Banker-hatred expresses a longer, deeper crisis

Financiers' immunity from justice mirrors their insulation from recession.

Why are we so outraged by the Barclays-Libor affair? Silly question really. It is scandalous that traders appear to have manipulated a fundamental market-making interest rate in pursuit of a quick profit. It is emblematic of habits and ethics that steered the British economy onto the rocks in 2007-08. The detail of the story – the brazen emails that lay bare the scam – exude the arrogant sense of entitlement that presents the protagonists in a repulsive light. And it reminds us, when we see Bob Diamond, conspicuously unburdened by judicial investigation or conscience, that the caste of people with the strongest claim to have caused the financial crisis are the same ones who seem least afflicted by its consequences. That provokes our natural sense of injustice.

But there is another layer to public feeling about this issue. It was the subject of an event I attended this morning at the Resolution Foundation, the consistently excellent think tank that dedicates a lot of thought to the problems facing low-to-middle income households. They are famously squeezed (the low-to-middle income households, that is; Resolution are hardly even cramped in their lovely spacious West End office and, outside of Westminster, are not all that famous).

The key observation contained in Resolution analysis – available on their website – is that wages and earnings for most people in Britain stopped growing some time in the middle of the last decade. As the cost of basic goods and services has risen, a process accelerated by some painful bursts of inflation in the last couple of years, people are struggling to keep their heads above the water. Crucially, this process started before the crash and before the recession. It is also a phenomenon recorded in many other developed economies and is especially pronounced and protracted in the US. (For a brilliant account of how wage stagnation is hollowing out the American middle class, read this essay by Ed Luce in the Financial Times. Behind a paywall, sadly.)

In the UK, the trend for decline in wages and the attendant slide in living standards was held back by the growth of tax credits. Shadow Chief Secretary Rachel Reeves spoke at this morning’s event and mounted a vigorous defence of tax credits – generally scorned by the coalition as a tool of deranged Brownian micro-management and first in line for cuts. The other way Britons topped up stagnant wages was private sector borrowing: credit cards, store cards, re-mortgaging, high street lending etc. That, needless to say, was not a terribly sustainable route to prosperity.

An important point that Resolution make (and that Reeves touched on but with characteristic caution) is that, when growth returns to the UK economy, there is no reason why it should do so in a way that solves the longer term structural squeeze on incomes. This is not some abstract question of economic balances. It is probably the issue that will decide the next election. On current trajectories, the overwhelming portion of British voters will reach 2015 feeling poorer, less secure in their jobs - if they have one - and less hopeful for the future than they did in 2010. And that is true even if the economy is growing.

Downing Street are alert to the problem. One reason why fuel duty rises were scrapped this week is that David Cameron and George Osborne badly need to find ways to signal that they have noticed how hard many people are finding it to make ends meet.

One Number 10 advisor told me recently of his conviction that politics for the next decade will come to be dominated by the decline in living standards for ordinary households and the question “so what are you going to about it?” I think he is probably right.

And it is against that backdrop that the Barclays scandal has to be seen. It is not just offensive in some abstract judicial way. It isn’t just scandalous as a case of bad regulation and wickedness unpunished. Seeing what bankers have been up to and suspecting that they might get away with it, when they have escaped the financial consequences of their actions and preserved their rising incomes, is a vicious, sneering affront to the British people. Politics itself will be devalued - more than it already is - if it fails to offer an effective response to their anger.

Rafael Behr is political columnist at the Guardian and former political editor of the New Statesman

Photo: Getty
Show Hide image

Tail docking is described as “barbaric” – so why did the SNP vote to bring it back?

The decision by the SNP to permit the docking of puppies' tails seems bizarre - until you consider the party's divided loyalties.

As Holyrood votes go, it probably doesn't get more emotive than the decision to lift the ban on tail docking - a procedure carried out on three-day-old puppies which involves crushing cartilage, nerves and bone without anaesthetic, and which campaigners have called "barbaric".

