Vote Balls get Clegg. Why bother?

In 2010, Labour joined in the general vilification of Lib Dem leader Nick Clegg for choosing the Tories over them after the general election produced a hung parliament. Now, with the next election on the horizon, Labour’s tune is changing.

It’s not hard to work out why Ed Balls, the shadow chancellor, is courting Clegg through the columns of the New Statesman. Apart from the fact that the incompetent and tarnished Balls needs all the friends he can get, is the reality that another electoral stalemate is entirely possible.

Although most polls give Labour a lead over the Tories, it continues to narrow. Throw in the wild card known as Ukip, mass abstentions by a disillusioned electorate and a revival of the economic fortunes of sections of the middle class and you can see why Ed Miliband is nervous.

With policies that for the most part are indistinguishable from those of the Tories, Labour is keeping its options open. So Balls has made overtures to Clegg, whose party is responsible for propping up the most reactionary government of modern times.

Balls, part of the negotiating team that failed to woo the Lib Dems in May 2010, now says: “I understand totally why Nick Clegg made the decision that he made to go into coalition with the Conservatives at the time. I may not have liked it at the time, but I understood it. I also understood totally his decision to support a credible deficit reduction plan, because it was necessary in 2010.”

Balls’ adds that “I’ve no reason to doubt his integrity”. This is a conscious attempt to rehabilitate Clegg and his party in the eyes of the voters who abandoned the Lib Dems after they joined the coalition and then broke their pledge by voting for a tripling of university tuition fees a few months later.

As to a future coalition with the Lib Dems, Balls left the door wide open by replying: “I think what you always have to do is deal with politics as you find it . . . I saw that subsequently he made a further statement to one of the newspapers that these things weren’t about personalities, and I think he’s right about that.”

So the chances are that if you vote for Ed Miliband’s party in May 2015 you’ll get a Lab-Lib coalition – carrying on more or less where the present government leaves off. Labour is committed to the Tories’ spending cuts programme, free schools, academies, benefit cuts, workfare for young unemployed and scapegoating immigrants.

Even though a European Union commissioner has attacked David Cameron for “peddling myths” about an invasion of migrant workers, this has not stopped shadow business secretary Chuka Umunna from joining the blame game. Speaking on BBC One’s Question Times, Umunna played his own nationalist card, saying: “I think on low-skill immigration we believe there was too much of it from the European Union.”

He was against the “free movement of jobseekers” and was seeking talks with “our European partners” on the issue. Umunna is, of course, only the latest in a long line of Labour leaders to go down this road, including Yvette Cooper, Tristram Hunt and David Blunkett.

We don’t have to wait 16 months to discover that the general election will be a mass fraud perpetrated on unwilling voters by parties that more or less agree with each other on crucial issues. Better to hang on to your vote and work for a democratic alternative where it will mean something again because your ballot counts for very little now.

Paul Feldman

Communications editor

Growth addicts meet in Watford

George Osborne, the ConDem’s chancellor and Labour’s Ed Balls, who are locked in a fierce agreement about the need for more austerity to promote growth – work that one out for yourselves – are in not-so-exotic Watford this week.

They are rubbing shoulders with the rest of the 140-odd big shots, aka “global political and financial elite” of the US and European capitalist economies attending the highly secretive 61st annual Bilderberg meeting.

This year, however, it’s not quite so secret, as the organisers have decided to pre-empt the leaks by publishing lists of the participants from 21 European and North American countries and 12 key topics.

The assembly is heavily skewed in favour of the top men of banking and finance, but they’ve been joined by the key figures from the most visible global corporations including Jeff Bezos, Amazon’s CEO, Google’s Eric Schmidt, Jorma Ollila, chairman, Royal Dutch Shell, Craig Mundie of Microsoft and a small number of big hitters from other key industries.

Also on board are opinion leaders from politics and the media who’ll be advancing what they’ve learned of the developing needs of the powerful in the year to come. With resistance to austerity growing everywhere, the organisers have brought in the military.

In attendance are General David Petraeus, former head of the US Army, and Olivier de Bavinchove, Commander of Eurocorps, the little known 60,000 strong standing army of the European Union.

Top of the list of key topics is “Can the US and Europe grow faster and create jobs?” No surprise there. Perhaps it is just a touch odd, however, that the list doesn’t include even a passing reference to climate change.

Especially in the light of current extreme weather events spanning the globe.

Or is it?

As the participants assembled, heavy rain had deluged large parts of Central Europe – Germany, Poland, Hungary, the Czech Republic, Austria, and Switzerland. Some areas like Passau on the Danube have experienced their worst floods in 500 years.

