Grassroots « Labour Uncut

If Ed is serious about banking reform, its a British investment bank that is needed

22/01/2014, 02:18:11 PM

by David Butler

The case for banking reform is one that, on the centre-left, does not require extensive repeating. The banks were central to the crash and have not been seen to have redeemed themselves. In particular, lending to small and medium enterprises has fallen substantially in the post-crash environment and was not particularly healthy pre-crash. It is into this sea which the good ship One Nation Labour (formerly known as Responsible Capitalism), under her captain Ed Miliband, sailed.

Small and medium-sized enterprises suffer from an inadequate supply of finance. The impact of this was captured in IPPR’s Investing for the Future report. SMEs are usually reliant on loan-funding and are unable to sell bonds or access other sources of capital available to bigger businesses. The report contends that banks have gradually been switching their activities towards loans and investment that offer bigger yields and more immediate profits, which has squeezed loan-funding to SMEs. Due to information asymmetry, banks have used a ‘tick box’ approach for making decisions on loan funding, which has result in a further structural shortage as many potentially good SMEs are shut up of the one-size-fits-all criteria.

Current government schemes to encourage SME lending do not appear to be successful. In the footnotes of the IPPR report, the authors quote an article in the Financial Times which claims that of the £100 billion in low-cost capital created by the government, banks plan to use up to £80 billion to replace existing loans backed by market-price capital. It is clear that simply giving cheap capital to private sector banks will not help. This has been matched by the continue fall in lending to SMEs captured by recent Bank of England figures. This lending problem is a constraint on future prosperity and do nothing to relieve the cost of living crisis. A new approach is needed. Ed Miliband believes that more competition will provide the answer.

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Labour has a foreign policy vacuum. It needs to be filled.

10/01/2014, 12:39:13 PM

by Nathan Jones

Ed Miliband and shadow foreign secretary Douglas Alexander have given little away of their plan for Britain on the international stage. While it is not traditionally at the centre of election debate, foreign policy holds a special significance for Labour today because, despite Ed Miliband’s professed belief that it was ‘wrong to take Britain to war’ in 2003, public trust in Labour remains inextricably bound to Iraq. It is perhaps for this reason that Mr. Miliband has chosen to remain largely silent on what Labour’s foreign policy priorities would be in 2015.

Despite the many achievements of the last Labour government, Iraq still defines its legacy in many ways. Leaving the debate over legitimacy aside for now, it is clear that a lack of transparency on the road to war generated a huge deficit of trust. Blair’s popularity waned in the ensuing scandal, and was further eroded by a series of gradual, incremental revelations and inquiries which undermined New Labour’s new-found legitimacy.

Therefore it was not Sure Start, the minimum wage or a New Deal for Young People that became the party’s new epithet, but Iraq. If Labour is to win in 2015, a clear statement of international intent would go a long way to restoring public trust in a Miliband government’s ability to take the country forward.

Although policy remains patchy, there are some clues as to what Labour’s international intentions after 2015 will be. The vote on Syria stands out, when Labour forced an almost unprecedented change in government foreign policy from opposition. The decision to oppose what seemed like the inevitable move to intervention drew plaudits from the party’s leftist, anti-war support, but led others to question whether political concerns had taken precedence over the fate of the Syrian people.

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Want a fairer tax system? Merge national insurance with income tax

09/01/2014, 08:30:44 AM

by Callum Anderson

One of Ed Miliband’s biggest successes of 2013 was shifting the political argument towards the cost of living crisis. Whilst this will not be sufficient to win the economic debate against the coalition government, it is still likely to be a significant battleground in the run-up to the next general election, as wages continue to stagnate and the cost of living rises, despite signs that unemployment is falling and that economic growth is (finally) beginning to be restored.

Indeed, by May 2015, Ed Miliband could be well set to ask the voters: “Are you better off than you were five years ago?”

Naturally, an aim of a government (and certainly that of a Labour government) should be to increase the money that low and middle income earners have in their pockets. They are more likely to spend more, which will subsequently lead to positive benefits for the economy. Much progress has already been made in increasing wages through the minimum wage (although, of course, a living wage must soon be implemented), as well as increasing the tax-free personal allowances (for which credit deserves to go to the coalition government). One way of improving the living standards of low and middle income households is through the tax system. Tax cuts aimed at the poor are good because they encourage work, reduce the welfare bill, and helps poorer people to be better off.

