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Don't let Miliband gain a monopoly in the struggle against crony capitalism

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By Paul Goodman

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The Greatest Living Englishman's interview with Ed Miliband in today's Telegraph is worth reading in full - at least if you're a political geek - because it is a serious attempt to discover what the Labour leader thinks government should do and why he thinks it.  A passage caught my eye:

"What Mr Miliband wants is 'responsible capitalism’....An employee should be on every remuneration committee. There is 'a strong case’ for making takeovers more difficult. He was attacked for his conference speech last year in which he divided businesses into 'predators and producers’, but 'I was definitely right’. It is ironic, says Mr Miliband, that Mrs Thatcher’s reforms, which attacked many vested interests, created new ones: they need to be taken on. There are too few banks, and six companies control 99 per cent of energy supply: 'This is about the free market working properly’."

The bit about the banks nagged at my memory, reminding me of something I'd read recently.  But what? After a little googling I found the answer:

"In many small towns the local banks have been replaced by ATMs. Those once local commercial decisions are now made hundreds of miles away, on nothing more than a business plan, probably written by some local government agency....We need to make it easier not harder to start a new bank. We need to tear down the barriers to entry in banking, and reverse the policy of the last decade which has effectively excluded banking from competition law, in a sad misunderstanding of the role of the financial sector in the modern state. Not so much Glass Steagall, as Glass Steagall squared."

Those words were a part of a David Davis speech called "There is an Alternative" delivered earlier this month.

Almost certainly, Messrs Miliband and Davis don't agree on making takeovers more difficult and putting employees on every remuneration committee, because they have different visions about the size and reach of the state and the role and nature of capitalism.

But they clearly don't disagree altogether about the banks, which raises the question: who can best be trusted with the legal and regulatory framework within which the market must work?  Who is best placed to tackle what Matthew Sinclair has called "Crony Capitalism"? (See here, here and here.) A policy programme to tackle it might include reviving "Captain Mainwaring Banking" (as Davis nicknamed local banking), ending taxpayer bungs for banks (Sinclair cites the Green Investment Bank) and restructuring the energy market to allow more competition.

There are party political as well as public interest reasons for pushing it.  The Conservatives are more vulnerable to the charge that they represent vested interests under "two posh boys" than they were under the Grocer's Daughter and the Boy from Brixton.  It would be interesting to see some polling about the effects of putting crony capitalism in the party's sights - especially in the midlands and north, where we most need to hold and improve our position.  Here's a last quote from a lighter moment in the interview:

"At this point, a mosquito settles on my shoulder. With a commanding show of decision, Mr Miliband squashes it, spattering its remarkably copious blood over my light grey suit. So that’s how he deals with capitalist parasites."