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Galloway's victory: everyone's an expert, says Mehdi Hasan

Why did Bradford West fall to Respect, and how bad it is for Labour?

Were you up for Galloway? I was - and I was gobsmacked by the result. A phenomenal, unexpected and landslide victory for the far-left Respect Party. Galloway, the bombastic founder and former leader of Respect, beat the Labour candidate Imran Hussain by more than 10,000 votes, with an astonishing swing of 37 per cent, in a seat that had been won by Labour in every single election since 1974. His was the first by-election victory by a candidate outside of the three major parties since March 1973 (when Dick Taverne seized Lincoln from Labour). And at just over 50 per cent, the turnout, as David Blunkett put it on the Today programme this morning, was "remarkable" too.

So what happened? How did this happen? The blogosphere and Twitter this morning are both abuzz with quick insights and ready-made pearls of wisdom on the 'meaning' of the Bradford West result - with regard to race relations, the Labour Party, British Muslims, identity politics, inner cities, the white working class, Ed Miliband's leadership - from Westminster-based journalists who draw on their years minutes of experience reporting on the ground, and talking to voters, in cities like Bradford, Leeds and Birmingham.

The truth is that none of us hacks saw this coming, so why on earth do we rush for pat explanations once the result's in? How about some proper reporting from Bradford first? Let's see what the evening news bulletins come up with, and what the constituents of Bradford West are actually saying. (Incidentally, on the subject of not seeing it coming, the best (worst?) tweet came from a smug John Rentoul on Wednesday: "Could he give Miliband/Labour a bloody nose?" A George Galloway #QTWTAIN from Political Betting".)

In less than twelve hours, there have been a plethora of explanations and "narratives" from self-proclaimed experts. I'll be honest: I have no idea how much biraderi and Pakistani-style clan-based politics played in provoking Labour's defeat in Bradford. Nor do I have the faintest clue as to whether or not, as one of my colleague Dan Trilling's Bradford contacts told him, the result was "partly driven by uni educated grads coming home and dismayed by lack of jobs+corrupt local politics". Unlock Democracy, the pressure group, tried to claim in a press release this morning that the result was a consquence of "the recent cash for access scandal" and a clear rejection of mainstream party politicians as "the people of Bradford West fired a shot across their bows". Really? Or was it, perhaps, all about the presence on the ballot paper of George Galloway himself, the provocative, outspoken larger-than-life politician-cum-media-personality who knows how to court the "antiwar" and "Muslim" votes (but just not, remember, in Poplar and Limehouse)? Maybe. Then, of course, there were the suggestions on Sky News and Five Live in the early hours of this morning that Galloway had won in the 'white' wards of the constituency too (and, I should add, we await a full breakdown of the vote), as well as the text to me from a senior Labour figure this morning which referred to "white w-c hostility to an Asian Labour candidate" and a "local party that needs some sorting out".

I'm with Labour's Harriet Harman, who said on the Today programme this morning that it's too soon to "jump to any swift conclusions" about the meaning of the result and that it was foolish for commentators "to sit in London and pronounce on what happened". Hear, hear.

On the subject of Labour, it's worth pointing out that when Ed Miliband's party won every single one of the previous five by-elections to be held since the 2010 general election, few commentators cited those victories as evidence that Labour was on course for a general election win in 2015. Yet a single defeat in Bradford has led to some of the more hysterical members of the political blogosphere - yes, I'm looking at you Dan Hodges - saying things like "the Labour Party is no longer fighting to win the next election. It's fighting to stay in existence." Um. Ok. Last time I checked, the Labour Party had a double-digit lead in the opinion polls, the Tory-led coalition was presiding over a double-dip recession and psephologists were pointing out how Cameron needed a 7.4 per cent lead over Labour at the next election just to secure a single-seat majority in the Commons.

