"Shared objectives", "illegal" briefings, and . . . Take That

What today's emails tell us about Jeremy Hunt and his relationship with News Corp.

After an explosive day, the Leveson Inquiry has published the email correspondence of News Corps’ top lobbyist, Frederic Michel, and it is not looking good for the Culture Secretary Jeremy Hunt. (You can read all 163 pages of it here).

First and foremost is the email dated 24th January 2011, quoted in today’s proceedings, in which Michel gets early warning about an announcement to be made by Hunt. Michel forwards it to James Murdoch saying:

Managed to get some infos on the plans for tomorrow (although absolutely illegal)

In the hearing, Murdoch defended this saying that the use of a winky face indicated that this was a joke.

Equally – if not more – damning, is an email sent the day before, in which Michel says that Hunt has stated that “he shared our objectives”:

He understands fully our concerns regarding the publication of the report and the consultation of Ofcom in the process; but he wants us to take the heat, with him, in the next 2 weeks.

He very specifically said that he was keen to get to the same outcome and wanted JRM to understand he needs to build build some political cover on the process.

If he were to follow our Option 1 and not provide any details on the Ofcom report, he would be accused of putting a deal together with ns behind closed doors and it would get in a much more difficult place. The more this gets out now, the better it will be as the opposition will lose arguments. This week’s events do not give him much choice.

He said we would get there at the end and he shared our objectives.

Finally, he asked us to stick with him in the coming weeks, plan the upcoming Tuesday’s publication and the debate which will unfold.

On a lighter note, an email sent to Hunt’s adviser Adam Smith on 7th June 2011 has raised some eyebrows. In it, Michel complains that his attempts to meet Ed Vaizey have been unsuccessful:

I tend to think that he could see us on specific policy items. We’re still involved in the media agenda even during the Sky deal.
It’s a very punitive decision ... I feel victimised :)

For example, I am working on our response for the open letter and it would have been great to discuss it with you before finalising it at some stage before end of June. Possible?

By the way, does that mean you and Jeremy will not be coming to Take That on the 4th July?

At the moment it looks like Hunt didn’t go to see the boyband’s reunion tour with News Corps. It is just as well really, as the scheduled date, 4th July, is when the Milly Dowler story broke. How is that for irony?
 

Take That performing in February 2011. Photograph: Getty Images

Samira Shackle is a freelance journalist, who tweets @samirashackle. She was formerly a staff writer for the New Statesman.

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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