Shadow cabinet minister and senior adviser to Ed Miliband, Jon Trickett, speaks in parliament. Photograph: BBC.
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Jon Trickett: Labour must remember every day that it's a "democratic socialist" party

In an exclusive interview, the left-wing shadow cabinet minister discusses his new role as a senior adviser to Ed Miliband. 

Few Labour MPs know Ed Miliband better than Jon Trickett. It was in 2005, shortly after Miliband was elected to parliament, that he told the Commons newcomer he would one day lead the party. "He found it a surprising thought, but so it proved," Trickett recalls when I speak to him. The shadow cabinet member, whose Hemsworth constituency neighbours Miliband's seat of Doncaster North, was taught by the Labour leader's father Ralph Miliband while studying for an MA in political sociology at Leeds University. "I vaguely knew him and David when they were children," he tells me. 

Trickett went on to play a defining role in Miliband's leadership campaign, providing the psephological analysis (the five million votes lost by Labour between 1997 and 2010, just one million of which went to the Tories) that convinced him that a break with New Labour was not just a moral necessity but a political one. In 2011 he entered the shadow cabinet as shadow cabinet office minister and was later named shadow minister without portfolio and deputy party chair in the 2013 reshuffle.

The Yorkshireman has long been one of Miliband's most trusted consiglieres, often used as a sounding board before major speeches and policy announcements. Now, with six months remaining until the general election, this role has been formalised with the left-winger joining the Labour leader's office as a senior adviser in Wednesday night's reshuffle

"I’ve been around a long time," the 64-year-old reflects. "I was the leader of the council [Leeds], I worked for Mandelson for 18 months and I worked for Gordon for about 18 months and I was on the backbenches for a long time. I think I’ve got a wide experience of the labour movement. I was first elected in the middle of the miners’ strike in 1984 as a councillor and I think I can bring to the table a lot of practical experience and hopefully an understanding of economic and social trends." 

Before entering elected office (he became an MP in a 1996 by-election), Trickett worked as a builder and a plumber for 12 years, making him one of the few senior politicians with experience of blue collar labour. "There was no money and I had to have a job," he says. But he adds: "I also had a university degree, so I’ve got an unusual background and it’s hard to say that I’m either fish or fowl from that point of view. I did work for a long time and for most of that time I was self-employed or working as part of an SME and I think I’ve got a good insight into what it’s like."

Trickett, who left school aged 15 with no qualifications before returning to education, adds: "Everything that I’ve achieved in life was by the support of a loving family and by pulling myself up by my bootstraps, basically." One of his greatest political passions is Labour's Future Candidates Programme, devoted to recruiting more people from working class backgrounds to the party. 

After serving as Parliamentary Private Secretary (PPS) to Peter Mandelson between 1997 and 1998 (departing following Mandelson's resignation), Trickett distinguished himself as a backbench radical, chairing the left-wing group Compass and campaigning against the Iraq war and the renewal of Trident. He later ran Jon Cruddas's deputy leadership campaign in 2007 before returning to government, 10 years after his first job, as PPS to Gordon Brown. 

With the election of Miliband as leader in September 2010, Trickett was gifted with a new opportunity to exercise political influence. When I ask what qualities he identified in the Labour leader, he tells me: "There are two things about Ed which are remarkable. One is his capacity to absorb huge amounts of information without seemingly even working at it. He’s got an enormous brain, a very, very powerful mind.

"The second is a capacity to empathise with others, which isn’t always well represented in the media. He does have a capacity to encounter people and somehow be able to immediately relate to them in a very human way. It’s not something we often see but I did find that remarkable in a world in Westminster where everybody’s busy, preoccupied with their own selves, projecting their own images. Ed always seemed to take the time to find out about other people. That combination of qualities is very, very rare."

More than perhaps any other member of the shadow cabinet, the comradely Trickett is an unabashed socialist. "I read somebody say the other day that it’s an old-fashioned notion. I do regard myself as a socialist and I always have, a democratic socialist. For me the ideas of socialism are what inspired me to join the Labour Party. Clause IV of the Labour Party constitution, which Tony Blair agreed, starts off with the words 'The Labour Party is a democratic socialist party' and I think it’s important that we remember that every day in every way.

"We are a democratic socialist party, we’re the party in Britain that has the largest number of socialists in it. As far as I’m concerned, that’s what we’re about. Now, there'll be debates about exactly what we mean by that, but it certainly means a society which isn’t obscenely unequal and it also means not being afraid, if a market is failing, to intervene to protect the public interest."

He cites Miliband's plan to radically restructure the energy market as an example of socialism in action. "The idea that five or six companies should effectively control almost the manufacturing and the distribution of energy, then between themselves drive up the cost of the energy is demonstrably not in the public interest.

"Our policy to freeze fuel prices, it’s not widely understood. We’re going to freeze fuel but then we’re going to do structural reform because prices rising is a symptom of the underlying problem, which is that the market in energy isn’t working."

