It is bizarre after 12 years in government that the voters don’t know, as David Miliband says, what Labour stands for. But that is the price of the Blair interregnum which was a power project devoid of ideology – other than largely maintaining the policies and ideas inherited from the Conservatives. Yet if there’s one thing the electorate craves as the election looms, it’s a genuine choice rather than a continuation of the essentially one-party State we’ve endured for the last 20-30 years. The outline of that choice is clear. First and foremost it should be the protection of jobs, incomes and homes of all those employed in the real economy. But that isn’t the policy being pursued at the moment. Eye-popping levels of taxpayer-funded grants, loans and guarantees have been put at the disposal of the banks so that they can continue lending to businesses and homeowners – £645bn at present, but projected by the Chancellor to double to a staggering £1.3 trillion by 2013 – yet the banks have been allowed to renege on their side of the deal. They have taken all the money to consolidate their own balance sheets whilst cutting back lending to the real economy almost to nothing. The latest Bank of England figures show that lending to businesses and mortgage-owners, which was rising at 19.8% a year in 2007, has now shrunk to a miniscule rise of 0.8% a year.
Just when it seemed that workforces across the country might be accepting the privations of the slump, a determination to protect jobs and pay has been gathering strength with marked success in several sectors. It’s true that where companies have been struggling for survival, as in the case of BA, management have imposed conditions on pay or pensions or productivity which would never have been tolerated a year or more ago, but which have now been enforced crudely by fear of loss of job. The request to the BA workforce to work for a month without pay was only accepted for this reason, not because of any supposed new solidarity between employer and employees. The idea that the chief executive Willie Walsh’s ‘sacrifice’ of one month of his £743,000 salary inspired some of his staff on £200 a week to do the same is the stuff of CBI dreams. It wholly misses the point of the far more significant developments in industrial relations that have been taking place elsewhere and tell a very different story.
It is far too readily assumed that a Tory victory at the next election is a foregone conclusion. In fact, if the LibDems perform as well as they did at the 2005 election, then Cameron will need an 11-point lead over Labour in the popular vote just to get an overall Commons majority of 2. Maybe the LibDems will do less well, but even if Clegg’s vote halved, Cameron would still need to beat Labour by 7 points to get a bare majority. That’s because the Tories still today hold only 197 seats, less even than Michael Foot had after the massive defeat of 1983, a very long way short of the 324 seats they would need to have an overall majority. Moreover, as is widely recognised, there’s no great enthusiasm for either Cameron or the Tories: their 28% vote in the Euro elections was well short of the 36% they secured even at the peak of Tony Blair’s power a decade ago. The problem is entirely with Labour which is why, theoretically at least, the situation is not irreparable. But it will require a fundamental re-directioning of the party. No mere tweaking of policies (or lack of policies) will do.
The fairly open spat between the Governor of the Bank of England and the Chancellor may turn out to be epic. What is so revealing is how they have changed roles. Mervyn King, who might be expected as Governor to be a staunch defender of the Square Mile, is now demanding significant reforms in regulation of the City, while Alistair Darling in the face of the biggest financial crisis for a century is offering only soothing rhetoric and minimalist change. One has to ask, why is Darling so shit-scared of the banks? Is it because the banks, whilst only accounting for 8% of national income, provided 25% of Exchequer funding before the crunch, and the Treasury in the depths of the recession is desperately anxious to regain this flow of revenue? Is it because New Labour is now so embedded within the neoliberal capitalist State that not just bailing out the banks, but also prioritising their interests as the central pillar of that Establishment, has now become their political way of life? Whatever his motive, the Chancellor and the Government are now out-torying the Tories in their defence of finance capitalism, while manufacturing, industry and commerce continue to be subordinated and the Labour Party and the unions politically marginalised. Who will now speak for the majority in this country?
There’s nothing like a crisis to throw into sharp relief the contours of the power structure that have long been latent until they burst out into the open under the force of events. It has been a long time since anybody believed that Parliament ran the country or was the final decision-taker in the nation’s affairs. Power has long since drained upwards, beginning with Lloyd George a century ago, towards the Cabinet and the Prime Minister. But the veneer of collegiality lingered on in the UK after the Second World War, even when Richard Crossman was still complaining that “the power of the Prime Minister has grown, is still growing, and should be cut back”. It was however only the ascendancy of Thatcher that consigned the premier’s role as primus inter pares to history, and that process of consolidating prime ministerial power was taken much further by Blair. He first consolidated his power within the Labour party by devaluing the role of the unions, party conference and national executive. He then systematically used the party machine to promote favoured (Blairite) candidates at selection conferences in order to clone the PLP with his own supporters who provided him with an ultra-reliable praetorian guard within Parliament. Having secured his party and parliamentary base and eliminated any serious challenge to his own position, he assiduously wooed the prevailing sources of power both within the UK (the City, CBI and the media) by giving them almost whatever they asked, and also on the world stage by slavishly cultivating whoever happened to be the US President (since Clinton and Bush could hardly be more different). Now all of that has fallen to pieces.
