Nowhere else to go

It is too easy to believe that anyone who votes for the BNP in the 3 May elections is a racist or a

Under grey skies at Oldham Athletic football ground, a group of schoolkids stands on the steps of our 1964 double-decker anti-racism bus, wearing Hope Not Hate T-shirts. All except one boy, a pale-faced 11-year-old in an ill-fitting school uniform, who is standing at the back of the bus studying the floor.

"Come on, lad!" his teacher calls out. The boy stamps his feet one after the other. His expression says he wishes he were invisible. In big letters behind him, a sign reads: "Celebrating Modern Britain".

"Come on, J!" His friends are calling him. He drags off his hoodie and pulls on a yellow Hope Not Hate T-shirt over his white school shirt. He takes his place on the steps of the bus for the photograph. J turns out to have a lovely smile.

"That's a big step for him," one of the mums says. "His family are all BNP. It's more than 40 per cent on our estate voted for BNP in the last election." When I ask her why, she shrugs. "Because there's nowhere else to go," she says, in a matter-of-fact way. "Not really, when you think about it. Working families feel let down by Labour. It's like it's a London party for southerners. It's all about spin. There's Iraq and all that. Local lads dying out there from the regiments round here - cannon fodder." And why isn't she voting for them? "Because they aren't a proper party, that's what people don't realise. They're not like the other parties. They're extremists as bad as the ones in the mosques."

On 3 May, the British National Party will contest a record number of seats in the local elections. A total of 827 across England and Scotland, and more than twice the number the party has ever fielded before. The Hope Not Hate battle bus - which took a 1,700-mile drunk's scribble of a journey from London to Glasgow organised by the Daily Mirror and Searchlight - was an attempt to engage with those parts of the country most likely to connect with a far-right message.

It also turns out to be a tour of an angry, alienated Britain - the estates and shopping centres and market towns mainstream politics is no longer reaching. On estate after city centre, supermarket after community hall, we meet the same feeling that there is no longer any party left to speak for the working man or his wife or children, or his elderly parents.

At times our trip on a 1964 Leyland Titan with a grindingly slow top speed of 38mph (downhill and in fair winds), without such mod cons as heating or a petrol gauge, feels like a journey into a vacuum, the ground vacated by the political parties as they rush to the milk-and-honey heartland of Middle England. Every day brings its own surreal hybrid of celebrity visits to soap opera sets, interviews with pop stars, tea on sink estates and leafleting of supermarket car parks.

We meet people left on council waiting lists for housing, whose estates are no-go at night because of antisocial behaviour, and whose schools are failing and knife-ridden. People whose experience of the NHS is distressing and whose home is between two burnt-out properties.

One day in the West Midlands we spend a morning with white working-class shoppers, followed by Sugababes, and then an evening eating baltis and drinking Guinness at a Sikh-Irish pub.

In Thurrock, in Essex, a man tells us proudly that the local BNP candidate is a young woman in her twenties. "Not a thug with a pit bull," he says. I find this strangely shocking, as if women shouldn't be fascists, or at least young people should be idealists.

He looks at me curiously. "Maybe she is an idealist. Have you thought of that?"

It is too easy to believe that everyone voting for the BNP is a racist or a fool, when in fact it is no coincidence that the party is flourishing in old industrial areas where jobs are scarce and hope is thin on the ground.

In the BNP heartland of Dagenham, where the car industry has been ravaged, BNP leaflets are fresh in the doorways of the estates, and the party's presence is strong in the old mill towns and the once-proud Potteries. In the multiply disadvantaged Sandwell, the BNP 4x4 follows us at a distance, watching the kids come and take the badges and balloons.

In the towns where Tory recession and abandonment have bled into the disinterest of the national Labour Party, nationalism is both listening and offering a voice to quiet, bottled-up rage.

As we trundle through Leicester and Lincoln, Nottingham and Sheffield, we meet the same faces again and again - men and women who feel ignored, put upon, let down. These are the communities spitefully mocked by the middle classes, who prefer to caricature the "chav" underclass as feckless, ignorant and thuggish. Yet if you ask them they'll tell you it is Westminster that isn't "bovvered".

In Yorkshire, we meet Andy Sykes, a former BNP organiser turned anti-racist, who tells us why he joined the party in 2002. "I started going to meetings because I was afraid," he explains. "I started believing the stuff they were pushing through my letter box about paedophiles and rapists and murderers."

The BNP understands that people are feeling frightened and abandoned. It is slipping into the vacuum left by mainstream politics and setting out its stall, countered only by handfuls of local activists and MPs.

