In October 2008, as that year's financial crisis began to unfold, the Observer's political editor, Andrew Rawnsley, looked back at what Gordon Brown had said in the years prime to the crisis erupting.
As he noted in an article dated 19 October 2008, Gordon Brown had in 2005, during his Mansion House speech, paid homage to the assembled ranks of bankers, noting:
'your unique innovative skills, your courage and steadfastness'.
He also thanked them for:
'the outstanding, the invaluable contribution you make to the prosperity of Britain'.
As we all now know, Brown fell for the City, and the consequence was lax regulation, poor oversight, and a total failure to understand where real value was added within the UK economy. It all ended in tears. Brown has never recovered from the failure of judgement that he revealed during those years running up to that crisis. It is entirely reasonable to argue that the economy of our society has not recovered either.
And just in case you think 2005 was the year of maximum hype and then Brown read the runes, Rawnsley added this:
Brown surpassed himself when he returned in 2007 to deliver his final Mansion House speech as Chancellor before he moved into Number 10. 'A new world order has been created,' he proclaimed. Britain was 'a new world leader' thanks to 'your efforts, ingenuity and creativity'. He congratulated himself for 'resisting pressure' to toughen up regulation of their activities. Everyone needed to follow the City's 'great example', emulate this 'high value-added, talent-driven industry'. 'Britain needs more of the vigour, ingenuity and aspiration that you already demonstrate.' Thanks to their 'remarkable achievements', we had the huge privilege to live in 'an era that history will record as the beginning of a new Golden Age'.
By the time Gordon Brown was uttering this drivel, the Green New Deal group had been formed and was meeting to discuss a plan on how the financial crisis that we were then anticipating could be managed.
Why note this? There is one very obvious reason, which is that in the last week, Rachael Reeves, when speaking to the same Mansion House audience, described what they do as the 'jewel in the crown' of the British economy. She then went on to explain why she felt it was time to relax regulations to provide the City with the opportunity to grow the economy as they would wish.
Reeves should have learned from Brown. Firstly, such comments always come before a crash.
Secondly, the City does not add value to the UK: its activities may well, in fact, be the best explanation for the UK's economic underperformance precisely because it sucks value out of everything that would otherwise contribute to the value of life in this country.
Third, it is very likely that she will come to regret her words. All Chancellors who last long enough to be held accountable for what they do (and most do not, of which fact she should be aware) come to regret the words that they have previously uttered precisely because they frequently reveal their total lack of judgement when it comes to matters related to the City of London. Reeves has already fallen into that trap and cannot now get out of it.
All we have to do now is wait for the crash. It will happen.
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The government have no ideas at all – cutting benefits for pensioners and those on working age benefits, making business less able to pay wages, shafting farmers. At the same time supporting the mega wealthy. I heard Keir Starmer droning on about black holes yesterday. If only he realised how ridiculous he sounds he would as has been suggested about Wes Streeting- ‘wind his neck in’.
It will end in tears but we will all suffer for it.
I agree except on farmers – they are not being shafted
Farmers are being shafted. They are, honestly. They must be. James Dyson said so. As an indusrialist rather than a farmer he would have no axe to grind, would he? Oh …..
🙂
Well we will disagree on that. I think if the govt were serious they would limit the amount of land that people could own – there is no reason for say James Dyson to own 36k acres and also limit who can buy farmland – cut out the investors and people in the city.
I agree on that – maybe the earlier comment created crossed wires.
On which point, Richard, see Will Hutton’s piece on this in today’s Observer (soon to be the ‘Sunday Guardian’). I don’t often agree with Will Hutton these days – or not on every point, at least – but this article is bang on.
https://www.theguardian.com/commentisfree/2024/nov/17/farmers-have-hoarded-land-for-too-long-inheritance-tax-will-bring-new-life-to-rural-britain
I agree.
But my namesake says
‘My family and I are farmers, not landowners. We have invested £120m, in addition to the cost of land, bringing long-term capital, technology and employment into British farming. Dyson Farming produced 70,000 tonnes of cereals and 16,000 tonnes of potatoes in 2022, plus out-of-season strawberries which avoid the food miles associated with imported alternatives. Our anaerobic digesters generate electricity for 10,000 homes, and the farms sequester more carbon than they emit.’