The Hester award is far from the only case of greed out of control. It is now clear that the City, which has been lobbying hard against a weak government to ensure that any financial re-regulation is minimalist, believes that the way is now open to resume stratospheric remuneration and bonuses in the temple of Mammon. Barcap, the investment arm of Barclays, is now looking to exceed even last year’s record payments to Bob Diamond of £27m and Roger Jenkins allegedly £40m. Earlier this month Shell proposed £3.6m share awards to 5 top executives, including the chief executive van der Veer, even though the group had failed to meet the targets on which the payments were conditional. It raises two questions. Who decided these payments? And how can this slide into avarice be controlled?
The decision to award Stephen Hester, the chief executive of RBS, a pay deal of up to £15 millions tied to a big increase in the share price is not only obscene in the size of the remuneration (625 times the average wage) when thousands of employees in his bank are losing their jobs, but it also signals something else altogether more disturbing. This deal was sanctioned by UK Financial Investments, the body set up by the Government to supervise the banks taken into public ownership and run by a senior mandarin, and its decisions certainly reflect the view of the Treasury. UKFI at the outset faced a choice: policy could either aim to consolidate the bank’s balance sheet and boost its share price or to give priority to lending to business to save the real economy. Hester’s pay packet – a mere £2m in basic salary and the remaining £13m in bonuses, incentive schemes and credit payements – is an unmistakeable sign that the Government has adopted the former course because it is more concerned to secure repayment of public debt (the Exchequer will get £8bn if the 70p share price target is reached) than to reduce unemployment. For a Labour Government this is fundamentally the wrong choice.
The election of John Bercow today is remarkable on several counts. A former Monday Club right-winger, he has now emerged both as close to the Labour Party and the anti-establishment figure (if those two together are not a contradiction in terms). At 46 he is the youngest Speaker in 150 years, with he himself in his speech today mimicking the ponderous Tory grandee Sir Peter Tapsell (seated 5 places away from him) who told him flatly: “Speaker? You’re too young for that, in fact you’re far too young; to be Speaker, you need to be almost senile!” He promised radical reform, like several of the other candidates (there were 10 in all) – all of them no doubt exaggerating what the role of Speaker could achieve – but was probably the candidate most likely to deliver it, which is why I voted for him. Potentially this is the biggest overturning of the writ of the party authorities for years, all the more remarkable that it’s been achieved by a Tory (sort of) and one who hardly got any Tory support in securing his 322 vote victory. But therein lies the future problem.
The blacking-out redaction of MPs’ expenses on the website, plus the uncertainties remaining over how opaque the Iraq Inquiry will be, are central issues this week in Parliament. They will also be test cases for the new Speaker (and I shall be voting for the person I judge most likely to bring about radical Parliamentary reform). But like all examples where concealment is used to hide embarrassment, they are also very revealing about how the Establishment works to preserve its own power and to divert attention away from its misdemeanours. In the case of the redacted MPs’ expenses, it has been suggested that the blacking-out followed advice from MI5 (unlikely, unless this was merely a cover to conceal intervention by senior politicians with an interest) or a belief that publication breached the Data Protection Act (hardly a plausible explanation) or manipulation by the Members’ Estimates Committee responsible for expenses matters (possibly, in view of their previous strenuous efforts to prevent full publication). The really important point, though, is that if the Daily Telegraph hadn’t bought the leaked data first and exposed it all, the official redacted version on the Parliamentary website would have concealed by far the most serious offence revealed, namely the ‘flipping’ of home designations to maximize financial gains and/or to avoid capital gains tax. It is likely therefore that some of those who stood to be convicted by the magnitude of these revelations had a hand in their suppression.
The drop in bank lending to business just reported by the Bank of England, the biggest in 9 years, sends a deeply disturbing signal about the future course of the economy and escalating unemployment. The Bank figures show that the annual growth rate in lending which averaged 17% last year fell sharply to 8% in January this year and then continued to fall steadily further to 5.7% in February and 4% in March. In April it fell even more dramatically to a mere 1.3%, a reduction in lending in that month alone of £5.4bn. This is all the more alarming when the Government has already fired what is virtually the last shot in its locker – the device of quantitative easing (in effect printing money) which in two tranches has increased the money supply by £125bn. What then should be done to prevent this downward trend turning into a vicious spiral?
