Big Bang made the rise and rise of London’s financial sector possible. A club of largely English gentlemen was transformed into a major global financial market. The old City stockbroking firms and their merchant bank clients had many talented people, but they were constrained by a lack of capital, by a concentration on UK activity, and by the protectionist rules of the market. The brokers did not compete on price, as tariffs were fixed for all. What competition there was occurred over research and levels of service. The merchant banks punched above their weight and sought to harness the much bigger investing and placing power of the commercial banks, without themselves having market making capital and opportunity. The market enforced separation of function, with jobbers making the market and running book positions, brokers acting for clients and seeking best prices, and merchant banks and investment management houses providing advice to the retail and corporate users of the stock and bond markets.
The vision I helped the government form was of a much larger, more responsive, more competitive marketplace. Opening up the market to new competitors meant welcoming in much bigger companies with access to large sums of capital. Markets could become more liquid. Removing the fixed tariffs and fixed roles allowed innovation and price cutting, offering a wide range of services at keener fee and commission levels. US, Japanese and other leading banks and investment houses from around the world wanted a presence in London or wanted a much bigger activity to utilise the new freedoms. Quite a few of the smaller UK businesses decided to sell out to larger players. Even the merchant banks often decided on tie ups with larger partners to get access to the huge sums of capital the new markets needed, and to do the big deals for the multinationals that had been beyond their balance sheet reach before.
The new freedoms brought demands for new regulations. The old city, as a club of like minded people with similar training and backgrounds, had relied largely on self regulation. Everyone was taught that “My word is my bond” and all were expected to behave to decent standards by other club members. Registered stockbrokers, jobbers and merchant bankers knew the measure of each other and of the competing firms. The club had ways of dealing with the few who transgressed against the club ethics and rules. Once the market was opened to many firms of varying cultures and backgrounds, and to so many more players, it became necessary to have longer rule books and more formal procedures for ensuring compliance. London began the long march to Statutory regulation and then to EU regulation that has characterised the last three decades.
At the same time as we lifted the restrictions on City activity we deregulated telecoms and put in a challenger to the monopolist. I saw this as a crucial component of helping build a bigger City. This was also an important planned part of the move to create a first rate global market. BT as a nationalised industry was struggling to keep up with the growing demand for capacity and sophisticated telecom based data services to allow the City to expand. It took the liberalisation to deliver that too, just in time for the explosion of talent and capital that has characterised the rise of London ever since.
The city with its banks, financial service businesses, legal and consultancy firms and a range of businesses serving the needs of industry and commerce is a crucial contributor to the UK economy. It creates a large number of jobs, generates substantial activity and pays a lot of tax.
The growth of the City took off following liberalisation of crucial city markets in the 1980s. The old cartel of stock brokers and jobbers was pushed aside, allowing many major multinational banks and financial service businesses to locate here, expand and compete. They brought in new talent and plenty of new capital. The London markets soon became the largest in Europe, and in some fields like foreign exchange and shares traded outside their home territory it became the biggest in the world including New York. The UK prospered on the back of it.
In 1997 the incoming Labour government decided to change the way the City was regulated. They took most of banking regulation away from the Bank of England and gave it to the newly created FSA. They set up a tripartite regime of Treasury, FSA and Bank of England to regulate the banks which turned out to be a disaster for London and for the UK economy. No-one felt in charge of commercial bank regulation. The FSA allowed the large commercial banks to expand massively, lending too much and making large ill judged acquisitions in the case of RBS. They allowed the prudential rules of the old banking regime of the 1980s to be relaxed, permitting banks to lend many more times the cash and capital they had at their disposal. Those of us who warned against this were told we were out of date. According to Labour’s regulators the commercial banks and larger markets were able to handle risk better than before, so would be fine operating with such slender capital and reserves.
In 2008-9 the regulators and government decided they had gone too far in allowing overexpansion of lending. They had inflated asset prices especially property too far. They reversed the policy dangerously, bringing about a collapse. Banks struggled for liquidity. People withdrew deposits from weak banks. Property values crashed, only to undermine many of the loans the banks had extended. Labour’s boom and bust soon spread from the City to the rest of the economy, scything through living standards and pushing many people out of work. Most commentators now criticise Labour’s regulators for allowing too easy a regime prior to 2008. Few criticise arguably the bigger mistake, bringing the whole structure down too rapidly when they switched policy in 2008.