They don't tell people that they didn't support England in the World Cup because of its black players, or that their constitution states that a black or Asian person can never be British. They raise valid issues and then exploit them with dizzying distortions, a bombardment of half-truths and semi-facts, all in a language littered with buzzwords designed to inflame feelings of outrage and paranoia: paedophilia, jobs, Islam, 7/7, immigration. They find a tiny blister and then they rub and rub until it is a running sore.

They will tell you it is because of asylum-seekers that your grandmother's heart operation is being delayed - when in fact the amount given to asylum-seekers is less than 1 per cent of what is spent on the National Health Service each year. They will say these people are bringing tuberculosis into the country and that they are criminals, when the British Medical Association refutes any claim about TB and the Association of Chief Police Officers confirms there is no higher rate of criminality among asylum-seekers (and that, in fact, asylum-seekers are far more likely to become victims than perpetrators of crime).

They speak to people's perception that crime - especially violent crime - is on the rise and that eventually all the jobs they can do (and it's all right for Middle Englanders in their gated communities, plugging in by laptop to a global job market) will have gone abroad, and they'll wake up one day and everyone will be speaking Hindi or in that homogenised black-white patois common to inner-city youth.

And all the while, the same language is being whispered by extremist Muslim leaders to young black and Asian youths in our young offenders' institutions, sink estates and prisons: "No one is listening to you, except us. You are nothing, nobody to anyone but us."

Towering heroes

We met some towering heroes on our tour: the boxing legend Brendan Ingle - trainer of Prince Naseem, Herol "Bomber" Graham and, now, a generation of white and Asian Sheffield kids; Chris Keen on the deprived Stoops Estate in Burnley, a great big ex-rugby player of a community worker; Joe Sargonis, a Nottingham Forest football coach offering teenagers alternatives to gun culture.

But if I could have taken the alienated voters of Dagenham anywhere, it would have been to Oliver's Gym, a sweat-soaked, old-fashioned boxing club on a Salford industrial estate.

Here is J the schoolboy's biggest idol, effortlessly jumping rope - a 5ft 10in British Pakistani Olympic boxing hero. "Look at that gym in there," Amir Khan says, taking a breather. "English, Jamaican, Pakistani, Irish, we all train together. We're all treated equal and we all treat each other the same."

According to the BNP, Khan shouldn't be allowed to represent Great Britain. And, with more candidates than the National Front contested at its peak during the Seventies - as the BNP website boasts - there is a real danger that it will increase its foothold in some groups on 3 May.

Some, of course, are only paper candidates, but the party is standing full slates of regional candidates in areas such as Stoke, Leeds, Thurrock and Sunderland, as well as Scotland and Wales. Once elected, these candidates acquire no track record of doing anything to help communities. In fact, it rather suits them if alienation worsens, because they already have their scapegoats in place.

Still, Khan, at least, is optimistic.

"I think racism's going to die out," he says, jumping up into the driving seat of our bus. "It's got to, right? 'Cos in the end, what's the colour of your skin got to do with anything?"

Ros Wynne-Jones is senior feature writer for the Daily Mirror. http://www.mirror.co.uk/hopenothate

Ros Wynne-Jones writes about poverty in the UK and abroad for the Daily Mirror and The Independent.

This article first appeared in the 30 April 2007 issue of the New Statesman, Pakistan: The Taliban takeover

MILES COLE
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The new Brexit economics

George Osborne’s austerity plan – now abandoned by the Tories – was the most costly macroeconomic policy mistake since the 1930s.

George Osborne is no longer chancellor, sacked by the post-Brexit Prime Minister, Theresa May. Philip Hammond, the new Chancellor, has yet to announce detailed plans but he has indicated that the real economy rather than the deficit is his priority. The senior Conservatives Sajid Javid and Stephen Crabb have advocated substantial increases in public-sector infrastructure investment, noting how cheap it is for the government to borrow. The argument that Osborne and the Conservatives had been making since 2010 – that the priority for macroeconomic policy had to be to reduce the government’s budget deficit – seems to have been brushed aside.

Is there a good economic reason why Brexit in particular should require abandoning austerity economics? I would argue that the Tory obsession with the budget deficit has had very little to do with economics for the past four or five years. Instead, it has been a political ruse with two intentions: to help win elections and to reduce the size of the state. That Britain’s macroeconomic policy was dictated by politics rather than economics was a precursor for the Brexit vote. However, austerity had already begun to reach its political sell-by date, and Brexit marks its end.

