Tag Archives: Leveson

Business Sec laments Bank of England independence

31 May

Vince Cable at Leveson, on power and whom it should lie with

Since no FT journalists were at the Leveson inquiry yesterday, this off-hand comment has gone unreported. But it is interesting and further than a Secretary of State has gone before in questioning Bank of England independence.

What powers should politicians have? Are politicians by necessity too partial to decide on media ownership? Or is media ownership, and should it be, a political question? This was the line of questioning Lord Leveson put to Mr Cable. Here is Vince’s reply:

I know this is taking the conversation in a slightly different direction, but the major area where I’ve had to confront the dilemmas you describe is in terms of economic policy and whether or not the Bank of England should be an independent body, separate from politicians, determining interest rates, and I was one of the people who argued for that independence when it was established 12 years ago.

But I think what we are now discovering is that there [is] – you know, a very different economic environment, that there are very big decisions which probably are political rather than technical, which the politicians are no longer able to make, because they have handed over decision-making to an independent arbiter constrained with rules, which were devised, as you say, to reflect the policy environment of that time.

This is the furthest Vince has gone. Mr Cable has always maintained that the government should not compromise Bank of England independence: he said so in 2008, and it is Lib Dem policy.

But since the downturn, he has started questioning orthodox Bank opinion. In October 2008, he urged the Chancellor to call on the Bank to cut rates on an emergency basis. In a leaked letter to David Cameron, he called for state banks. In March, he said he was in favour of redefining the Bank of England’s mandate. He said he was “attracted by”  targeting money GDP, over the Bank’s current inflation-targeting policy. When Observer columnist Will Hutton put the benefits to him, he replied:

One of the boring things being a cabinet minister is that the following day the Guardian says, “Minister instructs Governor of Bank of England to do X or Y”. […] The economic logic you set out is impeccable, let’s leave it at that.

Vince has turned from a sensible, tutting bank clerk of an economic pundit to a free-thinking druid tied back by a Witenagemot of fusty statesmen. Day by day he is realising, like King Cnut, there is not much he can do. The tide of financial wreckage is rising by the day, and he must sit in his throne and watch. It is no wonder he has started mining the depths of economic possibility.

The market, temporarily, has failed. Banks are not lending. Shoppers are not buying. Money printing has served only to better the balance sheets of the banks. The purses of Whitehall are empty. What can be done? Create state banks? Ignore inflation targets? Anything, Mr Cable would like to say, to get banks lending to businesses again.

It is in his frustration, in his impotence, that Cable has turned on the Bank of England. I have argued before that power has drifted from the politicians in Whitehall to central bankers across the world. Cable clearly agrees. The ECB is preventing recovery in Europe and the Bank of England has more levers of control than any cash-strapped government department.

Giving the Bank independence was broadly for the best. It was the last stage in Mrs Thatcher’s quest to conquer inflation. Inflation and its volatility have come down with no cost to employment or growth. But to ignore that this came with a surrender of political power is self-delusion. King is still King.

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Blair at Leveson: Blair never caved in to the newspapers; Brown did

28 May

Blair’s ghost: the medium on media

Peter Shaffer’s play Amadeus tells of the fall of a talented man driven mad by his own passions and desires for riches and glory. It is the story of Mozart’s rival and lesser musician called Salieri. In the final scene, we see a broken man who gives his last speech:

Now I go to become a ghost myself. I will stand in the shadows when you come to this earth in your turns. And when you feel the dreadful bite of your failures – and hear the taunting of unachievable, uncaring God – I will whisper my name to you: “Antonio Salieri: Patron Saint of Mediocrities!”

Today we saw a ghost who has been lurking in the shadows for some time, about whom only a few wizened and whispering old hacks care. It is Antonio Blairi, the Patron Saint of Mediacracy, come to prove that he had no interest in the media, media barons or media ownership.

The central charge against him: he was too fixated on what the newspapers thought. He denied this. When asked if the media ever distracted him from his job as PM, Blair said they never distracted him from “the main issues” of the day.

