Show Hide image

The unelected King

So much for the governor of the independent Bank of England not straying into party politics.

Perhaps I owe Nick Clegg an apology. I was one of those commentators who mocked the Deputy Prime Minister when he insisted in June that his Damascene conversion to the need for deeper and faster cuts in public expenditure had been prompted in part by a post-election conversation with the governor of the Bank of England, Mervyn King. "He couldn't have been more emphatic," Clegg told the Observer. "He said, 'If you don't do this, then because of the deterioration of market conditions it will be even more painful to do it later.'"

The Bank of England governor, however, played down the significance of his phone call to the Lib Dem leader at a Treasury select committee hearing in July. "There was nothing I said in that conversation that was different from what I had said in public," he stated. "When I am needed to give advice, I try to make sure the advice I give is full square in private and in public."

Private talk

Case closed, then. Or maybe not. The treasure trove of US diplomatic cables released by the whistle-blowing website WikiLeaks has revealed that, in private, King had been pushing the Tories to formulate a much tougher deficit- reduction programme in the run-up to the general election. "In recent meetings with [Cameron and Osborne], he has pressed for details about how they plan to tackle the debt," the US ambassador to the UK, Louis Susman, noted in a classified cable to the US secretary of state, Hillary Clinton, after a meeting with the governor in February. According to King, wrote the ambassador, cutting the deficit would be the "greatest challenge" facing whichever party won the general election.

So much for the governor of the independent Bank of England not straying into party politics, staying out of macroeconomic policy-making and ensuring his advice is "full square in private and in public". I suppose we should not be too surprised. He may have been one of the 364 Keynesian economists who signed a letter to the Times in 1981, condemning Geoffrey Howe's "austerity" budget, but King has since become a deficit hawk and senior Labour figures have long suspected that he leans towards the Conservatives. In April 2009, on the eve of the G20 summit in London, he enraged Gordon Brown by warning against "significant fiscal expansion"; in June 2009, he attacked Alistair Darling over the "extraordinary" size of the deficit, telling MPs that the Budget should be returned to balance faster than the Treasury had planned.

Last month, a member of the Bank of England's Monetary Policy Committee (MPC) claimed that King's post-election support for the coalition government's programme of austerity had been "excessively political". Speaking in front of the Treasury select committee, Adam Posen said: "There was a difference of opinion at the MPC, in particular in the main meeting, over a particular paragraph in the [May inflation] report that was talking about the need for a particular speed with which to deal with the fiscal deficit." Kate Barker, another MPC member at the time, said she was also "extremely unhappy" at the level of support expressed by the Bank for the coalition's policy of "significant fiscal consolidation".

Hasn't King's position as governor of the Bank of England, on a £300,000 salary funded by the taxpayer, become untenable? In my view, his credibility as an economist and forecaster had already been undermined in 2007 and 2008 when he failed to recognise the scale of the financial crisis and allowed, in Northern Rock, the first run on a British bank since 1866. Now he has been exposed as an "excessively political" and interfering figure - both by Wiki­Leaks and by his own colleagues on the MPC. How can he continue as head of the nation's central bank, a role that demands political independence and impartiality?

It isn't just the Bank of England governor who seems to have overstepped the constitutional mark. A BBC documentary in June revealed that the cabinet secretary, Gus O'Donnell - nicknamed "God" by his civil service colleagues - advised Conservative and Liberal Democrat negotiators in their first meeting at the Cabinet Office to go for a "more com­prehensive agreement" than a Tory minority government, in order to introduce "tough measures" that would reassure the financial markets "on the Monday morning". (In fact, the FTSE was up on the morning of Monday 10 May, despite the ongoing and unfinished negotiations between the two parties.)

No mandate

It seems the conservative British establishment - so memorably identified and critiqued by the late Anthony Sampson in his 1962 book, Anatomy of Britain - is very much alive and well, in the form of overmighty and politicised civil servants such as the cabinet secretary and the governor of the Bank of England, despite 13 years of Labour rule. But I don't remember the British public voting for Mervyn King or Gus O'Donnell.

