Sarkozy or Hollande: France prepares to choose its future

As the French decide between two very different roads ahead, John Lichfield looks at the presidential candidates’ visions

Saturday 05 May 2012

http://www.independent.co.uk/news/world/europe/sarkozy-or-hollande-france-prepares-to-choose-its-future-7715652.html

If François Hollande fails to emerge this weekend as the first Socialist president of France since 1995, every French opinion pollster will surely be searching for a new career.

Final surveys by seven polling companies give the challenger between 52.5 per cent and 53.5 per cent of the vote before the second and final round of the French presidential election tomorrow.

President Nicolas Sarkozy has cut Mr Hollande’s lead in recent days to between five and seven points. He hopes that his unashamed siren songs to the far right, and a massive turn-out by his own camp, could yet save his presidency.

He told cheering supporters in Vendée in western France yesterday that the election was on a “razor’s edge”. Mr Sarkozy complained that he had been deluged with insults by the media and political establishment for daring to use the word “immigration”. This was, he said, a form of anti-French “racism and intolerance.”

Mr Hollande, 57, addressing an open-air meeting inToulouse, appealed to voters to give him a “massive” victory and a “clear” mandate to govern for the next five years. Pollsters said Mr Hollande’s victory might be narrower than his lead in the final surveys suggested but that the outcome was almost beyond doubt. Gaël Sliman of the BVA polling agency said: “With the exception of a completely unforeseen catastrophe… François Hollande is going to win the presidential election.”

In the final week of the campaign, Mr Sarkozy has narrowed the eight- to 10- point lead held by Mr Hollande. In the past three days, however, the President’s slender hopes of an electoral miracle suffered a double setback.

Mr Sarkozy, also 57, was widely judged – even within his own centre-right camp – to have “lost” a bad-tempered live television debate with Mr Hollande on Wednesday night. The next day, François Bayrou of the middle-of-the-road Mouvement Démocrate (MoDem) became the first centrist French leader in recent times to announce he would vote for a left-wing presidential candidate. The centrist leader – once spoken of a possible prime minister in a Sarkozy second term – said the President had trampled Gaullist, Republican and European values and could not accept such a “headlong pursuit” of the 17.9 per cent of electors who voted for Marine Le Pen’s far right on 22 April.

The President’s heated language was blamed yesterday for an ugly incident at his Toulon rally. Young Sarkozy supporters threw plastic bottles full of water at a the well-known TV presenter, Ruth Elkrief, and a colleague and accused them of being “collaborationists” and “sold out” to the Left. Mr Sarkozy later apologised.

Nicolas Sarkozy: If the President is re-elected it will be an aberration

France does not want another five years of Nicolas Sarkozy. If the President is re-elected tomorrow, it will be an aberration: a triumph of cynicism and scare-tactics over the ill-defined “normality” and “unity” offered by François Hollande.

A second term would be built, partly, on appeals to racial-religious faultlines. That has never happened in the modern history of French presidential politics (since 1965).

The attack by the centrist leader François Bayrou on Thursday – calling Sarkozy’s campaign “dangerous” – has angered some senior members of the President’s party. Others, including at least two former centre-right prime ministers, privately agree with Mr Bayrou. Even if Mr Sarkozy wins, they ask, what mandate would he have to unite a fragmented France in the next five years?

Nicolas Sarkozy began his campaign as a sober euro-realist, with Angela Merkel as his de facto running mate. France should be more like Germany, he said. It should work harder and pay higher VAT to cut the payroll taxes on employers.

He has ended up with the language, themes, and tactics of the far-right National Front. It is one thing to call for the creation of new “frontiers” to stop “French civilisation” being wiped out by Europe, by immigration and by globalisation. It is another thing to try to smear your opponent as the candidate of Islam.

Mr Sarkozy, amid other exaggerations, has repeated the falsehood that 700 French mosques have appealed for a pro-Hollande vote.

By mid-February, it was clear that the main issue in the campaign would be Mr Sarkozy. A visceral dislike of the president had gripped many beyond the normal boundaries of right-left politics. Why? An easy explanation would be the economic crisis. Mr Sarkozy promised that he would make France work harder and live better. In the last five years, unemployment has soared to over 10 per cent and purchasing power has fallen.

Another easy explanation would be Mr Sarkozy’s attempts at reform. His belated pension reform in 2010-11 was courageous. Otherwise, he has tried relatively little.

In truth, Mr Sarkozy’s unpopularity began in his first 18 months in office: a blur of yachts, Rolex watches, divorce, a trophy marriage,nepotism towards his son and insults exchanged with the public. If France had boomed, all might have been forgiven. It did not.

The President and his advisers concluded in February that a plunge to the far right was his only hope of victory. The plan was to shift back towards Mr Bayrou’s consensual centre after topping the poll in the first round on 22 April. But Mr Hollande just topped the poll and Marine Le Pen’s far right scored a record 17.9 per cent. He plunged further to the right after the FN votes. A one-term Sarkozy will, in a way, be a political tragedy. His qualities have led him beyond mould-breaking and into villainy.

François Hollande: After years of frenzy, France wants a ‘Monsieur Normal’

Three months ago, The Independent asked François Hollande why anyone would want to be president of France in the next five, difficult and possibly dangerous years.

Did this approachable, thoughtful but elusive man have a secret desire to become the most detested person in France? Mr Hollande replied: “I ran because I felt that, at this time, and perhaps at no other time, I have the combination of qualities which … will allow [France] to succeed: stability, serenity, reflection, restraint.”

The Socialist candidate was then already the frontrunner to be the next French president. This weekend, according to the opinion polls, he stands on the verge of victory.

As often with Mr Hollande, his reply can be read in different ways. What he really meant, perhaps, was that France was exhausted by the glamour and frenzy of the Sarkozy years. It wanted – as it might never want at any other time – an understated sort of president, a “Monsieur Normal”. After 30 years in frontline French politics, always admired, often underestimated, never given a top job, this was going to be his year.

You might also interpret his words as meaning: “Sarkozy is so disliked that all it needs for the Left to win is an inoffensive man who can drift into the Elysée Palace on the anti-Sarko tide.” Or you could take Mr Hollande at his quietly messianic word. To get out of the mess we are in, France, and Europe, need a man like me: patient, pragmatic, likeable but stubborn.

Mr Hollande, 57, is not the French Tony Blair. He does not claim to have reinvented left-wing politics for the 21st century. If anything, he is a Gallic version of the quietly reformist Labour prime minister that Britain never had – John Smith, whose death in 1994 opened the door to Blairism.

Mr Hollande has fought a nerveless, understated campaign. His core economic policy – “oui” to fiscal discipline “with fairness”, but with Keynesian infrastructure programmes at EU level to kick-start growth – was mocked three months ago. It is now the conventional wisdom from the European Central Bank to Wall Street. It remains to be seen whether the German Chancellor, Angela Merkel, will also concur.

The problems begin with the fiscal discipline element. The Socialist candidate has pledged to reduce the French state deficit to zero by 2017. He has said almost nothing about cuts in state spending. Mr Hollande, if elected, will have no real mandate for paring back the most generous welfare state in the world. He asks big questions – on unemployment and growth – but offers mostly small answers.

“Stability, serenity, reflection and restraint” are excellent qualities in a president but the times also call for courage and for creative thinking. The stakes are high. A new “centre-right” under Mr Sarkozy has failed. If a newish centre-left under Mr Hollande also fails, a boulevard will open to the plausible ultra-nationalism and cosmetically altered xenophobia of Marine Le Pen.

It was British banks, not British borrowers, that crashed our economy

• Friday, 4 May 2012 at 12:28 pm

The Defence Secretary Philip Hammond tells The Daily Telegraph today that ordinary people are blaming the banks for Britain’s economic bust when they should be blaming themselves.

