Len McCluskey: Labour Right must stop scheming and start fighting the Tories


Len’s speech lasts 25 minutes then a Q&A

Len McCluskey | Jeremy Corbyn: Blast From The Past Or Leader Of Tomorrow? | Oxford Union

Published on Feb 25, 2016

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In his address to the Oxford Union tonight (20:00 hours, Tuesday 9 February), McCluskey will say that last summer’s Labour leadership election saw an exhausted New Labour collide with rising public discontent about the inability of business-as-usual politics to tackle growing inequality.  Against this backdrop, an electrifying campaign based on the promise of real political change propelled Jeremy Corbyn to Labour leader.

McCluskey, the first modern day trade union leader to address the Oxford Union, speaking on the subject Jeremy Corbyn: Blast from the past or leader of tomorrow? will say:

“Some have sought to excuse their disloyalty to Corbyn by pointing to his own rebellious past on the backbenches. But who can seriously argue that his votes in parliament against the Iraq war, identity cards or university tuition fees now diminish his ability to lead the Labour party today? On all these issues he was not only right, I believe, he was giving voice to the views of most Labour supporters.

“I’m not saying that any Labour MP should have to abandon his or her own views, or cease to articulate them within the party’s democratic structures. But I am saying that this continual war of attrition is achieving nothing beyond taking the pressure off the government.

“So my clear message to the plotters is – stop the sniping, stop the scheming, get behind Jeremy Corbyn and start taking the fight to the Tories.”

The leader of the 1.4 million-strong union will remind those undermining Jeremy Corbyn that they have failed to grasp why their brand of politics was roundly rejected by the Labour electorate – and dismiss the term ‘moderate’ as  wholly inappropriate for MPs advancing further foreign wars or versions of austerity:

“These MPs, who refuse to accept the overwhelming mandate Jeremy Corbyn got from Labour’s membership, are generously described as the “moderates” in the party.  It’s an abuse of language – there is nothing “moderate” about voting to bomb Syria or agreeing more public spending cuts, anything more than it’s “extreme” to vote for peace or for an end to eye-watering austerity.

“Such labelling simply obstructs the debate we need to have which is what went wrong with New Labour, what lessons can we learn, and how can we craft an appealing electoral pitch for the reality of 2020, not 1997?

“Their analysis of Labour’s defeat in 2015 was unconvincing, their proposals stale, minimalist and uninspiring – and for the most part they have still not shaped up after Corbyn’s victory. Until they can do that, they are a plot without a programme; a cabal without a critique.

“Labour cannot simply go back to where  it left off in 1997, 2007 or 2010.  Jeremy Corbyn’s message, his authenticity, his radical challenge to the status quo is part of an international movement against business-as-usual politics.”

McCluskey will further say that that the efforts of some in the parliamentary Labour party (PLP) to present the May elections as a referendum on the leader should be thoroughly dismissed:

“This is a sensitive issue and I am not a supporter of going  back to mandatory re-selection or other changes designed to intimidate or undermine Labour MPs. But I also believe that we need to issue a clear warning to those who are advocating the PLP being used as a lever to force Jeremy Corbyn out.

“The bizarre plans outlined by Joe Haines and pollster Peter Kellner, the call to arms by Damian McBride in his Times article and the ludicrous 99 days’ notice given by Michael Dugher to the arch-Tory Mail on Sunday – all have to be dismissed with distain by any real Labour supporter.

“If the Labour MPs want something constructive to do, then start working out policies and ideas that might help attract voters back to Labour. The leadership election revealed just how much the New Labour faction had run out of political impetus.  They offered no answers to the big questions of inequality, economic management, and 21st century social justice. There were certainly no big ideas from what were dubbed the “mainstream candidates” during the last leadership election.”

Turning to the need for an alternative to austerity, McCluskey will advance that Corbyn represents the best chance the UK has to reverse Conservative policies that have rendered this the most unequal of the major western nations:

“The global political and economic problems are so stark that they can no longer be ignored. Politicians who are willing to talk frankly about them will be listened to.  Under Jeremy now, we have a clear message: one that rejects austerity economics and promises investment and growth instead.

“Fairness, tackling corporate greed, tax avoidance and tax evasion, and holding power and wealth to account – all popular proposals which are resonating on both sides of the Atlantic.

