Mr Ed Miliband apologises for the wrong things

Today we are told that Mr Miliband will show some humility. He will tell us he understands how angry we are that Labour said they had abolished boom and bust.

He should wake up and understand that what made people angry was not the soundbite – that was just silly. What made people angry was the huge boom and bust Labour presided over and helped engineer. They wish to blame the global economy and the US credit crunch, but the UK credit crunch was made in Britain by British Regulators and by the Bank of England under the supervision of Labour Chancellors. Northern Rock, Bradford and Bingley, HBOS and Alliance and Leicester were UK banks supervised by Mr Brown’s very own design of banking regulator

To please his audience Mr Miliband will say Labour were wrong to go for a deregulated City. This remains one of Labour’s biggest lies or misunderstandings. The City was more regulated in 2007 than in 1997. Mr Brown set up an independent banking regulator, kept the Bank of England involved, and made the Chancellor the Chief Regulator of the whole structure. He introduced extensive mortgage regulation which regulated the wrong things. All his regulators, far greater in number and better paid than in the 1990s, got the main judgement call wrong. They did not control cash and capital sensibly, and allowed a boom. They then controlled money too fiercely, and brought on a bigger bust.

That is what Mr Miliband should apologise for. Don’t hold your breath.

Last week on Question Time I still had to rebut the Labour lie that I advocated the scrapping of regulation of mortgage banks, when the Report I wrote for the Conservatives warned of excess credit and said they should regulate cash and capital more tightly. It turned out to be correct that their box ticking mortgage regulation failed to stop the worst mortgage crisis in our history.

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19 Comments

  1. Robert Taggart
    Posted September 28, 2010 at 11:34 am | Permalink

    Cameos first reply / question to 'Red Ed' at their first PMQ encounter… " do you apologise for…" ? !

  2. waramess
    Posted September 28, 2010 at 11:36 am | Permalink

    Maybe it's time to move on and start asking questions like why David Cameron is adopting what looks like a tax and spend policy and why David Cameron has yet to dispense with the services of King and Bean and perhaps more to the point why his policies so far look very similar to those of the outgoing regime.

    Perhaps the answer will be that he is a socialist and what did we expect? Maybe electing a socialist party leader was what it took for the Conservatives to regain power.

    This all seems like a terrible dream where we all end up as paupers, other than those that are pulling the strings

  3. Albert M. Bankment
    Posted September 28, 2010 at 11:40 am | Permalink

    It's far too simplistic, and populist, to blame the Bank of England for the successive banking catastrophes. Had the Old Lady been allowed to continue its apolitical regulation of the banks, rather than that function having been given to the FSA, it is unlikely that any of it would have happened. The BoE itself has not been sufficiently robust in defending itself.

    I write as an informed and analytical outsider, rather than anyone with specific knowledge of the cases, but nevertheless feel that I'm broadly correct. The past century had been distinguished by the absence of any bank collapse, largely because the BoE was staffed by specialists, and had complete authority over the behaviour of the banks. Regulation was constant and merciless. Crises were foreseen, and solution strategies worked out, often before the failing bank's own board knew what was going wrong.

    New Labour's plan to allow the FSA to regulate ALL financial business, in conjunction with the Treasury and with the BoE playing a grudgingly conceded minor advisory role, both emasculated the BoE and handed regulatory oversight to a hastily cobbled together bunch of inadequates who signally lacked the BoE's generations of experience. They were the Keystone Gestapo, with absolute power but only the haziest notion of how to exercise it. Banks are a wholly different business from brokers, IFAs and insurance companies, and their regulation requires different and subtle skills which the FSA utterly lacked.

    Had that not happened, and had the BoE remained in charge, Northern Rock would not have been allowed to expand so irresponsibly. The Bank would have "had a word"; its word being law. The same goes for Bradford & Bingley. Neither would Peter Cumming have been allowed to lend so recklessly at HBOS, and HBOS would not have failed. RBS's hubristic global ambitions under Fred Goodwin would, similarly, have been thwarted by good, old-fashioned common-sense.

    It was the politicisation of financial regulation after 1997 – Gordon Brown's not-so-bright idea – which was the primary contributory factor in undermining financial stability here. Brown took a system which had been working exceptionally well, and subsumed it to his politically-motivated will. It should be yet another stick to beat him with, and not the unfairly traduced Bank of England.

  4. SITFO.org
    Posted September 28, 2010 at 11:50 am | Permalink

    I'm sure you'll correct me if my memory is playing tricks:

    1. Wasn't it David Cameron who persistently made the case for LESS regulation on financial services during the early Noughties?

    2. It was hedge funds that caused the global financial melt-down

    3. The SEC were warned what was happening well BEFORE the collapse. Action wasn't taken because of influential global players' relationships with government:

    Reply: We needed less but better regulation. It was not hedge funds that brought on the meltdown.

    • SITFO.org
      Posted September 28, 2010 at 3:15 pm | Permalink

      It's a shame that you deleted the link to the document sent to the SEC well before the bubble burst. Since when was Lehman Brothers' collapse brought on by mortgage defaults? (argues bond settlements caused problems for Lehmans) Why did it affect us? Because credit default swaps and other derivatives counter-parties were in Europe.

  5. P Haynes
    Posted September 28, 2010 at 12:13 pm | Permalink

    They always apologise for the wrong things.

