Steve Richards: Bite the bullet and nationalise the banks

The Prime Minister is the equivalent of a doctor asked to save the same life several times. At first the relatives are grateful but then they wonder why his services are required so often

Share
Related Topics

The sums involved are staggering. The banks were more reckless than even the most pessimistic minister had feared. The previous much-hailed rescue package has failed. Now Gordon Brown steps in again.

Not surprisingly voters are alarmed as the Government navigates in near darkness armed only with billions of pounds of their money. They are not the only ones who are worried. Brown is bound to be fearful too, far from certain whether this latest throw of the dice will work and much more aware than he was about the frightening scale of the banks' toxic debt. Once more perceptions of him change and he "bounces" no longer in the polls. Currently the Prime Minister is the equivalent of a doctor who is asked to save the same person's life several times. Originally the relatives are grateful but then start to wonder why his services are required so often.

Yet in such epoch-changing times the long-term political consequences are as unpredictable as the economic ones. There is still an extraordinary mismatch between the sudden ideological confidence of younger ministers and the growing Conservative lead in the opinion polls. At a weekend conference organised by the Fabians, ministers spoke like liberated prisoners emerging from the darkness. They do not underestimate how bad things are and how much worse they might become, but for them the near-collapse of the banks is a form of ideological vindication. The mismatch became most vivid late on Saturday afternoon. As they delivered speeches about a new progressive era news seeped through of the last poll giving the Conservatives a 14-point advantage.

The huge gap between their new found confidence and deepening unpopularity is both easily explained and without obvious resolution. Anxious, angry voters turn against the Government as they pose questions which no minister can answer with complete confidence. Will the latest proposals persuade the banks to start lending again? Who is responsible in the end for the banks' toxic debt – the taxpayers or the banks that acted with such deranged irresponsibility? Will they get back the hundreds of billions of pounds that appear to be thrown at the crisis?

At the same time the latest outburst of hyperactivity in No 10 and the Treasury explains the newly-discovered ministerial self-confidence. As the cabinet minister Ed Miliband declared at conference, no one can claim that the current crisis was brought about by too much government action. Government was not active enough. Miliband argued that 2008 will be seen as a watershed year, like 1945 and 1979: "This is a moment of profound crisis for the idea that in economics as far as possible we should leave markets to their own devices." From the Blairite wing, James Purnell suggested that the idea of achieving a fairer society through state action had been damaged by the Winter of Discontent in 1979. Now he saw the chance for more "balance".

Another cabinet minister, Douglas Alexander, suggested "we ultimately witnessed the demise of an ideology that says the only role for government is always to get out of the way".

All three are happy to make speeches every day of the week outlining the transformed ideological landscape. In contrast, while miles ahead in the polls, David Cameron has yet to make a single equivalent speech which addresses the ideological shift. Cameron is capable of delivering classy speeches so the reason for the gap can only be that he has nothing yet to say about the closing of the Thatcher/Reagan era, a period in which he formed his views about the state and markets. He has accepted there was a failure of regulation, but he has not explained when and how he wished the state had intervened in the past or in what form it will do so in the future.

The new shadow Business Secretary, Ken Clarke, has well-known views on the centrality of the European Union and the limits of tax cuts in the global economy, but he will not be allowed to take on his party over these issues. Clarke has returned to the Shadow Cabinet in a limited form rather than as a triumphant demonstration that the Conservative Party has changed.

Perhaps Cameron does not have to do anything more than blame Brown as the Prime Minister who was Chancellor during the age of irresponsibility, the great irony of the current political situation. Privately Brown's entourage spoke during the years of free market frenzy about the role of the state as they are now doing in public. But some of Brown's allies suggest that he was so frightened by the claim that he was to the left of Tony Blair he would not have even contemplated the idea of intervening in the markets unilaterally. Once more the explosive politics of the Blair/Brown relationship made their mark, leaving Brown trying to out-Blair Blair as the champion of free markets. In the new context he cannot point to a single quote that shows he was determined to get a grip on British banks.

The fact that he is getting a grip on them now, at least in terms of pumping in money and taking a limited and ambiguous form of control, shows how much politics has changed. On a more epic scale we are witnessing the same sequence that arose over Northern Rock. Although the Government has a majority stake in some banks and is propping up virtually all of them, it is still reluctant to be too assertive. Only now has it devised a scheme which guarantees that banks will start lending as a condition for acquiring more protection from the taxpayer.

Brown and Darling know that full-scale, formalised public ownership of some banks is possible. In my view it is probable and less messy than the current situation where ministers protect banks from the consequences of their recklessness and urge them to lend from a distance.