The misfortune is, “the main issues” were media-driven. To manage “the main issues” – be it a silly comment made by a minister, or the latest media panic – you need a media officer. Blair had a dozen: a Chief of Staff, a Communications Director, a Deputy Communications Director, a Director of Government Relations, a Strategy Adviser, among pointless others.

Alastair Campbell was Blair’s closest lackey. A cursory glance at his diaries show the trivia he dealt in. One can’t help think, reading the diaries 15 years later, why did this matter? Why did they care so much? On the one hand, listening to the media is good – in fact, healthy for democracy. The latest U-turns on planning reform and secret courts – in the face of media pressure – not only make for better legislation; they make democracy a more active thing than simply the process of voting every 5 years.

On the other hand, spending a large chunk of the day reading the newspapers, worrying about the angle, phoning Tony to discuss the narrative, phoning up hacks to berate them or toast them, checking on the 24-hour news channels – one can’t help but ask, what was the point? Here is a fascinating clip of the team, Tony and Alastair, in action (12:10). Watch the frozen look on their faces as they realise they are being filmed. It is like watching two schoolboys being caught up to no good.

We go too far, however, if we say Blair caved in to the newspapers. His aim was to manage the media, not to let them direct policy. We kid ourselves if we say Blair kept the Thatcher reforms on unions, on privatisation, on tax because of Rupert Murdoch. The truth is, Blair really was that rightwing. On vast areas of policy, from Europe to Iraq, he stayed the course despite a hostile press.

He did things Murdoch hated. He stopped BSkyB buying Manchester United and ITV. He introduced TV regulator Ofcom. He granted the BBC digital channels and a news website. He raised the BBC licence fee 14% above inflation, from £91.50 to £135.50.

The MMR uproar is a case in point. Despite a media frenzy after a report suggested an MMR vaccine caused autism, Tony Blair rose above it, saying:

On the contrary, the vaccine which [sic] is used throughout the world, helps prevent the spread of diseases that can, if contracted, cause very serious damage to children. [Parents can rely on] overwhelming research that has found the alleged link between autism and MMR to be unfounded.

It was Gordon Brown who caved in to newspapers. When he became PM, he set up a TV that screened rolling news all day in the office. Staff said he would shout at it when he was particularly incensed. Even on planes he would want to know the headlines. According to Andrew Ransley, he would badger aides: “What’s the story? What’s the story?” On a trip to the Vatican, an aide said: “Prime Minister meets Pope. Why doesn’t someone tell him that’s the fucking story?”

There is good evidence to suggest he let the media direct policy too. Blair had downgraded cannabis to a class C drug, something Brown had accepted as Chancellor. As PM Brown reclassified it as Class B, despite expert advice and a fall in cannabis use. Second, it is curious that despite Brown’s avowed love for the BBC, the license fee was frozen in real terms. Third, Gordon Brown wanted it to be legal to detain a British citizen without charge for 42 days on suspicion of terrorism. This was explicitly done to charm Murdoch. Brown’s most trusted aide Ed Balls told Anthony Seldon:

 Blair made it very clear to Gordon that he had to come across as tough; the News International people would worry if he was not. That is why he did 42 days.

This is one of the foundations of English liberty: the right not to be held on unknown grounds by the state. Gordon Brown acted like a reverse King John, coaxed by a baron to get rid of a freedom enshrined by Magna Carta. This was a clear contravention of his speech on liberty at the start of his tenure, in which he even hailed Magna Carta as the glorious start of British liberty. This is the man who would say anything to curry favour with the Tory press.

On reflection it is easier to cast Brown in the role of Shaffer’s Salieri. Jealous at a better man’s talents and popularity, he decides to make a pact with God. Salieri will do as God pleases if only He looks kindly on him. When it becomes clear Amadeus (“Beloved of God”) is the favoured one, and God has not kept his side of the bargain, Salieri declares war on God:

So be it! From this time we are enemies, You and I! I’ll not accept it from You – do you hear! They say God is not mocked. I tell you, Man is not mocked! I am not mocked! […] (Yelling) Dio ingiusto – You are the Enemy! I name thee now – Nemico Eterno! 

I can hear the mobile clatter across the room.