Meanwhile, the US National Weather Centre announced that, at 2.6 miles, one of last Friday’s five tornadoes to hit Oklahoma was the widest ever recorded - with wind speeds reaching 295 mph.  This followed the devastation of the Oklahoma City suburb of Moore on May 20 that killed 24 people. It was the first time in that two such powerful tornadoes struck have Oklahoma within such a short period of time. 

Following last year’s unprecedented drought in the USA, 82% of New Mexico is experiencing “severe” or “exceptional” drought conditions, according to Dan Ware, of the state’s forestry agency, of historic proportions not seen since the 1950s. A wave of vast wildfires has been sweeping through California.  

This intensification of extreme weather across the globe is the result of the Bilderbergers’ top priority – profit-driven, economic growth. The reckless exploitation of resources to produce commodities with limited life spans, an addictive dependence on fossil fuel and the industrialisation of food production have driven climate change to crisis point.

And they want more of it. They’ll try anything and everything within their power to pursue it. More public spending cuts in the dream of reviving the private sector? Don’t worry, Labour agrees with the Tories on that one.

Unrepayable debt? Never mind, generations to come will be made to pay. Record levels of unemployment reaching as high as two-thirds among young Greeks? Press on, it’s reducing the cost of labour. Demonstrations, riots, violence on the streets? Bring out the army. Governments overthrown? They just appoint their own.

Breaking the power of the Bilderbergers and their ruling class chums throughout the world is a priority if we’re going to get through this historic economic, political and ecological crisis in one piece.  

Gerry Gold

Economics editor

Labour is Coalition Lite

So the race to the bottom continues as Labour and the Tories try to outflank each other by getting tough with the unemployed, the disabled and “benefit scroungers” in general. How will the readers of the Daily Mail and other right-wing papers distinguish between the two?

It’s a question made more difficult by today’s announcement by Ed Balls, the shadow chancellor and his colleague Liam Byrne. Balls, who devoted his time in the New Labour government to deregulating the banks, says the long-term unemployed will have to take a designated job or lose their benefits if his party is returned to power.

The private sector will be given the money by the state to employ people for six months at the minimum wage. Labour would fund the scheme by reducing pension scheme tax deductions claimed by high earners. Labour’s workfare proposal is a variation of schemes already in operation by the Coalition government under which many claimants have to work for their benefits.

Labour is, in essence, Coalition Lite.

Balls’ scheme has nothing to do with solving unemployment as a social question and everything to do with impressing “swing voters”. Demonising vulnerable groups like the jobless and the disabled who depend on state benefits is always considered good for a few votes.

Labour's shadow work and pensions spokesman Byrne said the long-term unemployed needed to be "working or training and not claiming". Ah, music to the ears of Angry of Surbiton. "There is a vital principle at stake here," he added. Yes, there is Byrne. It’s called taking out on the poor and disadvantaged.

Not that Labour needs an economic crisis to launch its reactionary ideas. During 13 years in government, the Blair regimes set about “reforming welfare” along the lines they had picked up from the Clinton administrations in America.

Social security as a percentage of GDP fell. Many benefits for lone parents were terminated. Out went the Department for Social Security in favour of Work and Pensions, relegating the concept of the welfare state to the past. Directly in the firing line

were people claiming disability benefits.

In 2008, New Labour introduced the employment and support allowance (ESA) in place of disability benefits and instituted the dreaded work capability assessment (WCA). Firms like Atos have been paid millions since, with the incentive of forcing the disabled into work. Naturally, the ConDems picked up on all these initiatives and reinforced the attack. Iain Duncan Smith, the current work and pensions secretary, won’t be satisfied until he’s buried the welfare state for good.

Leaving aside the fact that Labour appears to have already earmarked cuts in pension tax relief for another policy, it is clear to anyone who cares to think about it that an Ed Miliband government would be just as reactionary as the present one.

The recent “one nation” rhetoric is a thin mask for another great deception. If elected, Labour would continue to make the cuts to reduce the budget deficit and appease the money markets. Miliband’s vision of a “one nation economy” is one where employers and workers collaborate in a kind of a corporate state.

Britain is a low-wage economy in the midst of a systemic global economic and financial crisis. That fact goes unsaid by Miliband and his party. Better to attack an easy target than identify capitalism itself as the problem. Which makes you ask again, what is the point of Labour? What is the point of electing a party whose policies are in essence indistinguishable from those of the Tories or Lib Dems? They are all in it together and we should have no truck with the whole sordid business of traditional party politics.

Paul Feldman

Communications editor

By jingo, Labour is the true patriotic party!

