Ian McGowan
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Jon Lansman interview: "There's no leader who would find it easier to win than Jeremy”

The Momentum chair on Jeremy Corbyn's electability, mandatory reselection of MPs and the mistakes the left made in the 1980s. 

On 27 September 1981, minutes after Tony Benn’s defeat in the Labour deputy leadership election, his 24-year-old campaign co-ordinator, Jon Lansman, told ITN: “To be less than 1 per cent below Denis Healey is a terrific result . . . The campaign for the policies and the campaign for party democracy will go on – and there’s nothing that’s going to be stopping it.”

The campaign went on but Lansman and the left entered what he calls “the wilderness”. In the 1988 leadership election, Benn suffered a landslide defeat to Neil Kinnock (89-11 per cent) and the party moved right. For decades, Lansman was a figure on Labour’s fringes, doughtily championing the policies of 1981. Few believed that the left would regain its past prominence. And then Jeremy Corbyn was elected Labour leader.

At 58, Lansman is more influential than he was at any point in his career. He is the founder and chair of Momentum, the group established by Corbyn’s allies. He is also one of the party’s most feared figures. Because of his lifelong advocacy of mandatory reselection, critical MPs believe Momentum will be used as a vehicle for their removal.

The Cambridge economics graduate rarely gives interviews and this has added to his mystique. But on 16 May, he agreed to meet me in Westminster’s Portcullis House. Lansman, a former aide to the late MP Michael Meacher, was dressed in a beige jacket, pink shirt, jeans and desert boots. On the day we met, a senior left-winger described him to me as “the person who got Jeremy on the ballot paper”. While Corbyn and John McDonnell were said to be all but resigned to failure, Lansman “wouldn’t give up”.

He was one of those outside the Parliamentary Labour Party (PLP) office on 15 June 2015 when the future leader achieved the requisite 35 MP nominations. “I was very persistent. It was a last-minute operation,” Lansman recalled. “I brought us all together on the final day and it made the difference.” By unfortunate coincidence, he was also in demand as a registered kidney donor. “I had to go and have a load of blood taken out of my arm mid-morning.”

On the day of Corbyn’s election, Lansman’s joy was tinged with melancholy. “I’m very happy. But sad too that it took 30 years,” he tweeted. I asked him how surprised he was by Corbyn’s decisive victory. “I absolutely did expect that if Jeremy got on the ballot paper, we would have a surge . . . I thought there had been enough of an opening-up of debate under Ed [Miliband] that if Jeremy was on the ballot paper we would do quite well. I didn’t expect to win. I thought that ‘quite well’ would be 35 to 40 per cent of first preference votes.

“On policy issues, I don’t think the membership ever stopped being on the left,” he told me. “They were never in favour of the Iraq war, they were never in favour of privatising the NHS, they were never in favour of academies and foundation hospitals. They voted for Tony Blair after many years of Tory government because they wanted to win. They saw him as a winner.”

I asked Lansman how he believed Corbyn was faring. “We knew we’d have a challenging press and we’d have a challenging time with some members of the PLP. It’s gone reasonably well.” On Corbyn’s foes, he said: “I don’t think it’s a matter of letting Jeremy down, I think it’s a matter of letting the membership down . . . [It doesn’t] like to see members of parliament trashing the party’s electoral prospects.”

Lansman has publicly stated that Momentum will not campaign for the deselection of MPs but he remains personally supportive of members having the right to do so. “I am in favour of accountable elected representatives. I think that’s what party members expect. I think it’s what the public expects. Zac Goldsmith is a bit of a bête noire at the moment but when he moved his recall bill he got a lot of support from the left of the Labour Party and he got support from the public . . . I don’t think that the general public thinks that MPs in safe seats should have a job for life. I actually think there should be some mechanisms for accountability and, yes, I still believe in those. But I do understand that when Jeremy is faced with a PLP, the vast majority of whom did not vote for him, that is a problem and it’s important that he’s able to reassure them.”

Though Labour has not reintroduced mandatory reselection, which was abolished under Kinnock in 1990, the government’s forthcoming boundary changes will force many MPs to stand again. “I would expect party members to make choices that reflect their views as closely as possible,” Lansman said. “There’s been a change in the complexion of the party membership as a result of the surge and that will have an effect.”

When a Labour seat falls vacant, the media almost always tout Lansman as a possible candidate but he told me that he had “no interest in standing for parliament”. Never? “Never is perhaps putting it too strongly. But I have no intention of standing.”