How much worse does it need to get before Governments – and their peoples – take the drastic action necessary to avert and mitigate by far the most dangerous threat the world faces? The latest report from the Met Office Hadley Centre makes sobering reading. It is already true that the hottest 10 years on record globally have all occurred since 1990. Now this landmark scientific report predicts, on the basis of pooling the results from running 300 versions of their sophisticated climate computer model, that peak summer temperatures in London and the South-East will regularly top 40C by 2080. To put this in context, the highest temperature ever recorded in the UK was 38.5C in Kent in August 2003, and memories of the stifling heat that day are still very live. More importantly, the heatwave in France a few years ago when temperatures reach 40C killed over 20,000 persons from heat-stroke. But there are 3 other reasons too for alarm.
Predictably attention has focused on the Digital Britain report’s proposal, not simply to extend existing broadband at 2Mb per second to everyone in the country by 2012 (at present 2 3/4 million homes, 11% 0f UK households, lack access to a connection at this speed), but also more controversially to levy a £6 a year broadband tax on every home and business with a phone line to raise £1.5 bn over 10 years to deliver by 2017 ‘final third’ next generation broadband, i.e. allowing consumers to download music in seconds and films in a minute. But this would mean the taxpayer is subsidisng private companies to extend their market access, but gets no return in the form of equity (unlike in the case of the banks). Nor is the content pumped down these broadband channels easily regulated. It amounts to an unrewarded transfer from citizens, including the poorest, to the big technology firms. That isn’t justified.
Remember how the trade unions were handled by Thatcher when they were deemed to have too much power and to have held the nation to ransom? They were subjected annually to a series of 6 Trade Union Bills which decimated their powers and hedged them round with such an impenetrable thicket of regulations that they were virtually legalised out of any capacity for independent action. Now compare that with the banks who are almost universally deemed to have too much power and to have used it to hold the nation to ransom by pursuit of their own greed and self-interest without any regard for the real economy. But instead of being crushed, they have been awarded £650bn of taxpayers’ money in grants, locans and guarantees, and are now being stroked with the softest of velvet gloves. Alistair Darling tonight is telling the City grandees assembled in the Mansion House that, no, there is no need to rstrict the size of banks lest they remain ‘too big to be allowed to fail’ – all that is needed is that “we, as well as the banks themselves, have plans for tackling failure”. Really? “Bank boards must have the right people, skills and experience to manage themselves effectively” (what business is that not true of?) and “their focus must be long-term wealth creation, not short term profits”. Well, what an original thought – so how is that to be secured?
Just as yesterday’s announcement on the private and carefully stage-managed inquiry into the Iraq War immediately blew a hole in Gordon Brown’s protestations the week before about a more open and democratic Parliamentary system, so today the revelation that the UK is seeking to promote its much-heralded crackdown on tax havens through an extremely weak double-taxation exchange agreement with the Cayman Islands threatens to do exactly the same on the taxation front. Both these cases generate a very unfortunate impression that worthy and ponderous Ministerial statements and media releases are somehow seen as sufficient in their own right without the need for the follow-through in effective and radical action on the ground. At the G20 Gordon Brown gained much credit for promising a real clampdown on tax havens, but the resultant double-taxation exchange agreements have to be robust, enforceable and capable of raising revenue very substantially. The agreement which the UK Treasury has just signed with the Caymans fails on all these grounds. So what should be done?
The Iraq inquiry, which the PM announced today, is obviously welcome, but just about eveything about the way it is to be conducted is wrong. It is far too late, since it should have been set up shortly after hostilities finished on 30 April 2003, i.e. at leat 5-6 years ago. It is being established in the time-honoured way by the PM, without proper prior consultation with the leaders of the other parties, and without any real likelihood that Parliament can alter either the chair, membership or terms of reference of the committee the PM has personally approved. We can be quite sure that the civil servant drafters made their choices in the manner they thought most likely (which had to be approved by the PM) would lead to an uncontroversial, even consensual, conclusion which would enable the Gopvernment to slip round the outstanding issues on the floor of the House and thus gain the space finally to move on. On that score the conclusion must be that the PM succeeded, by often evading the question and constantly repeating his well-rehearsed defensive mantra, in sloughing off several threatening lines of scrutiny. But that will not fend off the determination of the majority to get at the truth, wherever it may lead, on many still outstanding issues.