David Miliband on what Labour needs to do to win, Blue Labour and his future

"It does feel as if I have been going around attending various versions of my own funeral". Some highlights from a recent evening with the former foreign secretary at the Danish embassy.

Ahead of his departure to the US to lead the International Rescue Committee, David Miliband hosted an evening at the UK Danish Embassy last week, taking questions from an audience of Fabian Society members.

Miliband talked candidly about what Labour needs to do to win in 2015, his regret at not taking up the post of EU foreign policy chief and the significance of ‘Blue Labour’. Here are some highlights from the evening’s Q&A.

What is your take on the current state of play in British politics today?

“Today is an incredible exciting time in British politics for two reasons. Firstly, it is a really open time in politics because the traditional politics of the left, which was about the state providing answers, and the traditional politics of the right of the market finding answers, neither of those are going to meet the challenges of the present. Essentially, what is going on in politics is the centre-right and-centre left are trying to break out of the confines of their own inherited 20th century thinking – without losing the values which are the oxygen of these 20th century movements.

In this time of openness, when your elders are no longer necessarily your betters, the ideas that drive us forward are as likely to come from the young as from others.

What we do know is that successful left-of-centre parties are able to reinvent themselves and think in a way that holds on to the important anchors that brought them into politics in the first place, while at the same time really thinking about the new ways we can put our values into practice.”

Given you’ve got so much to say on the future of British politics, why are you leaving it?

“I’ve got a great opportunity to put my values into practice. The International Rescue Committee is an organisation founded by Albert Einstein in 1933 when he left Germany to flee the Nazis; it has 12,000 staff in 40 countries around the world who are literally doing life saving work, often in places governments can’t go.

For example, in parts of Syria today, there are IRC staff doing life saving work. I’ve got an opportunity within this role to make a real different to people who need help, a voice and representation. Moving to this role is an episode, not an emigration to the US.”

You describe your departure as an episode. What is the duration of that episode?

“Well I haven’t gone yet. When doing a bit of teaching in my old school, one of the kids said ‘I’m doing my A-levels, I’m 17 and I don’t really know what I’m going to do with my life’ and I said, look, I still don’t know what I’m going to do with my life either.”

How have the last few weeks been prior to you leaving for the US?

“It does feel as if I have been going around attending various versions of my own funeral, the difference being the corpse in the coffin is still speaking.”

Why did you choose not to take up the post of EU High Representative for Foreign Affairs? And do you regret that decision now?

“Well, with hindsight it did turn out to be a shame. The job came up in November 2011 and basically I didn’t want to be a rat leaving a sinking ship. We were five months away from a British general election, I’d spent 20 years trying to build the Labour Party up and having left at that point would have been wrong. I actually remember saying to my wife Louise, I don’t want to be sat in Brussels watching the Labour Party go to hell and so that’s the reason.”

During your time in Westminster, how do you think opportunities for women in politics have changed?

“On the one hand there has been a dramatic numerical break through, achieved through things like all women shortlists, which broke the back of the self-selecting oligarchic practices that we used to see of appointing candidates  because they were perhaps the son of so and so.

Culturally a lot of what passed as acceptable comment in the past doesn’t and isn’t acceptable now. Equally, the demands of politics now are massive and this isn’t conducive with the role of primary career. Things are tough, especially if you are trying to juggle a marginal seat, demands of the constituency and bringing up children.”

How can Labour secure victory in 2015?

“The Labour Party has only ever won elections when it’s been the party of production as well as the party of distribution. If left-wing parties are only about how you distribute the cake, and not how you grow the cake, that’s fine for a theoretical economy model but not for governing the country. So you’ve got to get into the guts of how to link production and distribution.”

What is your view on Maurice Glasman’s Blue Labour?

“Your could summarise Blue Labour by saying that by standing for change you mustn’t forget the social ties that bind people together and I think that’s right.

The criticism that New Labour lost a sense of community is a fair argument but, equally, I don’t think you want to flip into a position where you lose the modernising side. What I think marked out the successful elections of ‘97, 2001 and 2005 was that we weren’t just for social democratic virtues, we also had a progressive sense of national modernisation. Those words aren’t quite right, they are too technocratic, but they do sum up a sense of national purpose and progress. For both major parties, I think they are the keys to electoral success.

What I would say is the New Labour critique has force but beware of ending up looking back, rather than looking forward, because politics is always about the future. And the future can never be about remaking old things it’s got to be about retaining or rebuilding old virtues in new ways.

That’s the danger; you can’t do your politics through the rear view mirror.”

Marcus Hobley (@marcushobley) is a freelance commentator specialising in economic and public policy 

David Miliband will shortly become the new president and chief executive of the International Rescue Committee in New York. Photograph: Getty Images.

Marcus Hobley is a freelance commentator specialising in economic and public policy

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