Leaving aside whether such a project is "necessary" when we should be reducing road traffic, it is politically attractive to Reeves because like Gordon Brown before her, it would keep some of the costs off the government books, enabling her to claim fidelity to her self-imposed fiscal rules. It would score points with FT and Economist editorials, while signalling to overseas capital that returns are guaranteed thanks to Labour's industrial activism. But there are wider concerns impinging on Reeves's decision about the Thames crossing. What you might call the good reason and the real reasons.
There are close parallels between Keir Starmer's authoritarian modernisation project and the drum Will Hutton has spent the last 30 years banging. Starmer is appalled by and opposed to "sticking plaster politics", and wants to renovate the mindset of the state so it takes the longer view. Hutton back in his celebrated (but, pointedly, ignored by Blair) The State We're In railed against the short-termist culture of British capitalism, and argued building a competitive economy in the 21st century requires planning and interventionism. In this respect, the new PFI - rebrand incoming - can be seen as a government effort at tackling the short-termism, a habit picked up from the City, and therefore endemic amongst British capital and its hangers ons. Underwriting risk while capping returns forces investors to think longer-term. And if more similar schemes can be spun off (aspects of this are included in Great British Energy, for instance), Starmerism could affect the attitude change it wants to see. On paper, it could lead to a more stable economic environment, and one where investors are prudent with their stakes instead of chasing high risk, high reward fancies that have the periodic tendency of bringing stock markets crashing down.
As for the real reasons, the same applies here as it has always done with PFIs. Creating public-private partnerships brings business interests to the top of ministers' in-trays. It works as a pressure as office holders come and go, making sure they're treated as preferential clients as opposed to contractors engaged to provide a service. And, as everyone knows, if a minister is seen as "good for business", the rewards will be there when the political career is over: consultancies, board positions, chairs, retainers. All offering the promise of a comfortable retirement. We cannot forget the politics either. What motivates the Labour right more than anything else is their self-importance, and that is guaranteed by sustaining their careers as stewards of the state. PFI is a means of offering the fearless risk-taking animal spirits of British business guaranteed markets. Just as in the New Labour years a section of capital was annexed by Blairism, the aim is to repeat history - hopefully not as farce - and create a big bourgeois tent. If Labour are good for business, most sections of capital will support them. Which makes it harder for the Tories to come back and take their ministerial cars from them.
In other words, Reeves's preference for PFI-style schemes has nothing to do with "learning the wrong lessons", or "ideology", nor nostalgia for Blairism. It's about interests, which is what politics always is.
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Start with these basic premises 1) if you want less of something you tax it more, if you want more of something then you tax it less 2) people wants more of other peoples' money spent on the things they want. In the real world these are truisms.
ReplyDeleteNow make it controversial. Gov't wants more money to spend, successful investment generates money, so tax successful investment e.g. raise Capital Gains Tax or Corporation Tax or a windfall tax etc... But Gov't also wants investment, and investors want returns, the riskier the investment the higher the required return. Whether this comes from some form of public private partnership or straight-up borrowing is just a detail.
As for short-termism, Capital wants stability, it wants to be able to trust the Gov't. If it thinks that the Gov't is going to tax raid its returns every time it wants more money to spend it will adopt a short-termist approach because it cannot rely on long-term returns. But politicians have to get re-elected and to do that they need to find ways of spending more of other peoples' money on the things people want.
How do you balance it?
Can we please abandon the clear nonsense that taxation funds government spending?
DeleteThe only group that "spends other peoples' money is the group of vultures who inhabit the City.
In a sovereign country that has it's own currency, all the money the government spends is created at their instruction by the Bank of England. This is all explained by MMT, and it is the reliance politicians place on ignoring this fact that ultimately gets them into easily avoided trouble and leaves us living in the backward country we continue to inhabit.
