In this week’s New Statesman: Eton Mess

Cameron’s clique and the rebirth of the British ruling class. PLUS: Nigel Farage writes the diary.

Eton Eternal: Jason Cowley interviews the Eton headmaster

From the Archbishop of Canterbury and the head of No 10’s policy unit to top stage actors and the PM – Etonians have resurged into in public life. In our cover story this week, Jason Cowley meets Tony Little, the school’s headmaster. Is Eton guilty of creating “a peculiar form of conformity” in the upper corridors of power? Jason Cowley asks Tony Little. The headmaster replies:

“ ‘There or thereabouts’. I think this is one of those little moments in history that won’t be repeated. I’m pleased that it’s not just the Conservative Prime Minister, but the Archbishop of Canterbury and actors [Eddie Redmayne, Damian Lewis, Dominic West], who have a rather different take on the world. And that reflects the Eton I live in. The exciting thing about being in a place like this is having bright, young, aspirational people who see the world in very different ways. That is the optimistic view. Whether it holds up to scrutiny is rather more complicated.”

While debunking misconceptions about this centuries-old school for boys – such as the high percentage of “Russian plutocrats’ ” children in attendance and the notion that all Eton students “come from castles” – Little also addresses the British education system’s role in “flatlining” social mobility and assesses the reforms by the Education Secretary, Michael Gove:

“The good bit is rattling the cage and rattling it mightily. We now have these pinpricks of light, of some outstanding practice . . . the Teach First scheme . . . is the single best initiative that has happened in my professional lifetime.

“[However,] I see no joined-up plan. Nationally, I’m talking about . . . Huge amount of reform, maybe too much. I think most of the people I work with can’t see the big picture we are aiming for. People can see merit in the individual things that are going on, but we don’t yet see the whole picture . . .”

Plus, Danny Dorling, professor of human geography at the University of Sheffield, explains how social mobility got stuck.

ELSEWHERE IN THE MAGAZINE:

 

Nigel Farage: The Diary

Storming South Shields, dodging photographers and a new Nigel on the Eurosceptic scene. The Ukip leader, Nigel Farage, recalls a less-than-ordinary week, from the local elections and television appearances to gutting fish and Brussels

[On Thursday evening, I take] the train to London to film This Week with Andrew Neil, with a live studio audience and his dog, Mollie. The atmosphere among the programme’s acolytes is fantastic, almost cultish. I have since been told their audience figures stretched well beyond a million so I hope it is a format they use again. A few drinks after the show, and it is time to head to my hotel and await the results from South Shields. By around 1.30am the count has finished and Ukip is looking at a staggering 24.2 per cent. Not enough to steal the seat but a breathtaking vote share, in the light of such a short campaign where 60 per cent of votes cast happened via postal ballot. It’s a situation that needs to change, castrating the chance to campaign and communicate with the public and protecting the party in power. I am intending to sleep, but as the early results start coming in from Lincolnshire I know that something incredible is burgeoning. I finally turn my phone off at three.

The week ends with an unexpected political lift: “Bank holiday over and it’s back to Brussels. Tuesday continues the weekend theme of Nigels, as Mr Lawson speaks out against British membership of the EU. The world is slowly becoming a far less lonely place.”

Laurie Penny: Letter from Reykjavik

After the financial crash of 2008, Iceland refused to bail out its banks and overthrew its government. Five years on, has its flirtation with an alternative to austerity ended? Laurie Penny visits on election day. Laurie Penny writes:

Iceland is a little human crucible bubbling away in the middle of the north Atlantic, and an experiment in how to build and run a modern democracy. For most of the past 30 years, it embraced aggressive free-market capitalism. Then its banks failed, its population lost faith in conventional politics, and it began to be an experiment in something else entirely. Desperate people across the eurozone cling to the fairy tale of Iceland as a plucky country holding out against austerity – but Icelanders see things differently.

Rafael Behr: The Politics Column

Everyone’s talking about Nigel, but it’s Nick who has shaken up Westminster for good, says Rafael Behr in the Politics Column this week. He argues that there is a stark choice facing British politics, expressed in the form of a rivalry between two party leaders with distinct styles and incompatible creeds. Those leaders are, of course, Nigel Farage and Nick Clegg:

Labour and the Tories have fought each other to a standstill. We already know the contours of every stone they throw. David Cameron is the haughty toff who cuts public services for pleasure. Ed Miliband is the gormless wonk without the strength to grip the axe. Their repetitive skirmishes win no defectors from the opposite tribe.

Read the politics column online now.

 

IN THE CRITICS:

 

Jesse Norman on Edmund Burke

In the Critics section of this week’s New Statesman, John Gray reviews Edmund Burke: Philosopher, Politician, Prophet by Jesse Norman MP. Burke, John Gray argues, is “the thinker who more than any other exemplifies the contradictions of conservatism”. The principal contradiction in Burke’s conservatism is between his hostility to “political rationalism” – the notion that society can be remade in the image of abstract ideals – and his commitment to a species of providentialism, according to which the steady advance of liberty is evidence of a divine author at work. Margaret Thatcher, Gray goes on, saw the political settlement she achieved “as a chapter in a Burkean grand narrative of liberty. Unsurprisingly, this settlement has now collapsed.”

 

Brian Eno: The Critics Interview

The NS pop critic, Kate Mossman, talks to the musician, producer and all-round creative force Brian Eno. “The art world bothers Eno,” Mossman writes. Eno tells her: “The art world has got into the habit of believing that its prices reflect its importance.” Eno himself has sometimes been on the receiving end of the kind of snobbery that reigns in the art world, mostly for his production work with mega-selling bands such as Coldplay and U2. “People don’t think my production is cool,” he says. “[But] I like working with both those bands because they are at the centre of something I’m usually at the edges of . . . Snobbery is an English disease.”

 

Plus:

  • Sarah Churchwell is decidedly unimpressed by Z, Therese Anne Fowler’s novel based on the life of Zelda Fitzgerald
  • The former Conservative chancellor of the exchequer Norman Lamont reviews A Dangerous Delusion: Why the West Is Wrong About Nuclear Iran by Peter Oborne and David Morrison
  • Sophie Elmhirst reviews John Crace’s biography of Harry Redknapp, Harry’s Games
  • Nick Spencer, the research director at the think tank Theos, reviews The Serpent’s Promise: the Bible Retold as Science by Steve Jones
  • Daniel Swift reviews an edition of Kurt Vonnegut’s letters edited by Dan Wakefield
  • Ryan Gilbey reviews Our Children, the new film by the director Joachim Lafosse
  • The architect Amanda Levete explains why “resistance is the fuel in the process of design” and why “cities are never perfect”.
  • And much more.

Read our full “In the Critics” blog post here.

Purchase a copy of this week's New Statesman in newsstands today, or online at: subscribe.newstatesman.com

Getty
Show Hide image

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