A party of true patriotism, making tough decisions in the “national interest”, hiring top business figures as advisers and a party that will stand up to the trade unions. Tories? Lib Dems? Wrong, just wrong!

New Labour Mark II is on show in Manchester this week, with messages that many a Tory would be happy to embrace. On Sunday, leader Ed Miliband hit back at Len McCluskey, the leader of the Unite union, by defending Labour's commitment to a public sector pay freeze. The party, he said, was not in thrall to "sectional interests".

Yesterday, shadow chancellor Ed Balls told delegates that there would be “tough choices in the years ahead” and that “we cannot make any commitments now that the next Labour government will be able to reverse particular tax rises or spending cuts”. (In the meantime, naturally, Labour councils will keep on implementing ConDem austerity budgets.)

Balls has no political memory to speak of. So there were no references to the disastrous policies that he and Gordon Brown were responsible for when in office. Balls was unable to say how giving the banks an essentially free, unregulated hand had helped fuel the build-up of fictitious credit that played a role in bring the financial system to its knees and precipitating the recession.

He would not have wanted to recall, of course, the speeches extolling the virtues of the City of London on the eve of the crash, like the one in September 2006 when he told a Hong business audience: “The FSA [Financial Services Authority]… has confounded those who feared the FSA might become a heavy-handed and inflexible regulator. Today our system of light-touch and risk-based regulation is regularly cited - alongside the City’s internationalism and the skills of those who work here - as one of our chief attractions. It has provided us with a huge competitive advantage and is regarded as the best in the world.”

And brushing aside Labour’s “public finance initiative” leaseback funding of new hospitals and schools – which have left many of them struggling to pay exorbitant charges to the private sector – Balls announced that the party was going to employ Sir John Armitt. He would advise on how to manage and fund infrastructure projects.

Armitt, who chaired the Olympic Delivery Authority, was before that top dog at a number of major construction companies and, under New Labour, chief executive of Railtrack and its successor, Network Rail. A 2006 survey made Armitt the highest-paid public-sector employee in the UK, with a salary and bonus of £878,000 - rising to more than £1m  when pension contributions were included. A Labour-sponsored fat cat.

Today, shadow work and pensions secretary Liam Byrne indicated that Labour would make cuts in the welfare budget should it win an election. You have to ask what would be the point in voting Labour? This hardly constitutes a sharp difference with the Tories, unless Labour is trying to put clear blue water between the two parties.

If, however, you favour a touch of crude patriotism with your breakfast, then Labour is the party for you. The conference slogan is “rebuilding Britain”. Balls himself pledged to “rebuild Britain anew in the long term national interest", a phrase which sends shivers your spine. Miliband will no doubt repeat the mantra in his speech.

The political system is dying on its feet, tied inextricably to corporate and financial power that is itself in a deep crisis. The Labour leadership is simply a variant of the corporatocracy that rules over us, full of smooth operators and shallow thinkers. We must be able to do better than this.

Paul Feldman

Communications editor

Barclays shows how they are all in it together

Yes, they are all in it together: Barclays, the Bank of England, the Financial Services Authority, Tories and especially the previous Labour governments.

All share responsibility for creating an environment where, in spite of numerous and repeated claims of about the virtues of a “free market”, the financial system was in reality rotten at its very core - and far from free.

Barclays manipulated the Libor inter-bank lending rate lower in 2007-08 in part to try and show that it could borrow money cheaply while others were struggling. Barclays was desperate to avoid a state bail-out/nationalisation that befell Northern Rock, RBS et al.

This may account for the apparent collusion of the Bank of England in turning a blind eye to the Libor scandal.  Late in 2008, Bank governor Sir Mervyn King made a quip in public that Libor was “the rate at which banks do not lend to each other”. Will the now ex-CEO Bob Diamond name names when he appears before a Commons committee tomorrow? 

In one of the first acts of the New Labour government in 1997, chancellor Gordon Brown stripped the Bank of England of its regulatory powers and passed them to the most toothless body you could image – the Financial Services Authority.

This was the age of deregulation driven by the globalisation of capitalism. And New Labour fell over itself to show major corporations and the City alike that Britain was the most unregulated economy of them all.

Ed Balls, now the shadow chancellor, was a cheerleader for Brown. In 2006, just a year before the unravelling began, Balls made a series of speeches extolling the City.

Balls told a joint meeting of the Hong Kong General Chamber of Commerce and the British Chamber of Commerce in June: “The UK’s financial tradition as a free, fair and open global market has resulted in tremendous growth in London’s international financial markets in the past decade – over-the-counter derivatives turnover up by 770%, foreign equities turnover up by 260%, cross-border bank lending up by 160% and foreign exchange turnover up by over 60%.”

