Tuesday, February 24, 2009

The more things change, the more New Labour stays the same

The government, you will be heartened to learn, has something else on its mind aside from prominently displaying its mean streak toward the disabled and single mothers. The cabinet has been sick with worry about your welfare in this recession. For this reason, the nationalised bank Northern Rock, having slashed jobs and shed mortgages from its books for months on end, is now offering some first-time buyers mortgages on 10% deposits. And the government has also persuaded Lloyds to expand its lending to consumers and small businesses, on pain of full nationalisation. Wonderful. Orgasmically peachy. The trouble is that in the current climate, no one wants to borrow, given the real knowledge that they won't be able to pay it back. Who would be a first-time buyer today, when 1.2m households are in negative equity? Who would borrow money for an expensive consumer item that didn't have to? As for small businesses, forget it. Business investment has shrunk by 7.7% across the economy over the last year. Demand is plummetting, there is tons of spare capacity, and businesses are more likely to sell assets and cut jobs than borrow more to invest more.

But before you go drawing the conclusion that senior ministers think in terms of amusing demographoids such as ‘Vauxhall Man’ and ‘Bognor Regis Woman’, and designs policies on the basis of flattering said specimens’ alleged ‘aspirational’ propensities, please consider the stimulus. Because, after all, a giant middle finger aimed in your direction can be quite stimulating. Aside from the fact that the supposed spending increases comprise cash that was already in the pipeline, brought forward a couple of years, don't forget that the Chancellor is still intending to cut public spending by £5bn this year. Schools and hospitals, the latter already suffering from the burden of soaring PFI costs, are expected to fare the worst. There’s your stimulus – do you feel that? So, with unemployment expected to reach 3 million next year, and with the government pushing through cuts in public services and welfare, where are these millions of confident, spendy consumers going to come from to bail out the economy and get investment flowing again? It seems that the government is essentially committed to restoring the City of London and the housing market to their prior importance after the recession. They still think they can rely on the financial sector to generate jobs, and a strong housing market to give people collateral to borrow against. This is the only explanation that I can think of as to why they are still committed to keeping even the worst banks alive as profitable enterprises while refusing to do anything substantial about the massive housing crisis that the country faces.

And even as the government rushes to repeatedly inject billions into the financial system and (temporarily) nationalises failing banks, the rush to privatise existing (and comparatively well-functioning) public services continues. 30% of Royal Mail is to be sold off, following up on the pre-Xmas orders of the latte-moustached Secretary of State for Business Peter Mandelson. This is ostensibly to help recoup sufficient funds to make up for the pensions deficit and introduce modernising measures. The trouble is, the government has already pledged to fund the deficit, and all it is doing is handing over a profitable part of the enterprise to a private company. Taxpayer still gets milked, private capital gets the cream. It has absolutely nothing to do with pensions. This is a move that the government is by no means obliged to undertake. It is not politically popular, it will split the Labour Party, and it has galvanised serious opposition even among ordinarily spineless backbenchers. 125 Labour MPs have signed motions against the policy, and even that former left cheek of Blairism John Prescott is opposed to the plans. The government will have to rely on Tory votes to push the policy through. So, the government's slogan come election 2010 will be: "If you value it, vote for it; then we'll smash it up and sell the parts."

Still, at least you can rely on the government, having alienated voters on the left, to pander to voters on the right who are going to vote Tory anyway. Thus, even as the flow of migrant workers decreases sharply under the impact of recession, the Home Secretary still wants to ban thousands of them. That 'British jobs for British workers' bollocks has a lot to answer for. Meanwhile, Hazel Blears, having been taken to pieces by George Monbiot, is preparing her comeback as an archnemesis of political-correctness-gone-mad, in a madcap re-enactment of Margaret Hodge's campaign to give half of her constituency over to the BNP. When this bizarre mix of haughtiness, arrogance, elitism and pseudo-populism leads to electoral annihilation, Blears will be the first one to blame it on the government's refusal to use her purloined Jimmy Carr jokes in the campaign.