Remarks to Inter-Parliamentary Conference for the Common Foreign and Security Policy, Prague, 5 September 2022
Chairman, thanks so much for the chance to say a word from the House of Commons but also as chair of the International Parliamentary Network on the World Bank and the International Monetary Fund.
The hunger for peace has always driven Europe forward. And this moment can be no different. The reconstruction of the Ukraine is not simply a duty. It is a chance, a chance for us to rebuild a prosperous, clean market economy that is good for the people of the Ukraine, but is also a bulwark against the Kleptosphere that is taking shape from Kaliningrad through to Kamchatka.
But this effort will not going to be free. It is going to cost upwards of a trillion dollars. That’s why it’s not just our own resources we need – we need to start using the resources of the Bretton Woods institutions that we created in 1944 to help rebuild the world after World War Two.
Each of us needs to be asking what can we do with the $650 billion and special drawing rights that we each shared-out over the last year. This is a resource that we could mobilise now.
So as chair of the network, I invite you to join. But more important, I urge you to act – act within your own countries
As we say goodbye to Mikhail Gorbachev who was buried last week, we would do well to remember his words in Strasburg in 1989. It was there he said, we have a chance to build a common European home, rooted in the rule of law as a great gift to the world as we go forward.
Now, now is the time not to flinch, not to doubt but to act and make sure it is our ideals that prevail.
Remarks to OECD Parliamentary Network, Saeima of the Republic of Latvia
Thanks you much, Mr. Chairman for that kind introduction.
It’s great honour and privilege to be here on the International Day of the Parliamentarian here in this magnificent chamber.
It is today such a powerful symbol of your democracy, here beneath your great message emblazoned on the wall above us, that the sovereignty of this country lies well and truly with the people.
I just want to confine my remarks to a few today.
The OECD Parliamentarians Network at the Saeima in Riga
It is impossible for us to have this discussion in this chamber and in this country just 1000 miles from the conflict in the Ukraine without reflecting on the weaponization by our enemies of everything from food, to energy, to data to information.
That’s why I congratulate you on bringing this debate forward today because it is top of the agenda for democrats around the world.
What well we have seen in recent months is a lesson in how bad actors will seek to use data, information, and cyber skills for bad purposes.
When we look at bad actors like Russia, we see not just a conflict but a case study in how people will fight future wars on forward five different fronts.
Yes, of course, there will be the kinetic front, but there will also be the cyber front. There will be economic warfare. There will be political warfare, and there will be information warfare.
And as any one of those five fronts grows weak, then bad people will just step up their work on one of the other fronts.
That’s why the information battlespace is at the core of the debate.
Now, here in the Baltics, you have been expert for some years because you have been on the front line for so many years in combating disinformation.
We know that countries like Russia cannot generate positive narratives of their own.
So they will always seek to divide and rule. They will always seek to use proactive information conflicts, to try and exploit our great strength, which is our diversity and our discussion and turn that into a weakness.
So they will always find two sides of an argument and seek to fuel the rage on both sides in order to generate division and conflict in our countries.
There will be others that now seek to take this kind of playbook to a new level.
There will be countries that seek to develop AI powered systems. To build mass surveillance systems globally, and to use in the future as a weapon of war.
That’s why we now all have to be on our guard against the exfiltration of technology and data around the world.
Because we know bad actors are building the giant datasets needed to train the algorithms, which will be tools of warfare in the future.
So we cannot be innocents abroad in a world that is an innocent.
Liam Byrne at the Saeima in Riga
In the UK Parliament, there a five key issues in our debates.
1. The first is about investment. We do not invest as much as the bad players in strategic communication.
Yesterday in Madrid, the NATO conference we agreed for NATO members a new concept of operations that puts far far more investment into strategic communications that powerfully sets out the case for good. But this is still too little and too late.
2. Second, we have to be far smarter about the way that we use intelligence and analysis.
Both the United States and the United Kingdom took a very different approach that the way that we share proactively intelligence about for example, Russia’s bad intentions, putting it into the public domain, so that people are able to see and judge for themselves, what countries like Russia are up to.
But you know, the truth is that we still have bad frameworks for sharing intelligence between ourselves and coming to wise decisions about what needs to go into the public domain. What is the information and intelligence that we should be sharing more proactively with the people that we represent?
3. The third area is obviously education. I represent one of the most diverse communities in my country. When I was researching ISIS driven extremism five or six years ago, I was horrified by what I was seeing the kind of propaganda videos that look like they had the production values of a pop video or a video game like Call of Duty.
These were very powerful. Recruiting sergeants, for young people.
That’s why our classrooms are now the frontline of our defence against misinformation.
So we need to share ideas for how we teach our children to be good interrogators of what they see is part of how we train our young people to be good citizens and democrats for the future.
4. Fourth is obviously then in the field of regulation.
All of us have been having this debate in our different Parliament’s for a long time now, but we have still got to get better at how we regulate content online without jeopardising that fundamental right of free speech.
We’ve got to be all of us far smarter about how we regulate the money that comes into our politics and is used to promote bad and divisive messages.
5. And then the final point, Chairman, is really to encourage meetings and conferences and discussions like this because what all of us now need are not just rules, but tools.
We need to enshrine good ideas like a digital Bill of Rights. When I think about the charters of rights we’ve had in our country like the Magna Carta, I notice it was very good about how to police fish weirs. It didn’t say much about data privacy.
We need to keep up the debate about how we enshrine a digital Bill of Rights for our citizens. And part and parcel of that has got to be how we regulate and protect in the field of artificial intelligence. We cannot have old injustice being translated into new injustice through of algorithms, but equally we cannot hand those who wishes ill the tools to do us that harm by letting them simply steal our data and technology.
So this has been a really welcome opportunity for us to get together at a time to talk about some of the ideas and some of the debates that we all share. I’m really looking forward to the discussion ahead.
Boris Johnson’s law breaking is about to cost us a fortune
Liam Byrne, Tom Tugendhat and Vice President Sefcovic at the Berlaymont
As bunkers go, it couldn’t be nicer. The British ambassador’s Brussels’ home is a large and elegant terraced townhouse on the Rue Ducale, just across the street from the Parc Royal, once the hunting ground of the Dukes of Brabant. But unless something changes fast, the neoclassical mansion with its staterooms hung with exquisite tapestries is about become the command centre for Britain’s first trade war with Europe since the Cod Wars of 1975.
Boris Johnson’s decision to upend international law and ram through Parliament new laws to override the very Brexit deal he sought, agreed and sold to the British people has nuked what was left of his reputation in Brussels. ‘How can we believe such a man?’ despairs one very senior EU diplomat. ‘What’s the point of negotiating with someone who’s promise simply isn’t worth the paper it’s written on?’.
The Northern Ireland Protocol Bill, which had its second reading in a rowdy House of Commons this week, has its roots in the deep divides of Northern Ireland and the historic Good Friday Agreement secured by Tony Blair and Bertie Ahern to end one of the longest civil conflicts in Europe.
Amongst its core commitments was the pledge never to restore a ‘hard border’ of checkpoints along the hundreds of miles of winding roads and emerald green fields that separate Northern Ireland and Ireland. But, Brexit left a problem: how to secure an essentially invisible customs check between the two countries? It wasn’t and isn’t possible. And so the answer in the Brexit deal was to basically move the checks from north-south between Ireland and Northern Ireland – and put them east-west, through the Irish sea.
But that created serious concern for Northern Ireland’s Unionist community which couldn’t countenence division from mainland Great Britain. And after May’s election, the DUP – which holds 25 seats – are simply refusing to participate in the formation of a northern Irish government until the Protocol is fundamentally reworked. And that in turn means a new Northern Irish government cannot form because the Good Friday Agreement requires participation of both Protestant and Catholic communities in any administration.
Of course, Mr Johnson as a fundamentally dishonest man was fundamentally dishonest about what the Brexit deal meant for Northern Ireland. And the DUP, like so many of the people in Boris Johnson’s life, was foolish enough to believe him. But now the chickens have come home to roost. The UK needs power sharing to work in Northern Ireland; we can’t countenence a return to violence and so the customs checks must change to end the DUP’s strike on serving in power.
But rather than persist in the sort of patient, creative diplomacy that got the Good Friday Agreement secured in the first place, Mr Johnson has chosen drama before duty and proposed a law that simply overrides the existing international treaty with Europe. If he persists, there’s going to be a trade war.
This is a conflict Britain can ill afford. With the worst forecast growth of any G7 country next year and sky high inflation, the last thing we need is battle with our nearest neighbours who happen to buy more of our exports than anyone else. The UK business community in Brussels is in utter despair. The costs to them are not only lost sales but more importantly the end of progress on negotiating regulations under the rather optimistically entitled Trade and Cooperation Agreement, which considerably adds to business risk. Worse may be still to come.
The EU has already prepared a secret set of highly targeted sanctions designed to hurt constituencies on which Tory support now rests – a little like the sanctions on Harley Davidson designed to punish Trump.
Now there are some who point to the current record level of UK exports to the EU with an airy wave and declare ‘that all is in fact well’. But today’s UK exports to Europe are flattered by huge re-exports of fuel as Europe weans itself off Russian oil and gas. It’s a short term sugar rush. In fact, underlying trade is at best flat at a time when Britain’s trade deficit with the world continues to get worse.
In all wars, both sides miscalculate. In Brussels, there’s far too much wishful thinking that the NI Protocol Bill will get stuck in the Commons or that Boris Johnson might soon fall (and so why make concessions now?) or that an election might be soon. Meanwhile, in the House of Commons there is very little understanding of just far Britain’s reputation has now collapsed. And the tragedy of it all is that the two sides are not a million miles apart.
The EU’S Vice President Sefcovic, who I met in the Commission’s vast Berlaymont headquarters, is not seeking some dogmatic Procrustean imposition of EU red tape. He’s says he’s willing to be creative and believes there is still time to move in a better direction.
From what I heard over two days, it seemed to me
1. On the core issue of customs there is a ‘landing zone’ for a deal around minimising the data that’s collected and shared but which gives the EU fast enough access to data which they can put through their risk management tools to identify trucks or crates they’d like British customs officials to pull over for inspection.
2. The EU’s idea for an Express Lane (for goods only sold in Northern Ireland) is pretty close to the Government’s Green Lane – which the Government’s own policy paper says would only be open to ‘trusted traders’. The EU talks the language of’bare minimum’ checks which might mean ‘a couple of trucks a day’ being pulled out for the full treatment.
3. Equally, on agriculture it seems pretty straightforward to agree a biosecurity assurance framework which allows ‘trusted traders’ to move back and forth albeit with full checks for live animals. As it happens the UK has long had lots of checks like this anyway from the days of foot and mouth disease.
4. And on state aid, VAT and court rulings, the negotiators closest to the coal face are confident that with trust and good will on both sides, a deal could be done.
But that’s that’s the problem.
Between them, David Frost, Liz Truss and Boris Johnson have destroyed what trust there was. Nor has Johnson made it a personal mission to put in the hard yards and kinetic energy needed to get a deal. Liz Truss is regarded as ruthlessly manufacturing a row to bolster her own leadership credentials. Despite the hardworking UK team, there is no heavyweight UK ‘sherpa’ like Kim Darroch with a hotline to the PM or a narrative to the deal as a sort of Good Friday Agreement Preservation evolution of existing arrangements or indeed much effort to creatively format a bigger deal. ‘Where is our Europe strategy?’ asked one UK civil servant, ‘Where is the overall framework for what we want to get out of this?’ The answer is, there isn’t one.
The EU isn’t looking for EU victories. They’ve accepted they ‘might need to suffer defeat in the British tabloids’. After all there is Brexit exhaustion in Brussels too. They want this irritant out the way. They too want ‘Brexit done’. They have other fish to fry. The media view is that ‘there are more concessions up their (EU) sleeves’ but these won’t be revealed while the Bill is still live. The EU is not going to negotiate when the Northern Ireland Protocol Bill is rolling through committee. ‘Why should we negotiate with ‘a gun on the table’ said one diplomat. ‘And why should we accept the UK saying ‘it’s my way or the highway’?’
EU politicians don’t want a trade war but are ready for it. There will be no peeling off of the Balts and Poles. It’s a thoroughly united block. And for all the cheers from Tory benches the truth is that without a resolution, Johnson’s tedious tactical gambit will prove a strategic defeat. Economically, Britain as a small nation needs strong tech and trade partnerships with our giant neighbours across the narrow channel and the wide Atlantic. Europe is pouring billions into its Horizon science programme. The US is pouring hundreds of billions into industrial subsidies and talking generously of new ‘friendshoring deals’ with its allies. But Britain’s behaviour is so angry-making we risk shut out from Horizon while American politicians from Speaker Pelosi down have made it perfectly clear they’ll be no deals with Britain until a ‘durable way forward’ is found for the Northern Irish border.
Speaker Pelosi and Liam Byrne in Congress earlier this year
Since time immemorial all trade has rested on trust. A handshake can mean so much more than a contract. But the Northern Ireland Protocol Bill is the proverbial two fingers to Brussels. And for that we will pay a price.
As the Russian tanks rolled into Ukraine this week, we had a debate in Parliament about the shape of things to come. Here’s my speech for those who fancy a bit of a long read
It is clear from today’s events that we live no longer in an era of change but in a change of era. That has three significant implications for our strategy on Russia and China.
The three shifts entail a change in worldview, they require a shift in our defensive strategy and third, a renaissance in creative diplomatic strategy whereby, quite simply, we seek to build a new rules-based order for the new silk road.
Let me start with the new worldview that is going to be needed. I generally try to avoid a Manichean view of the world as divided into black and white, because the world is more complicated than that. But the truth is that, from Kaliningrad to Kamchatka, we are now witness to the creation of an enormous kleptosphere. Inside the borders of that kleptosphere, the merciless logic is that might is right: in the old phrase, the ‘strong do what they can and the weak suffer what they must’. We have to be the guardians of what we might call the “kanonosphere”—the space around the world where there are rules, where there is the rule of law, where there is justice.
Just as we once rid the world of piracy and slave trading, we now have to be the indispensable nation that leads the charge against economic crime, no matter where that crime is perpetrated. We have to be the guardians of the new rules-based order for this simple reason: if we think the scale of global corruption today is bad, we must think for a moment about the world that is to come.
The World Bank estimates that the value of natural resources in countries with bad corruption scores is $65 trillion. Imagine the world of the future, in which those natural resources are extracted and the profits go to some of the worst people on earth. That is why there is now an urgency for a very different kind of philosophy to guide our foreign policy. We have to be the place, the country, the leader that seeks a world of not simply free trade but clean trade. That must be the defining features of our foreign policy for the years to come.
The second dimension is that we obviously need new defences.
We in this House have to confront the reality that our strategy of deterrence has failed. Most of us who spoke in the debate on the economic sanctions were profoundly disappointed with the weakness of the package proposed. Frankly, many of us feel that the Prime Minister was a little late to the party. “Too little, too late” will be written on his political gravestone, I fear. None the less, we must now accept that the threat of sanctions has failed and we must now offer President Putin the iron fist. That has to take aim at Russia’s key strategic weakness, which is its 20 km border.
We must now envisage a different security environment along this cold border. That means proactive talks with Finland and Sweden about how they partner with NATO; it means further reinforcing our presence in the Baltics; it means new conversations at the other end of the border, in Georgia; it means re-thinking how we equip those fighting the insurgencies in places such as South Ossetia and Transnistria; and it means a completely different approach to the Balkans, where we must accelerate the path to NATO membership for Bosnia-Herzegovina.
We now have to start to roll NATO forward in strength across the border, so that President Putin’s tactical advance results in what is ultimately a strategic defeat. I am afraid part and parcel of that is that we will have to consider the deployment of intermediate ground-launched cruise missiles in Europe. The truth is that the intermediate-range nuclear forces treaty broke down because President Putin was breaking the rules and deploying SSC-8 missiles, which were prohibited by that treaty. Russia has built very effective anti-access and area-denial systems that safeguard it against air and naval attack. A defence against ground-launched cruise missiles is much more difficult. The Secretary-General of NATO has been right to rule out arming those missiles with nuclear warheads, but we must now think more aggressively about our defence posture, given the security threat President Putin now poses to this great homeland of Europe.
My final point is that it is time for a renaissance in British grand strategy. This is not an original point of mine but something that people such as Lord Ricketts have been writing about for some time. If we look back over history, we see so many examples of how, whenever Russian and Chinese leaders feel strong at home, they advance into the periphery—into the borderland. That was true under Tsar Nicholas and under the Qing empire, and it is true today. That means that a corridor of chaos is potentially going to emerge from the Baltic to Ukraine, down through Syria and Iran, through Kashmir, into Myanmar, into North Korea and into the South China sea.
We have not only to think creatively and imaginatively about how we provide a security environment for that space but to think anew about creating a Marshall plan for that space, just as we did in Europe after world war two. Then, we created the OECD to foster Europe’s economic development; we now need to do the same for the silk road. The passage to India, to the Pacific and beyond now needs a British-led institution that acts imaginatively at how we create new infrastructure. China will be spending something like $1.5 trillion on infrastructure across this great border zone. What are we spending? We do not know, but we could be using our skills to identify the infrastructure priorities in places such as Pakistan. We could be thinking imaginatively about how we mobilise infrastructure finance. London has been the home of infrastructure finance since we defeated Napoleon and Nathan Rothschild created the international bond market in London.
We have the wherewithal to mobilise sovereign wealth funds, which are growing radically and quickly in places such as the Gulf, and deploying that money in good strong contracts, with good strong standards, that avoid the kind of mistakes that we saw in the early days of the Qatari world cup stadium-building programme. We could be a force for good in building infrastructure, in financing infrastructure, and in making sure that there are good rules around that.
We could be thinking imaginatively about how we create free trade across this zone. We could be thinking imaginatively about how we settle disputes. We could be thinking imaginatively about the legal services and the consulting services that we offer out of London into this space. The reality is that, by 2050, the economies of the new silk road will be worth two and a half times the value of the economies on the Atlantic seaboard. The economic centre of gravity is moving east. This is possibly where I differ from the hon. Member for Isle of Wight. In my view, we need to think imaginatively about offering the welcoming hand of trade as well as offering a strong shield and a strong sword.
I will finish with a quote from Dean Acheson, the US Secretary of State after world war two, who famously boasted that he was present at the creation. He warned us that
“the future comes one day at a time.”
We now do not have a single day to waste. That is why this debate is so very important.
Quite rightly there’s a debate about how we kick European dependence on Russian gas. But what about the London’s dependence on the Russian gravy train? So much Russian loot is laundered through London that around the world our capital is known as Londongrad. So how did the government fail so badly to get a grip of Russian economic crime?
Problem No. 1 is the gaping hole where a plan for tackling economic crime should be. We know the scale of the problem because the National Crime Agency has told us. It says that the scale of economic crime is some £100 billion a year in money laundering and £190 billion lost to fraud—a total of £290 billion. That is a significant chunk of our nation’s GDP, so this is not an insignificant problem: it is a monumental problem over which the Government are presiding. Secondly, the reputational damage is so serious that think-tanks in Washington are writing reports saying things like:
“uprooting Kremlin-linked oligarchs will be a challenge given the close ties between Russian money and the United Kingdom’s ruling Conservative Party”.
How on earth has the Conservative party got itself into this mess?
Well, it is quite a story. I am going to rattle through the 10 key steps that have led the Government to get into this mess.
First, they abolished the Minister in charge of economic crime. When Damian Hinds was was appointed he was given the title of Minister for Security and Borders, whereas his predecessor was known as the Minister for Security and Economic Crime. So the Government are taking economic crime so seriously that they deleted it from the title of the Minister.
Secondly, the Government have now tasked not one, not two but 12 different agencies with tackling the problem of economic crime without going to the trouble of appointing someone to be in charge of these 12 different agencies so as to lead the charge.
Thirdly, they have neglected to implement 60% of the measures in their own economic crime plan. Going through the list of measures rated “red” by the Royal United Services Institute, some of them are pretty significant, such as making sure that the police get serious about tackling fraud and economic crime.
Fourth, the Government have starved the National Crime Agency of so many resources that its director general says that it will not take on cases where it thinks the legal costs will be too high.
Fifth, they have failed to equip Companies House with the powers to check information sent in by people setting up shell companies. According to Parliamentary answers to me, there are now 11,000 companies on the register that still have not filed returns on who is the person with significant control, yet how many prosecutions have we had? One hundred and nineteen. It is pathetic; it is lamentable.
Sixth, they have failed to bring forward a register of beneficial ownership of property, like the multi-million-pound mansions in Westminster. How we target sanctions at the right people if we don’t know who owns what?
Seventh, they have failed to use our unique role in the global financial economy to light up where bad actors are doing bad things. SWIFT, the financial messaging system, is based in the UK. We are the global hub, along with New York, of financial settlement worldwide. We could be using the panorama of information to which we have access to light up bad people, to create intelligence packages and then to ensure that those people are pursued to the ends of the earth.
Eighth, we have failed to stop our courts being used as arenas to silence journalists such as Catherine Belton and Tom Burgis, who are pursuing bad and corrupt companies. Thank God for HarperCollins and Arabella Pike because, frankly, without such brave publishing houses, we would not have the truth brought into the public domain.
Ninth, we have the Government’s failure to introduce a foreign agents registration Act, despite the fact that it works in America and Australia.
Tenth, to cap it all, they have failed to offer us any kind of hard timetable for the economic crime Bill, which is an omission so serious that they lost their own Minister to it in the House of Lords.
Those 10 elements—this 10-step decent into chaos—is why we now have a situation where the grand total of unexplained wealth orders targeted against oligarchs is zero. Apart from the Magnitsky sanctions, which came from a list of the crimes handed to us in 2007, we have not proposed any sanctions for economic crime against Russian-born individuals since 2014.
Some might say that is benign neglect; others might say it is malign neglect; and others might say that the Conservative party has been paid to look the other way.
While Boris Johnson disgraces his office, Keir Starmer has distinguished himself with progress made and poll leads. But one key challenge looms large: Labour’s support amongst the older voters is still too weak.
The biggest single fact in British politics is that Labour currently loses amongst the over 65’s by over 3 million votes. That huge margin guarantees the Tories power. The latest poll shift has cut the Tory lead but Labour is still way behind. In fact, we’re still two points behind amongst the 50-64’s and a whopping 16% behind amongst the over 65’s.
