Keir Starmer crawls to the banks – push the other way!

By Mohan Sen

The Financial Times reports that Labour has “embarked on a charm offensive with banks and fund managers”, “drawing a veil over its previously fraught relationship with banks and fund managers under the leadership of Jeremy Corbyn”.

• For our Friday 29 May meeting on public ownership of the banks, see here.
• For much more on this issue, see here.

The Shadow City Minister, Labour right-winger Pat McFadden, is leading this grubby initiative, holding “a series of meetings with banking and asset management representatives”. McFadden was a business minister under Gordon Brown and before that worked for Tony Blair. Shadow Chancellor Anneliese Dodds is also playing a central role.

The FT quotes senior financial figures lauding a “sea change” and a “completely different approach” from Labour under Jeremy Corbyn and John McDonnell.

What is ironic, and makes this particularly alarming, is that the Corbyn-McDonnell leadership was in practice far from hostile to the banks and finance. In 2018-19, McDonnell embarked on his own attempted charm offensive, even telling bankers that a Labour victory “would bring them into government”. McDonnell’s previous support, up to 2015, for public ownership of the banks and high finance was dropped completely.

Clearly this was not good enough for the bankers, who were upset by moderate statements from the former Shadow Chancellor about salaries and bonuses and about the banks’ role in the 2007-8 economic crisis – to say nothing of the Corbyn leadership’s left-wing past and sympathies, and other left-wing Labour policies.

The FT article cites concerns about “the party’s leftwing agenda [under Corbyn], such as its plans to nationalise utilities and increase corporation tax” – suggesting that Starmer and McFadden’s pitch to the lords of high finance is that these basic social democratic policies are being abandoned.

“I’ve always believed that an aspiring party of government should be as interested in wealth creation as it is in the fair distribution of wealth”, says Pat McFadden. This is obviously code for retreating back towards a neo-liberal agenda. Anyone who doubts this should note McFadden’s bizarre comment that the financial sector has faced “a cold climate politically in recent years” and his criticism of the Tories for being too anti-banker.

Who disagrees with “wealth creation”? Not left social democrats like Jeremy Corbyn, and not even us socialists. We simply believe that those who create the wealth – workers – should take ownership and control away from the non-wealth creators who currently have it.

Short of carrying that out in a thoroughgoing way, there are undoubtedly industries we should demand public ownership and democratic control over – and in this crisis banking and finance, along with for instance social care and the pharmaceuticals industry, should be at the top of the list.

The FT notes that Starmer’s “move comes as asset management is increasingly moving up the political agenda as a result of its rapid growth and importance in providing financing for companies, a role that is set to be turbocharged in the post-coronavirus recovery”. That reality does not mean that the labour movement should crawl to bosses of the financial sector, but that it should fight to break and take over their power by taking the sector under public ownership and democratic control.

This policy was passed at TUC Congress in 2012 and last year, but has not been campaigned for.

The Investment Association, which represents UK “investment managers”, said: “A constructive and open, even if at times robust, dialogue with political parties on all sides of the house is critical, not only to the good functioning of our economy but for our democracy too.”

In fact the role of the banks and financial institutions is self-evidently disastrous for democracy and for any hope of reorganising the economy in the interests of the majority (let alone moving towards socialism).

Faced by Starmer’s shift to the right here, the left needs to abandon its cautiousness and ambiguity on this issue – motivated in large part by a desire not to embarrass Corbyn, as well as more general conservatism and lack of ambition – go beyond anti-banker populism, and start seriously discussing the demand for public ownership of finance.

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  1. For those who can’t get it on the Financial Times site, here is the text of their article.

    Labour party embarks on charm offensive with banks and fund managers

    The UK opposition Labour party has moved to mend ties with the City since the election of Keir Starmer as its leader, drawing a veil over its previously fraught relationship with banks and fund managers under the leadership of Jeremy Corbyn.

    Senior members of the newly constituted Labour front bench, most notably shadow City minister Pat McFadden, have held a series of meetings with banking and asset management representatives since Sir Keir took over from the hard-left leadership of the party last month.

    Mr McFadden, one of several centrist MPs appointed to Sir Keir’s shadow cabinet after spending years on the backbenches, recently met representatives from Standard Life Aberdeen, the UK’s largest listed fund group by assets, and the Investment Association, Britain’s asset management trade body.

    The meetings, which were conducted through video due to the coronavirus lockdown, were initiated by Mr McFadden with the purpose of getting to know the UK’s £9tn asset management sector, according to people close to the situation.

    The move comes as asset management is increasingly moving up the political agenda as a result of its rapid growth and importance in providing financing for companies, a role that is set to be turbocharged in the post-coronavirus recovery.

    One fund management executive described the approach of the new Labour front bench as “a sea change” compared with Mr Corbyn’s five-year tenure as party leader.

    The hostile approach of Mr Corbyn and his shadow chancellor, John McDonnell, towards business alienated many in the City. The relationship was further damaged by investors’ and business leaders’ misgivings over the party’s leftwing agenda, such as its plans to nationalise utilities and increase corporation tax.

    Mr McFadden said the UK financial services sector faced “a cold climate politically in recent years” both on the right, with the populist direction of the ruling Conservative party, and on the left.

    A minority of Labour shadow ministers under Mr Corbyn’s leadership maintained a good relationship with business, such as Mr McFadden’s predecessor as shadow City minister, Jonathan Reynolds.

    But Mr McFadden, who served as business minister during the final year of Gordon Brown’s premiership and worked as an aide to Tony Blair before being elected to office, said that, overall, the party under Mr Corbyn had not been open to engaging with business. “I’ve always believed that an aspiring party of government should be as interested in wealth creation as it is in the fair distribution of wealth,” he added.

    The main issues to come up so far in discussions between the shadow City minister and fund managers include sustainable investment and the UK’s net-zero carbon emission target, the role of pensions in funding infrastructure and the contribution of asset management to the economic recovery.

    Iain Anderson, head of public affairs group Cicero, said the Labour front bench was taking “a completely different approach” compared with the previous regime. “There is now an entirely constructive and open relationship, and talk of partnership with finance again,” he said.

    Mr Anderson added that new shadow chancellor Anneliese Dodds, a former MEP who served on the European Parliament’s influential economic and monetary affairs committee, had also made her mark on the City in her new role. She recently spoke at a Cicero online event attended by 500 people, including fund managers.

    The Investment Association said it welcomed the recent engagement from the Labour party. “A constructive and open, even if at times robust, dialogue with political parties on all sides of the house is critical, not only to the good functioning of our economy but for our democracy too,” said the trade body.

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