!!!!! What more could one possibly add?
No economy operates in isolation. Outside influences can and do have serious consequences.
What does that mean?
The 2008 crash was born in the USA and affected the world’s institutions, us and Iceland amongst the many.
That is a naive (in the technical sense) explanation.
There is a reason why we suffered so badly once it began. Brown was a major factor in that.
I read of Reeves’s remarks in her Mansion House speech about regulation of the City with incredulity. The various Parliamentary hearings and reports following the 2008-9 crash made it plain how weak/ineffectual regulation of the banks and the City had been in the 2000s. Across many sectors during that time, New Labour figures made it plain, to regulators and quasi-regulators, that they were not to be energetic in enforcing regulatory requirements. It had a chilling effect – even before Thatcherism ramped up after 2010.
Starmer is reputed to be ruthless with dud performers. He needs to understand that Reeves appears incapable of mediating relations between the private sector the Treasury, the State, and society at large, in the national interest, and act accordingly.
Farmers , I know a farmer who has 350 acres, has over 2 million in euipment, hasnt paid tax in 6 years due to (accounting. ) Boasts of a massive pension pot.Thats why this Gov has closed the Rich Farmer loop whole, and may they close many more. PS im a higher rate tax payer.
It’s good that we dig up the past because otherwise we forget it, and the clash of ideas is based on history – it has to be – ‘memory against forgetting’ and all that – indeed.
Except here, it seems that inadequate so-called ‘Left’ politicians are claiming to offer something different when in fact they are not. Brown and Reeves are basically giving the City the green light just to circulate money for the sake of circulating money without really thinking about real outputs that could improve people’s lives. They are supporting and even encouraging a self-serving eco-system whose ‘output’ will make their government reporting figures look good but not really help their voters.
For me this means that politics has effectively stopped working. Politics no longer bridges the divide between power and the powerless. It has chosen a side and pulled up the bridge behind it, only to be extended to us – the demos – at the next to useless election which just like the Welby resignation is just a ceremony – pure theatre, pure spectacle – and means and changes nothing except insulating those from accountability in the way of actually doing some hard work to do things properly for once.
Richard, the problem is that these capitalist boom bust business cycles seem to be ingrained into society, without any political party who has a chance of getting into power willing to change things. So one can only speculate, the people who run society (e.g., the establishment) have no intention of changing things. Take for example the irresponsible economic policies that the tories or labour constantly enact or the Bank of England with their interest policies.
These people running society are clearly not that stupid, they’re in on the act. The people at the top are all land/property owners and other asset owners, so will manipulate the market to their gains. Think of housing, we constantly get told the lie that high house pricing is due to supply and demand issues – there are hundreds of thousands properties empty in the UK, so this is clearly not the main issue. Cheap money (I.e., low interest rates, money printing, borrowing absurd amounts that are unaffordable, government subsidies) is what really drives these property booms. And then now the establishment know we have likely reached the top of the bubble and now want to crash the market – hence the recessionary political choices being made and high interest rates by the BoE. The people making these changes won’t lose money though, they will swoop in for the bargain assets when we are in a depression. So who gets hurts by this? The working class and poor people of society. It’s just a Ponzi scheme waiting to burst.
Now reducing regulations on bankers is just one last attempt to squeeze some extra ‘growth’/asset boom before the inevitable crash. Any sensible asset holder would be cashing out at this point.
What’s ironic about these boom busts though and there capitalist ‘free market’ proponents is that socialism always seems to be available for the bankers when they need bailing out after they have lost all their asset value in the ‘free market’. It’s why I don’t really believe we live in a true democracy in the west.
I don’t watch GB News, but this clip featured trade unionist Paul Embery promoting Modern Money Theory while criticising Rachel Reeves.
https://x.com/PaulEmbery/status/1857918506773135489
Hmmm……………interesting, so Embury has read Kelton?
I reviewed Embury’s book ‘Despised’ (2021) and felt moved to review it on Amazon – I was less than impressed. It had blue Labour written all over it.