The Tory lead is no accident. As the great Greg McClymont once observed, the Tories are past masters of building a political economy of winners and losers – and associating themselves with the winners. And over the last ten years, the Tories have ruthlessly built a political economy based on fuelling older voters’ spending power – and wealth.
Key has been the triple lock; the ‘guarantee’ that ensures pension are uprated by the higher of the rise in earnings, inflation or 2.5%.
Mrs Thatcher infamously broke the link between pension rises and earnings. The result was massive pensioner poverty that took years for Labour to fix.
David Cameron wasn’t going to make the same mistake. While Labour declared it would restore the earnings link in the Pensions Act 2007, the measure was not brought into effect until April 2011. The Coalition’s triple lock went further. That was worth a lot of money. Over the last decade, the triple lock routed £48 billion extra to pensioners over and above what would have happened if pension uprating unfolded in line with earnings.
This massive transfer has helped boost pensioners’ consumption over the last ten years by more than anyone else. In fact, average weekly consumption amongst the over 75’s has risen by 48% since 2010. That’s way ahead of the rise enjoyed by the under 30’s (average consumption up by 32%), the 30-49’s (consumption up just 16%), and the 50-64’s (consumption up by 28%). Bluntly, the oldest have seen their weekly spending power rise most.
This strategy has actually changed the structure of our economy. A few years ago, Lucio Baccaro and Jonas Pontusson of the University of Geneva developed a way to understand varieties of capitalism by looking at differences in the components of aggregate demand. What they reported for Britain was stark;
Over the period 1994–2007, the United Kingdom relied on household consumption as the main driver of economic growth, spurring household consumption through a combination of real wage growth and the accumulation of household debt. In marked contrast, Germany came to rely on export-led growth, repressing wages and consumption to boost the competitiveness of the export sector.
As the great Prof Nick Pearce and his colleagues then flagged, the Tories’ consumption-driven economy of the last decade has been powered in large part by older people. In fact, it’s as close as the Tories have come to any sort of growth strategy. The combined effect of both growing numbers of older households and their rise in spending power – which has risen by an incredible £74 billion – now means older voters account for almost a quarter (22%) of UK consumption, up from 17% back in 2010.
Alongside, the triple lock on pensions, the great boon for older voters has been a decade of low interest rates that has helped power up house prices. That has helped transform the wealth of older voters who own their own homes. In fact, over half of older households now boast wealth worth over half a million pounds – and the proportion of households headed by someone over 65 with wealth of £1 million or over, has almost tripled. A quarter of the over 65’s are now technically millionaires.
Labour can’t win without a plan to consolidate new support amongst older voters, not least because 35 of the 77 of the seats most easy to win from the Tories are home to a higher than average percentage of pensioners.
However, Keir’s progress and the Tories’ mistakes create an opportunity. The Tories’ model is now beginning to fall apart. This year’s pension rise will be less than inflation for the first time in a decade. The social care levy proposed to fix the social care system is nothing of the sort. Older voters are the biggest users of the NHS. They are acutely unhappy about record backlogs for operations and the impossibility of getting to see a GP. Traditionally, older voters have been more sceptical of Labour’s handling of the economy and were of course far more inclined to vote for Brexit.
Even if Labour doesn’t win a majority amongst older voters, it needs to hold down the Tory lead – and not make mistakes. So loose talk about weslth taxes might be risky – it may make a lot more sense to target the wealthy with huge capital incomes (the top 10% of Britain’s richest take home 45% of capital income in Britain). Equally we need to reconfirm our social care offer and explain how to pay for it. And, of course we’ll need to get our policy straight on the triple lock.
While governments tend to lose elections, noone wins by default. And the path to power for Keir Starmer will be much easier with lots of ‘silver voters’ in his corner.
The Ukraine Crisis: How does the West offer Russia an iron fist in a velvet glove?
Liam Byrne meets Brigadier General Pamela McGaha at Camp Butmir in Bosnia Herzegovina this week
As tensions remain high in the Ukraine, it’s about time we heard something resembling a strategy from the UK government. President Biden has promised the Ukrainian president that the West will “respond decisively” if Russia invades but what does ‘decisive’ look like? How should the West offer the proverbial ‘iron fist in a velvet glove’?
While the Ukrainians are projecting a rather effective message of ‘keep calm and carry on’, Russia continues to mobilise assets at the border and UK diplomats on the ground are alarmed at the sheer spread of Russian forces around the Ukrainian frontier. So how do we break the long-jam?
Well, as it happens there should be a big point of consensus between the West and Russia, which is the need for a new framework for controlling deployment of intermediate nuclear weapons in Europe. Indeed some argue that
“the Kremlin could be satisfied if the U.S. government agreed to a formal long-term moratorium on expanding NATO and a commitment not to station intermediate-range missiles in Europe”.
The 1987 INF treaty negotiated by Presidents Reagan and Gorbachev was ground-breaking. It required both sides to eliminate their ground-launched ballistic and cruise missiles with a range of 500 and 5,500 kilometres from Europe and eliminated thousands of weapons from Europe.
But Russia’s violation of the treaty ultimately triggered President Trump’s withdrawal from the Treaty in February 2019 without a robust process for renegotiating. Hence Putin’s concern that NATO might deploy intermediate-range missiles once again.
Yet a process to credibly renew the INF treaty is in everyone’s interest; it’s good for us and would help demonstrate a respect for Russian homeland security. It is after all a nation that has been repeatedly invaded throughout history from the Mongols to Hitler. Without a Treaty in place, as the European Parliament warned, we face
‘stark choices all carrying inherent security risks, including engaging in a deployment race with Russia, or refusing re-deployment of US missiles on European soil, potentially leaving European countries exposed to Russian intimidation’.
Oddly enough when I asked the Defence Secretary to set out UK objectives for the Treaty he could only promise to write to me. Our goals were not at the top of his mind.
Nevertheless, it is now vital we prepare for the worse case scenario. Military defence of the Ukraine is hard and expensive (up to half a trillion dollars) but an attack is not impossible to deter, beyond arming the Ukrainians with defensive weapons.
A massive package of economic sanctions, from suspension of Nord Stream 2 (that will double gas capacity) from Russia to Europe plus Russia’s exclusion from the SWIFT international payment system would hit Russia hard (perhaps a 5% hit to Russian GDP) – but would also come at a cost to allies like Germany. There’s also plenty more space for sanctions targeting Russian oligarchs and corporate behemoths like Gazprom and VTB Bank, as the Atlantic Council’s Edward Fishman told the Guardian:
“Current sanctions against Russia are light-touch; if Iran sanctions are a 10 out of 10 in intensity, today’s Russia sanctions are perhaps a two or a three,” Fishman said. “Not a single major state-owned Russian company is under full-blocking sanctions.”
But nor are military options impossible. So what might they look like?
1. Moving NATO forward.
Russia’s greatest strategic weakness has always been it’s 20,000 kilometres of border – ten of which are in Europe. Threatening to bring NATO closer to Moscow along this huge front is therefore the option that would ensure a tactical advance for Russia in Ukraine becomes a strategic defeat in Europe. That could entail admitting Finland in the north, Georgia in the south plus Bosnia Herzegovina and Kosovo in the Balkans:
Finland has always maintained a strong military but hitherto not sought to join NATO. In this environment that could change. And strengthening Finnish defence is arelatively cheap option, perhaps as little as $5.2 billion upfront and $550 million annually.
Georgia is more expensive to shield with the famous NATO Article 5 mutual defence clause costing perhaps $9.5 billion in one-time costs and $3.8 billion annually for a full, multinational NATO brigade, a battalion-sized U.S. air and missile defense task force, plus permanent US division.
Fast tracking NATO membership for Bosnia and Kosovo would be low cost and stymy Russia’s pervasive active measures throughout the Balkans. Though the current political crisis in BIH makes outright membership hard, we could accelerate things by stepping up training exercises, and renewing a deal with the EU to allow the UK to redeploy forces into the peacekeeping force, EUFOR
Source: Carnegie Endowment
2. Moving forward on ‘frozen conflicts’.
Russia has created two ‘frozen conflicts’ in Georgia in Abkhazia and Ossetia along with a third in Republic of Transnistria inside Moldova. But as Kevin Ryan, the former U.S. Defense Attaché to Moscow argues, these spaces are therefore vulnerable because there are not part of ‘Russia proper’ and as such;
“Reinforcing Moldovan and Georgian forces to create a credible threat to retake these breakaway regions would require Russia to divert military forces from any plan against Ukraine —perhaps enough to throw the plan in doubt.” Especially if accompanied by a ‘quarantine’ of the Russian enclave of Kaliningrad, which is surrounded by Poland and the Baltic.
3. Accelerating NATO modernisation.
This should be the most important strategic result of President Putin’s gamble. Since NATO’s Wales summit, NATO allies have increased defence spending but the alliance’s capability to deploy large-scale strength at pace is too weak. NATO’s Non-US active personnel have declined by 40% since the Cold War and reliance is heavy on UK, French, and German capabilities. During the Cold War, NATO could field 360 combat battalions in Europe. More recently it was a challenge to stand up four battalions in the Baltic. NATO is punching below it’s weight and that’s simply not something we can afford any more.
We have to ensure this is a defining moment in drawing a hard stop to Russia’s attempt to ‘re-imperialise’ it’s old dominions in Eastern Europe, a project that proceeded apace in recent years without much challenge. The invasion of Georgia in 2008, seizure of Crimea in 2014, support for separatists in Eastern Ukraine, support for an attempted coup in Montenegro – along with a host of offensive ‘active measures’ against the West from murders in the UK to what Robert Mueller described as “sweeping and systemic’ interference in the 2016 US presidential election – all point to a larger trend which has got to be stopped. Even if we agree with Henry Kissinger’s argument made back in 2014 that Ukraine should ultimately live outside NATO, a strong Western response is vital now to ensure President Putin understands that military action to render Ukraine a satellite state
“would doom Moscow to repeat its history of self-fulfilling cycles of reciprocal pressures with Europe and the United States.”
For the long run it is now vital we bar any further advance in the kleptocapitalism that President Putin has perfected, described so well by Luke Harding in his fine book, Shadow State. This insidious corruption has already infected swathes of the UK and European and UK economy, where Chatham House concludes,
‘failures of enforcement and implementation of the law – plus the exploitation of loopholes by professional enablers – have meant that little has been done in practice to prevent kleptocratic wealth and political agendas from entering Britain.’
It is a cancer eating our economy from within. Ultimately we can’t afford yet another nation to be gobbled up by the Kleptosphere.
Above all, the crisis must be the spark for West to renew our story about our hopes and dreams for the great European motherland. Narratives matter and here our best guide is actually the last leader of the Soviet Union, President Gorbachev.
At the height of his power, Mikhail Gorbachev came to Strasbourg to speak to the Council of Europe, founded by Churchill to ensure there was never a return to the totalitarian monstrosities of the Nazis. Gorbachev offered a vision of a new unity of Christendom and Central Europe, stretching from Ireland’s Atlantic Coast to Siberia, ‘a common legal space’ for Europeans to call home. If we genuinely believe in a world that’s a ‘rules-based order’ this is a moment to make sure that dream isn’t lost forever.
The nice people at Tortoise invited me on to chat about ‘the prospects for inflation’ this week. Pulling together the research and chatting to Hodge Hill residents on Facebook and outside Aldi on Friday, three thoughts struck me.
1. This isn’t biting the government – yet. But inflation is already hurting the poorest.
Right now, voters sense that as we come out of lockdown and those that saved now spend and workers come off furlough, there’s likely to be more money swilling around the marketplace. So they expect prices to rise. But the poorest are already feeling the sharp cut of rising prices. Especially those on Universal Credit who have just lost £1k a year as the £20 uplift is withdrawn, or for example, carers.
I’ve generally found primary school heads are amongst the first to pick up changing social trends – and my local heads are telling me they’re already seeing parents under more financial pressure and kids in more hardship. Already.
2. Inflation risks may well be higher in Britain thanks to our broken competition system, bodged Brexit – and shambolic industrial strategy.
Economists are pretty divided about the outlook for inflation. There are some obvious causes; soaring energy prices, rising food prices and terrible disruption to supply chains.
As they teach you in the Business School favourite ‘beer game’, any supply chain can quickly get jammed when inventories are run down and then demand jumps. And there’s a tonne of pent-up demand from savers to fuel that demand right now. The excellent House of Commons library notes
the household savings ratio (household savings as a proportion of household disposable income) increased from 8.9% in January-March 2020 to 25.9% in April-July 2020, a record high since the series began in 1987.
So, it’s perhaps no surprise that retail sales and consumer confidence is up.
Add to this the pressure of soaring energy prices and a tight labour market, and it’s no surprise inflation has spiked. Gas prices led the way; the capped price is reviewed twice a year and jumped by £139 at the last review in August 2021. That could get worse: some report it could rise by a further £400 at the next review in February 2022..
But Britain is especially vulnerable to this short term surge breaking the anchors of price expectations for the future. Once that happens, inflation takes off as workers rack up wage claims. As Sebastian Mallaby argues in Foreign Affairs, that presages the end game for ‘magic money’ support for the economy. Britain’s vulnerabilities are three fold:
A. Our broken competition regime leaves us very vulnerable to large dominant companies raising prices. I’ve written about this elsewhere but suffice to say, IMF analysis of ‘mark-ups’ in the British economy shows over the long run, price rises here are worse than than the global average. In their extraordinary study, the IMF found markups, which are a good proxy for rising market power of leading firms, rose 38% across advanced economies – but by 60% here in Britain. This suggests we’re more vulnerable to dominant firms with the power to jack up prices.
B. The bodging of Brexit means our traders – importers and exporters alike – are hopelessly tangled in red tape. In the West Midlands you don’t have to wander far to find stories of manufacturers forced to shut down the factory floor because of supply delays at the border. These delays add to costs.
C. Our terrible training systems mean it’s very hard to retrain workers quickly to fill new gaps. The hopeless centralised system of controlling grants from the Department of Education means local areas lack flexibility to move at speed to surge funding into new areas to retrain workers. So in Birmingham we have both high vacancies AND high levels of unemployment. A sure sign of a broken system. This means we’re more vulnerable to sharp wage rises in particular sectors.
3. The politics of this will arrive next spring – when pensioners face falling living standards
I suspect the politics of this won’t actually become acute until next Spring, when stubbornly high inflation may cut into the living standards of pensioners. Remember, the over 65s are the key to deciding who governs Britain. While Labour narrowly wins the working age vote, we lose the over 65s by 3 million.
Now, at the Budget the Tories broke their manifesto commitment of a triple lock on pension rises. Using September’s CPI figure, the Tories decided that in April 2022, the basic pension is set to rise by £4.25, from £137.60 per week to £141.85 per week. That’s a rise of 3.1%. However if inflation is as bad as the Bank of England forecasts, peaking at 5% next Spring then pensioners will see a cut in living standards. And for some who are more exposed to energy price hikes, that squeeze will be harder still.
Hats off to the #PandoraPapers team that’s exposed the sheer scale of the tax avoidance by 35 current and former global leaders – including a prominent Tory donor who says the BBC contributed to Boris Johnson’s leadership campaign and “was involved in one of Europe’s biggest corruption scandals”.
The Chancellor Rishi Sunak obviously defended the government’s record on tackling tax avoidance as “very strong”. What a load of nonsense.
Corruption flourishes in the dark and so one reason London is beloved is that it’s so easy to create shell companies without declaring who actually owns them. Behind this fog of mystery, company directors can get up to no good.
Now, Boris Johnson claims he’s cracking down on this sort of thing. Really? In answers to my parliamentary questions a junior minister has slipped out that in fact over 11,000 companies have still not listed – as they are required to – a ‘Person of Significant Control’. And despite this only 119 convictions for the offence has been brought. Pathetic.
As the excellent Duncan Hames at Transparency International, points out, the summer’s G7 communique yesterday recognised “the need for action on corruption, including… tackling the misuse of shell companies” (para 48). Yet there’s no legislation this session to implement the Companies House white paper reforms that would get a grip of this.
If this Government is serious about tackling corroruption it’s time to bring new laws to the floor of the Commons. Now.
Believe it or not, I hadn’t planned to run for Mayor. It wasn’t on the back of my proverbial envelope. But from the summer of 2018 more and more people I respected grew more and more insistent. And, as it happened, I was, as the saying goes, on a bit of a political journey.
Since I was sacked from the Shadow Cabinet, I had been free to work on issues around inequality that were completely different to my first years in parliament and I helped re-found the Tribune Group of soft-left MP’s. But the real shock came in the wake of my dad’s agonising death in May 2015 after a lifelong struggle with alcohol. I fell deep, deep into a dark space, spent a lot of time in counselling unpacking the agony of what I came to realise was life as the child of an alcoholic. In search of a salve for the personal pain, I’d started working with the homeless community in Birmingham. I joined Sunday night soup kitchens outside Digbeth coach station, slept out to raise money for the homeless, and helped the homeless census. I was just knocked over by the number of people I met who were self-medicating trauma with alcohol and drugs – just as my Dad had done. That realisation bit into me deeply.
Around the same time, the food banks in Hodge Hill literally ran out of food. As families were rolled onto Universal Credit demand for food parcels went through the roof. So we rustled-up sturdy green delivery crates from the Tescos’ behind my office, drove them out to schools, churches and mosques and started collecting food donations outside supermarkets. One freezing Sunday morning in early 2019 sealed it. It was just after ten. I was out with the Community Street Kitchen team in Birmingham city centre. There, in the underpass by New Street Station that stank of urine, we found a disabled gentleman, a double amputee, ashen grey, crying in pain, next to his wheelchair. Still dressed in his hospital gown, with a hospital tag on his wrist, he’d been there for three days. It took us two hours to get him an ambulance. I felt rise up in me the hot rage I’d felt as a teenager watching the miners’ strike on telly in 1984, not long before I joined the Labour Party. When homeless people started dying on the streets, I knew I couldn’t just stand by.
The selection
I thought it was pretty unlikely that I’d ever get selected. The party membership had definitely shifted left. Like anyone who’s been in politics for a while, I have made plenty of mistakes to have a go at. Most politicians will tell you that selections are ten times worse than elections. They’re right. And it’s got a hell of a lot worse with social media.
But, in the wake of Jeremy Corbyn’s leadership election, I was convinced the Party could mobilise social action on the ground in new ways – what I called the ‘coalition of kindness’. So we started playing around with making films to inspire people to get involved and created a sort of Macmillan coffee morning kit for food bank collecting. Lots of Labour members responded. More and more were watching and sharing our videos – what we called ‘social justice social media’ – on homelessness and food justice. In fact by the time I filed my nomination papers in August 2020, our videos had been watched 2.5 million times.
I knew what members respected more than anything else was motive of the candidates. But that motive had to come with a message. So before taking any decisions, I spent a lot of time with my friend Shabana Mahmood, whose tough-minded, down to earth politics I respected hugely, and researched how Labour members thought about the sort of Mayor they wanted. My brother Ben came and helped me talking and listening to Labour members. And of course, what we found was members were feeling just like me, outraged at what they saw as cranes in the sky of our city centres – but homeless people living in doorways. But they didn’t want to pass resolutions about it. They wanted to change it. They wanted action. Now.
Out with the team from Homeless One after running the feed in Digbeth
“Homelessness! My God – it’s never been as bad as it is’ one member said to us. ‘If you’ve lived here as long as we have, most of my life, I didn’t see a single homeless person. Now you come into town, and every day you walk past a dozen. You can’t escape it. People sleeping on the streets. You stumble past them as you walk in the city centre”.
“New Street is spectacular now when you come in. It’s like Christmas” said another, “But only 150 yards away, you’ve got poverty. New Town – Jesus, it’s in a state. It’s almost like being in Brazil, where you’ve got these opulent white buildings and houses, and next door is the favelas.”
“[The crisis] is visual” said another, “You’ll walk through a street tonight, and you’ll see a dozen people homeless. People having to use food banks. Friends of mine have had to use food banks, and you’re just like, how on earth can it come to this?”
What Labour members wanted in a mayor was a ‘Champion of Social Justice.’ After all, this is what makes them Labour. From all walks of life, from a multitude of life experience, good people join the Labour party because in their marrow is an anger with growing inequality and social decay and in their minds an ambition to do something about it. In 2018, members felt that things were at breaking point; the agony of austerity had sparked a moral emergency. They wanted a more compassionate society, they wanted to do more, they wanted to bind the wounds. And this righteous anger was laced with a frustration that change was too slow and and a pride in the region that simply wasn’t punching its weight.
“I think we’re defined by how we treat the most vulnerable in society” said one member, “And at the moment, how we’re treating them is really bad. Piss poor.” Members thought we had it within us to fix this. They knew it didn’t have to be this way. People sensed our region’s unique strength lies in our people more than its economy. They prized our diversity and multi-culturalism and the truth that socially, ours is ‘a place that works’: a poster child in fact, for tolerance and rubbing along together where people are straight-talking, no-nonsense, down to earth.
“There’s a certain grit to people” one said to us, “perhaps because of the industrial background. We are who we say we are and we do what we say we’re going to do, there’s no messing around. We’re just very straight forward people.”
But what members wanted in a Mayor was someone who was going to get stuff done. People wanted a definite path to impact, to counter the inevitable cynicism of voters. Notions of a ‘new kind of politics’ appealed to some but more important was the hunger for our region to be a trail-blazer once again. ‘Action not talk’ was a powerful positive message at a time of stagnancy and inertia. It tapped into an optimism about the potential of the region and a sense of aspiration .
“I like the aspirational qualities of “Let’s Get Things Done” agreed one member, “We need someone who’s going to get things done. More action, less talk. That appeals to me – it made me feel about people going out to succeed for themselves, particularly the youth.”
“It struck a chord in me” said another, “We need to look after our region. It’s like a call to arms. If we want things to change, we need to do something about it.”
Our vision of a radical manifesto was seen as an absolute positive; it touched the desire for us to pioneer things again, to lead the country as we did once before. One member summed up the predominant mood for me; “I like ‘TURN IDEALISM INTO ACTION’” she said, “It’s alright doing this, but it’s all about putting it into action. I go to loads of meetings, but things don’t get done. So I do like that. Let’s start now.”
A champion for social justice is at the heart of what Labour members wanted from their mayor. That’s the north start to steer by. But action and civic pride were deep aspirations. And people are thirsty for a new political style. We did our best to boil it down into a simple – if imperfect – call to action: Radical compassion – Let’s Start Now.
