Tell me, how did you get so rich?

As chancellor, Gordon Brown put his trust in tycoons and city chiefs. But as wealth disparities grow

The austere Calvinism of the manse and the multi millionaire lifestyle of the nation's corporate princelings are not obvious bedfellows. Yet among Gordon Brown's first actions on taking over as Prime Minister was to anoint, for the first time, a grand-sounding Business Council for Britain.

This was not all. The old Department of Trade and Industry, with its smokestack heritage, was swept into the sea to be replaced by the freshly minted Department for Business, Enterprise and Regulatory Reform and the former boss of the CBI, the effervescent Sir Digby Jones, was elevated to the Lords as trade minister (despite his flirtations with the Tories and venomous criticism of Brown's pensions and tax policies).

Brown's critics would argue that all of this cosying up to the business and City elites is no more than window dressing as he seeks to shake the socialist tag and demonstrate a willingness to listen to all, even the private equity bigwigs so despised by the unions and the political classes.

The new Prime Minister is more complex than that. As chancellor, Brown made a fetish of abandoning the traditions of white and black tie for the Mansion House dinner, one of the great set pieces of the financial calendar. Yet he assiduously courted many of the same people, passing the "Loving Cup" up and down the lengthy silver-laden tables, for advice on economic and business problems.

Many of Brown's modern Labour predecessors as prime minister, including Tony Blair, had a penchant for self-made businessmen with less than distinguished reputations and a weakness for cutting corners. Harold Wilson formed a close relationship with the flawed raincoat tycoon Joseph Kagan, James Callaghan with the fringe Welsh banker Sir Julian Hodge and Blair with any number of troublesome money men, from Grand Prix magnate Bernie Ecclestone to the governance-lite steel billionaire Lakshmi Mittal. Blair's relationships were too often built around the need for large tranches of cash to fund his election coffers and an unhealthy fascination with great wealth and celebrity.

The current PM's business associates are largely drawn from the elite of thinking financiers and industrialists on both sides of the Atlantic. He sees businessmen as leaders who know how to get things done, not just as cash points, although on occasion that helps. It is no accident he counts among his gurus the most respected banker in the world, former Federal Reserve chairman Alan Greenspan, Bill Gates of Microsoft and, at home, Sir John Rose of Rolls- Royce, whose outspoken views on the nation's lagging engineering skills proved a wake-up call for Brown. The new PM views these bigwigs both as inspirations and a source of great ideas.

It is no secret that in 2001, when Brown sharply lifted resources for the NHS, he searched desperately for a chief executive able to run a vast organisation and transform the culture.

He turned to Sir Terry Leahy, chief executive of Tesco, a lad from the modest council estates of Liverpool who had turned Tesco into Britain's most successful retailer and took a special interest in health because his wife was a medic. Leahy still had much to do on the international front for his employer at that time. But Brown never lost faith in his ability to co-opt Leahy and has added him to his new Business Council.

If the former chancellor wants a job done he automatically turns to the commercial world. His Budget speeches were laced with references to people such as Paul Myners, the former chairman of Marks & Spencer, Sandy Leitch, formerly of Zurich, and his close pal Sir Ronald Cohen, the godfather of private equity in Britain - all of whom have carried out projects on his behalf. Businessmen, with few exceptions such as Lord Young under Margaret Thatcher, rarely make the transition from the boardroom to the cabinet room, with aplomb. So Brown has come up with alternate ways of harnessing their enthusiasm and tapping into their talent pool.

His Business Council for Britain may be something new for a prime minister, but at the Treasury it was part of the furniture. Brown regularly played host to a high-level business advisory group and latterly, as Britain's financial sector picked up momentum - accounting for up to one third of the nation's output - he and his closest associate Ed Balls (now in the cabinet) did the same thing for the City. Balls was so impressed by what he heard that he became almost hyper-active bringing forward new legislation, for instance, to strengthen and protect the UK's City regulator, the Financial Services Authority, in case of an overseas takeover of the London Stock Exchange.

I found myself among those invited along to Brown's high-level business sessions held under strict Chatham House rules. Somehow the chieftains from almost every FTSE-100 company, from bankers to industrialists, found time to respond to the chancellor's embossed invitations and to take part. Brown would lay on all the trappings: a rehearsed order of debate led by himself and fellow cabinet minister Alistair Darling, a cameo appearance from the American treasury secretary Hank Paulson and suffice it to say handsome outside catering with fine wines. Curiously, some of the most powerful figures in business, controlling payrolls encompassing hundreds of thousands of people and corporations that stretched to the far corners of the globe, appeared at times to be reduced to stuttering schoolchildren in the hallowed halls of the Treasury.