“What Jeremy Corbyn offers – like Bernie Sanders in the US – is a calling out of corporate corruption, a rejection of the austerity that has made the UK the most unequal economy in the G8 and the promise that politics and politicians can and will put things right for ordinary working people.”

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A tax that could raise billions without upsetting UK voters


Proposal: 5% annual property tax levied on all property owned by those not registered to pay tax in the UK. 

By Henry Stewart :  @happyhenry

The best taxes are those targeted at behaviours we want to deter. Apart from a small number of property companies, the purchase of UK property by overseas investors brings no benefit to any British voter. Indeed it reduces the number of homes available for people in this country and increases the prices.

I work in Aldgate in central London, where a succession of residential towers are being erected. For One Aldgate, the first to go on the market, I was told by a local estate agent that 40% of the flats were sold in one weekend in Hong Kong. Many of these flats will be left empty and only used occasionally, if at all, by the owners.

A report from Savills in 2013 (http://bit.ly/SavPropty) suggested that 70% of all newly built property in London is bought by overseas investors, with Hong Kong and China purchasers being responsible for 27%. Ironically one of the reasons for the London investment is “increasing restrictions on property speculation and multiple ownerships in many key [Chinese] cities”. There are currently no restrictions on property speculation in London.

There is an acute shortage of property in London and competition from overseas investors helps to ensure prices continue to rise. A targeted property tax, affecting only those not registered to pay tax here in the UK and thus not making any contribution, would either raise substantial revenue for the government or deter such investors altogether, thus reducing demand for property and hopefully reducing prices. Foreign-born individuals who are resident in the UK and pay taxes here would not be affected by the proposal.

There have been some moves even by the current government. In 2013 a special stamp duty rate of 15% was levied on property bought for over £2 million by a company. This April Capital Gains Tax (at 18% or 28%) was extended, for the first time, to non-UK residents that sold UK property at a profit. A Barclays report suggested this might lead to overseas investors selling in advance of the April deadline, but this does not seem to have happened. (http://bit.ly/BarcProp)

The exact level of the tax could be debated. If the main aim were to raise revenue then a rate of 1% or 2% might be best. However if the aim is to deter overseas investment in UK property, then a 5% rate (maybe introduced gradually, starting at 1%) would be preferable. If we agree that we want more UK property to be available to those who choose to live in the UK and pay taxes here, and that we want less demand increasing prices to unaffordable levels, then this new tax is surely common sense.

Contact Details Henry Stewart can be contacted on henry@happy.co.uk,

or on Twitter: @happyhenry

References and Further Reading:

Corbyn’s Investment Bank – A step towards Rational Fiscal Policy


Written before the election results were announced.

Gold wheeel

Adding Up FallacyIf you follow the Guardian then you know that among his other transgressions (like being on the verge of winning), Jeremy Corbyn is “a high-risk choice” to lead the Labour Party, because “he could crash and burn very quickly”.  We are told that this fiery end would be the consequence of economic policies that do not “add up”.The idea that economic policies should “add up” frequently reflects a fundamental confusion derivative from neoliberal ideology, that candidates (and governments) must be sure that “they get their sums right”. This, in turn, leads to allegations that the lack of sound arithmetic will lead to that great evil, inflation.The fallacy lies in an underlying belief that borrowing is a bad thing, and public sector borrowing is very nasty, indeed.  Corbyn does pose a risk but not to members of the Labour Party or the broader public (contrary to FT View).  The prevailing approach to economic policy and to the public sector are at risk as a direct result of Corbyn proposing effective policies that do not “add up” in the neoliberal sense.Sense and Nonsense on Deficits & MoneyAlmost all discussion of fiscal policy in general and for Britain accepts the neoliberal dogma that the public sector budget should be balanced (or run a surplus for the ultra-neoliberals).  Sometimes explicit and always implicit is the quasi-religious belief that (expenditure = revenue) should over-ride all other fiscal priorities.

More pragmatic neoliberals accept that during periods of economic downturn no government can avoid fiscal deficits, often described pejoratively as “revenue shortfalls” or for the true believers, fiscal “black holes”.  Those neoliberals tolerant of recession deficits stress both their temporary nature and the necessity to compensate for them by surpluses when the economy recovers.