On the weekend after the 2019 local elections, we launched our campaign on the BBC’s Sunday Politics programme with veteran regional broadcaster Patrick Burns, and the next day we published a short endorsement film from John McDonnell, who was generously unequivocal; ‘Liam’ he said, ‘has got the experience and the values to put our policies into action’. A lot of people were surprised that John McDonnell endorsed me. I understand that. But I think some of my work on a new, more inclusive political economy may have helped as did my old friend, John’s Parliamentary Private Secretary and Tribune stalwart, Lyn Brown. She is extremely persuasive.
The senior leaders in Unite, however, the power brokers who dominated Labour HQ, were rather less than mustard keen for a Byrne victory. And so they dragged their feet. We expected the selection vote amongst the region’s 13,000 members to start right after the 2019 local elections so that Labour’s candidate would have maximum time to take on Andy Street in 2020. But, oh no.
As May dragged into June, and June into July we still had no idea on even a timetable. Frankly, I didn’t care. I set out to criss-cross the region, driving hundreds of miles each week to research food justice and homelessness so I could raise the issues in Parliament. I began documenting what we called ‘Austerity Street’ in YMCA’s, homeless shelters and food banks, organising over 100 meetings with members to draw up our 60 page blueprint for action, while rattling out almost daily videos from members and activists who wanted to endorse me.
It felt a hell of a lot more practical than what was going on in Parliament, where in the Brexit debates, MP’s went to war with each other while the Labour Party went to war with itself.
Theresa May’s Brexit deal was hurtling on its parabola into a brick wall – and Labour was hurtling on its path into election catastrophe. Upstairs in the committee rooms in February, Tom Watson, who I’d known since my student days, launched a group of MP’s to rethink Labour policy. There were rumours I never believed that he was prepared to lead 50 MP’s out the Party. Meanwhile, downstairs in the lobbies, vote after vote on the Brexit deals failed to produce a breakthrough. Finally, Theresa May fell, and on 24 July, Boris Johnson took over in fevered Westminster summer, on the promise of breaking the deadlock.
Deadlock finally ended too in the West Midlands. By August we had a timetable for the Metro-Mayor selection. But it still wasn’t quick. People told me later, my opponents were delaying so Salma Yaqoob could bank at least a few months of party membership before taking me on. Who knows the truth. What I do know is that dragging things out made it tougher for Labour to win. And of course, just to keep us busy, MP’s – myself included – were fighting trigger ballots some of which were very nasty. Some in my own constituency party were up to no good. And so on Sunday evenings, I was visiting new Party members, freshly signed up, some of who did not actually know they were members! It was chaos everywhere. And while we were talking to ourselves, Andy Street’s newspapers were landing, thump, thump, thump, on the door-mats across the region.
Even when the deadline was set, it moved, inexplicably extended by a fortnight into mid December. The Party seemed determined to give the Labour’s winning candidate as little time as possible to campaign. Rumours swirled that Unison official Pete Lowe would be kept off the shortlist. But when the shortlist was published on the 21 October, we were all contenders, including Salma. The Shadow Cabinet had a blazing row about it. And then on 22 October, Naz Shah MP dropped her bombshell video, laying bare the behaviour she’d experienced at Salma’s hand in the Bradford election, which said Naz had driven her to the brink of suicide. By late that evening, the videos had had 200,000 views.
As summer turned to autumn in London and the Johnson deal played it phases through the House, the frazzled, deadlocked parliament stumbled on its last legs. In the final chaos of votes on Johnson’s deal, Labour blocked and bowed to the Tories’ pressure for a general election in which we knew wide-eyed, we’d be destroyed. And so it proved. The election was called. And the race for the metro-mayor selection was suspended as we were tipped into the Stygian turmoil of the worst election campaign I’ve ever fought.
It was chaos on the ground, ugly on the doorstep and nasty in the Party. The West Midlands political temperature was as freezing as the weather. The campaign commenced with Tom Watson resigning his West Bromwich seat, while up in Dudley, Ian Austin defected and delivered a coruscating jeremiad to voters on the flaws of Jeremy Corbyn. On Thursday 21 November we launched our manifesto at Birmingham CIty University. The regional office spent much of the previous day trying to ban me from coming. There were almost no MP’s there for photos with the Shadow Cabinet. It was as if the organisation hated half the people it was supposed to be trying to get elected.
Given our position in the polls – 19 points behind – the seat targeting was bonkers. The national polling told us we ought to be defending not attacking. Yet resources were poured into the Tory-held Walsall North and activists were moved from seats we needed to defend like Erdington, which we held and Northfield, Wolverhampton South West and Stoke-on-Trent North which we didn’t. MP’s bought into national print materials and were charged £5000 for the privilege – but the letters landed on the Saturday after the election.
On the ground in the Black Country
I got to almost every seat in the region and did my best to raise morale. It was freezing, dark, wet and miserable. While I was lucky, grinding out the biggest majority in the West Midlands, the results overall were a disaster. At the beginning of the month, the Yougov MRP forecast a Tory majority of sixty-eight. By election night, the Tory’s forecast majority was down to twenty seats. In the event, it was worse than anyone predicted. The Tories romped home with a majority of eighty.
When my results were declared in Birmingham’s ICC in the early hours of Friday 13th December I said, ‘this is a Friday the 13th that will forever live in our memory and in our history. We are in this party because we believe in a simple truth. But to be progressive, you have to deliver progress. And tonight we have failed in that task.’ I was more determined than ever to try and win the Mayoralty.
We didn’t have any big machines behind us. We were up against Momentum, Unite and Unison. But what we did have was a clear message, a tonne of ideas, massive passion, a Trojan work ethic, great technology and a genuinely broad church of backers which helped us mobilise scores of activists who were happy to endorse, make hundreds of calls and share ideas. By the time our mailings went out, we had support from well over a hundred of the key activists in the region, along with the Coop Party, the GMB, the TSSA, Community, Usdaw, the Fabians, Chinese for Labour, Labour Campaign for International Development, Labour Irish Society and the Socialist Health Association.
The game changer was a clever online callcentre called CallHub which let us dial into a system that then automatically served us up phone numbers. So we’d sit around upstairs in the Thousand Trades in the Jewellery Quarter, with a decent pint of Ubu, the air scented with wood smoke from its homely little log burner with a brilliant team making calls. Our icon was the legendary Elaine Hook, a former school-cleaner who got a pay rise when Labour Birmingham introduced the real living wage. I could listen to her all day; and I’ve never met anyone better on the phones than Elaine. We predicted our vote percentage within about 2%.
The night of 5th February 2020, I got a sense I’d made it. The deputy regional director messaged to check I was in Birmingham. And in the end it was a convincing win. I was ahead by over 1000 votes on the first round and delivered 56% on the final draw. Pete Lowe almost instantly published an incredibly gracious concession speech, a mark of his character. And in my victory statement, I tried to set out my pitch for the battle to come; “This is the first election since Brexit. The first election in a new, uncertain world. We need strong leadership to build a bold new future for our region. With the pioneering spirit of our history, we must now become the centre of Britain’s Green Industrial Revolution’. I’d campaigned for the selection as Green Labour. And now I wanted to campaign for office on the same terms. To build a future, inspired by our past.
“We were once the workshop of the world” I said, “Now we must become the workshop of a green planet. Becoming Britain’s first zero carbon city region and bringing to our region the green manufacturing jobs of the future, low cost solar energy for our citizens, new forests and clean air.
This new future was key to unlocking new chances for the young. “Our young people should lead the way” I went on “And we need to support them with youth workers back in every neighbourhood”.
I was clear that we’d put ending the moral emergency of homelessness centre-stage; “If we’re to end the shame of homelessness we need nothing short of a green home building revolution. To end rough sleeping and to give young families their first foot on the housing ladder.
“Our diversity is our strength” I concluded, “But we achieve most when we stick together and look out for each other. [Because] Communities that work together are stronger, and safer”.
A couple of nights later I invited everyone who worked so hard on the campaign to the Old Joint Stock pub in St Philip’s Square, one of my favourite Birmingham watering holes. It was just a lovely evening with lovely people. They’d been through hell in 2019, yet still put their shoulder to the wheel and won.
The chaos
Liam and Jack with the police on Erdington High Street
They have been no campaign without Jack Dromey, our campaign chair. Counsel, broker, fixer, pacifier, sage, coalition-builder, and campaigner par excellence he was, unlike me, permanently calm but like me started the day with a list of things to do before he slept. But that first morning in the office he was almost shivering with the cold.
The office was freezing. Upstairs in Labour’s Birmingham Bristol Street office, still badged with a sign for our last MEP, Neena Gill, there wasn’t any heating. It was like the Mary Celeste. We had a makeshift table. We all perched on stools I bought from IKEA. We huddled close for warmth and went through the battle-plan. Which didn’t take long because there wasn’t one. It was immediately clear that no-one on the regional team had run an election on this scale, the party had no money, no political strategy, and very few actual organisers. The regional press officer lived in Kent. And from there, it went from bad to worse.
When I was selected to fight the Hodge Hill by-election we had leaflets out with my face on them the morning after I was selected. Not this time. By the 11th of March – over a month on from the selection victory – I was screaming into my diary that the Labour Party machine was like a zombie organisation. We had no polling. Our focus groups got cancelled by HQ without anyone bothering to tell us. After a kick-off meeting with the elections team in Southside, HQ promised to carry the burden of our policy work. When I rang two weeks later to check where it was, I was told they could not help us after all. While Andy Street had delivered his second newspaper region-wide I think we eventually got our first, thin leaflet back 35 days after I was selected using photos we shot in the last general election. We eventually dragooned in a deeply unenthusiastic deputy regional director from the South West, before persuading the heroic Gareth Snell, who’d narrowly lost his seat in Stoke to take the helm. It was chaos.
We eventually got a poll by persuading our friends at Hope Not Hate to do one for us. And we were in for a nasty shock. Half of residents didn’t know there was an election coming and we were trailing Andy Street by 13 points – 50% to 37% amongst decided voters – with around a quarter undecided.
We had some strengths. Our support was young and centred in inner-city Birmingham but weaker in the suburbs, while the Greens had great support amongst eighteen to twenty-fours. The key battleground was amongst the thirty-five to fifty-four year olds where 39% were undecided, and were more worried about the economy and crime with much stronger views on housing and jobs for young people, parks and public spaces, and the lack of youth provision. Their ambitions for the green economy were also slightly different; they were much more focused on a nicer environment for themselves and their city. After Brexit, people felt on balance optimistic that new opportunities would flow, but incredibly, 70% of people in the Black Country said the next generation would have fewer opportunities than themselves while in the suburbs of Birmingham nearly 40% said things have got worse in their neighbourhood.
The good news was our basic argument looked popular; 42% said they would vote for someone who put tackling climate change and creating a greener economy at the heart of their policies, and overall three-quarters supported investment to create jobs in new clean industries with 78% wanting cleaner air quality. Over 70% agreed with me that the level of homelessness in the region was a disgrace. We realised we had a mountain to climb. And then suddenly, everything changed.
Lockdown
We’d been keeping a wary, worried eye on the spiralling Covid cases for months. Finally, on March 23rd, the Prime Minister got a grip and went on national television to declare “from this evening I must give the British people a very simple instruction – you must stay at home.” The elections, almost upon us, were now postponed. After what felt like the longest ever selection campaign, it looked like I now faced the longest ever campaign for election.
But there was work to do.
One of our best campaign posters
As soon as the crisis broke, I knew straight away we’d need a first class radar for Britain’s second city; a good system that picked up the unknown unknowns fast. The stuff that comes from left field and knocks you sideways. I rang Sutton Coldfield MP Andrew Mitchell (who was Andy Street’s campaign chair) and proposed a weekly pow-wow with the city’s MP’s, leaders and NHS chiefs. He agreed instantly and for much of the next year we met together every Wednesday to take stock, listen and act, banging out letters, calls, WhatsApps to ministers about things the city needed. It’s typically prosaic stuff; have we got enough ventilators? When do we run out? Are more on the way? How fast can we move aid to businesses? Are the banks providing credit? Planet Ice have offered their ice-rink as a mortuary – do we need it? Is there enough mortuary space? What about food supplies? Have the food banks got enough stock? Where are the infections spiking? Can we surge in extra messaging? The system let us act with speed. So for example, when I saw early signs of price gouging by unscrupulous traders hiking up prices – like for the children’s medicine Calpol – I was able to raise it in the Commons within days.
Creating order
In the background, we had now begun the haggling with the party to use the year we have been given to transform our chances of winning. I asked to be able to style myself as the shadow mayor of the West Midlands – which I thought was slightly comic – but I knew it would annoy the Tories and we wanted to give the media a sense that there was some clear opposition.
Crucially, we knew our first task was to re-build a regional party shattered by the heavy defeat just months before. So we asked for the resources to set up a policy unit and an informal shadow cabinet once a month to bring together Labour leaders, MPs and trade unions, together with the brilliant Steve Reed from the Parliamentary Shadow Cabinet, to help bring together some basic organisation.
Keir’s victory on 4th April was a game-changer. I immediately reached out to help and ask for help. In a five page note ahead of our first call I set out the prize at stake; the West Midlands election was the biggest scalp we could take in 2021 and at stake was stewardship of an £8 billion investment budget, oversight of the second largest police force in the country, the Commonwealth Games in 2022 and a real opportunity to shape and test a truly green Labour offer. Crucially we wanted to agree much better ways for our local government colleagues to work together with Labour’s front bench safe in the knowledge that the key lessons about running Britain day in day out, were being learned by Labour’s leaders on the ground.
Slowly but surely, as spring turned to summer, we began to create some order. I used a keynote speech to zero in on a plan to save lives and save livelihoods in the West Midlands. I reached out to some of the economists I’d worked with at the Cabinet Office during the global financial crisis and ran some basic numbers about what it would take to get our region back on its feet after the economic shock. It showed we needed something like £3 billion. And yet when we looked at how underfunded our region was compared to others, it was clear I was asking for no more than our fair share of the national capital investment pot. As if to underline the point, we quickly saw the Covid fatalities were much worse in our ethnic minority community. After a phone call with Cllr Paulette Hamilton that left us both in tears, I concluded we needed an urgent inquiry to get to the stories behind the statistics. I called Doreen Lawrence to make sure we were coordinating our work with her national commission, and over the weeks that followed, we heard hour after hour of the most harrowing testimony I’ve ever heard in public life.
We heard about a 35-year-old new mum who died after childbirth, never having the chance to hold her newborn son; the pastor’s wife who lost first her husband and then her best friend while battling the virus herself in hospital. She then learned the pastor due to conduct her husband’s funeral had also died. We heard from a son who said goodbye to his dad via WhatsApp while a doctor sat stroking his dad’s hand and holding him close “as if he was his own”. It was appalling. We worked together to produce a final 42-page report, with ten key findings from the experience of families who suffered devastating loss, and thirty-five recommendations for ministers, the region’s Members of Parliament, the Mayor of the West Midlands, NHS and Social Care leaders, Public Health Directors and local councils – some of which were quickly implemented. Some good came of our work.
Meanwhile, back on the campaign we finally ran our focus groups to fine-tune our message and plan the print runs. The truth is the Tories were already seen as doing a good job handling coronavirus. In some Black Country groups we ran in June people would say of Boris Johnson, ‘who’d want his job?’ ‘We are little country with a lot of people in it, people are bound to get ill’. ‘He (Johnson) is helping out with the furlough scheme’. ‘No one is ever dealt with anything like this before – what is he supposed to do?’
People were open to the idea that Johnson was a bit all over the place, that warning lights were flashing, that corners were cut with the NHS and Russian roulette played when the pandemic stock was cut. But no-one thought Labour could’ve done anything better. ‘It’s been a learning curve for everyone. We are being paid. What else could they do?’ went the conversation, and for the British public, there’s a simple rule of thumb: a national crisis requires politicians to pull together. ‘It’s not the time for bickering’ said was a typical comment, ‘This is not a time for different voices – we need to all be one’. ‘I think if Boris and Starmer got together they do a bloody good job of sorting the country out’ said a third.
Everyone was anxious about the second peak they could already see coming, the imminent recession and rising unemployment. There was a real readiness to talk about policy; a real interest in how we moved forward together as a society. The jagged, old divisions so familiar to us during Brexit were gone. And if there was a silver-lining it was the sense of community spirit re-built. Almost everyone liked the way that felt and crucially, wanted to sustain it.
Little was known about what Labour was up to. But Keir was clearly a vital asset. ‘Keir Starmer is a breath of fresh air’ said one ‘He’s strong, takes it back to the centre and seems to be well, brighter than Boris’.
Meanwhile, barely anyone had heard of Andy Street – or me. Those who had seen Street thought he was a bit of a ‘grip and grin guy’ – and the key attack line that cut-through was ‘can you name a single thing he’s done?’ Equally no-one really yet heard of Liam Byrne either and we realised that we could well be working from pretty much a blank slate. For obvious reasons, I wanted to know how big a problem my Treasury leaving note would be. I was astonished when no-one had heard of it. We asked the moderators to push as hard as possible; ‘You know, he worked at the Treasury under Gordon Brown’; that at least prompted people to remember the ‘selling of the gold’. But the note? It hadn’t registered.
Everyone’s chief concern was in fact, the things we needed to rebuild – jobs, security, growth, mental health and housing. In a region like ours, manufacturing was by far and away the key priority. But, there was a clear sense that young people had been hardest-hit of all, that they were our future and needed additional support and investment especially in mental health. Finally, as ever, policing was vital. It spoke to peoples’ extra new thirst for a sense of safety and security. But connected to this was a sense that our new community spirit was something everyone wanted to sustain. Lots talked about getting to know their neighbours better by going out to clap for the NHS on a Thursday night. But from there neighbours had begun WhatsApp or Facebook groups for their street to make sure that nobody was going hungry or lonely. “People have pulled together” one said, ‘Let’s keep it up’. ‘People are more pleasant and polite’ said another, ‘People seem a lot more engaged and being polite. The rat race scenario has cooled down. People have time to say hello. An extra bit of time on our hands.”
In this research my chief concern was to figure out how to get our green message pitch perfect. We’ve had new Labour, old Labour, bold Labour. I wanted to run as Green Labour. To create the greenest manifesto a Labour candidate had ever run on and win. Instinctively, it was the right thing to do and it was critical to mobilising younger voters. But I knew we needed to marry it to peoples’ pride in our region’s past and their sense, their wisdom, of how we had succeeded in the past.
In and of itself the environment didn’t work as a policy area – it was too big – but green initiatives do cut through when yoked to other issues. But on the environment and the economy, people felt like they were on the horns of a dilemma. Instinctively people felt that green was more expensive. They worried we needed to recover first and then ‘go green’. Nor did anyone feel very comfortable about the conflict. They didn’t want to kick the can down the road. They knew that we needed to get on with cutting carbon.
But what we discovered is that the dilemma dissolved when we talked about green manufacturing. ‘Wouldn’t it be amazing if we could be known for this’ one exclaimed. ‘I think it would be great if we could be at the lead of this’ said another. ‘Bang on. We are manufacturing region’.
With Jack and Anneliese Dodds on the shop floor in Coventry
Crucially, people thought this was the way we could trade our way back to health and earn the money to pay for the NHS which have been worth it’s weight in gold. By far and away, our idea of green industry zones was seen as a practical plan to hope industry go green and grow creating jobs and wealth at the same time. ‘This is a much stronger message, much more a plan’ said one. ‘It’s more realistic – it gives us a sense of how we trade our way out of it. It’s the way forward for our children and grandchildren’.
So ‘making our green future’ squared the circle. Once upon a time we were the workshop of the world. For the future our region need to set course to become the green workshop of the world.
This research helped us pull into focus a simple three-part message; making our green future, and becoming a world capital of green manufacturing; supporting our young people and finally rebuilding safety and nurturing the community spirit. These felt like Labour things to do, it capitalised on what people thought was best about our movement and it rhymed with the things people felt had got us through the crisis. We summarised it under a simple, bold, ambitious heading: a new future for the heart of Britain.
From this I worked with my brother and Fiona Gordon to develop both a message plan and a long arc for our print with a mixture of three direct mails and two newspapers and waves of digital ads. By early June we had finalised our first mailing: a friendly and open letter to people checking in, seeing if they were okay and providing a pretty open survey designed to extract how people were feeling and their point of view about the agenda we’d pinned down in focus groups.
Finally, it felt like progress. But as John Reid used to tell me incessantly at the Home Office, ‘no plan survives contact with reality’. And so it proved. Everything was taking forever. In large part, I was to blame. I wanted to get it right. I revised stuff endlessly. But by early July, just as the John Lewis in New Street station closed, we had a message book that was outstanding and a direct mail that was ready to go to print. Now we just needed to hand deliver it to a quarter of a million homes. And we were about to hit the realities of a party machine that still wasn’t match fit – and divisions in our own ranks about how to work with the Tory Mayor.
The Labour family was divided about how to respond to the crisis. Few of the Labour leaders were up for challenging the mayor’s policy leadership and so ended up signing up to his proposal for a far more modest plan to reboot the region. I understood the dilemma but it was a problem we never fully resolved. In early July, Yvonne Davies the leader of Sandwell Council was suspended. Anneliese Dodds on her first visit to Birmingham as shadow chancellor was scheduled to visit Northfield – yet no one had bothered to tell me. I found out about the visit from Twitter at 9 o’clock that night. She was mortified when I rang her to let her know. Keir joined us for his first visit to the region on the 18th July to Coventry College. It went brilliantly. People wanted to talk. He’s an excellent listener, and authoritative when he sums up. Yet somehow, no one had bothered to tell Colleen Fletcher, the local MP, who’d actually attended the college.
It wasn’t until early August that I finally managed to get a conversation with the new general secretary David Evans. By this stage we’d been nagging people about the budget for three months. We’d reached the point that some staff we’d had to bring in were not getting paid. But David was already under huge pressure.
‘We’ve got this massive set of elections’, he pleaded; ‘not just the local elections but the national elections in Scotland and Wales’. At best he estimated he had a third of the wherewithal he wanted to fight the elections. And here we were asking for £365,000. With a goal of raising around £150,000 from private sources. That was the minimum – and it was a quarter of what the Tories were spending.
