Mervyn King gets his life peerage and a lollipop, the rest of us get more misery

The newly ennobled Mervyn King blames “a collective lack of imagination” for the financial crisis. We, all of us, failed to see the iceberg. The only problem is that most of us were in the engine room shovelling coal.

I have long been convinced that a life peerage is very much akin to a pacifier. If a significant figure is retiring from public life and has the potential to command media attention, give them a nice title on which to suck and stop kvetching, plus the ability to claim £300 a day for spending a couple of hours in the House of Lords. Giving them a formal public platform has the brilliantly counterintuitive effect of diminishing their future risk index by making them one of many within the Westminster bubble.

The success, or lack thereof, in their former post seems a secondary consideration. And so it is with Sir Mervyn King. This week George Osborne announced that the outgoing Governor of the Bank of England would be taking his place within our unelected pantheon of gown and wig after his retirement at the end of the month. Sporting metaphors blinked like newly born rabbits in the lights of the annual Bankers and Merchants dinner. “You had to play on a sticky wicket,” mused the Chancellor. It was “a game of two halves”, added King.

The only problem is that many would disagree with the post-match analysis – even to the basic level of whether team GB won or lost. We are still a long way off from recovering pre-crisis economic activity levels, unlike the US or Germany, for instance. Inflation has been consistently way above the BoE’s target for many months. Solutions like Funding for Lending appear to have had little impact – lending to SMEs has actually decreased under the scheme. Too little of the river of cash being pumped into the system via Quantitative Easing appears to have trickled through to the real economy – the allegation is that banks are using such schemes and cash to shore up their own balance sheets.

Mervyn King's involvement in the more political aspects of economic strategy has also, rightly, been contentious. Documents released in November 2010 showed an oddly keen involvement in the coalition’s personnel and policies. His blessing of the austerity programme, which has now been questioned even by the IMF, could be seen as almost co-authoring it.

There is also significant criticism of King’s running of the organisation in the “first half” – the one he would term the “nice half”. It is suggested, correctly in my view, that his obsessive focus on inflation targeting failed to take into account the downward pressure on prices created by cheap Chinese imports entering the UK market and so, in effect, allowed the economy “to run too hot during the boom years”. Coupled with very light touch banking regulation, this could be argued to have sown the seeds of the crisis which followed.

Arguably, however, the most distasteful and dishonourable part of his legacy is his attempt to absolve himself of all responsibility. His explanation last year on Radio 4 had a distinct whiff of “nothing to do with me, guv”.  This was a failure of “the system”, he claimed. Isn’t that the system which he oversaw from a key position? "With the benefit of hindsight, we should have shouted from the rooftops that a system had been built in which banks were too important to fail, that banks had grown too quickly and borrowed too much."

It was not hindsight that was lacking. It was plain old present sight. The growth of banks, the mergers, the risky ventures, the out-of-control borrowing – these were not things which happened in secret. They happened in plain sight and with state approval.

Mervyn King blames “a collective lack of imagination”. We, all of us, failed to see the iceberg. We are, apparently, collectively blameworthy. The only problem is that most of us were in the engine room shovelling coal. Mervyn King was one of the people on the bridge. More than that, since one of the BoE’s core purposes and strategic priorities is to “maintain stability and improve the resilience of the financial system”, he was specifically in charge of the looking-out-for-icebergs department.

In those circumstances, it is adding insult to injury for him to shout back from his peerage lifeboat to the rest of us, now drowning in a freezing sea of debt and austerity, “well, you didn’t see the iceberg either”. Why wouldn’t we want to keep this sort of expert, constructive and visionary input a part of our legislature for the rest of his natural life? Happy retirement, Sir Mervyn. We look forward to being blamed for future shipwrecks.

Sir Mervyn King gets a life peerage - the pacifier of public life. Photo: Getty

Greek-born, Alex Andreou has a background in law and economics. He runs the Sturdy Beggars Theatre Company and blogs here You can find him on twitter @sturdyalex

Photo: Getty
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Ken Livingstone says publicly what many are saying privately: tomorrow belongs to John McDonnell

The Shadow Chancellor has emerged as a frontrunner should another Labour leadership election happen. 

“It would be John.” Ken Livingstone, one of Jeremy Corbyn’s most vocal allies in the media, has said publicly what many are saying privately: if something does happen to Corbyn, or should he choose to step down, place your bets on John McDonnell. Livingstone, speaking to Russia Today, said that if Corbyn were "pushed under a bus", John McDonnell, the shadow chancellor, would be the preferred candidate to replace him.

Even among the Labour leader’s allies, speculation is rife as to if the Islington North MP will lead the party into the 2020 election. Corbyn would be 71 in 2020 – the oldest candidate for Prime Minister since Clement Attlee lost the 1955 election aged 72.