The aches and pains of business were laid bare by his guests, from the lack of skills to fears of an implosion at the Doha round of trade talks. Among the serious and enduring issues raised was how the riches of the City were creating a divided nation where the best mathematical brains were drained off to the towers of the Square Mile and Canary Wharf direct from university and how the sheer quantity of wealth created in the City - 4,200 sterling-bonus millionaires in 2006 alone - contributed to a housing market which froze out those working in vital public services.

There is a bravery if not foolhardiness about Brown's adoption of certain business associates. Sir Ronald Cohen may not be in any official post, but he has been the PM's man for all seasons. Founder of Apax - the British private equity powerhouse - he has helped fund Brown's favoured think tank, the Smith Institute, as well as the Portland Trust, the group which paid for much of the work down by Brown advisers Ed Balls and Jon Cunliffe, now at No 10, on using economic muscle to lift the West Bank and Gaza out of poverty.

At home, Brown has asked Cohen to find ways of repatriating the "orphan assets" held by many banks and insurers, money left behind over the generations, and putting them to work on social projects in the inner-city.

The new PM has never wanted to acknowledge that using a tycoon who has accumulated at least £250m of personal wealth and is reported to be non-domiciled for tax purposes, may not play well on the council estates or in the Plc boardroom, where there is huge jealously of such tax privileges.

Perhaps most strange of all was his decision to include Damon Buffini, managing partner of Permira, among his new business advisers. Admittedly, Buffini's personal story is inspirational. A mixed-race child from a single-parent family, he rose to one of the most powerful jobs in the City as head of the private equity arm of the blue-blooded investment bank Schroders.

Pass the parcel

Buffini and Permira have been demonised for their management of the AA, where staff and membership services, including night patrols, were slashed in the name of efficiency.

In the past fortnight, the pass-the-parcel with the AA's assets continued after a merger with Saga in which Buffini and his pals extracted up to £2bn of cash on which they will pay a lower tax rate than the cleaners and gardeners at No 10. He is a choice that looks like political madness.

Certainly, it cocks a snook at the GMB and others who have declared Buffini and his private equity chums public enemy number one, not just for their greed, but for defenestration of pension systems and ruthless job-cutting. Brown's motivations and his slowness in closing down the tax loopholes that have made Mayfair the get-rich capital of the world are hard to fathom. It would be too cynical to think he refuses to confront the tax lacuna for fear of losing party donations.

His reasons are very different. Brown recognises that the greatest force behind Britain's long ten-year run without recession has been the sheer excellence, innovation and openness of British finance. Having created a more liberal tax regime for the super-rich he is unwilling to change it under political pressure and destroy wealth creation. He genuinely believes that there is something to be learned not just from the science of J P Garnier at GlaxoSmithKline but also from the genius of financial innovation. If he can put this to good use in government then so be it.

Brown's value system is so deeply lodged that, unlike some of his Labour predecessors, he has not personally been seduced into thinking he deserves what the captains of industry have, from the private jets to the villas in the Caribbean. But in his embrace of the greed of private equity and mercurial tycoons such as Apprentice star Sir Alan Sugar, he risks undermining his reputation for rectitude.

Alex Brummer is City editor of the Daily Mail. Read his new weekly column on business and economics, entitled "Money", starting next week

This article first appeared in the 09 July 2007 issue of the New Statesman, The new terror

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Why Jeremy Corbyn is a new leader for the New Times

In an inspired election campaign, he confounded his detractors and showed that he was – more than any other leader – in tune with the times.

There have been two great political turning points in postwar Britain. The first was in 1945 with the election of the Attlee government. Driven by a popular wave of determination that peacetime Britain would look very different from the mass unemployment of the 1930s, and built on the foundations of the solidaristic spirit of the war, the Labour government ushered in full employment, the welfare state (including the NHS) and nationalisation of the basic industries, notably coal and the railways. It was a reforming government the like of which Britain had not previously experienced in the first half of the 20th century. The popular support enjoyed by the reforms was such that the ensuing social-democratic consensus was to last until the end of the 1970s, with Tory as well as Labour governments broadly operating within its framework.

During the 1970s, however, opposition to the social-democratic consensus grew steadily, led by the rise of the radical right, which culminated in 1979 in the election of Margaret Thatcher’s first government. In the process, the Thatcherites redefined the political debate, broadening it beyond the rather institutionalised and truncated forms that it had previously taken: they conducted a highly populist campaign that was for individualism and against collectivism; for the market and against the state; for liberty and against trade unionism; for law and order and against crime.

