In memory: Kirsty Milne

Former NS staffer Dr Kirsty Milne has died.

We are sad to report the loss of a former New Statesman editor, Dr Kirsty Milne.

After joining the New Statesman staff in 1993 following its merger with her former paper New Society, Kirsty wrote reviews and features for the NS and other publications, including the Times, Telegraph and a politics column for the Scotsman. She later became a Nieman Fellow at Harvard University and a Research Fellow specialising in early modern English and the classics at Wolfson College, Oxford.

She died this week and will be much missed. Sarah Baxter, a colleague at the magazine in the early 90s and now Deputy Editor at the Sunday Times, said: "Kirsty was a wonderful colleague, full of energy, mischief and fun. She loved political ideas and political intrigue, and wrote about them brilliantly. She was always insistent that her name was pronounced Keersty, not Kursty ... After being told off a few times, I've never been able to pronounce Kirsty any other way. She was my great friend and confidante at the Statesman, and I'll miss her dearly."

Below is a reprint of the first article she wrote for the NS entitled, "Inside the Glasgow glass envelope", and dated 21 November 1986.

Inside the Glasgow glass envelope

What can you do for a city undergoing an economic identity crisis? With dying industrial heartlands, unemployment running above 20 per cent and a reputation for social deprivation which continues to stick? 'Adapt or die' is the response most commonly to be heard in Glasgow, and the result is a remarkable phenomenon — a city in search of a future.

There's no question that Glasgow is in danger of being left behind, a casualty city which just happened to be, in the words of one council official, 'in the wrong place, facing the wrong way, and making the wrong things'. Like the rest of Britain, Glasgow has had to watch the slow decline of its traditional manufacturing base — in shipbuilding, steel and engineering. There are only two shipyards left; the Clyde used to be crucial to Glasgow and now people are saying bitterly that you can fish in it. Manufacturing in Glasgow contracted by 30 per cent between 1978 and 1983, and plants which were once familiar features of the city continue to close.

The rate of redundancies, which peaked in 1980, is slowing down, but the cumulative result is a bad case of long-term unemployment: latest figures show that of the 77,204 jobless in Glasgow, 9,280 have been out of work for more than six years. Where are the new jobs to come from? The electronics industry clearly isn't the knight on the high-tech charger that's required; it only provides 42,000 jobs in the whole of Scotland, and besides, computer companies have tended to locate in other parts of 'Silicon Glen', especially New Towns.

To the rescue come Glasgow City Council and the Scottish Development Agency (SDA), both of which have put their faith in the service sector as the only realistic area for growth in employment. To this end there's been a lot of emphasis on improving the quality of the city centre, which is visibly in the process of turning itself inside out. The whole area known as Merchant City, with its extravagant Victorian facades, is being redeveloped to provide shops, offices and up to 2,000 homes as bait for Glasgow yuppies. South of Argyle St a huge site awaits a glass envelope which will protect a shopping centre, an ice rink and a multi-storey car park from the incessant Scottish rain in the £62m St Enoch's development. Even the old fish market, the Briggait, has been turned into glossy umbrella forstalls and specialist shops, though with a view across the Clyde to the Gorbals it looks as much like Covent Garden as a fish out of water.

Nevertheless, Donald Dewar, Shadow Scottish Secretary and MP for Glasgow Garscadden, describes the general atmosphere with the greater precision: 'the place is hopping'. And much of the hopping takes place under the careful eyes of the council and the SDA, working to combine public spending with private investment in as many projects as possible. The SDA is a unique phenomenon (and the Treasury would like it to stay that way): a semi-independent, government- funded organisation set up by Harold Wilson in 1975 to do something about the Scottish economy. As a leading industrial landlord with a gross annual budget of more than £130m, the SDA is much respected by the 200 or so people who make up the Scottish establishment for being hard­headed and commercially-minded. Not surprising, then, that a Treasury review last month criticised the SDA for being too interventionist. Certainly it has a finger in innumerable pies — in Glasgow alone it put money into the Scottish Conference and Exhibition Centre, initiated the GEAR project to put money into the East End of Glasgow, and is managing the 1988 Glasgow Garden Festival through a wholly-owned subsidiary.

Last year it set up a new group, Glasgow Action, to promote the city as a business location and the dynamic young director, David Macdonald, is as much interested in the music business as in merchant banks (Glasgow, remember, produced not only Ultravox and Simple Minds but the Associates and Strawberry Switchblade as well). His organisation has specific targets: relieving Glasgow of its status as a 'branch economy' (i.e. attracting more company HQs to Glasgow — Britoil was a recent success); improving air links with Europe and the USA; developing Glasgow's tourist industry (the Burrell Collection, opened in 1983, has now overtaken Edinburgh castle as Scotland's top tourist attraction).

However, there's nothing he can teach Glasgow City Council about selling the city; after all, for three years now Mr Happy has been seen on London buses proclaiming 'Glasgow's Miles Better' and the campaign has been given a boost since Glasgow won the British nomination for European City of Culture in 1990. Macdonald describes the council as 'solidly socialist and very pragmatic with it . . . the city's interests always come first'. Perhaps it's the pragmatism born of numerical supremacy (the Labour group has 50 councillors to the Conservatives' 5, and a visiting Hackney councillor was reputedly shocked when she saw how cosily collusive they all were).

The council needs its pragmatism when it comes to housing; as the biggest landlord in Europe it has the dubious distinction of presiding over some of the worst council housing in Britain: an estimate 10,000 homes in Glasgow don't have a bath. Government spending restrictions have limited the council's capital spending to modernisation and planned repairs, so it's small wonder that they should be encouraging private developers and housing associations to build and convert more homes — even selling council houses to tenants the deprived suburb of Easterhouse. But the core of the housing problem remains the post-war estates built on the periphery of the city: Pollok, Castlemilk, Easterhouse and Drumchapel. Almost one in four of the unemployed in Glasgow lives there.

What will the expansion of the service sector do for those one in four? Will it pick up the long-term unemployed? Retailing and office work may be subject to mechanisation and contraction of numbers in the future as manufacturing has been in the past. There are some economists that would argue that, anyway, the growth of the service sector goes hand in hand with the growth of the manufacturing industry. In Glasgow, Donald Dewar speaks of the need for a ‘balanced economy’ with ‘a core of manufacturing which is competitive’. Campbell Christie, General Secretary of the STUC is also unhappy about the over-reliance on the service sector. He would like to see Glasgow’s traditional areas of manufacturing, including the shipyards, sustained; new industries developed; and a major programme of expenditure on housing and construction projects to provide jobs and tackle Glasgow’s decaying infrastructure.

Earlier this month, the Invisible Export Council confirmed that employment in the UK service sector isn’t likely to increase substantially and won’t compensate for the jobs lost in manufacturing industry. But even if the service sector does represent the only real possibility for growth in Glasgow (and it’s worth pointing out that it’s remained more or less static since 1971), a depressing scenario suggests itself – that of a pepped-up city centre, a flourishing service sector, and, on the periphery, the long-term marginalised unemployed. In microcosm, it could be what’s in store for the British economy as a whole: 87 per cent of us in work and getting richer – and the rest out in the cold.

Getty
Show Hide image

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