Because we relied on hand delivery of material, we needed to customise our literature down to 228 wards, to help make sure local activists were motivated to do their bit. But that entailed endless negotiation with colleagues about what the literature looked like. Without Gareth Snell’s patience and persistence it would have proved impossible. Constantly we were knocked sideways by surges in Covid infections. In the third week of August I finally managed to get a few days holiday, to only to spend almost all of it trying to navigate the new lockdown in Birmingham. There was a constant stream of phone calls from Dido Harding, Jon Ashworth, the leader of the council and Birmingham MPs, as we tried to frame the strategy, sort our asks of government and crystallise messages for the media.
By September, there were some signs of movement. The direct mail was really starting to shift, the first of our digital ads went up, and we finally drew level at 40 to 40 with the Tories. Anneliese came back for a brilliant visit to LEVC in Coventry, maker of the world famous electric London cab, to help launch our new Green Manufacturing Taskforce. Keir came back for a superb visit to Walsall, where my team had organised for all our council leaders to come and have a photocall. Obviously a local row meant we had to do this in the informality of a local Indian restaurant but it went well and so did his interviews.
Liam and Keir in Walsall Market
But what was extraordinary was walking him back to the station through the busy Saturday market. As I stuck to his shoulder, tight as a magnet, I saw just how people responded to him. He had a simply brilliant reception. People knew him, wanted to chat and respected him. He left on a high and texted me back to say ‘Was great to see you & photos are fabulous” He was right. It was exactly what we needed.
We’d carefully organised our photos of Keir with local leaders to light up our next newspaper, which looked brilliant. The front cover had a nice picture of me and Simon Foster outside factories, with a simple message ‘Jobs, Jobs, Jobs’. We used the pages to publish the results of the thousands of surveys now flooding in. They were revealing. They showed people were super-worried about the future, with around half of people prioritising jobs as the number one issue followed by law and order.
Overwhelmingly, people felt the silver-lining from lockdown was a stronger community spirit, though people also appreciated cleaner air, spending time with family and the local environment. In fact, there was a real sense that politics had now become not just local, but hyper-local; focused on the state of the street, the park, the local parade of shops. Unsurprisingly, lockdown had shrunk the circumference of peoples’ horizons. Inside, we had a nice column from Keir Starmer and on page 3, a simple three-point plan to illustrate how we wanted to make the region Britain’s capital of green manufacturing.
But looking back on it now, it was just too high level; too Delphic and simply not practical enough for the here and now crisis that people confronted. That was my fault. By contrast we did have very clear plans on policing and our pledge to increase neighbourhood police numbers. Simon Foster zeroed in on that brilliantly. Crucially, we suffered from the contrast with Andy Street who could talk about what he was doing now whereas we were talking about things that we wanted to do in the future. And some of the things we proposed – like support for wages to protect jobs, or a job guarantee scheme – required a Labour government rather than merely a Labour mayor.
The truth is we were a bit dismissive of Andy’s campaign. It was, well, boring. There were no grand sweeps, vision, ambition. But Andy Street could talk about the money the government was actually investing in the region; it looked cheesy, complete with endless picture of hard hats – which by the way focus groups detest – but it looked practical and crucially underlined his access to Rishi Sunak and Boris Johnson. He looked like a man who was getting on with the job. That’s the power of incumbency. The word ‘Conservative’ by contrast was in a six point font on the back page of a newspaper in various shades of green. But to be fair it was overwhelmingly positive and constructive with only the mildest pop at me here or there.
As new restrictions were coming down the tracks, we were once again running into budget problems. We didn’t have enough activists to deliver the newspapers – and by 14 September, the rule of six was complicating campaign activity. We couldn’t afford the Royal Mail. So we opted for a network of delivery companies that proved a bit of disaster. Once again, we felt we had the message and optics right. We just couldn’t communicate the message. And then the party decided to cut a budget once again. Worse, the new polling that showed us neck a neck wasn’t such good news in the Midlands where we were still ten points behind; our recovery such that it was, was delivered by a bounce in in London and the north.
By October the strain was really starting to show. I was exhausted at pouring in the kinetic energy day in day out. In exasperation I wrote another missive to David Evans and Morgan McSweeney with a plea for resources. They must have thought me a terrible, demanding primadonna. But this campaign wasn’t some picaresque little adventure for us. We thought a Labour victory was critical not just for the Midlands, but to rebuilding the foundations for a Labour government.
After five weeks, the first direct mail was still at best 70% delivered and it was clear our volunteer base was weakest in the places where hitherto, Labour majorities were largest. We were getting feedback that party volunteers would struggle to get anything else out that year. And we still had at least two products to deliver!
We were struggling either to create ads and still lacked any Facebook strategy or digital campaigners despite our incessant nagging of the head office digital team. They were first class but very, very busy. Although I’ve been asking for awhile to get online newspaper ads delivered we just didn’t have the resources to do it. At best we had six organisers but they were now doing huge amounts of delivering direct-mail and we needed to pull them off to help organise the next wave of print materials. Nor did we have any capacity to actually enter the data from the thousands of replies from surveys that we had or in fact to write back to the people who would kindly got in touch with us. I was having to provide a lot of management of the communications operation, which given our constraints, I was pushing much too hard. Volunteers were doing the media monitoring. The Co-op Party, thank the Lord, stepped in to help us organise a policy task-force. Thanks to Jack Dromey and Lee Baron, the TUC in general and Frances O’Grady in particular were utterly brilliant in producing their first regional recovery report and letting us join their launch. It was hugely influential on our thinking, and actually was part of a superb, practical, grounded set of proposals, rooted in the realities of working life, that we sought from regional unions like Usdaw, Unite, the GMB, Unison and the Musicians Union. It was welcome stuff. We were straining with our capacity to take the party members through the business of writing a manifesto, but I was determined to maximise members’ input. It is just the fastest way to good ideas. But without my head of policy, the incredible Jake Sumner, working every spare hour God sent, we’d have been lost. I was now literally feeling sick with worry.
Jack Dromey, in his wisdom, asked me to pull together a six page organisational review which revealed the huge gaps in our press and digital operation. We were proud of what we’d achieved. We had pulled the party together after the catastrophe of our general election defeat, created a good message strategy based on good research and delivered the first region-wide direct-mail. We’d designed-up seven newspapers, hosted two leader visits and were knocking out two to three proactive stories a week. I’d also raised about £55,000.
But we were at least five organisers short in Birmingham alone, where we had about half a person’s time in a city which we wanted to deliver half our vote, and we were relying on volunteers to help us organise events and visits. When the three tier system kicked in on 14th October, Andy Burnham was quickly out calling for the support his region needed. I thought we should follow suite. So we put on a press conference to set out the ask for Birmingham. On our grid call the night before I asked who was actually staffing the press conference which would take place on the steps of Birmingham’s Council House. The meeting just went silent. We were struggling with the basics of political communication.
Still, we drove the ‘machine’ on. By the end of the month we eventually got a digital ad strategy, which was very focused on trying to drive a differential turn out with core Labour voters, encouraging people onto postal votes and raising the awareness of the vote. But basic things like Google ads which we knew would make a difference we barely got round to organising. I was pushing, pushing to get next direct mail done, which eventually landed in Birmingham on 13 December. But of course, we had barely anyone to help organise delivery. I turned up at our headquarters on a Saturday to find our heroic Birmingham activist Cory Hazelhurst, who didn’t even work for the Labour Party, trying to organise on his own, 100,000 direct mails in hundreds of huge boxes on the pavement of Bristol Street. There was nothing for it. My son John and I rolled up our sleeves and spent the rest of the day helping Cory lug around the boxes into order to go out to a city of a million people. It reminded me of my younger days unloading prawn trawlers in Australia’s Northern Territory. You had to laugh.
But just as we were getting organised, the Covid caseload surged. On our calls with the hospitals each week, it was becoming clear the city’s intensive care units were almost out of space.
Crisis. January 2021
Looking back on it now, I see how our campaign was destroyed by decisions in the final hours of December and the first few days of January. Not by us. But by Boris Johnson.
By early December it was clear that the country was in a race between the virus and the vaccine. On the 8th December we discovered from ITV that Birmingham’s hospitals had not actually been prioritised in the first 50, for vaccination rollout. We couldn’t believe it. I immediately raised it – for which I was attacked for ‘scaremongering’ – but it wasn’t until two days later that we got news from NHS leaders that delivery was coming Friday night – ready for a Saturday start. It was, as one NHS leader said to me, ‘a shambles’.
Over Christmas, the caseload had continued its remorseless rise and then we got the news we’d been dreading at 16:27 on 30th December. Gareth Snell messaged to say ‘Party are going to say that leafletting is *not allowed* in Tier 4’. I’m not sure the Party had much choice. But for us, it was a disaster. We tried to argue that a blanket ban was ridiculous. Why couldn’t members go out for a walk and deliver a few letters? After all, the Royal Mail was still delivering.
That night I messaged back to say, ‘I think it’s probably time for us to ask for a meeting with kier/ Angela so they’re totally clear how difficult this is…There is also a cheeky question of some financial support to pay for posted DMs…HQ seems determined to lose this’.
That was unfair of me. Their hands were tied. But I was frustrated that while we were being banned from doing anything there was no advice on how we ought to adapt. I just couldn’t see any evidence anywhere of an elections strategy. Worse was to come. On 4th January, the ‘frustrating and alarming’ spread of a new variant – and a 100,000 lives lost – triggered a new national lockdown which knocked out our field team. Hundreds of thousands of direct mails, which we’d sweated blood to ready for Christmas were locked in activist’s living rooms and car boots ready to go. But ordered to stay.
Right at this time came worse news that the Party would not after all have the funds to finance our short campaign – that final month-long burst that is seen as critical to victory or defeat. We were stuffed. I frantically messaged Jenny Chapman to plea for help, but I’m not sure there was much she could do. Meanwhile Mr Street’s newspapers – printed and delivered by the Royal Mail at at around £150,000 a time were landing on the door mats. Thump, Thump, Thump…
With lockdown we had to completely rethink our strategy. We had built a good network of hundreds of activists but they were not now allowed out either to talk to voters or deliver direct mail. We were screwed.
Better news came when the Party at last sorted out the management of our regional office. Since my selection, I think I saw the old Regional Director – who was after all responsible for elections in the region – about twice. In ten months. The new RD, Richard Oliver was a breath of fresh air. Clear, sharp, determined, Labour to his fingertips with a no nonsense style and a determination to win. He quickly re-organised his team, put extra staff into Birmingham and insisted everyone started using the Party’s great new call-centre system called Dialogue. It had a choppy start but the Party quickly sorted out the technology. The problem was the politics.
Our script basically asked, ‘how has the crisis been managed? How about jobs? How about Keir?’ The problem was the answers always tended to be ‘good – good – don’t know’. We risked leading voters down a path to affirm their support for the Tories.
Nevertheless, by the end of January we’d made over 2000 contacts, and 64% were breaking Labour. Richard messaged me to say “it is easily enough of the voter pool to win” and by early February we were able to use the system to sign people up to postal votes.
We were now beginning to land blows in the regional media – which had studiously avoided the race in 2020 – thanks to Olly Longworth, who we had brought on board part time, to help improve our communications together with Helen McCulluch, the superstar East Midlands regional press officer. Helen cooked up a new strategy of organising roundtables on hot topics on Zoom and inviting the media along. We got good hits for our work on the need to use pharmacists to deliver vaccinations and the plight of students. But it didn’t take long for the media to get bored.
So we looked hard at the work of people like Tory Ben Houchen who built a powerful Facebook presence for the Tories in the north-east to see what we could learn. Our new, amazing digital officer Alex Aitken together with our intern Tom Beardwell who took leave to develop a strategy using Streamyard to organise virtual events in every constituency which we could beam through Facebook Live so at least we can provide a way of talking to at least some residents. It wasn’t the Beto O’Rourke tour of every county that we’d hoped for. But it was as close as we could get.
The numbers logging on was never in the hundreds, but it worked absolute wonders for our Facebook engagement. We also mastered the art of working in Facebook community groups. Tom Beardwell built an index of a couple of hundred of them across the region so that at least we could begin sharing news strategically once or twice a week. What we quickly found was that the Tories were not only firmly bedded in, they had actually built their own ‘white label’ community updates network which looked like a local news site but which was in fact run by Tory operators.
Mastering digital events did allow us to do some things better. So, to kick off our campaign on the 20th February, Richard and Helen organised a brilliant online members conference. Keir came to kick us off followed by a regional press round and over 500 people joined in to share views on the final manifesto.
I pitched the launch squarely at the plight of the next generation where the mayor had said almost nothing. “When we shortchange children’ I said, ‘we short-change our future. That is why the defining mission of my mayoralty will become the place that gives young people the best life chances in Britain’. I went on to set out how I thought we could become a global capital of green manufacturing, the place the makes the things the world needs to save itself, while creating over 21,000 new jobs in a Green Industrial Revolution.
‘We want to create here in the region that led the carbon revolution, a new leader of the zero carbon revolution. The first city region in Britain to go net zero carbon. The region that makes the things the world needs to cut carbon’ I said. But crucially, I wanted to root this story about our future in the pride I knew people felt about the past.
‘When my great grandparents came here to set up shop in Kings Norton, they came because they had heard from far away that here was a place where “if you could draw it we could make it. Well this century needs us once again to make history by inventing the future’.
For the first time we’d set out the thirty failures which Andy Street had presided over. Keir messaged me later to say ‘‘You’re running a fantastic campaign – energy, passion and a winning mentality.’ But it was a collective effort that was so impressive. By the end of February we were making 1000 contacts a week on the phones – and 62% was saying they were Labour. And then, just about detectably, the tide began to turn.
The Tory Party is an absolute master of the art of using incumbency to win elections – and this campaign was no exception. They were not mucking around. At the end of February, they announced new headquarters for Department for Local Government in Wolverhampton – something our local Labour leader somehow didn’t mention to us – and in quick succession came announcements on moving chunks of the Department of Transport to Birmingham, a deal between the BBC to re-locate a tonne of new programme making to the city, followed by a Commonwealth Games Legacy strategy which was the DCMS had been holding back and suddenly agreed at 4pm one afternoon for immediate announcement before purdah.
Meanwhile, we still had no clarity on rules for campaigners. The best we knew was that hand delivery of letters could be allowed from the 8th of March and political campaigning could be a lawful reason to be outside your house. That meant we had lost two clear months in the crucial quarter running up to election day. But our challenges went deeper than that.
As the vaccine programme gathered steam, the Tories, inexorably began to refloat in the polls. At peak, eight out of ten voters felt they were doing a good job on the single issue that mattered most to the country: the vaccination programme. We delivered a good BBC package on our launch but as the vaccination roll-out gathered pace the government was reacquiring an air of competence and a mood was growing of ‘let’s just get back to normal’. We were banking on a ‘change’ election. In fact, the market for ‘steady as she goes’ was suddenly bigger. The media zeroed in on the great unlock and nationally, we’d not quite got ahead of that curve. That’s when the lobby decided to turn on Keir.
For some time, our challenge was that we did not have a properly researched campaign to take on Boris Johnson and nor was our story anywhere clear enough. I had a moan to Morgan McSweeney on 27th February to say ‘the challenge at the moment feels like we cannot see the wood for the trees of Labour’s opposition. We see day by day the small nights of disagreement… But we can’t see the big picture’. We could point to a library of material about how the Tories wanted to brand Keir. But we didn’t seem to be having the same debate.
Later that week I messaged Jack Dromey to say ‘I think the National party is now allowing itself to fall into a very very serious position. There appears to be no polling, no focus groups, no clear message or message strategy and ahead of the budget, there are at least four different lines of argument in the media. We’ve been hammering away a competence for a year, rightly but that card is no longer the trump it was and we’re not dealing ourselves any fresh cards.’
Worse, by the end of February I was compounding the problem for our team. The patchy delivery of our pre-Christmas newspaper plus the lockdown which stopped us delivering ‘Direct-Mail Two’, meant that for many of our target voters, we had not delivered anything for nearly 8 months, while the Tories had delivered three newspapers and a direct-mail in 2021 alone. I was still pushing for a couple of stories out the door every week, but now I was now agonising about how to make sure we used the extra money – raised thanks to incredible efforts by Richard Parker and Stephen Goldstein – to write to the right people. We couldn’t afford the £150,000 needed for Royal Mail delivery of newspapers to every home. We had at best £52,000 for an extra run of postal vote sign-ups plus an extra mailing into Birmingham, where we knew we had to maximise turn-out – and Solihull, where we needed to hold down the Tory vote.
This provoked the regional director getting tough with me. Richard urged me to let go of the print process; ‘Once again a very very good but perhaps less than perfect direct-mail leaflet is infinitely better and no direct mail leaflet… This may mean that some are less than perfect but do you have an excellent team working on this… And I am certain that everything will be of an extremely high quality”. I rolled over and got out the way.
The final weeks
As we shifted into the second week of March, the ground finally started to open up. By early March the polls had us about 13 points behind. It didn’t feel like that on the doorstep but the Tory budget landed very well and only stalled in the wake of the row about nurses’ pay. On 10th of March, we learnt that the Labour Party was launching its national campaign but frankly it was pretty difficult to understand the topline message and bizarrely although we were fighting the key election in England we weren’t asked to be involved.
Still we had the start of hustings which were more than enough to keep us busy – and they seemed to go to our advantage. After one of the first business community hustings, we got a message back to say ‘I thought Liam did really well – he conveyed empathy with constituents, was the only one who I thought seemed to want to engage local businesses and was fully in command of the economics and employment context.” That was good news.
Labour has to tell a story about how we bring back industry
Finally, we got the green light to start delivering our last direct-mail. It was a great mailing with a tonne of empathy; it related back what we’d heard about peoples’ fears about jobs and unemployment with anxiety about rising crime not far behind, and lots of worries about young people becoming a lost generation. Locally, people had told us they wanted the same simple things sorted: clean streets, less speeding, nice parks; public spaces that are actually nice – not run down and dirty.
We set out our plan to deliver three big things: to make our region a leading centre of clean green manufacturing; a place where we have better chances for young people, by reinvesting in youth workers, mental health support and proper careers guidance. And finally, we wanted to fuel the community spirit by investing in the clubs, groups, markets and festivals that support local business and bring us together. Crucially, Simon Foster underlined his plans to bring back neighbourhood policing.
Better still was the sheer joy at being allowed back out to make visits. We’d hatched a plan to try and set the agenda for the final stages of the campaign with a key note speech each week on our key themes of green manufacturing, young people, and community spirit. Nothing made me happier than a trip to go and see Very Light Rail in the shadow of Dudley Castle – where of course the first steam engine had been pioneered – to make a keynote speech on how we as a region could make our green future. It was a strong speech and we made a great film that connected our history as the pioneer of the industrial revolution to an achievable future as a global hub of green manufacturing. But again it was impossible to get the media to pick it up and so the film was confined to the digital arena of Facebook, Instagram and Twitter, a place of few voters.
In the wake of the Tories’ blizzard of goodies for the region, I was beginning to feel by mid-March, that we were simply not strong enough to win. I wrote in my diary that night “now rather feel it’s not gonna happen’. Another 14 hour day finished with a zoom call with Christians on the Left, whose prayers frankly, I felt I needed. Still, Andy Street’s launch on the 19th of March was pretty low-key. Grant Schapps came up to join in but the sound was so bad, Andy couldn’t hear any questions. It felt a huge contrast to the hundreds of people we had had on our launch.
I was now getting frustrated that we couldn’t effect much read across between the local and the national. We were finding it next to impossible to get regional media to cover us. We needed the Party’s national media coverage to help. But, as I moaned to Ellie Robinson one evening on WhatsApp, its was very hard to see Labour’s strategic narrative especially a story about the future. I could see the logic of connecting on values like family and patriotism. But without a story about the future, we were playing 2-D politics in the 3-D world. The disconnect became clearest to me, when Anneliese Dodds returned to do a keynote speech on high streets, which was not something we really majored on.
As we sailed into the end of March, we were really under pressure. A typical week could have three hustings, three visits and events, Facebook lives, Labour community events, a keynote speech and manifesto meetings with leaders. Meanwhile we just didn’t have anybody to write a flying start literature. We knew that we wanted good maps of every borough with a handful of nice specific projects which a Labour Mayor could deliver working together with councils. But I was the only person who could write it, and so had to spend two days just banging it out. Even here, we were hampered by our own internal divisions. We couldn’t get the members of parliament in Coventry and Labour group to agree on some precise wording, and so the exec of Coventry Labour Party decided it couldn’t green light delivery of the leaflets and so devolved a decision on whether they could go out to local wards! If any of this literature actually went out I’d be amazed. Money too remained a challenge. On 25 March, our regional director messaged me to say, we were out of budget – and needed to raise more to cover extra print.
Still, what the team was now producing was incredible. When the chips are down, what Labour Party organisers – and my own team – were capable of, was truly, truly impressive. At the end of March, I messaged Gareth Snell to say how incredibly proud I was of the effort we’d pulled together under his leadership; ‘Just reviewed a host of exquisitely beautiful films, tonnes of visits – including Shadow CX – and press releases, ads are both great and rolling, DM2 is largely delivered, our slogans and pledges are both stunning and perfect to the last syllable, the manifesto is bold, comprehensive – and agreed by a united and really pleased party executive, we’ve done Facebook lives and our flying start literature is sorted, customised to borough levels with brilliant borough level pledges’. Delivered in lockdown, when we couldn’t ever be together in one place, that was some going.
Finally at the end of March, we were allowed back out on the doorstep and after a couple of very heavy weeks getting manifesto slogans and pledges sorted along seven versions of our flying start literature, it was just amazing to be back on the doorstep. Our vote seemed strong and with a united – and excited – Party base, we could at least give the Tories a run for their money. It still felt like there was all to play for.
The manifesto was a beast. Forty pages long with 108 pledges. But it hung together well, told our story, was an action plan for office and actually united the full breadth of the Labour Movement, which we’d worked assiduously to involve at every stage. One would love to think these blueprints instantly awe the hearts of voters, but of course very few people read them. We anticipated this. So me, Jake and my brother sweated hard to boil it down into seven three word slogans each backed with a sentence of practical action. This is generally how manifestos do the driving for the final month of an election grid, and in a way, this was the stuff I was proudest of. We launched it with a day on the road visiting every borough – seven pledges for seven boroughs – which Olly managed to pitch into probably our best day of regional TV in the glorious sunshine of Birmingham’s Centenary Square. It was a good day. But in truth it was much too late. In retrospect we should have launched it at the beginning of the year and spent five months talking about them and nothing else. That bad decision on timing was on me.
