What did we learn today? Osborne will defend the banks. Again.

The Chancellor's Autumn Statement shows a commitment to backing the unregulated and reckless financi

Forget the bluster, the spin, the deflection of blame. Forget the bleat that "there is no money". Forget the "fake metrics". Forget "the plan to ensure we keep Britain safe from the sovereign debt crisis".

This Autumn Statement represents a welcome, if still inadequate, u-turn.

Underlying all the carrots and sticks is the Treasury's frank admission of error, the Bank of England's £75 billion (with a promise of more to come), and a frantic volte-face.

Of course, the Chancellor has had to disguise his about-turn by dressing it up as austerity, but he has dramatically relaxed fiscal consolidation -- even though public finances are, by his own admission, in far worse condition than they were just six months ago.

The Autumn Statement goes some way to acknowledging the cause of the rise in government debt and of turmoil in markets, noting that there was in the UK "the greatest expansion in debt of all the world's major economies over the last decade" and that "the full scale and persistence of that impact is slowly becoming clearer."

But while Treasury orthodoxy is finally "becoming clearer" about the scale of the crisis -- one deepened by synchronised austerity -- the Chancellor seems unable to learn the lessons and fully reverse course. While acknowledging that "the financial sector has acted as a drag on growth," the Chancellor today promised to ensure Britain "remains the home of global banks and that London is the world's pre-eminent financial centre".

In other words, the government is committed to subsidising, bailing out and rewarding the City of London -- at grave cost to public sector workers, pensioners and private firms. Their analysis, reactions and policies to this crisis remain profoundly inadequate.

For make no mistake, we stand at a pivotal moment in world history, and today our politicians and economic authorities are revealed to be disgracefully ill-prepared for it.

We remind them again: Britain is not facing a sovereign debt crisis. This is not a eurozone crisis. It is a private banking crisis: the catastrophic unravelling of the private, liberalised financial system. Governments, including our own, are not the cause of turmoil: they are victims of the turmoil in private financial markets -- in the City of London, "home to global banks".

The unregulated financial sector has lent recklessly and expensively for some thirty years to itself, to firms and to households. As a result, private indebtedness -- as both the Autumn Statement and the McKinsey Global Institute carefully document -- is at its highest as a share of income ever in history.

The unfolding and related crisis of sovereign debt is a consequence; the result of four years of futile attempts by western governments to maintain, compensate and support this bankrupt system. Osborne, in his statement today, persists in his backing of this failed order.

As rising unemployment, falling incomes and despair begins to crush western societies; as "indignants" in Britain, Europe and the US lead protests against more cuts in pay and pensions and are brutally assaulted by police for their pains, we are confronted by a frightening reality.

Our leaders and their advisers simply cannot absorb the lessons of the crisis. As a result they have abrogated any responsibility to lead. Instead, they struggle manfully to maintain and uphold the old, catastrophic financial system -- and are incapable of constructing a new, global order.

The resulting policy vacuum is frightening. No wonder the Polish foreign minister warns of "a crisis of apocalyptic proportions".

Ann Pettifor is executive director of Advocacy International and a fellow of the New Economics Foundation

Getty
Show Hide image

Is defeat in Stoke the beginning of the end for Paul Nuttall?

The Ukip leader was his party's unity candidate. But after his defeat in Stoke, the old divisions are beginning to show again

In a speech to Ukip’s spring conference in Bolton on February 17, the party’s once and probably future leader Nigel Farage laid down the gauntlet for his successor, Paul Nuttall. Stoke’s by-election was “fundamental” to the future of the party – and Nuttall had to win.
 
One week on, Nuttall has failed that test miserably and thrown the fundamental questions hanging over Ukip’s future into harsh relief. 

For all his bullish talk of supplanting Labour in its industrial heartlands, the Ukip leader only managed to increase the party’s vote share by 2.2 percentage points on 2015. This paltry increase came despite Stoke’s 70 per cent Brexit majority, and a media narrative that was, until the revelations around Nuttall and Hillsborough, talking the party’s chances up.
 
So what now for Nuttall? There is, for the time being, little chance of him resigning – and, in truth, few inside Ukip expected him to win. Nuttall was relying on two well-rehearsed lines as get-out-of-jail free cards very early on in the campaign. 

The first was that the seat was a lowly 72 on Ukip’s target list. The second was that he had been leader of party whose image had been tarnished by infighting both figurative and literal for all of 12 weeks – the real work of his project had yet to begin. 

The chances of that project ever succeeding were modest at the very best. After yesterday’s defeat, it looks even more unlikely. Nuttall had originally stated his intention to run in the likely by-election in Leigh, Greater Manchester, when Andy Burnham wins the Greater Manchester metro mayoralty as is expected in May (Wigan, the borough of which Leigh is part, voted 64 per cent for Brexit).

If he goes ahead and stands – which he may well do – he will have to overturn a Labour majority of over 14,000. That, even before the unedifying row over the veracity of his Hillsborough recollections, was always going to be a big challenge. If he goes for it and loses, his leadership – predicated as it is on his supposed ability to win votes in the north - will be dead in the water. 

Nuttall is not entirely to blame, but he is a big part of Ukip’s problem. I visited Stoke the day before The Guardian published its initial report on Nuttall’s Hillsborough claims, and even then Nuttall’s campaign manager admitted that he was unlikely to convince the “hard core” of Conservative voters to back him. 

There are manifold reasons for this, but chief among them is that Nuttall, despite his newfound love of tweed, is no Nigel Farage. Not only does he lack his name recognition and box office appeal, but the sad truth is that the Tory voters Ukip need to attract are much less likely to vote for a party led by a Scouser whose platform consists of reassuring working-class voters their NHS and benefits are safe.
 
It is Farage and his allies – most notably the party’s main donor Arron Banks – who hold the most power over Nuttall’s future. Banks, who Nuttall publicly disowned as a non-member after he said he was “sick to death” of people “milking” the Hillsborough disaster, said on the eve of the Stoke poll that Ukip had to “remain radical” if it wanted to keep receiving his money. Farage himself has said the party’s campaign ought to have been “clearer” on immigration. 

Senior party figures are already briefing against Nuttall and his team in the Telegraph, whose proprietors are chummy with the beer-swilling Farage-Banks axis. They deride him for his efforts to turn Ukip into “NiceKip” or “Nukip” in order to appeal to more women voters, and for the heavy-handedness of his pitch to Labour voters (“There were times when I wondered whether I’ve got a purple rosette or a red one on”, one told the paper). 

It is Nuttall’s policy advisers - the anti-Farage awkward squad of Suzanne Evans, MEP Patrick O’Flynn (who famously branded Farage "snarling, thin-skinned and aggressive") and former leadership candidate Lisa Duffy – come in for the harshest criticism. Herein lies the leader's almost impossible task. Despite having pitched to members as a unity candidate, the two sides’ visions for Ukip are irreconcilable – one urges him to emulate Trump (who Nuttall says he would not have voted for), and the other urges a more moderate tack. 

Endorsing his leader on Question Time last night, Ukip’s sole MP Douglas Carswell blamed the legacy of the party’s Tea Party-inspired 2015 general election campaign, which saw Farage complain about foreigners with HIV using the NHS in ITV’s leaders debate, for the party’s poor performance in Stoke. Others, such as MEP Bill Etheridge, say precisely the opposite – that Nuttall must be more like Farage. 

Neither side has yet called for Nuttall’s head. He insists he is “not going anywhere”. With his febrile party no stranger to abortive coup and counter-coup, he is unlikely to be the one who has the final say.