The Great Establishment Stitch Up

Originally written for Wales Home

If there was ever any doubt that the political and economic elite would act in any manner apart from their own narrow self interests, the response of the three main London parties to the current devastating recession and the political stitch up of the televised Prime Ministerial TV debates have blown all doubts out of the water.

With the UK economy having lost 6% of its economic output from peak to trough in the longest lasting recession since records began; the banking bailout having cost tax payers £1.3 trillion in loans, grants and guarantees – estimated at £40,000 per family – you would expect some element of decorum from the city bankers and casino capitalists who brought the global economy to the edge of Armageddon. We are now entering bonus season, and as a taste of what’s to come Barclays are set to pay their investment bankers £225,000 each on top of their annual salaries. With the three UK Banks, HSBC, Barclays and Standard Charter alone expected to announce £15.7bn in profits for 2009 and publicly owned RBS and Lloyds nearly £16bn between them – so called investment bankers across the city are expected to rake in £6bn in benefits this year on top of their salary.

These bonuses are obscene considering the public sector cuts that all main UK parties are now signed up to in response to the bail out, and shows the utter arrogance of the economic elite at a time when the real economy could be in dire straits for years and the devastating human cost of unemployment, debt and poverty which could last a generation. As always it will be those traditional manufacturing and public sector reliant economies such as Wales’s that will be the most at risk as a result of the obsession of the London parties with preserving the wealth and status of the super rich. When Gordon Brown in his New Years message talked of a return to prosperity he was obviously only talking to the select few who have benefited so much from the narrow focus of the London parties. What a damning indictment for a Labour party that has lost all sense of purpose and direction. With a million of the UK’s youth unemployed; 2.3 million children living in poverty and a quarter of all Welsh households living in fuel poverty you would expect a Labour Prime Minister to focus on the reality facing working people. Well over a million manufacturing jobs were lost in the UK under Labour during the ‘good years’ as a result of New Labour’s obsession with the city. And those of us who come from traditional manufacturing and heavy industry communities now face the double insult of effectively subsidising the square mile for the foreseeable future.

The Labour Governments one off bonus tax was a welcome change in policy direction from the previous laissez faire approach to the city pursued eagerly by Gordon Brown in his Tory triangulation strategy. Unfortunately, as Vince Cable pointed out – the policy has more holes than a cheese grater. The Bankers will not go without with retrospective and advance payments, increased pension benefits, share options and a whole raft of other ways to avoid this gimmick policy. Far better would have been to tax corporate profit along a long term Corporate Social Responsibility line as I have previously argued. A theme I will return to later.

The reality is that we have never lived in a situation where the political and economic establishment is so intertwined. Never in the history of democratic politics has the many been asked to sacrifice so much for the few. This General Election should be genuine debate about the future direction of UK economic and social policy. How we spread wealth evenly both at a regional and individual level and turn the tide of Tory/New Labour wealth polarisation; how we develop other sectors of the economy and re structure to become less reliant on the so called golden goose of the city (more like golden noose as far as the Welsh economy is concerned); how we ensure social mobility based on ability; how we strengthen the cohesiveness of our communities; how we use taxation and welfare to help achieve these aims; an how to address the global systemic failures of the world of finance. These should be the real issues of the day. Instead what we will get is a shallow debate at the General Election between the three London parties based on who can be the most efficient saboteurs of public investment. A policy direction whose sole aim is to keep the city creditors happy no matter the oblivion such a policy direction will send the real economy towards.

Which brings me to the Prime Ministerial TV political debates. Messrs Cameron, Clegg and Brown have really worked this one out in their own interests and the elite that they all represent. They know fully well that the General Election will now be dominated by these three events – the lead up and the aftermath of the debates will form the basis of public debate surrounding the election. Parties such as mine who offer an alternative vision for the economy and society will be totally sidelined as the British establishment closes ranks. Will these debates restore public confidence in politics? At a superficial level perhaps, but until we get a real battle of ideas its merely cosmetic politics. That’s the real tragedy of the Plaid and SNP media blackout. We will now have a skewed election which clearly favours the discredited political elite.

Well perhaps Wales Home might provide a forum for debate between progressive reformists who are seeking election such as myself and the regressive conservatism of the London parties and their ‘business as usual approach’. Here are some of my ideas for banking, economic and financial reform.

  • Global action to divorce commercial and investment banking so that no longer can the casino bankers and speculators act with impunity – an end to so called ‘moral hazard’.
  • Develop the growth of the mutual financial sector so that companies are motivated by other values other than the relentless search for profits.
  • A long term 10% Corporate Social Responsibility (CSR) levy on banking profits to pay for a redistributive economic development fund for the UK’s poorest areas. The CSR levy which will generate between £2bn and £6bn a year in additional revenue will also be used to fund acute and preventative money advice services provided by trusted 3rd Sector organisations such as the CAB, and finance Credit Unions.
  • Corporation tax cuts and business rates cuts in the UK’s most disadvantaged areas in order to stimulate growth of local businesses and attract inward investment
  • A borrowing cap on mortgage payments of 3 times income in order to avoid yet another unsustainable housing price bubble
  • A change in the calculi for interest rates from the Consumer Price Index to a formula that includes house price inflation
  • A genuine progressive taxation system in its totality so everybody pays what they can afford and an end to loopholes where the super rich pay less as a proportion of their income than their cleaners and gardeners.

The real choice at General Election facing the people of Wales lies between the London parties and their infatuation with the square mile and the economic elite and Plaid’s vision for developing a more diverse and equitous macro economic and social policy. It’s an insult to democracy that the main media events of the election will not touch on this defining choice.

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