This article originally appeared in the New Statesman on 3rd August 2012
Finding the balance of regulation after financial, media and political scandals is our challenge.
A defining political challenge of our times is how we tackle the collapse in the public’s confidence in those of positions of power and authority. This crisis in confidence is permeating our society, and is affecting our institutions, power bases, elites – the very groups that shape, influence and govern us. These are elites – be they financial, media or political – which give the impression of being out of control, increasingly unaccountable to the public, and whose power is being exercised without recourse to responsibility. It’s a crisis that’s seeing the public’s trust in those of positions of authority and power being corroded. The implications for our society, and for the future health of our political structures, are worrying.
Over the past five years, we’ve seen scandals rock the foundations of some of our country’s most important elites. We’ve experienced financial scandals – including the recent Libor scandal at Barclays – that have led to questions over the motives and sheer size of our banking sector. There’s been the phone-hacking scandal throwing up all sorts of ethical issues over the way our written press operates. In turn, the relationship of some in our police forces with the media has shaken confidence in their role, too. And, yes, the expenses scandal seriously damaged the standing of politicians in the eyes of the public.
Abuses of power have led to rising cynicism amongst the British public, shocked at double-standards and hypocrisy. In a recent YouGov poll, 77 per cent of those questioned felt bankers were unethical. For journalists on tabloid newspapers, the figure is 76 per cent, and politicians 64 per cent. As a benchmark, these figures are higher than for those long-standing stereotyped pariahs of society, car salesman and estate agents. This is quite a turnaround in fortunes.
Power and greed are perceived to have ridden roughshod over society’s best interests. For twenty years, policy makers have obsessed over sweeping away the state, and the removal of rules, regulations and conventions became the norm. The priority became the drive for instant gratification – a quick profit, short-term gain, with little regard for the long-term impact – even if it meant shaving off a few corners and removing safety nets. The implications of these activities were not considered and, if they were, weren’t considered to be a big enough deterrent.
But now we’ve reached a pivotal moment as politicians, and in the future of our country. It’s one where we choose to learn from the bitter experiences of the past, or one where we muddle on without tackling fundamental failures in the way our society is structured. Failure to do so risks repeating the string of scandals we’ve seen over the past five years, with further downward spirals in the public’s confidence in those exercising power in this country. As a country we simply cannot afford either financially, politically or morally to be impotent in the face of continued unchecked power. The public’s sense of helplessness will not survive many more crises of confidence.
How political parties respond to this crisis will shape the future of our country and likely determine the outcome of the next election. To go with the status quo would be a grave mistake for the country’s future. Instead, it’s about recognising that actually a healthy society is one where power blocs are not simply left to their own devices, unfettered and free to do as they please. We’ve seen the consequences of passivity – exploited in the financial crisis, phone-hacking and MPs expenses.
Instead, it’s about proper checks and balances, mechanisms in place holding to account – a system of effective regulation in banking, rooting out corporate monopoly and cartels that damage consumers, a mechanism for dealing with abuses of press power, but that champions the traditional foundations of investigative journalism, and methods of taking on an unresponsive public sector.
The public rightly expect that corporate criminality will be punished in the same way as if an individual breaks the law. They expect that a headlong drive for maximising profit isn’t simply to the detriment of the impact on individual consumers. And they rightly want more out of the public sector – no longer is it acceptable for services delivered by central and local government to be unresponsive to the needs and rights of members of the public, who are after all, citizens. And that means challenging the public too. We should encourage our voters to be more active than simply once every five years at election time.
This is a fertile time for policy-making in the Labour Party and how we respond to this growing unease will chart our course through future election battles. For Labour to sit idly by and do nothing to address this crisis of confidence would be a grave political miscalculation, out of step with our ideals and the beliefs of those active in the Labour movement. Our progressive and radical instincts must come to the fore. We need to connect with the fears of the British public and have an offer that avoids repeating past mistakes. We have a real opportunity to distinguish ourselves from the Conservatives, who are naturally inclined to leave the established elites alone, to steer clear of checks and balances. It might be over-simplistic to refer to the Tory friends in the city, but it’s not in their DNA as a party to radically root out corporate extravagance and monopolistic abuse of power. They are, after all, what it says on the tin – conservative.
