Why do political parties need such lavish finance?

The problem with Universal Credit, the return of the TSB and a memory lapse at the theatre.

 What nobody asks, in all the rows over funding, is whether political parties need such lavish finance. All sorts of campaigns and pressure groups – among them trade unions – publicise their views with little more funding than what they get from members’ subscriptions. The progressive online campaigning group 38 Degrees, which claims to have stopped the privatisation of forests, raises most of its annual £1.4m income from more than a million members. The view that, in the age of social media and Kickstarter, impecunious parties can’t fight election campaigns is outdated.
 
The only alternative to raising money from big donors, whether they are unions or private companies, is state funding, it is said. But most people want to hear less from politicians; they certainly don’t want to pay so they can be bombarded with “messages”. Anyone interested can watch BBC Parliament or the weekly Question Time programme on BBC1. Everyone else would settle for a nice letter at election time.
 
If the parties refocused a fraction of the energy they expend wooing rich donors on recruiting members, they would have armies of supporters ready to tramp the streets or hit the social media sites during campaigns. No doubt a reliance on subscriptions will compel economies. If the parties consult fewer focus groups, so much the better. If they are compelled to leave their expensive London headquarters and rent a couple of terraced houses in Doncaster or a disused factory in West Bromwich, better still.
 
Flirting with disaster
 
The highly critical report from the National Audit Office on Iain Duncan Smith’s Universal Credit plans carries uncanny echoes of past government disasters. The programme has had five different people in charge since 2012. Duncan Smith’s department cannot “measure its progress effectively against what it is trying to achieve”. The financial controls are inadequate. The programme team has developed a “fortress” mentality and a “good news” reporting culture. The IT needed to implement the scheme isn’t up to the job. The department is unclear about how Universal Credit “will integrate with other programmes”. The timetable is ridiculously tight.
 
Similar criticisms crop up again and again in The Blunders of Our Governments, a new book by Anthony King and Ivor Crewe, which is reviewed on page 54. It explains what went wrong with, for example, the poll tax, the Child Support Agency and Labour’s tax credit scheme. I suppose it is too much to ask IDS to study the book. The authors, both professors of government, propose (surely with tongues in cheeks?) £50,000 prizes for ministers who implement successful policies. Yet IDS isn’t terribly bright and will probably think there’s a prize for incorporating, in a single programme, every cause of government disasters in the past 20 years.
 
Person of interest
 
“We’ll meet again,” Vera Lynn sang. In the case of the TSB bank, returning to our high streets following its demerger from Lloyds, so we do. The Trustee Savings Bank, as it used to be known, was where I held my first account. It did not issue chequebooks. If you needed money, you took a red passbook and queued for what seemed like hours to withdraw it. The upside was that it paid substantial interest. It was a bank (not technically a single one but dozens of regional ones in loose association) for the respectable working class. When I went to university in 1963, my friends, mostly educated at public schools, were amazed that I banked in such a cumbersome fashion. However, they discovered that, thanks to the steady flow of interest and prudent habits inculcated by the TSB, I always had cash to hand. I often lent money (interest-free) to people far better off than I was. I thus learned an early lesson in how the class system operates.
 
Table service
 
When I arrived at the Open Air Theatre in Regent’s Park, London, the other day, I realised that (as you may have calculated from the item above) I am no longer in the first flush of youth. I had tickets for the performance and a dinner beforehand. Unfortunately, it transpired, they were for the previous night. After much smiting of forehead and apologising to my wife, I prepared to leave. Without the smallest fuss, however, the staff promptly found us a dinner table and, in what looked like a nearly full house, replacement theatre tickets two rows away from those I booked.
 
The explanation for such unusually flexible service is, I believe, that, because the theatre opens only in summer, the staff members are almost all students on vacation. They don’t expect to be serving on miserable wages for their whole lives. Nor do they, two weeks from the end of the season, fear being sacked for making the wrong decision.
 
Toilet humour
 
Arriving at his Timesoffice, my old friend and faithful Blairite columnist David Aaronovitch finds that he needs to master a new computer system called “Methode”. According to his column, his instructor misspeaks it as “commode” and: “Instead of . . . a clear, properly conceived system for getting my words . . . to the reader, I saw in my mind’s eye a receptacle for poo.”
 
You sure she misspoke, David?
 
The Open Air Theatre in Regent's Park, London. Image: Getty

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 16 September 2013 issue of the New Statesman, Syria: The deadly stalemate

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The Autumn Statement proved it – we need a real alternative to austerity, now

Theresa May’s Tories have missed their chance to rescue the British economy.