Nor, for that matter, do I remember the public voting for the biggest cuts to government spending since the Second World War. There is simply no democratic mandate for the coalition's austerity measures. On 6 May, voters were offered a clear choice between the Conservatives' pledge to eliminate the deficit over the course of the parliament, and the Labour and Lib Dem strategy to delay cuts in spending until the recovery was secure, with Labour pledging to cut the deficit in half by 2014. The Tories won 36 per cent of the vote; the more moderate Labour and Lib Dem position on deficit reduction had the backing of 52 per cent of voters. Little has changed in recent months: a Populus poll in September showed that just one in five voters (22 per cent) supported the coalition's plan to deal with the deficit by the next election, in just five years' time.

During the last election campaign, in April, Nick Clegg warned of "Greek-style unrest" on the streets of Britain if the Tories tried to "slash and burn" public services without a proper mandate. In recent weeks, his words have proved prophetic - and I suspect the student protests over tuition fees are just the beginning. There will be protests, strikes and sit-ins galore come 2011 and 2012. Perhaps the Deputy Prime Minister should have taken his own advice, rather than that of the unelected Mervyn King.

Mehdi Hasan is senior editor (politics) of the New Statesman.

Mehdi Hasan is a contributing writer for the New Statesman and the co-author of Ed: The Milibands and the Making of a Labour Leader. He was the New Statesman's senior editor (politics) from 2009-12.

This article first appeared in the 06 December 2010 issue of the New Statesman, Vietnam: the last battle

Photo: Getty Images
Show Hide image

What's to be done about racial inequality?

David Cameron's words on equal opportunities are to be welcomed - now for some action, says Sunder Katwala.

David Cameron made the strongest, clearest and most high profile statement about ethnic inequalities and the need to tackle discrimination ever yet offered by a British Prime Minister in his leader’s speech to the Conservative Party conference in Manchester.
“Picture this. You’ve graduated with a good degree. You send out your CV far and wide. But you get rejection after rejection. What’s wrong? It’s not the qualifications or the previous experience. It’s just two words at the top: first name, surname. Do you know that in our country today: even if they have exactly the same qualifications, people with white-sounding names are nearly twice as likely to get call backs for jobs than people with ethnic-sounding names? … That, in 21st century Britain, is disgraceful. We can talk all we want about opportunity, but it’s meaningless unless people are really judged equally”, said Cameron.
While the proof of the pudding will be in the eating, this was a powerfully argued Prime Ministerial intervention – and a particularly well-timed one, for three reasons.

Firstly, the Prime Minister was able to root his case in an all-but-universally accepted appeal for equal opportunities. It will always prove more difficult in practice to put political energy and resources behind efforts to remedy discrimination against a minority of the population unless a convincing fairness case is made that values cherished across our whole society are at stake. Cameron’s argument, that any party which tells itself that it is the party of the ‘fair chance’ and ‘the equal shot’ must have a response when there is such clear evidence of discrimination, should prove persuasive to a Conservative Party that has not seen race inequalities as its natural territory. Cameron argued that the same principles should animate responses to discrimination when it comes to race, gender and social class. Put like that, wanting job interviews to be fair – by eradicating conscious and unconscious patterns of bias wherever possible – would strike most Britons as offering as clear a case of the values of fair play as wanting the best baker to win the Great British Bake-Off on television.
Secondly, Cameron’s intervention comes at a potential "tipping point" moment for fair opportunities across ethnic groups. Traditionally, ethnic discrimination has been discussed primarily through the lens of its impact on the most marginalised. Certainly, persistent gaps in the criminal justice system, mental health provision and unemployment rates remain stark for some minority groups. What has been less noticed is the emergence of a much more complex pattern of opportunity and disadvantage – not least as a consequence of significant ethnic minority progress.

Most strikingly of all, in educational outcomes, historic attainment gaps between ethnic minorities and their white British peers have disappeared over the last decade. In the aggregate, ethnic minorities get better GCSE results on average. Ethnic minority Britons are more likely, not less likely, to be university graduates than their fellow citizens. 

