Bonded Labour?

If you had a vote in a Labour Leadership Election, then vote for whoever Peter Mandelson would less or least want. Wes Streeting would not be a candidate at all except as Mandelson’s proxy, so that rules him out, but there was no talk of reigning in the bond markets from Andy Burnham when he was Chief Secretary to the Treasury. The people who used to have to pay tax are now allowed to lend the State the money, and of course the lender sets the terms. Yet why does the State issue bonds in the currency of which it was the sole issuer, and which it issued precisely by spending it? The best Chancellor of the Exchequer that the Conservative Party never had was Sir Peter Tapsell. As Keynesian and as Eurosceptical as Peter Shore, he identified the money markets, along with the media moguls and the intelligence agencies, as the heirs of the nabobs and of the Whig magnates whom past generations of Tories had made it their defining cause to cut down to size and to subject to the sovereignty of Parliament.

But instead, yields are now even higher than they were under Liz Truss. That ought not to surprise anyone, and it will not surprise regular readers of this site. Labour opportunistically pretended to oppose the abolition of the 45p rate of income tax, the only mini-Budget measure that had not been in Truss’s prospectus to Conservative Party members, but it supported every single one of the others. Had Kwasi Kwarteng’s loony list ever been put to a Commons vote, then the Labour whip would have been to abstain, and any rebellion in favour of it might very well have been larger than any against. The Streeting juggernaut has not come out of nowhere. Jeremy Corbyn and John McDonnell were derided for exploring the possibility that their policies might have led to a run on the pound, but Truss and Kwarteng obviously never even considered it, and nor have Keir Starmer and Rachel Reeves. The City did not like many of Corbyn’s and McDonnell’s agenda, voted against them, and gave plenty of money to the other side, but had those agenda become Government policy, then the City would have factored them in, because that is what it does.

People who had always held the absolute infallibility of the Bank of England, the City, the money markets, and the American Administration of the day, have now spent nearly four years bewailing those forces’ removal of the worst British Prime Minister that they had ever seen even as a realistic possibility, never mind as an actual fact, although how little they knew what lay ahead. Those same individuals had considered it an unanswerable argument against Corbyn and McDonnell that those forces would never have stood for them. If their expectations in relation to Truss were anything to go by, then they would have been wrong about that. The Bank, the City and the markets have been wargaming a Labour Left Government forever. They would have got by, as they still would, not that a Left Government could ever now come from the Labour Party. It was the mini-Budget that they could not countenance. Now, though, they have it a second time. If Trussonomics had been accompanied by spending cuts, then the markets’ reaction would have been even worse. The fantasies of the Walter Mittys on Tufton Street and on the former Fleet Street bear no resemblance to the views of the Masters of the Universe. Since October 1997, when I was a fresher at Durham, City types have been telling me that I “would be surprised” at the real political centre of gravity there. I believe them. Ken Livingstone worked very effectively with it for eight years, his office largely staffed by the Socialist Action that Tariq Ali’s International Marxist Group had become.

As Shadow Shadow Chancellor for decades, and then on the frontbench, McDonnell cultivated all sorts of links that Truss, Kwarteng and the rest of the Tufties simply never did. They assumed that they had the Square Mile on side, when in fact nothing could have been further from the case. The City might not have liked any of McDonnell’s fiscal events awfully much, although it is rarely all that keen on anyone’s, but it could and would have lived with them all. It simply could not live with Kwarteng’s only one, to the point of forcing first his removal from office and then Truss’s. At 35, Kwarteng was making so little in the City that he could afford to become an MP instead. Truss managed nine years there before being unemployed for three, and then spent two as Deputy Director of some Westminster Village thinktank while she slept her way into a safe seat. She may be known only for a speech about pork markets and cheese, but as a disciple of Professor Patrick Minford, she wants Britain to have no agriculture, as would be the “free” market in action. In 2024, she was effectively made to defend that position on the stump in South West Norfolk. But what do we have now? Reeves, who presents her time on a bank’s complaints desk as experience as a banker and an economist. Yet with whom would any candidate for Labour Leader replace her?