Wednesday, November 26, 2008


Analysis: By John Pienaar Political correspondent, BBC News

Close your eyes and superimpose a huge, scraggly beard on the face of Mervyn King. Ruffle his hair a bit.
The governor of the Bank of England still doesn't look much like Karl Marx, does he?
Now remove the exquisitely tailored suit, and imagine him in a donkey jacket. Michael Foot he isn't. Or, for that matter, anyone but the cautious, conservative, pillar of the British financial establishment that he is.
Yet there he was, calmly contemplating the nationalisation of British high street banks. Not just public ownership or partial ownership of banks, but control.
No-one has seriously dreamt of such a thing since Labour's 1983 manifesto. Remember? They called it the "longest suicide note in political history".
At any normal time, it would have been a mind-boggling suggestion. But these times are far from being normal.
As it was, it was merely surprising.
Having listened to the latest session of the cross-party Treasury Select Committee, it is a little hard, surely, to accept that the pre-Budget report amounts to the "death of New Labour".
Is this really the return of old-style, redistributionist thinking to the party of Gordon Brown and Peter Mandelson (now, apparently, as close as ever they were in the salad days of the New Labour project)?
Cabinet ministers seem to laugh off the idea that Labour has returned to its rather withered, socialist roots.
Governor warns banks on lending
The present economic emergency has turned all conventional political thinking on its head.
Unconstrained borrowing is prudent. A spending spree is responsible, even selfless.
And public ownership of a high street bank may be no more than reminding the board to do its duty in our free market, capitalist system.
These are, as the chancellor said on Monday, "extraordinary times".
In any case, as one cabinet minister put it to me: "We've always been redistributionist. Look at tax credits."
A Downing Street adviser added: " New Labour has always been about adapting to changing circumstances. That's what we are doing now."
True. The "R" word was always banned and come to think of it, still is.
Euphemisms such as "social justice" are preferred. That and the need to pour cash into the pockets of those thought most likely to spend it.
Labour has, nonetheless, returned to a place traditionalist Labour MPs find wonderfully comfortable.

The proposal for a new top rate of tax on those earning over £150,000 a year is thought likely, by those MPs, to appeal to the British sense of fair-play.
In the meantime, they love the idea to bits. Cabinet ministers seem to laugh off the idea that Labour has returned to its rather withered, socialist roots.
Perhaps they are simply laughing with joy at the sudden influx of cash into their departmental coffers.
As for the Tories, they seem ideologically comfortable with their return to the principles of fiscal Conservatism.
But they are privately admitting to the discomfort of watching Gordon Brown's hyperactivity from the enforced idleness of opposition, while waiting for an instinctive dislike of deep debt, and a yearning for tax cuts in the distant future, to buoy up their position in the opinion polls.
As one senior member of the shadow cabinet put it: "Remember. Bill Clinton won an election on the issue of the national debt."
Maybe so. But Barack Obama won one on the issue of taxing the rich, and borrowing billions to spend refloating the economy.
This argument has a long, hard distance to run. It won't be easy for any of them. On both sides, they understand that perfectly well.



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