Lansman said that Miliband made an “enormous mistake” by “doing nothing to build up his own support network” (a view the former leader is said to share). It was not a mistake that Corbyn’s allies repeated. Less than a month after his election, Momentum was founded on 8 October 2015. Lansman was keen to dispel the view of the group as a tool for far-left entryists. “That isn’t what Momentum meetings are like. The vast majority of people are entirely new to politics. In some areas, yes, you have some returners but most of the returners aren’t Trots. This is not an entryist operation in any way.”

I asked him to respond to the description of Momentum by the deputy leader, Tom Watson, as “a rabble”. “I think that Tom was misled. He spoke immediately after Stella Creasy reported two things that were actually untrue. First of all, they hadn’t marched on her house; secondly, although they’d gone to the office, there were no staff inside. And they lit candles outside, it was no big deal . . . I don’t hold it against Tom.” (After publication, Creasy said that she did not claim protesters marched on her house, prompting Lansman to reply: "If I fell for media misinformation, I apologise".) 

Midway through our conversation, Seumas Milne, Corbyn’s strategy and communications director, passed by and cast a sceptical eye at the proceedings. After finishing his phone call, he returned and sat in for ten minutes. Lansman and I discussed Labour’s recent anti-Semitism feud. An atheist Jew, he was sharply critical of Ken Livingstone and has called for the left to abandon its pejorative use of “Zionism”. “Most Jews in Britain don’t see it as an ideology, they see it as indicating support for the existence of Israel as a Jewish state. Most British Jews . . . genuinely support two states, unlike the current government of Israel.” He added: “It’s wrong to talk about Zionism as a single ideology or a homogeneous group of people.”

Lansman was raised in an Orthodox Jewish family in Southgate, north London, and worked on an Israeli kibbutz when he was 16. He wrote in 2014 that it was the “pragmatic anti-Toryism” of a schoolboy “forced to work on A-level essays by candlelight during Heath’s three-day week” that drew him into Labour activism. He added: “Disillusionment with Wilson’s leadership, the IMF crisis and the realisation that Labour members had so little influence on our own government soon pushed me to the left.”

Even before Corbyn became leader, some in the party were plotting to remove him. I asked Lansman whether he believed there would be a challenge. “At the moment people clearly feel that a challenge is too risky and I don’t expect the arithmetic to change that much. Jeremy got a massive mandate and he will get a massive vote again . . . We’ve now got 120 local groups around the country. We have the basis for a very well-run operation. Part of my role has been to ensure that Momentum is equipped to campaign to defend the legitimacy of Jeremy’s leadership.” The day after we met, the Times published a YouGov poll showing that support for Corbyn among full Labour members had risen to 64 per cent (up from 49.5 per cent at the time of his election).

Lansman told me that he expected Corbyn to fight the next general election and that suggestions that he plans to hand over the leadership to McDonnell, the shadow chancellor, were “without foundation”. Of the party’s electoral prospects, he said: “I don’t think there’s any leader who would find it easier to win than Jeremy next time.”

Labour recently became the first opposition to lose council seats since 1985 but Lansman defended the results as “very good”: “They compared very well, in fact were in some ways better, than the high point of Miliband.” He added, “That isn’t bad, considering the media hostility we’ve had and, I’m afraid, the appearance of division which a small number of MPs have provided.”

Does he believe the UK’s conservative institutions would tolerate rule by a left-wing Labour Party? “I’ve still got my Harry Perkins badge,” he quipped, referring to the fictional prime minister of A Very British Coup. “Is that a realistic scenario? You certainly can’t dismiss it. I remember, immediately after the 1981 deputy leadership election, having dinner with Madame Allende and Tony [Benn]. The threat from those quarters felt very real . . . If Tony had won, we would have faced some pretty tough opposition from sections of the British establishment.”

Lansman was close to Benn until his death in March 2014. How would the left’s most revered leader have responded to Corbyn’s success? “He would have been absolutely delighted and he would have been surprised. That wasn’t what he was expecting when he died, which was not that long ago. I think he saw some improvements with Miliband but he was also disappointed. He was loyal to his family, he was very pleased with Hilary [Benn’s] role, so that mattered to him. I think there were complex personal things in the mix.”

At the close of our conversation, I asked Lansman if he was confident that the left would avoid again being consigned to the wilderness. He replied with a degree of self-criticism that may surprise his detractors.

“I think we made mistakes in the Eighties. With hindsight, I don’t think we helped ourselves. We allowed ourselves to be marginalised; we were too unforgiving of people who some saw as betraying our principles and didn’t give them a way back. My view has always been that if you don’t take the mainstream of the Labour Party with you, you’re going to lose. There is no point in taking hard-left positions which are not going to appeal to the centre ground.”

George Eaton is political editor of the New Statesman.

This article first appeared in the 19 May 2016 issue of the New Statesman, The Great Huckster

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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?