After praising the growth of fantasy finance, Balls declared that central to London’s “success story” was “light-touch principle-based regulation” which New Labour was entirely responsible for.

Admiring the Big Bang of 1986, when the Thatcher government opened up the City to global competition as “decisive”, Balls went on to laud the FSA which had “confounded those who feared the FSA might become a heavy-handed and inflexible regulator.” In fact, Britain’s “regulatory regime continues to be the best in the world”.

In September, he said the government would block “any imposition of any rules that might endanger the light-touch, risk-based regulatory regime that underpins London’s success”. The Tories went along with all this because their City chums told them to.

All concerned are trying to sing a different tune now but it’s too late for a host of reasons. Deregulation was more than just a theory – it was a necessity. The collapse of the post-war, regulated monetary and trading system in the early 1970s showed that capitalism had reached a certain limit of expansion.

The next phase beginning in the early 1980s, was to set capital free to roam the planet. Transnational corporations demanded transnational finance – and cheap credit for consumers to buy the commodities that were turned out in increasing amounts. Deregulation was driven by this process and was not simply an ideological choice.

The genie cannot be put back into the bottle. There is a global recession that threatens imminently to become a full-blown depression. The Bank of England is resuming the printing of money this week in a desperate bid to keep the economy afloat. This will go straight into the hands of the banks and stay there.

We don’t need inquiries, parliamentary or judicial, into the banks because they will avoid the main issue. The capitalist system is broken whichever you look – politically, economically and financially. There is no “golden age” to turn the clock of history back to, even if this were possible. Moving beyond capitalism to a democratic, sustainable, people-centred, not-for-profit economy is an immediate challenge.

Paul Feldman

Communications editor

Whatever happens on bonuses, we lose out

For all the excitement generated over the reluctant decision by Stephen Hester, the chief executive of the Royal Bank of Scotland, to decline his near £1 million bonus, this is not a zero sum game.

Hester forgoing his bonus, which would have been paid in shares, does not mean, for example, that as a result there is more money in the public purse to offset against the ConDem’s austerity cuts programme.

Nor does it help hard-pressed RBS borrowers – from small businesses to home owners with mortgages. They will not be treated any more sympathetically by the bank when they struggle to meet repayments.

Will it prevent RBS from punishing hard-pressed workers struggling to make ends meet when they accidentally drift into the overdraft zone? I don’t think so.

Paradoxically, it seems that the shares, if they had been cashed in over the next couple of years, would have produced a tax take of around £500,000 depending on their market value at the time.

In other words, if Hester hadn’t taken home more than £11m in shares and cash since being brought in by New Labour to run the bailed-out bank in October 2008 (with a golden hello of 10.4 million shares), we in the shape of the 99%, would not be better off by the same amount.

As RBS bankers outside the boardroom form an orderly queue to share in a bonus pool worth an estimated £500 million in the next month or so, some are waiting to see how many shares they get under a scheme approved in 2009, when Gordon Brown was prime minister. John Hourican, head of RBS’s investment bank, could receive up to 21.3m shares in April – worth around £5m at last night's price – and options on another 7.4m shares.

What all this demonstrates is not only that the bankers hold the aces – there is clear evidence that the RBS board threatened to resign if the Treasury had tried to block Hester’s bonus – but that they also have absolute control over resources.

While the financial system continues to be run for profit to benefit shareholders and senior staff, no good can come of it. Quite the reverse, as we have discovered to our cost since the meltdown began in 2007. The state’s resources – aka taxpayers’ money - are despatched to bail out the system without delay so that things can stay as they are. The sums committed are then added to the deficit and result in more cuts.

All the remedies suggested by either the government or Labour leader Ed Miliband are designed to maintain the status quo of capitalist-owned banks that serve their own interest. Miliband, of course, was a member of a government that gloried the achievements of the bankers and financed large amounts of public spending from tax revenues from the financial sector.

Ed Balls, now shadow chancellor but then a Treasury minister, speaking to business figures in Hong Kong in 2006, remarked: “The UK’s financial tradition as a free, fair and open global market has resulted in tremendous growth in London’s international financial markets in the past decade – over-the-counter derivatives turnover up by 770%, foreign equities turnover up by 260%, cross-border bank lending up by 160% and foreign exchange turnover up by over 60%.”

Miliband is not opposed to bonuses – so long as they are “merited”! As for a one-off tax on bonuses – which Labour actually introduced in 2009 – that is hardly going to change what goes on.

