Not lending? Time to nationalise the banks!

The chair of the Treasury Select Committee has been waving a big stick at the bankers in the form of naming and shaming:

Demand for full-scale nationalisation of more banks could also grow if loans were not made, John McFall said.

The Chair of the Left Economics Advisory Panel, John McDonnell MP says this demand should be heeded:

“Despite all Government attempts to stimulate the economy, all the evidence points to failure. The billions in bailouts have done little to increase lending, and we are witnessing a startling rise in home repossessions.

“The Government now needs to be more forthright and move towards the full nationalisation of the banking sector to be run in the interests of the British people.

“We can’t afford any more dithering by the Bank of England. We need an immediate and substantial cut in interest rates. It is now time for the Government to take back control from the dithering Bank of England.”

On that startling rise in repossessions, housing charity Shelter reports:

New figures released by the Council of Mortgage Lenders (CML) show that repossessions have risen 12% to 11,300 in the third quarter of the year from July to September.

This means that there have already been more repossessions in 2008 than 2007, and CML director Michael Coogan is still predicting 45,000 reposessions by the end of the year as the economic situation worsens.

The figures also show that the number of borrowers in mortgage arrears was up 8% on the previous quarter to 168,000.

Manufacturing meltdown! Productive economy faces catastrophy

It’s a funny old world. At the moment, I mean.

The Chinese saying goes: may you live in interesting times. I’m not sure if this is a friendly or unfriendly wish. Certainly the times are interesting, but also worrying.

Job “losses” are coming thick and fast. The old economic orthodoxies are being abandoned as the free market goes into free fall.

We’ve had a bailout of the financial sector – the government acting for the banksters, rather than for workers and customers.

But will there be a similar bailout of the productive economy?

After years of deindustrialisation we need to rebuild the manufacturing base of our economy with the aim of full employment, environmental sustainability, and workplace democracy.

A weak pound alone won’t save manufacturing…

The FT reports that:

Manufacturers are expecting the sharpest contraction in output in 30 years, according to a CBI survey published on Wednesday, which noted that the only time that a deeper decline had been expected was for two months in 1980 as the UK entered a recession.

The CBI Industrial Trends Survey, which covers October, came as the EEF, whose members are largely manufacturers, reported that one in four companies which had negotiated a pay deal in three months to the end of September had either deferred a decision or elected to freeze pay.

Separately, the Bank of England’s Agents’ Survey showed that companies last month pared back their investment plans to cover only essential expenditure as reports of small-scale redundancies and plant closures became more widespread.

Together, the three surveys point to a rapid deterioration in Britain’s manufacturing sector in recent months as the UK heads into a recession.

Commenting on the EEF and CBI surveys, David Yeandle, EEF head of employment policy, said: “The severity of these changes over such a short period of time indicates the extent to which companies are having to take immediate action to control their costs. It seems hard to believe it is only a few months since fears about wage inflation were so prevalent.”

Yeah, and it’s hard to believe that anyone took seriously the government claim that if public sector workers didn’t get a pay cut, there’d be rampant inflation…

It’s like a fascist state, fascists complain

Okay, so it’s illegal. It’s leading to people having their privacy invaded.

I’m talking, of course, about the leaking of the personal details (including home addresses as well as hobbies) of members of the white supremacist British National Party.

But putting people’s personal details online – this is the kind of thing fascists do, isn’t it?

Well, a former employee of the BNP (and so, one assumes, a racist sympathiser) is said to have uploaded the information.

As Jeremy Dear, the general secretary of the journalists’ union, blogs:

I’ve had neo-nazis threaten me at home, publish my details on Redwatch, the right-wing website designed to target and intimidate journalists and trade unionists, and was once physically assaulted by them and had to go to hospital. The BNP have staged demonstrations outside the NUJ’s head office and have issued threats to dozens of our members – particularly in Yorkshire. How sickening to hear Nick Griffin on Five Live this morning say he would use the Human Rights Act against to protect privacy when he stands for abolishing the act.

