The Economy

Part of Council Tax Rebate – in the House of Commons at 7:12 pm on 31st March 2009.

Alert me about debates like this

Photo of Michael Meacher Michael Meacher Labour, Oldham West and Royton 7:12 pm, 31st March 2009

I could not agree more. All the enormous financial inducements given to the banks have not succeeded in removing, or even identifying, those toxic assets. My point is that we need to have direct control if we are to achieve the objective that the hon. Gentleman has described. That is simply the only way to get the restructuring that the private sector either cannot or will not achieve—to change banks' governance and operational rules, and to change their top management to bring about the mandate to implement these alternative principles.

Why, therefore, do the Government not exercise that control? One answer that I have heard is that the policy is not about saving the real economy at all, but about saving the banks. If so, it might be said to have been moderately successfully, but I do not believe it is.

Another possibility is that the Government—and, given the speeches that I have heard, almost certainly the Opposition—believe that a bit of firm tweaking here and there, a successful G20, and a bit more regulation, perhaps flooding the banks with money and raising capital ratios, will mean that we can somehow return to the status quo ante, and that the engine of financialised capitalism can roar off again.

That is an absurd fantasy. The neo-liberal model of leaving things to the markets because they know best is irreparably bust. Whatever financial architecture emerges from the wreckage, there will have to be a fundamental restructuring: unquestionably, the financial sector will have to shrink dramatically.

The third answer—and the only other one I can think of—to why the Government do not exercise control of the banks is that the rejection of nationalisation and of giving direction to banks even temporarily is so embedded in the new Labour emotional and psychological mindset that it is simply not seriously considered. If that is so, we are in an almost Alice in Wonderland situation.

If the liabilities of RBS and Lloyds are included, as they have to be, public debt is now reaching a staggering £1.7 trillion to £2.2 trillion, according to the Office for National Statistics. That is up to 50 per cent. more than our entire GDP and, with all the implications that has for our national solvency, I find it incomprehensible that we are still not taking command of the situation. We face the impending collapse of the real economy, and tens of thousands of otherwise viable companies may collapse and unemployment may well reach 3 million to 3.5 million, so we should be using our power to direct the banks. I am all in favour of trying all the other policies first, but we must give absolute priority to restoring full-scale lending to businesses and home owners.

I conclude with a point about parliamentary accountability. We have not had a Government debate on the economy in the past six months, in which there has been a gathering storm of momentous peril, both for our country and globally. Even today, the debate is being held on a motion for the Adjournment of the House: there is no substantive motion and no vote.

It has been a fascinating debate, but what is the point of a talk shop if we cannot debate—and vote on, and made decisions about—key economic policy options? This is the most important issue this House has faced in the past five or 10 years. Ultimately, it is not just a question of economic direction: it is even more an issue of parliamentary accountability. That is what Members of this House need to address now.

Embed this video

Copy and paste this code on your website