As one comment on the Financial Times website noted: “What difference does Hester's bonus make to the billions already allocated to the rest of the banking community. Given the trillion the banks are now borrowing from the ECB [European Central Bank], I can only conclude that the banking community remains impervious to their financial reality. I wish someone would give me a bonus for defrauding my customers and still managing to go bankrupt!”

The real issue is about who owns and controls the country’s financial resources and what they are used for. Massive bonuses are a symptom of the problem – but not the problem itself.

Paul Feldman
Communications editor

They are all in it together!

The evidence of Labour’s collusion with the ConDem coalition has piled up so high that even Len McCluskey, the leader of the Unite union, can no longer ignore it. “The real points of differentiation between Labour and the government on the economy are now very hard to identify,” he admits today.

McCluskey’s union propelled Ed Miliband into the leadership in the vain hope that he would lead the party in a new direction, away from the Blairism of the previous 15 years towards a modernised version of Old Labour.

With shadow cabinet members lining up to support the government’s public sector pay freeze, cuts in education and saying that a Labour government would continue with the ConDems’ austerity policies, a shell-shocked McCluskey hit back – at least in words.

Writing in The Guardian, he says that “this year we have seen one shadow minister after another falling over themselves to endorse savage spending cuts which are hurting real people. Where does this leave the half a million people who joined the TUC's march for an alternative last year, and the half of the country at least who are against the cuts? Disenfranchised.”

The general secretary of Britain’s largest union, whose financial support keeps Labour afloat, says the country now has a “national government” consensus among the three major parliamentary parties. McCluskey tries, without success, to paint a picture of Miliband as a prisoner of the Blairites.

He claims that shadow chancellor Ed Balls's “sudden embrace of austerity and the public-sector pay squeeze” represents a victory for “discredited Blairism” and also “challenges the whole course Ed Miliband has set for the party, and perhaps his leadership itself”. This is desperate stuff.

Miliband has actually set the course himself. His front bench has backed many Tory policies and Miliband himself has declared that his policy is to build a fairer, more responsible, prosperous capitalism. It’s an approach that David Cameron himself has embraced enthusiastically if opportunistically.

The Labour leader attacked the mass strikes in defence of public sector pensions and instructed party-controlled councils to implement spending cuts passed down from the ConDem coalition (a policy backed by Labour-affiliated unions, by the way).

Blairism was an outright adaptation to and acceptance of capitalism and the power of financial markets. It marked the termination of the long social-democratic, reformist tradition in Labour politics, no longer viable within a globalised capitalist economy.

With the world economy in a profound crisis, Labour – along with similar parties in Greece, Spain, Portugal etc – has bent with the prevailing economic wind. It was either that or challenging the fundamentals of the capitalist system itself. Anyone expecting the latter to happen, whoever leads Labour, is living in a fool’s paradise.

McCluskey is also angry, rightly so, that as one of the party’s paymasters, he was not asked about the shift that has taken Labour into the arms of the ConDem coalition.Naturally, he has a remedy to hand if he serious about representing his members’ interests.

He could call a ballot on the case for disaffiliating from a party that clearly speaks for big business, the City and the bond dealers. As his members are, as he points out, disenfranchised, McCluskey could generate a discussion on how trade unionists and their supporters could be better served.

Unfortunately, there is no sign of that happening. McCluskey is desperate to keep the political fight inside a party that is now part of a national coalition against ordinary working people. This is, in practice, a great disservice to Unite members who will no doubt draw their own conclusions when they fight the ConDemLab pay freeze.

Paul Feldman
Communications editor

'New Bargain' gives us a one-party state

New New Labour (NNL) has not only confirmed that in essence it is indistinguishable from the other mainstream parties but that also the present form of what passes for politics in Britain is well past its use by date.

As to the first point, even before its conference kicked off NNL was scrambling to show that it was the party of market-led “solutions”. Ed Miliband – or should that be Moribund – declared that he favoured £6,000 a year university tuition fees instead of the Coalition’s £9,000.

Wow! The boldness of the idea took your breath away. Only joking.

Even the moderately-led National Union of Students had to say that far from advancing university education, the proposal reduced the whole issue of funding to a bidding war between the Coalition and Labour.

In power, when it was only New Labour (the other New is more recent), introduced tuition fees. In opposition, they opportunistically and hypocritically opposed the Coalition’s increase to £9,000.

Now they’ve accepted in principle that students should borrow the money to pay for their own degree. Once again there is not even a cigarette paper between NLL and the Coalition.

And that also applies when it comes to resisting government attacks on pensions. NNL is opposed to strikes scheduled for November 30. Even the ever-so-cautious Dave Prentis, leader of Unison, was aghast.

