The real winners of the Vince Cable debacle

Yep, the bankers!

I took part in a slightly bizarre but fun Today programme discussion this morning about whether or not we have a "Maoist" government. You may remember the remarks by the Business Secretary, Vince Cable, who told two undercover Telegraph journalists:

There is a lot of things happening. There is a kind of Maoist revolution happening in a lot of areas like the health service, local government, reform, all this kind of stuff, which is in danger of getting out of . . . We are trying to do too many things, actually.

He was also, we assume, one of the key cabinet sources for Andrew Rawnsley's column in the Obs last weekend:

I have actually heard more than one member of the cabinet explicitly refer to the government as "Maoist".

In fact, the truth is that we political journalists have short memories. Despite all the song and dance about Maoism, which prompted this morning's Today programme chat on Radio 4 (involving not just me, but the noted China and Chairman Mao specialist Jonathan Fenby) and led to the FT's "Mao rating" scheme, Cable actually used the Maoist tag in public more than a month ago.

From the Guardian, 12 November:

The abolition of regional development agencies by the coalition was a "little Maoist and chaotic", Business Secretary Vince Cable told a gathering in Birmingham last night.

Hmm.

Cable has a rather curious relationship with communist language, analogies and labels. As the politics lecturer Ed Rooksby points out over at Comment Is Free:

What is it about Vince Cable and communism? Barely a month seems to go by without Cable comparing others, or being compared himself, to something or someone related to it. In September, the Liberal Democrat minister was accused (implausibly) of being some sort of quasi-Marxist after making some mildly critical remarks about capitalism in a speech. In 2007, Cable made his memorable quip about Gordon Brown having undergone a "remarkable transformation . . . from Stalin to Mr Bean". While having his own Mr Bean moment, revealed this week, Cable was at it again. This time it was Mao.

Rooksby makes an important if provocative point at the end of his piece on Cable, the coalition and Chairman Mao. Like the Maoist government in China, he writes:

. . . this is, in an important sense, a class-struggle government – one acting consciously and directly on behalf of the rich. The role performed by the government in conditions of economic crisis is, all too often, to shift the costs of that crisis on to the poor and least well-off. The last government bailed out a banking system on the verge of collapse. Now this one is demanding that the rest of us pay for it, and is setting about that task with great enthusiasm.

You might roll your eyes at the analogy, but which group of people, aside from the bosses and shareholders of Rupert Murdoch's NewsCorp, will be rubbing their hands in glee this week at the sight of Cable's very public and humiliating defenestration? Yep, you guessed it, the bankers.

Here's the well-informed James Chapman writing in the Daily Mail:

The prospect of a crackdown on a £7bn bonus windfall for bankers is receding as a result of Vince Cable's weakened position in the cabinet.

The Liberal Democrat Business Secretary had been leading demands for tough action as banks prepare to make a bumper round of payments.

Mr Cable's allies have suggested Britain should follow Ireland's lead and block bonuses at institutions part-owned by the taxpayer, such as the Royal Bank of Scotland.

Cable built his reputation, in opposition, as the hammer of the bankers; in government for the first time in his life, he had the opportunity to help restrain the excesses, greed and irresponsible behaviour of our bailed-out financial elites. But no more. He is a diminished figure, lacking clout and credibility. George Osborne will be the man doing the deals with the bank bosses on behalf of the coalition and, as Cable admitted to the Telegraph duo:

We have a big argument going on about tax [on the bankers] and that is party political, because I am arguing with Nick Clegg for a very tough approach and our Conservative friends don't want to do that.

Osborne and his City allies might argue, in response, that the Treasury has already announced a levy on banks that will raise £2.5bn a year. But as the Labour MP Chuka Umunna, a member of the Treasury select committee, pointed out the day after the Chancellor's Spending Review on 20 October:

The government has opted to apply the levy over and above a £20bn allowance rather than using a threshold. Under a threshold, any bank with total liabilities of more than £20bn would have been taxed on all their profits, while under the plans announced today all banks regardless of their size will not be subject to the levy on their first £20bn of taxable liabilities.

A stipulation was included in today's plans that the levy will not apply to firms where 50 per cent or more of activity is defined as "non-financial". Because investment banks often have extensive and varied operations, this could allow firms to dodge the tax.

Figures obtained by Umunna through a parliamentary question in July show that the government only hopes to raise £1.15bn from the levy in 2011-2012 and £8.37bn in total between 2011-2012 and 2014-2015 – less than half the government's total cuts to welfare spending of £18bn announced in the Spending Review. As Rooksby concluded in his CiF piece:

The last government bailed out a banking system on the verge of collapse. Now this one is demanding that the rest of us pay for it . . .

Merry Christmas!

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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Find the EU renegotiation demands dull? Me too – but they are important

It's an old trick: smother anything in enough jargon and you can avoid being held accountable for it.

