Michael Foot: RIP

Some of his much-mocked policies remain relevant even in the 21st century.

The former Labour leader Michael Foot has died at the age of 96. He was a brilliant man, a prolific writer (and a former New Statesman journalist), a natural orator and a legendary if infamously unsuccessful leader of the Labour Party. Oh, and he was also a devoted Plymouth Argyle fan and the oldest registered professional player to date in the history of football. (Here's a link to some related New Statesman profiles, interviews and stories.)

Personally, I can't help but agree with Craig Murray, writing on his blog in May 2009:

The sad thing is that Michael Foot was perhaps the most honourable man ever to lead a major political party in this country. Foot would never have dreamed of milking his MP's allowances, or letting anyone else do so. It is totally inconceivable that Foot would have tolerated creatures like McBride and Draper around him. He was not in politics for backstabbing and smear.

The irony is that it was Foot's innocence of the dark arts we now deplore in politicians, that led to his extreme unpopularity. He deliberately and consciously abjured the media soundbite, in favour of the well-made and complete argument that did not fit in a news bulletin.

He absolutely refused image makeover. I remember very well that this came to a head when he arrived at a cold Remembrance Day at the Cenotaph wearing a duffel coat. The Murdoch press went crazy, calling it a "donkey jacket". It was at the time as big a media sensation as the MPs' expenses claims are today.

Foot's political legacy will be much discussed and much disputed in the coming days, but here is the architect of "New" Labour himself, Anthony Charles Lynton Blair, speaking about him at the Labour party conference in 1997, shortly after coming to power:

Thank you to the Party organisation, the volunteers, the professionals who fashioned the finest political fighting machine anywhere in the world. And thanks to those that led before me . . .

My own debt of honour to Michael Foot: you led this Party when, frankly, it was incapable of being led and without ever losing a shred of your decency or your integrity. Thank you.

Also in the coming days, among the inevitably innumerable profiles, essays and obituaries, you'll hear much about Labour's 1983 general election defeat under Foot and his "crazy" left-wing election manifesto, often described as "the longest suicide note in history" (copyright: Gerald Kaufman).

But here's a thought experiment. Read this extract from the 1983 election manifesto, from the "Finance for Industry" section:

It is essential that industry has the finance it needs to support our plans for increased investment. Our proposals are set out in full in our Conference statement, The Financial Institutions. We will:

* Establish a National Investment Bank to put new resources from private institutions and from the government -- including North Sea oil revenues -- on a large scale into our industrial priorities. The bank will attract and channel savings, by agreement, in a way that guarantees these savings and improves the quality of investment in the UK.
* Exercise, through the Bank of England, much closer direct control over bank lending. Agreed development plans will be concluded with the banks and other financial institutions.
* Create a public bank operating through post offices, by merging the National Girobank, National Savings Bank and the Paymaster General's Office.
* Set up a Securities Commission to regulate the institutions and markets of the City, including Lloyds, within a clear statutory framework.
* Introduce a new Pension Schemes Act to strengthen members' rights in occupational pension schemes, clarify the role of trustees, and give members a right to equal representation, through their trade unions, on controlling bodies of the schemes.
* Set up a tripartite investment monitoring agency to advise trustees and encourage improvements in investment practices and strategies.

We expect the major clearing banks to co-operate with us fully on these reforms, in the national interest. However, should they fail to do so, we shall stand ready to take one or more of them into public ownership. This will not in any way affect the integrity of customers' deposits.

Funny to see "New Labour" Brown and Darling going beyond "Old Labour" Michael Foot and Denis Healey in terms of nationalising the banks, eh? If only it had happened sooner . . . !

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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We are heading for the next recession – it's crucial the right people are in charge

There is grave economic trouble ahead, and if the Tory right are in power, the consequences could be ghastly.

Well, we were warned. The governor of the Bank of England and the IMF, as well as much of the financial community, were very clear that Brexit would produce a damaging economic shock. It is happening.

Even if we discount George Osborne’s absurd and counterproductive attempts to predict the precise fall in house prices and threaten a deflationary emergency budget, there were sensible and dispassionate warnings of severe trouble ahead. We now need to think through how progressive opponents of this government should respond.

My starting point is a disagreement with my Tory former colleagues in the coalition – from both Remain and Leave – who argue that Britain has a “fundamentally strong economy”. It doesn’t. We have barely recovered from the 2008 crisis, are still on the life-support system of artificially cheap money and have a horribly unbalanced economy. Recovery was happening but fragile.

The first stage in the post-Brexit shock is the predictable turbulence in financial markets as liquid investors jump into safer assets and away from riskier holdings of sterling, UK banks and other shares. This is a very different situation from 2008, which was a financial crisis to which politicians had to respond; this is a political crisis, a huge escalation of political risk, to which markets are responding.

The fall in sterling should not exercise us too much. If devaluation is locked in, it would help rebalancing. The Monetary Policy Committee will surely be sensible and disregard the short-term inflationary consequences, as members did the spike in commodity prices five years ago. If investors move out of UK residential property and precipitate a sustained fall in house prices, that is also to be welcomed. The main casualties of the immediate turbulence are Brexit-voting pensioners whose annuity values crashed with the flight into gilts.

The gravest potential short-term risk was anticipated by the Bank of England when it pumped in £250bn to prevent a drying up of liquidity in the banking system and another credit crunch. The prompt action has clearly reassured markets. However, what may be more serious is the gradual reassessment of risk by bank credit committees leading to restrictions on lending to smaller businesses. That would be disastrous for growth. A pragmatic government should reach for some of the tools created by the coalition, such as the British Business Bank, for sources of business credit.

In the second stage the crisis will migrate from asset markets to the real economy and jobs. The new Tory leader will be praying the time before unemployment kicks in will be long enough to have a general election. By autumn, we shall have a clearer picture of the scale of any slowdown, but I find it difficult to see how we can avert a Brexit recession.

The issue is how to deal with a recession. Monetary stimuli are losing effectiveness. With interest rates close to zero, there isn’t much scope for further cuts and quantitative easing is becoming increasingly problematic. Some in the City will be urging more cuts, worried about Osborne’s plan to eliminate government borrowing by 2019.

There was never a better time for public investment to fill the gap in demand left by private investors. There is a long pipeline of coalition infrastructure projects, including Network Rail’s stalled investment plan, to get on with. But then we encounter the Treasury’s pathological aversion to borrowing to invest. Its deep conservative instincts will be reinforced by our deteriorating credit rating.

Yet the need to confront the structure and balance of the economy transcends the issues of short-term crisis and medium-term macroeconomic management. The financial sector may well take a bad hit with banks migrating to European centres. We should not minimise the costs to individuals and the Exchequer, but it may be no bad thing if the result is some rebalancing. The industrial strategy put in place under the coalition is an ideal vehicle for building confidence in long-term investment in manufacturing and creative industry. Of course, none of this will happen without a speedy confirmation of the UK’s continued role within the single market.

How the economics of this political crisis will be dealt with depends on the parliament that is returned when a new Tory leader calls an election. If the Tory right emerges triumphant, the consequences will be ghastly. If the parties of the centre and left – including disaffected Tory Remainers – can get themselves organised, however, we could see an altogether happier outcome.

This article first appeared in the 30 June 2016 issue of the New Statesman, The Brexit lies