Well, people change maybe and in the future we may not have much choice in our allies?
That was my thought at the time
I like the fact that he didn’t need to call his proposals ‘modern monetary theory’ or any other theory, he just used logical arguments.
I ‘m afraid I must disagree with you, Richard , on the matter of a blanket Inheritance Tax on all agricultural ‘estates’ of over £1 million. I agree a million pounds sounds a lot, but when you think that a small farm, not just in Wales, but also in large swathes of Northern England and the South West, has to have at least that level of assets-land, stock and machinery just to be viable, then this tax would be regarded as an extra blow to agricultural productivity, and thence food security.
There is a reason that for many years there has been a separate branch of Economics called Agricultural Economics, unfortunately not studied much since the halcyon days of Wye College. (Sorry, I had to put that in , having studied there many years ago). There is also a subset of that discipline, called Peasant Economics where the farmers are ‘ not assumed to be simply small profit-maximising farmers ‘, but also have other motivations/ideals.
Obviously, in your neck of the woods you don’t meet many of that sort-but I think you would be surprised how many farmers across the country-England, Wales, Scotland and Northern Ireland do not regard their land/ farm just as a cash cows, to be milked for all they are worth.
Many of the problems that the urban elite regard as being the fault of farmers is that they -the farmers, have been driven by the directives of first the CAP, and now by the increasing influence of the ‘green’ lobby.
You worry about my ‘ wealth’ as the owner of a bit of scrub land whilst ignoring the methods in which the truly wealthy in this country squirrel everything away in trusts and tax havens!
Ann
Your answer is, I presume, meant to be insulting. I doubt anyone has done more than me via my campaigning to take on the wealthy and the abuse of tax havens – and my work has resulted in real change, so I am rightly annoyed by your claim.
Your comments about farmers in East Anglia are just rude, and unnecessary.
But most of all I note your non-existent economic arguments despite your claim to have studied that subject. I have just drafted a 1,700 word post on this subject for the morning and then read your comment. I suggest you read mine tomorrow. If you don’t rationally engage with its reasoned argument with a similarly reasoned response I will reasonably assume you just want to be rude.
Richard
No, Richard, I have no wish to be insulting, nor rude. I just want to put another perspective on the situation which I am sure is going to arise after the protests next Tuesday. There is a feeling amongst many people -not just farmers- that the Government is keen on going after the ‘chubby’ cats whilst the really ‘fat ‘ones swan away with their trusts to the tax havens,- despite your efforts in the past they do still exist, unfortunately. I look forward to reading your post tomorrow.
That was not an apology
It was an attempt at a justification.
And I very much doubt if there is much sympathy for farmers.
You say…”Secondly, the City does not add value to the UK: its activities may well, in fact, be the best explanation for the UK’s economic underperformance precisely because it sucks value out of everything that would otherwise contribute to the value of life in this country.”
Would help if there were the occasional shred of evidence for it. Flogging legal, accounting and banking services to foreigners produces about 4% or so of GDP. Seems value to me.
I referred to the City i.e. financial speculation
I made clear nit all financial services are the City
Dear old Gordooom Brooon, doncha love ‘im, when it came to selling Britain’s Gold ?a gullible nitwit on the subject of the NHS PFI farce, a man who abolished boom & bust – and then went bust to the tune of £786 billion in bank bailouts
He got a lot wrong
But selling gold was utterly inconsequential
Please can we stick to what matters?
I remember that at the time, Kenneth Clark said he would have done the same.
I look forward to tomorrow’s post on agriculture. I trained/worked in agriculture between 1971- 1991, visiting huge estates on the Wiltshire downs, commoners in the New Forest, and family mixed farms on the Hamphire Wiltshire border (usually milking about 100 cows non intensively), and similar on the Dorset/Wiltshire border. We also had clients who were Schedule 1,2 & 3 tenants of the MOD on Salisbury Plain, which could be exciting on live firing days – a truly unique type of farming. During my training I visited small farmers on marginal hill land both in Northumberland and Heriot country in the Yorkshire Dales. An incredible variety in people, farms, tenure, geography, climate and economics, ranging from the near feudal in the New Forest, gypsy smallholdings (who always paid cash on the nail!) through family farms running on the parent/child model (no longer viable fulltime without external income), a (declining) number of council tenanted farms, and wealthy landed gentry with titles and cornfields and grazing from horizon to horizon. The farms I know LEAST about are the huge arable estates in E Anglia.
