Why UKIP's right wing economics won't appeal to the city

They're far too simple.

“The government has NO money!!!” – so erupted a speaker at a lunch at the House of Commons, and he brought down his fist so hard on the table the water glasses bounced into the air. As they landed, even I received the message that this was someone with a sense of conviction.

To be fair this wasn’t the first time I had come across Professor Tim Congdon: he was one of the first people to warn of the impending problems in the UK economy in a 1987 Channel 4 opinion piece just at the time when everyone else was congratulating themselves that the Thatcher government had achieved the holy grail of a deunionised, free market economy based upon borrowed money. People had been persuaded that everybody could be materially equal as long as you were up to your neck in debt but Congdon was intent on pricking that particular bubble. Much to everyone’s annoyance, he was right.

Fast forward some time from the tub-thumping House of Commons moment and Congdon is standing for the leadership of the UK Independence Party (UKIP) against Nigel Farage. He loses, but in the process has imbedded himself deeply into the early intellectual base of the party, mainly because he is usually right on economics. His main area of interest is how money dictates inflation. Or, more to the point, how the growth of borrowed money dictates inflation: the more borrowed money there is, the more inflation there is. It seems a self-evident truth but some are apt to violate it from time to time. The departure from this mantra led Congdon to become disappointed with Margaret Thatcher in the latter years of her premiership. Unforgivably, inflation had hardly changed, at some 10 per cent, at the end as at the beginning of her premiership, because according to Congdon she ignored the law of controlling broad money supply  – it was a betrayal of his principles.

Congdon is famously unforgiving to people who contradict him on economic matters, especially when he believes himself to be uncontrovertibly right. But it isn’t out of a sense of hand-wringing fear that one wonders why he is so absent in UKIP’s public statements on economic policy even though he is officially UKIP’s economics spokesman. Perhaps even more interesting, why there are no economic policies on UKIP’s website? There is a long exposition on their position on tax, written by Godfrey Bloom MEP, but that is all. Bloom laces his text with classical references from Adam Smith through David Ricardo, Arthur Laffer and the Regan/Thatcher nexus. You get the feeling Aristotle is missing merely because there wasn’t enough room.

There are some economic principles within Bloom’s thesis: an acknowledgement of the UK’s chronic debt position, recognition of the rising UK interest bill and the desire to reduce taxes to increase the tax take. There is also the claim of being able to reduce government expenditure by £90bn a year without touching front-line services, including defence. There is advocacy of low and flat taxes and the idea that people are better than governments at spending their own money. If you shut your eyes and had it read out loud you would be forgiven for confusing it with a Conservative Party political broadcast (particularly if you left out the stuff about Europe but even that is beginning to harmonise).

What UKIP appeal to is what they would call common sense economics. They are “sound money” advocates: they see the economy like a PLC or a household. They certainly don’t advocate policies that would put them in the camp of those who would use that last hiding place of failed economic policy – currency devaluation – as a tool for economic management. The economist David Blanchflower would be shaking his head in disbelief at this omission, as though – in a famous similie -- they were going onto a golf course with only a driver and a putter in their bag.

On the surface you could be forgiven for assuming that if the UKIP economic thesis, such as it is, could be brought together into something with specific implementation points, there would be many in the clubs up and down Pall Mall and the wine bars of the City of London nodding in agreement with the principles evinced. But this forgets that proper capitalists don’t necessarily want sound money policies: they may welcome low taxes but in capitalist societies all profits are financed through a lavish debt cycle which is the antimatter of sound money and, by extension, of Tim Congdon. Rapacious and calculating capitalists beset by cold ambition for profit would rather see a party in power which lets society at large flash the cash than one that saved up for an indulgence sometime in the future. So to say that the City, or business generally, would automatically welcome UKIP on the basis of ostensibly right-wing policies is too simplistic.

The right isn’t synonymous with capitalists and capitalism isn’t synonymous with financial temperance. In fact, arguably, the opposite is true and may be what is needed in the future. UKIP have a problem.

Nigel Farage. Photograph: Getty Images

Head of Fixed Income and Macro, Old Mutual Global Investors

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Keir Starmer MP: Choosing ideological purity before power is a dereliction of duty

The former director of public prosecutions believes getting involved with Brexit negotiations is crucial. 

