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  1. Politics
2 August 2016

Labour’s troubles “worse than the eighties“: A veteran donor on the leadership race and Brexit

John Mills praised "open-minded" Owen Smith but warned against a second referendum. 

By Julia Rampen

The Labour party is in a worse situation than during its decade out of power in the eighties, a veteran donor and campaigner has warned.

The entrepreneur John Mills said he had not made up his mind about who to back in the Labour leadership election.

But he warned: “I think the situation now is worse than the eighties. It was pretty savage [then].

MPs are more split than they were then, he said: “There were lots of divisions. The parliamentary Labour party was split in views, but there was no position like now with votes of no confidence.”

While Mills refrained from backing either Labour leadership candidate, he praised Smith’s “open-mindedness” and argued he had a better chance than “metropolitan” Jeremy Corbyn with Labour’s provincial voters.

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He declared: “I really hope the Labour party doesn’t split.” If the challenge to Corbyn fails, rebel MPs should be prepared to “buckle down”, he added.

Mills, who has been secretary of Labour’s economic policy group since 1985, may be keeping schtum about his preferred candidate, but he is keen to shape the future of the opposition.

Against a second referendum

A second referendum on the EU would be “the worst way of doing things”, Mills, a Brexit campaigner, declared.

Labour challenger Owen Smith has pledged to demand a second vote on the terms of a Brexit deal.

Mills warned that a second referendum would be a “disastrously bad idea”.

He said: “If we spend the next two to three years negotiating a deal on the EU which is going to be very complicated and then British people vote it down, what is going to be done then?

“It seems like the worst way of doing things.”

The economist criticised both Remain and Leave campaigns for promoting scare stories.

He said: “When the history is written about who misled everyone, it is going to be Even Stevens. But I think the Leave side will be slightly better on balance than Remain.”

A political Bank of England

Four days after New Labour came to power in 1997, Gordon Brown released the Bank of England from political control. The decision earned him international acclaim. It was the first of a series of moves that saw a left-of-centre government leave the City to its own devices.

Now, Mills thinks it is time for the Government to take the central bank in hand once more.

The economist and entrepreneur said: “I probably back the renationalisation of the Bank of England. The decisions taken over the last few months have been pretty political anyway.

“The problem is, the Bank of England tends to represent the City view rather than the economy as a whole.”

Mills believes in radical steps to make the British economy more competitive – namely aggressively devaluing the pound.

In his view, the Bank of England should have an exchange rate target as well as its current one for inflation.

But in the wake of Brexit, he has also stepped up his calls for a more interventionist approach from the Government.

His demand for a public interest test on foreign takeovers chimes with the rhetoric of the new prime minister, Theresa May – although she notably failed to protest when a Japanese company bought ARM holdings.

Nevertheless, Mills has been busy meeting John McDonnell, the shadow chancellor, and Owen Smith, the challenger to the Labour leadership.

He described Smith as “open-minded” on his devaluation argument, but acknowledged: “These people have a problem with carrying the rest of the Labour Party with them. If you start advocating devaluation, you don’t necessarily scoop up a lot of votes.”

The Staggers asked Smith and Corbyn about their views on Mills’ policy suggestions. 

A spokesman for the Corbyn campaign welcomed the suggestions, but added: “The only policy we have supported of those mentioned is the public interest test for foreign takeovers.”