After 12 years of New Labour’s Third Way and the start of the global banking crisis, Gordon Brown came to his senses and realised that the policy of light-touch regulation of the City had been disastrous. In April 2009, at the end of the G20 summit in London, he said:
The old Washington consensus is over. Today we have reached a new consensus that we take global action together to deal with the problems we face, that we will do what is necessary to restore growth and jobs, that we will take essential action to rebuild confidence and trust in our financial system and to prevent a crisis such as this ever happening again.
There are no quick fixes but with the six pledges we make today we can shorten the recession and we can save jobs. First of all for the first time we have come together to set principles to reform the global banking system. This is a comprehensive programme of measures that includes for the first time bringing the shadow banking system, including hedge funds, within the global regulatory net.
We have agreed that international accounting standards will have to be set. We will regulate credit rating agencies in order to remove their conflicts of interest.
We have agreed that there will be an end to tax havens that do not transfer information on request. The banking secrecy of the past must come to an end. The Organization for Economic Cooperation and Development are this afternoon publishing a list of tax havens that are non-compliant and where action must immediately be taken.
And we have agreed tough standards and sanctions for use against those who don’t come into line in the future.
We will create a new Financial Stability Board to ensure cooperation across frontiers and to spot risks to the economy and together with the International Monetary Fund provide the early warning mechanism that this new global economy needs.
We will complete the implementation of international colleges of supervisors of financial institutions and we will implement new rules on pay and bonuses at a global level that reflect actual performance with no more rewards for failure. We want to encourage corporate responsibility.
Unfortunately, it was 12 years too late for the UK. We are now faced with a Tory/LD government who have no intention of implementing any form of banking regulation before 2019. The shadow banking sector and hedge funds still flourish. International accounting is dominated by the same companies that signed off the failed banks as ‘safe’. Credit Rating agencies remain unregulated, with their conflicts of interests intact. There is no transfer of information from tax havens, and banking secrecy persists.
Needless to say “We will implement new rules on pay and bonuses at a global level that reflect actual performance with no more rewards for failure.” is a complete pipe-dream. And at a point when we are seeing the corporate takeover of the NHS, welfare, public services and doubtless education in time “We want to encourage corporate responsibility.” is a tragic reminder of what a democratic socialist LP could have done in government.
Gordon Brown’s subsequent two years as PM were characterised by media assassination, undermining from within the LP, an appalling GE campaign and a victory to a more extreme asset-stripping government than Margaret Thatcher’s. Ed Miliband is also subject to media assassination and undermining from within the LP. If the UK is to be rid of this ‘wrecking’ government in 2015, or before, the left needs to hang together and Ed Miliband must come out fighting as he has (rather late in the day) on the NHS. We need some conviction politics from the LP around which the broad left can unite to defeat the corporate policies of the right. The alternative is to continue with the erosion of wages/pensions; mass unemployment (particularly of the 17-24 year olds); destruction of any vestiges of the welfare state; and the increasing political power of the transnational corporations. Unfortunately, the old Washington consensus is alive and kicking under the Tory/LD coalition… as we shall see in George Osborne’s budget.