The Eric Morecambe government

All the right things in the wrong order.

One of the great comedy lines of all time is Eric Morecambe’s retort to Andre Previn’s complaint about his inability to play Greig’s piano concerto. Grabbing Previn by the lapels he says, “I am playing all the right notes, just not necessarily in the right order”.

This might well be the motto for the government’s efforts to get the economy growing. They are doing some of the right things, just not necessarily in the right places and not really in the right quantities and crucially not with the right focus. Take the variety of state-sponsored lending schemes launched in the last year. When Project Merlin failed to magic up the boost in small business lending that it was expected to, the government launched (or relaunched) the Small Firm Loan Guarantee Scheme (SFLGS), which according to the department for business, was apparently successful, although it failed to get the economy really moving. Three months after it was launched the SFLGS was effectively replaced by the credit-easing scheme billed as Funding for Lending, which would allow banks to borrow at a cheaper rate.

Fast forward another two months and business secretary Vince Cable was out and about this week promoting an industrial strategy that included a suggestion all this may soon be collected together under the umbrella of some form of British business bank.

The details — whether it would include new cash (unlikely), who would be picking the schemes, sectors and firms to invest in and so on — weren’t included. It was a policy announcement coalition style, in effect little more than a floating of an idea to judge its credibility. A business bank in itself sounds like a sensible idea, although simply rebranding lending schemes or creating a fancy new website to house them all in won’t make businesses any hungrier for lending.  

Until that demand for borrowing returns (and to some extent that appetite will require the banks to drop some of the more onerous conditions and rates they are placing on lending at the moment), supply side measures will continue to have little impact.

Some commentators immediately seized on the problematic issue of governments picking winners and images of 1970s British Leyland plants were rolled out again to illustrate why this is such a bad thing. The real problem of course is not picking winners, but rather investing in losers. However, picking sectors seems to be more acceptable. Here, too, there are signs the government is playing the wrong tune. While freeing up planning regulations might help the housing sector, allowing a few homeowners to get the eight-foot conservatory they always dreamed of won’t pull us out of recession.

It is welcome to see a broader acceptance of the fact that there is a role for what shadow business secretary Chuka Umuna calls active government. But this activity will naturally involve selecting sectors to back. One sector that too often gets overlooked as a driver for growth is professional services. What role can the professions play in getting what has become known in some parts of Westminster as “this growth thing” moving?

To address just this question, the Professional and Business Services Group (PBSG) has produced an excellent report Seizing Opportunities for Growth, summarising the work of the sector and suggesting what needs to happen to keep things growing in the right way. The sector remains a major contributor to the UK economy, accounting for roughly 13 per cent of all economic activity, employing 3.5 million people and producing £167bn of GDP in 2010. Crucially it is an international business and accounts for 14 per cent of UK exports and returned a surplus on the UK’s current account of £28.5bn in 2010.

But the report makes it clear that despite the success of the sector there is more than can and must be done to protect and enhance this sector. Chief among these is the expansion of digital infrastructure to create what it calls “smart cities” and the opening up of government data for commercial exploitation and innovation.

The crucial point is that if we get the underlying structures, skills and systems right, then there would be less need to worry about government picking sectors or spotting winners, because everyone would be able to benefit from a more productive environment.

This article first appeared in economia.

Morcambe and Wise. Photograph: Getty Images

Richard Cree is the Editor of Economia.

Photo: Getty
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Ken Livingstone says publicly what many are saying privately: tomorrow belongs to John McDonnell

The Shadow Chancellor has emerged as a frontrunner should another Labour leadership election happen. 

“It would be John.” Ken Livingstone, one of Jeremy Corbyn’s most vocal allies in the media, has said publicly what many are saying privately: if something does happen to Corbyn, or should he choose to step down, place your bets on John McDonnell. Livingstone, speaking to Russia Today, said that if Corbyn were "pushed under a bus", John McDonnell, the shadow chancellor, would be the preferred candidate to replace him.

Even among the Labour leader’s allies, speculation is rife as to if the Islington North MP will lead the party into the 2020 election. Corbyn would be 71 in 2020 – the oldest candidate for Prime Minister since Clement Attlee lost the 1955 election aged 72.

While Corbyn is said to be enjoying the role at present, he still resents the intrusion of much of the press and dislikes many of the duties of the party leader. McDonnell, however, has impressed even some critics with his increasingly polished TV performances and has wowed a few sceptical donors. One big donor, who was thinking of pulling their money, confided that a one-on-one chat with the shadow chancellor had left them feeling much happier than a similar chat with Ed Miliband.

