The lesson of Labour's Rotherham selection disaster

The walkout by half of local members shows why party-imposed shortlists must be abandoned.

The Tories aren't the only party suffering byelection woes this morning.  At the Labour selection meeting in Rotherham last night, half of the members present walked out in protest at the party's failure to include a local figure on the shortlist. This left fewer than 50 to vote on the selection of Sarah Champion, who defeated the only other person on the list, former RAF Wing Commander Sophy Gardner.

The walkout was staged by supporters of Mahroof Hussain, a prominent local councillor who was the preferred choice of the membership. As is  standard for by-elections, the shortlist was drawn up by Labour's National Executive Committee, rather than a local selection committee, which chose not to include Hussain. Last night's debacle shows why this approach must be abandoned. The party cannot talk credibly about localism if it is not prepared to trust its own members to select the Labour candidate.

There is inevitably speculation that Hussain will stand as an independent, although earlier this week he tweeted, "Friends, I have not been shortlisted for Rotherham. We need to unite behind the next Labour Party candidate and keep Rotherham labour (sic)".

Others fear that a potential split in the Labour vote could allow Respect candidate Yvonne Ridley, a former journalist who famously converted to Islam after her capture by the Taliban, to repeat her party's triumph in Bradford West earlier this year. However, it is doubtful whether she will attract the support necessary to overturn a Labour majority of 10,462 (27.9 per cent).

Although the byelection (which will be held on 29 November) was triggered by Denis MacShane's resignation over false invoices, I would be surprised if Labour is punished as a result. The lesson of the 2010 general election was that, so long as expense abusers stand down, their parties rarely suffer.

Ed Miliband walks through Hyde Park after addressing TUC members at an anti-austerity rally last month. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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BHS is Theresa May’s big chance to reform capitalism – she’d better take it

Almost everyone is disgusted by the tale of BHS. 

Back in 2013, Theresa May gave a speech that might yet prove significant. In it, she declared: “Believing in free markets doesn’t mean we believe that anything goes.”

Capitalism wasn’t perfect, she continued: 

“Where it’s manifestly failing, where it’s losing public support, where it’s not helping to provide opportunity for all, we have to reform it.”

Three years on and just days into her premiership, May has the chance to be a reformist, thanks to one hell of an example of failing capitalism – BHS. 

The report from the Work and Pensions select committee was damning. Philip Green, the business tycoon, bought BHS and took more out than he put in. In a difficult environment, and without new investment, it began to bleed money. Green’s prize became a liability, and by 2014 he was desperate to get rid of it. He found a willing buyer, Paul Sutton, but the buyer had previously been convicted of fraud. So he sold it to Sutton’s former driver instead, for a quid. Yes, you read that right. He sold it to a crook’s driver for a quid.

This might all sound like a ludicrous but entertaining deal, if it wasn’t for the thousands of hapless BHS workers involved. One year later, the business collapsed, along with their job prospects. Not only that, but Green’s lack of attention to the pension fund meant their dreams of a comfortable retirement were now in jeopardy. 

The report called BHS “the unacceptable face of capitalism”. It concluded: 

"The truth is that a large proportion of those who have got rich or richer off the back of BHS are to blame. Sir Philip Green, Dominic Chappell and their respective directors, advisers and hangers-on are all culpable. 

“The tragedy is that those who have lost out are the ordinary employees and pensioners.”

May appears to agree. Her spokeswoman told journalists the PM would “look carefully” at policies to tackle “corporate irresponsibility”. 

She should take the opportunity.

Attempts to reshape capitalism are almost always blunted in practice. Corporations can make threats of their own. Think of Google’s sweetheart tax deals, banks’ excessive pay. Each time politicians tried to clamp down, there were threats of moving overseas. If the economy weakens in response to Brexit, the power to call the shots should tip more towards these companies. 

But this time, there will be few defenders of the BHS approach.

Firstly, the report's revelations about corporate governance damage many well-known brands, which are tarnished by association. Financial services firms will be just as keen as the public to avoid another BHS. Simon Walker, director general of the Institute of Directors, said that the circumstances of the collapse of BHS were “a blight on the reputation of British business”.

Secondly, the pensions issue will not go away. Neglected by Green until it was too late, the £571m hole in the BHS pension finances is extreme. But Tom McPhail from pensions firm Hargreaves Lansdown has warned there are thousands of other defined benefit schemes struggling with deficits. In the light of BHS, May has an opportunity to take an otherwise dusty issue – protections for workplace pensions - and place it top of the agenda. 

Thirdly, the BHS scandal is wreathed in the kind of opaque company structures loathed by voters on the left and right alike. The report found the Green family used private, offshore companies to direct the flow of money away from BHS, which made it in turn hard to investigate. The report stated: “These arrangements were designed to reduce tax bills. They have also had the effect of reducing levels of corporate transparency.”

BHS may have failed as a company, but its demise has succeeded in uniting the left and right. Trade unionists want more protection for workers; City boys are worried about their reputation; patriots mourn the death of a proud British company. May has a mandate to clean up capitalism - she should seize it.