Who runs Britain?

Having spent most of my lifetime reporting on British politics, it’s hard to remember such a potentially bumpy, and exciting, coming together of big events. There’s the Scottish referendum. Then there’s the general election, following on from the first coalition government in my lifetime—and depending upon its results, there’s then an in-out European Union referendum with a strong chance of Britain leaving.

So we could have, in theory, an independent Scotland trying to get back into the EU, while the rest of the UK is muscling its way through the exit door. Or we could have a Labour majority government in Westminster next year—but one dependent upon Scottish MPs who are bound to leave when independence negotiations conclude. All this shaking-up is happening against the international background of chaos in the Middle East, the worldwide rise of Islamism, a sharp downturn in relations between President Vladimir Putin’s Russia and the west; stagnation and political lassitude in the EU; and an uncertain United States which has been less decisive and influential on the world stage than at any time in living memory. Back at home, politics has managed to find a way of dipping below its already low reputation: our merely local village stories include lurid claims about child-sex rings at the top of previous governments, and the aftermath of an incestuous relationship between tabloid journalism and government. The novel arrival of a coalition, even though it has produced a government less radical and assertive than a Tory-only one would have been, has not been welcomed by the tepid British people as a brave new world. They’ve changed their minds again: they don’t agree with Nick Clegg, the Deputy Prime Minister.

Politically, we are living through a very strange time. The challenges—from the decline of real-term wages and the shortage of affordable housing, to the arguments over global climate change and the triumph of jihadist groups—are all too obvious. And yet what seems to be happening to our democracy is a weary turning-away from the only political structure we have that could potentially address at least some of these.

The real question is whether, below the passing ups and downs of political life—a budget from Chancellor George Osborne here, a reshuffle by Prime Minister David Cameron there, a missing file, an errant bacon sandwich—we are seeing substantial changes in the web of power we call politics. What’s the big picture?

This is too important to leave to parliamentary impressionism. Of all the sources of raw data, the British Social Attitudes Survey, which has been going since 1983, is perhaps the most useful. And what it shows is a drastic slide in public trust: the percentage of those who say they trust the government to put the needs of the nation first has fallen from around 33 per cent in 1991 to 17 per cent in 2013. It was small to start with, and it’s now shameful.

The trends on voter turnout are similar, if less dramatic. The 1992 general election saw a turnout of 77.7 per cent and that slumped to just under 60 per cent in 2001, albeit an election whose outcome seemed predictable. But the 2010 general election, which was hard fought and very difficult to predict, produced a turnout of just 65 per cent. Party membership numbers are no less woeful. So people are mistrustful and are less likely to vote: that seems clear enough. What makes it more surprising and more worrying, is that in so many ways, life could be a lot worse. The economy is recovering, unemployment is falling, we are not at war and the political scandals are no worse than usual.

So what’s going on? Looking back over any set period in political history has an element of the arbitrary, but the perspective over the past 20 years is, I’d argue, a useful one. It takes in the rise and fall of New Labour; the Conservative modernisers’ by and large successful attempt to refashion an election-winning machine in the aftermath of Thatcherism; and the advance of the Liberal Democrats from a movement of moderate outsiders to a well established part of government. Those two decades also include the tightening grip of the internet age; the falling-back of traditional media; and the financial crisis which caused us, however briefly, to re-examine the power of international capital. In other words, if there are changes that explain the falling-away of trust and interest in politics, we should be able to see them and discuss them.

And indeed, the last two decades have seen the development of such trends. The past was a different country, but it’s recognisable still.

Let’s remind ourselves of the basics. In 1994, John Major was Prime Minister after an unexpected general election victory two years before; the Labour Party lost John Smith, the last “old Labour” veteran leader, with links back to the James Callaghan and Harold Wilson governments; Tony Blair and Gordon Brown had had their famous supper at Granita (where they allegedly made a deal about the party’s leadership); and from opposition the contours of the “Blair revolution” were already becoming apparent.

All that is interesting enough, and provokes some easy parallel thoughts. Scotland’s long road to the independence referendum clearly leads from Labour enthusiasm for Scottish devolution, brewed during the Margaret Thatcher years, championed above all by John Smith and supported as a matter of reluctant fealty to his memory by Blair. What’s happening this year is the consequence of the Thatcher and Blair eras, not something unexpected.

