I don’t know how it came about that Matthew Oakeshott is no longer speaking for the party on economics in the House of Lords. I don’t know whether it was his decision or George Osborne’s. But the fact is that he is overwhelmingly right.
Project Merlin is no solution to the banking problem. In fact, by failing to recognise the real problem here, it may make matters worse.
The real problem is this. It isn’t that banks are somehow unwilling to lend money to small businesses; it is that they are no longer set up to do so. They have no local managers empowered to take decisions. They have risk software that rules out most deals. They have such onerous conditions and charges that many SMEs shun them altogether.
Pretending that our current banking system is capable of doing the job delays a solution that may provide us with a proper lending infrastructure. Worse, it may fuel the next property bubble.
Why? Because 70 per cent of UK bank lending in this area is going into property deals. Force them to lend more to small businesses and all it will do is to funnel more money into property, with another dismal round of the whole economic bubble again.
Banking is fast emerging as the great moral issue of the time – and I speak as someone whose bank charges have gone into Bob Diamond’s obscene bonus. Every generation is slow to wake up to the moral horror in their midst; we are slowly waking up to ours. A dysfunctional banking system is undermining our ability to build effective, interdependent local economies, while fuelling inflation and corrosive inequality in their pay packets.
Thursday, 10 February 2011
Friday, 4 February 2011
But HOW do we grow this enterprise economy?
Sorry to have disappeared for so long. I've had flu and goodness knows what else. But I've been roused into activity by the latest leader's speech.
Nick Clegg’s speech in Rotherham was vitally important. Not only did it re-state the kind of language about the economy that was in the coalition agreement – a commitment to reviving the real economy, not the speculative economy of financial services. It was also important for another reason, which maybe was less conscious. It provides a future agenda for the Lib Dems, if they have the nerve to grasp it.
It was a relief that the coalition is still on track in its promises to rebalance the economy, and to interpret that as it was originally interpreted – to create enterprise, not just cream off the profits of speculation. There had been some signs that, thanks to the old guard at the Treasury, this vital commitment was being watered down.
He also gargled with the idea of a Green Investment Bank which may mean – fingers crossed – that the battle against the Treasury has been won over this important commitment.
So far so good. But here’s the problem. There is no understanding in government – and certainly not in the Lib Dems – about how in practice you grow this new local economy. How, in Sheffield or Liverpool, do we cultivate this new enterprise? The gap was horribly obvious in the speech. What do we do? Wait for it to pop up of its own accord?
But there is a way forward. There are a whole range of techniques, based on building value chains and re-circulating money – on diverse local economies, not Tesco monocultures – which are emerging from outside mainstream economics. The New Economics Foundation, the Ford Foundation and many others around the world, are showing the way forward.
It’s time the Lib Dems grabbed this agenda, preferably soon enough to press it into use by the coalition.
Nick Clegg’s speech in Rotherham was vitally important. Not only did it re-state the kind of language about the economy that was in the coalition agreement – a commitment to reviving the real economy, not the speculative economy of financial services. It was also important for another reason, which maybe was less conscious. It provides a future agenda for the Lib Dems, if they have the nerve to grasp it.
It was a relief that the coalition is still on track in its promises to rebalance the economy, and to interpret that as it was originally interpreted – to create enterprise, not just cream off the profits of speculation. There had been some signs that, thanks to the old guard at the Treasury, this vital commitment was being watered down.
He also gargled with the idea of a Green Investment Bank which may mean – fingers crossed – that the battle against the Treasury has been won over this important commitment.
So far so good. But here’s the problem. There is no understanding in government – and certainly not in the Lib Dems – about how in practice you grow this new local economy. How, in Sheffield or Liverpool, do we cultivate this new enterprise? The gap was horribly obvious in the speech. What do we do? Wait for it to pop up of its own accord?
But there is a way forward. There are a whole range of techniques, based on building value chains and re-circulating money – on diverse local economies, not Tesco monocultures – which are emerging from outside mainstream economics. The New Economics Foundation, the Ford Foundation and many others around the world, are showing the way forward.
It’s time the Lib Dems grabbed this agenda, preferably soon enough to press it into use by the coalition.
