Prime Minister Gordon Brown told the Labour Party conference yesterday that the City was ‘ideologically bankrupt’, and insisted that bankers would ‘pay back the British people’ for their sins – as well as denouncing the ‘right-wing fundamentalism that says you just leave everything to the market’. This seemed a bit funny to us, since unless we’re very much mistaken, this was the exact approach he himself favoured during his time in the Treasury, when the City’s tax receipts kept rolling in. But clearly ideologies aren’t set in stone when there’s an election to win...
Brown’s idea appears to be to link the financial crisis with the Tories and a privileged few in the City, while trumpeting his own commitment to ‘hard-working British families’. As such he hinted at further tax rises for top earners, grandstanded about new laws to claw back excessive City bonuses and promised to disqualify any negligent bank directors (which we’re sure is going to make it even harder to find anyone interested in doing it). What has ‘let the world down’, he insisted, was ‘the Conservative idea that markets always self-correct but never self-destruct’. Funnily enough, he didn’t mention the fact that the Labour government spent years deregulating the financial markets (and boasting about our ‘light-touch’ model to the rest of the world), as well as trying to create markets in the public sector. We don’t remember him crediting the Tories back then.
There was potentially some good news for business in the PM’s speech. Small and medium-sized firms are a lot more voter-friendly than rich bankers, so Brown was keen to trumpet the creation of a new £1bn ‘national investment corporation’, based on the old 3i model and designed to funnel public cash to companies finding it difficult to access funding. There’s also going to be a partnership with the Federation of Small Businesses to provide 10,000 skilled internships. Admirable ideas both (though it’s probably worth waiting to see the small print before deciding whether they’d actually do any good). On the other hand, Brown also promised regular increases to the minimum wage and statutory pay, which upset business groups like the CBI. And big tax hikes aren’t likely to go down well either.
We’re not going to shed any tears if a few greedy bankers get their comeuppance as a result of this (though we’ll believe it when we see it). But Brown’s about-turn seems (at best) disingenuous. And more importantly, this kind of rhetoric doesn’t just create hostility to the City – it has a knock-on effect on the way that UK plc and the whole market economy is perceived. It's entirely predictable - as far as Brown's concerned, desperate times call for desperate measures, and all that - but no less disappointing for it.
In today's bulletin:
Relief for Rose as Marks & Spencer sales recover
City bad, SMEs good - Brown bites the hand that fed him
Recruiters get £40m OFT fine after whistleblowers expose cartel
Will HR soon be a thing of the past?
Downturn sees rise in corporate prisoners