Labour and Unite at war: McCluskey accuses party HQ of a "stitch-up"

The Unite general secretary hits back after Labour announces the end of the "union join" scheme and suspends Unite candidate Karie Murphy from the party.

After weeks of criticism over Unite's alleged manipulation of the Falkirk selection process, culminating in the resignation of Tom Watson earlier today, the Labour machine has swung into action tonight. The party has announced the end of the "union join" scheme, which allowed trade unions to pay the first year's subscriptions of party members they recruited, and has suspended Karie Murphy, the Unite-backed candidate in Falkirk, and Stephen Deans, the chair of Falkirk CLP, from the party. Here's the full statement:

“We announced on 26th June that the General Secretary was going to review membership procedures.

“Ed Miliband is determined to uphold the integrity of Parliamentary selections and, therefore, as a result of that review we have several more measures to announce today.

In the light of the activities of Unite in Falkirk we will end the ‘union join’ scheme.

“Union join was established before Ed Miliband became Leader of the Labour Party with the aim of legitimately encouraging ordinary members of trade unions to become members of the Labour Party.

“However, due to the results of Unite in Falkirk it has become open to abuse but also open to attacks from our opponents that damage Labour. 

“In particular it was a mistake to have a scheme where others pay for people to join the party. Ed Miliband has today ended the scheme. Ordinary members of trade unions should join Labour and they will continue to be encouraged to do so, but that cannot be through schemes that can be tied to individual parliamentary selections or open to attack from our opponents.

“We have also suspended two members of the Labour Party from holding office or representing the Labour Party.

“They are: Karie Murphy and Stephen Deans who is the chair of Falkirk CLP.

“There have been allegations that they may have been involved in a breach of Labour Party rules. These relate to allegations concerning potential abuse of membership rules.

“The administrative suspension means that you cannot attend any party meetings and that they cannot be considered for selection as a candidate to represent the Labour Party at an election at any level.”

In a letter to Labour general secretary Iain McNicol this evening, Len McCluskey has responded by accusing the party HQ of a "stitch-up" and demanding an independent inquiry into the Falkirk affair. Here's his letter in full:

"Simply a ‘stitch-up’ [the report] designed to produce some evidence, however threadbare, to justify predetermined decisions taken in relation to Falkirk CLP. 

"Even on the basis of this flimsy report, it is clear that these decisions cannot be justified. There is no emergency which would justify imposing these undemocratic restrictions, since any real problems could easily be addressed before embarking on a parliamentary selection process. 

"The report has been used to smear Unite and its members. Even if the allegations of people being signed up to the party without their knowledge were true, this had nothing whatsoever to do with my union. 
  
"It is noteworthy that members of the shadow cabinet have been in the lead in initiating this attack upon Unite. Have they had sight of this report while I, the leader of the union put in the frame, has not had the courtesy of a copy? 

"The mishandling of this investigation has been a disgrace. I, however, am obliged to uphold the integrity of Unite, and I can no longer do so on the basis of going along with the activities of a Labour party administration in which I can place no trust. 

"I will therefore be publicly proposing that an independent inquiry be held into all circumstances relating to Falkirk CLP and the conduct of all parties involved, including Unite, the Labour party centrally (including the Compliance Unit) and in Scotland, the officers of the CLP itself, and all those who have sought or are seeking nomination as the Labour PPC. 
  
"Unite will cooperate fully with such an inquiry, and draw appropriate conclusions from any findings regarding our own behaviour. I trust that you will support such an inquiry, will direct all Labour party employees to cooperate with it and encourage other individuals to do likewise." 

Unite general secretary Len McCluskey. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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