It has taken a long time to mend the banks after such a roller coaster ride from the regulators in the previous decade. The Bank of England is back in charge. Let us hope it is a better judge of the cycle than the FSA. Let us hope it finds that Goldilocks balance, where banking regulation allows banks to extend enough credit to keep the economy growing, but not too much to threaten the stability of the economy again.
Copy of the article: House Magazine.
Wokingham is home to much modern technology. We use our computers and smart phones a lot, and are used to finding information and news on the web. It is therefore no surprise to learn that our local newspaper now has to be digital and electronic alone, with no further paper copies after Christmas.
Over the years the local paper has played an interesting role in our community. It has helped charities and good causes. It has made parents and grandparents proud of their childrens’ achievements captured in Wokingham Times photographs. It has tried to explain the workings of our local Councils to voters, and has given a voice to the opponents of those in office. It has asked me to write a fortnightly column to keep people up to date with some of the issues that our national Parliament tackles that matter to us here in the Borough.
I wish the staff who will continue with the on line news and comment every success in keeping it relevant, topical and interesting. There is still a need for people to come together even in an electronic community to celebrate successes, to mourn common tragedies, and to keep each other informed of what is going on. Much of our communication may be digital, but the heart of Wokingham still pulses in the everyday exchanges in the shops and market place, in schools, churches and charities, in the halls and theatres when we meet and come together in person. That needs some recognition, explanation, and sometimes criticism which a local electronic paper can provide.
I have received numerous complaints about increased aircraft noise in recent weeks over Wokingham. I took these up with the authorities. They explained they were running an experiment with new routes which was making the problem worse. They agreed to curtail this experiment early in response to my and other representations they received. They pointed out they were not about to change the routes permanently to follow the way of the experiments.
There has still been continuing noise and protests after the end of these experiments. Some of this may relate to wind direction, as we do get more overflying and noise when the wind direction means easterly operations. However, in view of the undoubted noise and the level of complaints I am taking it up again with the Airport. I also suggest that any of you concerned about it and experiencing increased and unacceptable noise should make regular reports and complaints on the Heathrow noise website which is available for that purpose. (www.heathrowairport.com/noise)
I am also renewing my lobbying for reduced noise surfaces and noise barrier improvements on the M4. Lower noise materials were promised to me in the past for the next resurfacing of the motorway. The change to a managed motorway which the government is considering would also provide a suitable opportunity to improve and extend noise barrier protection near residential areas. I sympathise with all who find their lives adversely affected by aircraft, traffic or railway noise and will do what I can to see if in future these levels can be abated. We are promised quieter planes for the future. We also need quieter trains as they order new railway stock.
Some of you have written to me with concerns that the NHS may be privatised in the future, or that the proposed EU trade agreement with the USA could force privatisation. I have taken this up with the Secretary of State for Health who assures me he has no plans to privatise the current service, and expects the NHS to be outside the EU competition agreement with the USA. None of the main political parties in the UK wishes to change the central proposition of the NHS that service is offered free at the point of need to all UK citizens. It is a wicked lie to try to worry people into thinking otherwise.
There has always been strong private sector involvement in providing free healthcare to patients. Right from the foundation of the NHS most GPs have remained as private sector contractors running their own surgeries and being paid by the state for the work they do for the NHS. Right from the start most drugs and medical supplies have come from for profit private sector companies. Under governments of all 3 main parties private contractors have provided cleaning, catering and other hotel services in hospitals where required by NHS managers. No party is suggesting nationalising GPs or drug companies, so to that extent there will continue to be substantial private sector participation in the NHS.
Remembrance day was a very moving event. In Church in Wokingham people read out the names of around 220 local men who lost their lives in the Great War. They were mainly very young men, with their whole adult lives ahead of them, mown down by shells or bullets in the dreadful mud and terror of the trenches. They were our Great Uncles and Great Great uncles – and a few of our grandfathers and great grandfathers, though many were too young to have married and had children.
