David Lammy’s lesson

The Tottenham MP has started the hard work of asking how Labour should respond to the crisis laid ba

David Lammy's book Out of the Ashes: Britain After the Riots (Guardian Books, £9.99) is about more than the English riots, it's about the future of Labour in the country. Lammy and Duncan O'Leary, whom he generously credits as a writing partner, were both part of the Oxford London seminars taht produced the ebook The Labour Tradition and the Politics of Paradox (reviewed by Jonathan Derbyshire for the NS here). A number of other texts by participants of the seminars have since been published, notably Graeme Cooke's Still Partying Like It's 1995. But Out of the Ashes tells a story for a readership beyond the political and intellectual classes, and for this reason it is the first significant attempt to frame a popular politics and language for Labour in the coming period of austerity. Commentators on the right appear to understand this. The left has been slower to recognise its significance.

For five days in August, the young and the workless poor held up a mirror to England, and so also to Labour, which, in government, had played a role in shaping 13 years of their lives. Here was the market and its transactional culture gone berserk in looting, and here was the state in the form of the police, hated by many of the rioters, failing to maintain social order.

The riots were about the breakdown of the market and the state. The cause of this breakdown was the absence of society; the trust, empathy and reciprocity among individuals which ensures our interdependency. The destructiveness and narcissism of the rioters were symptoms of a country in which the life experiences and values of its citizens are no longer shared or held in common. Lammy's Tottenham is only a few miles from Hampstead, but it might as well be on another planet.

The riots were a carnival of nihilism and hedonism, but targeting the shops had its own political logic. For every opportunist looter grabbing something free because they could, there were ten who knew the humiliation of being second-class in a culture of conspicuous consumption. Foot Locker isn't just a store selling trainers, it's a source of positional goods. Our consumer culture teaches the young that you must own to achieve status, and in order to own, you need money.

The economy that drives this culture systematically deprives millions of the financial means to achieve this end. Money isn't just about acquiring things, it's the means to acquiring recognition and respect through status-enhancing goods. To be invisible to those above, or to be culturally out of sync with one's peer group, are sources of shame and mortification. This is the way class domination operates in a society of consumers. Invidious comparisons between oneself and others and between one group and another creates feelings of inferiority.

The looting and rioting were cathartic acts of vengeance. Lammy criticises his own repeated public assertions that the rioters were "mindless". With hindsight, he thinks they were "cruel and calculating". But, he writes, what shocked him the most, looking at police videos, was that people were enjoying themselves. The police were attacked and chased off, and the high streets, department stores and shops became lawless spaces that were systematically ransacked. For a short period, the law of exchange value was transgressed and those who took part in the looting were, probably for the first time in their lives, participants in something larger than themselves. The looting was terroristic, but many of those involved felt empowered and free; for them it was a joyful experience.

Who speaks for England?

Like bankers' bonuses, the politicians' expenses scandal and phone-hacking by the press, the English riots were a defining moment in the moral decay of our economic and political order. The political class, out of touch and compromised by the decline of its popular legitimacy, did not know how to respond. David Cameron and Boris Johnson in London were confronted with a people they neither knew nor understood.

Three popular voices emerged out of the rioting. The first was the insurrectionary Darcus Howe, interviewed and patronised by the BBC. The second was Pauline Pearce, giving rioters in Hackney a piece of her mind and a sharp political lesson. And the third was Tariq Jahan, whose son was killed and who deflected the threat of inter-ethnic conflict by asking young Muslims in Birmingham to go home and reflect on their lives and not "march in the name of our sons". For millions, the moral lesson of the riots came courtesy of YouTube and the clip of youths "helping" and then robbing the Malaysian student Mohammed Ashraf Haziq.

Who spoke for England? Politics was silent. The overwhelming message the riots delivered to Labour was that no one in the aftermath was interested in what it had to say. Its history in the national life of the country as a political representative of the working class, its moral traditions, its recent period in office, counted for little. More than the other scandals marking our national descent, the riots exposed Labour's disconnection from the country.

Order has been restored. The English penal system, historically brutal in the face of mass proletarian disorder, has locked away the looters. The traumatised victims and communities can be gently guided offstage, and the political parties can quietly forget the riots. Both Conservative and Labour have returned to their pretence of business as usual, but both function in a state of suspended animation, disorientated and picking their way through the detritus of their old orthodoxies.

The riots were a warning from the future about the fate of England as we lurch into the unknown of falling incomes and years of unprecedented public spending cuts. We have never experienced this kind of radical economic contraction before. The welfare state is under huge pressure and political attack, threatening millions with being cast outside the norms and structures of society. What will this austerity mean for our cultural values, for our social order and for our relationships with one another? What role can the state play under conditions of fiscal conservatism? What kind of political economy and what kind of pro-social politics can we create to counter the further fragmentation of society?

This is an extraordinarily dangerous moment for the left. Labour faces the biggest crisis in its history and yet it has not yet begun asking itself these questions. Lammy's book offers a start. He admits that the book was a long time in the gestation, but the riots were the catalyst for two impulses that spurred him into action. The first was personal. Tottenham is Lammy's home and where he feels he belongs. The book has a national sweep, but its heart is local and parochial as Labour's should be.

The second is a return to the past, not to stay there in a wistful reverie, but to find Lammy's autobiographical voice and political identity. He returns to a time before becoming an MP, before his days as a lawyer, to his life growing up in the local streets and to the loss of his own father. What he believes in comes out of a love of home, a sense of belonging, his relationships and his life experience. It is a good allegory for Labour's renewal.

Ties that bind

If the right has recognised the significance of Lammy's message, the left veers away from its implications. What is left of Labour's purpose when the state runs out of money? The things that matter to Lammy and, he argues, to the people he represents, are on the whole socially conservative values. The liberal freedoms of the market have meant the freedom to be poor and insecure. What holds the line against social disintegration and cultural despair is a sense of duty born of personal dignity, a common decency toward others, and a willingness to work hard for a fair reward.

Strong relationships build resilience and aspiration in individuals and in communities. The support of the state is vital, but it can't replace these goods. Lammy has no time for abusive rhetoric about a feckless underclass. These values, he argues, are those of the great majority of Tottenham people.

At the heart of his story is the flight of men from family life. The fate of his own father is multiplied countless times in communities devastated by poverty and worklessness. The deindustrial revolution in England has brought a significant decline in men's contribution to the family income as their wages have fallen. Women have made up the shortfall and have been the driving force behind the increases in living standards for the medium- and low-paid. But now women are losing their jobs and an already inadequate system of childcare is being cut back. In areas of deprivation, the model of dependable family men and masculine virtues of responsibility are scarce. Women have been left to shoulder the burdens of family and community without the prospect of trusted partners and good fathers.

Lammy asks, "What kind of country do we want to build?" He offers thoughtful arguments about immigration, work, masculinity and crime and punishment. One doesn't have to agree with all his points of view to know that he is in the right place to ask the question of his fellow countrymen and women.

Labour wins when it is patriotic and when it owns the future with a sense of national purpose. It needs to confront its crisis of purpose and embark on a politics of nation-building: to make a society worth living in, an economy that works for all its citizens, and a country to be proud of.

Jon Cruddas is MP for Dagenham
Jonathan Rutherford is professor of cultural studies at Middlesex University

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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