IN AN economic crisis as great as the present one, rules are meant to be broken and some conventions ignored. Tony Blair once declared that his job would not be done until the Labour Party learned to love Peter Mandelson. That will probably remain a forlorn hope for the former Prime Minister. But Mandelson, who understands the value of brands, recognised that when banks are crashing through the floor and requiring billions of government money to bail them out, the Post Office brand is “gilt-edged”. Rescue came after political pressure from the Communication Workers’ Union and Labour MPs, but as the “saviour” of the Post Office in cancelling the bidding war for the contract to privatise the Post Office Card Account, Mandelson deserves praise.
It’s a decision which should not be underestimated and is at least a tentative sign that the economic calamity that has befallen us means the “new” Labour mantra – public bad private good – may be about to be consigned to a dustbin of history already spilling over with failed nostrums.
It can’t come a moment too soon. Tragically, it’s probably too late for those post office branches which have already been closed by the Government in pursuit of economic efficiency. But it is a decision that should be regarded as a first step in creating a “people’s bank”. Jobs that would have been lost had the Post Office lost the contract have now been saved. The network, albeit scarred by earlier closures, is nevertheless not fatally wounded and can still be the backbone for the provision of financial services among which should be lending money to the lower paid at fair rates.
High street bankers still don’t understand that their arrogance has sickened most of the country. As last Sunday’s Observer editorial pointed out, the rescue of the banks was not carried out simply to enable them to hoard money, sit out the recession and then resume business as usual. We don’t want the Government to adopt an arm’s length approach when it comes to the banks. We don’t want the banks to be self-regulated – they must be properly accountable and subject to political pressure.
For too long, the real economy was at the mercy of voodoo economics. And, inevitably, those who pay the highest price are those such as the 10,000 BT employees who are to be made redundant. They will, we are told, be agency workers, as if that makes it any more acceptable, when all it really means is that those without security before now don’t have jobs at all. Nor do they have periods of notice and nor are they entitled to compensation. They were used to fuel the economic boom. Now they are being used to make layoffs sound less threatening.
Unemployment figures will still stack up mercilessly. This Government used to boast that Britain had the least restrictive working practices in Europe. This country was the easiest place in Europe to get rid of workers who didn’t even have the luxury of the Working Time Directive, because “new” Labour – in thrall to high finance – fought tooth and nail to keep Britain’s opt-out. That boast should be another one for the dustbin.
Next week, Alistair Darling will offer his prescription for taming the ravages of the recession. The crisis is too great to stick to the rules, so they must be broken. It’s been trailed that we should expect tax cuts to stimulate spending.
People on lower incomes will spend because they have to – so they must get the tax cuts. There will be arguments that there is no point in balancing this up by taxing the higher paid more. These should be countered and resisted. Tax loopholes should be closed and tax havens shut down.
An energy windfall tax should not fall off the political agenda – if for no other reason than to punish those companies which exploit pre-pay as they profit from the poorest customers forced to pay an average of an additional £195 a year for their fuel.
We need a major bout of Keynesian investment for infrastructure projects, social house building and, as Barack Obama is planning to do, to promote green jobs. At Compass’ annual general meeting, it was reported that Government minister Pat McFadden, when urged to make climate change a priority, replied that the Government had to concentrate on the economic crisis. Protecting the environment or concentrating on the economic crisis is a false dichotomy. Green jobs are the jobs of the future. Green technologies are the technologies of the future. The suggestion that there is a choice to be made between them is another one for the dustbin.
We have gone through a period of savage capitalism and now world leaders are coming together to try to tame it once again. The sub-prime mortgage market meant that “bad” money was driving out “good”. Gordon Brown wants to change this – hence he is striding the world stage in an attempt to convince the rest of the world to follow his lead on a recovery plan. In a globalised free market, where money travels faster than light, that will not be easy.
Political and trade union pressure must ensure that if unemployment rises to the expected three million, the safety net of the welfare state is protected and enhanced. The Prime Minister and his Business Secretary may find this unpalatable, but in the United States, with wars and a slump confronting the President-elect without such a safety net, unemployment on a massive scale could well drive Obama to embrace protectionism. That rule of inevitability is unlikely be broken.
In the meantime, Shadow Chancellor George Osborne, weakened by indiscretions committed on summer holiday in Corfu and his tryst with Oleg Deripaska, is desperately trying to save his job by ignoring a parliamentary convention and “talking down the pound”. True, sterling was already tumbling. However, Osborne’s comments were a lamentable misjudgement. At a time when the stakes are high, good judgement is what it is all about.