Friday, 14 January 2011
Why we struggle over bonuses
Newspaper commentators and opinion-formers are largely united in their astonishment that massive bank bonuses in the state-owned banks, for state-owned employees, are likely to go ahead. Maybe there will be some kind of eleventh hour agreemenr, but it seems unlikely.
So it is worth spelling out the reason the government seems prepared to take such enormous flak over this. It is that the Treasury is determined to sell their holding in the banks as soon as possible, and their ability to retain top staff depends on bonuses. So any shift in the government's position needs to tackle that point head on.
Of course, to that extent: the Treasury is right. But it would be really staggering if they were to sell off the nations stakes in these banks, and consider it a good job done if everything was exactly the same as before.
This isn't about risk and regulation, which is being dealt with separately. It is about whether they are meeting the coalition agreement promise to create a diverse banking system. We have to wait another year before Vince Cable's commission reports on splitting up the banks. It would be absolutely extraordinary if we got back our money, but were still left with a dysfunctional and monpolistic banking system that doesn't do its job of supporting local enterprise.
So it is time we asked the Treasury what banks are for. Would we as a nation really be relieved to get our money back but to find everything just as dysfunctional as before?
So it is worth spelling out the reason the government seems prepared to take such enormous flak over this. It is that the Treasury is determined to sell their holding in the banks as soon as possible, and their ability to retain top staff depends on bonuses. So any shift in the government's position needs to tackle that point head on.
Of course, to that extent: the Treasury is right. But it would be really staggering if they were to sell off the nations stakes in these banks, and consider it a good job done if everything was exactly the same as before.
This isn't about risk and regulation, which is being dealt with separately. It is about whether they are meeting the coalition agreement promise to create a diverse banking system. We have to wait another year before Vince Cable's commission reports on splitting up the banks. It would be absolutely extraordinary if we got back our money, but were still left with a dysfunctional and monpolistic banking system that doesn't do its job of supporting local enterprise.
So it is time we asked the Treasury what banks are for. Would we as a nation really be relieved to get our money back but to find everything just as dysfunctional as before?
Wednesday, 12 January 2011
Set a maximum percentage of property loans by the banks
It isn’t ever quite clear, just from the newspapers, just where the delicate negotiations between the government and the banks have reached on bonuses. It looks as though there is some kind of deal emerging that would nod through outrageous bonuses in return for an agreement to lend more and better to small businesses.
Nick Clegg hinted at a distinction between the private banks, which will qualify for this deal, and the failed banks in public ownership – where bonuses will be quashed, though even that seems to be in doubt at the moment.
I agree that RBS and Lloyds are cases where the outrage is particularly intense, and rightly so, but I think we urgently need to ask the following questions – and to do so before we embrace any deal between the banks and a Lib Dem administration:
1. Will the coalition veto the £2.5m bonus which is pencilled in for Stephen Hester, boss of loss-making RBS?
2. Should we really accept an agreement with the big banks to improve their ability to lend locally, when all the evidence is that they no longer have the local infrastructure capable of doing so? Should we really agree when any blip in local lending would be just that, a blip brought on by intense and temporary political pressure?
3. In what other profession, certainly any other state-run service, will it be acceptable for people to earn inflationary six or seven figure bonuses just for doing the job they are supposed to be doing – lending to local enterprise?
The coalition agreement promises to sort out bank bonuses. Any failure to do so, just when other public employees doing more useful and important work are getting the push, will be a huge and damaging problem for us.
And it should be. Why should we tolerate, as a society, this spectacular failure by the banks to play a useful role in the enterprise economy – when 70 per cent of what passes for local lending, and has done for the past four years, is actually lending on property, fuelling the next asset bubble.
What I suggest is that any agreement with the banks on lending – if such an agreement is to mean anything – must also specify a minimum percentage of those loans which are not on property deals. To lend more on property, they will then have to lend more to conventional small business.
Nick Clegg hinted at a distinction between the private banks, which will qualify for this deal, and the failed banks in public ownership – where bonuses will be quashed, though even that seems to be in doubt at the moment.