“People say to me, ‘it was the banks’. I say, ‘hang on, the banks had to lend to someone’. People feel in a sense that someone else is responsible for the decisions they made. Of course, if banks don’t offer credit, people can’t take it. [But] there were two consenting adults in all these transactions, a borrower and a lender, and they may both have made wrong calls. Some people are unwilling to accept responsibility for the consequences of their own choices.”

Mr Hammond, who was part of David Cameron’s economic team in opposition, also suggested that it is the public’s desire to pay down huge debt levels now that is holding back the economy.

I’m skeptical about this for two reasons. First, and most important, the UK’s banking crisis was not a consequence of bad loans made to British households or companies. Second, it is far from clear that UK households were disastrously overly indebted in the years preceding the crisis.

Let’s deal with the banks first.

Ben Broadbent, the former Goldman Sachs economist who now sits as an external member of the Bank of England’s Monetary Policy Committee, last month gave a speech in which he showed our largest banks got into trouble in 2008 because of their bad loans made to the rest of the world, not their UK lending.

This chart demonstrates the point:

75% of the banks’ losses were from their non-UK lending books. As Broadbent points out, the major UK banks were hit 15 times harder by losses on non-UK mortgages than duff UK home loans.

There’s no question that UK banks became perilously overextended in the years after the turn of the millennium. Their total assets reached 350% of our annual GDP, almost doubling over a decade. But let’s be clear: this massive expansion of lending was not a consequence of loans to British households. Much of it was lending to other banks (both here in the UK and abroad) as their casino trading arms engaged in an orgy of socially useless speculation.

This chart, again from Mr Broadbent’s speech, shows that lending to the British non-financial sector remained pretty constant as a share of GDP over the decade, at around 80%:

So what can we draw from this? Britain’s largest banks went bust, helping to plunge the UK into the deepest slump since the 1930s, because they overextended themselves. But bad loans made to British households were a minor part of their total losses. The banks did not go bust because ordinary Britons borrowed too much.

Now let’s address the idea that – even if it didn’t cause the banking bust – British households borrowed too much in the boom years and that these debt levels are now weighing down on our economy, stifling recovery.

This has become conventional wisdom. Proponents point to graphs such as these (courtesy of Fact Check), showing that debt as a share of household disposable income in the UK rose to 170%, much higher than in other advanced countries:

Case closed? Not necessarily. Ben Broadbent has some very interesting things to say on this area in his speech too.

He pointed out that the majority of the extra debt incurred by British households was mortgage debt, as this shows:

Secured lending here is mainly mortgage borrowing.

And when one considers mortgage debt one also needs to consider the other side of the balance sheet: housing values, which exploded over the decade.

When one factors in rising house values, the net financial position of UK households during the last decade looks much less alarming:

As Broadbent points out, UK households’ net financial wealth was no lower in 2008 than it was in 1992.

Ah, but didn’t we have a massive housing bubble? Hasn’t much of the value of those “assets” been wiped out, proving that we did borrow too much after all? The answer to that is that we don’t know yet.

House prices have fallen from the pre-crisis peak by around 15%. But that is nothing like the collapse witnessed in bust housing markets such as the US and Spain, where values are down by something close to 50%:

House prices may be on their way down again here in the UK, and this will cause further problems for the banks, but this is by no means certain. In the past I’ve argued that the only way is down for the market, with prices still well above historic income to value ratios. But now I’m beginning to think that there’s such a shortage of housing supply in this country that values could well remain elevated, despite the weak economy.

Reasonable people can take different views on this subject.

It is also reasonable to point out that unsecured lending – credit card debt – rose in the years running up to the recession and that this is likely to be weighing on consumer spending now as people seek to pay off debt:

But be wary of those who confidently assert that our present economy malaise is a consequence of high household debt levels. And certainly don’t accept for a moment that British banks fell over in 2008 because they lent too much to us.

Cameron didn’t learn from Lamont on recession – early sharp cuts hurt

The real mistake was not getting the forecast wrong, but getting the economics wrong. Look back to the last recession.

guardian.co.uk, Friday 4 May 2012 10.00 BST

‘Norman Lamont said that he would not raise taxes or cut spending right away, thus allowing the recovery to take hold.’ Photograph: Martin Argles for the Guardian

The UK economy fell back into recession in the first quarter. But talk of a double-dip recession misses the bigger picture – we’ve now had 18 months of essentially no growth, and more than four years after the start of the recession, the economy is well over 4% below its pre-crisis peak. The latest forecast from the National Institute of Economic and Social Research isn’t for another deep recession, but for no growth this year, and that we won’t get back to pre-recession levels until some time in 2014 – six full years on. Already, this is this is the slowest recovery on record, comparing poorly with what happened after the Great Depression.

The official forecast at the time of the June 2010 “emergency budget” was that we would now be growing at over 2.5%, with unemployment falling sharply. This was hopelessly optimistic. But getting the forecast wrong was not the government’s main mistake. Everyone gets forecasts wrong – we were too optimistic as well, albeit not by nearly as much. The point is that the government got the economics wrong. What the last 18 months has given us is as clear a test as you could ask for (in the messy real world of economics) of two competing worldviews.

The first was that, as the chancellor said then, “reducing the deficit is a necessary precondition to growth”: cutting the deficit quickly would restore consumer and business confidence, and allow lower interest rates, which would lead to growth. In other words, you can’t spend and borrow your way out of a recession.

The second, advocated by the likes of Martin Wolf and Paul Krugman, was the view that this was precisely wrong: the government deficit was the counterpart of excess private sector saving, as households tried to reduce their debts and businesses – knowing that the demand wasn’t there – held back from investment. Cutting the deficit too sharply would just make things worse. In other words, you can’t cut, tax and save your way out of a recession. As for low interest rates, they too were the result of a depressed private sector, trying to save too much and invest too little.

What have we seen since then? Not just low growth, but also, as a direct result, continued very high deficits. Indeed, in the past year, the deficit on current spending hardly changed, with almost all the reduction in the total deficit coming from cuts in investment spending. Hardly surprising therefore that it was the construction industry that was the biggest drag on growth in the latest figures.

But despite this continued high borrowing, long-term interest rates have remained very low, the result, as even a quick look at the data reveals, of a lack of investment opportunities far more than “confidence”. The markets have indeed spoken. As Wolf says, “they are saying: borrow and spend”.

What should the government do? There are plenty of alternatives, none of which involve abandoning the necessary medium-term goal of fiscal sustainability. Boosting investment spending now would boost growth, create jobs and would have no direct effect on the government’s primary fiscal target. Alternatively, or additionally, a “balanced budget expansion”, as advocated by the Social Market Foundation and the IMF, could achieve the same objectives. Either way, with long-term government borrowing as cheap as in living memory, with unemployed workers and plenty of spare capacity and with the UK suffering from both creaking infrastructure and a chronic lack of housing supply, not investing now is simply to ignore the most basic principles of economics.

The prime minister, of course, is not listening: his response to the GDP figures was to reiterate that “the solution can’t be more debt”. But perhaps he should look back to the last recession. In the then-chancellor Norman Lamont’s recovery budget of 1993, he famously, and controversially, raised taxes. But not immediately. He explicitly said that he would not raise taxes or cut spending right away, thus “allowing the recovery to take hold”. In fact, the government didn’t start cutting the structural deficit at all until 1994-95; by which time the economy had been growing for 18 months, by then at a very healthy pace of over 3%.

So Lamont grasped the basic economics, and got the timing right. I should know: I was his (civil servant) speechwriter. So should David Cameron: he was his (political) special adviser. Sadly, he appears to have learned the wrong lessons.

