In defence of Maurice Glasman

He has spoken up for the low-paid workers whose standard of life has been forced down by excessive i

In the last two issues of the New Statesman, Maurice Glasman is to be found apologising for his remarks about immigration, but many rank and file Labour voters will be wondering why. He said nothing that was untrue or lacking in balance. As a long-standing campaigner for a living wage he will have been acutely aware that opening the borders to a sudden increase in newcomers has driven wages down, especially for the least well paid.

The same point has been repeatedly made by Polly Toynbee in the Guardian, and so far she has not been forced to recant in public. Here she is in 2005:

"The implication is that these Londoners are so thick or lazy that we need cheap foreigners for catering, caring and cleaning who can take low pay while sleeping on friends' floors in this expensive city. But what part of the good society does this help to create? It makes restaurants cheap for the well-off and lowers taxes, while public services are manned by those on sub-survivable pay."

And again in 2006: "Poor families in this most expensive city can't pay for childcare, and compete for jobs with single migrants willing to take less than a living wage. But the rich prosper: restaurants, cleaners and all other services are cheaper because wages are low."

And once more in 2010, when she criticised Gordon Brown for "boasting frequently" about low wage inflation growth, by which he meant: "Foreigners willing to work harder for less do hold down pay, especially in the care and hospitality sectors still not covered by the Gangmasters Act." Immigration is "wonderful for employers and the affluent wanting cheap nannies, cleaners and plumbers - bad for the unemployed, many of whom would have been skilled-up for the jobs otherwise.' Controlling the borders, she thought, was 'a first duty of government. Sudden and unexpected immigration has abruptly changed the nature of some communities."

Maurice Glasman was speaking with the authentic voice of Labour voters. About three quarters of Labour voters want tighter immigration controls. A YouGov poll in May this year found that 76 per cent of Labour voters supported government measures 'to limit the number of economic migrants from outside the EU who are entitled to work in Britain'. Only 18 per cent were opposed. The trouble is that the 18 per cent includes the people who write articles for the New Statesman and the 76 per cent have to rely on the bravery of people like Maurice Glasman.

Back in August 2006 Home Secretary, John Reid, in a speech at Demos tried to take the emotion out of the debate: '"n my view mass migration and the management of immigration is now the greatest challenge facing all European governments. We have to get away from the notion that anyone who wants to talk about immigration is somehow a racist." But the issue still makes some of the more sensitive party intellectuals so uncomfortable that they would rather not think about it. And yet most developed countries have an immigration policy, not least because the sheer weight of numbers can cause problems. The more crowded the country, the more necessary is an immigration policy. The UK is already one of the most densely populated parts of the world, with double the population density of France and eight times that of America. England, on its own, is more densely populated than India. The consequences for house prices, traffic jams, school places, wages, and hospital waiting lists are there for all to see.

A UK study for the Low Pay Commission looked at the impact of immigration between 1997 and 2005 and concluded that the arrival of economic migrants benefited workers in the middle and upper part of the wage distribution, but placed downward pressure on the wages of workers on lower levels of pay. Over the period, wages at all points of the wage distribution increased but the UCL study concluded that wages in the lowest quartile would have increased faster without the effect of immigration. They estimated that for each one per cent increase in the ratio of immigrants to natives in the working age population there was a 0.5 per cent decrease in the wages of the lowest tenth of workers.

It is often said that immigrants will do the jobs British people don't want, but this question is entirely a matter of pay and conditions. People will do dirty or hard jobs if they are paid enough. Employers want to pay as little as possible; whereas workers understandably want a living wage. The campaign for a London Living Wage is seeking only £7.85 -- not much to ask for. The inescapable fact is that immigration produces winners and losers - and the poorest members of society have been the losers.

The impact on housing has also been severe, especially in London. First time buyers have been priced out of the market. Immigration has not been the only factor, but it has had a major and decisive influence on prices. We can compare the ratio of average prices to average incomes in the UK over time. In 1980 the ratio was 2.3, but by 2009 during the height of mass immigration, the ratio had nearly doubled to 4.5. Take Tower Hamlets. It is possible to compare the average price of houses in the lowest quartile of the distribution with the average wage for the lowest quartile of earners. In 1997 the ratio was 3.7. In 2009 it was 7.6, double the 1997 figure.

Such realities no doubt explain why opinion surveys consistently show a majority against mass immigration. A YouGov survey in 2008 asked whether immigration should be 'stopped', 'reduced but not stopped', or 'increased': 23 per cent said it should be stopped; 61 per cent thought it should be reduced but not stopped and only 2 per cent that it should be increased. Even among 'recent immigrants' there was a slight majority in favour of reduction: 3 per cent thought it should be stopped; 48 per cent reduced but not stopped, a total of 51 per cent. Only 10 per cent wanted an increase. That result is not as paradoxical as it may seem at first sight. Many people on low incomes are recent immigrants.

Instead of being pressurised into public recantations, Maurice Glasman should be given a special Labour party medal for the moral courage he has displayed in speaking up for the powerless low-paid workers whose standard of life has been forced down by excessive immigration.

David Green is Director of Civitas

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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