The "overbearing tyranny" at the Bank of England

Blanchflower v King, Round Three

Round One, you may remember, in the very public row between Professor David "Danny" Blanchflower, a former independent member of the Bank of England's Monetary Policy Committee and the new weekly economics columnist here at the New Statesman, and Mervyn King, governor of the Bank of England and one-time hawk on interest rates, kicked off on the pages of this magazine last week. In an exclusive article for the Statesman to coincide with the first anniversary of the financial crash, Blanchflower claimed that his old boss on the MPC ruled the Bank of England with an "iron fist", crushed dissenting voices and encouraged the "tyranny of consensus".

Round Two commenced yesterday in front of the Treasury select committee, where the Bank of England governor was forced to defend himself against Blanchflower's attack. "You can decide for yourself whether I do or do not have this iron fist, but look at the voting record," he said. And, as my colleague George Eaton pointed out on his blog yesterday: "King repeated his claim that earlier cuts in interest rates would not have diminished the force of the financial crisis and argued that no one could have foreseen the size of the recession." He also attacked Blanchflower's decision to publish his insider account in the New Statesman as "unwise and not sensible", and said that "Danny's recollection of events does not coincide with mine".

Round Three has now kicked off in earnest, after I asked Professor Blanchflower this morning for his response to the governor's comments. "I guess my main reaction is to say that it is the role of an independent member to speak up in the interests of the British people," he told me. "I disagreed with the overbearing tyranny." He added: "People are too scared to speak up."

On the governor's claim that earlier rate cuts would have been pointless, the professor is scathing. "If, as King argues, cutting rates earlier would have done little, then I guess his view is that we do not need an MPC at all, as it is, according to his view, entirely powerless."

What about his decision to go public with criticisms of his former colleagues at the Bank, including his explosive article in the NS? Was it the right thing to do? "It's what the British people should expect from an independent member [of the MPC]," he said. "I realised the MPC had made a mistake that needed correcting, so I spoke up.

"With hindsight, it turns out I was right to do so."

Over to you, Mervyn . .

Mehdi Hasan is a contributing writer for the New Statesman and the co-author of Ed: The Milibands and the Making of a Labour Leader. He was the New Statesman's senior editor (politics) from 2009-12.

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No, the Brexit vote wasn't just about immigration

The data shows that most voters want a fairer society. Labour must fight for this in the Brexit negotiations. 

The result of the UK referendum to leave the European Union has shaken the political establishment to its core. As I have argued since then, it should be a wakeup call to all political parties.

Some have also argued that the referendum result is having international repercussions, with the election of Donald Trump to the White House cited as "Brexit Plus Plus". With the imminent election in France, and Germany’s later this year, responsible analysts are trying to understand why people voted the way they did and what this means. Too often, there are knee jerk explanations without any evidentiary justification to back them up. 

Analysis of who voted to leave shows the majority of people who voted to leave live in the South of England, and 59 per cent were from the middle classes (A, B, C1). Only 21 per cent of people in the lowest income groups voted to leave.

Analysis of why people voted as they did is more complex. This includes an increase in Euroscepticism particularly from older, middle class voters; concerns about globalisation and the impact on jobs; inequalities and being left behind; and new voters who didn’t vote in the 2015 General Election, for whom immigration was a concern. When this analysis is overlaid on analysis of that election, some themes emerge. The attitudes and values of the majority of the British public are firmly rooted in the desire for a fairer society, based on principles of equality and social justice. Although immigration played a part in the election and referendum results, perceived competence, being "left behind" and disillusionment with the direction of change were the key drivers.

Whether people voted to remain or leave, they did so because they believed that they and their families would be better off, and the majority who voted believed they would be better off if we leave the EU. Labour accepts and respects this. We have said that we will vote for Article 50, but we intend to hold this Tory government to account to ensure we get the best possible deal for the country.

In his speech last week, Jeremy Corbyn set out the issues that Labour will hold the government to account on. We have been absolutely clear that we want tariff-free access to the single market, to ensure that Britain continues to trade openly with our European neighbours, and to protect the cost of living for families struggling to get by. Getting the best deal for the UK means that we must continue to have a strong relationship with our EU neighbours.

Under my work and pensions portfolio, for example, we know that 40 per cent of pension funds are invested outside of the UK. If we want to guarantee a dignified and secure retirement for our pensioners, we must ensure that savers can get the best returns for the investments they make.

We also know that many of the protections that have until now been offered by the European Union must continue to be guaranteed when we leave. Provisions that secure the rights of disabled people, or that protect worker’s rights are an essential part of British society, enhanced by the EU. These cannot be torn up by the Tories.

Defending these rights is also at the heart of our approach to immigration. The dire anti-migrant rhetoric from some parts of the media and certain politicians, is reprehensible. I reject this scapegoating, which has fear and blame at its heart, because it is not true. Blaming migrants for nearly seven wasted years of Tory austerity when they are net contributors of over £2bn a year to the economy is perverse.

Of course we need to respond when public services are coming under pressure from local population increases. That’s why Labour wants to reinstate the Migration Impact Fund that the Tories abolished. We also need to ensure new members of communities get to know their new neighbours and what’s expected of them.

We believe that migrants’ broader contribution to British society has too often been obscured by the actions of unscrupulous employers, who have exploited new arrivals at the expense of local labour. A vast network of recruitment and employment agencies has developed in this country. It is worth hundreds of billions of pounds. Last year over 1.3m people were employed in the UK by these agencies. In 2007, 1 in 7 of these people came from the EU. We should ask how many are recruited directly from the EU now, and offered precarious work on very low wages whilst undercutting local labour. Labour will put an end to this practice, in order to protect both those who come here to work and those that grew up here.

Importantly, however, we cannot let our exit from the EU leave us with skill shortages in our economy. Our current workforce planning is woeful, particularly for the long-term. We need to reduce our need for migrant labour by ensuring our young, and our not so young, are trained for the jobs of the future, from carers to coders. Again, the Conservatives have undermined people’s chances of getting on by cutting college funding and the adult skills budget.

Unlike the government, Labour will not shirk from our responsibilities to the nation. Our plans for Brexit will respect the referendum result, whilst holding the Government to account and delivering a better future for all our people, not just the privileged few.

Debbie Abrahams is shadow work and pensions secretary.