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Labour's problems in Scotland go well beyond Jim Murphy

Labour's troubles in Scotland go beyond left and right, and there's blame to be shared on both sides of the border. 

The election result in Scotland was for us in the Labour Party nothing short of cataclysmic.

For those of us who spent our evenings and weekends knocking on doors for our party, being on the receiving end of abuse by Cybernats on twitter, and having cameras shoved in our face by angry nationalists trying to shame us from participating in democracy, it was a bitter blow.  A bitter blow that is all the more painful for the ill-informed backbiting that has followed.

In the past week we’ve seen blame being heaped on the Scottish Labour Party, the UK Labour Party, Jim Murphy, ‘Red Tories’, ‘Tartan Tories’ and everyone else on the political spectrum.  They braying mob may have Jim’s head but –whether you agree with his politics or not - it is a gross misunderstanding of Scottish politics to lay all the blame at his door. The scrum for short term political advantage risks obscuring the real, deeply embedded reasons for the defeat.

The truth is the SNP’s rise, and our fall, is not the fault of one leader, one policy issue or one election campaign.  It was not a direct result of the referendum (though that had a role in the SNP’s long term strategy) and didn’t happen just over the last five years (as one senior MP said to me just the other day). 

Our difficulties in Scotland run much deeper than that and there is fault on both sides of the border.

Labour lost Scotland in 2007.  In that Scottish Parliamentary election the SNP took control of Holyrood by one seat.  Labour lost one seat – my home constituency of Cunningham North in Ayrshire – by 48 votes (a far smaller number than the 1,000+ rejected ballots in that constituency).   

What happened there is symptomatic of the problems we faced.  Our vote share in that seat alone - previously a Labour stronghold - had dropped 8 percentage points since the 2003 election.  The electorate had fired a warning shot across our bows and alarm bells should have been ringing throughout the Party.

At the 2010 general election we increased our share of the vote in Scotland.  This result was banked as a sign that Scotland had returned to the fold.  But there was a failure to recognise the positive impact Gordon Brown had on results north of the border.

In 2011 the SNP secured an absolute majority in the Scottish Parliament (and increased their majority in Cunninghame North from 48 to 6,117).  The electorate had fired anther warning shot across our bows, this time of gigantean proportions.

Was that a reflection of support for independence?  The outcome of the referendum would suggest not, certainly not at the time – many areas that voted SNP in the 2011 Scottish Parliamentary elections did not vote for independence in the referendum, including in Ayrshire.  But look beyond the headline figures to the ward by ward results and the picture shows worryingly high Yes votes in many previously ‘Labour’ areas.  The electorate had sent another warning, but again it was banked as a win.

Over the course of these elections our membership in Scotland fell and with it our activist base.  Whilst some areas fought the good fight with every fibre of their being in too many parts of the country active campaigning was viewed with suspicion - people weren't brought up on the doorstep, activists weren’t accustomed to talking to voters and didn't see the benefit.  Local representatives (with notable exceptions) didn’t lead from the front and weren't challenged sufficiently to do so.  Many councillors just didn’t see it as part of their role.  Some MPs seemed to hold voters in contempt. People did not always work together well or welcome help.

Is it any wonder then that we lost so badly last week?  Is it any wonder then that when tried to warn Scots about the risks of independence, the risks posed by the politics of division that they had actually stopped listening?  It’s clear to anyone who has spent any time campaigning in Scotland that the electorate there has been angry at us for a long time.  The wonderful John Smith could have been leader of the Scottish Labour Party last week and we would still have lost.  It didn’t matter what our policy platform was because everyone had stopped listening. That anger was palpable on the doorstep - when we weren’t being sworn at, we were being laughed at.

As the only Scot representing Labour members on the National Executive Committee I have been warning about the threats posed by nationalism for years.

I argued that the NEC should meet and campaign in Scotland regularly; I argued for more funds for the Scottish Party to aid the referendum campaign; I asked repeatedly to see the contact rates for all Scottish constituencies early on so they could be monitored and improved;  I’ve argued that we need to offer a vision of hope and reconnect with Scottish voters. Too often my pleas fell on deaf ears.  And, in January, when I asked that we rule out a coalition with the SNP the suggestion was met with derision – when we eventually did so, it came too late. 

As an organisation we struggled to adapt to the devolved settlement.  Our Scottish Party became too insular and our UK Party too frightened of accusations of interference to provide the support and solidarity Scottish Labour so desperately needed.  We now have a generation of MPs at Westminster who have never stepped foot in Scotland for fear of being accused of starting a turf war and a group of MSPs in the Scottish Parliament that few outside Scotland recognise.

In this context the SNP haven’t needed to win the argument about independence.  They simply needed to convince the electorate they were a better alternative to us.  More socialist.  More radical. The fact that they are neither of those things was immaterial – all they had to do was provide more hope.

They conflated nationalism with patriotism whilst we struggled to fight flags with facts.  All the while the national media has played along – look at all the articles recently about ‘the arrival of the Scots in Westminster’.  The same number of Scottish MPs were elected this time as last – Scottish representatives are not new, they’ve just had different values.

A toxic mix of complacency, contempt, disillusionment and crippling austerity sowed the seeds for the politics of division.  There are lessons here for the rest of the UK – UKIP are now in second place in 100 constituencies – and a new Leader that doesn’t understand Scotland won’t win for us in the rest of the UK.

In the months ahead people will try to turn this into a battle between left and right.  It’s bigger than that.  Unless we face up to that and what’s happened in the past, change, start listening to the people and giving them hope, our Union will fracture even further than it already has. 

A separate Scottish Labour Party, as some have suggested, is not the answer – that would concede the argument on independence and would be a betrayal of our values.  We may have to think of a changed, more federal structure, as does the UK as a whole but separation will never provide the solutions to those most in need and would cost us a country and a union that benefits both sides of the border.  

We achieve more together than we do alone – those are our values.  Values of solidarity.  We fight for them or our whole movement dies.  Like the canary in the mine – if Scotland falls, we all fall.

 

Johanna Baxter is a member of Labour’s NEC.

Johanna Baxter is a CLP representative on Labour's NEC and Chair of the Southwark Labour Campaign Forum

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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