After the euphoria of Ed Miliband’s commanding speech, the reality of tomorrow’s agenda. It’s all very well to promise legislation if the banks don’t carry out the Vickers Commission’s prescription of building Chinese Walls between the investment and retail arms, but even if they did, the City would sidestep the walls in no time through regulatory arbitrage. Even if the so-called walls remained intact, the idea that that would prevent another financial crash is moonshine. The banks would still be ‘too big to fail’, risking the demand for yet another bailout. What is really needed is for the Big Five banks to be structurally broken up and replaced by a series of smaller specialist banks focusing on regional industry, infrastructure, SMEs, science and technology sectors, green economy, etc. And at present only 8% of total bank lending goes towards productive investment in the UK. Above all therefore the money supply which the banks have steadily privatised to serve their own interests, not the national interest, over the last 40 years should be brought under public control, as has been the case with all the most successful economies since the War.
Second, Labour has strengthened its commitment this week to stabilise and enhance living standards through a jobs and growth strategy. That can only be achieved through a massive revival of UK manufacturing. The market free-for-all which Thatcher launched in the 1980s decimated our manufacturing base to the point where in 2010 the balance of trade in goods reached the staggering deficit of £100bn a year. It is likely to increase further this year to some £120bn, over 8% of GDP. This is utterly unsustainable since financial services now cover less than half this deficit. We urgently need a concentrated and sustained national effort to improve manufacturing productivity, vocational and skills training, restoring broken supply chains, protecting key companies and sectors against takeovers that damage the national interest, and instilling incentives to boost long-term market share as opposed to short-term profiteering.
Third, ballooning inequality has reached obscene levels not seen since the Edwardian era a century ago. Not only is this profoundly unjust, it undermines aggregate demand which is a major cause of continuing recession. What is needed are Enterprise Councils in all large companies, composed of representatives of all the main employment grades from boardroom to cleaners, which should meet at least annually to receive reports on the state of the company, to scrutinise funding, and to examine bids for improved pay from each section of the workforce which would have to be justified to gain general consent.