The Tory party, then as now, Maggie-haunted, was deeply divided over Europe. If today’s arguments take place in the aftermath of the financial crisis and the weakness of the euro economies, back then they were in the wake of the humiliation of the exit from the European Exchange Rate Mechanism. The debates about whether it’s possible to have a successful currency without full political union have barely altered. All that’s happened is that most of Europe has gone ahead anyway.

In some respects, Ed Miliband’s current leadership of the Labour Party represents an attempt to find an original authenticity before the Blair years. Others in the party think that Blair and his comrades, focused on the English middle classes, had found the key to Labour victories, now carelessly cast aside. Again, a time-travelling political commentator from 1994 would find a lot in the politics of 2014 familiar.

In retrospect, we were just getting used to the impact of a deregulated financial world, something we now take for granted. Hear this magnificent outrage, for instance, from a House of Lords debate in 1994 after Britain’s exit from the ERM. “The globalisation of finance, under which mafia-gilded young lemmings can remove $1000bn dollars a day in microseconds across exchanges, pushed us out of the Exchange Rate Mechanism. So this government had to jettison within 24 hours something that they had called the sheet anchor of their economic policies.” That was Denis Healey, of course, the former Labour Chancellor. Since then, governments have learned not to dare to try to buck the markets. It took the combined might of the continental EU to hold the line over the euro, and they only just did it, and at the expense of millions of jobs, slashed living standards and widespread misery in Greece, Spain and other countries. Here, the free-floating pound is such an article of faith nobody would dream of questioning it, whatever its effect on exporters and inflation. When was the last time we had a “run on the pound”? What would it mean?

In terms of money, the most important act of policy in recent years has nothing to do with any political party in this country or any of our institutions: it was the financial deregulation measures agreed at the third plenum of the 18th Congress of the Chinese Communist Party held late last year. This almost certainly heralds a wave of Chinese capital coming our way, initially experienced in inflated property prices across London and the south-east, followed by the buying-up of other British assets.

It’s a long-term trend, and seen as such in China. I was talking recently to a developer who had built a glass tower overlooking the Thames. He was selling the flats, at tens of millions apiece, off-plan in Shanghai. He’d asked a young couple who had purchased a vastly expensive three-bedroomed apartment what they intended to do with it. Would they live there? (Aghast smile. No.) Were they going to let it out? (No.) So what was it for? They explained that they wanted their son to go to university in London. He would live in the flat and then they would sell it afterwards, using the profit to pay for his education. That seemed a shrewd move, said the London developer; and how old was their son? “Six months already.”

We are just beginning to see the distorting effects of being an open, relatively small and relatively stable economy in a world of vast, fast financial movements. This openness extends to almost all aspects of public life. The reshaping of city centres around Britain by huge developments depends on restless capital stopping here from Dubai, China and other sovereign wealth funds. Our universities survive by luring Chinese and Indian students. We have become so used to foreign ownership of our car industry, whisky, fish farming, nuclear power stations and airports that it’s barely discussed. Much of the time, of course, it doesn’t matter. We are building more cars in this country than we were in the 1960s: the ultimate home of their corporate owners doesn’t bother people earning a good living in the northeast of England, or Oxford.

Yet, of course, the ability of a national government to negotiate new labour conditions, safety regulations or competition rules, is lower with a major foreign-based corporation than it would have been with a locally-owned British

company. I’m not in any sense suggesting that EDF, or for that matter the Chinese (with whom Cameron announced £14bn of trade deals earlier this year), are in some sense “worse” owners of British nuclear power stations than British companies would be. Of course not. But I am suggesting that local concerns, channelled through British politicians and via a British government department, may find it harder to gain purchase on nuclear power companies based in central China.

This isn’t an abstract question. The guaranteed pricing scheme for the next generation of British nuclear power—or rather, nuclear power based in Britain—looks generous in the extreme. We had the recent controversy over safety margins in the graphite blocks at our old advanced gas-cooled reactors, a type of nuclear reactor. Does it matter at all that they are French-owned? Possibly not. But a British minister carries less authority than he might have done 30 years ago. From time to time, the denationalisation of the economy causes a brief media flurry. Most recently, we had the Pfizer bid for AstraZeneca, and worries over the UK science base. Vince Cable now wants to toughen up the national interest rules. About time: because there will be another such kerfuffle soon, and then another one; and that’s not even mentioning all the controversies we don’t hear about in the national media.