I don’t know about you, but I found the details of Britain’s European Union renegotiation demands quite hard to read. Literally. My eye kept gliding past them, in an endless quest for something more interesting in the paragraph ahead. It was as if the word “subsidiarity” had been smeared in grease. I haven’t felt tedium quite like this since I read The Lord of the Rings and found I slid straight past anything written in italics, reasoning that it was probably another interminable Elvish poem. (“The wind was in his flowing hair/The foam about him shone;/Afar they saw him strong and fair/Go riding like a swan.”)

Anyone who writes about politics encounters this; I call it Subclause Syndrome. Smother anything in enough jargon, whirr enough footnotes into the air, and you have a very effective shield for protecting yourself from accountability – better even than gutting the Freedom of Information laws, although the government seems quite keen on that, too. No wonder so much of our political conversation ends up being about personality: if we can’t hope to master all the technicalities, the next best thing is to trust the person to whom we have delegated that job.

Anyway, after 15 cups of coffee, three ice-bucket challenges and a bottle of poppers I borrowed from a Tory MP, I finally made it through. I didn’t feel much more enlightened, though, because there were notable omissions – no mention, thankfully, of rolling back employment protections – and elsewhere there was a touching faith in the power of adding “language” to official documents.

One thing did stand out, however. For months, we have been told that it is a terrible problem that migrants from Europe are sending child benefit to their families back home. In future, the amount that can be claimed will start at zero and it will reach full whack only after four years of working in Britain. Even better, to reduce the alleged “pull factor” of our generous in-work benefits regime, the child benefit rate will be paid on a ratio calculated according to average wages in the home country.

What a waste of time. At the moment, only £30m in child benefit is sent out of the country each year: quite a large sum if you’re doing a whip round for a retirement gift for a colleague, but basically a rounding error in the Department for Work and Pensions budget.

Only 20,000 workers, and 34,000 children, are involved. And yet, apparently, this makes it worth introducing 28 different rates of child benefit to be administered by the DWP. We are given to understand that Iain Duncan Smith thinks this is barmy – and this is a man optimistic enough about his department’s computer systems to predict in 2013 that 4.46 million people would be claiming Universal Credit by now*.

David Cameron’s renegotiation package was comprised exclusively of what Doctor Who fans call handwavium – a magic substance with no obvious physical attributes, which nonetheless helpfully advances the plot. In this case, the renegotiation covers up the fact that the Prime Minister always wanted to argue to stay in Europe, but needed a handy fig leaf to do so.

Brace yourself for a sentence you might not read again in the New Statesman, but this makes me feel sorry for Chris Grayling. He and other Outers in the cabinet have to wait at least two weeks for Cameron to get the demands signed off; all the while, Cameron can subtly make the case for staying in Europe, while they are bound to keep quiet because of collective responsibility.

When that stricture lifts, the high-ranking Eurosceptics will at last be free to make the case they have been sitting on for years. I have three strong beliefs about what will happen next. First, that everyone confidently predicting a paralysing civil war in the Tory ranks is doing so more in hope than expectation. Some on the left feel that if Labour is going to be divided over Trident, it is only fair that the Tories be split down the middle, too. They forget that power, and patronage, are strong solvents: there has already been much muttering about low-level blackmail from the high command, with MPs warned about the dire influence of disloyalty on their career prospects.

Second, the Europe campaign will feature large doses of both sides solemnly advising the other that they need to make “a positive case”. This will be roundly ignored. The Remain team will run a fear campaign based on job losses, access to the single market and “losing our seat at the table”; Leave will run a fear campaign based on the steady advance of whatever collective noun for migrants sounds just the right side of racist. (Current favourite: “hordes”.)

Third, the number of Britons making a decision based on a complete understanding of the renegotiation, and the future terms of our membership, will be vanishingly small. It is simply impossible to read about subsidiarity for more than an hour without lapsing into a coma.

Yet, funnily enough, this isn’t necessarily a bad thing. Just as the absurd complexity of policy frees us to talk instead about character, so the onset of Subclause Syndrome in the EU debate will allow us to ask ourselves a more profound, defining question: what kind of country do we want Britain to be? Polling suggests that very few of us see ourselves as “European” rather than Scottish, or British, but are we a country that feels open and looks outwards, or one that thinks this is the best it’s going to get, and we need to protect what we have? That’s more vital than any subclause. l

* For those of you keeping score at home, Universal Credit is now allegedly going to be implemented by 2021. Incidentally, George Osborne has recently discovered that it’s a great source of handwavium; tax credit cuts have been postponed because UC will render such huge savings that they aren’t needed.

Helen Lewis is deputy editor of the New Statesman. She has presented BBC Radio 4’s Week in Westminster and is a regular panellist on BBC1’s Sunday Politics.

This article first appeared in the 11 February 2016 issue of the New Statesman, The legacy of Europe's worst battle