In their memory, we can ask what would they have wanted for the generations that followed? I am sure they would have wanted us to have learned from the bitter experiences of total war in the machine age. They would want us to redouble our efforts to try to avoid it in future. Those soldiers who survived that conflict hoped they had fought in the war to end all wars. Twenty one years later our country was at war again against the same aggressor.
Today we also mourn our more recent military dead – in Afghanistan and other modern conflicts. They too were brave. They fought for us and for our country and we take pride in their conduct and military skills. We need to ask how we can best remember them.
One of the most onerous tasks an MP can have is to debate and vote on whether our country should go to war again. When doing so it is wise to remember the loss and suffering that voting for war can bring. It is vital that MPs ask if there is some other way to improve the lot of those we wish to help, to seek some political or diplomatic solution to the problems. The First World War showed that even after an orgy of death and destruction and a crushing military victory, it was still all too possible for the politicians and the peoples to mess up the peace and place it all at risk a few years later. The Middle Eastern conflicts of today show that after military victory it is even more important to know how to create and support a stable democratic government in the country concerned. If we fail to do so the sacrifice of soldiers does not lead to the better life we want them to help create.
My study of history and my close engagement with the debates about recent wars has made me more reluctant to commit our forces, and keener to seek political and diplomatic solutions to problems. Of course if our country is directly threatened and force is the only means of defence we must be strong and resolved in it use. Where the problems are complex, in different cultures, and where our knowledge of the religions, languages and customs is imperfect, we should be careful about committing forces and resorting to arms. Many of these situations will need political solutions in the end, so the sooner we help others locally to try to bring peace about, the better.
The surge in support for UKIP at the two recent Parliamentary by elections came as no surprise to me. I have spent much of this Parliament trying to get the Coalition government to take seriously people’s worries about the scale of European migration, the impact of EU law on our benefits system and the wide range of powers the EU now exercises to thwart the will of the British people and their Parliament.
Many voters think too many people now come to the UK each year making it difficult for us to keep up with their legitimate needs for houses, school places, health services and the rest. Many voters think someone coming here to work should not receive our welfare benefits until either they become citizens or they have paid taxes and National Insurance for a long enough period to qualify. I agree with this. I took up the need to charge visitors who use our health service where there are no reciprocal arrangements for us when visiting their country, and pressed the government to send the bills to other European countries under the EU scheme. It seemed odd that we pay out far more to other EU countries for healthcare than we receive back. I have pressed for a contributions based approach to benefits for non citizens, and want to see the same rules for new entrants to the UK from the rest of the EU as this government has imposed on non EU migrants.
The government did take some action on access to healthcare. It tried to tighten benefit rules, but European court cases are making it difficult to change as much as is needed. It has introduced a sensible system of controlling the scale of migration from non EU countries which has been successful in reducing numbers. The Lib Dems in government have blocked any attempts to start a renegotiation now of our relationship with the rest of the EU to enable us to control our own borders and decide who to admit from the EU.
The main thing I have done to help this Parliament is to be one of a small group of MPs who persuaded Mr Cameron to alter policy on the EU. His Bloomberg speech set out why the current arrangements are not working for us. It said he will seek to negotiate a relationship that makes sense. He will then put this to the voters in a referendum. So if you do not think the new relationship is good enough you can vote to leave the EU instead.
I think this is the best possible way to handle a difficult situation. Most of the rest of the EU wishes to move towards full political union to support their membership of the Euro. We are not in the currency, so we do not need the same benefits, wages and migration policies as all those countries who do share a currency. We should not stand in their way if that is what they want, but they in turn must understand the UK does wish to control, its own b orders, decide on its own welfare system, and make more of its own decisions in a democratic UK Parliament where you the voters can fire the MPs if we get it wrong. Those votes for UKIP are telling us we need change, and should remind MPs that the voters are the bosses whose views matter. Simply announcing we will leave without talking to the rest is not a good idea. We will need to have agreements in place for free trade, flightpaths, pipelines and the rest, so it makes sense to talk about how to do it.