In terms of the tussle between globalised corporate power and national politicians, there is of course no bigger issue than tax. Every intelligent company would like to exploit a well-educated and healthy labour force, on a territory that is safe, pleasant to work in and well-provided with transport and other amenities; they would like these things without the pesky obligation of paying for them through local taxes.

In the end, if local politicians allow companies this kind of deal, more fool them: they are bankrupting the jig. But, all too clearly, it isn’t easy. After public outrage at the low tax bills being paid by Starbucks, Google, Amazon and others, George Osborne has spent a lot of time at international meetings lobbying for tighter controls. At times he’s sounded like an old-fashioned tax campaigner, winning plaudits even from the Guardian.

But take the case of that familiar and much-loved face of the British high street, Boots the chemist. It’s actually owned by Alliance Boots, in turn part owned by an Italian billionaire and the private equity firm, Kholberg Kravis Roberts. Government cuts in corporation tax allowed a recalculation of its huge deferred tax bill, resulting in a global tax charge in the spring of just £2m. The tax campaigner Richard Murphy called it a huge gift from the Chancellor: “Osborne has just written off future tax liabilities, and the rest of us will have to foot the bill.” Again, I don’t want to make it sound simple. This arm-wrestling over tax is incredibly difficult: companies, often secretive, based abroad, have most of the cards—not to mention almost all the chips—in their hands. They’re the ones who offer the jobs, who can promise to pay taxes at some point in the future and whose collapse would be noticed by British consumers and employees. Nor is it the case that British politics isn’t fighting back: the House of Commons Public Accounts Committee under Margaret Hodge has been at times rather magnificent on this subject. But if we’re talking about the status of British politicians in relation to the real centres of power, global companies, my contention is that at some level voters have spotted the shift, and have drawn conclusions.

What of the parties themselves? A 2012 YouGov poll tried to drill down into the reasons behind Britons’ lack of enthusiasm for politics. What were the worst and best aspects of political life? Interestingly, newspaper and TV political coverage—and the role of the Queen—all got a relative thumbs-up. But 39 per cent of those questioned picked out the poor quality of British political parties as a feature they liked least, and 53 per cent picked out “the poor quality of our politicians.” There is, of course, a vast amount of voter hypocrisy about all of this. We consume a media deeply mistrustful of parliament and gleeful about individual MPs’ foibles; we chase after them, mock them, ensure that they are not richly paid… and then we feign surprise when we discover that so few talented, ambitious people want a life in politics. Would you want it for yourself? Would you want it for your children?

Money and status follows power, and power has migrated to the city, and the big global corporations. Their commanders are the ones who relatively easily (though not always) evade scrutiny, reward themselves richly and retire to rolling acres in Hampshire or Oxfordshire. The political classes scrabble along behind. When bankers became hated public figures, they didn’t like it: one told me that for the first time in his life he began to understand what politicians went through. “Mind you, I’ve got a better pension,” he added.

For many people, including the 4.37m who voted for the UK Independence Party in the 2014 European elections, the decline in the status of British MPs is a direct and singular result of the increasing influence of the EU. Certainly in terms of domestic politics, the biggest political shift over those 20 years has been the steady victory of Euro-scepticism as it captures the imagination of virtually all of the right of British politics, as well as swathes of the centre ground and centre left as well. The easy headlines and major excitements have come from Ukip, but a lot of the real action has happened in the belly of the Tory party, in the hardening views of rural party chairmen and the victories of Eurosceptics in obscure committee battles at Westminster. Cameron’s recent reshuffle did indeed, as the new Defence Secretary Michael Fallon immediately noted, produce a largely Euro-sceptic government.

If British politicians want to reclaim their power and status then it is, almost self-evidently, easier to do it by leaving the EU than by somehow disentangling themselves from the new pressures of global capitalism. That’s fine, as long as an independent UK wouldn’t then find itself more at the mercy of the US, continental and Chinese companies than it is today.

Meanwhile Cameron has, it seems to me, two central messages in the run-up to the next general election. The first is about Labour leader Ed Miliband. (“Ed? Ed? You don’t want Ed, do you?”) The second is the hard and fast promise of an in/out referendum by 2017. All his public utterances suggest that Cameron is a natural moderate on the question and fully intends to lead Britain to vote to stay in, on the basis of specific guarantees won between then and now. But the story of politics is often the story of unpredicted consequences. His failure to block Jean-Claude Juncker for the European Commission presidency suggests this is going to be a tougher proposition then he perhaps first thought. Conservative “outers” are delighted that Juncker is in situ as a reliable national bogeyman and feel confident that whatever position the Prime Minister takes at the time, the country will be with them.