Guardian Letter 03/05/2012

The banks are multinational and too big to fail. Mrs Thatcher saw to that. Increasing uk interest rates before 2007 would have had no effect. It would have caused a uk recession but the banking crisis would have still happened here. Uk banks would simply borrow somewhere interest rates are low (not parking reserves in Bank of England) and atill lent into dodgy high yield markets such as US sub prime. The madness with derivatives would have still happened. In 2008 net borrowing was 2.6% of GDP, net debt was 36% of GDP and structural deficit was 2.6% of GDP. The next year net borrowing and trebbled (6.7% and then 11.1% last year) as had the structural deficit (rising to 6.3% and then 8.8%). Net debt rose from 36% of GDP in 2008 to 43% and then to 52%. These changes have bugger all to do with labour spending and everything to do with the costs of the worldwide bank induced great recession. In 2008 there was a Worldwide financial crash. The cause is the fundamental basis under which the money supply has operated since the 1980s. Basically the only way we currently allow the money supply to widen (allowing growth) is for private banks to create new money as debt. This is how 97% of all new money (£2.6 trillion of it since 1997) has been created. This has nothing to do with labour (it has to with Mrs Thatcher and Mr Reagan if were looking for blame) and is how all G20 countries now work their economies. There are very good reasons we should return to the system we had before the 80s as the cause of our problems is the debt and inequality that allowing the banks to create debt causes. What should happen is massive QE to buy back government debt and then the Bank should destroy the debts. Fortunately this process is fairly advanced now with the wholly publicly owned Asset Purchase Facility owning a third of all outstanding government debt the OECD think this will rise to 40%. In our current liquidity trap with the money supply contracting due to the banks, private sector and households all deleveraging there is no danger in doing this and it will be done. However, To prevent inflation this needs to be matched with a corresponding decrease in bank leverage levels – making the banks safer. The result is a money supply, not based on debt that ensures less recessions and financial crashes. This is how the money supply operated for thirty years after WW 2 – a period of high growth, no financial crashes and only two very mild recessions. Also much more equality and very high growth in real terms earnings and living standards. The Tories get over 50% of their funding from bankers. They have done nothing to reform the banks and have removed the bankers bonus tax. What we need is public outcry to force the seperation of retail from casno banks now – not in 2019. We need a statutorylimit on bankers earnings at 25 times minimum wage. We need a financial transaction tax. We need a banning of tax havens such as the Crown protectorates. We need a full ban on over the counter derivatives. Bankers and media magnates should be banned from political patronage. Guilty bankers should be thrown in jail.

Britain’s press are fighting a class war, defending the elite they belong to

It’s not just Rupert Murdoch and his crooks. All the corporate barons who corrupted our political system must be unmasked

George Monbiot

guardian.co.uk, Monday 12 December 2011 20.30 GMT

Illustration by Daniel Pudles

Have we ever been so badly served by the press? We face multiple crises – economic, environmental, democratic – but most newspapers represent them neither clearly nor fairly. The industry that should reveal and expose instead tries to contain and baffle, to foil questions and shut down dissent.

The men who own the corporate press are fighting a class war, seeking, even now, to defend the 1% to which they belong against its challengers. But because they control much of the conversation, we seldom see it in these terms. Our press re-frames major issues so effectively, it often recruits its readers to mobilise against their own interests.

Crime and antisocial behaviour are represented as the predations of the poor on each other, or on the middle and upper classes. “Blonde millionaire’s wife raped in luxury home by asylum-seeking benefits cheat” is the transcendental form of a thousand tabloid headlines, alongside “Pippa Middleton’s bottom gets £1m makeover from top designer”. Though benefit fraud deprives the exchequer of £1.1bn a year while tax avoidance and evasion deprive it of between £40bn and £120bn, the tabloids relentlessly pursue the petty crooks, while leaving the capos alone.

On Monday the rightwing papers applauded government plans to cut benefits for people in social housing who have more rooms than they need. The “growing scandal of under-occupation”, the Mail observed, contributes to the housing crisis, depriving larger families of the homes they need. The Express told us that “it is only right that decisions such as this must be taken”. But what about the private sector, where there’s a much higher rate of under-occupation, especially among the wealthy? When this column suggested that these under-used homes should be taxed, the corporate press went berserk. Only the poorest should carry the cost of resolving our housing crisis.

Not a day passes in which rightwing papers fail to call for stiffer regulation of protesters, problem families, petty criminals or antisocial teenagers. And every day they call for laxer regulation of business: cutting the “red tape” that prevents companies and banks from using the planet as their dustbin, killing workers or tanking the economy.

The newspapers’ own criminal behaviour, more of which is being exposed before the Leveson inquiry as I write, looks to me like the almost inevitable result of a culture that appears to believe that the law, like taxes and regulation, is for little people. While portraying the underclass as a threat to “our” way of life, the corporate papers ask us to celebrate the lives of the economic elite. Saturday’s Telegraph devoted most of a page to a puff piece flogging the charming jumpers being sold by a Santa Sebag-Montefiore (nee Palmer-Tomkinson) from her “white stucco Kensington House”. She works – if that’s the right word for it – with someone she met at Klosters, where she and her family “ski with the Prince of Wales and Princes William and Harry”. So far they have managed to sell 40 of these jumpers, which somehow justifies an enormous photo and 1,400 breathless words.

I mention this sycophantic drivel not because it is exceptional but because it is typical. A friend who used to work as a freelance photographer for the Telegraph stopped when he discovered that most of those he was sent to photograph were the well-heeled friends and relatives of people on the paper. Journalism is embedded in the world it should be challenging and confronting.

These papers recognise the existence of an oppressive elite, but they frame it purely in political terms. The political elite becomes oppressive when it tries to curb the powers and freedoms of the economic elite. Take this revealing conjunction in the Daily Mail’s leading article on Saturday: “David Cameron yesterday finally said no to the European elite – vetoing plans for a treaty that included an EU-wide tax on financial transactions.” In other words, Cameron said yes to the British elite. But it cannot be explained in those terms without exposing where power really lies, which is the antithesis of what the rightwing papers seek to achieve.

As the theologian Walter Wink shows, challenging a dominant system requires a three-part process: naming the powers, unmasking the powers, engaging the powers. Their white noise of distraction and obfuscation is the means by which the newspapers prevent this process from beginning. They mislead us about the sources of our oppression, misrepresent our democratic choices, demonise those who try to challenge the 1%.

Compare the Daily Mail’s treatment of the Occupy London protesters, confronting the banks, to its coverage of the camp set up by people of the charming village of Meriden, confronting some gypsies. “Desecration, defecation and class A drugs” was the headline on the Mail’s feature article about Occupy London. Published on the day on which the City of London began its attempts to evict the protesters, it deployed every conceivable means of vilifying them and justifying their expulsion.

The Mail’s Meriden story, on the other hand, was headlined: “Adding insult to injury: now villagers who have protested against an illegal travellers’ camp for 586 days are told: YOU are facing eviction.” The story emphasised the villagers’ calm fortitude and the justice of their cause. Presumably they don’t defecate either.

 

Press barons have been waging this class war for almost a century, and it has hobbled progressive politics throughout that time. But the closed circle of embedded journalism is now so tight that it has almost created an alternative reality.

Ten days ago, for example, the Spectator ran a cover story that could not have been crazier had it been headlined: “Yes, Father Christmas does exist, but he’s been kidnapped by lizards”. A serial promoter of mumbo-jumbo called Nils-Axel Morner, who claims he has paranormal dowsing abilities and that an iron-age cemetery in Sweden is in fact the Hong Kong of the ancient Greeks, was given 1,800 words to show that sea levels are not rising. Citing “evidence” that was anecdotal, irrelevant or simply wrong, explaining that it was all a massive conspiracy, Morner ignored or dismissed a vast wealth of solid data from satellites and tide gauges.