The challenge, he acknowledges, is communicating these ideas in a way accessible to voters. "I know I can fall into the trap of using what you might call Westminster language, but it’s not how I communicate with friends, neighbours and work colleagues at all ... I like to think I speak Yorkshire, that’s the language I try to use. I try to speak in a very plain, northern, Yorkshire dialect hopefully it’s my way of communicating." Labour, he says, must speak in "the plainest language, in primary colours, so that people understand exactly what it is that we’re saying." 

Among Trickett's many roles is a seat on the party's new anti-Ukip strategy unit, which also features Yvette Cooper, Caroline Flint and John Healey. He attributes the rise of the Farageists to "insecurity in an uncertain world, pressure on jobs, the decline in social mobility, a feeling that the future looks pretty bleak for a lot of people. The coalition are offering a future of cuts and more cuts with no end to it. It feels pretty bleak." 

"Our answer has got to be that this is a complex problem. It’s not unsolvable but it does mean radicalism and boldness, radicalism and boldness rooted in the centre of British politics and prepared to take on vested interests and the other obstacles to change," he adds. 

"It's not saying there’s a single answer to this, or a group of people who you can scapegoat and say 'They’re responsible'. But the truth is, most fair-minded people, when they sit down and you speak to them, they get it straight away." 

The key to reducing anxiety over immigration, the pre-eminent cause of Ukip's surge, is dramatic labour market reform, he argues. "There’s effectively a reserve army of cheap labour in the east of Europe who are being brought over, often by unscrupulous employers and agencies, to do work on the cheap and that can’t be right either for the people who are being shipped across or for the people who are already here.

"You often hear anecdotes or come across examples where the employers are using cheap migrant labour to undercut existing conditions - that can’t be right and Labour’s been clear that we’re going to stop all that."

Few weeks have been as taxing for Trickett's friend and ally Miliband as this one. Just six months before the election, the Labour leader has been forced to publicly dismiss threats to his position. Trickett's message to the rebels is unambiguous: don't feed the flames. 

"We’re the Labour Party and we are the labour movement and one of our founding principles is that an attack on anyone of us, by the forces of darkness, our political foes, is an attack on all of us. If one of us is attacked then all of us are attacked.

"The truth is that Ed Miliband has been subject to the most sustained level of attack and critique by the forces of reaction, our political foes, that I’ve ever seen and I was first elected 30 years ago this year. I’ve never seen anything like it.

"I think there’s an absolute duty on us, when anyone of us is under attack, particularly somebody we’ve elected to lead us, not to allow that and not to feed the flames.

"My own judgement, for what it’s worth, is that I will stand by anyone who is under attack. That doesn’t mean there can’t be a debate about policy options, we are a democratic movement, but that’s entirely different to feeding this frenzy of attack that has really been created by the right-wing in our society against our leader and that is completely inappropriate."

But as well fighting the fires fuelled by Miliband's foes, one senses that Trickett's greatest mission will be to keep the flame of socialism burning in the Labour leader's soul.  

George Eaton is political editor of the New Statesman.

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We're racing towards another private debt crisis - so why did no one see it coming?

The Office for Budget Responsibility failed to foresee the rise in household debt. 

This is a call for a public inquiry on the current situation regarding private debt.

For almost a decade now, since 2007, we have been living a lie. And that lie is preparing to wreak havoc on our economy. If we do not create some kind of impartial forum to discuss what is actually happening, the results might well prove disastrous. 

The lie I am referring to is the idea that the financial crisis of 2008, and subsequent “Great Recession,” were caused by profligate government spending and subsequent public debt. The exact opposite is in fact the case. The crash happened because of dangerously high levels of private debt (a mortgage crisis specifically). And - this is the part we are not supposed to talk about—there is an inverse relation between public and private debt levels.

If the public sector reduces its debt, overall private sector debt goes up. That's what happened in the years leading up to 2008. Now austerity is making it happening again. And if we don't do something about it, the results will, inevitably, be another catastrophe.

The winners and losers of debt

These graphs show the relationship between public and private debt. They are both forecasts from the Office for Budget Responsibility, produced in 2015 and 2017. 

This is what the OBR was projecting what would happen around now back in 2015:

This year the OBR completely changed its forecast. This is how it now projects things are likely to turn out:

First, notice how both diagrams are symmetrical. What happens on top (that part of the economy that is in surplus) precisely mirrors what happens in the bottom (that part of the economy that is in deficit). This is called an “accounting identity.”

As in any ledger sheet, credits and debits have to match. The easiest way to understand this is to imagine there are just two actors, government, and the private sector. If the government borrows £100, and spends it, then the government has a debt of £100. But by spending, it has injected £100 more pounds into the private economy. In other words, -£100 for the government, +£100 for everyone else in the diagram. 

Similarly, if the government taxes someone for £100 , then the government is £100 richer but there’s £100 subtracted from the private economy (+£100 for government, -£100 for everybody else on the diagram).

So what implications does this kind of bookkeeping have for the overall economy? It means that if the government goes into surplus, then everyone else has to go into debt.

