GIVEN that Gordon Brown’s political mission is, as he put it yesterday, the “renewal of new Labour”, his speech to conference was remarkable for the absence of anything new.
Mr Brown pledged to lift spending on state school students from £5,500 per pupil per year to the current level for private school pupils, £8,000 — just as he had promised at the Budget; he reiterated a call he made at the United Nations in April to advance a $20 billion (£10.5 billion) fund for cleaner and more efficient energy in the developing world; and he reconfirmed his commitment to raising the minimum wage next month to £5.35 per hour. (British business should be quietly relieved that that is all he did: this issue will now fall under the scrutiny of the Low Pay Commission and, according to one former commissioner here, the minimum wage is now likely just to edge up to £5.50 by 2008.) All in all, more repetition than renewal.
For those people still getting to know this “quite private person”, there was personal repositioning. He started with a paean to Tony Blair. As evidence of the “team player” he now purports to be, there were more name checks than in the average Oscar acceptance speech. He declared himself proud to be both Scottish and British. He cast himself, by implicit contrast with David Cameron, as a politician not of image, not of celebrity, but of substance.
Yet the one substantive idea at the centre of his speech — the idea that bears upon the future management of government and the opportunities for business in Brown’s Britain — harked back to 1997. Mr Brown cited the decision to grant the Bank of England independence as a marker of his decentralising philosophy. “The purpose of independence for the Bank of England, the Financial Services Authority and the Competition Commission was to devolve power and separate the making of public policy from the independent administration of daily business,” Mr Brown said. “And I believe we must now examine how elsewhere we can separate the decisions that, in a democracy, elected politicians must make from the business of day-to-day administration.”
The Bank of England’s independence is, undoubtedly, A Good Thing.
Of course, it was not wholly original. The Chinese Communist Party likes to keep the People’s Bank of China on a tight leash, but the Federal Reserve has long had the freedom to set interest rates in America.
More importantly, it is not at all apt. The Monetary Policy Committee is not like the National Health Service. An unelected, Treasury-appointed, publicity-shy group of policy wonks may be exactly what you want to make decisions on interest rates, but not deciding on hospital closures, passing judgment on access to IVF treatment and cancer drugs and managing a staff of 1.3 million people. In fact, the MPC makes decisions, it does not administer daily government business.
Finally, it is not entirely credible. Over the past nine years, the Chancellor has centralised power, reasserting the Treasury’s authority across Whitehall. Much to his credit, Mr Brown, the public servant, has faith in the power of government to improve life in Britain. It is what propels him towards the premiership.
Unfortunately, Labour’s leader-in-waiting presented himself yesterday as an old-style substantive politician with a back- to-the-future philosophy for government. If he is to win the premiership, rather than just inherit it, renewal will have to mean offering something new.
The white knight who rode on
MICHAEL SPENCER was, in so many ways, the London Stock Exchange’s ideal saviour. For one thing, there was a neat strategic logic to merging Icap with the LSE: Icap, Mr Spencer’s business, is the world’s largest interdealer broker, a technology platform that enables more than $1 trillion in daily trading in derivatives and other financial instruments; the LSE is a natural counterpart, a utility that provides a similar service for equities.
For another, there was a Britishness about the solution. Mr Spencer is a City grandee. A deal would have kept the Exchange in London’s hands. And while national champions are generally more trouble than they are worth, the LSE is an exception that proves the rule: its identity as a distinctly London institution is critical to its role in the global competition for capital. But Mr Spencer balked at the price. The talks are, for the time being, over. And the inevitable conclusion is that the failed LSE-Icap discussions make the prospect of a Nasdaq deal more likely.
For Clara Furse, the LSE’s chief executive, has sought to persuade shareholders that the Exchange is undervalued at £12.43 a share — the price at which Nasdaq would have to bid, if it resumes its offer in October. She has told the City that the LSE’s stand-alone growth prospects would value the business much higher. But if Mr Spencer, who presumably had access to those growth projections, could not be convinced, it is unlikely that the hedge funds that hold the critical balance of LSE stock will be persuaded.
The white knight rode in and rode on. Paternoster Square is left exposed.
Power play
THE chief executive of a major British company was asked the other day why he was finding it hard to do business in China. He paused. He is a precise man. He wanted to offer a single- sentence analysis. Then, he said: “Internal friction.”
Yesterday, China announced that Chen Liangyu, Shanghai’s top government official, had been sacked over a scandal involving the city’s pension fund. This is hugely significant. Shanghai, which for so long held sway over the communist leadership in Beijing, is being put in its place by President Hu Jintao. Chinese officialdom typically goes into a state of paralysis a year out from the five-yearly Communist Party Congress. Chen’s dismissal will only make everyone more nervous, less decisive.
If you think body language is bad at the top of the Labour Party, consider the internal friction in the upper echelons of the People’s Republic.