"It's no time to sit on the fence when this country faces a stark choice between taking on the powerful and privileged, or letting the price be paid by the poor and the powerless. My members are no militants. But they will stand up for what's fair, what's right," he told the conference.

Well, Brother Prentis, I have some news for you. NNL is not “on the fence”. It stands four square with the government. After all, the pensions’ attack was prepared by one of its former ministers, Lord Hutton.

Naturally enough, shadow chancellor Ed Balls then declared that a future NNL government would not reverse Tory spending cuts. As Labour councils are implementing most of the cuts with party backing, this was no surprise.

Balls, of course, together with Gordon Brown, helped created the “light touch” system of financial “regulation” which contributed to the 2008 financial meltdown and led directly to the Coalition’s axe on public spending. Of this, Balls had nothing to say.

He did, however, urge the Coalition to reduce VAT to 5% on home improvements. As someone suggested, this is a canny move for all those MPs wanting to do up their second homes at taxpayers’ expense.

From Miliband today, there was the disgusting equation of “anti-social tenants” with asset strippers in his "New Bargain" speech. Oh how the Daily Mail and the right-wing press will love this. Miliband is bidding to outflank prime minister David Cameron, who used the August inner-city riots to blame “feckless parents”.

Milipede’s appeal to what is known as the “law-abiding silent majority” is straight out of the Tory textbook. He was scheduled to say: "The hard truth is that we still have a system where reward for work is not high enough, where benefits are too easy to come by for those who abuse the system and don't work for those who do the right thing."

In practice, all this leaves us with is a one-party state where “politics” is reduced to a competition for the most right-wing policies. No wonder increasing numbers of people are sick of the whole charade and want nothing more to do with it.

Ultimately, however, we have to find answers to the catastrophic economic crisis that is beginning to engulf society. With the parliamentary channel patently a cul-de-sac, our future lies in practical, revolutionary proposals like people’s assemblies and not in the Westminster merry-go-round.

Paul Feldman

Communications editor

What a balls up

The degree to which Ed Balls, as a key Treasury minister in the last New Labour government, is responsible for the government’s massive budget deficit is subject to argument. But what is not in dispute is Balls’ undying support for the unbridled, unregulated expansion of the financial sector which, as we know, went down in flames in 2008.

Balls, newly promoted as shadow chancellor following the sudden resignation of Alan Johnson, claimed yesterday that having studied economics for over 25 years, he knew what it was all about. Subsequent events prove a) how useless bourgeois economics is and b) how arrogant Balls is.

New Labour, as we know, transformed itself into a party that cheer-led the rise of corporate-driven globalisation and, in particular, the parallel growth of a financial sector that fuelled consumerism and, more to the point, had with government support, evaded all known regulatory frameworks.

As chancellor, Gordon Brown couldn’t believe it. The financial sector’s tax revenues grew apace. And in September 2006, Balls, then economic secretary to the Treasury under Brown, went to Hong Kong to sing the praises of London as a financial centre and how easy it was to do business under New Labour.

Balls told a joint meeting of the Hong Kong General Chamber of Commerce and the British Chamber of Commerce: “The UK’s financial tradition as a free, fair and open global market has resulted in tremendous growth in London’s international financial markets in the past decade – over-the-counter derivatives turnover up by 770%, foreign equities turnover up by 260%, cross-border bank lending up by 160% and foreign exchange turnover up by over 60%.”

After praising the growth of fantasy finance, Balls declared that central to London’s “success story” was “light-touch principle-based regulation” which New Labour was entirely responsible for. Giving the Bank of England independence was Brown’s first act in May 1997. Creating the toothless Financial Services Authority was act two.

Admiring the Big Bang of 1986, when the Thatcher government opened up the City to global competition as “decisive”, Balls went on to laud the FSA which had “confounded those who feared the FSA might become a heavy-handed and inflexible regulator.” In fact, Britain’s “regulatory regime continues to be the best in the world”.

Famous last words or what, considering there were queues outside Northern Rock branches 12 months later as people scrambled to withdrew their money from a bank that had failed in every respect?

The truth is that regulation was non-existent, not so much a light touch as light-headed. Bankers were running rings round the FSA and the Bank of England – and everyone knew it. “Products” like derivatives lay completely outside the scope of the regulators, yet Balls praised them as if they were a new form of gold.

At the time, this is how the political class and the financial elites saw it. Money could beget more money, profits would rise along with tax revenues, ordinary people could get as much credit as they wanted to buy commodities mostly made in other countries. Surely it could never end? As Brown himself said on the eve of the meltdown in July 2007, the City had entered a “new golden age”.