The Spectator kindly gave me space to write a response last week, but it strikes me that a story like this could not have been published five years ago. It first required a long process of normalisation, in which evident falsehoods are repeated until they are widely believed to be true. The climate talks in Durban were slotted by the papers into the same narrative, in which climate scientists and the BBC conspire to shut down the economy and send us back to the stone age. (And they have the blazing cheek to call us scaremongers.)

It’s not just Murdoch and his network of sleazy crooks: our political system has been corrupted by the entire corporate media. Defending ourselves from the economic elite means naming and unmasking the power of the press.

• A fully referenced version of this article can be found on George Monbiot’s website

Britain is ruled by the banks, for the banks

Is David Cameron’s kid-glove treatment of the City remotely justified, when it neither pays its way nor lends effectively?

Aditya Chakrabortty

guardian.co.uk, Monday 12 December 2011 20.00 GMT

The City, London . . . Britain’s finance sector contributes less to the country than manufacturing. Photograph: Andy Rain/EPA

The national interest. It’s a phrase we’ve heard a lot recently. David Cameron promised to defend it before flying off last week to Brussels. Eurosceptic backbenchers urged him to fight for it. And when the summit turned into a trial separation, and the prime minister walked out at 4am, the rightwing newspapers took up the refrain: he was fighting for Britain. In the eye-burningly early hours of Friday morning, exhausted and at a loss to explain a row he plainly hadn’t expected, Cameron tried again: “I had to pursue very doggedly what was in the British national interest.”

As political justifications go, the national interest is an oddly ceremonial one. Like the dusty liqueur uncapped for a family gathering, MPs bring it out only for the big occasions. And when they do, what they mean is: forget all the usual fluff about ethics and ideas; this is important.

You heard the phrase last May, as the Lib Dems explained why they were forming a coalition with the Tories. More seriously, Blair used it as Britain invaded Iraq.

But here Cameron wasn’t talking about foreign policy; nor about who governs the country. The national interest he saw as threatened by Europe is concentrated in a few expensive parts of London, in an industry that would surely come bottom in any occupational popularity contest (yes, lower even than journalists): investment banking.

In its haste to depict events as Little Britain v Big Europe, the Tory press hasn’t dwelt on the inconvenient details of last week’s fight. But it was only after the prime minister failed to secure protection for the City from new financial regulation mooted by the EU that he told Nicolas Sarkozy to get on his vélo.

On one issue in particular, Cameron had a good case: Britain wants banks to put more money aside for a rainy day than the EU is considering. Elsewhere, he just looked unreasonable – what exactly is wrong with having international banking supervision? One reason for the euro crisis was that its members have 17 national bank watchdogs and barely anyone looking across borders.

Step back from what even EU officials were calling “arcane” details, though, and the big principle is this: the prime minister effectively stuck relations with the rest of Europe in the deep freeze in order to protect one sector of the economy.

In my recollection, no British minister in recent times has termed one industry as being of “national interest”. “Vital” or “key”? Why, such words are the very currency of the MP’s address to a trade association. But on the big phrase, I asked the Guardian’s librarians to check the archives from 1997 onwards. They came back empty-handed.

Cameron is merely expressing more openly something Labour frontbenchers also believe: that the City is pretty much the last engine functioning in Britain’s misfiring economy. Indeed, one of the Labour lines of attack against Cameron this weekend has been that he has left the City more open to regulation.

A few weeks ago, the shadow chancellor Ed Balls warned against any further taxes on financial trading within Europe. However, he said, he would urge a “Robin Hood tax with the widest international agreement”. In other words, Balls will give his fullest support to something that has no chance of happening.

This is the same kind of political subservience towards the City, observed by the Financial Services Authority (FSA) in its report into the collapse of RBS. According to the watchdog, a major reason why Fred Goodwin wasn’t checked as he drove RBS off a cliff was because of “a sustained political emphasis on the need for the FSA to be ‘light touch’ in its approach and mindful of London’s competitive position”. Had regulatorsbeen harder on the bankers, “it is almost certain that their proposals would have been met by extensive complaints that the FSA was pursuing a heavy-handed, gold-plating approach which would harm London’s competitiveness”.

As all British taxpayers know by now, securing the “competitiveness” of RBS has wound up costing us around £45bn.

So what is it that justifies the kid-glove treatment of the finance sector? Switch on the news and you normally hear some minister or lobbyist (come on down, Angela Knight of the British Bankers’ Association) talking about the vital contribution banking makes to employment. Our tax revenue. Or the role banks ideally play in directing money to needy businesses.

These claims are repeated so often that they rarely get even the briefest patdown from interviewers, let alone backbench MPs or economists. Yet they are largely bogus, as explained in a new book called After the Great Complacence, produced by academics at Manchester University’s Centre for Research on Socio-Cultural Change (Cresc). Indeed, on nearly any important measure, finance actually contributes less to Britain than manufacturing.

Take jobs. The finance sector employs 1m people in Britain. Chuck in the lawyers, the PRs and the smaller fry that swim in its wake and you are up to a grand total of 1.5m. And most of these people are not the investment bankers for whom Cameron went to war in Brussels. At the big British banks such as RBS and HBOS, 80% of the staff work in the retail business. Even if Sarkozy were to shroud Canary Wharf in a giant tricolore, those staff would still be needed to staff the branches and man the call centres. Even in its current state of emaciation, manufacturing employs 2m people.

What about taxes? Lobbyists like to point out that banks are usually the biggest payers of corporation tax, but usually omit to mention that corporation tax isn’t that big a money-spinner. For their part, even leftwingers will usually assume that the bankers effectively paid for the tax credits, hospitals and schools we enjoyed under Labour.

It’s not true. The Cresc team totted up the taxes paid by the finance sector between 2002 and 2008, the six years in which the City was having an almighty boom: at £193bn, it’s still only getting on for half the £378bn paid by manufacturing. It would be more accurate to say that the widget-makers of the Midlands paid for Tony Blair’s welfarism. But that would be a much less picturesque description.

Even in the best of times, the finance sector hasn’t paid anything like as much to the state as the state has had to pay for them since the great crash. According to the IMF, British taxpayers have shelled out £289bn in “direct upfront financing” to prop up the banks since 2008. Add in the various government loans and underwriting, and taxpayers are on the hook for £1.19tn. Seen that way the City looks less like a goose that lays golden eggs, and more like an unruly pigeon that leaves one hell of a mess for others to clear up.

Ah, but what about lending? After all, this is why we have banks in the first place: to channel money to productive industries. The Cresc team looked at Bank of England figures on bank and building society loans and found that at the height of the bubble in 2007, around 40% or more of all bank and building society lending was on residential or commercial property. Another 25% of all bank lending went to financial intermediaries. In other words, about two-thirds of all bank lending in 2007 went to pumping up the bubble.

This doesn’t look like a hard-working part of an economy humming along: it’s nothing less than epic capitalist onanism.

If the statistics don’t support the arguments for the City’s pre-eminence, the public don’t either. In 1983, 90% of the public agreed that banks in Britain were well run, according to the British Social Attitudes survey. By 2009, that had plunged to 19%.

In other words, both the evidence and the voters are against investment bankers. So why do the politicians cling on to them?

Part of the answer is financial. Bankers used the boom to buy themselves influence – so that, according to the Bureau of Investigative Journalism, the City now provides half of all Tory party funds. That is up from just 25% only five years ago.

Another part must be cultural. Running this government are two sons of bankers. Cameron’s father was a stockbroker, Clegg’s is still chairman of United Trust Bank (and famously helped his son get some work experience). For its part, Labour spent so long outsourcing all economic thinking to Gordon Brown and Ed Balls that it has long lost the ability to argue against the orthodoxy of giving the City what it wants.