"Capital wants stability"...well, it has a funny way of going about getting it. Let's develop a wealth siphon that sucks all the wealth upwards so that the bulk of the population supports a tiny uber rich elite, and watch as the anger grows. Then everytime we (i.e. the city suits) f*ck up and cause a recession or a crash, they get to pay for it. That'll guarantee stability...???
DeleteYou don't appear to understand how tax works. I suggest you have a look at this article https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4890683
ReplyDeleteThanks. Imagine: what would the country be like if enough voters knew and understood this?
DeleteMoney creation is irrelevant: governments cannot create wealth, only appropriate it "money creation" is just another way of appropriation. PFI is just a way to try and get the use value of wealth/capital while still leaving it under the control of capitalists who get the profits. A hospital in state hands is unprofitable, but in private hands is profitable, and this profit is achieved through labour discipline ("sweating").
ReplyDeleteThe result is the same: we live in a backward country.
DeleteAppropriate it? The infrastructure and stability that a well governed country has contributes hugely to wealth 'creation'. In fact, it is pretty much essential for a technologically capable society. No individual creates wealth - it is a by-product of cooperative endeavour, which requires an environment that facilitates trust. At the national scale, this means some sort of shared , accepted system of governance. Which needs resources. So... one person's appropriation is another's contribution.
DeleteI really enjoy your blog, but question your continual reference to Starmer as authoritarian. Please don't think I'm a Starmerite but...(I bet you hear that a lot :-)) I really don't think we can compare his approach to that of any of the great and awful authoritarians of this world and of history - as far as I know you can write this blog quite comfortably without any fear of among other things being boiled alive, chucked out of a window or sent to prison where you might soon enough wake up without one of your kidneys. Is he authorative, yes, does any government have within itself the possibility of turning authoritarian, absolutely, but even when compared to more 'light touch' authoritarian regimes such as Singapore it is fairly disingenuous and does little to endorse many of your other very compelling points and arguments.
ReplyDeleteAll politicians, to my mind, are authoritarians, in that they seek to use state power (the state fundamentally being an authoritarian institution) to achieve their ends. That said, there is of course a continuum. Starmer is probably about as much of an authoritarian as it is conceivable that a 'mainstream' politician in a 'liberal-democratic' polity could think that they could get away with being.
DeleteAnonymous, you're not understanding the sense in which the author uses the word. It's possible to be "authoritarian" on many different scales and in different domains. Within the Labour Party, and now within the government, the management style of the Starmer regime is unquestionably authoritarian. Anyone perceived as less than a 100% loyal line-toer is likely to be deselected, suspended, booted out of the party, etc, as soon as any pretext or mechanism is available; the examples have been many and high profile. A big tent or a marketplace of ideas it most certainly is not.
ReplyDeleteI think it is valid in that he (and his antidemocratic Gen Sec Evans) immediately issued diktats restricting discussion in branch meetings and began the use of the fake antisemitism tool to remove socialists from positions or even from the party. Labour had some semblance of internal democracy surviving, even thriving; now it effectively has none, even lurching towards corruption and Soviet-style democratic centralism an example is Akehurst via the NEC selecting himself for a safe Durham seat while denying the local CLP any part in the process.
ReplyDelete> But there are wider concerns impinging on Reeves's decision about the Thames crossing. What you might call the good reason and the real reasons.
ReplyDeleteIf the real reasons happen to align with the good reason, wouldn't this be an (all too rare nowadays) example of the UK's system of government "working", in the sense of actually doing what it is justified superficially as having the purpose of doing?
Some other commenters have alluded to this, but PFI can be seen as a way to secure state investment while sticking to the "treasury view," and so avoid the tax share of capital increasing (as per Kaleki).
ReplyDeleteSince the turn away from post-war corporatism in the mid-late 1970s, this is effectively the only means by which such investment has been allowed to happen. I think Reeves is comfortable with this arrangement, but it would require a very committed political movement with a plan and a significant base of support to challenge it. That does not apply to this version Labour, nor any other recent incarnations.