 

Three weeks after Brexit, Keir Starmer held a public meeting in his London constituency of Holborn and St Pancras. “We had hundreds turning up,” he remembered. “The town hall was absolutely packed - it was standing room only and we had to turn people away. We haven’t had a public meeting of that size for some time.”

When it comes to Brexit, Starmer is an obvious Labour asset. Director of public prosecutions from 2008 to 2013, he has the legal background to properly scrutinise an EU deal. His time spent as a shadow immigration minister means he understands some of the thorniest problems facing negotiators.

But instead, the MP finds himself on the shadow back benches.

“My decision to resign was driven by Jeremy’s decision on the referendum,” he told The Staggers. “I was particularly troubled by his suggestion that we should invoke Article 50 straight away, and start the exit process [Corbyn has since backtracked on this suggestion]. 

“That is not for me a question of left-right politics. When he said that, I felt he was in fundamentally a different place from me in terms of how we fight for the future of our country.”

Starmer is not a man to enjoy life in opposition, and he has little time for airy promises. “Jeremy talks of dealing with inequality and housing projects, and a fairer society - all of which I would agree,” he said. “What I haven’t seen is the emergence of detailed policy that would get us to these places.”

He also gives purists in the party short shrift. “I would reject wholeheartedly any notion of a Labour Party that is not committed to returning to power at the first opportunity,” he said. “Of course that needs to be principled power. But standing on the sidelines looking for the purest ideology is a dereliction of the duty for any Labour member.”

Starmer believes Labour should be joining Scottish and Northern Irish leaders in trying to influence Brexit negotiations. He sees the time before invoking Article 50, the EU exit button, as crucial. 

Nevertheless, the man named after the Scottish founder of Labour, Keir Hardie, is pessimistic about the future of the UK. 

“It is going to be increasingly difficult to resist a further referendum in Scotland,” he said. “It will be increasingly difficult to keep Scotland as a part of the UK. I hope that doesn’t happen, but everyone knows David Cameron has put that at risk.”

Starmer may be a London MP, but he follows events in the rest of the country closely. While still in his shadow cabinet post, he embarked on a countrywide tour to learn more about attitudes to immigration.  

He condemns the increase in racist attacks post-Brexit as “despicable”, but insists there is “a world of difference” between these and genuine concerns about resources. “If you lose your job because there has been an influx of labour from another country, that is a legitimate cause for concern.”

He is equally scathing about the Government’s net migration cap. “If immigration is simply seen as a numbers game, nobody will ever win that debate,” he said. “The question should be: what is it we want to achieve?

“What do we expect of those who are arriving? What is the basic deal?”

In January, Starmer visited the informal camps in Calais and Dunkirk. “What I saw in Calais was appalling,” he said. “It is an hour from London. 

“To see families and children in freezing, squalid conditions without any real hope of a positive outcome was enough to make anybody think: ‘This is not the way to solve the refugee crisis.’”

The new PM, Theresa May, built her reputation on a rigid asylum policy, but Starmer believes a strong opposition can still force change. “If you take the Syrian resettlement scheme, that started life as a scheme for victims of sexual violence,” he said. “When pushed, it became a scheme for 20,000 Syrians but not if they reached Europe. When pushed, the Government accepted the case for some unaccompanied children in Europe to come to this country. 

“Labour needs to keep pushing.”

For now, though, Labour is divided. Starmer has been tipped as a future leader before, in 2015, but declined to run because of a lack of political experience. One year and a Brexit on, he certainly has some of that under his belt. But he rules himself out of the current leadership challenge: “I am 100 per cent behind Owen.” What will he do if Jeremy Corbyn wins? “Let’s cross each bridge when we come to it.”

Starmer is clear, though, that Labour can only win an election if it comes up with a more ambitious project, an economy with purpose. And the Brexit negotiations provide an opportunity. “We have to ask ourselves,” he said. “Do we simply want a series of trade agreements, the more the merrier? Or do we want deals that achieve certain ends? It is a moment to recast the future.”