I agree that RBS and Lloyds are cases where the outrage is particularly intense, and rightly so, but I think we urgently need to ask the following questions – and to do so before we embrace any deal between the banks and a Lib Dem administration:
1. Will the coalition veto the £2.5m bonus which is pencilled in for Stephen Hester, boss of loss-making RBS?
2. Should we really accept an agreement with the big banks to improve their ability to lend locally, when all the evidence is that they no longer have the local infrastructure capable of doing so? Should we really agree when any blip in local lending would be just that, a blip brought on by intense and temporary political pressure?
3. In what other profession, certainly any other state-run service, will it be acceptable for people to earn inflationary six or seven figure bonuses just for doing the job they are supposed to be doing – lending to local enterprise?
The coalition agreement promises to sort out bank bonuses. Any failure to do so, just when other public employees doing more useful and important work are getting the push, will be a huge and damaging problem for us.
And it should be. Why should we tolerate, as a society, this spectacular failure by the banks to play a useful role in the enterprise economy – when 70 per cent of what passes for local lending, and has done for the past four years, is actually lending on property, fuelling the next asset bubble.
What I suggest is that any agreement with the banks on lending – if such an agreement is to mean anything – must also specify a minimum percentage of those loans which are not on property deals. To lend more on property, they will then have to lend more to conventional small business.
Friday, 7 January 2011
Civilised values and the Yeates invesitigation
I was hauled over by the police about 18 months ago under anti-terrorism legislation, largely because I was looking a little unusual. I was wearing shorts with a briefcase, one of the privileges for those of us who are self-employed on a hot day.
It only took 20 minutes or so and they were perfectly nice about it, but it reminded me of the vulnerability of people who can be portrayed as being very slightly peculiar, or even mildly different – especially when things get serious, as they did in the Joanna Yeates investigation in Bristol over the New Year.
I thought back to that incident when the landlord, Christopher Jefferies, was arrested. As the days went by and the police time limit was continuously extended – while he was vilified day by day by the tabloid press – I began to obsess about it, constantly tuning in to hear whether he had been released, as he was inevitably going to be.
You may not know somebody well by sitting in their classroom for two years, but you learn some things about them. It seemed extraordinarily unlikely that he could have been involved in anything like that.
We haven’t even spoken for nearly three decades, but the truth is that I owe a huge debt to him, and not just him but to the whole English department at Clifton College, which in the 1970s became a kind of Rolls-Royce operation of huge ambition, civilisation and generosity, and from which I learned a very great deal.
As the days wore on, and he remained in custody, and the column inches grew, I came believe that those civilised values were under attack, maybe not so much by the police – I don’t know what was going on in their investigation – but by the rest of society, and by my own profession,
Yet only a handful of what must have been hundreds, if not thousands, of pupils spoke to the press. The rest must have been aware, as I was, that almost anything we said in his defence could fuel the flames. I am hugely relieved that he was released, if only because the investigation could then continue in a more fruitful direction.
But just for a moment, I felt I glimpsed a miserably intolerant and illiberal aspect of the nation – which I had naively ignored before. It makes me realise a little more clearly that, because I see the world differently from the prevailing culture, those parts of it constructed by a monopolistic media, then perhaps I am also at risk. More than just being questioned occasionally because I'm dressed unconventionally.
I was prompted to write this by the report in the Daily Mirror today that Mr Jefferies has been told by police that it isn’t safe for him to be seen in public. Every generation has its abuses which it seems to be blind to – we seem to accept, with merely a quibble, that loss-making banks should paid inflationary bonuses while corroding the economy.
We also, apparently, accept that some of the most civilised people in society will have to hide themselves away because of a police and tabloid cock-up, and from fear of the mob. I find that frightening.
It only took 20 minutes or so and they were perfectly nice about it, but it reminded me of the vulnerability of people who can be portrayed as being very slightly peculiar, or even mildly different – especially when things get serious, as they did in the Joanna Yeates investigation in Bristol over the New Year.
I thought back to that incident when the landlord, Christopher Jefferies, was arrested. As the days went by and the police time limit was continuously extended – while he was vilified day by day by the tabloid press – I began to obsess about it, constantly tuning in to hear whether he had been released, as he was inevitably going to be.
You may not know somebody well by sitting in their classroom for two years, but you learn some things about them. It seemed extraordinarily unlikely that he could have been involved in anything like that.