The fascists have also taken the opportunity to do some Muslim-bashing while they are busy insisting that they are being victimised.

If nothing else good comes of this exposure, perhaps it will help a few racists understand what it’s like being bullied – some might even empathise with ethnic minorities facing abuse and discrimination.

Strike shuts Dover port

From The News Line:

Hundreds of Unite members working for the Dover Harbour Board began a 48-hour strike at 7am yesterday morning.

Speaking from the picket line yesterday afternoon, Unite Regional Industrial Organiser Jane Jeffery told News Line: ‘The strike is going incredibly well.

‘About 330 of our members are on strike against 190 jobs being tendered out to a third party contractor.

‘Some of the jobs are in security and others are in landside operations, which moor the ships and put the bridges on, the things which the cars drive over to board.

‘The 84 per cent ballot result reflects the fact that staff feel absolutely betrayed.

‘Over the last few years there have been various changes that have been agreed around the negotiating table in order to protect jobs and stay within the Harbour Board.

‘Now, for them to turn round and say they no longer wish to employ these members of staff has really angered our members. They feel really betrayed.

‘About 400 to 500 marched through Dover on Saturday – workers, their families, a delegation from Calais, France and workers from other ports in this country.

‘Management are still claiming that they are running a full service, but our members are down at the docks and it is clear that they are just running a very limited service, they are not running a full service at all.

‘Our members are resolute in their position, they need to win this dispute and we will be announcing further strike dates at a time that suits our members.’

Unite National Secretary for Docks and Waterways, Brendan Gold, said: ‘Dover Port management have forgotten the huge contribution our members make to run the port efficiently.

‘To outsource port security at a time when security is of vital importance is negligent in the extreme.

‘Dover is a trust port which has a responsibility to its workforce and the local community.

‘Clearly the port management have ignored this important fact in their relentless drive for profit.’

Kent Police warned that the strike could lead to freight and traffic delays and announced that a lane on the M20 motorway has been closed in preparation for ‘Operation Stack’ which could be introduced between junctions 11 and 12 to allow vehicles to park.

The strike is against plans to transfer 190 jobs to the private sector in the New Year.

Unite said its members were determined to protect their terms and conditions of employment, particularly their pensions which would be threatened by the outsourcing plans.

The Harbour Board wants to turn the former Hoverport at the Western Docks into a second ferry terminal with a new marina and four new berths.

It said service operations at the port needed to be opened up to competition, in line with European Commission objectives, before a second terminal was built.

Labour MP for Dover and Deal, Gwyn Prosser said that many workers had been employed by the board for as long as 30 years.

‘In recent years the workforce has shown enormous flexibility. They’ve shown the company they’re able to compete with the best.

‘So with that background the town is absolutely stunned by the behaviour of the chief executive, Bob Goldfield.

‘They’ve shown great loyalty to the port through good times and bad and are being rewarded by being told their jobs are just going to be hived off without any negotiations at all.’

The busy port operates 52 tourist and freight departures, and 14 freight-only departures every day, employing 570 staff in total.

Bury the neoliberal agenda!

Washington summit should bury Washington consensus
TUC General Secretary Brendan Barber will be joining an international trade union delegation to lobby the Washington Summit of G20 leaders called to discuss the economic crisis. The union delegation will argue that the Washington consensus of deregulation, privatisation and unfettered markets must end.

The union statement drawn up by the International Trade Union Confederation (ITUC) says:

‘A national and global regulatory architecture needs to be built so that financial markets return to their primary function: to ensure stable and cost-effective financing of productive investment in the real economy. Beyond this governments and international institutions must establish a new economic order that is economically efficient and socially just – a task as ambitious as that confronted by the meeting in Bretton Woods in 1944.’

