Show Hide image

The looting of bank deposits, a whiff of regulation and self-hating Mail readers

Peter Wilby's "First Thoughts" column.

The deal to bail out the Cypriot banks by imposing a levy on all bank deposits unravelled almost as soon as it was made. The ultimate nightmare loomed: a run on banks across the whole of southern Europe. Moreover, the Cypriots approached Russia for financial support, raising the possibility that Vladimir Putin will acquire a client state in the Mediterranean.

Yet one can see how the levy may have seemed a good, even progressive idea. The poorest people don’t have money to deposit in the banks. Imposing what amounts to a wealth tax on depositors is better than what governments usually do in a financial crisis: cut public services and public-sector wages; raise sales taxes, which hit the poor hardest; and reduce state pensions and social security payments. Equally, if Cyprus were compelled to leave the euro, everybody’s money would fall steeply in value, regardless of how much money they had in bank deposits.

The obvious course – which may still emerge from the crisis – was to exempt deposits of less than €100,000 and to hit higher deposits with a 15.1 per cent levy instead of the 9.9 per cent proposed. That would hurt money-laundering Russian oligarchs without affecting ordinary savers. The Cypriot economy, however, is heavily dependent on Russian and other “inward investment”; the higher the levy on big deposits, the greater the threat to the island’s future as an offshore tax haven.

Sound familiar? Yes, George Osborne and other Tories, and for that matter New Labourites, use the same argument against more serious measures to limit bankers’ bonuses and tax rich foreigners in London.

The levy was dry

Whatever the outcome of the Cypriot crisis, the genie is out of the bottle. Right-wing propagandists have always warned against electing socialist governments on the grounds that they will “expropriate” savings. Maybe voters will now understand that their “nest eggs”, as newspapers cosily call them, are just as likely to be looted by capitalists. The levy is an unusually transparent example. The financial services industry, including pension funds, routinely loots savings through poor rates of return, high charges and misselling of “products” such as insurance. By comparison, governments of both left and right are mere amateurs.

Hacking the system

If the system of press regulation agreed by the three main political parties survives a threatened boycott by big newspaper groups, its effectiveness will depend on the individuals who do the regulating. How will they be appointed? This is not easy to establish.

The new regulatory system appears to have ten separate panels and committees involving at least 56 people, some of whom have no function other than to appoint another panel and, presumably, to choose replacements when vacancies arise. Whether the first panel can sack its appointees for insanity or idleness is unclear. The potential for disputes within and between panels is considerable. The regulator may have difficulty ever lumbering into action.

That should be one comfort for the press. Another is that, though serving editors are excluded from most panels, “industry members” will occupy a little short of 50 per cent of the places on nearly all. I’m not sure how an “industry member” will be defined. For example, will my friend and former colleague Brian Cathcart, the professor in journalism at Kingston University and director of Hacked Off (who, according to the Daily Mail’s editor, Paul Dacre, has “an agenda”), count, on the grounds that he still occasionally writes for newspapers? Whatever the answer, the “industry members” are likely to carry disproportionate weight because of their superior inside knowledge. The danger, as with all regulators, is of “producer capture” rather than, as the potential press refuseniks claim to fear, too much sympathy for vexatious complainants.

Read robins

The argument over press regulation led to a rash of round robins, supporting one side or the other, in the letters pages. The day MPs debated the subject, the Times had three. I signed a few such things in the past but resolved, some 20 years ago, to sign no more. What is the point of them? Presumably the signatories expect their names to carry persuasive power. But why should I, or any MP, care that Nick Cohen, Suzanne Moore, Mick Hume, James Delingpole and 20 others believe “the mere whiff” of regulation is already “stifling what people feel they can say and write”? Nearly all these hacks’ views were already well known and I hadn’t noticed them being stifled. Frankly, I’d be more interested to hear from 24 pensioners in Barnsley.

Disgusted of Islington

The Mail has a daily lottery that awards prizes if “unique numbers” printed at the bottom of your copy’s back page match those printed at the top of page two. The winners, published the next day, almost invariably come from places such as Sutton Coldfield, Ilkley, Bolton, Lowestoft and Tunbridge Wells and hardly ever from Greater London boroughs – particularly the more fashionable ones. The Mail is proud to be the paper of “Middle England” but surely it also has a significant number of metropolitan readers. Are they too ashamed of reading the Mail to claim their prizes?

Oliver Bullough, Observations, page 15

Peter Wilby was editor of the Independent on Sunday from 1995 to 1996 and of the New Statesman from 1998 to 2005. He writes the weekly First Thoughts column for the NS.

This article first appeared in the 25 March 2013 issue of the New Statesman, After God

David Young
Show Hide image

The Tories are the zombie party: with an ageing, falling membership, still they stagger on to victory

One Labour MP in Brighton spotted a baby in a red Babygro and said to me: “There’s our next [Labour] prime minister.”