When lockdown lifted, I was out the door like a bat out of hell. The heroic David Hallam, now recovered after a health scare, took leave to drive and round and round the region we ploughed. It helped we’re both fascinated by faith, Labour gossip and industrial history. One day we even persuaded ITV to come and film an interview at what was left of Boulton & Watt’s great factory, the Smethwick Soho Foundry, because we just wanted to get the history on the telly.
‘I think I’ve worked you out’, he said. ‘For you, the doorstep is a sacred place’. That was absolutely bang on. On the doorsteps is where I’m happiest. Not long after I was elected in 2004, I was at one of those drink parties in Westminster. I didn’t know anyone, and everyone just seemed to be having the best time. Siobhain McDonagh, the legendary campaigning MP for Mitchum & Morden, rescued me. And stumbling I asked her for a bit of advice about what I should be doing. ‘Coffee mornings’, she said. ‘Coffee mornings and after work get togethers. And never stop’. It’s amongst the best advice I ever got in parliament. And I never stopped. I’ve done hundreds in my time in Hodge Hill, and together with the humble art of doorknocking, I have to say its the place I’ve learned most about the sixth sense of the great British people.
This year, the atmosphere was already ten times nicer than the General Election. One glorious evening we pulled up outside a busy pub in Sandwell. It was sunny and the clientele was sitting out enjoying the refreshments. Spying our rosettes, one young man bounded over to us. ‘Labour?! Labour?!’ He shouted. With the general election fresh in my mind, I thought, ‘Here we go’. But I was wrong. ‘Give me some of those leaflets, mate. I’m going to put them out in the bar’. That was something new.
Best of all is when you meet an absolute diamond where you just want to listen all night. Mary was one of them. She was almost blind now, voted in every election since 1948, and always voted Labour. She’d been a Land Army girl, and sewed her own Labour rosettes which she proudly wore to the canteen every night, no matter who told her not to. ‘I can’t stand people who don’t vote’ she said, ‘we fought for that. We fought for that’.
By the end of April, the regional polls were showing we were 9 points gap behind, which privately, I felt was pretty impossible to close. But on the doors, our base seemed very strong and you could feel a discernible shift back to Labour – what I called the LTDs – they were Labour, shifted Tory and now had moved to ‘don’t know’. Some are shifting all the way to us. Some were sticking at don’t know. And if anything, we found a real antipathy to Boris.
I find lots of the media are enamoured with him. But the odd thing is, it’s actually quite hard to find much love for him. Fascinated, I started playing a little game with voters. ‘Give me three words’ I’d ask, ‘to describe Boris Johnson’. Most places, one word comes up time and time again; ‘clown’. But not quite everywhere.
On the doors
Out on a neat estate one lovely Sunday afternoon in Sandwell’s Friar Park I met a lovely old lady in her 90’s who wasn’t sure who she’d vote for. Asked the Boris question she paused for a moment before replying, ‘Fucking dickhead’. Technically two words, but she’d made her point with eloquence. That kind of response was not uncommon and now Tory sleaze was starting to come up. Equally, our data was even showing a shift from Tory to Not Voting. Not ideal, but for us a helpful trend. And there was enough of our data for it to be pretty solid. In the final week, we spoke to 11,000 voters, with over 30,000 people spoken to in the final month. That was more than we achieved in the previous general election. And 62% were saying they were voting Labour. Keir came back for our best ever visit to Sandwell College to help me underline how under the Tories the apprenticeship system was in free fall. He practiced changing wheels, did a spot of welding (reasonably well) and led a politics class. Above all, he listened to people in a way you could simply never imagine from Boris Johnson.
We only got one debate on the TV – which bizarrely we had to film in a warehouse outside Manchester – but we thought we won it. Steve McCabe, the Selly Oak MP who lives round the corner from me, and whose judgement I’ve learned to treasure messaged to say ‘Thought you dominated debate & had the ideas whereas he looked a bit uncomfortable & diffident…Think turnout remains the challenge particularly in parts of Birmingham where no other elections’. As ever, Steve was right.
But the debate didn’t move the polls. On 18 April, the polls were running against us. Opros UK had the Tories besting us by 52-48 on the second round. Worse we now had Labour officials openly briefing against us. ‘Liam is under the illusion he’s going to win’ one waspishly told the Times, ‘He isn’t’. Another snitty little barb ran, ‘So pessimistic are the party that they believe he will not only lose but quit politics.” Charming from your own side. Yet the numbers were worse than the narky briefing. The Times poll on 22nd April was awful. It had Andy Street on 46% and me down at 37%. Yet on the doorstep it just didn’t feel like this.
As we got closer to D-Day, the challenge was becoming clearer: the national media – not completely unreasonably – was determined to make the frame whether Keir was doing enough to ‘recover the red wall’. Full stop. And we become the test case. Even the Daily Mirror couldn’t give us a decent write-up. National journalists would wander in, stubbornly unwilling to look past the ‘Westminster view’ and with no interest in either Street’s record or the issues at stake. No one ever asked about our plans for green manufacturing. Or why the changing dynamics of gang violence, county lines, social media and access to serious weaponry, meant youth workers were more important than ever. I think we were only asked once about our plans for council tax. Superficial doesn’t even become to describe it.
As we headed into election week, the West Mids skies were full of beautiful fluffy clouds through which the sun shone warmly enough for a bit a doorstep tan, and the rain held off long enough to get some proper door knocking done. The pink and white blossom was late on the trees but on a warm day, you could smell cut grass. It was campaign joy. Old friends like Rachel Reeves, Jon Ashworth, Seema Malhotra and Tulip Siddiq came up to help. Tonnes of people joined our zoom phone banks. Our campaign in the inner cities, carefully organised by my old friend Ansar Ali Khan was superb. Campaign teams led by Gurinder Josan and Sikhs for Labour, not only kept us well fed, they contacted thousands of people. Jack Dromey has an almost infinite capacity to organise visits with our friends in the trade union movement, keeping us rooted in the world of work. But while I headed out around the region for two-three door knocking sessions a day, we pulled all our organisers back to Birmingham where we didn’t have any other elections, and just tried to get every party member we could, contacting voters.
By Wednesday 5th May, the media narrative was simply awful. Tiny polls in Hartlepool and the West Midlands had us 17% behind, while our enemies within were briefing furiously. But Keir and Angela came down to Birmingham for a final stop. These things take huge amounts of organising and it was pouring with rain. But Keir and Angela were jolly, did their TV clips and together we took a stroll through town, down to the Bullring markets for some final interviews.
And while I was waiting for them to arrive, one of those strange things happened which in a slightly miraculous way, reminded me on the eve of the poll what the whole campaign had actually been for. We were waiting for Keir and I was joking around with the staff and the media in Victoria Square when suddenly a lean, smart dressed man strode across the square towards me. ‘You don’t remember me, do you?’ he smiled. Actually I remembered his face clearly, but the last time we met, he was not this smart. ‘Two years ago, I was homeless. And you helped me. You helped me tell my story and get me sorted. And now I’m back on my feet and doing well’. I wanted to burst into tears. And so with wet eyes, I said, ‘Well, look at you. All smart. You look amazing. So, what’s your next step?”
“Well, the next step is getting a job. But I’m up for that now. Anyway, I wanted to say thank you.” And off he strode. I looked up to the heavens and shook my head at the extraordinary way this world works. David Hallam, who is a Methodist preacher in his spare time, looked over at me and smiled.
When election day broke, David came to pick me up. The Birmingham Post, true to form, had decided to splash on the Tories’ press release that if I was elected Mayor, I’d never get an audience with Boris Johnson. I went out and voted and then we began our final tour around the region, joining teams in every borough for an hour each on the doors, before a final run through Saltley in Hodge Hill, where election day is like a carnival and I’m with people I’ve campaigned with for years, with residents I love, on streets I know backwards. It felt good, and we broke about 8:30 and people were getting ready to break their Ramadan fast. I was keen to do a final run, so we headed out to Selly Oak for one last blitz with Steve McCabe’s team, for the karma as much as anything else. We finished about 9.30 in the evening, deliriously happy that it was finally all over. The rain held off, and an exhausted, happy team came back to pile under the gazebo in my garden for a few libations. We lit a fire and candles and in the dancing firelight we drank the drinks cabinet dry, laughed, reminisced and told stories into the wee small hours. That was one fine team.
***
Birmingham doesn’t count votes fast. I knew it would be slow. But when news from Hartlepool arrived, I knew I’d lost. And so it proved. That night across our region, we were wiped out in Dudley, knocked back across the Black Country, and heavily defeated in Solihull.
In the West Midlands, we were forecast to lose by 17%, and we slashed that margin to eight points. We got our police and crime commissioner elected, amassed 46% of the vote (after second preferences were counted) and in terms of sheer raw number of votes, moved our numbers up by 14% on last time. We’d added nine per cent to the first poll we had taken before the race truly began. But the Tories’ doubled their vote in places like Dudley and Solihull, consolidating the old UKIP vote which collapsed and then going further.
WITH ANDY STREET AT THE COUNT
I didn’t write a victory speech. Just a speech to say thank you, good luck and to say something nice about Andy’s mum, who had tragically died of Covid in Heartlands Hospital in my constituency that February. ‘I know she’s looking down today’ I said ‘and is looking on with pride’. I hoped he’d appreciate it. And then, we strolled out as a family through the grey car park of the NIA, through the grey damp of the drizzling afternoon to the car. I felt the rain on my face and cast a glance towards Edward Street, once the home of the Church of the Saviour, where a century ago the ‘civic gospel’ was born in the sermons of George Dawson. Seventeen of his congregation were elected to the Town Council and six were elected mayor, including one Joseph Chamberlain. I was not to join their ranks. I think it rained for the next fortnight.
Defeat is the toughest teacher. But unless Keir Starmer confronts Labour with tough truths in Brighton, defeat is what we face in the election still to come.
I learned the hard way. In my May race for the West Midlands Mayor, we made progress to be proud of. Our sheer, raw vote tally moved up 14%. A large step, yes. But nowhere near enough to crack the Tories’ cementing of the Right.
What is true for the West Midlands is true for Britain and that’s why five lessons must now be gripped.
Our strategy can’t simply be ‘rebuild the Red Wall’ – or ‘conquer Southern Discomfort’. It’s both. It’s time for a 45% strategy.
For understandable reasons, the media is obsessed about whether Keir Starmer is winning back the ‘red wall’. But go back a few years, and the question was very different; it was called Southern Discomfort and described our inability to win in the south. The truth is that we need to win seats in both the north and south.
LIAM AND KEIR CAMPAIGNING IN WALSALL
In fact, if we look at the seats where we stand the best chance – the constituencies where the Tory majority over Labour is under 6,000 but the Remain vote was over 40% – we see that twenty of these seats are in the Midlands, East of England, London, South East and South West. There’s another eight in Wales. All told, just 16 of these seats are in the North East, North West and Yorkshire.
ConstituencyName
Region
Majority > Labour
1
High Peak
East Midlands
590
2
Gedling
East Midlands
679
3
Derby North
East Midlands
2,540
4
Lincoln
East Midlands
3,514
5
Northampton South
East Midlands
4,697
6
Broxtowe
East Midlands
5,331
7
Wolverhampton South West
West Midlands
1,661
7
Watford
East of England
4,433
8
Norwich North
East of England
4,738
9
Ipswich
East of England
5,479
10
Kensington
London
150
11
Chipping Barnet
London
1,212
12
Chingford and Woodford Green
London
1,262
13
Hendon
London
4,230
14
Cities of London and Westminster
London
5,425
15
Hastings and Rye
South East
4,043
16
Reading West
South East
4,117
17
Wycombe
South East
4,214
18
Stroud
South West
3,840
19
Truro and Falmouth
South West
4,561
20
Filton and Bradley Stoke
South West
5,646
TWENTY OF THE MOST WINNABLE SEATS FOR LABOUR (REMAIN VOTE > 40% AND TORY MAJORITY UNDER 6,000) ARE OUTSIDE THE ‘RED WALL’
This has big implications for the way we prioritise contact with voters. In the West Midlands mayoralty race, we prioritised four groups for contact;
Core Labour, who were very likely Labour supporters, as identified by voter ID in 2019, 2017 and 2015 and Labour scores. This was the bedrock of our vote.
‘Core Turnout’ who were very likely Labour supporters but had a patchy voting record. Again their voter ID was from 2019, 2017 and 2015 and Labour scores.
Likely Labour-Lib Dem and Labour-Green switchers. Highly likely to have voted for both Labour and one of the other two parties in past elections, and often middle-class, home-owning families, young professionals, students and renters/owners.
And, Labour-Tory/Brexit Party switchers, who were highly likely former Labour voters who typically left us for the Tories or Brexit Party in 2019 and more likely to be middle-aged.
In retrospect, our strategy of trying to connect to and turnout these voters was faulty because a lot of our data was pretty old, and predated both the Brexit referendum and 2019 election, and second, we were less focused on actually trying to switch voters away from the Conservatives to Labour. In a sense, we were aiming too low. But ultimately, this task of persuading former Tories to vote Labour is the only way you can really win a General Election. We have to aim at winning 45% of the electorate – not 35%.
This has two big implications.
First, it means adapting our coalition as Britain has changed.
One story makes my point. I wanted to do a manifesto for white van man and woman – the self employed plumbers, sparkies, chippies, plasterers, painters and decorators. I started working life driving white vans. I love them. And out in Northfield one night, I met a self-employed builder who’d lost £20,000 because he didn’t qualify for any of the government help last year. Yet our plan would have helped him. David Hallam and Jake Sumner drafted a brilliant little press release which declared ‘Local tradespeople will see their businesses boom if Liam Byrne wins next week’s West Midlands mayoral election. They will be a core part of his plans to bring back industry to the region’. We pointed to our ambitions to bring back industry, use a big retrofitting programme for 1.2 million homes to drive business to local tradespeople, push public procurement into buying local, and fighting for the rights of Excluded UK. We set the stage to launch it with Anneliese Dodds. Now, I knew it wasn’t going to splash the papers, but I wanted to make a point; that it was time for Labour to start connecting to workers and families, like the self-employed, who need Labour-shaped solutions.
Launching our white van manifesto with Anneliese Dodds
But guess what?
How many Labour members are white van drivers? I nagged for weeks, but no-one could find one. Eventually I rang a friend of mine, who was both a councillor and a plumber in Sandwell and twisted his arm to come to Birmingham. And with Anneliese Dodds, we made a lovely little film in the rain. But here’s the big picture point: in the West Midlands there are 100,000 people who work as contractors or from vans. That’s one in 12 of the West Midlands workforce. How could the party of labour not focus on their needs? Especially, because at the next election, they’ll be more self-employed workers than public service workers.
But, this isn’t the whole story because we also have to fix our non-working class problem. In some of the media debate, there’s an odd argument about whether Labour has a ‘working class’ problem because we trail amongst social class C1 and C2. But this misses the big picture. Amongst all working age adults, Labour has a narrow lead. But amongst the over 65’s we lose the popular vote by over 3 million. A third of the Tory vote is over the age of 65. Given we’re an ageing country, we simply cannot win unless we improve this position.
If we look at the challenge at a constituency level, things are very clear. Thirty five of the seats where the Tory majority over Labour is under 7,000 have a higher than average number of pensioners. Winning back at least a portion of the ‘silver vote’ is mission critical to winning an election and aiming at 45%. The grey wall not the red wall is our bigger challenge.
2. Stop the policy ’til we get the story straight.
I love policy. I could discuss it all day. I drove my team bananas with our policy-driven story making each week. They were often too polite to tell me they thought it was a waste of time. And to a degree they were right. Because the media is now less interested in policy than at any time I can remember. They just don’t cover it. Today, a good story beats policy every time.
I’d been trained to do story-led news in the new Labour years. You take the issue of the moment. Analyse it. Crunch the numbers. Figure out the proverbial five point plan and bang it out. We did this upto two-three times a week. Using pharmacies to vaccinate. School computer shortages. Gigafactories. Green manufacturing. Ten page letters to the Chancellor with comprehensive economic recovery plans. Support for veterans.
We were nothing if not creative. But the media just wouldn’t pick it up. It was soul destroying. TV news was wall-to-wall Covid and the regional papers were written by about four or five people, some of whom were viciously hostile and some of whom were actually based in London. And so we’d be reduced to pushing our short films out on Twitter and Facebook.
Now that looked busy. Activists liked the energy, the tempo, the leadership. But it just didn’t break the local sound barrier. And as we got into the campaign my opponent Andy Street literally stopped doing stuff on telly. And so the BBC wouldn’t cover us because it’d skew their balance. Hustings gave us some chance to air the argument. The BBC at least organised a West Midlands hustings – albeit in a warehouse in Salford – but even our key local paper, Birmingham Live was reduced to wasting most of its precious hustings trading in lobby gossip rather than getting into any specific ideas. It was beyond banal.
Now that said, what Labour lacks today is not ‘stories’ – but a special kind of story; what’s called a strategic narrative. A strategic narrative is a morality tale that says who you are as an organisation. Where you’ve been, where you are, and where you are going. How you believe value is created and what you value in relationships. It explains why you exist and what makes you unique. For some years now, thinkers have argued strategic narrative is the key to soft power.
At the beginning of the new Labour years we actually had a short sharp debate on exactly what our story should be – and rewrote clause IV.
We will not make progress until this is sorted. In a world of spiralling inequality, our Clause IV – the definition of our aims and purpose – doesn’t mention inequality and says precious little about tackling climate change. So our challenge feels like we often cannot see the wood for the trees of Labour’s opposition. We see day by day the small notes of disagreement entailed in ‘constructive opposition’ but we cannot see the big picture because the big picture is just a bit too foggy. The result is our opposition doesn’t cut through as it could because the different attacks don’t reinforce a larger legend. A strategic narrative turns communications upside down. Instead of opposing everything, or chasing the issues of the day, we look strategically for the stories, issues and policies that help us communicate the big picture of what we’re trying to say.
Now as it happens, we felt in the West Midlands that we did develop exactly this kind of narrative. Our young digital organiser, the brilliant Alex Aitken developed a film that coupled a nostalgia with the region’s past with a vision for the future as a green manufacturing powerhouse. We didn’t eschew nostalgia. We embraced it. But we weren’t trapped in it. We used it a trigger – our ‘once upon a time’ – to tell a story about what could be; what I summarise as ‘build our future with the pride of our past’. We deliberately chose our slogan not as ‘build new industries’ but ‘bring back industry’ because we wanted to connect to the emotional sense of loss that so many of us feel about the decline of manufacturing that once made us the workshop of the world. It was by far and away our most successful film – but we simply didn’t have a national story or message that rhymed or reinforced what we were trying to say in the region.
3. Culture wars can be our friend – if we bring the best of our culture to the fight
We know a key part of the Tory strategy will be to perpetuate a sort of culture war on ‘wokeness’ in an attempt to divide us from traditional voters. It’s tedious but true.
Today, the ranks of the Conservative parliamentary party are packed with ‘Podsnap patriots’. Like Dickens’ eponymous hero of A Mutual Friend, too many of their MP’s are well satisfied with most things, and, above all other things, with themselves. Lots feel other countries are “a mistake” and foreigners “unfortunately born”. As John Le Carre once put it, they’ve never travelled far enough to know the difference between self-interest and national interest. But they will now unveil all manner of brittle initiatives, sound bites not strategy, decked out in union jacks, saluted as the patriotic fruits of our newfound independence and featured in glowing terms on the front page of the Daily Mail. Behind the arras, the upper-class jobbery will proliferate while a tolerance of incompetence is led by a Cabinet of mediocrity. The pinnacle, the beacon, the deep core of the British state will be a Cabinet of the under-whelming. Inspiring stuff.
But the key to avoiding this trap is to be a hell of a lot clearer and prouder about the culture that gave birth to the Labour Party in the first place; the culture of compassion, cooperation and mutual aid that animated the trade unions and coops of the 19th century which in turn gave rise to the Labour Party. The Labour brand has been damaged by recent years. We’ve been hit hard by what’s known as the ‘dealignment’ of voters, the withering of age-old affinities. There are fewer partisans in our corner these days, and that’s hit us hard.
But, our values, the values that gave birth to the Labour Party are alive and well in Britain. We saw them everywhere during the pandemic. In many ways the community spirit got us through the worst of moments before the vaccine arrived. In the Labour Party, our basic instinct is to look after each other. It’s the fountainhead of much of what we believe. And it’s been there right through our history.
EVERYWHERE YOU GO, YOU CAN FIND LABOUR PEOPLE MUCKING IN TO HELP OTHERS
EP Thompson once noted that it was the words of Isaiah 41:6 that adorned the first banners of trade unions and coops; ‘They helped everyone his neighbour and everyone said to his brother, ‘be of good courage’. A century later, Clement Attlee, after his time in East London at the end of World War One, was writing books called The Social Worker. If you’re a socialist, you believe in society, and you are therefore a worker for society, or as we say more often these days, a community. Labour is the community party. That’s why as a campaign, we put so much emphasis on a culture of social action; it’s not something that can or should be outsourced to ‘community organisers’. It’s something that every Labour leader should lead. It is intrinsic to our culture, our history, our soul. We should talk about it and campaign about it. Not simply because it will win us votes – though it will because the Marcus Rashfords of this country will always out-class the Priti Patels. We should do it because it’s who we are.
4. Radical is good. Plausible is better.
In the aftermath of 2015, Ed Miliband’s strategy was been condemned for being too, well ‘retail’. The ‘Edstone’ of infamy came to be seen as the nadir of a plan to entice voters with a sort of ‘vote Labour and get a microwave’ approach. It’s why we have to have a narrative first, and policy second. We have to start with a vision of what a good life under a Labour government will look and feel like. And then we do the policy. But typically a challenge quickly follows: is it radical enough? Can I be more radical than you? Everyone in the Labour Party thinks we need radical policy. Even Tony Blair. This is understandable because so much needs to change.
But, what we rarely debate is: is it plausible?
Will voters believe we, the Labour Party, are capable of actioning the stuff we say is needed? As it happens, plenty of radical policies are plausible. Voting for Brexit is pretty radical, but people believed it was possible. But there is literally no point being radical if voters don’t believe a word of it. They won’t let you near the levers of power. Voters are now deeply cynical both about politicians’ ability to tell the truth, and worse, their ability to actually change anything.
