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Labour let us down yesterday: Laurie Penny reports from A&E

The grim truth is that nobody in the Labour Party has any answers.

It's 2am, and I'm sitting under a strip light in the emergency unit of my local hospital, waiting for the doctors to finish attending to a young friend of mine who attempted to end her life tonight. When the paramedics arrived, they told us she wasn't the first -- for many Londoners, it seems, something about the news or the weather today gave the impression that a crisis point has been reached.

Apart from a shoeless shouting drunk growling at the nurses to give him back his confiscated footgear, the waiting room is quiet, strewn with ill, beaten-looking people patiently waiting to be seen. The frontline NHS personnel staffing the emergency desk were rushed off their feet even before massive public-sector cutbacks were announced a few hours ago, but they're doing the best they can. Somewhere behind my head, a machine that goes 'bing!' -- Monty Python observed that every hospital must have one -- seems, at this hallucinogenic hour of the night, to be taking the slow, trembling pulse of the nation.

The people of Britain have been badly let down today. The poor, the young, the old, the tired, the unwell: we have all been let down. Not just by the Tories, who let us know what was coming with all the oily subtlety of side-street sleaze artists; nor by the Liberal Democrats, from whom nobody expected any more than the stern, funereal complicity that they delivered during today's spending review. No: the people have been let down by Labour.

In 13 years of meandering and hawkish leadership, it seems that the Labour Party has utterly forgotten what effective opposition politics are supposed to look like. If its collective response to the greatest assault on social democracy in living memory is anything to go by, Labour has also lost sight of what it means to be a party of the left.

After laying out the details of his economic shock doctrine, George Osborne glibly asked the shadow chancellor if he had any other ideas. With all the panache of a sixth-form debater, Osborne repeated the question: did Labour's new economic spokesperson, or indeed anyone on the Labour benches, have alternative suggestions for fixing the economy other than tearing up the Attlee settlement, throwing a million on to the dole and destroying welfare?

Alan Johnson did not answer. Instead, he stammered, he clucked, he flapped, he did everything but lay an egg in an apparent attempt to mimetically re-enact the chickenish behaviour of his party over the past few weeks. The shadow chancellor gave no answer because he has no answer; nobody in the Labour Party, it seems, has any answers. They have knelt down and swallowed the Tory narrative that this recession is all Labour's fault, rather than the result of years of systematic global financial deregulation with which every major political party in Britain and the US was until lately in agreement.

The strongest criticism Mr Johnson could find was to suggest that the planned cuts were a little 'ideological' in aspect -- which is a shame, because the left could really do with some alternative ideology to counterbalance the Conservative Party's determination to wage class war with a calculator, and right now the Labour Party can't seem to find its ideology with both hands.

The grim truth is that the recoagulated Labour Party has no ideology and no new ideas. It was Labour that began the privatisation and withdrawal of public services in this country; now, today, with the Blairite model of intermittently caring neoliberalism buried at the crossroads of global economic crisis with a repossession order through its heart, even a new leader seems to have done little to raise any life from the ashes of the Labour left.

Labour has no answers; not for Osborne, not for its supporters, and certainly not for the weary Hackney residents currently curled up in this NHS waiting room, wondering if they can afford to spend a pound on a hot chocolate from the machine. The teenage boy next to me has started vomiting noisily into a cardboard dish; a drowsy-looking young woman is bleeding into her seat, a trickle of dark fluid slowly seeping on to the floor while her nervous partner holds her hand. My friend still has not returned. Alan Johnson doesn't have an answer for her either, nor for the hundreds of thousands of people who have felt despair shove its chill fingers into our hearts tonight.

That Labour does not have any answers for us is a disgusting display of the irrelevance of Westminster politics to the lives of ordinary citizens. If today's pathetic equivocation parade is a benchmark for the next four years of Labour politics, we will have to look elsewhere to find a voice in the hard, cold months ahead.

Laurie Penny is a contributing editor to the New Statesman. She is the author of five books, most recently Unspeakable Things.

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Let's turn RBS into a bank for the public interest

A tarnished symbol of global finance could be remade as a network of local banks. 

The Royal Bank of Scotland has now been losing money for nine consecutive years. Today’s announcement of a further £7bn yearly loss at the publicly-owned bank is just the latest evidence that RBS is essentially unsellable. The difference this time is that the Government seems finally to have accepted that fact.

Up until now, the government had been reluctant to intervene in the running of the business, instead insisting that it will be sold back to the private sector when the time is right. But these losses come just a week after the government announced that it is abandoning plans to sell Williams & Glynn – an RBS subsidiary which has over 300 branches and £22bn of customer deposits.

After a series of expensive delays and a lack of buyer interest, the government now plans to retain Williams & Glynn within the RBS group and instead attempt to boost competition in the business lending market by granting smaller "challenger banks" access to RBS’s branch infrastructure. It also plans to provide funding to encourage small businesses to switch their accounts away from RBS.

As a major public asset, RBS should be used to help achieve wider objectives. Improving how the banking sector serves small businesses should be the top priority, and it is good to see the government start to move in this direction. But to make the most of RBS, they should be going much further.

The public stake in RBS gives us a unique opportunity to create new banking institutions that will genuinely put the interests of the UK’s small businesses first. The New Economics Foundation has proposed turning RBS into a network of local banks with a public interest mandate to serve their local area, lend to small businesses and provide universal access to banking services. If the government is serious about rebalancing the economy and meeting the needs of those who feel left behind, this is the path they should take with RBS.

Small and medium sized enterprises are the lifeblood of the UK economy, and they depend on banking services to fund investment and provide a safe place to store money. For centuries a healthy relationship between businesses and banks has been a cornerstone of UK prosperity.

However, in recent decades this relationship has broken down. Small businesses have repeatedly fallen victim to exploitative practice by the big banks, including the the mis-selling of loans and instances of deliberate asset stripping. Affected business owners have not only lost their livelihoods due to the stress of their treatment at the hands of these banks, but have also experienced family break-ups and deteriorating physical and mental health. Others have been made homeless or bankrupt.

Meanwhile, many businesses struggle to get access to the finance they need to grow and expand. Small firms have always had trouble accessing finance, but in recent decades this problem has intensified as the UK banking sector has come to be dominated by a handful of large, universal, shareholder-owned banks.

Without a focus on specific geographical areas or social objectives, these banks choose to lend to the most profitable activities, and lending to local businesses tends to be less profitable than other activities such as mortgage lending and lending to other financial institutions.

The result is that since the mid-1980s the share of lending going to non-financial businesses has been falling rapidly. Today, lending to small and medium sized businesses accounts for just 4 per cent of bank lending.

Of the relatively small amount of business lending that does occur in the UK, most is heavily concentrated in London and surrounding areas. The UK’s homogenous and highly concentrated banking sector is therefore hampering economic development, starving communities of investment and making regional imbalances worse.

The government’s plans to encourage business customers to switch away from RBS to another bank will not do much to solve this problem. With the market dominated by a small number of large shareholder-owned banks who all behave in similar ways (and who have been hit by repeated scandals), businesses do not have any real choice.

If the government were to go further and turn RBS into a network of local banks, it would be a vital first step in regenerating disenfranchised communities, rebalancing the UK’s economy and staving off any economic downturn that may be on the horizon. Evidence shows that geographically limited stakeholder banks direct a much greater proportion of their capital towards lending in the real economy. By only investing in their local area, these banks help create and retain wealth regionally rather than making existing geographic imbalances worce.

Big, deep challenges require big, deep solutions. It’s time for the government to make banking work for small businesses once again.

Laurie Macfarlane is an economist at the New Economics Foundation