This fiscal canon that “deficits are a problem” suffers for many analytical and even logical inconsistencies.  First, it presumes an automatic process that ensures market economies will by their nature tend to full capacity, as if there exists a great free market magnet at maximum capacity, irresistibly pulling the system out of recession and into recovery.  By this ideology fiscal policy should be neutral and deficits represent a problem, signalling non-neutrality.

Integral to this fiscal neutrality ideology is the conviction that deficits invariably generate inflationary pressure.  This bit of fiscal nonsense achieves its justification through misunderstanding (or mis-representing) the nature of money.  The neoliberals tell us that deficits involve “printing money”, a malign practice specific to governments and central banks.

Those who believe that only governments “print money” need a crash course in basic economics.  What governments print is a tiny traction of the “money supply”, which consists overwhelmingly of bank credit.  Though governments and central banks can and do generate credit, private financial institutions generate far more in Britain and other market economies.

To put it simply, “banks create money”.  The balanced budget ideologues would agree, but believe they have the killer response – banks create money on the basis of a “monetary base” that governments control.  This represents more nonsense on the same neoliberal theme.  Over thirty years ago, most economists rejected the effectiveness of inflation management by “targeting” the monetary base.  In the late 1980s, almost all central banks, including those in the UK and the US, abandoned the policy in favour of manipulating the central bank lending rate (“interest rate”).

This relates directly to the attacks on Corbyn’s economic policies.  Fiscal deficits in themselves are not a problem (stressing the invariant need to eliminate them is ideology).  Specifying some general rule on when they should be in balance, such as “over the cycle” or “at full employment” has no theoretical justification (the same ideology in superficially more sophisticated form, see my Pieria article 17 August).  And, governments do not have monopoly on money creation or the generation of inflationary pressures.

Active Fiscal Policy

I presume that all four candidates for the Labour leadership are committed to maintaining the UK economy near full employment.  If so, for consistency each should commit to an active fiscal policy.  And active fiscal policy has two components, the use of current expenditure to reduce the short term instability of the economy and the capital budget to increase the capacity for growth.

The use of current expenditure to stabilize the UK economy near full capacity has an obvious justification.  Almost all items in the capital budget involve projects with implementation over several budget years.  Assume that the government starts construction of a new rail line that has an expenditure period of four years.  Then, two years later the economy moves so close to full capacity that inflationary pressures result.

No rational government would stop the rail project half-finished.  Therefore, the appropriate fiscal instrument to temper the inflationary pressure would be reductions in current expenditure or an increase in taxation.  In effect the current budget becomes the countercyclical mechanism and the capital budget an instrument to increase medium and long term economic capacity.

To state the rule simply, use the current budget to keep us at maximum capacity by management of aggregate demand and the capital budget to increase that capacity.  The latter can indirectly to manage demand by the mode of its financing, through bond sales to the Bank of England or to private buyers.  The former increases the monetary base and the latter does not.

National Investment Bank

The national investment bank proposed by Jeremy Corbyn should be placed in the context of this budgetary division of function.  In a recent Guardian article Robert Skidelsky explained the need for such an institution, which he has long advocated.

I would link the functional division of the budget to the points made by Lord Skidelsky.  When faced with fiscal deficits governments in many countries choose public investment as the first candidate for cuts, motivated by the belief that these could be less politically dangerous than cuts in health or education services.  Chancellor George Osborne has applied this approach with zeal (Office of National Statistics, Quarterly Survey of Capital Expenditure).

A national investment bank would serve as an effective way to avoid politically motivated cuts in public investment.  Parliament would formally separate the current and capital budgets.  The former would be proposed and approved an annual basis much like present practice.

The government would design a capital budget for a longer period (for example, three years), with annual adjustments as earlier projects cess end and new ones begin.  Implementation of this budget would be the responsibility of the national investment bank.  This arrangement might be seen as similar in practice to the “independence” of the Bank of England.  The selection and design of projects would be a political decision, with their implementation through a designed non-political institution.

Redefining the Budget

This reform of the budgetary process would have several advantages: 1) it would formally separate current and capital budgets and assign each its appropriate role; 2) it would reduce (though never eliminate) the diversion of long term investments into short term political opportunism; and 3) potentially make for a more rational selection, design and implementation of public investment.