And the clearest (not to mention the simplest) way of achieving this? Merging National Insurance contributions (NICs) with income tax. I believe that not only would we be able to help millions of the country’s lowest earners, we would also be able to create a fairer tax system that ensured that everyone pays their fair share, as well as making tax avoidance more difficult.

Currently, employees pay income tax on earnings over £9,440 per annum (increasing to £10,000 in April), yet begin to pay NICs when they earn more just £7,748 per annum. Clearly, this is significantly lower than the personal allowance for income tax, despite both being deducted from the same pay packet: NICs are essentially income tax 2.0.

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Labour needs to get serious about tackling government waste

08/01/2014, 01:30:38 PM

by David Butler

With memories of seasonal excess still fresh in the mind, it is perhaps a good time to talk about waste. Waste reduction (or efficiency) is too often given as an easy means of freeing up funds; rarely is life so simple. However, there are opportunities for savings, both public and private, and a number of ancillary benefits available from a good waste reduction strategy.

In their pre-Christmas report on the Government Accounts 2011-12, the National Audit Office highlighted over £20bn worth of fraud losses in the public sector with £13bn in write-offs due to fraud and error. This, combined with the long-term funding pressures on the government coffers put a premium on waste and fraud minimisation.

One means of reducing fraud and waste is to improve the whistleblowing culture. At a recent meeting of the Communities and Local Government Committee, Head of Counter Fraud at the Audit Commission, Alan Bryce told MPs that fraud prevention relied on whistleblowers. Last June, the law was reformed in the Enterprise and Regulatory Reform Act 2013 to give protection to workers judged to reasonably believe that exposures are in the public interest. While this protection is welcome, the lack of definition and guidance over the exact meaning of public interests means that it will be left to individual employment tribunals. A government interested in fostering a whistleblowing culture should offer up clearer guidelines in consultation with trade unions, employers and legal experts. In public procurement, central and local government should ensure that whistleblower protection and clear channels for highlighting issues are built into contracts. Changing a cultural norm is not simple, but further legal changes and smart public procurement are a good beginning.

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For too many working and middle class voters, Labour doesn’t value aspiration. This needs to change.

30/12/2013, 12:57:12 PM

by Renie Anjeh

Various theories are doing the rounds at the moment about why Labour is not performing as well as it should. On the left of the party, they bemoan the fact that Labour is not nearly as leftwing as they think it should be. On the right of the party, there is much concern about the party’s lack of credibility on the economy. The left-wing Labour Representation Committee would argue that nationalising everything from the energy companies to children’s Christmas presents will deliver a crucial victory in 2015. Progress would think otherwise (and rightly so). But I still think that we have not asked a very important question. Are we really standing up for all working class and middle class people?

During the Mayoral election in 2012, I canvassed a middle aged couple in Ilford who were less than pleased when they saw my ‘vote Labour’ sticker. They worked hard all their lives and played by the rules but they didn’t think that we were on their side. They felt that the odds were stacked against them and that we had no answers. To them, we were completely out of touch with their aspirations and their concerns.

Unfortunately, people like the couple in Ilford have become objects of incomprehension at best, or derision at worst, for too many in our movement. The idea that we should give them as much focus to as we give to the bedroom tax, is an anathema to some on the Left.

Part of the reason why Labour lost power is that we were seen to be a party exclusively for special interest groups such as public sector workers, single parents, immigrants and benefit claimants not a party for the generality of working class and middle class people.

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It’s time for a rational discussion on immigration

26/12/2013, 11:20:24 AM

by John Stephenson

The divisions within the coalition appear to have widened of recent, as Vince Cable broke rank yet again to denounce the Tory approach to immigration. In an interview with the BBC’s Andrew Marr last week, the business secretary dismissed the proposed 75,000 cap on EU migrants as “illegal”, making reference to Enoch Powell in his assessment of Cameron’s populist style of politics.

Such a move speaks volumes for the quandary and confusion the Conservatives are facing in the run up to 2015 and Labour can now seek to cash in on any discord among the Tory frontbench.

Labour is right to steer clear of the battleground that has seen UKIP dominate the thinking of Tory strategists. Recent victories for the far-right party have arguably led to the prime minister’s tough stance on immigration and it bears a striking similarity to the concern surrounding James Goldsmith’s Referendum party, which went on to have little, in any, impact on the 1997 general election.

Though the Tories are keen to stress the errors of their predecessors for the “mess” they’ve found themselves in, this is not to say that Labour have not acknowledged the error or their ways.

