Westminster may dabble in xenophobia, but the reality is that racism isn’t popular

Britain’s immigration debate would look very different if ministers overcame their fear of the fringe and trusted voters with a more honest account of the country we have.

Painted in a certain light, Britain in the summer of 2013 can be made to look pretty nasty. Government vans crawled the streets with a threat to migrants conveyed in the tone of a police state and the idiom of the far right: “Go home or face arrest.” Politicians blame every malaise on foreign interlopers: new arrivals with jobs must be jumping the queue; those without work must be gobbling benefits and hogging hospital beds. Westminster cringes before Ukip, a party that lubricates intolerance with theatrical pub cheer.

But with a change of palette, the same country can be construed differently. The menacing vans have been steered off the streets by the threat of a legal challenge, exposing a failure of process at the Home Office. The stunt has been quietly disowned by Downing Street. (“The Prime Minister probably didn’t even know it was happening,” a senior Tory adviser tells me.) Even Nigel Farage affected distaste at a “nasty, Big Brother” device.

The anxiety about immigration that shows up in opinion polls is not matched by an exclusion of immigrants and their families from British culture. Only a year ago, the nation cheered Mo Farah and Jessica Ennis-Hill, flagbearers for multi-ethnic Britishness, as its Olympic king and queen. TV audiences elected a Hungarian dance troupe as this year’s winner of Britain’s Got Talent. It isn’t a scientific reading of the collective mood but it suggests we are some way off from nationalist frenzy.

For every ministerial dabble in the vilification of migrants, there is a caveat of admiration for the contribution that foreigners have made to the enrichment of these isles. That is the paradox of British political xenophobia – the racist element in populism must be discreet because overt racism isn’t popular.

There is plainly some ugly bigotry expressed in Ukip’s rise but the stronger animus is reserved for politicians from other parties who are accused of colluding in an open-border policy and sneering at anyone who objects. Conservative and Labour MPs say the pro-Farage voters they meet on the doorstep barely distinguish between a blue and a red rosette. They are treated as interchangeable logos on one governing machine.

So there may be less mileage than Conservative strategists think in boasting that the Tories are slamming shut the gates supposedly left open by Labour. When official statistics show net migration falling, voters don’t believe it. Besides, the transitional controls on migration from Bulgaria and Romania – EU members since 2007, whose access to the British jobs market has been delayed – will be lifted in January 2014. Ukip officials barely contain their glee at the unravelling this portends for Conservative claims to be running a “tough” border regime.

Labour suffers from a complex of agonies over immigration. It knows it has lost thousands of votes over the issue. The political computation of that number is then muddled by contradictory impulses: anti-racism as an ethical hallmark of left politics; a tendency to be automatically pro-European for fear of overlapping with Little Englanders’ cartoon hatred of Brussels; a liberal conviction that enterprising migrants are good for the economy and society; a less liberal distaste for the way globalisation treats labour as a fluid resource, sloshing across borders at capital’s behest.

Then there is Ed Miliband’s background as the son of Jewish refugees from the Nazis. The Labour leader is obliged by political reality to address resentment of mass immigration and driven by his upbringing to see the migrants’ side of the story. That could be a recipe for indecision. It may also be a useful combination, because immigrant communities in marginal seats could decide the outcome in a closely fought general election.

Non-white voters do not have uniform political preferences but there is a clear pattern of mistrust of the Tories. There are Conservatives, mostly in urban constituencies with thin majorities, who see this as a long-term crisis for the party. Their concerns have been swept aside in the tactical dash to plug the leak of angry white votes to Ukip.

By contrast, Labour’s position – interpreted generously – is to focus on the causes of antiimmigrant feeling: low wages; a housing crisis that breeds resentment of foreign families in council properties; the skills shortage in an army of unemployed youth. Miliband’s aim, say his friends, is to move the conversation away from race and on to systemic failings in an economy that permits the routine exploitation of migrants and neglect of local labour forces.

That was the point the shadow immigration minister, Chris Bryant, tried to make in a speech on 12 August but the message was garbled. The intervention was erected on a platform of factual error, resulting in an overnight rewrite and a panicky retreat from attacks on corporate employers, encouraging the less generous interpretation of Labour’s position as an unprincipled shambles.

That is unfortunate, because Miliband’s nuanced line, treating immigration anxiety as a function of deep-rooted economic insecurity, deserves an airing. Britain is not a nasty country. Nor is it poised to instal a Ukip government, as more level-headed Tories can see. One Conservative backbencher, lamenting his party’s fringe obsession, recently told me: "People talk about Nigel Farage’s great charisma. Actually, I think a lot of people see him as a bit of a dick."

Westminster devotes more energy to decoding what goes on in the minds of the one in ten voters who might back Ukip than it does to understanding the larger number of people who know that Faragism isn’t the solution. There is in any society a bitter, defensive streak that can be brought out by fear and a generous side that thrives on trust. Britain’s immigration debate would look very different if ministers overcame their fear of the fringe and trusted voters with a more honest account of the country we have and the kind of country most of us want.

A van carrying the Home Office's message to illegal immigrants: 'Go home or face arrest.'

Rafael Behr is political columnist at the Guardian and former political editor of the New Statesman

This article first appeared in the 19 August 2013 issue of the New Statesman, Why aren’t young people working

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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