These ideas were dismissed by the left as just an extreme version of the same old Toryism, entirely failing to recognise their novelty and therefore the kind of threat they posed. The 1979 election, followed by Ronald Reagan’s US victory in 1980, began the neoliberal era, which remained hegemonic in Britain, and more widely in the West, for three decades. Tory and Labour governments alike operated within the terms and by the logic of neoliberalism. The only thing new about New Labour was its acquiescence in neoliberalism; even in this sense, it was not new but derivative of Thatcherism.

The financial crisis of 2007-2008 marked the beginning of the end of neoliberalism. Unlike the social-democratic consensus, which was undermined by the ideological challenge posed by Thatcherism, neoliberalism was brought to its knees not by any ideological alternative – such was the hegemonic sway of neoliberalism – but by the biggest financial crisis since 1931. This was the consequence of the fragility of a financial sector left to its own devices as a result of sweeping deregulation, and the corrupt and extreme practices that this encouraged.

The origin of the crisis lay not in the Labour government – complicit though it was in the neoliberal indulgence of the financial sector – but in the deregulation of the banking sector on both sides of the Atlantic in the 1980s. Neoliberalism limped on in the period after 2007-2008 but as real wages stagnated, recovery proved a mirage, and, with the behaviour of the bankers exposed, a deep disillusionment spread across society. During 2015-16, a populist wave of opposition to the establishment engulfed much of Europe and the United States.

Except at the extremes – Greece perhaps being the most notable example – the left was not a beneficiary: on the contrary it, too, was punished by the people in the same manner as the parties of the mainstream right were. The reason was straightforward enough. The left was tarnished with the same brush as the right: almost everywhere social-democratic parties, albeit to varying degrees, had pursued neoliberal policies. Bill Clinton and Tony Blair became – and presented themselves as – leaders of neoliberalism and as enthusiastic advocates of a strategy of hyper-globalisation, which resulted in growing inequality. In this fundamental respect these parties were more or less ­indistinguishable from the right.

***

The first signs of open revolt against New Labour – the representatives and evangelists of neoliberal ideas in the Labour Party – came in the aftermath of the 2015 ­election and the entirely unpredicted and overwhelming victory of Jeremy Corbyn in the leadership election. Something was happening. Yet much of the left, along with the media, summarily dismissed it as a revival of far-left entryism; that these were for the most part no more than a bunch of Trots. There is a powerful, often overwhelming, tendency to see new phenomena in terms of the past. The new and unfamiliar is much more difficult to understand than the old and familiar: it requires serious intellectual effort and an open and inquiring mind. The left is not alone in this syndrome. The right condemned the 2017 Labour Party manifesto as a replica of Labour’s 1983 manifesto. They couldn’t have been more wrong.

That Corbyn had been a veteran of the far left for so long lent credence to the idea that he was merely a retread of a failed past: there was nothing new about him. In a brilliant election campaign, Corbyn not only gave the lie to this but also demonstrated that he, far more than any of the other party leaders, was in tune with the times, the candidate of modernity.

Crises, great turning points, new conjunctures, new forms of consciousness are by definition incubators of the new. That is one of the great sources of their fascination. We can now see the line of linkage between the thousands of young people who gave Corbyn his overwhelming victory in the leadership election in 2015 and the millions of young people who were enthused by his general election campaign in 2017. It is no accident that it was the young rather than the middle-aged or the seniors who were in the vanguard: the young are the bearers and products of the new, they are the lightning conductors of change. Their elders, by contrast, are steeped in old ways of thinking and doing, having lived through and internalised the values and norms of neoliberalism for more than 30 years.

Yet there is another, rather more important aspect to how we identify the new, namely the way we see politics and how politics is conceived. Electoral politics is a highly institutionalised and tribal activity. There have been, as I argued earlier, two great turning points in postwar politics: the social-democratic era ushered in by the 1945 Labour government and the neoliberal era launched by the Tory government in 1979.

The average Tory MP or activist, no doubt, would interpret history primarily in terms of Tory and Labour governments; Labour MPs and activists would do similarly. But this is a superficial reading of politics based on party labels which ignores the deeper forces that shape different eras, generate crises and result in new paradigms.

Alas, most political journalists and columnists are afflicted with the same inability to distinguish the wood (an understanding of the deeper historical forces at work) from the trees (the day-to-day manoeuvring of parties and politicians). In normal times, this may not be so important, because life continues for the most part as before, but at moments of great paradigmatic change it is absolutely critical.

If the political journalists, and indeed the PLP, had understood the deeper forces and profound changes now at work, they would never have failed en masse to rise above the banal and predictable in their assessment of Corbyn. Something deep, indeed, is happening. A historical era – namely, that of neoliberalism – is in its death throes. All the old assumptions can no longer be assumed. We are in new territory: we haven’t been here before. The smart suits long preferred by New Labour wannabes are no longer a symbol of success and ambition but of alienation from, and rejection of, those who have been left behind; who, from being ignored and dismissed, are in the process of moving to the centre of the political stage.