    If they did it for the right ones the whole socialist vote, based on envy, transfers of wealth from the responsible to the feckless and a huge bloated state sector would collapse.

  6. lola
    Posted September 28, 2010 at 12:26 pm | Permalink

    The FSA and the whole tri[artite structure is, well, cobblers. The FSA rule book, if printed out on A4 single spaced stands at least eight and one half feet high. The regulated can't understand it, and neither does the FSA. The sole purpose of the document is to provide open opportunities for the FSA to interpret anything as against its rules. It is entirely uncertain. Furthermore the FSA is on record stating that is 'makes law'. What! How can an entirely unaccountable quango be alowed to do this?

    Shut it down, now.

  7. Antisthenes
    Posted September 28, 2010 at 12:30 pm | Permalink

    If you had truly free markets you would not need very much regulation at all.

    • waramess
      Posted September 29, 2010 at 3:00 pm | Permalink

      If we had free markets we would not be in this mess. New banking regulations are almost certain to cause the next banking crisis and yet we press on like lemmings: http://subprimeregulations.blogspot.com/

  8. Robert
    Posted September 28, 2010 at 12:50 pm | Permalink

    So true. When I asked about a mortgage in 2006 and the broker told me the sum the building society was prepared to lend my response was "they must be crazy". They wanted to lend five times my salary and made no enquiries about other financial commitments I may have had. They didn't even ask for payslips to prove what I was earning. A youngster in my office was offered 130% of the purchase price of his house. This was when mortgage rates were at historical lows, so there was no room in these ridiculous offers for any increase in interest rates. This was not engineered by the free market of supply and demand but by a government determined to stoke up an asset boom to fund its big-state ambitions. The photo yesterday of Red Ed in the clutches of a deliriously happy Neil Kinnock says it all about Labour's trajectory now.

  9. Demetrius
    Posted September 28, 2010 at 3:03 pm | Permalink

    According to Tax Justice Network and others the key factor in the US credit crunch was the balance sheet washing done from Wall St. to The City by large firms to stay inside US regulatory limits which the UK had done away with. In other words The City enable Wall St. to evade good practice.

  10. Mike Stallard
    Posted September 28, 2010 at 4:24 pm | Permalink

    I am a Catholic and Mr Miliband is an atheist. I am married with children all of whom are labelled on their birth certificates as mine. The same is not true for Mr Miliband. I have lived outside of politics all my life. The same is not true for Mr Miliband.
    When he becomes Prime Minister of this godforsaken country, though, he will try to make me just like himself, no doubt.
    That is why, "I'm out".

    • waramess
      Posted September 29, 2010 at 3:07 pm | Permalink

      I'm an atheist I am married with children all of whom are labelled on their birth certificate as mine, You really should not, just because you are a religeous person, try to capture the high ground in the name of religeon.

      And, why on earth would an atheist try to make you just like himself? there's no profit to be made out of it.

      • Robert Taggart
        Posted September 30, 2010 at 12:59 am | Permalink

        Speaking as a childless, singleton, atheist, methinks 'Red Ed' has his plus points !
        But, if he wishes to be really radical… could he be a republican ? PLEASE !

  11. James Clover
    Posted September 28, 2010 at 8:04 pm | Permalink

    Oddly, we should all be thankful that the crdit crunch came when it did, and shook sense into the system, so that debt became a bad word instead of a means to easy profit, and the "benefits culture" came under critical and open scrutiny.
    Had there been no crunch, New Labour would have been re-elected, the deficit would have grown ever more quickly, and the inevitable bubble-burst woud have been much greater; much, much greater.

  12. Geoff
    Posted September 28, 2010 at 11:41 pm | Permalink

    Continuing the simplistic themes: if interest rates had been gradually raised from June 2004 we would most probably not be be in quite so much brown stuff as we are at this time.
    Socialists and envy will always make good bed fellows.

  13. Robert Pay
    Posted September 29, 2010 at 5:09 am | Permalink

    Unfortunately, John's narrative has not become the Tory narrative…

    The Labour Party will never apologise for overspending and regulatory failures because the vaste majority of the popluation think the only problem was greedy bankers (75% in a recent poll give this as the prime reason for the recession). In addition, many people think the deficit is the national debt and so don't understand that were we a family (which we are) that we are living way beyond our means and that deficit reduction to zero means we still have a large structural debt.

    More work on this narrative is key. The Coalition has spent too much time banker bashing. As a result Miliband will not have to own up to the Labour overspend…Brown is still seen by many as a great chancellor…ho-ho…

  14. THE ESSEX GIRLS
    Posted September 29, 2010 at 9:22 am | Permalink

    Ed Miliband's speech was, in the main, pedestrian. However the main spotlight overnight is on his Iraq comments and the fall-out with ex-colleagues.

    As 2003 protest marchers we resent the fact that politicians of both major parties have failed to say that the decision to invade was plain wrong. Wrong in hindsight and wrong then. A million of us marched because WE knew it was wrong however much Blair twisted the evidence and Duncan Smith failed to examine that evidence properly.

    Ed Miliband deserves credit on this issue.

    • Robert Taggart
      Posted September 30, 2010 at 1:01 am | Permalink

      Hopefully this 'new generation' of politicos will not want to be 'Uncle Sams Poodles' !

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    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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