To understand why austerity today is opposed by nearly all economists, and to grasp the partial nature of any Conservative rethink, it is important to know why it began and how it evolved. By 2010 the biggest recession since the Second World War had led to rapid increases in government budget deficits around the world. It is inevitable that deficits (the difference between government spending and tax receipts) increase in a recession, because taxes fall as incomes fall, but government spending rises further because benefit payments increase with rising unemployment. We experienced record deficits in 2010 simply because the recession was unusually severe.

In 2009 governments had raised spending and cut taxes in an effort to moderate the recession. This was done because the macroeconomic stabilisation tool of choice, nominal short-term interest rates, had become impotent once these rates hit their lower bound near zero. Keynes described the same situation in the 1930s as a liquidity trap, but most economists today use a more straightforward description: the problem of the zero lower bound (ZLB). Cutting rates below this lower bound might not stimulate demand because people could avoid them by holding cash. The textbook response to the problem is to use fiscal policy to stimulate the economy, which involves raising spending and cutting taxes. Most studies suggest that the recession would have been even worse without this expansionary fiscal policy in 2009.

Fiscal stimulus changed to fiscal contraction, more popularly known as austerity, in most of the major economies in 2010, but the reasons for this change varied from country to country. George Osborne used three different arguments to justify substantial spending cuts and tax increases before and after the coalition government was formed. The first was that unconventional monetary policy (quantitative easing, or QE) could replace the role of lower interest rates in stimulating the economy. As QE was completely untested, this was wishful thinking: the Bank of England was bound to act cautiously, because it had no idea what impact QE would have. The second was that a fiscal policy contraction would in fact expand the economy because it would inspire consumer and business confidence. This idea, disputed by most economists at the time, has now lost all credibility.

***

The third reason for trying to cut the deficit was that the financial markets would not buy government debt without it. At first, this rationale seemed to be confirmed by events as the eurozone crisis developed, and so it became the main justification for the policy. However, by 2012 it was becoming clear to many economists that the debt crisis in Ireland, Portugal and Spain was peculiar to the eurozone, and in particular to the failure of the European Central Bank (ECB) to act as a lender of last resort, buying government debt when the market failed to.

In September 2012 the ECB changed its policy and the eurozone crisis beyond Greece came to an end. This was the main reason why renewed problems in Greece last year did not lead to any contagion in the markets. Yet it is not something that the ECB will admit, because it places responsibility for the crisis at its door.

By 2012 two other things had also become clear to economists. First, governments outside the eurozone were having no problems selling their debt, as interest rates on this reached record lows. There was an obvious reason why this should be so: with central banks buying large quantities of government debt as a result of QE, there was absolutely no chance that governments would default. Nor have I ever seen any evidence that there was any likelihood of a UK debt funding crisis in 2010, beyond the irrelevant warnings of those “close to the markets”. Second, the austerity policy had done considerable harm. In macroeconomic terms the recovery from recession had been derailed. With the help of analysis from the Office for Budget Responsibility, I calculated that the GDP lost as a result of austerity implied an average cost for each UK household of at least £4,000.

Following these events, the number of academic economists who supported austerity became very small (they had always been a minority). How much of the UK deficit was cyclical or structural was irrelevant: at the ZLB, fiscal policy should stimulate, and the deficit should be dealt with once the recession was over.

Yet you would not know this from the public debate. Osborne continued to insist that deficit reduction be a priority, and his belief seemed to have become hard-wired into nearly all media discussion. So perverse was this for standard macroeconomics that I christened it “mediamacro”: the reduction of macroeconomics to the logic of household finance. Even parts of the Labour Party seemed to be succumbing to a mediamacro view, until the fiscal credibility rule introduced in March by the shadow chancellor, John McDonnell. (This included an explicit knockout from the deficit target if interest rates hit the ZLB, allowing fiscal policy to focus on recovering from recession.)

It is obvious why a focus on the deficit was politically attractive for Osborne. After 2010 the coalition government adopted the mantra that the deficit had been caused by the previous Labour government’s profligacy, even though it was almost entirely a consequence of the recession. The Tories were “clearing up the mess Labour left”, and so austerity could be blamed on their predecessors. Labour foolishly decided not to challenge this myth, and so it became what could be termed a “politicised truth”. It allowed the media to say that Osborne was more competent at running the economy than his predecessors. Much of the public, hearing only mediamacro, agreed.

An obsession with cutting the deficit was attractive to the Tories, as it helped them to appear competent. It also enabled them to achieve their ideological goal of shrinking the state. I have described this elsewhere as “deficit deceit”: using manufactured fear about the deficit to achieve otherwise unpopular reductions in public spending.