Such a reform goes beyond what is proposed by Jeremy Corbyn, but would correct a longstanding flaw in the budgeting system, the Treasury practice of making little if no distinction between borrowing for current expenditure and borrowing for investment.  If nothing else, a formalization of this distinction would make a great contribution to rational discussion of fiscal policy and especially deficits by over-riding the fiscal ideology of “getting the sums right”.

A fairer society means breaking the big business stranglehold on politics


Labour’s challenge to fight inequalities and rebuild democracy rests on addressing Britain’s ‘finance curse’

If the next Labour leader wants a fairer society, they must break the big business stranglehold on politics.

by Nick Dearden Re-posted from openDemocracy 10.09.15

In just a few weeks, the Labour leadership contest has substantially shifted the political debate in Britain, challenging the policy of austerity, raising inequality as the defining issue of our times, highlighting the erosion of democracy.

Fighting inequality and rebuilding democracy depend on breaking the stranglehold of big business and finance on politics in this country.  And this means reassessing Britain’s role in the world, because the prestige of this country is based upon London as a financial hub and a corporate HQ.

We live in an offshore centre for corporate interests, and this has not only fuelled poverty and inequality around the world, it has done so at home too.  Britain’s prestige has not translated into benefits for ordinary citizens here.  Despite this, political leaders have for decades failed to tackle the vested interests that have captured this country.

If they want to really change Britain, top of the list for the next Labour leader is the dependence of our economy on finance.  We have a ‘finance curse’, in the same way oil-rich nations can develop a ‘resource curse’.  Far from harnessing resources to build a fairer society, finance’s dominance has undercut other sectors of our economy.  Today, governments of every shade jump to the tune of finance, as we experiment in ever greater forms of deregulation, allowing the banks to transform everything we value into a derivative to be gambled on.

Britain has been captured by financial interests, which use this island to avoid taxes globally, to unsustainably inflate debt bubbles, and to speculate on the air we breathe.  There is no path to rebuilding democracy which doesn’t involve an almighty battle to ‘tame the City’ – with robust mechanisms to make companies pay their taxes internationally, levy taxes on speculation, restrict stock market listings, cancel unjust debts and reform the Corporation of London.

But finance is only the most obvious case of corporate capture in Britain.  In fact big business has a stranglehold on our politics.  On the one hand our government is aggressively pushing forward a ‘new generation’ of trade agreements like the EU-US investment deal known as TTIP.  TTIP threatens to water down social and environmental standards across the board, seeing such regulations as little more than ‘trade obstacles’.  TTIP will even give multinational corporations a special ‘right’ to sue our government for passing laws which threaten their profits.

On the other hand the British government is obstructing attempts by Latin American countries to hold multinational companies accountable for abusing real human rights, meaning that people have no access to effective legal redress for harm done to them by British-based corporations.  So far is the British state in the pocket of corporate interests that even our aid budget is used to privatise and deregulate economies in Africa, Asia and Latin America.  Aid money is thrown at free market think tanks to privatise energy supplies; agribusiness conglomerates get a helping hand to control seed markets; education multinationals find new markets in some of the poorest countries on the planet.

The rule of multinational corporations, which places a higher value on profit than human rights, is a key factor driving inequality. Combatting inequality means the next Labour leader needs to be prepared to use the British veto in Europe to halt TTIP and its sister deals, limit the influence of multinational corporations over the UK political process, establish a commission to tackle corporate abuse of workers’ rights and environmental sustainability, and overhaul the aid budget as a form of redistributive taxation which can help countries across the world develop decent public services.

These proposals form part of a manifesto of policies which we launch today, the first step in beginning to rebuild our democracy and properly fight inequality.  It also includes reducing carbon emissions and giving substantial reparations to help developing countries build democratically-controlled energy systems in low carbon economies.  And supporting small scale, organic agriculture, rather than industrial farming.

If we really want a fairer society, there is no alternative to taking on vested interests.  We can’t just decide to exercise a ‘nicer’ form of global power, because our power is built on a base that necessarily erodes democracy.  A powerful financial sector, unfair trade practices, ideologically-driven privatisation, and many other policies, which we inflict on the world, also serve to make our own country more unequal.  So these policies must be changed not just for the millions of people around the world affected, but for the British people too.

True, it may make our country less ‘important’ at the top table, but that is a price well worth paying for a fairer world, and a happier society

This article is cross posted from Global Justice Now and appears here.

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