In a speech to the IPPR at the Local Government Association, Chris Bryant admitted that the measures taken by the party when in government had at times been mistaken. A lack of transitional controls on workers from the eastern European countries that joined the EU in 2004 saw a disproportionately high volume of workers stream into the UK, while countries like Germany and France (which retained controls until the last possible moment in 2007) were spared such an influx.

Yes, the arrival of around 500,000 migrants between 2002 and 2010 created problems, but if the Conservatives are so willing to play the blame-game then it seems only fair that Labour return the favour. At the start of the Blair years, the government faced a mountain of around 71,000 asylum applications each years; dealt with by just 50 employees. The very position of Immigration Minister was created by the party to deal with the challenge.

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If Dave thinks Merkel will ride to his rescue on Europe, he doesn’t understand German politics

23/12/2013, 11:18:25 AM

by Callum Anderson

After three months of intense negotiations, Germany finally has a new government. Angela Merkel’s CDU/CSU centre-right party will enter a so-called ‘Grand Coalition’ with the centre-left social democrats, the SPD, after its members ratified the agreement in a vote a week ago.

The arrangement, however, could represent the proverbial ‘spanner in the works’ for David Cameron’s plans to repatriate powers from the European Union to individual member states. Although Mr Cameron does have a natural ally for EU reform in Chancellor Merkel, her coalition partners, the SPD, are likely to prove a substantial stumbling block for any attempt by Ms Merkel to collaborate with the prime minister.

For a start, the Euroscepticism of David Cameron’s Conservative Party is completely at odds with the staunchly pro-EU stance of the SPD. A German government, with SPD involvement, will almost certainly take a dim view of any potential “Europe a la carte” arrangement that the prime minister seeks, especially in regard to social regulations such as the working time directive. Indeed, it is highly likely that it will actively try to block attempts to return EU powers to national governments.

Difficulty also represents itself in the form of the new foreign minister, Frank-Walter Steinmeier, who also served in the same capacity in the last ‘Grand Coalition’, between 2005 and 2009. Steinmeier not only frequently scuppered Merkel’s foreign policy plans during that time, but is also considered one of the Social Democrats’ closest links to the French Socialist party. Indeed, Steinmeier is reported to have said in December 2011 that he expected the UK to leave the EU, remarking that, “I fear the decisive step for Great Britain’s exit has already been made. If the regular meetings take the form of a Europe of 26 without Britain, then a process of alienation will become inevitable and irreversible.” It is therefore likely that he will not idly sit by and let Angela Merkel freely negotiate with David Cameron.

The possible ramifications of SPD hostility are obvious. By blocking Angela Merkel’s attempts to work with the UK on a new relationship between the EU and its member states, the SPD will deprive David Cameron of a possible key ally in claiming powers back from Brussels. If Germany is unable or unwilling to work with the UK prime minister, other Northern European states such as the Netherlands and Sweden are also likely to become sceptical. Similarly, any significant strengthening of Franco-German relations could further weaken London’s hand.

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For Labour, the “cost of living” debate is dead

17/12/2013, 09:53:44 AM

by Alex Chalmers

A month ago, the next election was going to be decided by “the cost of living crisis”; the electorate would see through the economic growth figures, feel the pinch, and elevate Ed Miliband, scourge of the energy fat-cats, to Downing Street. The government’s response to the energy price freeze was inconsistent and unintelligible, the public seemed to love the policy, and for a moment, the opposition looked like it had a leader. Yet within a few weeks, Labour’s poll resurgence had turned into full-on retreat. Today, YouGov has Labour’s lead down to 2 points.

So what went wrong? On a very simplistic level, elections are not won or lost on one policy. An idea, even a popular one, cannot hold media or public attention for more than a fairly short period of time. Unless it is part of a broader theme or narrative, and is followed by a series of other well-timed announcements, it will quickly become buried under a tide of other news stories. Labour cannot agree on one policy and prepare to collect the keys to Number 10. The public liked the sound of it, some other things happened, and then they moved on. If Miliband truly wishes to define the next election in terms of the cost of living, then he has to say a lot more about it.

Unfortunately, this is something of a recurring theme. At the height of the NHS reorganisation fiasco, the next election was going to be about that, but once the reforms started to be implemented, the party suddenly quietened down. A limp half-hearted campaign based on the Twitter hashtag #dropthebill unsurprisingly made little impact. Retweeting to the converted does not an election win. Nothing was made of the collapsing patient satisfaction ratings, whilst the attempts to focus on staffing levels were wrought with statistical errors and easily batted away by the government. The NHS is now in the headlines again, but Labour appears to be making no effort to communicate its message. In the days of New Labour, the media operation would have been ruthlessly hammering five key pledges home, trying to make sure the issue caught the public imagination. Ed Miliband’s “Zen-like calm” interspersed with cries of, “same old Tories” is simply no substitute.

