Ed Miliband, David Cameron and Nick Clegg all promise reform. But voters need a lot more than noisy posturing
First, the good news for Ed Miliband – and he needs a cup of cheer after an otherwise unhappy New Year for the Labour leader of silly rows and serious questions about his strategy. The good news is that he has come up with an idea that has impressed rival party leaders. Now, the bad news. They are seeking to steal it.
It was in his party conference speech last autumn that Mr Miliband first divided capitalism between good “producers” who ought to be encouraged and bad “predators” who had to be curbed. The thesis received mixed reviews from the media, generated sceptical responses among some of his own side and provoked a highly negative reaction from the Conservatives. And yet just a few months later, all the parties are now trying to march on to this ground by voicing an ambition to fashion a better form of capitalism. The political world, every bit as much as the capitalist one, is stalked by the predatory. When politicians scent that one of their competitors has produced an idea that might have traction with the voters, they all want a piece of it.
In the past few days, David Cameron has criticised bankers’ bonuses as “completely out of whack” and had a swipe at the tax-avoidance industry. This, we are told by his aides, is the precursor to a forthcoming speech from the prime minister in which he will define his version of what constitutes a more responsible capitalism. The Lib Dems are also jostling for what they regard as a potentially valuable tract of political real estate. Nick Clegg has recently stepped up his attacks on “crony capitalism” and extravagant executive remuneration. He, too, is planning what is billed as a keynote speech in which he will outline a distinctively Lib Dem approach to reform.
On the face of it, this sounds encouraging for Ed Miliband. If imitation is the sincerest form of flattery, he could derive some satisfaction from seeing rivals drawn towards his ground and impelled to take up the theme that he articulated in his party conference speech. But this also points up a perennial problem for leaders of the opposition. Come up with an idea that might be popular with the voters and the other side will first scorn it, then they will try to make it their own.
One reason that all the party leaders are trying to lay claim to this ground is that they know that it is potentially very resonant with many voters. They all commission focus groups and therefore they all hear similar things about public attitudes towards the very rich. It is not much resented when great wealth is perceived to be the reward for genuine business success or other skills that are admired. There is little public animus towards highly paid stars of sport, film or music. Nor is there great hostility towards real entrepreneurs such as the late Steve Jobs. There is deep discontent – rage might be a better word – towards those whose wealth is unrelated to either talent or usefulness to the rest of society. That anger is felt in all sorts of ways. There is the high visibility of the generally young and leftist protesters who pitched their tents outside St Paul’s. There is also the quieter, but just as keenly felt, fury of the Tory-voting small businessman who pays his taxes in full and on time while big corporations avoid their fair dues to society. There is the understandable bitterness of the naturally conservative pensioners who have seen their prudently accumulated savings devastated by the financial crisis while many of those responsible continue to enjoy lavish lifestyles. At the same time, the public needs a lot of convincing that politicians are actually willing or able to do anything about the “unacceptable face of capitalism” – a phrase coined by Ted Heath back in the early 1970s.
For the Lib Dems, this ought to be fertile ground. They can make a fair claim that they were on this terrain in advance of either Labour or the Tories. Before the last election, indeed before the financial bubble burst, Vince Cable was warning that Britain had become dominated by a debt-fuelled, short-termist, reckless and unsustainable version of capitalism; this at a time when the Conservatives were saying that the only problem with the City was that it was over-regulated and New Labour was still doe-eyed in its dumb adoration of the financial sector.
In government, the Lib Dems have pushed for a tougher approach to corporate excesses and more stringent bank regulation. Ideas now being advanced by the Lib Dems include giving shareholders a binding vote on executive pay and putting employees on company remuneration committees to try to break up the cosy clubs in which executives reward each other with ridiculous pay increases. These click with what have long been themes for the Lib Dems. Their fundamental problem with being given a serious hearing by voters is the same problem they have in many other areas. Fairly or not, many of the public think them too weak to be able to have a decisive influence on coalition policy.
The Conservatives have the advantage that they possess more power than anyone else to do something. The question about them is whether they really want to. Reformers of capitalism – sometimes very great ones – can come from the right-hand side of the political spectrum. It was a Republican president, Teddy Roosevelt, who took on the “robber barons” of early 20th-century American capitalism by busting their cartels. Some of the new generation of Tory MPs are thinking and writing interestingly about the issues. Matthew Hancock, a former adviser to George Osborne, and his fellow Tory MP, Nadhim Zahawi, recently published a book, Masters of Nothing, with pungent observations about the behaviour of the City in which they ventured some good ideas about how it might be changed.
The phrase “crony capitalism” was introduced to British political discourse by Jesse Norman, Tory MP for Hereford and South Herefordshire. He is writing a pamphlet that will argue that Britain has been through a period of “fake capitalism” during which failures of law, markets, government and culture allowed certain groups to become “enormously wealthy without taking risk”. He draws attention to a fault-line running through the right. On the one side, there are “free-market neoliberals” who see no practical or moral difference between producers and speculators and are hostile to regulation of either. On the other side, there are “free-market conservatives”, among whom Mr Norman numbers himself, who believe in markets but not in idolising them; who do make a moral distinction between producers and speculators; and want to encourage the former to flourish while constraining the latter.
On which side of this divide does David Cameron fall? As is often the case with this prime minister, it is not really clear. He first made a speech on “moral markets” in January 2009 when public rage against the bankers was especially intense. He has intermittently returned to the subject whenever it has boiled its way into the headlines. But when it has come to engaging with serious reform, the prime minister has been a road block to action more often than he has been an activist for change. It is authoritatively said that he has been particularly reluctant – more so than George Osborne – to embrace robust reform of the banks. His recent honours list conferred a lot of gongs on speculators. The persistent suspicion about the prime minister is that he is a opportunist. He doesn’t want to find himself on the wrong side of the public so he will make the right sort of noises about issues such as excessive executive pay, but he is not really interested in doing anything truly radical to change capitalism for the better.
Labour has been trying to put him under pressure by saying that it would fully implement the recommendations of the independent high pay commission and challenging the prime minister to match that pledge. In an interview with the Guardian yesterday, Ed Miliband asked: “Does anyone really believe that David Cameron came into politics to create a more responsible capitalism? The public are not going to buy it.”
Maybe not. But will voters be any more inclined to buy Mr Miliband? His desire to shape a better form of capitalism is not in doubt. What is in question is his capability. To be seen as an effective reformer of capitalism, Labour and its leader will first have to be trusted with the economy. At the moment, poll after poll indicates that Labour is still suffering from a big credibility deficit. Ed Miliband will not own this ground unless he can win the wider battle for trust with the economy. Over the coming days, there will be the appearance of a consensus among the rival leaders that something must be done. All the parties want – or say they do – to curb excessive boardroom pay. All the parties want – or say they do – to crack down on corporate price-fixing. All the parties want – or say they do – to reform the banks. That will amount to so much noise. The party that wins this terrain will be the one that is convincing when it comes to translating words into deeds.