Yes, it was a bad, bad night for Labour as they lost a safe seat that both Eds had visited and campaigned in - and their vote share collapsed. But, lest we forget, so did the Tories' share of the vote, with Conservative Party chair Sayeeda Warsi reduced to pointing out on Sky News how the governing party had

kept our deposit

Congratulations! This morning, an ebullient ConservativeHome editor Tim Montgomerie tweeted:

Ed Miliband didn't win in Scotland. Ed Miliband didn't win in Bradford. If he doesn't win in London it's crisis time for him.

Hold on, I don't deny the Labour leader will have questions to answer if Livingstone doesn't win in London in May but let's be clear: even if Labour loses the mayoral election, the party will have been defeated by Salmond (Scotland), Galloway (Bradford) and Johnson (London). In all three of them, the victor would be a canny, charismatic populist; in none of the three could Cameron or Osborne take credit for defeating Labour and Miliband. I stand by the conclusion of my column in yesterday's magazine: I don't see where Cameron's Conservatives are going to get the extra votes from, between now and May 2015, to secure a parliamentary majority. However, as Bradford West shows, that doesn't mean Miliband's Labour Party is going to get a majority either. Politics, as Raf says, is "hung".

On a side note, the hysteria surrounding Galloway's victory has far outweighed, for once, the hysteria surrounding Ed Miliband's leadership "crisis". I am no fan of Galloway or his sectarian, far-left, self-serving politics but I was amazed at how unified, vitriolic and, I'm sorry to say, lazy the Twitterati's response has been to the Bradford West result.

Indeed little has changed since the last Galloway upset victory. Media commentator Roy Greenslade - no friend of Galloway's and the subject of a lawsuit from the latter! - wrote a powerful piece in the Guardian back in May 2005:

There will be many who snort contemptuously when I say that Galloway is now more sinned against than sinning because he has become so unpopular with both the media and political elites that they regard him as outside the normal rules of the game.

Indeed, to defend him places the defender beyond the pale too. But the victim of what has all the hallmarks of a media feeding frenzy deserves a fair hearing, not only for his personal benefit, but for those he now represents - and in order to confront journalists with their own misguided agendas.

Let me be clear again for the sake of the illiterates and Islamophobes who will no doubt congregate "below the line": I don't have any personal affection or admiration for Galloway, nor am I a supporter of the Respect Party. Galloway was, by all accounts, a poor constituency MP in Bethnal Green and Bow; he made a tit of himself on Celebrity Big Brother; and I haven't yet forgiven him for trying to to sue the television company I worked for in 2002 based on a (mis)quote from me. His fawning email to "His Excellency" President Assad and his now-notorious speech to the "indefatigable" Saddam are both stomach-churning - but to pretend that he is the only politician to have been chummy with Mid East dictators is beyond absurd.

Tony Blair, idol of the British press corps, embraced Colonel Gaddafi in the desert and referred to Egypt's torturer-in-chief Hosni Mubarak as "immensely courageous and a force for good". When asked by Jeremy Paxman whether he'd be willing to condemn Saudi Arabia's barbaric and medieval criminal-justice system, Blair replied:

They have their culture, their way of life.

David Cameron and Nick Clegg's government, meanwhile, sold weapons to Gaddafi right up until the NATO attacks on Libya began and continued to sell arms to the Bahraini king even after he'd started teargassing and torturing his opponents last year.

Now, as far as I'm aware, Galloway, despite his multitude of sins, hasn't ever armed or funded any foreign dictators. Labour and Tory frontbenchers, on the other hand, have - and the latter continue to do so. But you wouldn't have guessed from the one-sided reaction on Twitter this morning. Few of our brave, fearless and liberal journalists are willing to call out Cameron, friend of the Bahrainis, or Blair, friend and holiday guest of Mubarak. It's much easier to go after the rabble-rousing demagogue who appeared on a reality show and attack those who highlight the brazen double standards as "apologists" for Galloway and/or Saddam.

I've said it before and I'll say it again: the sanctimony and shameless hypocrisy of some of our leading reporters, commentators and bloggers is a sight to behold.

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