In a poorer country, the cosiness of relations between bankers and politicians would be scrutinised by an official from the World Bank and disdainfully pronounced as pure cronyism. In Britain, we need to come up with a new word for this type of dysfunctional capitalism – where banks neither lend nor pay their way in taxes, yet retain a stranglehold on policy-making. We could try bankocracy: ruled by the banks, for the banks.

What are the results of bankocracy? It means that the main figures arguing for a Robin Hood tax are the Archbishop of Canterbury Rowan Williams and Bill Nighy. It means that opposition to the rule of banks isn’t found in Westminster, but in tents outside St Paul’s or among a few grizzled academics and NGO-hands – with no political vehicle to carry them. Meanwhile, the politicians declare that the national interest of Britain can be defined by what suits one square mile of it.

Osborne set to borrow billions more than Darling was projected to

We know from this morning’s unemployment figures that the government’s austerity programme is hurting – and it’s hurting the young and unemployed the most. But is it working?

David Cameron and Nick Clegg asserted in the Coalition Agreement (pdf) that tackling public sector debt was the government’s ‘most urgent task’. It has been revealed this morning that across the finance industry, the verdict is failure.

The Treasury has collated 14 independent forecasters’ predictions (pdf, p.18) for net government borrowing over the next four years.

Their collected view is that chancellor George Osborne will borrow billions more than the Office of Budget Responsibility predicted he would in June 2010 (pdf, Table C7, p.90) – or that the OBR said Alistair Darling (pdf, Table 4.5, p.38) would have if Labour had been re-elected.

Here are the raw figures:

At worst, the government’s swinging cuts have stopped the recovery in its tracks, leading to borrowing far above and beyond what they predicted their supposedly profligate rivals intended. At best, with the European and global economy facing such turmoil, the facts have significantly changed since the general election of May 2010.

The current strategy has failed. It’s time for serious change.

http://www.leftfootforward.org/2011/11/george-osborne-set-to-borrow-billions-more-than-alistair-darling-was-projected-to/

NHS cancer figures contradict David Cameron and Andrew Lansley’s claims

The prime minister and health secretary have criticised the NHS on cancer, but new figures suggest the service is a world leader

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Denis Campbell, health correspondent
guardian.co.uk, Monday 7 November 2011 18.48 GMT
Article history

Andrew Lansley and David Cameron, who have used criticisms of the NHS record on cancer to justify a planned shakeup. Photograph: Dan Kitwood/PA
David Cameron and Andrew Lansley’s repeated criticisms of the NHS’s record on cancer have been contradicted by new research that shows the health service to be an international leader in tackling the disease.

The findings challenge the government’s claims that NHS failings on cancer contribute to 5,000-10,000 unnecessary cancer deaths a year, which ministers have used as a key reason for pushing through their radical shakeup of the service.

In fact, the NHS in England and Wales has helped achieve the biggest drop in cancer deaths and displayed the most efficient use of resources among 10 leading countries worldwide, according to the study published in the British Journal of Cancer.

“These results challenge the feeble justification of the government’s changes, which appear to be based upon overhyped media representation, rather than hard comparable evidence. This paper should be a real boost to cancer patients and their families because the NHS’s performance on cancer is much better than the media presents. It challenges the government’s assertion that the NHS is inefficient and ineffective at treating cancer – an argument for reforming the NHS,” said Prof Colin Pritchard, a health academic at Bournemouth University.

He co-wrote the research with Dr Tamas Hickish, a consultant medical oncologist at Poole and Royal Bournemouth and Christchurch hospitals in Dorset.

The research shows that ministers have misrepresented the NHS’s record on cancer in order to gain support for their unpopular shakeup, said Pritchard.

The prime minister and the health secretary have said that both survival and death rates from the disease in Britain are low by international standards. Cameron, for example, claimed during last year’s general election campaign that Britain had a higher rate of cancer deaths than Bulgaria.

The authors studied cancer mortality and the amount of GDP spent on healthcare between 1979 and 2006 in England and Wales and nine other countries, including Germany, the US, Spain, Japan and France.

While cancer deaths fell everywhere, England and Wales saw the biggest drop in mortality among males aged 15-74 – down 31%. While six countries saw falls of at least 20%, England and Wales – which in 1979-81 had the third highest rate with 4,156 deaths per million men – improved the most, achieving the fifth lowest rate among the 10 countries by 2004-06 with 2,869 deaths per million. Among men aged 55-64 and 65-74, who are more likely to get cancer, mortality dropped by 35% and 28%.

While mortality among women the same age declined by less, at 19%, that was the third biggest improvement after Japan (23%) and Germany (20%).

And the NHS was the most efficient of the 10 countries at reducing cancer mortality ratios once the proportions of GDP spent on healthcare were compared, the study found. While England and Wales spent less on health than most others, they achieved the biggest overall annual fall in cancer mortality over the 27-year period, of 900 deaths per million. Once average GDP spending on healthcare was compared, the NHS saw the biggest fall in male and female cancer deaths of an extra 119 lives a year per 1% of GDP spent, ahead of the Netherlands (74) and almost double that in Germany (68), France (67) and Japan (60).

“That shows how good England and Wales are on cancer care, relative to spend. We do significantly more with proportionately less. It means that 34,484 people are alive today that wouldn’t have been if things had not improved since 1980,” said Pritchard.

Two authoritative studies have concluded that cancer survival rates in the UK have lagged behind those in comparable major developed countries, though experts dispute which indicators give the most accurate picture of Britain’s cancer performance. For example, Prof John Appleby, chief economist at the King’s Fund health thinktank, published research in the British Medical Journal earlier this year which disputed the portrayal of Britain as “the sick man of Europe” and argued that cancer survival rates had been improving, significantly in the case of breast cancer.

Duleep Allirajah, policy manager at Macmillan Cancer Support, said: “In the past 10 years cancer services in the UK have improved dramatically. Waiting times have decreased and services have been modernised.” But, with cancer survival improving, the NHS now has to address new challenges, notably improving care for patients who have undergone treatment.

“Far too many people in the UK still experience sometimes serious problems related to their cancer treatment. For many these can persist up to 10 years after treatment. The focus now must be for the government and the NHS to address the issues of aftercare and making sure cancer is treated as a long term condition,” said Allirajah.

Pritchard said: “David Cameron and Andrew Lansley are happier with NHS ‘bad news’ stories rather than, as our research shows, that we should celebrate the NHS which, in monetary terms, is vastly superior to the private healthcare system of the USA.

“Of course we should always be looking to improve. But the only way to judge the NHS is to compare it with other countries, which shows that we are still getting the NHS on the comparative cheap.”

The Department of Health declined to respond directly to Pritchard and Hickish’s findings. “There is a difference between achieving efficiency and the results patients receive. While it is good that NHS cancer treatment is relatively efficient, we know that the results patients actually get lag behind many other countries,” said a spokesman.

“Our cancer strategy is clear – we aim to save 5,000 lives extra every year by 2015 which will bring us up to the level achieved in many other comparable countries. We owe it to patients to deliver standards which are up there with the best in the world,” he added.

http://www.guardian.co.uk/society/2011/nov/07/nhs-cancer-figures-cameron-lansley

George Osborne – Benefit Cheat

If there is one thing that George Osborne wants you to think about him it is that he is a man to stay the course – a chancellor who sets out clear rules to guide the way forward, and then follows them to the letter. Except, it transpires, where those rules concern benefit payments. According to well-sourced reports, Osborne is plotting to bend strictures about uprating social security for inflation which he himself penned just a few months ago.

Traditionally, benefits had gone up each spring with the overall cost of living as measured by the retail price index. But in his first budget the chancellor signalled that they would henceforth rise in line with September’s consumer price index instead, which measures the cost of shopping more narrowly.