The ITUC calls for further co-ordinated interest rate cuts; governments to bring forward infrastructure projects; a ‘Green New Deal’ to create environmental jobs; and tax and expenditure measures to boost the incomes of low and middle income families.

The unions will also press for a new system of global financial regulation to ensure that a financial crisis of this type never occurs again. This will involve:

‘counter-cyclical asset requirements and public supervision for banks; the regulation of hedge funds and private equity; the reform and control of executive compensation and corporate profit distributions; the reform of the credit rating industry; the ending of offshore tax havens; the taxation of international financial transactions; proper consumer protection against predatory lending and aggressive banking sales policy; and active housing and community-based financial service public policies.’

TUC General Secretary Brendan Barber said: ‘There is change in the air. The collapse of the right-wing economic consensus that said markets would look after themselves, wealth would trickle down and that Government should keep out of the way has already delivered a new US President. The Washington summit should bury the Washington consensus.

‘It took the world-wide convulsions of the Great Depression and the Second World War to produce previous significant movements of progressive economic change. With imagination world leaders could start to do the same today, and produce a global response that ensures the recession is short and shallow, and makes sure that the world emerges fairer, more stable and more sustainable from the effects of the crisis.’

Arms-length banks? Take them in hand!

Even the Liberals are calling for an interventionist role.

We need representation for workers and consumers as well as the government on the boards of these part-nationalised banks – not Sir Philip of Sainsbury’s!

From the FT:

The state’s £37bn stake in Britain’s part-nationalised banks will be held at arms-length with no direct boardroom representation, according to the two men charged with managing the investments.

In an article in Friday’s Financial Times, Sir Philip Hampton and John Kingman emphasise giving the banks commercial freedom to “protect and create value for the taxpayer”. They write: “We must operate on a commercial basis at arm’s length … our job [is] to manage the taxpayer’s investments, not to manage the banks.”

Their approach, spelled out for the first time, contradicts earlier statements by Alistair Darling, the chancellor, who last month said the taxpayer would have “appropriate representation” on the boards of Royal Bank of Scotland and a merged Lloyds TSB/HBOS, and the government would make the appointments. Neither now appears to be the case.

Sir Philip, chairman of J Sainsbury, and Mr Kingman, a senior Treasury official, insist that the government will “engage robustly” with the banks’ boards, warning it wants them to pay executives “fairly but not beyond fairly”.

But they stress: “We have not been asked to act as some sort of general regulator of the recapitalised banks in difficult times.”

The new non-executive directors that the government insisted were a condition of the partial nationalisation “will not … be our representatives and will not report directly to us,” they state.

This lack of direct representation on the boards will alarm MPs who believe the government should use its power as a shareholder to bring the banks to heel.

Vince Cable, Liberal Democrat Treasury spokesman, said the assurances extracted from the banks had proved “worthless” and called for the state to have an “enlarged and interventionist” role.

Clarification of the government’s arms-length role will also put further pressure on Barclays to explain why it rejected an injection of government capital in favour of raising £5.8bn from investors in the Middle East.

Barclays executives are expected to discuss the deal on Friday with leading investors some of whom have threatened to vote against the capital increase this month.

It emerged that RREV, the voting advisory service, had recommended that shareholders express their dissatisfaction with the deal by abstaining.

The government’s reassurances over its role are crucial for Lloyds TSB, HBOS and RBS, all of which are hoping to persuade existing shareholders to exercise their right to buy some of the new shares they are issuing to the Treasury.

If shareholders decide to “claw back” some of the shares, it would reduce the amount the taxpayer would have to invest.

Some large shareholders have been waiting for a clear indication of the influence the government intends to exercise over the banks before deciding whether to buy more shares.

All three banks are trading below the price at which the government has agreed to buy new shares. At Thursday night’s closing price, the government is in effect sitting on a £4.9bn paper loss.

Unless the shares recover, the government is likely to be left with all the shares, giving it a 60 per cent stake in RBS and 43 per cent of Lloyds and HBOS.