The campaign to speak for England has taken off. I am receiving large numbers of emails and web contributions in support. There is a strong feeling that England deserves and needs a fairer settlement. There is a strong surge in opinion in favour of England having a voice and the right to govern herself as Scotland does. I went to Chequers to present my thoughts on how to take this forward to the Prime Minister. He agrees that we now do need to deliver some justice for England.
There is no nasty nationalist movement in England. Most English people do not define their Englishness by expressing dislike or hatred of other countries. There is none of that unpleasant undercurrent that you hear on the fringes of Scottish nationalism that is anti English. There is none of that strident nationalism based on anti Russian sentiment which we see in Ukrainian nationalism.
We English are on the whole glad Scotland voted to stay with us, and wish the UK to be our country representing us abroad and taking the big decisions on defence, war and peace and general economic and monetary policy. We also now strongly feel that if Scotland is to have more devolved power we too need our own devolved government to balance the kingdom. We want a fair settlement over who makes the decisions, and how the money is raised and spent.
We English would like there to be a BBC England which does for our culture and debates what BBC Scotland and BBC Wales do for them. We want to hear our worries and arguments more on our media, and know that our concerns and our public services will be dealt with by English MPs answering to their constituents.
We in Parliament have to take up the task of sorting out a quick and straightforward way of ensuring that in future we have English votes for English matters. There are ways that we could deliver this soon, with some co-operation from other parties. Otherwise it has to await the General Election, when English votes for English issues will be a central promise by the Conservatives. I just hope Labour and Liberal Democrats realise that if they wish to be serious contenders for votes in England they too now have to join us in creating justice for England. I could not justify to the electors of Wokingham giving Scotland the power to settle its own Income tax rate, and also giving to Scottish MPs the right to vote on what Income Tax we have to pay in England when they would not have to pay it themselves.
Last week I asked in the Commons Who speaks for England? This week I find myself developing my Speak for England campaign, with huge support coming in from all round our country.
Whatever the Scots decide on Thursday, our country is going to change substantially. If they vote to stay in our Union, they will do so only on the basis of much more home rule in Edinburgh. They will expect to fix their own Income Tax rate and much else besides.
I will vote for these changes as they have been promised and will form part of the referendum outcome. I will only do so as long as the same powers of self government are also granted to England.
We English have accepted lop sided devolution as the price to pay to keep the Union together ever since Labour first invented it. It means that English students at Scottish universities have to pay fees whereas Scots and people from other EU countries go free. It has meant more public spending per head in Scotland than in England, and a better deal on care for the elderly. As the aim is now to give the Scottish Parliament an even better deal, of course we must be fair to England and sort out the injustice of the current arrangements .
The Liberal Democrats agree England gets a poor deal, and agree there should be some devolution to England as well. However, they just want to give more powers to big cities. This goes nowhere near tackling the imbalance. If Scotland can settle her own Income Tax rate, why can’t England? If Scotland is going to make decisions on welfare benefits, why can’t English MPs settle those matters for England as England wishes? Why would there be devolution to Sheffield but not to Wokingham?
Others want to devolve power to unloved English regions. Are we in the rest of the South-east, the south, Thames Valley or what? This system was defeated by a huge majority when it was offered to the North East by the last government.
If devolution to a Scottish Parliament is what Scotland wants, England should be offered no less. If the new relationship between Scotland and England is one between two nations with a strong sense of their own identities as well as a wish to have a common defence and currency union then England too must have a Parliament to make decisions and express the national will on all devolved matters.
If you would like to support my “Speak for England” campaign then please email your support to the media and put it on your favourite relevant websites.
I am urging the government to be a force for peace in both Europe and the Middle East.
I not like the way the EU and the USA have escalated the trade war and the war of words with Russia over the Ukraine. I want to see the Kiev government stop shelling and bombing its own country in response to the pro Russian rebels, and get on with the patient task of talking to them and seeking a way of governing the country that meet the aspirations of more of the people. Whatever the rights and wrongs of the government and rebel positon, and whoever started it, it does not look good in a western democracy to see the scale of violence and destruction.