There was some spurious pretext about bringing the arrangement into line with the Bank of England’s inflation target, but he did not bother to conceal his real game. The CPI excludes costly housing and so tends to rise slower, thereby ratcheting down the benefit bill every year until – by the end of the parliament – £6bn will be saved every year. This is not small change – it is one third of the vast £18bn which the government is hacking off the annual welfare budget. Debating alternative inflation measures is very much a minority sport, but over time they turn out to have vast effects. That is true not merely for the exchequer but also for those on the receiving end. Benefits could be pegged to the price of baked beans or even the tumbling price of computers, but those who rely on them would still need to grapple with rising rents to keep a roof over their head. This was always a change that ignored that reality, and achieved savings by making the poor steadily poorer.

Now, however, Osborne seems to have concluded that this impoverishing process is taking place rather too steadily for his taste. Although September’s CPI rose by 0.4% less than the overall cost of living as captured by the old RPI, amid rising prices it nonetheless climbed at the relatively rapid rate of 5.2%. That should obviously trigger an automatic 5.2% rise in most benefits, but the chancellor is said to be bristling at the thought of claimants getting a rise that outstrips those for people in work. Regular pay is currently rising at a mere 1.8% a year, and hence the chancellor is scrambling round for some means to evade his responsibilities under his own new rules.

There is talk of an outright freeze, but this is mere kite-flying designed to soften up opinion for a somewhat less savage proposal that finally emerges. To deny poor families and still more poor pensioners any assistance in meeting rising fuel and food bills would be beyond the political pale. It would also almost certainly breach the law and trigger a judicial review. Beyond an obligation to do something, however, there is much wiggle room within the legislation. Whereas the value of income tax allowances have been protected through an automatic uprating process which parliament wrote into law by parliament back in the 1970s, MPs have shown less concern for benefit claimants than wage earners, and have mandated the work and pensions secretary merely to “have regard for prices” in setting benefit rates.

There are slightly tighter duties in respect of the national insurance benefits that accrue to those who have paid their stamp, including the state pension. Ministers have in any case signalled they want to protect the basic pension, and indeed have actually moved towards a more generous indexation regime for this payment, even though it is the costliest benefit of the lot. The £18bn in cuts they have already pencilled in are loaded away from the old, and piled instead upon the shoulders of the younger poor. And it is in relation to the means-tested benefits that these people claim that the government now enjoys the freest hand to snatch back what should be an automatic rise.

Osborne’s political calculator is still functioning – no doubt many workers on stagnant pay will resent benefit rises. But his moral compass is askew: the reason why benefit payments need special protection during hard times is precisely because they affect the poor. The unemployed and the sick do not have the scope to muddle through by scrimping and saving as those who are lucky enough to be in work do. Iain Duncan Smith understands that the government’s claims of concern about the unfortunate in a broken society are already strained, and would be shredded entirely by an arbitrary move to cheat people out of protection against inflation which that they were so recently promised. The welfare secretary is said to be ready to take the chancellor on over this, as indeed should any Liberal Democrat who still wants to claim that they are part of a progressive government. After all the regressive cuts announced, that phrase already rings hollow. A policy expressly designed to ensure that the poor suffer the pain of inflation would take the “progressive” claim into the realms of bitter satire.

http://www.guardian.co.uk/commentisfree/2011/nov/04/george-osborne-benefits-cheat

Nye Bevan lecture, given by Ed Balls

It is a great honour to give the 10th Bevan lecture:

To pay tribute to one of the towering heroes of the Labour movement;

To speak tonight alongside Geoffrey Goodman, Nye’s close friend and an authority on the man himself;

To join a long and distinguished line of past lecturers including Neil Kinnock, Gordon Brown, Robin Cook and my predecessor as Shadow Chancellor, Alan Johnson who have given this lecture.

And to understand why, 51 years after his death, we are still today celebrating the life and contribution of Aneurin Bevan to Labour and the trade union movement, you just have to look back at those past lectures and the tributes they paid.

But I am not going to start this lecture by quoting from the current generation of Labour greats who have paid tribute to Nye Bevan – but by quoting from one of the next younger generation of Bevanites.

Because I have been helped in researching this lecture by a young Bristol graduate, Ellie Gellard, the young woman who Labour chose to introduce Labour’s last manifesto in a new hospital in Birmingham.

And the name on Twitter she goes by?

‘Bevanite Ellie’

And when I asked her to put into words why Bevan was her hero, she told me:
“Bevanism is the perfect political combination of principle and power.

“Nye was the most vocal proponent of a democratic socialism which actually delivered for the people it sought to help.

“A figure who, still today, shows us that to change society for the better, we need to be true to our roots and our founding principles, but to do anything for the people we represent, we first and foremost need a Labour Government.”

So let me start this lecture tonight with that good news: the legacy of Bevan is alive and well and being taken forward by the next generation of Labour activists.

And tonight, as Shadow Chancellor, I want to explain why Bevan is a hero of mine too.

BEVAN THE HERO

Everyone has a special reason why Bevan is a hero.

For some, there is the fact that he overcame great hardship. Born in Tredegar – the son of a miner – forced to leave school at 13, self-taught, then winning a scholarship to the Central Labour College in London, sponsored by the Miners’ Federation… these were his first step towards Westminster – to become an MP in 1929, make it to the Cabinet and then be Deputy Leader.

For others, there is the fact that – even before he was first elected to Parliament in 1929 – he had established a reputation as a brilliant speaker with that rare gift to inspire and lift an audience.

A great speaker – and such a colourful and controversial and sometimes frustratingly volatile figure – storming out of the Cabinet in 1951, expelled from the Labour party once, and almost a second time; passionately in love with his wife, Jennie Lee, a Labour heroine in her own right; a vocal critic of Winston Churchill, Ernie Bevin, the Daily Mirror, Tory “vermin” – and pretty much everyone else at some point in his career.

Of course, for all of us, it was his passion and compassion alongside his hard work, persistence and patience, delivered the greatest achievement of Labour in power of the last century – the National Health Service – his lasting legacy, renewed and reaffirmed in the twenty-first century by the last Labour government, and now threatened as never before by the current Tory-Liberal Democrat coalition.

And then there is the fact that Bevan never made it to be Labour leader, in part, and aside from that famous volatility, because he put his beliefs before political expediency at key moments in his career – which is, for some romantics, enough of a reason to bestow hero status. But again, he is far from being alone in the history of our Party.

For me, though, there is an extra special reason.

Because Bevan rose to be a senior figure in the Labour Party – and an impassioned platform speaker – despite struggling for all his life with a stammer.

And for Bevan, this struggle was the making of the man.

As John Campbell writes in his biography, this stammer:

“…did not make him hate himself, or in the least degree diminish his self-confidence. Instead it drove him… to public speaking, first at Sunday school, later at lodge meetings, as a technique of mastering the demon by meeting it head-on… he used to practice declaiming large chunks of poetry on walks with his sister, he became adept at using the stammerers’ device of using an alternative word when he might stick on the obvious one…”

Techniques which stammerers everywhere will most certainly recognise.

As Campbell concludes:

“Whatever caused Bevan’s stammer, and whatever scars his stammer left, the determination and ultimate success with which he faced, harnessed and practically eradicated it was the first revelation, and the first exertion of an exceptional will.”

Which is why, for stammerers like me, Bevan will always be a special kind of hero.

BEVAN: A VISONARY AND A PRAGMATIST

But my admiration for Bevan goes beyond the personal.

Because, as I argued at a special Guardian fringe meeting at our Party Conference in 2008 – organised to debate who is Labour’s greatest hero – Nye Bevan combined two important qualities both essential for success.

First, he was a visionary.

As Geoffrey Goodman has said:

“I can think of no one in Labour’s pantheon who evoked and inspired the vision of a socialist society more eloquently and vibrantly than Aneurin Bevan.

