A big boost for Labour in London: Mehdi Hasan on the battle for mayor

Ken v Boris just got very interesting. The former mayor has much more than a fighting chance come May.

Back in November 2010, I wrote in my NS column:

One of the most frustrating aspects to writing a regular column on British politics is having to challenge the conventional wisdom in which so many of our leading broadcasters, reporters, columnists and now bloggers seem to bathe. Groupthink abounds inside the Westminster village. Lazy assumptions proliferate like weeds.

Take the run-up to the general election. For much of 2009, political correspondents and pollsters, columnists and commentators queued up to predict the size of the impending Tory landslide. Would it be double-digit? Or triple-digit? The idea that the Tories might fail to win the election outright was, to put it mildly, considered "unconventional".

I also noted how I had been

mocked by some of my peers for daring to suggest on these pages, in June 2009, in the wake of Labour's humiliating defeat at the European elections, that the Tories' poll ratings were "soft" and Labour still had "a fighting chance of a hung parliament at next year's general election".

So I couldn't help but smile when a press release from YouGov, with the results of their latest poll on London's forthcoming mayoral election, dropped into my inbox this morning.

It revealed that Ken Livingstone had overtaken Tory incombent Boris Johnson in the race for City Hall, with the Labour candidate taking a narrow 51-49 lead.

Ken takes lead over Boris in race for Mayor

announced the headline in the Evening Standard.

Refreshingly, YouGov president Peter Kellner openly confessed:

The facts have changed, so I have changed my mind.

Throughout last year, I regarded Boris Johnson as the likeliest winner of London's coming mayoral election. YouGov and other pollsters showed consistently that around one-in-five Labour supporters would desert Ken Livingstone and vote for Boris. From Labour's viewpoint, London began to look alarmingly like Scotland, where Alex Salmond won his stunning victory last year because one in five normally Labour voters switched to the SNP.

Our latest poll tells a different story. We find a five-point swing from Boris to Ken. Last June, Boris enjoyed an eight-point lead (54-46%); now Ken is two points ahead, by 51-49%. Allowing for sampling error, the race is too close to call.

Will others in the Westminster village and the commentariat now join Kellner in "changing" their minds? Will they now admit that Ken Livingstone has not just a chance but a fighting chance, a good chance, of winning May's mayoral contest? Up until this point, the "lazy assumption" - even among some centre-left journalists - has been that Boris Johnson will walk it, that he has the election sewn up. (Remember all those journalists and columnists who were so keen to crown Cameron as PM in 2009 and January-April 2010, and assume a landslide majority for the Tories was in the bag?)

YouGov's latest poll suggests that those of us who were sceptical about such claims had good reason to be. Admittedly, it's a single poll and there's all the usual stuff to note about outliers, rogues, sampling errors and the rest, but I suspect more and more polls will start reflecting Ken's start-of-the-year "surge" in the coming weeks.

As the Standard notes:

Moreover, the three issues that Londoners regard as most important are those that Mr Livingstone has campaigned hardest on: tackling crime (picked by 42 per cent), improving transport (41 per cent) and easing the cost of living (33 per cent). Only four per cent think promoting London abroad, a regular Boris theme, is a priority.

The energetic and focused Livingstone is hitting the right issues - and hitting them hard. There is a lesson for his party leader here: Ed Miliband shouldn't be trying to cover and campaign on every issue, in detail, all the time, but picking those few issues that voters care about and that Labour has leads over the Tories on - for example, jobs and the NHS - and hitting them hard, in speeches, interviews, photo-ops, etc, again and again and again.

There's also the intriguing issue of Livingstone's personality, his authenticity: in the modern political era, few candidates for high office are harmed by being themselves. In fact, the reverse is true.

Speaking of Ed Miliband, this latest poll will provide a much-needed boost for him and his aides too, after a horrid start to the year. If Livingstone wins against the odds in May, and London goes Labour, expect Miliband and his supporters to spin it as a victory for his leadership and his political agenda - and vote of no-confidence in David Cameron. If Ken loses to Boris, however, expect whispers about the future of Miliband's leadership to get louder. Much louder.

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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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