Corbyn, you may recall, was instantly rejected and ridiculed for his sartorial style, and yet we can now see that, with a little smartening, it conveys an authenticity and affinity with the times that made his style of dress more or less immune from criticism during the general election campaign. Yet fashion is only a way to illustrate a much deeper point.

The end of neoliberalism, once so hegemonic, so commanding, is turning Britain on its head. That is why – extraordinary when you think about it – all the attempts by the right to dismiss Corbyn as a far-left extremist failed miserably, even proved counterproductive, because that was not how people saw him, not how they heard him. He was speaking a language and voicing concerns that a broad cross-section of the public could understand and identify with.

***

The reason a large majority of the PLP was opposed to Corbyn, desperate to be rid of him, was because they were still living in the neoliberal era, still slaves to its ideology, still in thrall to its logic. They knew no other way of thinking or political being. They accused Corbyn of being out of time when in fact it was most of the PLP – not to mention the likes of Mandelson and Blair – who were still imprisoned in an earlier historical era. The end of neoliberalism marks the death of New Labour. In contrast, Corbyn is aligned with the world as it is rather than as it was. What a wonderful irony.

Corbyn’s success in the general election requires us to revisit some of the assumptions that have underpinned much political commentary over the past several years. The turmoil in Labour ranks and the ridiculing of Corbyn persuaded many, including on the left, that Labour stood on the edge of the abyss and that the Tories would continue to dominate for long into the future. With Corbyn having seized the political initiative, the Tories are now cast in a new light. With Labour in the process of burying its New Labour legacy and addressing a very new conjuncture, then the end of neoliberalism poses a much more serious challenge to the Tories than it does the Labour Party.

The Cameron/Osborne leadership was still very much of a neoliberal frame of mind, not least in their emphasis on austerity. It would appear that, in the light of the new popular mood, the government will now be forced to abandon austerity. Theresa May, on taking office, talked about a return to One Nation Toryism and the need to help the worst-off, but that has never moved beyond rhetoric: now she is dead in the water.

Meanwhile, the Tories are in fast retreat over Brexit. They held a referendum over the EU for narrowly party reasons which, from a national point of view, was entirely unnecessary. As a result of the Brexit vote, the Cameron leadership was forced to resign and the Brexiteers took de facto command. But now, after the election, the Tories are in headlong retreat from anything like a “hard Brexit”. In short, they have utterly lost control of the political agenda and are being driven by events. Above all, they are frightened of another election from which Corbyn is likely to emerge as leader with a political agenda that will owe nothing to neoliberalism.

Apart from Corbyn’s extraordinary emergence as a leader who understands – and is entirely comfortable with – the imperatives of the new conjuncture and the need for a new political paradigm, the key to Labour’s transformed position in the eyes of the public was its 2017 manifesto, arguably its best and most important since 1945. You may recall that for three decades the dominant themes were marketisation, privatisation, trickle-down economics, the wastefulness and inefficiencies of the state, the incontrovertible case for hyper-globalisation, and bankers and financiers as the New Gods.

Labour’s manifesto offered a very different vision: a fairer society, bearing down on inequality, a more redistributive tax system, the centrality of the social, proper funding of public services, nationalisation of the railways and water industry, and people as the priority rather than business and the City. The title captured the spirit – For the Many Not the Few. Or, to put in another way, After Neoliberalism. The vision is not yet the answer to the latter question, but it represents the beginnings of an answer.

Ever since the late 1970s, Labour has been on the defensive, struggling to deal with a world where the right has been hegemonic. We can now begin to glimpse a different possibility, one in which the left can begin to take ownership – at least in some degree – of a new, post-neoliberal political settlement. But we should not underestimate the enormous problems that lie in wait. The relative economic prospects for the country are far worse than they have been at any time since 1945. As we saw in the Brexit vote, the forces of conservatism, nativism, racism and imperial nostalgia remain hugely powerful. Not only has the country rejected continued membership of the European Union, but, along with the rest of the West, it is far from reconciled with the new world that is in the process of being created before our very eyes, in which the developing world will be paramount and in which China will be the global leader.

Nonetheless, to be able to entertain a sense of optimism about our own country is a novel experience after 30 years of being out in the cold. No wonder so many are feeling energised again.

This article first appeared in the 15 June 2017 issue of the New Statesman, Corbyn: revenge of the rebel

Martin Jacques is the former editor of Marxism Today. 

This article first appeared in the 15 June 2017 issue of the New Statesman, Corbyn: revenge of the rebel

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