Show Hide image

The return of the Blair

What Ed M should and shouldn't learn from TB.

He's back. From yesterday's Sun:

Ed Miliband has been holding secret talks with former PM Tony Blair to discuss Labour's strategy.

The pair have met four times to review the party's direction under Mr Miliband's leadership.

That is despite his attempts to distance the party from the New Labour years. He has also criticised Mr Blair's decision to take Britain to war in Iraq.

But a party source said despite their differences, the pair have held fruitful discussions since Mr Miliband became leader.

And from Jonathan Freedland's Guardian column last Saturday:

The former PM, clearly keen to re-engage with British politics after nearly five years away, has been meeting small groups of young, class-of-2010 Labour MPs. What he says privately is that the Lib Dem position is hopeless. . .

Blair's proposed method starts with a repeated insistence that this is nothing but a "Tory government".

I have no problems with Blair advising Ed Miliband or the "class-of-2010" MPs - and not just because our former premier agrees with my line on the coalition. As a "friend" of Blair's told the Sun:

Tony is the greatest political strategist of his generation -- why wouldn't Ed want to meet him?

Indeed. And Miliband shouldn't be embarrassed about taking Blair's advice on strategy and tactics and spin and communications and the rest. The truth is that Blair was, and still is, a master of presentation and persuasion. As I wrote in a column in the Times in December:

Above all else, [Ed Miliband] struggles as a rhetorician in set-piece speeches and primetime interviews. Mr Miliband is the exact reverse of Tony Blair: for this Labour leader, politics is an intellectual, not a theatrical, pursuit. He needs to be much more Blair-like in front of the cameras.

But Miliband and the new intake of Labour MPs should be wary of listening to Blair on matters of substance. According to the Sun, the pair "talked about the need for Labour to be in the centre ground of British politics". But Blair's definition of the "centre ground" is very different to Miliband's - it is premised on the arguments and rows of the 1990s and the fallout from Labour's back-to-back election defeats, at the hands of Margaret Thatcher, in the 1980s. Yet, from public attitudes to high pay and bankers' bonuses to political and media attitudes to the Murdoch empire, the world has moved on. We don't know what TB's response would have been to the 2008/09 financial crisis - we do know, however, that he offered a seeming endorsement of the Tory-led coalition's cuts-obsessed economic strategy in his memoir, A Journey (though Freedland says Blair now "backs Ed Balls in the great macro-economic question of the age, agreeing that excessive austerity will choke off recovery and that what's needed is Keynesian action for growth. . . accompanied by a clear deficit reduction plan and enough business allies to convince voters that if Labour's advocating spending it is doing so not out of congenital habit, but hard-headed economic necessity").

The standard and lazy riposte from the ultra-Blairites to even the mildest criticism of their hero is to remind us that he "won three elections in a row". Yes, he did - an impressive, remarkable and historic achievement. But, in the cold light of history, his record as a vote-winner isn't as impeccable or infallible as some might assume. Some points to consider:

1) In July 1994, Blair inherited a 13 per cent poll lead over the Tories from the late John Smith; it was handed to him on a plate. Despite extending it to a massive 29 points in June 1995, on election day in May 1997, Labour beat the tired, divided, lacklustre, scandal-ridden Tories by - wait for it - just under 13 percentage points.

2) Labour lost four million votes on Blair's watch, between 1997 and 2005 (and another million on Brown's watch, in 2010). From the moment Blair walked through the black door of Number 10, the Labour vote share started to decline and the "master" himself could do little to halt or reverse it in the subsequent general elections.

3) Blair won his three election victories, in an age of affluence, against John Major, William Hague and Michael Howard (who picked up the baton from Iain Duncan Smith). He never had to face a tough opponent - be it Ken Clarke, who the Tories crazily rejected again and again, or Blair's own "heir", David Cameron.

4) Blair benefited from a voting system that is biased in favour of the Labour Party: in 2005, for example, TB secured a third term, with a healthy 66-seat majority, on just 35.2 per cent of the vote (that is, one in five eligible British voters). Five years later, however, Cameron's Conservatives couldn't get a majority in the Commons despite winning 36.1 per cent of the vote.

5) By the time Blair reluctantly left office, in the wake of a series of embarrassing scandals and unpopular wars, his sheen had worn off - the Tories' had a near-uninterrupted poll lead over Blair's Labour Party between December 2005 and Blair's resignation in May 2007. Unlike Blair, Ed Miliband inherited a Labour Party trailing the Tories in the polls in September 2010.

In our recent biography of Miliband, James Macintyre and I explore how the current Labour leader succeeded in beating his elder brother - and hot-favourite - David by understanding the need for a message that stressed "change" over "continuity". As the younger Miliband stated, provocatively, in an essay for the Fabian Society in August 2010:

It is my rejection of. . . New Labour nostalgia that makes me the modernising candidate at this election.

