Time to abolish the UK's last "rotten borough" - the City of London Corporation

One year on from the Occupy protest at St Paul's, we're no closer to reforming the dark heart of predatory capitalism.

On the night Occupy LSX marched into the City tweets came into me asking for help as the police kettled activists on the steps of St Paul's. I went down there and did what little I could to prevent people being roughed up. Over the next few days the tents soon appeared and the occupation became a debating forum on the causes and creators of the economic crisis.

As days turned into weeks and the cathedral hierarchy split over whether to evict the camp, the occupiers soon discovered the existence of an organisation the vast majority of the population barely knows exists. The City of London Corporation was flushed out of the shadows in which it normally lurks to show that it was something more than the organiser of a good pageant in the Lord Mayor’s Show.

Naturally members of Occupy turned their inquisitive attention to this seemingly quaint body that was threatening to send in the bailiffs. Just as the direct action by UK Uncut transformed the issue of tax evasion from a dry debate for accountants into a popular cause, Occupy has helped turn the spotlight on the abuse of power that is the City Corporation.

In Michael Chanan’s and Lee Salter’s new film, “Secret City”, Maurice Glasman explains ironically that St Paul’s was the site of our earliest democracy, where the citizens of London in medieval times would hold hustings. In the sixteenth century the city took over from Amsterdam as the centre of international credit and maritime trade. Its coffee houses became banks and governments became dependent upon them for loans, largely to finance wars.

Government's reliance on the city to finance the national debt gave the city such influence that the Corporation was able to avoid the successive reforms that established democratic local government in the rest of the country.

Instead the City Corporation to this day retains the business vote, which overwhelms the votes of residents in the elections for its Common Council. The vast proportion of elections in the City have not been contested. Instead an old boys’ network amongst the companies sorts out which favoured son is to be bestowed the seat.

This usually prevents anyone slipping through the net who shows any spark of independence, although not always. Around a decade ago, Malcolm Matson was elected with 80 per cent of the vote but was known to favour reform. He was hauled before the City’s Court of Aldermen and was blackballed. Local vicar, the William Taylor, was also successful in being elected but as soon as he started asking questions about the Corporation’s unpublished accounts, his bishop received letters with more than a hint of a threat.

Matson and Taylor could not be tolerated because they were asking questions about the massive resources being spent on the secretive role the City Corporation plays as the lobbyist for finance capital. The Corporation has used its influence to dictate successive government’s policies on the regulation of finance and taxation.

This secured the deregulation of the “Big Bang” era of Thatcher and the hands off approach under Blair and Brown. City speculators were allowed to create the bubble that eventually burst to create the current economic crisis. London became a funnel through which trillions poured into tax havens and the concentration on financial speculation rather than investment in our manufacturing base unbalanced our whole economy. Obscene levels of incomes and conspicuous spending in the City have also created a society grotesquely scarred by inequality and a capital city in which immense wealth is located cheek by jowl with stark levels of poverty.

It was Labour Party policy since its foundation to abolish the City Corporation, until Blair arrived and the policy changed to reform. The City cynically interpreted reform as simply giving more businesses the vote.

The abolition of this last “rotten borough” would show that Ed Miliband is serious about tackling predatory capitalism.

John McDonnell is the Labour MP for Hayes and Harlington

"Secret City" previews at the House of Commons on Tuesday 16 October. For details of screenings and to watch a trailer for the film, visit: secretcity-thefilm.com

A statue of a dragon that marks the boundary of the City of London. Photograph: Getty Images


John McDonnell is Labour MP for Hayes and Harlington and has been shadow chancellor since September 2015. 

Photo: Getty
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Scotland's vast deficit remains an obstacle to independence

Though the country's financial position has improved, independence would still risk severe austerity. 

For the SNP, the annual Scottish public spending figures bring good and bad news. The good news, such as it is, is that Scotland's deficit fell by £1.3bn in 2016/17. The bad news is that it remains £13.3bn or 8.3 per cent of GDP – three times the UK figure of 2.4 per cent (£46.2bn) and vastly higher than the white paper's worst case scenario of £5.5bn. 

These figures, it's important to note, include Scotland's geographic share of North Sea oil and gas revenue. The "oil bonus" that the SNP once boasted of has withered since the collapse in commodity prices. Though revenue rose from £56m the previous year to £208m, this remains a fraction of the £8bn recorded in 2011/12. Total public sector revenue was £312 per person below the UK average, while expenditure was £1,437 higher. Though the SNP is playing down the figures as "a snapshot", the white paper unambiguously stated: "GERS [Government Expenditure and Revenue Scotland] is the authoritative publication on Scotland’s public finances". 

As before, Nicola Sturgeon has warned of the threat posed by Brexit to the Scottish economy. But the country's black hole means the risks of independence remain immense. As a new state, Scotland would be forced to pay a premium on its debt, resulting in an even greater fiscal gap. Were it to use the pound without permission, with no independent central bank and no lender of last resort, borrowing costs would rise still further. To offset a Greek-style crisis, Scotland would be forced to impose dramatic austerity. 

Sturgeon is undoubtedly right to warn of the risks of Brexit (particularly of the "hard" variety). But for a large number of Scots, this is merely cause to avoid the added turmoil of independence. Though eventual EU membership would benefit Scotland, its UK trade is worth four times as much as that with Europe. 

Of course, for a true nationalist, economics is irrelevant. Independence is a good in itself and sovereignty always trumps prosperity (a point on which Scottish nationalists align with English Brexiteers). But if Scotland is to ever depart the UK, the SNP will need to win over pragmatists, too. In that quest, Scotland's deficit remains a vast obstacle. 

George Eaton is political editor of the New Statesman.