And in the words of Jennie Lee following Nye’s death in 1960:

“He was not a cold blooded rationalist…..He was no calculating machine. He was a great humanist whose religion lay in loving his fellow men and trying to serve them.”

Growing up in a mining community in South Wales he saw hardship first hand. For Nye, Westminster was therefore a place to build a better future for the people he represented.

And no task was too big or too daunting. While Beveridge set out the five giants threatening our post-war society, Bevan sought to slay as many of them as possible.

And while slaying demons, Bevan also famously took no prisoners among his opponents – in others parties and also, at times, in his own – coruscating about the economic mistakes of MacDonald and Snowden in 1931, woundingly mocking of Winston Churchill in 1945, and – typical of the rebellious streak that held him back politically – storming out of the Cabinet over the costs of rearmament in 1951.

But second, and despite these outbursts, Bevan was also a pragmatist – who always knew that principles and values required political power to make a difference.

As a Cabinet minister, he compromised when necessary. As a political leader, he was a realist who was prepared to take the tough decisions when that was not the politically expedient thing to do.

As Labour historian Kenneth Morgan has written:

“Bevan had a sense of the compromises and complications that the exercise of power might involve. The language of priorities, the relativism of his political philosophy, were essential ingredients of his outlook no less than the socialist bedrock.”

Or in the words of Bevan himself, at the beginning of the 1945 general election campaign:

“We have been the dreamers, we have been the sufferers, now we are the builders.”

Take the NHS.

His vision of healthcare – free at the point of use, based on need and not ability to pay, one National Health Service – was born of his own practical experience of hardship in the valleys of south Wales. And it was radical, challenging and difficult to come to terms with – for foes but also for friends too anxious at seeing local municipal hospitals nationalised.

But Bevan the NHS architect was also a self-confessed pragmatist.

After a long, complicated process of negotiation with the vested interests of the health-care system, during which the very future of the NHS itself was cast into doubt, Bevan put aside purity, giving the BMA important concessions on earnings and pay beds… but without ever compromising the founding principles of the NHS.

As he famously said, to get the doctors on board, he “stuffed their mouths with gold”.

And on defence and international affairs, too, we see this same combination of vision and pragmatism.

Staunchly internationalist, appalled by the post-war direction of Soviet policy, an early advocate of NATO, famously critical of the Korean War and its implications for Britain…

… his disavowal of unilateralism at the 1957 Labour Conference again showed his pragmatism in action – famously suggesting the consequence of such a policy would be like sending the Foreign Secretary “naked into the conference chamber”… all in the face of howls of protests from his Bevanite followers.

Indeed, it was disagreement over Bevan’s stance on disarmament which provoked the famously Bevanite Tribune newspaper to part company with Nye, who had been a board member at its launch in 1937.

And as monthly columnist of Tribune myself now for over eight years, I know that Nye Bevan would want me and all of us today to celebrate the news that, despite its financial troubles, an agreement has been reached with the proprietor and staff to allow the paper to continue as a co-operative – I hope securing the future of this august and historic part of the Labour movement.

BEVAN AND THE ECONOMY

Bevan – a visionary and a pragmatist – on the NHS and defence… and on the economy too.

Over the past year, I have regularly said that Britain and the world must learn the lessons of the early 1930s – the mistaken austerity, the misplaced policies of the coalition National Government, the failure of international cooperation – if we are not to repeat the mistakes of those years.

And coming into Parliament in 1929, the year of the Wall Street Crash, the second biggest financial crisis of the last hundred years, the trigger for a decade of stagnation and rising unemployment, Bevan’s speeches are highly instructive for today’s economic debate.

From the outset, Bevan argued, at a time of financial meltdown, that to do nothing, to fail to take a lead, to blindly accept the consensus…was a complete abdication of the responsibility of political leadership.

In his biography of Bevan, Michael Foot describes a conversation between MacDonald and Bevan:

“the premier explained how his economic advisers had told him the crisis had passed its peak, how the unemployment figures would soon be turning the other way, how ‘recovery was just round the corner’, how if the Party avoided internal embarrassments it might soon be able to face the country with renewed prospects of victory. Bevan left the interview in despair.”

Sounds familiar?

And Bevan was deeply disparaging of the new National Government’s attempts to blame everything on the previous Labour government, speaking in the House of Commons in December 1931:

“it would be foolish for hon. members to say, as some have said, that this crisis is due to (2 1/2 years of) Socialist Government. That is too frivolous…it ignores the fact that in countries which have not enjoyed the advantages of a Socialist Government the crisis is even worse… if that were so, the defeat of that Government and the mere coming into existence of a National Government would have resuscitated British industry, and it would be showing signs of immediate revival, whereas it is lying prostate as ever.”

Sounds familiar too?

But while angry in his opposition to the economic failings of the coalition, and desperate for an alternative vision, Bevan’s pragmatism and realism again shines through in that debate:

“If you have a certain purpose in view, you seek for the right instruments to carry out that purpose, and the National Government, if it is to justify itself, must declare its purpose and plan… is it not obvious that the PM is merely fobbing off the House of Commons with one tit-bit after another in the hope that time will come to his rescue? I would prefer to see in power a strong party Government with a party programme, clearly thought-out and boldly executed, than this stalemate, the miserable conspiracy which today is called a national government… Let us face our problems in the spirit of realism.”

And what happened next?

The national Government did not listen to criticism – whether Labour Bevan or the Liberal John Maynard Keynes. And what followed? The Great Depression of the 1930s, mass unemployment and – yes – the deficit got worse.

As I said to the Labour Conference this year and last: you either learn the lesson of history or you repeat the mistakes of history.

That is why I have argued that, facing a similarly dangerous economic crisis today, we need our political leaders to put ideology aside, demonstrate the same pragmatism and look at the facts.

And in setting out Labour’s alternative five point plan for growth and jobs at this year’s Labour Party Conference, I drew again on the parallel with the 1930s, arguing that our country – the whole of the world – is facing a threat that most of us have only ever read about in the history books – a lost decade of economic stagnation:

- The aftermath of a worldwide financial and banking crash;

- Families and businesses fearful about the future, cutting back on spending and investment;

- Governments all around the world trying to cut spending at the same time;

- Demand sucked out of the economy;

- Stock markets tumbling, banks in trouble, economies stalling, unemployment rising – a vicious circle as slow growth makes it harder to get deficits down;

- Not a crisis of any one country or continent – but a spiralling global crisis – from which no economy can be safe…

- … Threatening the jobs, pensions and living standards of families here in Britain and across the world.

Not – as the Conservatives claim – simply a crisis of public debt which can be solved – country by country – by austerity, cuts and retrenchment – but truly a global growth crisis which is deepening and becoming more dangerous by the day.

The world must remember the lesson of the 1930s: that there is no credibility in piling austerity on austerity, tax rise on tax rise, cut upon cut in the eventual hope that it will work when all the evidence is pointing the other way.

A conclusion that, for all his – in my view – misplaced antipathy to John Maynard Keynes, I am sure that Bevan and Keynes would today agree with.

BEVAN TODAY

And this Bevanite combination of vision and pragmatism must continue to guide us now – in opposition, and as we develop a credible and radical programme for government. And I choose the words ‘credible’ and ‘radical’ with care.

I believe it would be a profound mistake to now shy away from setting out our values and a radical vision for the future. In the face of a right wing and ideological government, core Labour values of fairness and social justice are more important than ever.

But we must show that we do not hold values for their own sake or for show. Our beliefs and principles are our reference point but we must also show what they mean in practice, how they are relevant to people’s lives in the 21st century and how they will guide our work in building a better Britain in the current economic and fiscal conditions.