The UK recovery from the 2008/2009 recession was the weakest on record. Although employment showed strong growth from 2013, this may have owed much to an unprecedented decline in real wages and stagnant productivity growth. By the main metrics by which economists judge the success of an economy, the period of the coalition government looked very poor. Many economists tried to point this out during the 2015 election but they were largely ignored. When a survey of macroeconomists showed that most thought austerity had been harmful, the broadcast media found letters from business leaders supporting the Conservative position more newsworthy.

***

In my view, mediamacro and its focus on the deficit played an important role in winning the Conservatives the 2015 general election. I believe Osborne thought so, too, and so he ­decided to try to repeat his success. Although the level of government debt was close to being stabilised, he decided to embark on a further period of fiscal consolidation so that he could achieve a budget surplus.

Osborne’s austerity plans after 2015 were different from what happened in 2010 for a number of reasons. First, while 2010 austerity also occurred in the US and the eurozone, 2015 austerity was largely a UK affair. Second, by 2015 the Bank of England had decided that interest rates could go lower than their current level if need be. We are therefore no longer at the ZLB and, in theory, the impact of fiscal consolidation on demand could be offset by reducing interest rates, as long as no adverse shocks hit the economy. The argument against fiscal consolidation was rather that it increased the vulnerability of the economy if a negative shock occurred. As we have seen, Brexit is just this kind of shock.

In this respect, abandoning Osborne’s surplus target makes sense. However, there were many other strong arguments against going for surplus. The strongest of these was the case for additional public-sector investment at a time when interest rates were extremely low. Osborne loved appearing in the media wearing a hard hat and talked the talk on investment, but in reality his fiscal plans involved a steadily decreasing share of public investment in GDP. Labour’s fiscal rules, like those of the coalition government, have targeted the deficit excluding public investment, precisely so that investment could increase when the circumstances were right. In 2015 the circumstances were as right as they can be. The Organisation for Economic Co-operation and Development, the International Monetary Fund and pretty well every economist agreed.

Brexit only reinforces this argument. Yet Brexit will also almost certainly worsen the deficit. This is why the recent acceptance by the Tories that public-sector investment should rise is significant. They may have ­decided that they have got all they could hope to achieve from deficit deceit, and that now is the time to focus on the real needs of the economy, given the short- and medium-term drag on growth caused by Brexit.

It is also worth noting that although the Conservatives have, in effect, disowned Osborne’s 2015 austerity, they still insist their 2010 policy was correct. This partial change of heart is little comfort to those of us who have been arguing against austerity for the past six years. In 2015 the Conservatives persuaded voters that electing Ed Miliband as prime minister and Ed Balls as chancellor was taking a big risk with the economy. What it would have meant, in fact, is that we would already be getting the public investment the Conservatives are now calling for, and we would have avoided both the uncertainty before the EU referendum and Brexit itself.

Many economists before the 2015 election said the same thing, but they made no impact on mediamacro. The number of economists who supported Osborne’s new fiscal charter was vanishingly small but it seemed to matter not one bit. This suggests that if a leading political party wants to ignore mainstream economics and academic economists in favour of simplistic ideas, it can get away with doing so.

As I wrote in March, the failure of debate made me very concerned about the outcome of the EU referendum. Economists were as united as they ever are that Brexit would involve significant economic costs, and the scale of these costs is probably greater than the average loss due to austerity, simply because they are repeated year after year. Yet our warnings were easily deflected with the slogan “Project Fear”, borrowed from the SNP’s nickname for the No campaign in the 2014 Scottish referendum.

It remains unclear whether economists’ warnings were ignored because they were never heard fully or because they were not trusted, but in either case economics as a profession needs to think seriously about what it can do to make itself more relevant. We do not want economics in the UK to change from being called the dismal science to becoming the “I told you so” science.

Some things will not change following the Brexit vote. Mediamacro will go on obsessing about the deficit, and the Conservatives will go on wanting to cut many parts of government expenditure so that they can cut taxes. But the signs are that deficit deceit, creating an imperative that budget deficits must be cut as a pretext for reducing the size of the state, has come to an end in the UK. It will go down in history as probably the most costly macroeconomic policy mistake since the 1930s, causing a great deal of misery to many people’s lives.

Simon Wren-Lewis is a professor of economic policy at the Blavatnik School of Government, University of Oxford. He blogs at: mainlymacro.blogspot.com

 Simon Wren-Lewis is is Professor of Economic Policy in the Blavatnik School of Government at Oxford University, and a fellow of Merton College. He blogs at mainlymacro.

This article first appeared in the 21 July 2016 issue of the New Statesman, The English Revolt