As a result of that progress, Cameron’s intervention comes at a moment of significant potential – but significant risk too. Britain’s ethnic minorities are the youngest and fastest-growing sections of British society. If that educational progress translates into economic success, it will make a significant contribution to the "Great British Take-Off" that the Prime Minister envisions. But if that does not happen, with educational convergence combined with current ‘ethnic penalties’ in employment and income persisting, then that potential could well curdle into frustration that the British promise of equal opportunities is not being kept.  Cameron also mirrored his own language in committing himself to both a ‘fight against extremism’ and a ‘fight against discrimination’: while those are distinct challenges and causes, actively pursuing both tracks simultaneously has the potential, at least, depolarise some debates about responses to extremism  - and so to help deepen the broad social coalitions we need for a more cohesive society too.

Thirdly, Cameron’s challenge could mark an important deepening in the political competition between the major parties on race issues. Many have been struck by the increase in political attention on the centre-right to race issues over the last five to ten years. The focus has been on the politics of representation. By increasing the number of non-white Conservative MPs from two to seventeen since 2005, Cameron has sent a powerful signal that Labour’s traditional claim to be ‘the party of ethnic minorities’ would now be contested. Cameron was again able to celebrate in Manchester several ways in which his Cabinet and Parliamentary benches demonstrate many successful journeys of migrant and minority integration in British society. That might perhaps help to ease the fears, about integration being impossible in an era of higher immigration, which the Home Secretary had articulated the previous day.

So symbolism can matter. But facial diversity is not enough. The politics of ethnic minority opportunity needs to be about more than visits to gurdwaras, diversity nights at the party conference fringes and unveiling statues of Mahatma Gandhi in Parliament Square. Jeremy Corbyn’s first speech as Labour leader did include one brief celebratory reference to Britain’s ethnic diversity – “as I travelled the country during the leadership campaign it was wonderful to see the diversity of all the people in our country” – and to Labour bringing in more black, Asian and ethnic minority members - but it did not include any substantial content on discrimination. Tim Farron acknowledged during his leadership campaign that the Liberal Democrats have struggled to get to the starting-line on race and diversity at all. The opposition parties too will no doubt now be challenged to match not just the Prime Minister’s rhetorical commitment to challenging inequalities but also to propose how it could be done in practice.

Non-white Britons expect substance, not just symbolism from all of the parties on race inequalites.  Survation’s large survey of ethnic minority voters for British Future showed the Conservatives winning more ethnic minority support than ever before – but just 29 per cent of non-white respondents were confident that the Conservatives are committed to treating people of every ethnic background equally, while 54 per cent said this of Labour. Respondents were twice as likely to say that the Conservatives needto do more to reach out – and the Prime Minister would seem to be committed to showing that he has got that message.  Moreover, there is evidence that ethnic inclusion could be important in broadening a party’s appeal to other younger, urban and more liberal white voters too – which is why it made sense for this issue to form part of a broader attempt by David Cameron to colonise the broad centre of British politics in his Manchester speech.

But the case for caution is that there has been limited policy attention to ethnic inequalities under the last two governments. Restaurateur Iqbal Wahhab decided to give up his role chairing an ethnic minority taskforce for successive governments, unconvinced there was a political commitment to do much more than convene a talking shop. Lib Dem equalities minister Lynne Featherstone did push the CV discrimination issue – but many Conservatives were sceptical. Cameron’s new commitment may face similar challenges from those whose instinct is to worry that more attention to discrimination or bias in the jobs market will mean more red tape for business.

Labour had a separate race inequalities manifesto in 2015, outside of its main election manifesto, while the Conservative manifesto did not contain significant commitments to racial inequality. The mid-campaign launch in Croydon of a series of race equality pledges showed an increasing awareness of the growing importance of ethnic minority votes - though the fact that they all involved aiming for increases of 20 per cent by 2020 gave them a slightly back-of-the-envelope feel. 

Prime Ministerial commitments have an important agenda-setting function. A generation ago the Stephen Lawrence case opened the eyes of middle England to racist violence and police failures, particularly through the Daily Mail’s persistent challenging of those injustices. A Conservative Prime Minister’s words could similarly make a big difference in the mainstreaming of the issue of inequalities of opportunity. What action should follow words? Between now and next year’s party conference season, that must will now be the test for this Conservative government – and for their political opponents too. 

Sunder Katwala is director of British Future and former general secretary of the Fabian Society.