“The political establishment is in the pockets of the economic establishment: all the bureaucrats together. The banks, the supermarkets, the other inhuman institutions… don’t want to win by creating better products, they want to win by getting the Government to rig the market so they won’t be challenged.”
Who wrote that? Jeremy Corbyn? John McDonnell?
No, it was Steve Hilton, formerly David Cameron’s closest adviser, in his book, More Human, just published in paperback. For good measure, Hilton said the Conservatives depend heavily on funding from wealthy people in financial services, so “politicians end up spending their time in the company of a very narrow fragment of society.”
This week two Commons select committees sank their teeth into the bosses of BHS and Sports Direct for the disgraceful treatment of their workforce. “The unacceptable face of capitalism” – coined by Prime Minister Edward Heath in 1973 about the tycoon Tiny Rowland’s Lonrho group – is back in vogue at Westminster. MPs, their own reputation still scarred by the 2009 expenses scandal, sense an opportunity to stand up for people angry that the gap between the “have nots” and the “have yachts” has widened.
Capitalism worked – sort of – when ordinary workers got a fair reward. But during an unprecedented six years of wage stagnation after the 2008 financial crisis, the fat cats still got the cream. In the digital age, the labour market has polarised, with well-paid jobs for the well-educated, and lower paid, insecure or temporary work for the unskilled. Anger at being “left behind”, coupled with fears about immigration, largely explain why working class people could tip the balance in favour of Brexit in the 23 June referendum.
What struck me this week was not predictable protests by Labour but the anxiety among Tory backbenchers. Echoing Hilton, senior Tory MPs told me they want to see “capitalism with a human face,” “capitalism with a conscience” or “considerate capitalism.” But they are worried that Cameron and George Osborne don’t get it, even though reforms to ensure fairness in the labour market would fit neatly into Cameron’s One Nation legacy project.
There is no point in the Tories trumpeting the £7.20 an hour national minimum wage, misleadingly rebranded as a “living wage” in April, if firms like Sports Direct can get away with not paying it. And the Tories now style themselves as “the party of working people”, determined to improve social mobility and wage an “all-out assault on poverty.”
The Government cannot interfere in the running of every company. But ministers are responsible for the regulatory system and cannot simply dismiss abuses like those at BHS or Sports Direct as “one for the regulators”.
Reforms to the labour market and the way companies are run might feel un-Conservative, but would help to tackle a “party of the rich” image reinforced by the Panama Papers revelations about Cameron’s wealth and Osborne hailing Google 's paltry £130m tax payment.
The generation of Tory MPs elected in 2010 and 2015 are aware of the danger to their party of a laissez-faire approach. A paper produced by the 2020 Group of Tory ministers and backbenchers says that “shared values are as important as share values” and proposes a much more ambitious programme of employee share ownership and profit-sharing. They say that everyone earning more than £1m should give 5 per cent to charity, and be hit by a “philanthropy tax” if they refuse.
The paper says the Tories should declare that they “will not tolerate the lazy dominance of the big corporations in our political economy, but will instead unleash the forces of insurgent competition and innovation. We should disrupt the often openly cosy cartels in utilities and banking by letting in the new providers.”
These good ideas might prove a step too far for whoever leads the Tories into the 2020 election but they deserve a hearing. The Tories would turn a blind eye to the worst excesses of capitalism at their peril. If the frustration of those “left behind” grows, the Tories could throw away the chance of a long spell in power by letting Labour back into the game.
New Labour was in thrall to the bankers and missed a chance to reform the banks after the crash. Ed Miliband wanted to crack down on the “predators” while helping the “producers.” He proposed an energy price freeze and action on zero hours contracts but his anti-capitalist crusade fizzled out amid a backlash from the New Labour tribe.
But under its new management, Labour has no inhibitions about shaking up the system. Corbyn and McDonnell have long wanted to and sense an opening from the BHS and Sports Direct scandals. They plan to spell out reforms to end the “one rule for them, one for us” culture and to ensure fairness “from the shop floor to the boardroom.” These could include tougher measures to combat tax avoidance, better enforcement of the minimum wage, a ban on exploitative zero hours contracts and better rights for agency workers.
McDonnell said: “Britain under the Tories is slowly descending into a place where big businessmen think they can say and do what they like, and run companies like BHS or Sports Direct as their own little kingdoms regardless of the cost to the workforce or our economy.”
If the Conservatives do not smooth the unfair, rough edges of capitalism exposed for all to see this week, then a Corbyn-led Labour Party will be a much bigger threat to them than they think.
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