Michael Meacher MP

My lords, ladies, etc., etc., I’m pleased to present the first legislative programme of this new experimental coalition government – though I wish that their security was a bit tighter so that my speech, written by others, wasn’t also already leaked by others.

My government has made clear that their aim is the transformation of Britain.   They have therefore decided that their highest priority is to rein in the City of London whose poorly regulated malpractices so nearly caused a national financial and economic collapse.   They will therefore bring in a Banking Reform Bill to break up the banks so that they are no longer too big to fail, shrink the City so that it doesn’t crowd out our industrial and manufacturing sectors, prohibit banking involvement in hedge funds and private equity, and require all derivative financial products to be sanctioned by a revamped FSA before they can be traded.

My government will bring in a real Constitutional Reform Bill which will not only protect and enhance civil liberties – which is welcome though hardly transformative – but will also confront  the gross inequality of power in Britain today.   It will tackle the excessive power of the media (where balance, diversity and redress are urgently needed), the security services (where the ISC oversight committee is feeble and non-independent), the financial markets (where a Financial Activities Tax will be introduced), and the industrial sector (where a partnership framework for industrial relations will be introduced). (more…)

A checklist of 4 key items will determine the nature of this new Government and its likely fate.    They are:

1   Who will carry the burden of the big spending cuts which the Tories have repeatedly declared their intention to impose in this next year and which the LibDems have now succumbed to?   If it is low-paid public sector workers – nurses, teachers, porters, dinner ladies, low-level administrative staff, local government workers – rather than the top echelons especially the bankers with their bonus millions, there will be serious social unrest – maybe not on the Greek scale, but certainly enough to prevent a Tory election victory any time in the next year. (more…)

There are 3 issues which should dominate tonight’s debate on the economy, but probably won’t:

1. Fundamental banking reform is now urgently needed if another, and possibly lethal, financial-economic collapse is to avoided.   We now know that the meltdown in 2008-9 was caused, not just by greed and recklessness, but by deliberate fraud, as the current Goldman Sachs prosecution in the US now shows.   But it wasn’t just the US – fraud is now being revealed in Ireland, Iceland, Switzerland, as well as in the UK.   The charge in the US is that a Goldman Vice-President created a dud financial instrumentspacked by valueless sub-prime mortgages at the instruction of a hedge fund client Paulson, sold it to investors knowing it was worthless, and then allowed their own hedge fund client to move in for a killing.   Goldham says the buyers were sophisticated mortgage investors – it’s more like a used car salesmanflogging a broken car he’s got from some up-market barrow boy to some driver who can’t access the log-book.   The moral of all this is that the banks need breaking up, the hedge funds very tightly regulated, and the more arcane and exotic derivatives prohibited.
2. Then there’s inequality – the rich/poor divide which has now reached the proportions of Victorian society a century ago.   The Tories would of course let this explode further, not only weakening Sure Start and the 3,500 children centres in deprived areas and cutting the invaluable working family tax credits, but cutting inheritance tax on the rich and ending the very modest 50% rate on the bankers and top executives.   We need a much more progressive income tax, much more vigorous action against those who cheat by tax avoidance/evasion, and an end to the outrageious non dom privileges for the ultra-rich.
3. The other really big issue is funding for businesses, jobs and homes.   The Tory priority for major premature public spending cuts will stife the precarious recovery at birth and could well precipitate the deadly double-dip recession that most economists fear.   Banks contiue to starve deserving businesses of credit.   Families concentrate on paying off debt rather than spending, which is understandable but robs the economy of momentum.   The major support for the recovery – 0.6% over the last 6 months – has been public spending, and any government cuts it at the country’s peril.

Whilst the Great Leader beauty debate continues to divert attention away from policy to every nuance and twist of personality politics, we shouldn’t allow that to overshadow far more fundamental reforms now at last beginning to address the global financial meltdown.   The IMF, no less, the inner sanctum of capitalist orthodoxy, is now proposing not one, but two, taxes on the banks.   One is an annual insurance fee against the risk of future bail-outs, and the other is a financial activities tax, driven by the universal outrage at the vastness of bank profits and colossal bonuses in the last two years when the rest of the economy is in deep recession. (more…)

One month to go, and the main issues so far seem to be safeguarding the economic recovery, immigration, and whether exempting half or more of employees from the 1% rise in insurance contributions at a cost of some £7bn is a good idea or not.   Yet that is not what the real arguments should be about.

Neither party is addressing the central issue of whether deep cuts (‘deeper than under Margaret Thatcher’) are needed at all to bring down the deficit if the rich (the top 10% and particularly the top 3%) are made to pay their way through increased taxes, reduced allowances and tax breaks, and the stopping of artificial tax avoidance, and if economic growth picks up anywhere near as fast as the Government is predicting.

Neither party is offering policies to tackle directly the economic disaster of 2.5 million jobless through a public sector-led job creation programme rather than a range of minor tax incentives to business which will leave unemployment far higher for far longer.

Neither party will face up to the banks, whose bail-out and the recession it generated has increased Britain’s national debt to over £73obn so far and who have used the money overwhelmingly to stuff their own balances, by forcing them instead to lend to businesses and homeowners starved of credit and thus to cut unemployment and strengthen the recovery.

Neither party is mentioning the biggest social indictment in Britain today, – the collapse of house-building to its lowest level since 1922 and the failure over the last decade to build more than 300 Council houses a year (half a house per constituency) when there are 1.8 million households on Council waiting lists.

Neither party is offering any prospect of serious banking reform which will prevent a recurrence of the worst financial crisis for 80 years, namely the splitting off of casino investment banks from retail banks, the prohibition or tight regulation of toxic derivatives, and the downsizing of gargantuan banks that are ‘too big to fail’.

Neither party is offering any policies to eliminate unacceptable inequality which is now greater than at any time in the last century and which now leaves top executives with incomes 100 times higher than the average worker, and will not even introduce a High Pay Commission to regulate the grotesque excesses at the top of the income scale.

If all the big issues are being sidestepped, what’s the point of an election?