We tend to think of money as if it is a bunch of poker chips already lying around, but that’s not how it really works. Money has to be created. And money is created when banks make loans. Either the government borrows money and injects it into the economy, or private citizens borrow money from banks. Those banks don’t take the money from people’s savings or anywhere else, they just make it up. Anyone can write an IOU. But only banks are allowed to issue IOUs that the government will accept in payment for taxes. (In other words, there actually is a magic money tree. But only banks are allowed to use it.)

There are other factors. The UK has a huge trade deficit (blue), and that means the government (yellow) also has to run a deficit (print money, or more accurately, get banks to do it) to inject into the economy to pay for all those Chinese trainers, American iPads, and German cars. The total amount of money can also fluctuate. But the real point here is, the less the government is in debt, the more everyone else must be. Austerity measures will necessarily lead to rising levels of private debt. And this is exactly what has happened.

Now, if this seems to have very little to do with the way politicians talk about such matters, there's a simple reason: most politicians don’t actually know any of this. A recent survey showed 90 per cent of MPs don't even understand where money comes from (they think it's issued by the Royal Mint). In reality, debt is money. If no one owed anyone anything at all there would be no money and the economy would grind to a halt.

But of course debt has to be owed to someone. These charts show who owes what to whom.

The crisis in private debt

Bearing all this in mind, let's look at those diagrams again - keeping our eye particularly on the dark blue that represents household debt. In the first, 2015 version, the OBR duly noted that there was a substantial build-up of household debt in the years leading up to the crash of 2008. This is significant because it was the first time in British history that total household debts were higher than total household savings, and therefore the household sector itself was in deficit territory. (Corporations, at the same time, were raking in enormous profits.) But it also predicted this wouldn't happen again.

True, the OBR observed, austerity and the reduction of government deficits meant private debt levels would have to go up. However, the OBR economists insisted this wouldn't be a problem because the burden would fall not on households but on corporations. Business-friendly Tory policies would, they insisted, inspire a boom in corporate expansion, which would mean frenzied corporate borrowing (that huge red bulge below the line in the first diagram, which was supposed to eventually replace government deficits entirely). Ordinary households would have little or nothing to worry about.

This was total fantasy. No such frenzied boom took place.

In the second diagram, two years later, the OBR is forced to acknowledge this. Corporations are just raking in the profits and sitting on them. The household sector, on the other hand, is a rolling catastrophe. Austerity has meant falling wages, less government spending on social services (or anything else), and higher de facto taxes. This puts the squeeze on household budgets and people are forced to borrow. As a result, not only are households in overall deficit for the second time in British history, the situation is actually worse than it was in the years leading up to 2008.

And remember: it was a mortgage crisis that set off the 2008 crash, which almost destroyed the world economy and plunged millions into penury. Not a crisis in public debt. A crisis in private debt.

An inquiry

In 2015, around the time the original OBR predictions came out, I wrote an essay in the Guardian predicting that austerity and budget-balancing would create a disastrous crisis in private debt. Now it's so clearly, unmistakably, happening that even the OBR cannot deny it.

I believe the time has come for there be a public investigation - a formal public inquiry, in fact - into how this could be allowed to happen. After the 2008 crash, at least the economists in Treasury and the Bank of England could plausibly claim they hadn't completely understood the relation between private debt and financial instability. Now they simply have no excuse.

What on earth is an institution called the “Office for Budget Responsibility” credulously imagining corporate borrowing binges in order to suggest the government will balance the budget to no ill effects? How responsible is that? Even the second chart is extremely odd. Up to 2017, the top and bottom of the diagram are exact mirrors of one another, as they ought to be. However, in the projected future after 2017, the section below the line is much smaller than the section above, apparently seriously understating the amount both of future government, and future private, debt. In other words, the numbers don't add up.

The OBR told the New Statesman ​that it was not aware of any errors in its 2015 forecast for corporate sector net lending, and that the forecast was based on the available data. It said the forecast for business investment has been revised down because of the uncertainty created by Brexit. 

Still, if the “Office of Budget Responsibility” was true to its name, it should be sounding off the alarm bells right about now. So far all we've got is one mention of private debt and a mild warning about the rise of personal debt from the Bank of England, which did not however connect the problem to austerity, and one fairly strong statement from a maverick columnist in the Daily Mail. Otherwise, silence. 

The only plausible explanation is that institutions like the Treasury, OBR, and to a degree as well the Bank of England can't, by definition, warn against the dangers of austerity, however alarming the situation, because they have been set up the way they have in order to justify austerity. It's important to emphasise that most professional economists have never supported Conservative policies in this regard. The policy was adopted because it was convenient to politicians; institutions were set up in order to support it; economists were hired in order to come up with arguments for austerity, rather than to judge whether it would be a good idea. At present, this situation has led us to the brink of disaster.

The last time there was a financial crash, the Queen famously asked: why was no one able to foresee this? We now have the tools. Perhaps the most important task for a public inquiry will be to finally ask: what is the real purpose of the institutions that are supposed to foresee such matters, to what degree have they been politicised, and what would it take to turn them back into institutions that can at least inform us if we're staring into the lights of an oncoming train?