Mixed metaphors in the AV race

Is AV a horse race or a football match? Or is it just whatever the plebs can understand?

What if a general election were a horse race? No, too complicated. Fences. Horses and jockeys. Difficult to understand. I'll try again. What if a general election were a 100-metre race? Mmm, no, too tricky. Scope for misunderstandings. Lanes cause problems. No, that won't do. That won't do at all. Starting pistols? Photo finishes? All far too hard to understand. Give me a minute.

OK, let's say a general election is just like a cricket match. And the ball is your vote, and the stumps are the winning margin, and you bowl your vote at the winning margin, and . . . no. No, no, no. This isn't helping at all.

I'll try again. Nice and simple. Because you're stupid. Because you're too thick to get the idea of voting, and you need it turned into something that you can understand, because you hate the idea of politics and everything that goes with it; and besides, you don't have the time to think about facts, or problems, or complexity, or nuance – you're just a tot in a crib, waiting for Daddy to tell you a story. You don't want anything other than a happy ending.

Let's face it, you're thick. You're dumb. You're barely more than a dribbling infant slamming its tiny hands into a bowl of goo because you like the way it splatters. That's the level we're trying to pitch this at. Because that's all you're capable of getting. Voting is something that you're afraid of because you're a dummy, and unless we talk to you about it bright colours AND CAPITAL LETTERS and smiley faces, you're not going to get your oh-so-pretty little heads around it, are you?

OK. So. Right. Imagine you're at a football match, right, and the team you wanted to win didn't win because someone else wanted the other team to win, even though they actually wanted your team to win. Yes . . .? No. No, we really aren't making any headway.

OK, let's see if we can try and nudge you in the right direction another way. What if someone you liked thought about voting in a particular way; what would you think then? Look, here's someone famous, them off from off of the television. What do you think now? They look pretty bright, don't they, and they got famous for writing, or being funny, or running around and jumping over hurdles, or whatever it is; and look, they think this way. Or, if that won't convince you, look at these bad people, people you don't like. They're bad people, and they think this way. Now what do you think?

Forget about all those thoughts about things being slightly more complicated than they might at first appear. Try to forget, if you can. It's a miracle you don't burn yourself on the toaster every morning, really, but there it is; you've made it through life this far without too many problems, and so you get given a vote, to do with as you wish. It's just that, well, you don't want to do all that boring stuff about democracy, and representation, or the comparable benefits of different voting systems, do you? You don't want to think about all that. You've got better things to do.

So let's just talk about things in a simplistic, infantile way that you can comprehend, even in your tiny squashy noggin, because you're frankly not bright enough to want to know about anything that's slightly more difficult to grasp than a slap in the face with a gardening glove. Just you leave it to us to tell you how to do it. And there you are! Democracy will be improved unimaginably, just by you putting your vote here. Or there. Wherever we've told you to put it. Because it's the right thing for YOU.

Patrolling the murkier waters of the mainstream media
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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