And that means our opposition and our vision for government must be credible as well as radical and based on our values. Because we must make clear that part of that vision is rooted in a robust and credible economic analysis – to persuade people in their heads as well as their hearts to come back to Labour again.

The fact is that we do have a radically different set of values and approaches to this Conservative-led government.

Where Margaret Thatcher promised to “roll back the frontiers of the state” and Michael Howard smeared a publicly funded NHS as “Stalinist”, in government we recast Labour’s mission to proclaim: “by the strength of our common endeavour we achieve more than we achieve alone”.

As a matter of ideology, based on their values – whatever the Conservatives say about the responsibility we all have to act together – they will not do what is necessary to deliver social justice and opportunity for all. It is the same old Conservative ideology of small state and deep spending cuts, leaving the vulnerable relying on charity.

So instead of the private and voluntary sectors working alongside an empowering and enabling public sector, the involvement of charities and businesses is being boosted not to enhance public provision but to undermine it. Each new policy, fresh initiative or hasty Bill pushed through Parliament sees the state being withdrawn from support for the economy, the family and public services.

I take a different view of the importance of supporting the economy and sustaining public services and protecting those on lowest incomes as we ensure the deficit comes down in a steady and balanced way – a different view that is as important to our economic success as it is fundamental to our Labour and cooperative roots.

They have a narrow view of the role of the state – that it stifles society and economic progress. We have a wider view of the role of state – a coming together of communities through democracy to support people, to intervene where markets fail, to promote economic prosperity and opportunities.

They have a narrow view of justice – you keep what you own and whatever you earn in a free market free for all. Ours is a wider view of social justice that includes equal opportunities, and recognises that widely unequal societies are unfair and divisive.

Far from thinking that electoral success is based on the shedding or hiding of values, I believe we now need to champion those values and the importance of a fairer Britain – to show we are on people’s side after all. We need a much stronger, clearer vision of the fairer Britain we will fight for – very different from the unfairness and unemployment the right wing coalition’s deep and dogma-driven cuts will cause.

The dividing line at the next election will remain between progressives who believe in rights and responsibilities – strong communities, supported by enabling government with a strengthened voluntary sector guaranteeing fairness and justice for all, and Conservatives who do not accept that there is a collective responsibility and are determined to pursue deep cuts in spending, leaving the vulnerable with less support and charities stepping in.

But it will not be enough simply to set out warm words and wishful thinking. It is not enough to wail that cuts are unfair, because if the Tories can persuade people they are unavoidable we won’t win the argument.

That is why the real lesson from New Labour’s political success was the importance of combining our values with economic rigour and tough fiscal disciplines. That is why it is vital that we show that deep Tory cuts are avoidable as well as unfair.

So my vision for Labour has at its heart an alternative economic plan to the devastating strategy of this Conservative-Liberal Democrat government; an alternative plan that is rooted in economic history and analysis as well as Labour values and principles.

Because just as Ramsay MacDonald and his chancellor Philip Snowdon did after the biggest financial crisis of the last century, David Cameron and George Osborne claim deep spending cuts are unavoidable to slash the deficit and satisfy the markets.

It is the same strategy then and now to ease pressure on sterling and hope that downward pressure on wages would boost competitiveness and trigger a private-sector led economic recovery.

But then as now the promised private sector recovery has failed to materialise as companies themselves retrench, unemployment is rising, and growth is stagnant.

The government says deep cuts are unavoidable – and when I say they are wrong – that the spending cuts and tax rises go too far and too fast and are a political choice, not economic necessity – Cameron echoes MacDonald and calls his critics “deficit deniers”.

They enthuse about a private-sector led economic recovery; they say the governor of the Bank of England; and that the financial markets demand rapid deficit reduction. But that argument was always nonsense – as the stagnation of our economy for the last twelve months has shown.

First, there is no precedent to believe that, with slowing growth in our main trading partners and companies deleveraging, public sector retrenchment will stimulate private sector growth. The 1930s and 1980s proved the opposite. And we have seen in recent months that private sector jobs have failed to fill the gap left by cuts to public sector jobs.

This argument is as specious as the government’s claim that the reason why we have a large deficit is because of Labour’s spending prolificacy. The truth is that Britain started the crisis with lower national debt than America, France, Germany and Japan. It was a global crisis triggered by the irresponsibility of bankers not public servants – it was not too many teachers, nurses and police officers in Britain which caused the Lehman Brothers investment bank to collapse in New York.

Second, while I respect Mervyn King, 1931’s bank governor Montagu Norman also strongly advocated the “Treasury view” that rapid cuts were necessary. Sometimes even bank governors get it wrong, especially when the political and media wind is blowing so strongly in one direction.

And third, the idea that the UK faces a financial crisis if we do not cut the deficit faster is a fiction. Outside the Eurozone and with low long-term interest rates, Britain faces no difficulty servicing its debts, and the main worry in financial markets is now about the absence of growth.

What matters to market credibility is not how tough politicians talk on deficit reduction, but whether their plans are deliverable. Savage cuts which hit the economy or are politically undeliverable won’t in the end achieve sustainable deficit reduction or build market confidence either. In fact, the government is already set to borrow £46 billion more than they planned.

That is why I believe we need a slower, steadier, fairer deficit reduction plan, which does not put jobs, growth or front line services at risk, is more likely to succeed and have market credibility too.

So yes, there is an alternative. And following in the tradition of Bevan and Keynes, it is Labour’s responsibility to set it out: a clear five point plan for growth and jobs, a more sensible timetable for deficit reduction, and a robust explanation of why that will better support our economy and public finances.

We do need to set out distinctive values, ideas and vision for the future. But the risk is that we talk only of our values and visions and fail to focus on the economic realities we face and persuading people.

That is why we must set out spending discipline and tough new fiscal rules alongside action now for growth and jobs to get the deficit down.

In the 1990s the challenge for Labour was to win people’s heads as well as their hearts. After 13 years in government we lost too many hearts. We have to win them back. But in the process we also have to win their heads too. We need a credible and radical programme for government.

That’s how – drawing upon a Bevanite combination of vision and pragmatism – I believe we combine our values and the pursuit of electoral success so we can put them into practice too.

CONCLUSION

So it is clear why Bevan is a hero of mine… stammering, the NHS, defence, the economy – a pragmatic Labour visionary.

But let me return to the argument I made at that Guardian fringe meeting of three years ago, at which the Guardian political columnist Martin Kettle asked me to make the case for Nye Bevan as the greatest Labour hero of the past one hundred years…

Why Nye?

That he is a hero of our movement is beyond doubt, right up there with Keir Hardie, Clem Attlee, Barbara Castle, Tony Crosland, Neil Kinnock and (– yes – )Tony Blair and Gordon Brown too.

But the greatest hero?

What is extra special about Nye Bevan, I argued, is that his passion, his values and his example inspired a succeeding generation of followers, the Bevanites, who were loyal to their hero and determined to nurture his legacy in a way that no other Labour figure has achieved.

Keir Hardie and Clem Attlee were great leaders who paved the way, but who were the Hardie-ites, the Attlee-ites?

Barbara Castle? Well she was a Bevanite, as was Harold Wilson, Michael Foot and Neil Kinnock.

And, unlike ‘Gaitskellite’, ‘Bevanite’ remains a meaningful term – still today invoking a Labour vision of a better and more equal society.

That is why, I argued, Nye Bevan deserves the title of Labour’s greatest hero.

And what greater tribute to the great man than that he is still a hero today – his name evoked by a new generation to describe their approach to politics.

Ladies and gentlemen – just ask Bevanite Ellie…

Thank you

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Posted November 1st, 2011 by Ed’s team
This entry was posted on Tuesday, November 1st, 2011 at 8:56 pm and is filed under Shadow Chancellor Blog. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.