It is, therefore, irrelevant how many times Miliband meets with Blair - I just hope the Labour leader doesn't forget these all-important words of his. To modernise is to change and move on from the past. In substance and message, Tony Blair is very much the past.

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.

Getty
Show Hide image

Investors are panicked - why we should care

Look closely at the markets, they tell a story. 

If markets diving was a sport, this is the Olympics. Since it became clear Britain was heading for Brexit, the FTSE 100 and FTSE 250 have been plunging headfirst into the abyss, coming up for air and then plunging again. 

On Monday morning, RBS temporarily suspended trading in its shares after the value plunged 14%, and Barclays did similar after a 10% hit to the price. 

The FTSE 100 was down 1.2% overall, while the FTSE 250, which is more exposed to domestic markets and hence a better bellweather of the domestic economy, was down nearly 4%. 

Meanwhile, the pound could buy $1.33 on Monday, compared to $1.46 a week before. 

It's the kind of day that makes financial journalists giddy with excitement and sends normally sedate investment houses into meltdown. 

But how far should ordinary voters actually care? 

After all, the general public has not felt particularly sympathetic to bankers since their reckless behaviour caused a financial crisis that threatened the very fabric of society in 2008. 

The financial services industry disproportionately benefits London - the kind of metropolitan elite society that Leave voters resolutely protested against. 

And stock markets are famously nervy. Earlier in the year, unease about China triggered a "Black Monday" for FTSE traders but made little dent in ordinary workers' lives. 

Despite all these reservations, though, this time voters should keep an eye on market moves. This is what they appears to be telling us:

1. This is a domestic crisis

Many of the biggest companies based in the UK are actually international corporations, with customers all over the world. Shares in Unilever, for example, a company that does more than half of its business in emerging markets like India, are up. 

The real damage is in the companies with a lot of exposure to UK customers. For example, shares in the housebuilder Persimmon were down 12.5% on Monday morning, while EasyJet was down 18.4%. 

The FTSE 250, which has more domestically-exposed companies, was down 5% on Monday morning, compared to the FTSE 100's much milder 1.63% dip. 

All in all, this suggests investors are nervous about the impact the uncertainty will have on the domestic economy, whether that means less shoppers on the high street or less first-time buyers able to purchase homes. 

2. Banks are still a weak spot

We may love to hate banks, but for most of us they perform essential services, like providing a safe place to hold savings, dispense cash and provide credit. Underpinning their ability to do this is, of course, their own financial stability. Since the financial crisis, building a robust banking system has been a major project of the Government and Bank of England. 

Banks are also an important chunk of the economy - in 2014, financial services added £126.9billion in gross value to the UK economy. Banks also current benefit from an EU passport which allows them easy access to the European markets.

As the suspension of RBS and Barclays shares show, though, investors are clearly feeling nervous. Virgin Money shares - the rebranded Northern Rock - were down 18.9%, while those in Lloyds Banking Group had tumbled 9.4%. 

This doesn't mean anyone has to panic about their savings, but it does suggest that UK banks are hitting a rough patch. This in turn could mean a dent in economic growth, banks moving to Europe, or in the worst-case scenario it could lead to liquidity problems and taxpayer support. 

3. Investors still trust UK institutions

Government bonds, known as gilts, are generally seen as a safe investment. It effectively means you lend to the Government via the Bank of England, in return for a certain interest payment, known as a yield. Bonds from creditworthy states, such as German bunds, pay lower yields, whereas less creditworthy states generally pay higher ones in return for the investor taking more risk. 

On Monday, 10-year gilt yields fell below 1% for the first time ever in their history. In other words, investors may be very jumpy about the stock market, but they still regard gilts over a longterm as a safe investment.

It's generally obvious that investors see governments as a safe haven, but given the spasms the UK is now going through, it's worth noting. 

The days ahead

There will be less dramatic days ahead. But some of the concerns investors feel will be more long-lasting than others. If, for example, UK financial institutions decide to move headquarters to Frankfurt or Dublin, this could tear a hole out of our current economic set up, for better or worse. It would mean job losses, particularly in London and Edinburgh. 

If house prices do stagnate, as investors seem to fear, it could make buying a property more affordable. The flipside of this is we may see an echo of the years after 2008, when house prices are low but banks were unwilling to lend to anyone but the most creditworthy borrowers.

As for the investors, there will be winners and losers. Some who buy shares now may find that once the dust settles, confidence in returns and they make a profit. But that's little comfort to anyone on the rough end of a redundancy round, or negative equity.