What will happen if Cameron retains or increases his lead over the next year or so? The Conservatives might inherit an economy where the Government owns the banks, other private companies are pleading for state aid and economists are screaming for a sinking pound to join the euro. Such a mismatch between governing philosophy and external circumstances would make the current disparity between ministerial confidence and the commanding Tory lead seem like a neat, logical pairing.

React Now

iJobs Job Widget
iJobs General

JavaScript Developer (Angular, Web Forms, HTML5, Ext JS,CSS3)

£40000 - £45000 per annum + Benefits + Bonus: Harrington Starr: JavaScript Dev...

BC2

£50000 - £70000 per annum: Harrington Starr: Business Analyst Consultant (Fina...

SAP Data Migration Consultant

competitive: Progressive Recruitment: My client, a FTSE 100 organisation are u...

Programme Support, Coms, Bristol, £300-350p/d

£300 - £350 per day + competitive: Orgtel: My client, a leading bank, is curre...

Day In a Page

Read Next
 

i Editor's Letter: The final instalment of our WW1 series

Oliver Duff Oliver Duff
 

Simon Usborne: The more you watch pro cycling, the more you understand its social complexity

Simon Usborne
A History of the First World War in 100 Moments: Peace without magnanimity - the summit in a railway siding that ended the fighting

A History of the First World War in 100 Moments

Peace without magnanimity - the summit in a railway siding that ended the fighting
Scottish independence: How the Commonwealth Games could swing the vote

Scottish independence: How the Commonwealth Games could swing the vote

In the final part of our series, Chris Green arrives in Glasgow - a host city struggling to keep the politics out of its celebration of sport
Out in the cold: A writer spends a night on the streets and hears the stories of the homeless

A writer spends a night on the streets

Rough sleepers - the homeless, the destitute and the drunk - exist in every city. Will Nicoll meets those whose luck has run out
Striking new stations, high-speed links and (whisper it) better services - the UK's railways are entering a new golden age

UK's railways are entering a new golden age

New stations are opening across the country and our railways appear to be entering an era not seen in Britain since the early 1950s
Conchita Wurst becomes a 'bride' on the Paris catwalk - and proves there is life after Eurovision

Conchita becomes a 'bride' on Paris catwalk

Alexander Fury salutes the Eurovision Song Contest winner's latest triumph
Pétanque World Championship in Marseilles hit by

Pétanque 'world cup' hit by death threats

This year's most acrimonious sporting event took place in France, not Brazil. How did pétanque get so passionate?
Whelks are healthy, versatile and sustainable - so why did we stop eating them in the UK?

Why did we stop eating whelks?

Whelks were the Victorian equivalent of the donor kebab and our stocks are abundant. So why do we now export them all to the Far East?
10 best women's sunglasses

In the shade: 10 best women's sunglasses

From luxury bespoke eyewear to fun festival sunnies, we round up the shades to be seen in this summer
Germany vs Argentina World Cup 2014: Lionel Messi? Javier Mascherano is key for Argentina...

World Cup final: Messi? Mascherano is key for Argentina...

No 10 is always centre of attention but Barça team-mate is just as crucial to finalists’ hopes
Siobhan-Marie O’Connor: Swimmer knows she needs Glasgow joy on road to Rio

Siobhan-Marie O’Connor: Swimmer needs Glasgow joy on road to Rio

18-year-old says this month’s Commonwealth Games are a key staging post in her career before time slips away
The true Gaza back-story that the Israelis aren’t telling this week

The true Gaza back-story that the Israelis aren’t telling this week

A future Palestine state will have no borders and be an enclave within Israel, surrounded on all sides by Israeli-held territory, says Robert Fisk
A History of the First World War in 100 Moments: The German people demand an end to the fighting

A History of the First World War in 100 Moments

The German people demand an end to the fighting
New play by Oscar Wilde's grandson reveals what the Irish wit said at his trials

New play reveals what Oscar Wilde said at trials

For a century, what Wilde actually said at his trials was a mystery. But the recent discovery of shorthand notes changed that. Now his grandson Merlin Holland has turned them into a play
Can scientists save the world's sea life from

Can scientists save our sea life?

By the end of the century, the only living things left in our oceans could be plankton and jellyfish. Alex Renton meets the scientists who are trying to turn the tide
Richard III, Trafalgar Studios, review: Martin Freeman gives highly intelligent performance

Richard III review

Martin Freeman’s psychotic monarch is big on mockery but wanting in malice