Enormous variety, but that was over 30 years ago, in a world of EU subsidy and milk quotas. I won’t opine on how it is today because I lack the current data on farm size, tenure, land values and subsidy regimes.
My suspicions are that the big landowners lobby well, and live well. So when I read farm lobby stuff I want to know about farm size, farm income, tenure, how many are employed, what the turnover is, what the land is worth, and are the beneficiaries of eventual inheritance currently working on the farm full time or do they just have their eye on a saleable asset?
My main anxiety in agriculture is that government seems not to care about food security OR sustainable countryside management, yet Brexit, the climate emergency, rural flood management, the war in Ukraine, and massive changes in who owns agricultural land in the USA (and here) along with immigration restrictions affecting the seasonal labour force, supermarket dominance (they are a powerful influence on food prices and policies) ALL these have an effect on food production and food security in the UK.
So, if tomorrow’s article is based on good data, this out of date friend of REAL farmers, is looking forward to it.
My pessimistic expectation about food, is that we will be seeing prices rise, choice decline (perhaps less choice is a good thing, how many varieties of “mature cheddar” do we need on the supermarket shelf?), along with declining quality and safety.
Whatever happens to inheritance tax, GOV need to get their finger out on agriculture, but this lot seem indistinguishable from their predecessors. They don’t seem to have a clue.
I think you are right to highlight the broader issue
I will be tomorrow
The plight of the small farm is well known. After WW2 agri business took off in a big waÿ, Traditional, labour hungry methods were replaced by industrial methods and the social and environmental impacts on the rural economy were huge. The Common Agricultural Policy, under the influence of big, highly mechanised farmers compounded the problems using lobbying methods that rewarded the owners of 1,000 + acre farms to the effect that they took 90% of the agricultural subsidies. The smaller family farms scramble for the rest.
The supermarket conglomerates, operate as monopoly buyers pushing prices the farmer gets ever lower.
When there is any government changes in policy the farm lobby bosses in the National Farmers Union hide the vast wealth they hold and highlight the plight of the struggling smaller farmers, many of whom barely make a living.
The true financial problems faced by the farming community should be measured in this context.
There is a blog on this issue coming soon.
“Secondly, the City does not add value to the UK: its activities may well, in fact, be the best explanation for the UK’s economic underperformance”……….for the past 200 years. It has only ever been fixated on trade – not on manufacture (= investment in the UK).
There were one or two brief moments when UK mfu was funded (e.g. 1830 – 1860) but otherwise, the city was driven by England/UK’s colonial “experiment” – and when that dried up post WW2 – it moved from trade (in goods) into what amouns to money speculation.
Its still difficult to understand why Brown and Reeves – would go out on such an oratorical limb – even addressing the great and good of the City. They must know, that saying the City is the ‘jewel in the crown’, ‘unique skills/ creativity’ etc, when it’s all geared to such ridiculars speculative ends, is bound to discredit the speech maker in the end.
Good review in LRB by John Lanchester about the uselessnes of the City
https://www.lrb.co.uk/the-paper/v46/n17/john-lanchester/for-every-winner-a-loser
https://www.theguardian.com/business/2024/sep/23/concerns-lack-of-city-of-london-oversight-hurting-efforts-to-halt-dirty-money
Controversy about the efficacy of the the financial sector has been around for a very long time. I remember my grandad ,a miner, talking about “the bankers ramp” when I was a little boy. I must confess I never really understood what he was talking about . I just gathered it was something that harmed the pre war Labour Government. I know Churchill made a famous comment that “bankers should be on tap, not on top.” Perhaps that’s why Attlee nationalised the Bank of England as soon as Labour took power in 1945. Would it be a good idea do the same?
You mean take back control of it?