We haven’t even spoken for nearly three decades, but the truth is that I owe a huge debt to him, and not just him but to the whole English department at Clifton College, which in the 1970s became a kind of Rolls-Royce operation of huge ambition, civilisation and generosity, and from which I learned a very great deal.
As the days wore on, and he remained in custody, and the column inches grew, I came believe that those civilised values were under attack, maybe not so much by the police – I don’t know what was going on in their investigation – but by the rest of society, and by my own profession,
Yet only a handful of what must have been hundreds, if not thousands, of pupils spoke to the press. The rest must have been aware, as I was, that almost anything we said in his defence could fuel the flames. I am hugely relieved that he was released, if only because the investigation could then continue in a more fruitful direction.
But just for a moment, I felt I glimpsed a miserably intolerant and illiberal aspect of the nation – which I had naively ignored before. It makes me realise a little more clearly that, because I see the world differently from the prevailing culture, those parts of it constructed by a monopolistic media, then perhaps I am also at risk. More than just being questioned occasionally because I'm dressed unconventionally.
I was prompted to write this by the report in the Daily Mirror today that Mr Jefferies has been told by police that it isn’t safe for him to be seen in public. Every generation has its abuses which it seems to be blind to – we seem to accept, with merely a quibble, that loss-making banks should paid inflationary bonuses while corroding the economy.
We also, apparently, accept that some of the most civilised people in society will have to hide themselves away because of a police and tabloid cock-up, and from fear of the mob. I find that frightening.
Tuesday, 21 December 2010
The truth about Vince's war
I suppose Vince's remarks were unwise, but that is easy to say. Personally, hardly a day goes by without me saying something seriously unwise. What they also seemed to me to be was overwhelmingly true.
We may not actually be at war with the Murdoch press, but if we are not at war with corporate privilege and monopoly power as Liberal Democrats, then we need to be. That is the abuse of power which now threatens our liberty, just as Murdoch tightening his grip on the UK media is a threat to our freedom of speech. The role of Liberals now is to launch the battle against monopoly, over our minds as well as our wallets. The affair of the taped interview this afternoon was indeed a battle lost in this undeclared war.
The Conservatives may be led kicking towards the same position. Labour will not; in fact they were the first to rush to Murdoch's defence, as usual, this afternoon. What I find fascinating is that, although this central issue was barely mentioned in the party's manifesto, it seems to loom increasingly large in the minds of Lib Dem ministers - Vince Cable included.
That is as it should be, because - although it has gone almost unmentioned for half a century - the historic role of Liberals is to fight monopoly. Today was a setback, but it did at least articulate that central truth, and not before time.
We may not actually be at war with the Murdoch press, but if we are not at war with corporate privilege and monopoly power as Liberal Democrats, then we need to be. That is the abuse of power which now threatens our liberty, just as Murdoch tightening his grip on the UK media is a threat to our freedom of speech. The role of Liberals now is to launch the battle against monopoly, over our minds as well as our wallets. The affair of the taped interview this afternoon was indeed a battle lost in this undeclared war.
The Conservatives may be led kicking towards the same position. Labour will not; in fact they were the first to rush to Murdoch's defence, as usual, this afternoon. What I find fascinating is that, although this central issue was barely mentioned in the party's manifesto, it seems to loom increasingly large in the minds of Lib Dem ministers - Vince Cable included.
That is as it should be, because - although it has gone almost unmentioned for half a century - the historic role of Liberals is to fight monopoly. Today was a setback, but it did at least articulate that central truth, and not before time.
Ugh, utilitarians...
Utilitarians, ugh, they make me shudder. And for some reason those in authority who make me shudder most, when I hear them in the radio, are actually refugees from the old New Labour regime like Lord Browne or Lord Freud. There was something about New Labour, with its contempt for history and its narrow view of the world - measuring everything in terms of money - which made it the most utilitarian government in history.
This is what I wrote on Open Democracy about the mismatch between Lord Browne's university funding plans, now partly adopted by the coalition, and the hugely important idea of measuring well-being:
http://tinyurl.com/2wykdpa
This is what I wrote on Open Democracy about the mismatch between Lord Browne's university funding plans, now partly adopted by the coalition, and the hugely important idea of measuring well-being:
http://tinyurl.com/2wykdpa
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