Then came the crash, an immediate recession and the crisis found its way into government finances, producing eye-watering deficits and interest payments on the debt heading towards £100 billion a year. So, yes, Balls does share political responsibility for the crisis. As he said in Hong Kong: “Government decisions … have an important role to play, for good or ill.”

Paul Feldman
Communications editor

For the TUC and Miliband, resistance is futile

As the coalition puts the finishing touches to next week’s budget cuts, which are certain to devastate services and jobs, you might wonder what the trade union leadership and the Labour Party are up to. Keeping their heads down, is the answer.

While French unions battle the Sarkozy government over pension cuts, our very own Trades Union Congress has called a lobby of Parliament for the day before the cuts are made public. Why then, you might ask? It’s because they don’t want loads of angry workers turning up outside of the Commons once they’ve heard the bad news.

As for a lobby, that is really going to frighten the Lib-Con government! Nothing like seeing your MP and asking him or her to oppose the cuts, to put the fear of God into elected representatives.

And that’s it as far as the TUC is concerned. Perhaps they’ll be a demonstration in March next year, probably on a Saturday to avoid workers having to strike to be there. For the main part, the most dramatic changes to public services and the role of the state will be implemented without official opposition.

When it comes to Labour under Ed Miliband – or should that be Millipede? – they might as well be part of the coalition. Miliband has already spoken out against holding strikes against the cuts and agrees that the budget deficit has to be reduced.

By blocking Ed Balls from becoming shadow chancellor, the job he coveted most, Miliband revealed his hand. Balls’ view is that the government is cutting too much of the deficit too quickly. His argument, essentially, is that the cuts are not really necessary. By giving the job to Alan Johnson, a man who on his own admission knows little about economics, Miliband moved closer to the coalition’s policy.

The reason for this is not hard to fathom. Miliband, Balls, Yvette Cooper and other senior members of the shadow cabinet, fully signed up to the New Labour project. At its heart, was the acceptance that market-driven, globalised capitalism is the only game in town. Whatever you do, don’t upset the bankers.

And, despite the collapse of the banks and the subsequent recession, this is what they still believe. That is their ideology, their world outlook. So when the Tories step up the creation of more Academy schools, raise tuition fees and introduce a market framework in the NHS, they are building on what Miliband and others did in government.

This is the political reality as Britain staggers on towards a further banking crisis and with a national debt that is eating up £70 billion a year in interest rates alone. The International Monetary Fund has revealed the startling prospect that US and European banks need to refinance around about £2.75 trillion in debt over 2011 and 2012. The IMF also repeated its claim that European banks were still hiding losses off their balance sheets, having written down only around a quarter of expected losses.

And guess which country is in the worst position? You’ve worked it out. Britain’s banks need to refinance to the tune of £800 billion over the next two years, nearly a third of the refinancing the IMF has identified. With state finances looking like a sea of red, the idea of another bailout – should the banks, as is almost certain, be unable to refinance on their own – looks highly improbable.

All sorts of political scenarios are possible in such an emergency, including a national government. One that can be safely ruled out is the idea of Miliband’s party doing anything other than rushing to the aid of the capitalist system, as they did in 2008. For them, resistance is futile. For the majority, it’s the only option.


Paul Feldman
Communications editor

Breaking out of the circle

“We are alarmed to be informed that, despite earlier agreements with the Police and Birmingham City Council, West Midlands Police are attempting to stop the trade union demonstration against public service cuts from marching past the Conservative Party conference at the International Convention Centre on Sunday 3rd October... "

So begins a petition to West Midlands Police appealing to them to restore the rights of trade unionists and others to demonstrate outside the Tory party conference in October. It is not even a protest for the right to protest, it is simply a polite "ask" of the police to restore that which they had no right to remove in the first place.

There is a kind of circular logic to the whole "rights" question. Because really what are rights? Do we have a birthright to these rights and if so, then logic would seem to suggest that they cannot be removed no matter what arguments the police "in the interests of public order etc" and the state authorities make. If that route is taken, then that should be the end of the matter - our rights are inalienable.

But the dismayed tone of this letter suggests that the signatories to the document, who include Labour MPs and trade unionists and left-wing film director Ken Loach, do not viscerally believe in that idea. These members and supporters of the Right to Work campaign, good people though they undoubtedly are, are taking an underwhelming approach to this very serious issue.

There are in fact two issues here. First: what can people who are aiming to demonstrate against this government's austerity measures hope to achieve? The senior partner in the coalition is not going to return to Westminster convinced of the error of its ways - the protests will make no difference whatever in that regard. Second: what will they do if the 'right to protest' is not magnanimously restored, meekly acquiesce? Hopefully not. It would actually be uncharacteristic of them, going on past form, because back in February this year members stormed the Conservative Party Spring Conference in Brighton. Unquestionably a militant action!