While Corbyn is said to be enjoying the role at present, he still resents the intrusion of much of the press and dislikes many of the duties of the party leader. McDonnell, however, has impressed even some critics with his increasingly polished TV performances and has wowed a few sceptical donors. One big donor, who was thinking of pulling their money, confided that a one-on-one chat with the shadow chancellor had left them feeling much happier than a similar chat with Ed Miliband.

The issue of the succession is widely discussed on the left. For many, having waited decades to achieve a position of power, pinning their hopes on the health of one man would be unforgivably foolish. One historically-minded trade union official points out that Hugh Gaitskell, at 56, and John Smith, at 55, were 10 and 11 years younger than Corbyn when they died. In 1994, the right was ready and had two natural successors in the shape of Tony Blair and Gordon Brown in place. In 1963, the right was unprepared and lost the leadership to Harold Wilson, from the party's centre. "If something happens, or he just decides to call it a day, [we have to make sure] it will be '94 not '63," they observed.

While McDonnell is just two years younger than Corbyn, his closest ally in politics and a close personal friend, he is seen by some as considerably more vigorous. His increasingly frequent outings on television have seen him emerge as one of the most adept media performers from the Labour left, and he has won internal plaudits for his recent tussles with George Osborne over the tax bill.

The left’s hopes of securing a non-Corbyn candidate on the ballot have been boosted in recent weeks. The parliamentary Labour party’s successful attempt to boot Steve Rotheram off the party’s ruling NEC, while superficially a victory for the party’s Corbynsceptics, revealed that the numbers are still there for a candidate of the left to make the ballot. 30 MPs voted to keep Rotheram in place, with many MPs from the left of the party, including McDonnell, Corbyn, Diane Abbott and John Trickett, abstaining.

The ballot threshold has risen due to a little-noticed rule change, agreed over the summer, to give members of the European Parliament equal rights with members of the Westminster Parliament. However, Labour’s MEPs are more leftwing, on the whole, than the party in Westminster . In addition, party members vote on the order that Labour MEPs appear on the party list, increasing (or decreasing) their chances of being re-elected, making them more likely to be susceptible to an organised campaign to secure a place for a leftwinger on the ballot.

That makes it – in the views of many key players – incredibly likely that the necessary 51 nominations to secure a place on the ballot are well within reach for the left, particularly if by-election selections in Ogmore, where the sitting MP, is standing down to run for the Welsh Assembly, and Sheffield Brightside, where Harry Harpham has died, return candidates from the party’s left.

McDonnell’s rivals on the left of the party are believed to have fallen short for one reason or another. Clive Lewis, who many party activists believe could provide Corbynism without the historical baggage of the man himself, is unlikely to be able to secure the nominations necessary to make the ballot.

Any left candidate’s route to the ballot paper runs through the 2015 intake, who are on the whole more leftwing than their predecessors. But Lewis has alienated many of his potential allies, with his antics in the 2015 intake’s WhatsApp group a sore point for many. “He has brought too much politics into it,” complained one MP who is also on the left of the party. (The group is usually used for blowing off steam and arranging social events.)

Lisa Nandy, who is from the soft left rather than the left of the party, is widely believed to be in the running also, despite her ruling out any leadership ambitions in a recent interview with the New Statesman.However, she would represent a break from the Corbynite approach, albeit a more leftwing one than Dan Jarvis or Hilary Benn.

Local party chairs in no doubt that the shadow chancellor is profiling should another leadership election arise. One constituency chair noted to the New Statesman that: “you could tell who was going for it [last time], because they were desperate to speak [at events]”. Tom Watson, Caroline Flint, Chuka Umunna, Yvette Cooper, Andy Burnham and Liz Kendall all visited local parties across the country in preparation for their election bids in 2015.

Now, speaking to local party activists, four names are mentioned more than any other: Dan Jarvis, currently on the backbenches, but in whom the hopes – and the donations – of many who are disillusioned by the current leadership are invested, Gloria De Piero, who is touring the country as part of the party’s voter registration drive, her close ally Jon Ashworth, and John McDonnell.

Another close ally of Corbyn and McDonnell, who worked closely on the leadership election, is in no doubt that the shadow chancellor is gearing up for a run should the need arise.  “You remember when that nice Mr Watson went touring the country? Well, pay attention to John’s movements.”

As for his chances of success, McDonnell may well be even more popular among members than Corbyn himself. He is regularly at or near the top of LabourList's shadow cabinet rankings, and is frequently praised by members. Should he be able to secure the nominations to get on the ballot, an even bigger victory than that secured by Corbyn in September is not out of the question.

Stephen Bush is editor of the Staggers, the New Statesman’s political blog. He usually writes about politics.