Labour’s challenge is to develop a narrative in which is reflected at every turn the need for checks and balances. We want a society where the public feel safe in the knowledge that something, somewhere is in place that guards against the exploitation of uncontrolled power.
This isn’t just a debate about regulation and state interference. But there will be occasions where government needs to establish the rules and also what happens if those rules are broken. It is for politicians – accountable to the electorate through the ballot box – to put in place transparent mechanisms that give the public confidence that should power be abused, there will be recourse to rein in those in abusing their power. Quite simply, we need safeguards in place to prevent a repeat of what has happened over recent years. It seems to me unquestionable that the era of light tough regulation – or even self-regulation – is over, be it the financial sector, the media, or politicians. It has been discredited by the catalogue of abuses.
But it’s about more than just regulation. It’s about culture too. We’ve seen a worrying decline in the culture of responsibility. We need a responsibility towards our wider society – not one built on short-term gain, greed and avarice. Culture change cannot be simply brought about through a change in government policy. It takes time to permeate out through society. But an attempt at starting a culture change is important, and as part of this some examples will have to be made of those who abuse their power.
Politicians can, of course, set an example and start in their own backyard. Voters put their cross on the ballot form, assuming they are sending an MP to Westminster who will represent their interests. But somewhere somehow this link has been weakened. The political class needs to be re-democratised, the establishment challenged and our Parliament strengthened. That’s why I was in favour of a more proportional system of electing our MPs – seeking a mechanism that gave all voters a feeling their vote counted regardless of whether they lived in a marginal constituency or a safe seat. I’m afraid that Nick Clegg may have put this issue to bed for a generation. But there’s more we can do to enhance the accountability of our elected representatives and to bring decision-making closer to the people. It’s for Labour to seize this opportunity and present a fresh, modern package of proposals to reform our constitution in order to achieve this.
Within our political system, a new approach is needed to check the power of governments. We currently have a political system where ministers and aides on the government payroll in the House of Commons is now so vast that it all but guarantees a majority in parliamentary votes. With plans to reduce the number of MPs by 50 without any corresponding plans to shrink the size of the government, this power bloc will become more entrenched and scrutiny undermined. This is the wrong thing to do. Governments, whatever their political persuasion, need to be held to account by a strong Parliament. It leads to healthier governance. And it will in turn be reflected in the voting public having a stronger affinity to those whom they send to Westminster if they appreciate that an ordinary MP can play a big role in the way the country is run.
I believe that in the battleground of the next election, the party demonstrating it has learnt the most from the bruising series of scandals stands to benefit. They will better reflect the anxieties of the British public and present an offer which seeks to soothe their concerns about continued abuses of power.
So, the policy challenge for Labour is about turning passive shareholders, rail users, customers and citizens into active ones, refocusing our economy on responsible capitalism. It’s about individual voters trusting the political system to hold to account politicians, bankers, corporate giants and media conglomerates. It’s about enshrining the public’s basic rights so there’s a clear idea about what citizens expect from the public sector, and giving them recourse to challenge unwieldy and unresponsive monolithic central and local government.
Ideologically, Labour’s instincts ought to chime with those of the concerned public. Our challenge is to do so without resorting to a suffocating focus solely on regulation, that risks snuffing out sensible economic risk taking, eroding the freedom of the press, preventing crucial political decision making. As with many of these things, it’s about balance – but the balance is too far the other way as things stand. It will fall to Labour to swing that back in favour of the public.
Rt. Hon Sadiq Khan MP is Shadow Justice Secretary with Special Responsibility for Political and Constitutional Reform