They have also given support to workers in dispute, including building solidarity with the BA cabin crews and Royal Mail workers, for instance. Now however the ground seems to be shifting for some reason. Perhaps it's because they wish to appeal to a wider section of the population who might be frightened off by 'militancy' or 'direct action'? Probably not a worry the campaigners need entertain, given the level of dissatisfaction and anger out there. So, given that they have planned to protest, that is, they have decided that 'doing something', even if that something achieves not much at all, is better than 'doing nothing' they really ought to follow through and not be derailed by some sort of liberal respect for the forces of law and order, when quite obviously those very forces are intent on simply protecting 'our rulers' from any uncomfortable experiences.

Given that the supporters include the likes of Ed Balls and Diane Abbott, perhaps it's not too surprising that the Right to Work campaign is leaning towards respectability, at least in its public face. Having Labour Party leader hopefuls on board amounts to a kind of co-option, or at least the danger of it, they might after all be the government again one day!

Whatever the outcome of the Right to Work's little dispute with the police and however they resolve it if the answer is No, there will be protesters from various other groups outside the ICC on 3rd. October. Members of the IWW for example are planning to march along with a militant workers bloc and things may get lively!

This brings us back in suitably circular fashion to the basic question of what constitutes 'rights' and how far can we go in the exercise of them. Just applying peaceful pressure perhaps? http://www.abouthumanrights.co.uk/human-rights-your-rights-protest.html Or are there other courses of action such as working for People’s Assemblies, that we claim, assert and utilise, come what may?

Fiona Harrington
A World to Win

Balls spills the beans

There are at least two conclusions you can draw from the admission by Ed Balls, the schools minister, that Britain is facing its most severe economic and financial crisis for more than a century: We have been systematically lied to about the severity of the rapidly developing catastrophe and the public is being softened up for dramatic political developments.

Balls, the prime minister’s closest political ally and economics adviser to Brown when he was chancellor, is, along with the rest of the government, privy to information we don’t have access to. So when Balls says that the crisis was "more extreme and more serious than that of the 1930s" and that these were "seismic events that are going to change the political landscape", he is only letting the cat out of the bag.

That’s why Downing Street was today trying to “explain” that Balls did not actually mean what he said, just as No.10 had to “explain” last week that Brown’s use of the D word in the Commons was also a “slip of the tongue”, and that the prime minister meant recession and not depression. A Freudian slip might be a more honest account.

For the New Labour government actually knows that the banking system is shattered and beyond repair, that jobs are vanishing at an unprecedented rate, that demand for everything except food has collapsed, that the pound is on its knees on foreign exchange markets and that Britain is the most vulnerable of all the advanced economies because of its reliance on a now broken financial sector.

And yet the government staggers from pillar to post, with a bail-out here and a bail-out there and a pathetic inquiry about City bonuses headed by Sir David Walker, who enjoyed and sanctioned bonuses when chairman of investment bank Morgan Stanley International. Walker earned the nickname Mr Whitewash after being closely involved in two previous inquiries – into the transparency of the private equity industry and ethical standards at BAe Systems – that led to little change.

Back to Balls, who told New Labour members in Yorkshire: "We now are seeing the realities of globalisation, though at a speed, pace and ferocity which none of us have seen before. The reality is that this is becoming the most serious global recession for, I'm sure, over 100 years as it will turn out." More to the point, Balls also them that they should remember how the politics of the 1930s “were shaped by the economy".

We are left to draw our own conclusions about what he implying. The politics of that period included fascism in Germany and Spain, military dictatorship in Japan and, of course, national, coalition rule in Britain following the collapse of Ramsay MacDonald’s minority Labour government in 1931. So which of these are we are being softened up for by Balls’ reference to “seismic events” that will change the “political landscape”?

None of these “choices” are acceptable yet the fact is that we now have a profound political crisis alongside the global economic and financial crisis. This is making itself felt in every country, including America where president Obama is already in some difficulties, in Spain, where the government is being overwhelmed by the growth of unemployment and in France, where Sarkozy is under enormous popular pressure.

At times like these, there is an all too apparent danger that the façade of the parliamentary democratic state will be torn aside in favour of some sort of emergency, authoritarian rule. Such a move will expose the capitalist state for what it is – an instrument for preserving the rule of the corporations and banks at any cost. Balls has spilled the beans and we should take note.

Paul Feldman
AWTW communications editor