Queen’s Speech

Lord Giddens Excerpts

Thursday 5th June 2014 Lords Chamber

[Lord Giddens (Lab)]

My Lords, I also congratulate the right reverend Prelate the Bishop of Rochester on his excellent maiden speech, which was both forceful and charming—two qualities which are hard to merge. I hope that the right reverend Prelate enjoyed the reference to “up to the heavens and down to Hades”, because that is the way we speak in the House of Lords.

I have recently, after many years, been rereading Marx. After all, capitalism is in the middle of probably the biggest crisis that it has experienced in its existence, because it is now a global system. Here are one or two choice quotes which I dug out from Marx:

“just as any revolution eats its children, unchecked market fundamentalism can devour the … long-term dynamism of capitalism itself”.

Here is another juicy little quote:

“Capitalism loses its sense of moderation when the belief in the power of the market enters the realm of faith”.

The net result, Marx concluded, is revolution.

I do not know whether I have fooled anyone—probably not the Minister—but these phrases do not come from Marx at all but from an altogether different source: Mr Mark Carney, the Governor of the Bank of England. They were made not a century ago but as recently as last week. Moreover, Mr Carney’s objective was not to overthrow capitalism but to rescue it. The speech was, however, remarkable, especially given the source from which it came. I ask the Minister for his opinions on some of the themes which it contains. They are pretty powerful. The speech was full of implications for policy-makers and is relevant to the themes of the gracious Speech.

Mr Carney identifies some of the economic stresses and strains that have caused disillusionment among citizens, have alienated many of them from orthodox politics and have helped to fuel the rise of populist anti-establishment parties. He identifies three sets of factors in his speech. All, I suppose, are pretty well known but they are fundamentally important. First, he mentioned the emergence of staggering levels of inequality, especially at the very top, with the bankers in the lead. He says:

“Bankers made enormous sums in the run-up to the crisis and were often well compensated after it hit. In turn, taxpayers picked up the tab for their failures”.

Huge resentment has followed from the fact that ordinary people have had to pay for the excesses of the rich. At the same conference at which Mr Carney spoke, Christine Lagarde, the head of the IMF, made similar points in an equally forceful fashion, not about inequality in general, but about extreme inequality at the very top. I am pleased to see that the gracious Speech contains not one but two references to creating a fairer society. I would like, later on, a bit of expansion on how this is going to be achieved.

Mr Carney’s second point, made by many noble Lords here this morning, is that the recovery leaves large swathes of young people especially isolated from prosperity or jobs. The famous “lost generation” is a phrase used by everybody but is no less powerful for that because it is a serious risk. Even in my sector, as a university person, a substantial proportion of college graduates are unemployed—much larger than was the case a few years ago.

The governor’s third point is about the enduring effects of the crisis upon the poor, of which we have again heard mention today, especially in decaying working-class areas. These people bear,

“the real costs of financial instability—unemployment and the seizure of credit”.

Does the Minister accept this analysis, which seems to me to be very accurate? I particularly ask the Minister whether the Government accept the key theme of the speech—which is why it is such an important speech to be given by the Governor of the Bank of England—that market fundamentalism has proved divisive and dangerous. That is a big thing for the Governor of the Bank of England to say, and its implications are important.

Mr Carney indentifies three basic strategies which the Government should actively pursue to try to pick up the threads of these difficulties. Again, I will list them as a threefold set of remarks. The first policy should be to reintroduce competitive markets where market principles have become undermined. As Mr Carney puts it,

“Many supposedly rugged markets were revealed to be cosseted”.

Would the Minister agree that this includes situations of oligopoly? In circumstances of oligopoly, you have neither public control of the companies concerned, nor do you have a market. That situation applies in fairly large chunks of British industry today. It would be interesting to know if the Government have any policy of attacking that issue.

Secondly, Mr Carney says we should affirm the centrality of social justice, concentrating especially on the redistribution of wealth and income. He said,

“inequality… is a critical determinant of well-being”.

What policies do the Government have in place to reduce inequalities at the very top? The stress on tax avoidance has been important and consequential, but it is clear that much more needs to be done and we are dealing to some extent with a global and not just a national issue. What progress has been made, in the Government’s eyes, in either closing down or limiting the impact of tax havens?

The third point made in the speech is that we have to rebuild a sense of vocation in business and especially in banking. Mr Carney said:

“In the run-up to the crisis, banking became about banks not businesses; transactions not relations; counterparties not clients”.

What should the role of Government be in promoting a culture of ethical business? How can relationship banking be introduced on a substantial scale?

I do not ask these questions in a particularly partisan spirit because we all have an interest in saving capitalism from itself.