U-turn over New Labour’s plans to privatise Post Office services

This is probably part of Mandelson’s game plan. I imagine he hopes that by giving in to this, the back-bench and union rebellion over part-privatising Royal Mail won’t come.

We know that introducing private capital into Royal Mail won’t help it become independent of government subsidy. Just look at the privatised railways – they get more money from the public purse than when they were publicly-owned!

So, good news, but beware the Blairites, they are staunch defenders of big business!

Ministers axed a £1bn ($1.48bn) procurement on Thursday, allowing the Post Office without competition to renew its five-year contract to run a card account for 4.5m people and averting a serious Labour revolt by staving off the closure of a further 3,000 post offices.

James Purnell, the work and pensions secretary, told MPs that the bidders would be compensated for costs incurred as a result of the cancelled tender. He refused to disclose the costs of this compensation or the terms of the cancelled tender. The main rival to the Post Office for the contract was Citibank. Paypoint, the supplier for the Citibank bid, said in a one-line statement that it was “disappointed with the decision”.

The new contract to run the Post Office Card Account, which pays out pensions and benefits, will run from April 2010 to March 2015 “with the possibility of an extension beyond that”, Mr Purnell said. He told MPs the account was “central to the viability of the network”.

The decision will be seen as reflecting the influence of Peter Mandelson, recently appointed business secretary. Lord Mandelson is keen to reassure backbench MPs that the post office network need not be threatened by any shake-up of Royal Mail, following publication of the Hooper report which is likely to call for private capital to be brought in to sustain the postal service.

Labour risked an enormous backlash from its own backbenchers as well as opposition parties if the contract was not awarded to the Post Office. Ministers were warned by the National Federation of Sub-Postmasters that up to 3,000 more post offices could close as a result. But the terms of the competitive tender precluded them from rejecting the Citibank/Paypoint bid on political grounds.

Mr Purnell said the government had taken fresh legal advice before deciding to cancel the procurement. The government said in 2006 that its legal advice was that the contract had to be put out to tender. Government advisers suggested they were confident the decision would stand up to a legal challenge and would be cleared by Brussels under European state aid rules.

The recession has affected the basis for the decision, Mr Purnell told MPs. “Now is not the time for the government to do anything to put the network at risk, particularly as post offices are often the only providers of financial services in remote areas,” he stated.

Compass welcomes the news as “a signal to show they recognise the game has changed. The obsession with pro-market rhetoric may be over.” (I very much doubt this, and so should Compass…)

The Post Office is a trusted public service; it is an essential institution that meets the needs of pensioners, poorer individuals and rural communities, all of whom would have lost out through privatisation.

At a time of looming recession with the collapse of the banking system, people more than ever are looking to institutions they trust for the support they need. Which is why, while this move is applauded, we must go further a create a universal People’s Bank, based on the Post Office and the Post Office card account with its 5 million card holders and network of 14,000 branches.

A People’s Bank would provide the service the banking system failed to deliver.

Neal Lawson, Chair of Compass, says: “The government have seen sense. This decision will help quell the social recession just as the economic recession begins to bite. People need institutions they can trust, that are on their side and which build society. The Post Office is such an institution. Now Royal Mail needs more investment and modernisation based on the principles of universalism and a public service ethos. The next step is the creation of a People’s Bank on the lines of the Kiwi Bank to provide financial services accessible to the whole community and trusted by everyone.”

Jon Cruddas, MP for Barking and Dagenham, says: “This is a very welcome first step and I know my constituents will be delighted. But we need to go further in future – there are over two million people unable to get a bank account and they are going to increasingly feel the pinch from the credit crunch, extortionate credit card rates and rising bills. We need the Post Office to become the People’s Bank and the card account to become a real alternative to a bank account. That will not only help secure the Post Office as a vital public service but also open up basic financial services to those who most need them. We need to show some real joined-up thinking.”