David Miliband guest-edits the New Statesman

In this week's magazine: Age of crisis


The special issue includes contributions from Hillary Clinton, Richard Branson, Tony Blair, José Manuel BarrosoKevin Rudd, Ed Miliband, Jonathan Coe, Kwame Kwei-Armah, Jo Brand and many others, as well as Michael Semple’s interview with a Taliban leader and David Walliams’s interview with Russell Brand 

 

For this week’s 80-page issue of the New Statesman, David Miliband, Labour MP for South Shields and former foreign secretary, has commissioned a series of articles by leading international figures from politics, culture and business on the theme of shifts in world power. His issue follows last year’s acclaimed New Statesman guest-edits by the Archbishop of Canterbury, Rowan Williams, in June, and Richard Dawkins, in December. 

The magazine is available on newsstands from Thursday 12 July. Single-issue copies can be purchased here

Click here to read David Miliband's leading article in full

Hillary Clinton: The great power shift

In the NS Essay, US secretary of state Hillary Clinton makes a major intervention on US foreign policy ahead of her government's bid for re-election this November. In an unusual and bold move, Clinton espouses her "smart power" doctrine by stating the US will place greater emphasis on financial operations - over military - in the name of US national security:

[We] recognise that countries such as China, India and Brazil are gaining influence less because of the size of their armies than because of the growth of their economies. And we have learned that our national security today depends on decisions made not just in diplomatic negotiations and on the battlefield, but also in the financial markets and on factory floors. So US has made it a priority to harness more effectively the tools of global economics to advance our strategic aims abroad. That might mean finding innovative financial levers to ratchet up pressure on Iran's nuclear programme, or forming new public-private partnerships that put corporate energy and expertise to work on such challenges as climate change and food security.

Clinton also states her government has made "expanding opportunities for women a cornerstone of America's foreign policy":

[E]mpowering women and girls around the world is crucial to seizing long-term opportunities for promoting peace, democracy and sustainable development . . . We've launched amibitous efforts to increase women's participation in the economy by opening access to credit and markets, to enhance the role of women in resolving conflicts and maintaining security, and to focus global health programmes on the needs of mothers, who are linchpins of entire communities.

José Manuel Barroso: “How is Britain so open to the world, but so closed to Europe?”

Outside Europe, Britain will be reduced to the role of a “Norway or Switzerland”, warns the president of the European Commission, José Manuel Barroso, in conversation with the NS guest editor.

Click here to read extracts from the wide-ranging discussion

Tony Blair on his friend Philip Gould

Writing in this special issue, Tony Blair reflects on his relationship with Philip Gould, the Labour Party consultant who died in November last year:

Philip was always a great writer. His notes to me during the 13 years I led the Labour Party were always so beautifully expressed that I used to say that they beguiled me, persuading me of the validity of the view just by the manner of telling it. 

As a strategist and pollster, Gould was a “genius”, Blair writes, in part for “his ability to step back from the data and surface noise”:

He often wrote in tactics; but he saved his best for strategy. In strategy he was the master: regularly challenging the conventional wisdom and always coming out with a solution to the problem, not just an analysis of it.

Gould’s book When I Die: Lessons from the Death Zone concludes with the words: “I am approaching the door marked death. What lies beyond it may be the worst of things. But I believe it will be the best of things.” Blair describes how those words by his friend affected him:

I knew Philip. But I felt as I read this that I was being introduced to someone new, someone different. This is a book that will give you pleasure and peace.

David Walliams interviews Russell Brand

Given the offer by David Miliband to interview whomever he wished for this issue of the New Statesman, the actor and author David Walliams chose Russell Brand, his “wildly famous” friend, a “cross between the Artful Dodger and Harry Flashman”. 

On Britishness and patriotism, Brand tells Walliams:

When I’m spending a lot of time in Los Angeles, I consider myself countercultural; I don’t think of myself as an establishment figure. But over here, if I see an image of Her Majesty the Queen, I wince with national pride.

Asked when he sees such an image of the monarch, Brand makes an intimate confession:

I’ve had her tattooed on my inner thigh. And I spend quite a lot of time staring at that.

The two comedians turn to politics; Brand revealing that he has never voted in his life (“It’s gestural politics”) and suggesting an alternative he thinks would be more representative of the electorate:

I’d like to see spirituality brought to the forefront of life. I think that socialism is the politicisation of spirituality. I think we have a cultural obligation to regard the whole as more significant than the individual.

Michael Semple interviews a senior member of the Taliban

The former diplomat and author Michael Semple has interviewed a veteran leader of the Afghan Taliban movement – “one of the most senior surviving Taliban commanders and a confidant of the movement’s leadership”. The identity of his interviewee is protected, to allow him to speak freely about the upper echelons of the movement, but Semple has verified his seniority and cross-checked his account.

Click here to read extracts from the widely-reported interview

Ed Miliband Diary

In the Diary column, the Labour leader Ed Miliband recounts a conversation he had on Wednesday last week at a summer drinks reception organised by the Spectator magazine:

I chat to Nick Robinson, the political editor of the BBC, about what has gone wrong with the banks and the response of politics. I find myself acknowledging that my father would probably have said this is about a conflict between democracy and capitalism.

Miliband’s Diary entry for Thursday:

I switch on the radio. Nick Robinson is on the Today programme saying he has been reliably informed how Ed Miliband sits in his Westminster office musing on how this is now a battle between democracy and capitalism.

Miliband isn’t perturbed:

Now there is a journalist with good sources.

Click here to read Ed Miliband's Diary in full

Elsewhere in the New Statesman

  • Richard Branson on tax, Bob Diamond and a European army
  • Kevin Rudd: The west isn't ready for the Chinese century
  • Jo Brand on the freedoms of punk
  • Jonathan Coe on our obsession with state-of-the-nation novels

New Statesman guest-edit exclusives

Melvyn Bragg’s guest-edit on 11 October 2010 featured “Last Letter”, a newly discovered, previously unpublished poem by Ted Hughes about the night that his wife Sylvia Plath committed suicide.

Jemima Khan’s guest-edit (11 April 2011) featured her agenda-setting interview with the Deputy Prime Minister, Nick Clegg – in which he declared “I’m not a punchbag” – as well as Hugh Grant’s undercover interview with a former News of the World executive, which became a worldwide media sensation.

Rowan Williams’s guest-edit on 13 June 2011 dominated the news agenda for several days in response to his bold leader article criticising the coalition. He wrote, “We are being committed to radical, long-term policies for which no one voted.”

Richard Dawkins’s guest-edit (19 December 2011) contained the last interview with the writer and polemicist Christopher Hitchens.

The magazine is available on newsstands from Thursday 12 July. Single-issue copies can be purchased here

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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