It was "savage" for Campbell. But only outside

A defiant Alastair Campbell was never going to come clean at the Iraq inquiry

It was the first big name. The scene outside the Queen Elizabeth II Conference Centre in Westminster this morning reflected the anticipation. Photographers thronged the entrance, policemen lined the streets, television presenters perched like birds along a wall waiting to go on air. The queue for public access was the longest it had been since the Iraq inquiry had begun, said a dedicated inquiry-goer ahead of me in the queue. "Do you think he'll come clean?" one woman asked enthusiastically.

The moment Campbell stepped out of his car, he was mobbed by cameramen -- policemen had to fight them off to let him through. Once inside, I heard two inquiry staff members discussing his arrival. "It was savage," said one. "He [presumably Campbell] said it was worse than Hutton."

But Campbell, it quickly became clear, was not going to "come clean" despite prodding from the panel (mostly from Sir Roderic Lyne, who was by far the most needling and interrogative of the committee members). In fact, he was going to do what he does best: stay resolutely on-message.

Parts of the press are running the "letters" story -- that Tony Blair pledged Britain's support for the Iraq war in a series of notes (which Campbell saw) to George W Bush in the course of 2002, while publicly backing the diplomatic process. But in reality, for five hours straight, Campbell doggedly defended both the decision to go to war and the process leading up to invasion (he admitted government weakness only in the aftermath of the war).

As he put it: "I defend every single word of the dossier. I defend every single part of the process."

That's not to say he wasn't rattled, or that inconsistencies weren't thrown up by some of Lyne's more persistent lines of questioning. Campbell never thought it necessary, for example, to clarify the 45-minute claim as it was reported in a number of newspapers. (His excuse? That if he had spent all his time countering false stories in newspapers it would have absorbed him "24/7".) Nor did he see anything wrong with his chairing of the meetings that put together the case for war, despite, at the very beginning of the session, insisting that he was "not a policy person. I never was." He chaired, he said, because of the "support" he was giving John Scarlett on "presentational" aspects of the dossier.

Further questioning on the dossier only elicited Campbell's wrath, directed mostly at the media. He still seemed obsessed by Andrew Gilligan's report on the Today programme that claimed his dossier was "sexed up", constantly repeating his belief that the only reason why people questioned the dossier was the hyped-up media reporting. Clearly his contempt for journalism in this country hasn't abated, either (he complained of "conspiracy theories" published in the Guardian yesterday).

By contrast, Campbell's loyalty to Blair, in his defence of the previous prime minister's "conviction" about Iraq, was passionate. But he also turned to Blair to help him in his stickiest moments -- as Lyne challenged him over the dossier's claim that the intelligence was "beyond doubt", Campbell tellingly shifted the focus. It was the then prime minister's "belief", and fundamentally his final "judgement", that Iraq was a growing threat. He was loyal, unquestionably, but his evidence also set the stage for Blair's appearance before the inquiry later this month.

Campbell was a strange combination of vague and pugilistic. He veered from not being able to recall meetings or conversations (even some of the most important, such as the conference between Bush and Blair at Crawford) to bullishly recounting the exact dates of media reports and their contents. He quibbled about semantics or the "philosophical" question of how you define the UN.

But, over and above it all, he was adamant: he would defend the course of events that led to the invasion of Iraq until the "end of his days". Not only that, but Britain and her people should be "proud" of what we did. The shaking heads in the public audience didn't seem to agree.

Sophie Elmhirst is features editor of the New Statesman

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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