In our focus groups, I wanted to explore this. So I insisted we do a little exercise that asked voters to rank what was a priority – and what actually sounded plausible.
After a general election campaign where we were roundly attacked for promising ‘pie in the sky’, I wanted to get a sense of both what people thought was a high priority and what people thought was plausible. The results were fascinating.
People thought that manufacturing, policing and support for young people were both a high priority and areas where plausible offers could be fashioned. But people were far more sceptical that anything could be done about the ‘environment’ in the round, transport or support for self-employed and SMEs. Fixing the housing crisis fell somewhere in the middle. Old language that harked back to the past like ‘Bobby’ or ‘new deal’ simply met a wall of cynicism. There was no market for partisan attacks or unrealistic claims like ‘100%’ or ‘job guarantees’.
I would agonise a lot about whether our ideas were clear enough. Were our policies too theoretical? Too complex? Were they credible? I’m convinced that the way we frame things – and combine things – has a critical bearing on whether we’re believed. At first, we ran on ‘jobs, jobs, jobs’. But how many believed (a) Labour and (b) a mayor could do much about this? We’d have been more plausible running on manufacturing right from the start, a belief in which many voters see as there in Labour’s marrow. Voters are far more likely to hire the right people (and party) for the right task. Andy Street’s plan was far, far more modest than ours. We looked at it and just said to ourselves; is that it? But to many voters, it was probably more plausible than ours.
The hardest bit is then to make some choices about what we say and what we don’t. In truth, Labour’s appetite for unity is clouding our acuity. Sit in a manifesto planning meeting with Labour activists and you’ll soon find it’s impossible to leave anything out. So we end up with a message that’s so over-laden no-one can understand any of it. That challenge is more pronounced in today’s world of information overload. I tried desperately hard to boil down our pledges to seven. I should have had three. Or one. Mea culpa.
5. We have to fix the broken machine: half our problems aren’t ideological. They’re organisational
IN the wake of my defeat, I was talking to an old friend who asked me straight: was the defeat organisational or ideological?
I have to say I think it was half and half. We’d built a unity in the party – thanks in no small part to the heroics of Jack Dromey, Gareth Snell and Cerys Way – but the campaign machine we inherited was well and truly broken. If anything Keir needs to be far blunter with the party about just how bad things had become. By the time we got close in on the election, we still had members of Labour Party staff briefing against me and the campaign.
Now, its possible that some of these staff were those who’d been openly telling councillors that they ‘had’ to support Salma Yaqoob during the selection battle. But, 12 months on, it said something that we still hadn’t managed to deploy an election fighting machine that was match-fit. And we were up against a Tory machine, that has money coming out of its ears.
At one point, I checked Andy Street’s donations in the 18 months up to £1.7 million. I couldn’t believe my eyes. They were outspending us five to one.
Traditionally, the way we conquer Tory money is with our doorstep army. We rarely see Tory activists on the doorstep – but lockdown destroyed our ability to compete. We had two hands tied behind our backs. What we could do is ring. But at best we had phone numbers for a tiny proportion for voters. Nor do we match the Tories’ digital prowess.
When push comes to shove, we can muster a first class ad campaign on Facebook. But the Tories have mastered the art of the drip, drip, drip of ‘community news’ – for which read ‘Conservative News’ – often spread unbranded in Facebook community groups with thousands of members. They are better digital warriors than us. By far.
Conclusion
Politics in Britain has changed a lot in the last ten years. The combined shocks of the financial crisis, the Scottish referendum and the Brexit vote have shaken the kaleidoscope of old politics and given us new patterns. And right now those patterns work well for a nimble Tory party, flexible, pragmatic and ruthless; prepared to change as the times change. Yet now we face a dangerous decade. As a country. And as a party. Who amongst us, has any hope that Boris Johnson might lead us through the maze of choices ahead? A man who governs with word clouds, dead cats bounces and culture wars? A man determined to perpetuate the Supper Club conception of national leadership. This is no moment for a muddler – but a muddler in chief is what we have. Yet, unless Labour moves faster to learn the lessons of defeat this muddler in chief is going to remain prime minister. We need to step up the pace of change. Learn the lessons of our defeats – and our victories – faster. Change faster. Much is riding on our success.
It’s the Foreign Secretary’s job to supply a foreign policy. Ours has failed.
The Economist doesn’t mince it’s word this week in judgement on the Foreign Secretary. It says what must be said; “Britain’s foreign secretary isn’t up to the job” it declares. Indeed, Mr Raab, claims the august news-weekly is now known to his officials as ‘5i’s’; ‘insular, imperious, idle, irascible and ignorant’.
I know from personal experience that civil servants will occasionally – in extremis – brief against their minister. But this isn’t the reason Mr Raab should go. Rather his departure is required because his job to supply a foreign policy. And in this he has singularly failed.
Though the NATO departure has been fraught with dishonour, it’s imminence was not a secret.
The US departure is not some act of new American solitude. It’s literally American strategy. And in fact it is not that new.
Since Hillary Clinton’s tenure as Secretary of State, US policy has been to pivot – or rebalance – to Asia, and ever since there are plenty in the foreign policy community ready to point out that since the policy was declared, action has fallen short of words
“Ten years and two administrations later” wrote two well placed commentators in Foreign Affairs, “it is clear that the United States has fallen short.
“In speeches and statements, the Obama, Trump, and Biden administrations have all appropriately emphasized the singular importance of Asia to the United States’ future…But such rhetoric has often been disconnected from actual U.S. policies, budgets, and diplomatic attention…What matters more is what they actually do.”
Biden knows America is no longer the world’s great cloud-herder, the Zeus-like hyper-power of the post-Soviet world. He knows he must make choices. Choices, Biden knows, are key to the preservation of American power.
“The chaotic exodus from Afghanistan need not herald U.S. global decline in the twenty-first’ writes Chatham House director, Robin Niblett; “Power in international relations is always relative. And in relative terms, the United States has far more going for it structurally and societally than its two main geopolitical rivals’.
This is true. As long as America doesn’t try to do everything. So Biden knows he must make choices, backed as it happens, by plenty of political support for a ‘global America’ which is alive and well in the United States. Americans still hanker for leadership – as long as that leadership is shared; most Americans for example would support a defence of Taiwan despite supporting exit from Afghanistan.
So this is less Biden-retreat than it is Biden-re-aim and re-load at a different target.
America’s gameplan for Afghanistan – in place since the Obama surge – was always going to have a shelf life, regardless of whether it teetered on the razors edge. For the simple reason Henry Kissenger notes in the Economist this week;
“The United States has torn itself apart in its counterinsurgent efforts because of its inability to define attainable goals and to link them in a way that is sustainable by the American political process…. Such an enterprise could have no timetable reconcilable with American political processes”.
What is more, American analysts simply do not see Afghanistan and central Asia as the same place it was twenty years ago. They mark the risk of safe spaces for terrorism as lower (not non-existent) for the simple reason that Afghanistan’s neighbours are now far more concerned about stability.
‘Today, there is a regional order that can accommodate Washington’s absence’ wrote one expert ‘The United States’ enduring military presence also spurred China and Russia to develop their own rival institutions, norms, and practices, including security organizations such as the Shanghai Cooperation Organization (SCO) and the Russian-led Collective Security Treaty Organization (CSTO)
Which is why both Democrats and Republicans had targeted exit from the blood-fouled earth of Afghanistan as a priority.
But the reason we should have had better British planning is that the American exit was not simply an exit from occupation but the well-telegraphed advent of new tactics.
Plenty of the American security establishment is fairly confident that it has not perfected but certainly evolved effective counter-terrorism tactics that don’t require large scale occupations. As one author put it this week;
When defending withdrawal from Afghanistan, Mr. Biden made clear that he has no plans to give up counterterrorism. The infrastructure of drone and missile strikes and special forces raids is indeed ramping up again after the fall of Afghanistan, an antiseptic Frankenstein monster loosed even as the gory laboratory that birthed it closes down.
So a Pacific-America however is hardly a state secret. Which begs the question of why UK foreign policy has not adapted, especially given our efforts to stick as tight as a magnet as to our American cousins.
Once upon a time the brilliant historian Niall Ferguson coined the phrase Chimerica to illustrate the symbiotic relationship between the US and China.
But it’s RussChi that should command our attention today, and the corridor of chaos along Russia and China’s West and southern border from the Ukraine, to Crimea and the Black Sea, Syria, Iran, Kashmir, Myanmar and North Korea.
Can anyone tell us what is British grand strategy for this huge Eurasian market, the largest in the 21st century, the hottest conflict zone on earth and a space our two most important geo-strategic competitors are set to dominate? I can’t. Answering that question demands a foreign policy. We know Joe Biden’s. We know President Xi’s. We know President Putin’s. What can we say about a Britain’s? The best we can say is ‘there isn’t one’.
As the smoke clears on our disastrous retreat from Kabul, the Spectator’s James Forsyth rightly points in the Times, at the hole where there should be a foreign policy.
He is quite right. And nowhere is this challenge more acute than Eurasia, the centre of the world in the 21st century.
For some years now I’ve argued that Britain needs a place to ‘turn east’. Not simply because of the rising tide of American isolationism, but because this is where the money is – and the threat. Think of the ‘corridor of chaos’ which is the buffer zone of Russo-China; the Ukraine, Syria, Iran, Afghanistan, Kashmir, Myanmar, and North Korea. It’s quite the vortex.
But now think about the economic opportunity: by 2050, the major economies stretched along the silk Road will be around 2.4 times the size of the economies of the trans-Atlantic coasts – some PPP$193 trillion on the Silk Road compared to PPP$82 trillion along the Atlantic coasts. Simply put, the Silk Road is where the money will be, which is why it is of course now the centre of China’s geo-economic ambition: the creation of the One Belt, One Road initiative.
Once upon a time, faced with a challenge like this, Britain would be an initiative-shaper not a by-stander. But where is our grand vision, our strategy for the new Silk Road? It’s our absence, our failure of imagination that creates the space for others to shape the future.
Yet here’s an inspiration from the past: in post-war Europe, we knew we needed a huge reconstruction effort – and critically new institutions to help steward the work. And from that insight we created the OECD. So, why doesn’t Britain now lead the case for a new OECD for the Silk Road?
It wouldn’t be short of work.
First, let’s take infrastructure.
Today, we in the West have very little idea about what we think our priorities for trade-enhancing infrastructure might be. What is top of the list? And how do we make sure we develop infrastructure in a way that avoids all the mistakes of loading countries with debts they can’t afford – as happened in Africa in the 1980’s? How do we make sure that labour standards are high, in a way that avoids the early mistakes of the Qatar World Cup? In other words, how do we make sure that the infrastructure of the new Silk Road is built on rules that we agree?
Second, can we agree rules around infrastructure finance? Where should the bonds be listed? In what currency? What underwrites them? Can we get western and eastern bond buyers to ensure transparency and good standards of corporate governance?
Third, is the question of financial flows. Capital account liberalisation is one of the thorniest risks that China must grasp. But financial integration is inevitable if we trying to create a common trade zone. So how do we liberalise safely? What’s the pace? What are the rules?
Fourth, is data: the essential flow for more and more trade. In Europe, we’ve just agreed new rules for keeping data safe. How we spread agreements like this along the stretch of the Silk Road? How do we resolve disputes? In tribunals? In new courts? How do we work together to develop the case law? And train the judges? These are areas rich in the potential for cooperation.
Fifth, how do we agree the tariff rates along the route? Can we work together to bring them down? And how do we ensure that when businesses make money, they pay the right taxes to the right people? Can we bring g tax transparency into trade agreements? How do we agree the rules to make this happen?
Sixth, is the question of security cooperation. The New Silk Road is home to some of the most violent places on earth, with huge numbers of conflict related deaths in Syria, Afghanistan and Iraq. How do we ensure that we work together to help keep the peace that is so essential to trade? How do we cope with the new movements of people? How we offer new sanctuary to refugees? And how do we work together to redevelop countries smashed to smithereens in war?
Seventh, at the centre of this new web is the WTO; a place where the UK is re-establishing its seat.
These are all difficult thorny questions that must be solved. But helping solve them creates influence. Put it all together and we have the makings of an architecture for locking a critical part of the world into something resembling a rules based order. Of course it leaves huge question of democratic norms unaddressed. That is not an excuse for avoiding the difficult questions. It’s an argument for getting started on a practical agenda for change.
In Peter Rickett’s excellent new book, Hard Choices, there is a clear challenge to British leaders; re-discover the art of grand strategy. The catastrophe of Afghanistan shows us, we’ve not a moment to lose.
Since the creation of the Competition and Markets Authority in 2013, competition has stalled, big companies have got ever bigger, and productivity has flatlined.
In the spiritual home, of the free market this is a problem.
And for my constituents the problem isn’t theoretical.
For them, it’s meant higher prices and lower wages for much of the last decade.
In their extraordinary study, the IMF found markups, which are a good proxy for rising market power of leading firms, rose 38% across advanced economies – but by 60% here in Britain.
That’s why I think John Penrose is right to say, UK competition and consumer choice has weakened in the last two decades.
Now as we face a decisive decade ahead, packed with challenges, we need to fix our broken competition regime.
Today, I’d like to offer three thoughts about how the central challenge:
how does Brexit Britain stay in lockstep with the Biden White House and Brussels where new regimes will re-write the rules of the last fifty years for the markets of the West.
First things first.
We have to understand the basic flaws in the economic thinking that have characterised laissez faire economics for the last fifty years.
Just as behavioural economics helps us see how markets are inherently prone to bubbles so a re-appraisal of Joseph Schumpeter reminds us that markets also tend to monopoly.
Philip Aghion’s new book on the economics of Joseph Schumpeter is a timely reminder of the basic insight some forgot.
Everyone here will remember Schumpeter’s famous dictum that capitalism is driven forward by a process of creative destruction.
What people sometimes forget is the flipside of creative destruction that Schumpeter observed, is the destruction of competition.
And in fact that shouldn’t surprise us.
Just over 20 years ago I walked into my first strategy class at the Harvard Business School with renowned professor Michael Porter.
What we were taught in Michael’s class was not so much the celebration of competition, but how to destroy it – because that’s who firms maximise profit, and post super normal returns.
Yet Michael’s class wasn’t the most popular at Harvard.
That class was a class called ‘building information age businesses’.
I literally pleaded with the professor in a rainswept Cambridge car park to be admitted to the class and I wasn’t the only one.
Everyone wanted to know how to harness new technology to build the businesses of the future.
What everyone was trying to figure out was, as the famous HBR article how to ‘use architecture to win wars’.
We were trying to lock in customers in a way that maximised the value of the business that now had unparalleled scale and scope with next to zero marginal costs.
And in the 20 years since I left Harvard we’ve now seen a combination of the lackadaisical regulators in the west and the market Leninists in the east, create a global economy that is now dominated by what I’ve called Technopolies.
In China, the market Leninists became well practised at using a whole range of tools to shelter markets, support local firms, only to now watch those firms grow if anything, too powerful.
President Xi is now taking concerted action against Jack Ma or Didi to clip their wings.
And though western politicians rail against unfair Chinese competition the truth is the West was lax.
Our Technopolies use big tech, big brand and big data to dominate their markets and big balance sheets to buy-out the competition and lock-in customers.
Into these firms, like shovelling coal into a furnace, governments have poured hundreds of billions of pounds of free science and technology subsidies while in turn the firms poured hundreds of billions into brand-building, together creating the sort of barriers to new competition which would make Michael Porter proud.
Today, global spending on Research & Development is in the region of $2 trillion a year. But the world’s top 1000 R&D investors account for almost a trillion of that.
Brand spend multiplies the advantage.
The world’s firms spend around $618 billion on advertising. But, the world’s largest 200 companies spend $163 billion of this, over a quarter.
Amazon now spends $27 billion on both R&D and advertising. Google’s parent, Alphabet spends a combined total of $19 billion. How can any firm compete with that? The evidence suggests they can’t.
Worse, these firms were allowed ‘kill in the crib’ startup competitors which threaten the data monopolies the big firms aspire to build.
Google bought 215 businesses since 2000.
Facebook has bought 69 companies since 2007 including WhatsApp merger, which helped consolidate its data monopoly with a treasure trove of 1 billion users.
Our competition regime has been blown apart.
Now the wind is changing.
At last.
Now what we’ve heard in the reports of the last couple of years is an excellent debate about the scale, the scope, the speed and the sanctions needed by modern regulators.
John Penrose is surely right to say that it is time that we had a new competition act.
But before we get any further down the track, I want to flag three basic questions where we need a better consensus.
The first challenge is philosophical –
Andrew Tyrie proposes an overriding consumer interest duty for stronger regulator.
That’s not the new view in Washington.
There, we see a new debate that takes aim at the commercial power of the firm, not simply the consumer welfare enjoyed by the firm’s customers.
That a big shift from the philosophy of competition policy since Richard Bork’s 1978 book, [The Anti-trust Paradox], which argued rising prices signal harm – but if a company is lowering prices to consumers size is not a worry.
Lina Khan, the new chair of the FTC is leading this.
She’s leading what’s been called the ‘new Brandeis’ school of public policy, which recognises as Brandeis once said that
“far more serious even then the suppression of competition is the suppression of industrial liberty”.
In her 2017 paper [The Amazon anti-trust paradox] Kahn argued that harm is about more than prices.
If companies like Amazon use predatory pricing and data lock-ins to drive rivals out of business, consumers suffer from a lot of choice and competition. And so do workers.
I think this wider approach is wise because not least because it is so hard to quantify the impact of competition on better prices.
The CMA here in the UK estimates its work is worth perhaps £1 billion to consumers in an economy where we spend £1.4 trillion.
Crucially, this new philosophy welcomes us to consider broader questions of not simply monopoly but – monopsony.
The reality that in many parts of our country the predominance of certain firms in effect hold down wages in poorer communities.
Since 2000, in our country, output per hour is up 19% – but wages are up 15%.
Workers are producing more but not getting paid for it.
President Obama’s CEA was on the case;
‘There is increasing recognition among economists and policy makers’ it wrote ‘that employers often have some degree of monopsony power in labour markets”
These ‘superstar firms’ as economists like David Autor argue, drive down workers share of the national pie, hoovering up high profits and pushing wage share down.
Of course people say that if you don’t like the jobs on offer you can always move.
You can get on your bike.
But that ignores the reality that our broken housing market means people can’t afford to move.
It ignores the reality that our broken care system means that many families are tied to a place because they care for others.
In other words many workers have a Hobson’s choice – which is no choice at all.
Second we have to think about how we act faster.
When we confront firms that are determined to move fast and break things, we know that we need stronger upfront rules to police the marketplace.
Now we don’t quite know how Europe’s Digital Markets Act will settle down.
But we can see Lina Khan proposing new approaches to precautionary rule-making to prevent conduct that constitutes ‘an unfair method of competition’- especially when private litigation is unlikely to materialise.
Like for example the noncompete clauses in employment contracts that cover 28 million Americans and limit their employment options.
(See Lina Khan and Rohit Chopra, the case for unfair methods of competition rule-making).
This approach to precautionary rules based on good analysis of patterns of unfair behaviour seems to me a better approach than endless cases in courts that so many can’t access.
Now for the future, it is vital that the UK finds ways of collaborating closely with the United States and Europe to closely study – and quickly act;
To move quickly to revise rules against unfair competition that hurts consumers – or workers – backed by a strong political mandate.
This has two institutional implications.
First, we may consider whether for example, the OECD should take a much stronger coordinating role just as they have on questions of international tax.
Second we need to radically improve Parliamentary oversight.
Once upon a time we had select committees to study EU legislation. Mr Cash spent years on them.
It may now be time for specific select committee focused on competition rules.
This would allow Parliament to opine quickly on proposals which the CMA should lead, based on their scrutiny of unfair behaviour.
Finally, we will need to grip the nettle of industrial policy.
In Europe Commissioner Mellanox has already emerged as an advocate of stronger European champions. Many in Congress will make the case for American champions too.
Meanwhile, here in Britain, the government is clear that industrial policy, procurement policy, subsidies will all be more flexible – which means more available.
As we try to decarbonise the economy and solve new real-world challenges together with the private sector, the truth is that public investment will be needed to cover risky investments, that the private sector simply won’t make.
It won’t be long before we are debating unfair subsidies, or unfair contracts, or risky mergers and acquisition where important local firms full prey to foreign takeovers.
The appalling misbehaviour of Melrose closing down GKN in Birmingham is just the latest example of how today’s regime needs to improve.
Personally I don’t see good ways round this without new safeguards for the public interest.
In cases of intellectual property investments, this means the state retaining a share of the intellectual property we help fund so that the taxpayer gets a yield on the investments we make.
But on the other, we need legally in forcible obligations that by on directors personally in return four waving through mergers and acquisition is which we think pose a risk the jobs.
So let me conclude with this.
Many of these ideas are a departure from the thinking there was informed public policy for five decades.
But these ideas are not novel to economics.
Rather they seek to renew I’m much older tradition of the moral economy that once with the guide to lawmaking here in the House of Commons.
There is no better example than the debates we had here in parliament about the Limited liability Act in the 1850’s.
It was the founding act of modern capitalism.
It allowed shareholders to combine their capital without fear of liabilities when things went wrong.
It is what you might call the exorbitant privilege of companies.
But almost without exception parliamentarians who rose to speak in these debates rested their argument on how limited liability would help advance the ‘common good’.
Today, our competition isn’t working hard enough for consumer, for workers, and for citizens.
We need reforms to ensure that the privileges we grant two firms advance the good of all.
And that competition policy that actually works for the common good.
The BBC has woefully under invested in the Midlands for years. And as we hurtle into the Fourth Industrial Revolution, that’s not something our regional politicians can let continue. So: what should we be asking of the BBC for the future? South Korea, of all places, has some pointers.
Samsung’s D’Light Showcase in Gangnam offers a tantalising glimpse of the future
The sheer scale of BBC under investment in the West Midlands since the closure of Pebble Mill is something to behold. Solihull MP Julian Knight, who chairs the DCMS Select Committee, castigated the Corporation last year after its annual report showed just 2.8% of the network television programming spend was in the Midlands. It spends 49% in London and 14% in the North of England. For me, the ultimate ignominy was having to travel to Manchester to film the BBC hustings for the West Midlands Metro-mayor. You couldn’t make it up.