The issue of the succession is widely discussed on the left. For many, having waited decades to achieve a position of power, pinning their hopes on the health of one man would be unforgivably foolish. One historically-minded trade union official points out that Hugh Gaitskell, at 56, and John Smith, at 55, were 10 and 11 years younger than Corbyn when they died. In 1994, the right was ready and had two natural successors in the shape of Tony Blair and Gordon Brown in place. In 1963, the right was unprepared and lost the leadership to Harold Wilson, from the party's centre. "If something happens, or he just decides to call it a day, [we have to make sure] it will be '94 not '63," they observed.

While McDonnell is just two years younger than Corbyn, his closest ally in politics and a close personal friend, he is seen by some as considerably more vigorous. His increasingly frequent outings on television have seen him emerge as one of the most adept media performers from the Labour left, and he has won internal plaudits for his recent tussles with George Osborne over the tax bill.

The left’s hopes of securing a non-Corbyn candidate on the ballot have been boosted in recent weeks. The parliamentary Labour party’s successful attempt to boot Steve Rotheram off the party’s ruling NEC, while superficially a victory for the party’s Corbynsceptics, revealed that the numbers are still there for a candidate of the left to make the ballot. 30 MPs voted to keep Rotheram in place, with many MPs from the left of the party, including McDonnell, Corbyn, Diane Abbott and John Trickett, abstaining.

The ballot threshold has risen due to a little-noticed rule change, agreed over the summer, to give members of the European Parliament equal rights with members of the Westminster Parliament. However, Labour’s MEPs are more leftwing, on the whole, than the party in Westminster . In addition, party members vote on the order that Labour MEPs appear on the party list, increasing (or decreasing) their chances of being re-elected, making them more likely to be susceptible to an organised campaign to secure a place for a leftwinger on the ballot.

That makes it – in the views of many key players – incredibly likely that the necessary 51 nominations to secure a place on the ballot are well within reach for the left, particularly if by-election selections in Ogmore, where the sitting MP, is standing down to run for the Welsh Assembly, and Sheffield Brightside, where Harry Harpham has died, return candidates from the party’s left.

McDonnell’s rivals on the left of the party are believed to have fallen short for one reason or another. Clive Lewis, who many party activists believe could provide Corbynism without the historical baggage of the man himself, is unlikely to be able to secure the nominations necessary to make the ballot.

Any left candidate’s route to the ballot paper runs through the 2015 intake, who are on the whole more leftwing than their predecessors. But Lewis has alienated many of his potential allies, with his antics in the 2015 intake’s WhatsApp group a sore point for many. “He has brought too much politics into it,” complained one MP who is also on the left of the party. (The group is usually used for blowing off steam and arranging social events.)

Lisa Nandy, who is from the soft left rather than the left of the party, is widely believed to be in the running also, despite her ruling out any leadership ambitions in a recent interview with the New Statesman.However, she would represent a break from the Corbynite approach, albeit a more leftwing one than Dan Jarvis or Hilary Benn.

Local party chairs in no doubt that the shadow chancellor is profiling should another leadership election arise. One constituency chair noted to the New Statesman that: “you could tell who was going for it [last time], because they were desperate to speak [at events]”. Tom Watson, Caroline Flint, Chuka Umunna, Yvette Cooper, Andy Burnham and Liz Kendall all visited local parties across the country in preparation for their election bids in 2015.

Now, speaking to local party activists, four names are mentioned more than any other: Dan Jarvis, currently on the backbenches, but in whom the hopes – and the donations – of many who are disillusioned by the current leadership are invested, Gloria De Piero, who is touring the country as part of the party’s voter registration drive, her close ally Jon Ashworth, and John McDonnell.

Another close ally of Corbyn and McDonnell, who worked closely on the leadership election, is in no doubt that the shadow chancellor is gearing up for a run should the need arise.  “You remember when that nice Mr Watson went touring the country? Well, pay attention to John’s movements.”

As for his chances of success, McDonnell may well be even more popular among members than Corbyn himself. He is regularly at or near the top of LabourList's shadow cabinet rankings, and is frequently praised by members. Should he be able to secure the nominations to get on the ballot, an even bigger victory than that secured by Corbyn in September is not out of the question.

Stephen Bush is editor of the Staggers, the New Statesman’s political blog. He usually writes about politics.