I think NATO should turn down the application from the Ukraine to join. It is inconceivable the Ukraine can join on its old borders, as Russia has taken over Crimea. NATO would not wish to begin its relationship by having to fight against the Russian military there. Nor can Ukraine on its new de facto borders without Crimea claim to be stable and easily defended by NATO members. NATO should not take on military tasks that are either too difficult or could only be done at disproportionate cost in lives.
I do not have any time for the advisors who want the West to become new friends of Assad and fight alongside him against ISIL forces in Syria. When I joined with other MPs to oppose going to war in Syria against Assad, one of my main reasons was I did not like the company we would have to keep given the nature of the opposition forces to Assad. We won that argument. I do not wish the west to make the opposite mistake by now siding with the very man they wished to overthrow.
The unfolding tragedy in Libya reminds us how difficult it is to support and help set up a stable democracy to replace a former tyrant in the Middle East. It should be a warning to all those who want us to use our power to topple more unpleasant regimes. I have no more time for the violence and tyranny meted out in the name of ISIL than any other western democrat. I do, however, recognise that there are many differing violent and extremist terrorist groups in the Middle East. There is also a major Sunni/Shia civil war underway. I do not think it is in the UK’s power to settle these disputes by our own military means.
Meanwhile our concentration needs to be given to righting more of the wrongs in our own society. The Rotherham child care scandal reveals we have much to do to create a caring and protective environment for many children in our own country. Those senior people who failed in their tasks should resign or face disciplinary actions. The criminals involved should be prosecuted. Every Council social service department, good and bad, needs to read the Rotherham Report and make sure they cannot make the same mistakes.
There have been horrific scenes on our tv screens from Iraq as the IS forces make their advance. We have seen the impact of the violence in the Israeli/Hamas conflict. The damage done in the Ukrainian civil war has not figured so prominently in the media, as journalists do not seem so interested in the clash between the Russian sympathising rebels in the East and the government forces where tanks, planes and other serious weaponry have been deployed by the Kiev government.
I am concerned like many of my constituents about these difficult and dangerous civil wars and wars over borders and rights to self government. I wish the UK to do what it can to promote peace, offer humanitarian aid to those in need, and work with the international community through the UN to be a force for stability where possible. I do not think in any of these three tragic cases there is a role for the UK military to insert themselves into the conflict to act for one side or the other.
Some constituents write to me passionately on the side of the Palestinians over the attacks on Gaza, or on behalf of the Israelis and their right to self defence. Some write to me condemning Russian involvement in the Ukraine, others write to me saying the EU’s foreign policy has pushed too hard against the Russian influences in the Ukraine with unfortunate results. Some write to me condemning the Sunni forces in the Middle East, others are less supportive of the Shia governments.
This is as it should be and as I would expect in a liberal democracy with people from various backgrounds living peacefully together here. It is a further good argument why the UK government should not seek to side with one belligerent or another in these tense and dangerous situations. The UK government should be neither Shia nor Sunni, neither Palestinian nor Israeli, neither pro a united Ukraine nor pro a federal or multi state Ukraine. The UK’s views on each of these conflicts should be that they are for local people to resolve how they are governed and what pattern of states best helps them. It is best done by talking and by democratic processes. Wars break into the pattern of talking and seeking negotiated settlements, but they can only end when people do wish again to talk through their differences and come to a new agreed settlement. Wars are what happen when diplomacy and politics fails. Where atrocities are committed the UK should condemn these and seek an international solution.
The UK can help with advice, diplomacy and by showing by example how differences about how we should be governed are best resolved by peaceful means. The Scottish referendum should be an example to all countries facing independence movements in part of their territory. There may be times when we need to help the international community rescue people in special distress or supply military support and force to a UN mission. This is not the time to plunge into another Middle Eastern war, where intervening on one side may have unwished for consequences. I was one of those MPs who opposed the idea of military intervention in Syria. I now see that some of the opponents of the Assad regime have turned up in IS, showing how difficult it is to find the right allies in a just cause in that troubled part of the world. My job is to help keep a peaceful and successful community here at home. We can best do that with moderate language about these international matters, and a suitable sense of humility about how much UK power could achieve.