The BBC now says it wants to change. It signed an interesting agreement with Create Central in April which could help turbocharge the new Digbeth creative quarter, and which could be home soon to Steve Knight’s new studio venture. But there’s no timetable for the BBC plan, or a budget and critical stakeholders like Equity and The Musicians Union seem frozen out of the dialogue.
This must change – and this is where we can learn from both our past and trailblazers like South Korea
THE story of the West Midlands Industrial Revolution – as I argue in my biography of Matthew Boulton – married both engineering genius and design genius. So the Soho Manufactory had both the greatest engineers – like James Watt, and the greatest artists. With that alchemy we changed the world.
The place that changed the world
Similar things are happening today. The infotainment system in a new Jag is worth more than the engine. There’s more code in an XF than in an Airbus. We’re marrying engineering brilliance – and digital design brilliance. ‘Content’ and ‘objects’ are fusing together. Those who succeed in doing this best – and I think South Korea is leading the way – will win out in the Fourth Industrial Revolution.
So, how could the BBC’s new investment help us? What does the BBC need to get right?
1. Set a ten year budget to scale up to spend 9% of the programme budget in the West Midlands. That would be about a quarter of a billion pounds. We’re about 9% of the UK population. Why wouldn’t we provide 9% of the programming services? This would be a huge demand side kick to the digital and content sector in the region
2. Create a BBC-sponsered University College trust to bring together universities like BCU with some of our great colleges and academies like BOA. Skills are the key to great content but we need to start earlier with a wider range of schools to transform the diversity of the industry which remains overwhelming white and male. A University – College Trust (as I proposed in Robbins Rebooted) would begin to create hard-wired pathways, to provide a clear line of sight into creative careers for children from a young age and fix the broken bridge between Levels 4 and 6 in our terrible skills system. Some of our institutions – like Birmingham Royal Ballets Dance Track programme or Birmingham’s training orchestras are interesting models to learn from, dropping in inspiration to primary schools.
3. Invest in artists and festivals. People create content – not buildings. So, creating a stable of aspiring young artists with small grants, investing in festivals and live performance and partnering with regional arts organisations to show case great content is essential. More of this live experience should be in our streets and squares and could help bring life back to city centres. Much as it is in America and on London’s South Bank.
4. Create a South Korean style Creative Content Lab with one of our universities. We should consider earmarking a big slice of the BBC investment to create a 4IR-Creative Content Lab. This could be modelled on Catalyst/ Catapult centres and bring together existing content players like museums, arts council funded institutions and the games industry to create new apps that exploit big data, AI and VR together with some of our great manufacturing names. The focus could be on both nurturing talent but also creating nurturing smaller firms for spin-out. This plays to our strengthes, push new areas like haptics and helps the BBC drive our broader industrial policy.
5. Help create better culture sector coordination in the region. The BBC is a big beast. It should be the head of the comet in the region. When I was writing our manifesto for Metro-mayor mayor, we found it harder than it should have been to coordinate with arts and culture organisations, unions, institutions and artists. As a result our culture-lobbying power is weaker than it should be. And a new, bigger BBC could help fix this.
So. There we are! Five ideas that I’ll be presenting to the IPPR’s roundtable with the BBC later. I’m looking forward to the debate – and below is a bit of the write up of my takeaways from South Korea.
Here’s my note on IKorea 4.0 back in 2018, and what I thought Labour could learn from it
iKorea 4.0/ D-N-A
1. S Korea is now overhauling its strategy for the future and focused squarely on the Fourth Industrial Revolution as its inspiration – or iKorea 4.0. As in the past, policy makers are focused on a series of enabling technologies rather that the more amorphous approach of Industry 4.0 seen in Germany (and the U.K.) and the country is set to replicate this approach with a couple of important twists in the years to come. They are fond of quoting Davos research which estimates 7 million jobs will be lost as the 4IR gathers speed over the next five years; ‘countries and individuals that understand the nature of the current changes and quickly adapt to them will flourish while others will lag behind and lost jobs’. (Davos, 2016)
2. The key enabling ideas are summarised as DNA – (big) Data; Networks and AI.
Liam and the South Korean ministerial team leading the creative content strategy in Seoul
3. ‘Data’/ content. Alongside ensuring big data capacity, in practice a lot of the ‘Data’ element of the strategy will be driven by a much sharper focus on content as the driving force for demand of 4IR services.
◦ Their strategy explicitly states: ‘the content industry is the driving force of Industry 4.0’ that creates jobs and promises unlimited possibilities for growth’. It’s already an industry with £66 billion in revenues up, 1.7x in the last ten years. Around 1/3 is publishing and broadcasting. Content exports are now $6 billion – up fourfold in 10 years and dominated by gaming (over half of exports). The country’s goal is to be one of the world’s top five content powerhouses, up from 8th today. It’s market size is currently around half of the UK’s.
◦ Today’s plan draws on the infrastructure created by the the Cultural Industry Promotion Act in the 1990’s which knits together broadcasting, gaming, cartoons and stories.
◦ The new programme backed by $500M aims to (j) nurture talented people working to knit together new technology and creative content; (ii) enrich through support this talent with facilities like campuses that bring together equipment and incubator space through a national network of 10 Korea Content Labs; and (iii) support exporting.
◦ What’s fascinating is the way one agency KOCA has oversight of broadcasting, gaming, culture, content and digital business – and is therefore is a good position to help sponsor businesses which are driving the fusion of these industries.
◦ The big data industry will always be slightly hamstring by the security risks around storage as it faces dedicated, long term cyber-espionage challenges from North Korea (which took down the banking and social security system a couple of years ago) and China. Equally the country lacks an Estonian-style e-ID system; there are widespread digital signatures but there isn’t much trust in Government, recently dominated by dictatorship, and at risk of foreign cyber attack
South Korean firms are marrying together new interfaces to brilliant design
4. Networks
◦ S Korea already has ubiquitous fibre and three mobile networks at 100% coverage of 4G. The country boasts the fastest smartphone internet connection speed (we don’t make it into the top 7) and is the first country with low range wide area networks that allows internet of things device connectivity. Crucially the Network is good at home, at work and on the go – on metro and rail (which boasts networks strong enough to stream Netflix)
◦ Now: the S Korea aims to be the first country to commercialise 5G – expected in 2019, followed by wide scale roll out
◦ This is the backbone for commercialise applications. Samsung for instance is investing heavily in a suite of connected technologies (linked devices controlled through phone-based apps and screens) to create ‘smart homes’ (lots of domestic appliances controlled from your phone); smart classrooms (smart screens with educational material linked to tablets for students) and ‘smart shops’ (connected advertisements, ordering, paying and delivery).
◦ 5. AI. S Korean policy makers laud estimates which show AI May boost American productivity by 35% by 2030 and add 14% to global GDP over the same period.
◦ Here S Korea estimates it is a year or so behind the U.K. and allegedly looks jealously at our Turing Institutes. Samsung however recently decided to make its £45M AI centre in Paris. There was a moment of national shock in 2016 when DeepMind/ AlphaGo defeated the national Go world champion in four straight games. This has prompted a £1.45 Billion investment in AI, focused on a series of challenges;
Healthcare
Goal is to stretch life expectancy by three years, capitalising on technology like Lunit which has a much better success rate at picking up breast cancer tumours; AI based new medicine; and electronic exchange of medical records
Intelligent transport
The goal is to reduce congestion by 10% and accidents by 5% for instance by creating intelligent road signs near accident hot spots – recognising the live risks and then adapting warnings and smart roads
Crime fighting
Improve crime arrest rates and reduce marine accidents; eg through use of intelligent CCTV
Defence and security
25% more unmanned guard and surveillance
◦ These challenges are aimed at clearing away a load of factors in the way of private sector investment in the sector including; regulation (creating regulatory ‘sandboxes’/ new safety standards for AI malfunction; clarifying property rights in AI networks; clarifying responsibility for Automated Vehicle accidents); lack of public procurement and support for startups. Equally the South Korean model has always been ‘perfect at home – and then export’.
Implications for Labour
There are a number of ideas that we can draw from S Korea and adapt for our programme:
1. Our overall story
2. Our infrastructure policy
3. Our content development story and use of the creative industries fund
4. Our approach to applied R&D in this area
Recommendations for discussion
1. Rather than position our plan as ‘Digital’ we should set out a bold, Fourth Industrial Revolution strategy. Our story then is simple: a party born in the first industrial revolution is determined to ensure Britain wins the Fourth Industrial Revolution. Only Labour is prepared to make the right, smart investments in the future and make sure everyone – not just a lucky few – is able to adapt and do well in these new times.
2. We should launch our draft infrastructure paper quickly – but rather than just pose the question of how much it’ll cost to accelerate a USO of 10 Mbt/ second, we should set a longer term ambition for ubiquitous 5G plus networks to support Internet of Things, and commit to develop a road-map for its delivery.
3. We should consider earmarking a big slice of the Creative Industries Fund to create a. National network of 4IR-Creative Content Labs. These could be modelled on Catalyst/ Catapult centres and form a network where we seek to bring together existing content players like museums, BBC, arts council funded institutions and the games industry to create new apps that exploit big data, AI and VR. The focus could be on both nurturing talent but also creating nurturing smaller firms for spin-out. It’s striking how Samsung is harnessing KandyKrush-style formats developed in the gaming industry to make its interfaces cool and fun.
4. Finally, we should consider whether a specialised 4IR Institute should be created within Innovation U.K. (the old Technology Strategy Board creates by David Sainsbury) to pull together 4IR strategy. The key question is this: how do we make a handful of big investments in strategic technologies where we have a competitive advantage, rather than the usual ‘little bits for lots of things’ approach that we typically take to this.
5. Finally, there is an annual U.K.-Korea Content Summit held in London in June for which they’re dispatching ministers. We should be a proactive part of it
The rows between No 10 and No 11 Downing Street are almost part of the constitution. And now they’re back.
In The Sunday Times this weekend, Tim Shipman lays bear the current episode; ‘”As the Chancellor recipes with the gargantuan bill for Covid” runs the stand-pull, “Boris Johnson has grown evermore addicted to making grandiose spending promises.”
But what does a government do when, as the phrase goes, ‘there is no money’? In this lovely little book by NIESR I set out the way we approached the Great Financial Crisis in 2009-10 (I’ve extracted my essay below).
It is the Treasury’s job to make sure the nation lives within its means. Hence the old tradition of private living notes from one team to the next, lamenting the lack of cash. It’s a tradition that goes back to Winston Churchill.
In the final years of the last Labour government it was my job, together with Alistair Darling, to try and put the budget back on an even keel after the Great Financial Crisis.
Pity the poor fiscal policy maker trying to steer the ship of state between the Symplegades of certainty and flexibility. On the one hand, voters – and bond markets – like the comfort of a plan for balanced budgets. On the other, politicians like to get re-elected. As I we used to say in 2010, ‘we know what to do, we just don’t know how to get re-elected once we’ve done it.’
After months of work, I had in fact negotiated across government a detailed blue print as part of Alistair’s plan to halve the deficit in four years and put debt on a the decline by 2016 – a better trajectory than George Osborne in the event managed to achieve.
Summarised in what was known as ‘The Sum’ our approach entailed a mix of underpinning economic growth (which helped bring down unemployment and out up tax yields), raise taxes by around £19 billion, and moving spending down by £38 billion, carefully protecting as we did it, frontline services, an approach set out at length in the Smarter Government White Paper that I wrote alongside No 10 colleagues. It was a balanced approach. Radically different to the Osborne plan that involved trying to go much faster and shifting over 90% of on the consolidation on spending cuts, an approach that triggered the double dip recession we were desperate to avoid – and pushing out his own self declared target for deficit reduction.
I got used to telling my colleagues in the long hours of patient negotiation as I sought to reduce their budgets, ‘I’m sorry, there is no money’…But the plan that emerged was far better than the Tories. We were obsessed about avoiding a double dip recession (like Japan) or seeing inequality rise. So we chose not to go to fast, to carefully weigh the right mix between spending cuts and tax rises and to take incredible care about reform of social security (to the great credit of both Yvette Cooper, who was Secretary of State for DWP at the time and Alistair).
But of course, we were conflicted about how to explain this to the public (investment vs cuts?) and in 2010, in the wake of my infamous note, we simply abandoned the field of argument, failed to set out the detailed alternative in the 2010 budget as a better plan (along with much defence of our achievements in office), and lost trust as a result.
Our challenge was different to the challenge today. Back on 2009 the world economy was basically having a heart attack as the financial system went into cardiac arrest.
There has always been such a strong link between financial globalisation and financial crises. While many nations have graduated from a troubled past repaying national debts, as Rogoff and Reinhart elegantly put it ‘so far graduation from banking crisis has proven elusive.’ In their masterful study of sixty-six countries since the Napelonic War, the pair point out that the world’s great finance hubs – the US, the UK and France have experienced some forty banking crises since 1800 and just four of the nations they studied avoided a banking crisis between 1945 and 2007. In eighteen of the twenty-six banking crisis since 1970, the financial sector was liberalised in the preceding five years sparking faster international capital mobility.
2009 was no different, as we watched some very familiar patterns repeat; financial liberalisation, faster international capital flows, and an asset price bubble. But the scale was staggering.
At the beginning of the 21st century the world was awash with huge cash piles building in countries running significant export surpluses like China and Germany and this abundance helped fuel an extraordinary asset price boom. As early as 2005, the Economist was warning of ‘the biggest bubble in history’.
Financial sector deregulation in the United States (especially President Clinton’s repeal of the Glass-Steagal Act) multiplied the risk as loans were offered to those who could ill afford them, creating a vast ‘sub-prime market’ which the Federal Reserve failed to stem. The US Financial Crisis Enquiry Commission later castigated this pervasive permissiveness as ‘the Federal Reserve’s pivotal failure to stem the flow of toxic mortgages’. As a result, ‘trillions of dollars in risky mortgages had become embedded throughout the financial system as mortgage related securities were packaged, repackaged, and sold to investors around the world’. When the housing bubble collapsed, noted the US investigators, ‘a string of events…led to a full blown crisis.”
But when sub-prime lenders began going bust many were simply bought by bigger banks, concentrating the risk in the arms of fewer and fewer banks. And these arms were not strong because the Basel II safeguards had been relaxed after 2004 allowing banks to reduce minimum regulatory capital by around $220 billion. “Banks could [now] either expand their portfolios and take on more risk’ says Adam Blundell Wignall and Paul Atkinson, ‘or return the money to shareholders via dividends and buy-backs”. Worse, the relaxation of regulation on investment banks allow them to operate with capital ratios that were half the level of commercial banks – yet many were building funds composed of sub-prime problems.
The costs of any financial crisis are severe because they trigger secondary crises. The US financial crisis enquiry commission concluded “nearly $11 trillion in household wealth has vanished”. In the UK, one million jobs, and £400 billion of UK net wealth – most of it household wealth – would be destroyed.
‘The sentries [ie the Federal Reserve] concluded the US Financial Crisis Enquiry Commission, ‘were not at their posts, in no small part due to the widely accepted faith in the self-correcting nature of the markets and the ability of financial institutions to effectively police themselves’.
Today, I feel right in saying Boris Johnson knows far less about economics than Gordon Brown. And Alistair Darling had a hell of a lot more experience of running Whitehall departments than Rishi Sunak. It’s going to be a bumpy ride.
It was Cicero who once said, ‘The sinews of war are infinite money’. So as Joe Biden squares up to Russia it might just be time for Britain do something practical to help, and actually slam shut the spigots of ill-gotten Russian cash that flow through the City of London.
As Tom Newton Dunn writes in an excellent piece in today’s Times, the City of London has long been the place where oligarchs bury their golden acorns.
Corruption flourishes in the dark and so one reason London is beloved is that it’s so easy to create shell companies without declaring who actually owns them. Behind this fog of mystery, company directors can get up to no good.
Now Boris Johnson claims he’s cracking down on this sort of thing. Really? In answers to my parliamentary questions a junior minister has slipped out that in fact over 11,000 companies have still not listed – as they are required to – a ‘Person of Significant Control’. And despite this only 119 convictions for the offence has been brought. Pathetic.
As the excellent Duncan Hames at Transparency International, points out, last week’s G7 communique yesterday recognised “the need for action on corruption, including… tackling the misuse of shell companies” (para 48). Yet there’s no legislation this session to implement the Companies House white paper reforms that would get a grip of this.
Biden is right to get tough. Boris should start backing him up.
After every major summit the Prime Minister comes back the Commons to update us and take questions. As you might, many of us zeroed in on the basic question: how does the world escape the pandemic?
Last week, the Prime minister was keen to tell the world that his objective was to see the world vaccined safely by the end of 2022. With the right will, there’s a way to do this. In fact the International Monetary Fund has shown a path to this.
So how did the G7 leaders do?
Bluntly, not well.
On Monday I checked in with the IMF to ask their assessment of what was achieved.
So. In other words, we’re still $23 billion short of the grant finance we need to deliver a plan to jab the world. The question I put to the Prime minister today therefore was simple. Where’s the money going to come from, and when? I’m afraid answer came there none.
This week, I published my argument for Labour’s approach to creating a country of ‘powerful people’. I mentioned that over the last ten years, I have been much influenced by the way I thought about this, by my practical experience trying to regenerate Hodge Hill, and philosophically, by Amartya Sen. Sen’s book, An Idea of Justice, was published this summer, and a few weeks ago I interviewed Prof Sen about his work. You can access an excerpt of the interview below…
Some will have seen news in the Guardian and elsewhere today about rights to new services for people with suspected cancer. For those who want more background about the government’s approach to rights, have a look at Working Together – our strategy for public service reform; World Class Public Services, where we looked at how rights can preserve equity while devolving power. My speech to the CBI sets out some more of the background argument.
Yesterday, we had simply the most extraordinary turn-out for our Big Lottery Fund Awards for All masterclass at the Beaufort Sports & Social. Building a stronger network of social entreprenuers is at the absolute core of Hodge Hill 2020 – our programme for regenerating the constituency. I’ll be posting some of the information we went through and a video report next week, but in the meantime, if you are part of a group in the constituency which wants some help bidding for money, then drop me a line. Also email me if you are doing great things locally – we want to build a stronger network of community activists where everyone knows what’s going on, and how to get involved. Thanks to all who came along – and thanks to Big Lottery Fund for answering my call to come and tell us more!
Lots of workers at Jaguar Land Rover live in Hodge Hill, and they’ll be worried about the plans that Jaguar Land Rover announced today.
I rang the directors to discuss their plans this afternoon. Here’s what they said.
Firstly, and most importantly, JLR said that they are absolutely committed to the West Midlands – and want to build ‘significant’ numbers of new cars in the region. I think the firm will need the same number of workers in the region to build all the new models, which is why JLR has said they don’t want to see compulsory redundancies.
Secondly, when I asked whether government was doing everything they could, JLR said yes – and they were especially grateful for the £10 million of government aid to build new models.
I agreed to lobby hard for the kind of automotive research institute that will help keep our industry at the world’s cutting edge. Long term, that’s the way we boost manufacturing jobs, not see them go abroad.
The company must discuss these changes with the trade unions, and I’ll be in touch with them in due course.
Below is the full text of my John Smith Annual Finance Lecture; The New Opportunity Economy. There’s a bit of a trail in the Guardian today. The argument is simple; is we make the right choices now, we can not only rebalance our economy towards investment and exports, but we can open the new jobs that it is possible to create to people from a wider range of backgrounds, tackling the issue of low pay, and redoubling efforts to get people back to work.
Here’s the link to my rather long Channel 4 interview about George Osborne’s school-boy economics. A transcript of my Sky interview is below.
Basically George Osborne first said there were ‘secret’ tax plans. So secret they were set out in Table 2.9 (page 40) of the Budget’s ‘Economic and Finances’ document, and Table C7 (page 235) of the Red Book.
Then we heard there ‘must be a black hole’ because we projected money from taxes goes up sharply in future years. Of course it does. Partly because we announced tax rises for top earners in the last budget.
Second, because as an economy returns to growth, tax receipts go up – part of a process called ‘fiscal drag’. In a downturn income tax falls sharply – by some £12 billion we estimate. But in a recovery, they bounce back. National Insurance contribution don’t move around so much because they are a flat rate tax.
Conclusion? Either George Osborne doesn’t understand public finance. Or, he’s determined to twist the truth. Neither is a good sign for his future. Sky transcipt below….
First, a huge thank you to the great race organisers at the National Institute for Conductive Education, who organised the fab 10K in Cannon Hill Park this morning…a personal best for me – 51 minutes 20 seconds…my knees now hurt quite a lot….
The OECD says fighting unemployment – not cutting back inthe middle of the recession – has to be everyone’s top priority; ‘Helping the unemployed and getting economies moving again will be among the most pressing issues on the table at the G20 Summit in Pittsburgh on 24-25 September 2009.’ Keynes, I think, would have agreed. Reviews of Robert Skidelsky’s new book on Keynes are out in both Business Week and the Washington Post.
ONS set out latest public spending numbers, recording a £12.8 billion deficit in August, broadly in line with Budget forecasts, as tax receipts fell sharply on the same period last year.
Meanwhile a series of surveys underlined the need for continued government action – not cut-backs – to accelerate the recovery. The Bank of England’s Lending Survey found the weakest flow of total net lending to UK businesses since 1998, as some lenders some lenders said companies used the proceeds of money raised on capital markets to pay back bank debt. In other words, creating ‘headroom to enable them to respond quickly to any future investment opportunities’ But ‘The availability of finance remains more constrained for smaller companies.’
Unemployment figures were published showed a continued rise. ONS, however, confirms retail sales for August were 2.1% higher than August last year and Markit’s survey of labour activity concludes; ‘September data from the Markit/YouGov Household Finance Index (HFI) highlighted a rise in activity at respondents’ workplaces for the first time since the start of the survey in February 2009’.
The FTSE100 posted a second weekly rise, and now stands 47% than 3 March.
A simply incredulous attack on the cost of fighting the recession, from Mr Cameron today. He has attacked this month’s deficit figures; and yet admitted in his press conference earlier this week, that his plan for £5 billion cuts in public spending this year wouldn’t reduce the deficit by a penny – the money he said would go to pay for a tax cut for a handful of savers. Naturally, the BBC has carried Mr Cameron’s line straight.
And for those interested, just six Tory policies have been estimated to cost upwards of £35 billion; the costs are calculated by civil servants and were issued under a Freedom of Information request earlier in the week. You can see them here.
