners begin in just a few days, and thus far in the worst possible atmosphere and approach, from both Brexiteers  but also to some extent reflected on the European side, it is crucial that Labour and allies put forward an alternative European strategy straight away. 

The aim of this strategy should not be focused narrowly on simply securing ‘the best deal’ for Britain, but to reset the whole long-term relationship with Europe for the benefit not just of Britons, but of all Europeans. 

 A European Green New Deal

The purpose will be to enable Britain to have access to the Single Market and customs union, while also achieving improvements in economic policies across the European Union and the Eurozone.  Already our European partners are discussing the necessary Treaty changes to enable the Eurozone to work more effectively. This provides an ideal opportunity to discuss issues that could enable a positive and mutually beneficial economic, social, security and environmental framework for the relationship between Britain and current European partners. 

To achieve this, it is most important to ensure that we have time. For this to happen we must seek to extend the Article 50 timeline to at least four-years. But this requires Britain now to make clear that it would fully honour all budget commitments during this period and in particular, confirm that EU citizens resident in the UK would have their rights protected.  
This should include a commitment to pay our fair share for the future mutual benefits arising from our future framework of partnership. 

For Labour’s progressive economic policies (e.g. railway nationalisation) to take effect a number of EU Treaty as well as policy changes would need to be negotiated and agreed. The neoliberal economic policies that underpin austerity within the EU need to be changed. 

First, a stronger commitment to full, good quality employment should become a primary, not secondary aim of Article 3.3 of the Treaty on European Union.  

Second, Article 126 of the Treaty on the Functioning of the European Union sets in concrete the so-called excessive deficit rules – ultimately punitive. This reflects the ‘household budget fallacy’ so prevalent in neoliberal economic theory.  At the same time the Article ignores other major economic imbalances, such as the excessive build-up of private debts and the imbalances in current account surpluses and deficits. 

Third, some restoration of more discretion on state aid matters to be restored to member states under Article 107. 

Fourth, the policies that require the liberalisation of public services, or impede the democratic power to restore sectors to public ownership, need to be changed so that this becomes a democratic choice of the member states. 

Last but not least (for now), the provisions on industrial strategy need to be strengthened, including the role of the European Investment Bank (EIB). We need to strengthen the role and tasks of the EIB, if there is to be a European as well as UK Green New Deal.  

(Further details of Treaty changes required are outlined in this report published by PRIME and the Rosa Luxembourg Foundation in March, 2017). 

Conclusion

If the aspirations of the British people, as expressed in the election result, are to be fulfilled by Labour, and to avoid the dissipation of the momentum and energy generated by the campaign, it is urgent that Labour lays out a viable and popular political and economic strategy.  We believe that the ideas outlined above would attract substantial political and popular support.