The reasoning is that these "working" dogs, flushing out animals to be shot on Scotland's vast hunting estates, can injure their long tails. The British Veterinary Association disagrees, saying the procedure inflicts significant pain and deprives dogs of a "vital form of canine expression". 

So why has the Scottish National Party, with its left-wing rhethoric and substantial block of left-leaning newer members, voted through such a deeply controversial proposal?

One clue is to be found in 2014-15 - not the independence referendum, but the push for land reform which followed it. The extraordinary concentration of land ownership in Scotland - around 430 families or companies own half of the private land - became a touchstone issue for independence campaigners. After September 2014, many transferred their enthusiasm to this issue, demanding a new bill that would kickstart land reform after a decade in the long grass.

This presented a real problem for the SNP. In its longheld tactic of appealing to both left and right, rich and poor, the land issue showed up the cracks. While the new First Minister made rash promises of "radical" reform in November 2015, her cabinet nevertheless included Fergus Ewing, a centre-right politician with links to the landed estates and rural lobby. 
 
Pictures of Ewing clad in tweed alongside gamekeepers at a PR stunt caused some of the party's new membership a twinge of unease. Unedifying rows over fracking, which highlighted Ewing's relationship with the Duke of Buccleuch, did not help. While much was made of the SNP's 56 MPs opposing fox hunting at Westminster, Ewing opposed a Scottish ban more than a decade before
  
Before the SNP made its unprecedented break into the Labour strongholds of the west of Scotland and central belt, the party's support was concentrated in the largely rural east. Perthshire, Banff and Buchan, Moray are places where people voted Tory in the past - and indeed, turned blue once more this June. Not that such a swing can be said to have come entirely from SNP voters. Nevertheless, it does highlights another side of SNP membership that is often forgotten about. "It's said that there are two SNPs," said Professor Ailsa Henderson, professor of political science at the University of Edinburgh. "An SNP voter in Govan is perceived to have a very different profile than another in Perthshire". 
 
This project to appeal to all Scotland - particularly noticeable during Alex Salmond's leadership - produces strange paradoxes, and this tail docking issue is just the latest. The rural lobby is strong, from gamekeepers' associations to hunting proponents to the powerful Countryside Alliance. The current government's proposal to reintroduce the practice didn't come out of the blue. As Green MSP Mark Ruskell explains, the lobbying began with the SNP's victory at Holyrood in 2007. The previous Labour-led "rainbow" parliament, with its seven green MSPs and six socialists, had introduced the Animal Welfare (Scotland) Act, banning the practice of docking as well as fox hunting. 
 
"The gamekeepers were furious," Ruskell said, "And the first thing they did was to lobby the new Scottish government". Ten years later, their wish was granted. "The evidence was rejected by professional bodies, but they still went ahead. It's been spectacularly misjudged," added Ruskell. The power of lobby groups at Holyrood has repeatedly been raised as a concern by campaigners and parliamentarians alike, with last year's Lobbying Act cricitised as being far too weak to ensure real transparency. Pressure from gamekeepers and shooting groups, Ruskell said, influenced the whole way the evidence was put together. One report was simply a survey of self-selecting shooting estates, describing the frequency of tail injuries. 
 
For its part the Scottish government defended the move by pointing out that the rules will still be more restrictive than in other parts of the UK. Only a vet can make the decision to shorten tails - "no more than the end third" - and it will apply only to spaniels and hunt point retrievers. "We have seen enough evidence that some working dogs are suffering tail injuries to make the case for the law being changed", said a government spokesperson. "Scotland is a nation of animal lovers and we take the welfare of our pets, animals and livestock very seriously." 
 
Reaction from SNP members online has been fairly damning, with some talking of leaving the party - though others have defended the decision. The next big showdowns in Holyrood on animal welfare are likely to be just as emotive: the use of electric shock collars on dogs, and the prosecution of wildlife crime (or, how to deal with the fact that poisoned, bludgeoned birds of prey keep turning up on grouse shooting estates). The latter in particular will test, once again, the direction of a party split between appeasing a land management lobby, and meeting the high expectations of its newer members. 
 

0800 7318496