All football clubs have “ultras” – and, increasingly, political parties do, too: although, in the case of political parties, their loudest and angriest supporters are mostly found on the internet. The SNP got there first: in the early days of email, journalists at the Scotsman used to receive bilious missives complaining about its coverage – or, on occasion, lack of coverage – of what the Scottish National Party was up to. The rest soon followed, with Ukip, the Labour Party and even the crushed Liberal Democrats now boasting a furious electronic horde.

The exception is the Conservative Party. Britain’s table-topping team might have its first majority in 18 years and is widely expected in Westminster to remain in power for another decade. But it doesn’t have any fans. The party’s conference in Manchester, like Labour’s in Brighton, will be full to bursting. But where the Labour shindig is chock-full of members, trade unionists and hangers-on from the charitable sector, the Conservative gathering is a more corporate affair: at the fringes I attended last year, lobbyists outnumbered members by four to one. At one, the journalist Peter Oborne demanded to know how many people in the room were party members. It was standing room only – but just four people put their hands up.

During Grant Shapps’s stint at Conservative headquarters, serious attempts were made to revive membership. Shapps, a figure who is underrated because of his online blunders, and his co-chair Andrew Feldman were able to reverse some of the decline, but they were running just to stand still. Some of the biggest increases in membership came in urban centres where the Tories are not in contention to win a seat.

All this made the 2015 election win the triumph of a husk. A party with a membership in long-term and perhaps irreversible decline, which in many seats had no activists at all, delivered crushing defeats to its opponents across England and Wales.

Like José Mourinho’s sides, which, he once boasted, won “without the ball”, the Conservatives won without members. In Cumbria the party had no ground campaign and two paper candidates. But letters written by the Defence Secretary, Michael Fallon, were posted to every household where someone was employed making Trident submarines, warning that their jobs would be under threat under a Labour government. This helped the Tories come close to taking out both Labour MPs, John Woodcock in Barrow and Furness and Jamie Reed in Copeland. It was no small feat: Labour has held Barrow since 1992 and has won Copeland at every election it has fought.

The Tories have become the zombies of British politics: still moving though dead from the neck down. And not only moving, but thriving. One Labour MP in Brighton spotted a baby in a red Babygro and said to me: “There’s our next [Labour] prime minister.” His Conservative counterparts also believe that their rivals are out of power for at least a decade.

Yet there are more threats to the zombie Tories than commonly believed. The European referendum will cause endless trouble for their whips over the coming years. And for all there’s a spring in the Conservative step at the moment, the party has a majority of only 12 in the Commons. Parliamentary defeats could easily become commonplace. But now that Labour has elected Jeremy Corbyn – either a more consensual or a more chaotic leader than his predecessors, depending on your perspective – division within parties will become a feature, rather than a quirk, at Westminster. There will be “splits” aplenty on both sides of the House.

The bigger threat to Tory hegemony is the spending cuts to come, and the still vulnerable state of the British economy. In the last parliament, George Osborne’s cuts fell predominantly on the poorest and those working in the public sector. They were accompanied by an extravagant outlay to affluent retirees. As my colleague Helen Lewis wrote last week, over the next five years, cuts will fall on the sharp-elbowed middle classes, not just the vulnerable. Reductions in tax credits, so popular among voters in the abstract, may prove just as toxic as the poll tax and the abolition of the 10p bottom income-tax rate – both of which were popular until they were actually implemented.

Added to that, the British economy has what the economist Stephen King calls “the Titanic problem”: a surplus of icebergs, a deficit of lifeboats. Many of the levers used by Gordon Brown and Mervyn King in the last recession are not available to David Cameron and the chief of the Bank of England, Mark Carney: debt-funded fiscal stimulus is off the table because the public finances are already in the red. Interest rates are already at rock bottom.

Yet against that grim backdrop, the Conservatives retain the two trump cards that allowed them to win in May: questions about Labour’s economic competence, and the personal allure of David Cameron. The public is still convinced that the cuts are the result of “the mess” left by Labour, however unfair that charge may be. If a second crisis strikes, it could still be the Tories who feel the benefit, if they can convince voters that the poor state of the finances is still the result of New Labour excess rather than Cameroon failure.

As for Cameron, in 2015 it was his lead over Ed Miliband as Britons’ preferred prime minister that helped the Conservatives over the line. This time, it is his withdrawal from politics which could hand the Tories a victory even if the economy tanks or cuts become widely unpopular. He could absorb the hatred for the failures and the U-turns, and then hand over to a fresher face. Nicky Morgan or a Sajid Javid, say, could yet repeat John Major’s trick in 1992, breathing life into a seemingly doomed Conservative project. For Labour, the Tory zombie remains frustratingly lively. 

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.

This article first appeared in the 01 October 2015 issue of the New Statesman, The Tory tide