After six wasted years of failed Conservative austerity measures, Philip Hammond had the opportunity last month in the Autumn Statement to change course and put in place the economic policies that would deliver greater prosperity, and make sure it was fairly shared.

Instead, he chose to continue with cuts to public services and in-work benefits while failing to deliver the scale of investment needed to secure future prosperity. The sense of betrayal is palpable.

The headline figures are grim. An analysis by the Institute for Fiscal Studies shows that real wages will not recover their 2008 levels even after 2020. The Tories are overseeing a lost decade in earnings that is, in the words Paul Johnson, the director of the IFS, “dreadful” and unprecedented in modern British history.

Meanwhile, the Treasury’s own analysis shows the cuts falling hardest on the poorest 30 per cent of the population. The Office for Budget Responsibility has reported that it expects a £122bn worsening in the public finances over the next five years. Of this, less than half – £59bn – is due to the Tories’ shambolic handling of Brexit. Most of the rest is thanks to their mishandling of the domestic economy.

 

Time to invest

The Tories may think that those people who are “just about managing” are an electoral demographic, but for Labour they are our friends, neighbours and the people we represent. People in all walks of life needed something better from this government, but the Autumn Statement was a betrayal of the hopes that they tried to raise beforehand.

Because the Tories cut when they should have invested, we now have a fundamentally weak economy that is unprepared for the challenges of Brexit. Low investment has meant that instead of installing new machinery, or building the new infrastructure that would support productive high-wage jobs, we have an economy that is more and more dependent on low-productivity, low-paid work. Every hour worked in the US, Germany or France produces on average a third more than an hour of work here.

Labour has different priorities. We will deliver the necessary investment in infrastructure and research funding, and back it up with an industrial strategy that can sustain well-paid, secure jobs in the industries of the future such as renewables. We will fight for Britain’s continued tariff-free access to the single market. We will reverse the tax giveaways to the mega-rich and the giant companies, instead using the money to make sure the NHS and our education system are properly funded. In 2020 we will introduce a real living wage, expected to be £10 an hour, to make sure every job pays a wage you can actually live on. And we will rebuild and transform our economy so no one and no community is left behind.

 

May’s missing alternative

This week, the Bank of England governor, Mark Carney, gave an important speech in which he hit the proverbial nail on the head. He was completely right to point out that societies need to redistribute the gains from trade and technology, and to educate and empower their citizens. We are going through a lost decade of earnings growth, as Carney highlights, and the crisis of productivity will not be solved without major government investment, backed up by an industrial strategy that can deliver growth.

Labour in government is committed to tackling the challenges of rising inequality, low wage growth, and driving up Britain’s productivity growth. But it is becoming clearer each day since Theresa May became Prime Minister that she, like her predecessor, has no credible solutions to the challenges our economy faces.

 

Crisis in Italy

The Italian people have decisively rejected the changes to their constitution proposed by Prime Minister Matteo Renzi, with nearly 60 per cent voting No. The Italian economy has not grown for close to two decades. A succession of governments has attempted to introduce free-market policies, including slashing pensions and undermining rights at work, but these have had little impact.

Renzi wanted extra powers to push through more free-market reforms, but he has now resigned after encountering opposition from across the Italian political spectrum. The absence of growth has left Italian banks with €360bn of loans that are not being repaid. Usually, these debts would be written off, but Italian banks lack the reserves to be able to absorb the losses. They need outside assistance to survive.

 

Bail in or bail out

The oldest bank in the world, Monte dei Paschi di Siena, needs €5bn before the end of the year if it is to avoid collapse. Renzi had arranged a financing deal but this is now under threat. Under new EU rules, governments are not allowed to bail out banks, like in the 2008 crisis. This is intended to protect taxpayers. Instead, bank investors are supposed to take a loss through a “bail-in”.

Unusually, however, Italian bank investors are not only big financial institutions such as insurance companies, but ordinary households. One-third of all Italian bank bonds are held by households, so a bail-in would hit them hard. And should Italy’s banks fail, the danger is that investors will pull money out of banks across Europe, causing further failures. British banks have been reducing their investments in Italy, but concerned UK regulators have asked recently for details of their exposure.

John McDonnell is the shadow chancellor


John McDonnell is Labour MP for Hayes and Harlington and has been shadow chancellor since September 2015. 

This article first appeared in the 08 December 2016 issue of the New Statesman, Brexit to Trump