Labour must challenge the governor of the Bank of England

Today’s CLASS-YouGov poll should be a confidence booster for Labour. I write ‘should be’ because Labour’s deafening silence in response to the provocative speech last week by Mark Carney, the new Governor of the Bank of England, indicates Labour’s continuing lack of confidence. This is dismaying given that the City of London is an industry that is as much loathed by the British public as the energy sector; an industry that “generates instability and rising inequality” – to quote Martin Wolf in the Financial Times.  This is an industry that allocates 34 per cent of its lending to financial institutions and a mere 1.4 per cent to manufacturing. And as the economy struggles to recover, the City shrinks its lending to SMEs.

Frances Morrell, the wise and effective, if now neglected, Labour leader of the Inner London Education Authority back in the 1980 and 90s, once taught me a profound lesson. Leaders are not born, she said. They become leaders. It takes time. They grow into the role.

Ed Milliband ought to be feeling really confident about the way he has grown into his role. The decision not to support an American invasion of Syria has had global consequences. The vote, the stance of the Parliamentary Labour Party, changed the balance of power in the world. It forced the most powerful leader into a retreat. It did so, and achieved global impact, because it reflected the will of the British people, who for years have tried to lead their leaders away from engagement in stupid and destructive wars.

Ed and the Labour Party ought to be proud of that vote and its global impact.

Ed has done more. He has shaped the national political agenda – with his attack on the energy oligopoly, and the focus on falling living standards. Not just for a day or two. Not just for a week. But for weeks on end. Because Ed is reflecting the will of the British people, he has placed the government – with its huge resources and firepower, backed by the incandescent fury of the Daily Mail – on the back foot. Each day the Daily Mail exposes its fear of Ed by protesting too much. It reflects Conservative anxieties that voters support Ed’s stance, and succeeds only in looking and sounding defensive.

Putting the government and the Daily Mail on the defensive is a considerable political achievement which should make Labour really confident.

And yet last week the Labour Party had nothing to say when the City of London’s newest and most zealous defender – the governor of the Bank of England –  promoted a vision of the UK economy as one predominantly based on global finance: a kind of “greater Hong Kong” in Martin Wolf’s words.

As the BBC’s Robert Peston noted in his blog, Mark Carney:

“used a rhetoric about how valuable big international banking can be to the prosperity of the UK that not even the pro-City Chancellor of the Exchequer has felt able to deploy since the debacle of five years ago.”

In response to this provocative and highly political speech from a civil servant who has been appointed to act as “Guardian of the Nation’s Finances” – Labour’s Shadow Chancellor and front bench have said not a word.

Does this mean the front bench were consulted about the speech before it was made? If so, did they approve its direction?  If not, why the long silence?

The new governor, Mark Carney – once an employee of Goldman Sachs – has moved too fast; has revealed his hand too soon in defence of the overweening power of the City of London.  He must be checked, because the City of London continues to pose a profound threat to the current and future prosperity of the British people. He can only be checked by the real possibility of a Labour government determined to subordinate finance to the interests of the British people as a whole, and not to a tiny, global financial elite.

A YouGov-Cambridge ‘Public Trust in Banking Report’ in April, 2013 shows that 83% of the public surveyed thinks “bankers are greedy and get paid too much” and 80% believe that “banks aren’t doing enough to get out of this economic crisis which they helped cause.” 47% believe that they would have “more trust in those big banks which receive taxpayer bailouts if they had been fully nationalised and so were now fully owned.”

If Labour wants to rebuild the public’s trust in its handling of the economy, it will be vital to sever the artery between the Labour Party and the City of London – and to stand up to the City in just the same way it has stood up to the energy behemoths.

To win the next election, Labour must show itself to be on the side of the British people, not global finance. It must show itself willing to re-balance the economy away from finance, and towards a more fully employed, more socially useful productive sector.

A first step would be to summon up the confidence to challenge the governor of the Bank of England.