Miliband takes inspiration from Germany with new regional banks policy

Labour would establish a new network of banks, modelled on the German <i>Sparkassen</i>, with a duty to promote growth in underdeveloped regions.

The "blank sheet of paper" is being filled. Ed Miliband will announce today that a Labour government would establish a new network of regional banks as partners of a British Investment Bank. In his speech at the British Chambers of Commerce conference this morning, he will say: "We do not just need a single investment serving the country. We need a regional banking system serving each and every region of the country. 

"Regional banks with a mission to serve that region and that region alone, not banks that are likely to say no but banks that know your region and your business; not banks that you mistrust, but banks you can come to trust."

The policy, like much of Miliband's political economy, has a distinctly German flavour. Last February, Chuka Umunna visited the country to study the Sparkassen, locally managed banks with a duty to promote growth in economically underdeveloped regions. The shadow business secretary said: 

There is quite a lot we can learn, in particular from the savings banks here, the Sparkassen, which have a much better relationship, if you like, with their businesses, the people here, their banking structure's very local in its nature, the people running those local banks really understand and get to know the businesses, so they're in a good position to assess the risk and provide the support needed to. 

Labour's Small Business Taskforce, which publishes its final report today, has identified the lack of  finance for small and medium sized enterprises as one of the factors restricting growth and innovation. It suggests that a new German-style network of regional banks (dubbed "Sparks") could help promote a more balanced economy.

There are important details to be worked out, most notably where the banks will operate and how they will be capitalised, but this is an encouraging example of Miliband's long-term focus on rebuilding "the foundations" of the economy. 

Ed Miliband walks through Hyde Park after addressing TUC members at the end of a march in protest against the government's austerity measures on October 20, 2012. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Where Labour has no chance, hold your nose and vote Lib Dem

May's gamble, MacKenzie's obsession and Wisden obituaries - Peter Wilby's First Thoughts.

In 2007 Gordon Brown allowed rumours to circulate that he would call an early general election for the spring of 2008. When he failed to do so, he was considered a coward and a ditherer and never recovered. Theresa May has tried a different strategy. After firmly denying that she would call an early election and killing off speculation about one, she suddenly announced an election after all. Will this work better for her than the opposite worked for Brown?

The Prime Minister risks being seen as a liar and an opportunist. Her demand for “unity” at Westminster is alarming, because it suggests that there is no role for opposition parties on the most important issue of the day. If Labour and the Lib Dems are smart enough to co-operate sufficiently to rally the country against what looks like an attempt to instal an authoritarian, right-wing Tory regime, May, even if she wins the election, could find herself weakened, not strengthened. I never thought I would write this but, in constituencies where Labour has no chance, its supporters should hold their noses and vote Lib Dem.

Taken for granted

I wonder if May, before she took her decision, looked at the precedents of prime ministers who called unnecessary elections when they already had comfortable parliamentary majorities. In 1974, after three and a half years in office, Edward Heath, with a Tory majority of 30, called a “Who runs Britain?” election during a prolonged dispute with the miners. He lost. In 1923, Stanley Baldwin, a new Tory leader sitting on a majority of 75 obtained by his predecessor just a year earlier, called an election because he wished to introduce tariffs, an issue strikingly similar to the one raised by Brexit. He also lost. The lesson, I think (and hope), is that prime ministers take the electorate for granted at their peril.

China’s long game

Commentators compare the crisis ­involving North Korea and the US with the Cuban missile crisis of 1962. It doesn’t feel that way to me. For several days that year, nuclear war seemed, to my 17-year-old mind, all but inevitable. I went to the cinema one afternoon and felt surprise when I emerged three hours later to find the world – or, at least, the city of Leicester – going about its business as normal. Two nuclear powers were in direct confrontation. The US threatened to invade communist Cuba to remove Soviet missiles and blockaded the island to prevent deliveries of more weapons. Soviet ships sailed towards the US navy. It wasn’t easy to imagine a compromise, or who would broker one. Nobody doubted that the two sides’ weapons would work. The Soviet Union had carried out nearly 200 nuclear tests. North Korea has claimed just five.

For all the talk of intercontinental missiles, North Korea at present isn’t a credible threat to anybody except possibly its neighbours, and certainly not to the US or Britain. It is in no sense a geopolitical or economic rival to the US. Donald Trump, who, like everybody else, finds the Middle East infernally complicated, is looking for an easy, short-term victory. The Chinese will probably arrange one for him. With 3,500 years of civilisation behind them, they are accustomed to playing the long game.

Mussel pains

Whenever I read Kelvin MacKenzie’s columns in the Sun, I find him complaining about the size of mussels served by the Loch Fyne chain, a subject on which he happens to be right, though one wonders why he doesn’t just order something else. Otherwise, he writes badly and unfunnily, often aiming abuse at vulnerable people such as benefit claimants. It’s a new departure, however, to insult someone because they were on the receiving end of what MacKenzie calls “a nasty right-hander”, apparently unprovoked, in a Liverpool nightclub. He called the victim, the Everton and England footballer Ross Barkley, who has a Nigerian grandfather, “one of our dimmest footballers” and likened him to “a gorilla at the zoo”.
The paper has suspended MacKenzie, a former Sun editor, and Merseyside Police is investigating him for racism, though he claims he didn’t know of Barkley’s ancestry.

Several commentators express amazement that Sun editors allowed such tripe to be published. It was not, I think, a mistake. Britain has no equivalent of America’s successful alt-right Breitbart website, disruptively flinging insults at all and sundry and testing the boundaries of what it calls “political correctness”, because our alt right is already established in the Sun, Express and Mail. To defend their position, those papers will continue to be as nasty as it takes.

Over and out

Easter is the time to read the cricket annual Wisden and, as usual, I turn first to the obituaries. Unlike newspaper obituaries, they record failures as well as successes – those who managed just a few undistinguished performances in first-class cricket and, most poignantly, some who promised much but died early. We learn of a 22-year-old Indian who, during demonstrations against the alleged molestation of a schoolgirl, was shot dead by police and whose grieving mother (invoking the name of one of India’s greatest batsmen) cried, “Bring my Gavaskar back!” In England, two young men drowned, having played one first-class match each, and a 22-year-old Sussex fast bowler, described as “roguish” and “enormously popular”, fell off a roof while celebrating New Year with friends in Scotland. In South Africa, a young batsman was among five municipal employees killed when their truck crashed; the local mayor fled the funeral as his workmates “chanted menacingly” about unpaid wages.

Among the better-known deaths is that of Martin Crowe, probably New Zealand’s best batsman. In a Test match, he once got out on 299 and reckoned the near-miss contributed to the cancer that killed him at 53. “It tore at me like a vulture pecking dead flesh,” he said. Cricket can do that kind of thing to you. 

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 20 April 2017 issue of the New Statesman, May's gamble

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