THE attempts by David Cameron and his increasingly strident Shadow Chancellor, George Osborne, to pin the blame for the collapse of the Bradford & Bingley bank on Gordon Brown are a bit rich – even for a Tory team which has specialised in such things. The stark reality for Cameron is that it was Margaret Thatcher’s free marketeering government which was initially responsible for the two disastrous developments which led, with dreadful inevitability, to the B&B debacle.
The first of these was the wholesale deregulation of banking and finance which directly encouraged the transformation of those most admirable of Victorian non-profitmaking self-help institutions, the building societies, into rapacious profit-hungry commercial banks. The second was the halt to council house building programmes brought about by that quintessentially Thatcherite policy, the “right to buy”, which forced councils to sell off their housing stock to tenants at knock down prices and put a lid on their ability to build more.
As I have argued before, the deregulation of banking and finance was part of the overall drive towards a truly free market economy which was the central plank of the Thatcherite theology. It was item one on the wish list drawn up for her by her ideological guru Sir Keith Joseph – a man known to many of his saner Cabinet colleagues as the Mad Monk. In her turn, Mrs T made it a priority for her two first chancellors, Geoffrey Howe and Nigel Lawson, who duly pushed it through.
Among its most baleful consequences was what might be described as the Red Braces Revolution. Simple and hitherto honest caretakers of the people’s pennies running institutions like the Bradford & Bingley, the Halifax, Northern Rock and Scottish Widows saw what was going on in the City and realised that they too could wear the braces, pay themselves the huge salaries and award each other the massive bonuses of the City big boys if they could just transform their mutual societies into commercial banks.
This required the approval of the depositors and borrowers who, until then, had jointly owned the societies. They were persuaded with straightforward bribes in exchange for their votes. They got pathetically small sums of cash and promises of shares in the putative banks. The top chaps got the big salaries and the even bigger bonuses.
And now, of course, the cash bribes have been spent and the shares are either worthless or nearly so. It has been a classic story of stealing sweeties from children in which the victims failed to apply the elementary test for all such transactions: if it looks too good to be true, then it probably is.
The second Thatcherite element in the current debacle, the right to buy policy, did not directly cause the crisis. But it did fire up the consequences of the demutualisation programme because it ensured that there was going to be an almost insatiable demand for houses. The transformation of the building societies into banks came just as the mortgage market was massively boosted by a calamitous housing shortage. They tumbled over each other to meet the demand, at ever increasing prices. All we needed was the credit crunch and the perfect storm was upon us.
So it is, as I said at the beginning, a bit rich for the Tory bright boys to point the finger at Gordon Brown. But, on the other hand, there is no denying that Brown does have a share of the blame since he made no attempt to rein in the deregulatory bonanza. Quite the reverse; in the early stages of his chancellorship he made it plain that he was all in favour of the Red Braces Revolution. Other pillars of the “new” Labour project declared themselves “intensely relaxed about people getting filthy rich”.
Nor did he do anything to encourage a resumption of the council housing programme which had helped to limit, if not actually solve, the post war housing shortage. In tune with his mad Treasury accounting system, which decrees that public spending is bad while private spending is good, he continued to rely on the sacred free market to deliver the homes. Predictably, it didn’t.
But, somehow, I don’t think we are likely to hear either Cameron or Osborne say that Gordon Brown is at fault because he failed to reverse the policies of the previous Conservative government. We on the left, on the other hand, are fully entitled to draw attention to this disastrous mistake – just as we did at the time. Not for the first time, the left has been proved right.
Miraculously, that message seems to be getting through even to those twin pillars of the capitalist press, the Daily Telegraph and The Times. A few days ago the Telegraph published a cartoon which simply showed Karl Marx’s grave, complete with the famous slogan from the Communist Manifesto: “Workers of the world, unite.” There was no caption and the familiar black marble head was realistically drawn – except that a small smirk can be detected on the lips.
And, last week, The Times carried an extraordinary third leader singing the praises of Tribune in terms which even our editor might have regarded as immodest. Our beloved little paper, said The Times with total accuracy, is such an important contributor to the national debate that it must not be allowed to die.
After reading it, I imagine Tribune’s editor must have searched with more than usual diligence through the day’s post, looking to see if there was an envelope containing a large cheque from Rupert Murdoch as a contribution to the fighting fund. I wonder what he would have done about it if he had found one. After all, Lord Beaverbrook once rescued Tribune in an earlier hour of need.
