Why Labour should support an English parliament

A devolved body could aid the party's revival in England.

The former Labour cabinet minister George Robertson declared that devolution would "kill nationalism stone dead". Instead, it turned out to be the biggest threat the Union has ever faced. Devolution has given the Scottish National Party [SNP] the platform it needs to fulfil its dream of disbanding the United Kingdom.

Alex Salmond is proving just as adept at manipulating English public opinion as Scottish public opinion. The Campaign for an English Parliament , which I chair, has noticed a sharp increase in calls for English independence in line with the SNP’s campaign for Scottish independence. A ComRes survey for Newsnight showed that 36 per cent of people in England (and 47 per cent of skilled manual workers) now want England to become an independent state and to break up the United Kingdom.

The devolutionary problem is that it is too easy for nationalist politicians to indulge in political point scoring by blaming Westminster for their problems. And at a time of unprecedented public austerity these tensions are exacerbated yet further.

There are now distinct differences in state provision, including health, education (most notably tuition fees) and elderly care, between the different nations of the UK. These divisions are deliberately emphasised by nationalist politicians with the aim of inflaming national passions. And not only ostensibly nationalist politicians. Rhodri Morgan, Labour’s former First Minister for Wales, declared that his aim is to "make the English feel jealous". But it is encouraging to hear Carwyn Jones now talk about the need for an English parliament.

The Union will only survive if it treats all its citizens fairly and equally. We need a solution that is fair to all the UK's constituent nations, and that allows us to separate what divides us, from what unites us. If this is done in good faith, then there is no reason why a renewed Union cannot be cemented. At least, if it is done early enough, and before attitudes have hardened too far on all sides and the talk of independence becomes too entrenched

The only answer to these problems is to reinstate an English parliament matching those parliaments already granted to Scotland, Wales and Northern Ireland. As Tony Benn proposed in his 1991 Private Member’s Bill "The Commonwealth of Britain", this would mean national parliaments dealing with the issues that concern the individual nations of the United Kingdom. Just as there is no better way to drive a wedge between us than by treating the people of England as lesser citizens, there is no better way of reinforcing the UK family than by recognising our individual needs and treating us all equally.

The problem is that Westminster MPs will not vote for an English parliament that takes away most of their domestic powers. This is naked careerist self-interest. The remaining federal responsibilities would only need a much smaller Union parliament or, in other words, one with fewer MPs. And so even though every MP lost from the Union parliament could be an MP gained by an English parliament, they don't want to take the risk of voting themselves out of a job.

There are other arguments against the restoration of an English parliament, of course. But they fall apart under the slightest scrutiny. The first of these is that an English Parliament would be inevitably dominated by the Conservative Party. Yet the same was said about the "inevitable" Labour domination of the Scottish and Welsh Parliaments, which simply did not happen. Democracy has a tendency to find a balance. An English parliament would be accompanied by a resurgent Labour movement in England under an English Labour Party, which in turn would improve the party’s standing in Westminster.

Labour established devolution in the first place in order to defend Scotland and Wales from what it saw as the depredations of an over-mighty Conservative parliament at Westminster. The same opportunity is now presenting itself. For instance, England's forests were put up for sale by the coalition but the forests of Scotland, Wales and Northern Ireland were all protected by their respective parliaments.

The second argument is that the current problems with the restored Scottish parliament would be replicated in a restored English parliament. This is unlikely as long as the resentment now building in England is dealt before the Scottish independence referendum. Labour cannot wait, procrastination will be fatal. National Devolution has emphasised the fault lines within the Union. Indeed, rather than trying to deny that these exist it is necessary to cement the Union along these lines by going still further and creating a federal state - the only practical way of separating what divides us from what unites us.

Nor is England "too big" for a federation to work. A federation would directly address the problem of an out-sized England because English voting weight would affect only England itself. If a federation with England wouldn't work then a Union without a federation's protections certainly couldn't - except of course it did, for nearly 300 years before being undermined by devolution.

In his book Will Britain Survive Beyond 2020?, the Welsh Conservative Assembly Member David Melding argued: "The best way to preserve Britain as a multi-national state is to accept that the UK...requires a new settlement. This settlement will need to be federal in character so that the sovereignties of the Home Nations and the UK State can be recognised in their respective jurisdictions". Henry McLeish, the former First Minister of Scotland, was also the man who saw the Scotland Act through Westminster. When speaking to the Calman Commission (on Scottish Devolution) he said that the English need a voice, and that he doesn't think that our current asymmetrical devolution can be sustained. Furthermore, and I quote: "We must move towards some balanced framework, a quasi-federal framework, where it can make some sense rather than the English feeling aggrieved. At the end of the day, their grief and their anger spills over on to us."

It's not too late to resolve the problems that devolution has caused. But time is short. What do you chose – dissolution of the UK or a federal UK? If the latter, then action is urgently needed.

Eddie Bone is the chair of The Campaign for an English Parliament.

"An English parliament would be accompanied by a resurgent Labour movement in England". Photograph: Getty Images.
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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