The party’s strategy of choosing a key issue and promptly forgetting it is going to cost it dear come the next election. For the vast majority of its term in office, the coalition has managed to frame the main debates. It has managed to paint Labour as the public spending bingers and the friends of the scroungers.

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Heads, not hearts, must guide UK drug policy. We must decriminalise now.

16/12/2013, 09:17:20 AM

by Callum Anderson

The decision by the Uruguayan government to legalise the production, sale and consumption of marijuana – becoming the first country in the world to do so – has been widely reported in the media. With this in mind, how governments all over the world tackle drug use and drug addiction has been thrust back into the spotlight. Indeed, it is one of the most emotive and polarising issues in politics.

Many experts, including the International Centre for Science in Drug Policy have concluded that the so-called ‘war on drugs’ cannot be won. Indeed, I believe that the time has come for drug policy to be led by our policy makers’ heads, and not their hearts. Drug use and drug addiction must primarily be treated as a public health (and an economic) issue, not a criminal one.

It is an indisputable fact that drugs affect all of us, whether directly or indirectly. There are many of us, who have witnessed the stranglehold that drugs can have on an individual. It is, of course, a somewhat more painful experience if that individual is a relative, a friend or a partner. The seemingly unstoppable unravelling of ones life. The growing disconnection between the addiction and what really matters – family, work and friendship – is truly agonising.

In addition, there are indirect costs. Research by the Home Office has found that the economic and social costs of drug use are estimated to be around £15.4 billion a year in England and Wales alone, with drug related crime constituting 90 per cent. These facts are reflected in the Ministry of Justice’s figures, which show that the custody rate for drug offences have risen from 16.9 per cent in 1993, to 17.3 per cent in 2011, with the average custodial sentence rising from 28.3 months to 31.3 months in the same period. This has resulted in 14 per cent of prisoners being incarcerated due to drugs.

I do not deny that the case for decriminalisation is a tough sell to the British public: recent polling suggests the majority of people support the current law, which criminalises the sale, possession and use of drugs.

What then, does this all entail?

Well, let’s take a look at Portugal.

In 2001, the Portuguese (centre-left) government took the step of decriminalising the possession and use of drugs including cocaine and heroin. Instead of seeking to diminish use by punishing users, the new measures considered drugs illegal, but no longer treated drug consumption as a criminal offence. In addition, Portugal’s drugs reforms included a wide range of measures such as prevention and social education to discourage the use of drugs, as well as providing treatment for drug dependent people and assisting their reintegration into society.

So, what happened to drug usage rates in Portugal?

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The left should focus on the prejudice BAME Brits face instead of playing political football with Mandela’s death

12/12/2013, 12:11:05 PM

by Rene Anjeh

Tuesday was the day of Nelson Mandela’s memorial service. World leaders, politicians, celebrities and ordinary South Africans gathered in Soweto’s FNB stadium. It is worth remembering that over 37 years ago, in that very town, the Soweto riots took place. It was not just a day of mourning but a day of celebrating the life of truly magnificent individual.

I remember when I heard the news of Mandela’s death. I was playing pool with a friend but the game was interrupted by a text. “Apparently Nelson Mandela is dead,” my friend said in disbelief. I put down the pool cue and checked the BBC website to see for myself.

Tears started to stream down my face as if a close relative, or even a grandfather, had passed away. Nelson Mandela was a hero who personified the last great struggle for racial equality in the twentieth century. Mandela set an example to the four black Labour MPs elected in 1987. Mandela arguably paved the way for Barack Obama to become president of the United States almost twenty years after his release. Mandela reminds everyone – especially the BAME community – that many of the rights that we enjoy have been fought for and won.

Which is why it was saddening to see certain members of the Twitterati play political football with this great man’s death.

One prime example was from Michael Chessum. For those of you who don’t know, Chessum is the president of University of London Union (a fellow London Young Labour comrade too) who has recently been arrested for protesting against the closure of ULU in this academic year. He tweeted:

Nelson Mandela was made honorary President of ULU when the British government said he was terrorist. He’d be on our side #copsoffcampus

Personally, I could not care less about Chessum’s protests, in fact I am completely unsympathetic as it was he who banned ULU student officials from wearing poppies or attending a remembrance day service. However, it was his decision to use Mandela’s death to make a petty point that was really annoying.

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