After street surgeries in Bordesley Green yesterday, I had the incredible privilige last night of hearing the report back of a dozen teenagers who visited Sweden to research how we can use sport to transform our community. The group, organised by Comm:Pact, spent some time in Sweden looking at the extraordinary availability – and accessibility of sports facilities, and showed in what was at times an incredibly moving presentation, how better use of sport could transform the self-confidence and self-esteem of our youngsters, equipping them with the forward drive to really make an impact on life. I’ll be posting my video report shortly.
The next step is really feed this work into our ambition to create a sports village trust for the constituency, owned and run by local people. WE took a big step forward last night, in getting a vision for the trust in place. Well done Comm:Pact.
So here’s a bit of a round-up. Bottom-line; encouraging signs that the shot in the arm we gave the economy is beginning to work – hence we’re cautiously optimistic that growth will return by the end of the year.
NIESR, a leading independent forecasting team, said in its rolling 3 month estimate of GDP was now positive – based largely on figures showing that manufacturing output rose sharply, by 0.9% last month.
One of the key indicators of forward confidence, hit an 18 month high. The PMI survey reported; ‘Output rose for the fourth successive month and at the steepest pace since February 2008’. The manufacturing index rose at the fastest rate since December 2007. The ONS also reported that; ‘Total production output increased by 0.5 per cent between June and July’.
The UK stock-market broke the 5,000 mark – a level last seen last October – before falling back a bit today.
Finally, much depends on the shape of world growth and trade. Economists are revising up estimates of global growth next year. The IMF argued ‘high-frequency data point to a return to modest growth at the global level’, and the OECD say; ‘Recovery from the global recession is likely to arrive earlier than had been expected a few months ago but the pace of activity will remain weak well into next year…Governments will need to continue to stimulate their economies as rising unemployment and weak housing markets continue to dampen private demand’
I’ve reported before on the fantastic £9.5 million new Colebourne and Beaufort School, which I helped open with Schools Secretary Ed Balls on Monday. My video report is now online on LiamTV. The even better news? We have won some £40 million from the Education Secretary to rebuild more schools for our young people across the constituency. Our campaign to make Hodge Hill the best place in Birmingham to be a young person is starting to pay off. So when the leaflets asking your support come through your door – please keep filling them in!
Nick Robinson put it rather well last night. The political divide in Britain has been clear for some time. But with Mr Cameron’s speech last night, the economic divide became crystal clear. Mr Cameron has set himself against the fiscal stimulus we put in place. Here’s what he said; ‘”You need to start the process of bringing spending down now. In practice that means that the substantial increase in spending next year, which is currently planned by Labour, is unaffordable. ” He said the rise in public spending next year was; ‘political calculation, not economic necessity. “
This is a recipe for putting the recovery at grave risk. But don’t take my word for it. Here’s a selection of thoughts….
Dominique Strauss-Kahn, Head of IMF at Bundesbank conference on 4 Sep: “Unwinding the stimulus too soon runs a real risk of derailing the recovery, with potentially significant implications for growth and unemployment” …”Premature exit from accommodative monetary and fiscal policies is a principal concern.”
ECB President Trichet 4 Sep 09 “Now is not the time to exit.”
Martin Wolf (9 September):”The response to the crisis was both essential and successful. But it is still too early to declare victory. Now suppose that, instead of keeping calm, the authorities are frightened into premature monetary and fiscal tightening. Given the extreme fragility of the private sector, that could cause another economic downturn.”
David Blanchflower (formerly of the MPC): “I am worried that in the UK and the rest of Europe people don’t appreciate that unemployment is still rising and that this, alongside rising negative equity, will be extremely damaging for confidence and for the broader economy. Despite these figures, banks are still not lending; these are not green shoots – they are just noise” 9 September
Paul Krugman: “Just a brief reminder. Industrial production is now rising; so, probably, is real GDP. Given the way the official business cycle dating committee dates recessions, this probably means that the recession – again, as officially defined – is over. But unemployment is still very high and rising. As Calculated Risk points out, long-term unemployment – which is the most destructive in human terms – is at its highest level recorded since the Depression. And the purpose of stimulus is, first and foremost, to mitigate unemployment. The fact that the economy may be technically in recovery is irrelevant.”
Bottom-line: Mr Cameron is as wrong on economics as he is on politics…
George Osborne today did a good impression on the Marr show, of being completely detached from the economic realities of the moment. On the one hand, he said the recovery wasn’t in the bag. Then he refused to support any of the measures we’ve put in place to make sure the recovery is delivered! (globally, by the way, we’re only half way through the stimulus agreed this year). Here in Britain, Government plus Bank of England action is supporting upto 500,000 jobs and helping hundreds of thousands stay in their homes. Cutting that back is simply a recipe for a recovery that doesn’t happen.
More curious was his inability to give a word of detail about the vast spending cuts he’s proposed (you can tell he’s not in control of the shadow cabinet, because they keep making big spending committments). We heard a bit in the press about ‘boomerang bosses’ – but this is something the Audit Commission is already investigating. Anyone would think he’s making it up as he goes on air. Yet, this is a time for sensible economics, not school-boy politics…
Here’s a summary of some of the key G20 outomes, agreed yesterday. The meeting of finance ministers was ahead of this month’s Pittsburgh Summit. Yesterday, Alistair Darling brokered agreement to tough global rules on pay, and ordered the Financial Stability Board to thrash out how the rules will be implemented ahead of the Pittsburgh Summit at the end of the month, around four principles; o Greater disclosure and transparency o Deferral, clawback of bonuses to ensure no rewards for failure o Stronger corporate governance – including more independent remuneration committees o Exploring possible limits on total remuneration in a way that actually works internationally (so one country isn’t played off against another)
These rules are part of wider reform of financial regulation, where G20, led by US and UK, stepped up the pressure on the Basel Committee – the global body responsible for capital rules – to quickly deliver: o More stringent capital requirements designed to rein in reckless risk taking: more and better capital; countercyclical requirements; leverage ratio added to Basel framework; minimum high quality liquidity standards o Living wills and cross-border resolution regime
Against the backdrop of signs that the global economy is improving as a result of the concerted international action agreed at the London Summit, Finance Ministers also agreed that the greatest risk to recovery would be to think that the job is done and that sanctions should be taken against tax havens that don’t come into line by March 2010 – delivering on London Summit’s commitment to end tax secrecy for good.
And, as part of the implementation of the agreement reached in London in April 2009, and ahead of the Pittsburgh Summit and IMF Meetings in early October, Ministers also announced that commitments to deliver an additional $850 billion to the IMF and World Bank were almost complete and looked forward to substantial progress at Pittsburgh on an increase in voice and representation for emerging and developing economies in the IMF and World Bank.
For those who take an interest in these things…here’s the link to Alistair Darling’s interview in the Times, and below is the part of the Prime Minister’s speech to the G20 today…
“Now, we have also made clear that over the following years we will invest in the future within a framework of sustainable public finances that we are all committed to achieve.
Because of the loss of tax revenue in all countries and necessary measures to support the economy, gross government debt ratios, as reported by the IMF, which were on average 80 per cent before the crisis began, are expected to rise to nearly 120 per cent in advanced countries. Although in the United Kingdom we start from the position that gross and net UK debts are relatively lower than many G7 and G20 countries, we’ve already made clear that we are committed to halving our fiscal deficit over the next five years, and to achieve this we have already pre-announced specific tax increases including raising the top rate of tax and reducing reliefs for those on highest incomes.
Alistair Darling and I have spoken, too, of hard choices needed in public spending over the coming years, and we won’t flinch from the difficult decisions that are necessary, and we will always act in accordance with our core values of fairness and responsibility, and to take just one example from decisions implemented this week, by finding new efficiency savings in our education budget we have been able to begin and finance a new guarantee to every school-leaver that instead of thousands being unemployed as in the last recession for long times, each of them will have the chance to receive training and work opportunities.
So our tough approach will be based on an approach that emphasises front line services – front line first – to shift resources from where we can achieve greater efficiency, reducing costs where we can, selling assets where we no longer need them and giving priorities to investment that can secure the jobs of the future and deliver improved front line services to the members of our public.”
I interviewed Amartya Sen today for something I’m writing about how important communities are to helping people really get on in life, and turn dreams into reality. I’ll post a few comments shortly – but in the meantime, here’s some of the key links to the Nobel prize winner’s work. He’s had a massive impact on politicians of my generation, and Development as Freedom (1999), was probably one of the most influential books on me, I’ve read.
Many of Prof Sen’s early lines of argument were set out in ‘Equality of What’. His Nobel prize autobiography is here and his Nobel lecture is here. The work developing a definition of exactly what kind of ‘capabilities’ societies should help support was developed together with Martha Nussbaum, whose bio page at Chicago university is here. Finally, some of the thinking about capabilities in high income countries is underway. You can access the links here.
When I scraped home in the 2004 Hodge Hill by-election by 450 votes, I knew I had a fight on my hands to win the next election.
But as we organised endless street surgeries and coffee mornings, we realised that victory was not going to come from politics as usual. There was a “frustrated force” of people who wanted to participate but to reach them meant kicking an attitude problem. Too often, we were just asking for votes or help stuffing envelopes. That ask was – and is – critical. But we failed to ask a second question. What could we the Labour party do, to help people change what was going on outside their front-door?
So we patiently started helping local people bid for money and projects, and things started to happen. E-Caffs started for teenagers. Training for people seeking work. Outreach among disaffected youngsters on our toughest estates. ‘Frustrated voices’ became community activists. And the community activists started joining the Labour party. These “social entrepreneurs” didn’t want to change Britain simply law by law, they wanted to change it street by street. They needed advice, connections, money and perhaps above all, someone who believed in them. That’s what we helped provide.
Today, many have not only joined the Labour party, but they’re out door-knocking with me on Friday nights. A month ago, one sought selection as a Labour council candidate. He won hands-down.
Our story in Hodge Hill is only one story of political change. But as I’ve talked to activists around the country, I’ve heard strong endorsement. One said “so basically you want the Labour Party to be a community service organisation like the WI or British Legion”. Another said “it sounds just like what the Church of Scotland do where my mum and dad live”.
I think that’s right. The Labour party needs to be the home of realistic radicals who change their local community. And two big changes in Britain mean the opportunity to do this is now.
First, we can connect community entrepreneurs to the new centres of local power we’ve created in Government: neighbourhood policing, Sure Starts, new schools and youth centres. The places community activists can partner with to improve services – whether its new beat patterns, youth clubs, or advice on getting a job.
Second, twelve years of Labour has helped Britain become a more progressive country with a bigger army of active citizens. We can connect these people to each other – and to the forces of political change. Indeed, unless we connect to this new force, we are missing one of the biggest opportunities handed to our movement this decade.
The online world can help. A few of us are setting up a virtual organisation – www.localactionnetwork.co.uk – to connect social entrepreneurs and community activists with Labour activists and politicians who want to help. Please log on and help us build it!
But this is only the start. Because this is not going to be a battle that is won or lost online – as they are discovering in America. In February I met young Democratic leaders in Washington to discuss how the Internet transformed electioneering. The challenge they talked about? How to turn a 13 million strong database – gathered by the Obama campaign – into local change.
An email list can’t simply be kept ‘on tap’ for a national purpose. It should be let off the leash for local change. The next frontier, we agreed, is not simply how to mobilise communities to ‘serve’ political parties – but how to mobilise parties to change streets and serve communities.
As I’ve discussed this argument with activists up and down the country, I couldn’t but be struck by the echoes with Labour’s past. Before we were born as a political party, we started the movement of mutual help, self-organisation, getting things done for ourselves. I believe this is happening all over again in modern Britain. We need to lead it.
This week we’ve seen one of the key forward looking indicators of business confidence – the purchasing managers index for Britain’s services sector move up to a 17-month high of 53.2 for July (surpassing expectations for an increase to 51.6); Office for National Statistics data shows an 0.5% jump in June’s industrial production (the largest rise in 20 months) and Halifax says British house prices saw a 1.1% monthly rise in July.
Commenting today, Paul Krugman writes; ‘Two months ago I wrote that there were hints of a relatively quick economic turnaround in Britain. Now those hints have gotten much stronger. Basically, aggressive monetary policy and the depreciation of the pound are giving Britain a boost relative to other advanced countries’.
Finally, the Bank of England has decided to to continue with its programme of asset purchases financed by the issuance of central bank reserves and to increase its size by £50 billion to £175 billion (the ‘qe’ programme) commenting; ‘”On the one hand, there is a considerable stimulus still working through from the easing in monetary and fiscal policy and the past depreciation of sterling. On the other hand, the need for banks to continue repairing their balance sheets is likely to restrict the availability of credit, and past falls in asset prices and high levels of debt may weigh on spending”
John Denham’s department announced the winning areas for the Inspiring Communities programme yesterday. This is a vital project that is exploring new ways of turning around a shortage of aspiration in some of our poorer communities. Its a good example of community driven reform of public services; on the one hand delivering services in a way that strengthens the local community – and on the other, draws on the strength of the community for its effectiveness. I made a speech on the idea to the Fabians a while ago. This is a growing field of work. In the US, President Obama is using similar ideas in the national roll-out of the Harlem Childrens’ Zone and other community based solutions honoured at the White House.
Yesterday I got confirmation of the Government’s decision to award millions of pounds to Birmingham and its partners to help create 7,500 jobs – especially for young people. Today, there’s fresh evidence highlighted in the New York Times, of just why its so important to keep people in work. Economist, Till von Wachter finds;
“even 15 to 20 years later, most (workers) on average had not returned to their old wage levels. He also concluded that their earnings were about 15 percent to 20 percent less than they would have been had they not been laid off.”
“One of the main reasons for the drop-offs, according to economists, is that workers who endure a layoff are more likely to be laid off again.”
Naturally the Conservative party opposed the Future Jobs Fund…
With this week’s news you can see why Alistair Darling has being saying repeatedly that we’re confident but cautious that growth will return at towards the end of the year. News over recent months has been mixed, but today credit rating agency Fitch reaffirmed the Government’s AAA debt rating, adding the outlook is ‘stable’; UK retail sales were up according to the ONS 2.9% on the same month last year; Nationwide reported Thursday that house prices have risen three months in a row, reporting the ‘Three month rate of change at highest level since February 2007’ and the FTSE is back at levels last seen in January. GfK NOP’s also reported on consumer confidence today, noting; ‘Consumer Confidence remains at the same level as last month, fourteen points higher than its all time low of last year, but still very low historically’.
Tonight I did my after-work get together in the Pump in Kitts’ Green; what was reassuring is local residents reporting far fewer problems with gangs and drugs, and many more saying they saw their neighbourhood police team out and about and knew how to get hold of them. This is a big change over the last year an half. We prioritised three sets of problems tonight; pressing for stronger security on local buses; action to get more cameras in place and better street-lighting; and more work to help every resident know not only their local officers, but how to get hold of them, and what was happening about crime – and prosecutions – in the streets where they live. Thanks to all who came.
For some years now, we have been having a debate in this country and among our allies about the influence of China and this vexed, significant issue of debt diplomacy.
This is an issue. If we look at the countries that did not support the UN resolution on Russia, we see that, on average, they owe five times more debt to China than the countries that supported the resolution.
The key issue now is that the debt in many of these countries and others is about to fall over and the G20 common framework process, which we have held up as the great saviour of debt sustainability, has been so successful that precisely zero countries have engaged in it. It ain’t working and we need a different approach.
We could be restructuring developing country debt using both IMF and World Bank resources. The World Bank has just committed $170 billion to an emergency programme that we could be using to restructure the debt of vulnerable countries around the world and rich countries could be pooling their new Special Drawing Rights to help.
Chinese debt & natural resources: There does seem clear relationship between Chinese lending and the wealth of a countries natural resources
The big point is this: if we do not want to live in a world where China is the lender of last resort to countries around the world, then lets use the Bretton Woods institutions that we set up in 1944.
In the midst of a big war, in 1941, the Atlantic charter was signed, and its story is extraordinary. Our Prime Minister at the time, Mr Churchill, was on the other side of the Atlantic with President Roosevelt and the draft of the charter was sent to Downing Street. Clement Attlee was in the Chair and he convened the Cabinet at two o’clock in the morning in order to review the draft and make one vital change. He added article 5, which said that one of our war aims would be that the victors would
“desire to bring about the fullest collaboration between all nations in the economic field with the object of securing, for all, improved labor standards, economic advancement, and social security”.
Three years later, at Bretton Woods, President Roosevelt, welcomed delegates from 44 countries from around the world with these words:
“the economic health of every country is a proper matter of concern to all its neighbors, near and distant.”
As we begin to think about what the new world looks like, those are wise words to guide us.
The National Security Bill got a fairly warm welcome when it came to second reading.
But it’s missing one crucial component: measures to keep our tech regulation in lockstep with our allies. So it the interests of building a bit of cross-party unity about the issue, here’s a draft amendment:
Liam Byrne
Companies subject to controls: Reporting
To move the following Clause—
(1) Within six months of the passing of this Act, and every twelve months thereafter, the Secretary of State must lay before both Houses of Parliament a report on companies subject to relevant controls.
(2) A company is subject to relevant controls for the purpose of subsection (1), where—
(a) condition A, and
(b) either condition B or condition C are met.
(3) Condition A is that a public authority in the United States of America or the European Union, or both, has imposed on the company either—
(a) controls on its raising of finance,
(b) controls on its investing in or trading in financial instruments,
(c) restrictions on its exports,
(d) restrictions on its imports,
(e) controls on its export of data,
(f) revocation of its trading licenses, or
(g) sanctions against its board directors.
(4) Condition B is that the public authority imposed the applicable controls in subsection (3) in response to conductof the company which the public authority believed represented, or was capable of representing, a threat to the national security of the United States of America or European Union (as applicable).
(5) Condition C is that the imposition of applicable controls in subsection (3) has not been attributed by the public authorityto conduct set out in subsection (4), but that the Secretary of State believes, or has reasonable basis to believe, that the company has engaged in conduct which represents, or is capable of representing, a threat to the national security of the United Kingdom.
(6) A report under this section must set out what controls,restrictions or other sanctions UK public authorities haveimposed on each of the companies listed in the report.
Why isn’t Britain actually seizing the yachts, jets, mansions – or football clubs of Putin’s mates, when EU countries are getting much tougher?
Already we’ve seen news that Russian billionaire Alisher Usmanov’s 512-foot yacht was seized by German authorities in Hamburg. But the UK seems to be pulling it’s punches – allowing Roman Abromovich for example, the time and space to sell a £3 billion football club.
So what’s going on?
Basically our rules differentiate between an asset freeze and sequestration of assets.
A UK asset freeze prohibits those in possession or control of the designated person’s economic resources to ‘deal’ with them, make them ‘available’ to the designated person, or make them ‘available for the benefit’ of the designated person.
But, ‘dealing with economic resources’ generally means using them to obtain funds, goods, or services in any way.
Crucially, however the regulations say in para 3.1.3 that, “the everyday use by a designated person of their own economic resources for personal consumption is not prohibited.”
So: these conditions don’t bar the designated person from making use of assets – staying in a property, travelling in a vehicle, sailing around, flying around or lounging around in the Director’s box.
Where the financial sanction is an asset freeze, it is generally prohibited to:
• deal with the frozen funds or economic resources, belonging to or owned, held or controlled by a designated person
• make funds or economic resources available, directly or indirectly, to, or for the benefit of, a designated person
• engage in actions that, directly or indirectly, circumvent the financial sanctions prohibitions.
The funds and economic resources are to be frozen immediately by the person in possession or control of them.
An asset freeze does not involve a change in ownership of the frozen funds or economic resources, nor are they confiscated or transferred to OFSI for safekeeping.
3.1.2 What must you do?
If you know or have ‘reasonable cause to suspect’ that you are in possession or control of, or are otherwise dealing with, the funds or economic resources of a designated person you must:
• freeze them
• not deal with them or make them available to, or for the benefit of, the designated person, unless:
– there is an exception in the legislation that you can rely on; or
– you have a licence from OFSI
• report them to OFSI …
Reasonable cause to suspect refers to an objective test that asks whether there were factual circumstances from which an honest and reasonable person should have inferred knowledge or formed the suspicion. …
3.1.3 Asset freezing terminology
Funds generally means financial assets and benefits of every kind, including but not limited to:
• cash, cheques, claims on money, drafts, money orders and other payment instruments
• deposits with financial institutions or other entities, balances on accounts, debts and debt obligations
• publicly- and privately-traded securities and debt instruments, including stocks and shares, certificates representing securities, bonds, notes, warrants, debentures and derivatives contracts
• interest, dividends or other income on or value accruing from or generated by assets
• credit, right of set-off, guarantees, performance bonds or other financial commitments
• letters of credit, bills of lading, bills of sale
• documents showing evidence of an interest in funds or financial resources
• any other instrument of export financing.
Economic resources generally means assets of every kind – tangible or intangible, movable or immovable – which are not funds, but may be used to obtain funds, goods or services. This includes but is not limited to:
• precious metals or stones
• antiques
• vehicles
• property
Goods generally means items, materials and equipment.
Crypto assets – Statutory definitions of “funds” and “economic resources” are wide, as referenced above.
Crypto assets are considered to be covered by these definitions and are therefore caught by the financial sanctions restrictions.
Dealing with funds generally means moving, transferring, altering, using, accessing, or otherwise dealing with them in any way which would result in any change to their volume, amount, location, ownership, possession, character, destination or other change that would enable the funds to be used, including portfolio management.
Dealing with economic resources generally means using the economic resources to obtain funds, goods, or services in any way, including, but not limited to, by selling, hiring or mortgaging them.
Making available funds or economic resources, directly or indirectly, to a designated person – If funds are made available (directly or indirectly) to a designated person, or economic resources are made available (directly or indirectly) that would likely be exchanged, or used in exchange, for funds, goods, or services, this may constitute a criminal offence.
Making available funds or economic resources for the benefit of a designated person – If funds or economic resources are made available for the benefit of a designated person and they obtain, or are able to obtain, a ‘significant financial benefit’, this may constitute a criminal offence. In this case, ‘financial benefit’ includes the discharge, in whole or in part, of a financial obligation for which the designated person is wholly or partly responsible.
So: the regime sets conditions on individuals and legal entities that have control or possession of that person’s assets, but it does not appear that this would restrict the person simply making use of them. As Russian war crime multiply, surely this has now got to change. Not least to pay for reparations.
Byrne After-Reading 