We’ll see. Those shy commanders of global business, who emerged against the Yes campaign in Scotland, will re-emerge again, no doubt, against the cause of independence from the EU. But what isn’t in doubt is that attempting to reclaim some form of national political sovereignty would make the politicians doing the claiming seem bigger and more popular, for the old contradiction between parliamentary democracy and a federal union has never gone away. Having quoted Denis Healey earlier on, how about some Michael Foot—who later became the Labour leader—from way back in 1971 when he told the Commons that it and “the British people will have less power to protest against VAT than John Hampden had to protest against ship-money.” His then ally, Enoch Powell, added that the British people “have insisted upon discerning the one simple, overwhelmingly important question: to be or not to be, to be ourselves, or not to be ourselves.” Of course, as history then relates, they promptly voted not to be themselves, and may do so again.

But at the time when the very authority of the political state is so embattled, exit from the EU is the most obvious proximate argument ahead. My only prediction is that the apparent determination of the Europhile side to brush away issues of democracy and sovereignty, won’t hold and can’t hold. They can’t win simply on economics alone. To recap the argument thus far: faith and engagement in the British political system has fallen to a damaging low because real power has moved away to the lords of money and the commissioners of the EU; and the electorate has started to notice. I imagine, however, that others will say, no, it’s much more to do with media and social trends, from the under-representation of women in politics to the incessant heckle that is social media.

But sticking with our 20-year comparison, I’d disagree. Women certainly are much better represented now, partly thanks to such controversial innovations as all-women shortlists. This is good in itself but it doesn’t seem to have had any effect at all on voter participation. If a politician doesn’t possess real power, electors are no more likely to be impressed if it’s female impotence, not male.

Politicians today certainly don’t have a harder ride from the collective media than they used to. There are instant mockery-memes ricocheting around the social media world, to be sure. But back in the mid-1990s Spitting Image was in its prime, as was the television satirist Chris Morris, whose The Day Today lampooned Newsnight and satisfactorily outraged the establishment. His great collaborator Armando Ianucci would go on to tear into New Labour. With Brass Eye, Morris himself would become labelled as the “most hated man in Britain” after satirising our national obsession with… yes you guessed it… paedophilia.

Culturally, therefore, it didn’t seem a gentler or kinder age. Away from satire, the major newspapers devoted more time to the analysis and reporting of parliamentary debate, and to the failings of departments than they do today.

Two decades ago, the online age had started to arrive. About 10 per cent of British households were connected to the internet—slowly, of course—by 1998. Social media barely existed, certainly not as an imminent threat to the traditional newspapers and broadcasters: Facebook was still a decade in the future, and Twitter 12 years away. All of this has allowed millions of citizens to mock the political classes and to enjoy their mistakes more easily than ever before.

But consider this. The biggest media hit on Westminster politicians was the 2009 expenses scandal, which blew open something which had been a closed secret for decades. And this was an old-fashioned scoop by an old-fashioned newspaper (the Daily Telegraph) based on an old-fashioned leak. It had nothing to do with new media at all. In general, the increasing pace of revelations about misdemeanours by public officials can be traced back to Tony Blair’s Freedom of Information Act, something he said he deeply regretted in retrospect. Again, nothing to do with changed media structures or delivery systems at all.

The expenses scandal didn’t trigger the phone-hacking scandal, which destroyed the News of the World. That came into the open partly through the dogged endeavours of old-fashioned newspaper journalists, particularly at the Guardian. But for a while the delighted revenge of backbench MPs looked as if it was taking us towards a radical shift in the balance of power between politicians and the media. The long theatre of the Leveson Inquiry shone a spotlight on a murky area which hasn’t had nearly enough attention—the sticky relationships between media proprietors, their editors and senior politicians.

Andy Coulson’s belated sacking from Cameron’s office, and his subsequent conviction and imprisonment confirmed for many that relations had been too close. But at the end of it all, the press has emerged with its own system of self-regulation, nudging aside the (overblown) spectre of state censors. After all the noise, how much has really changed? You certainly couldn’t argue that the political classes have somehow subdued journalism or put the media back in its box.

So I look around on all sides and see our democratic system apparently losing the attention and respect of the people it evolved to serve. I’m reminded of Matthew Arnold’s poem “Dover Beach,” in which he has a vision of the declining age of faith and “its melancholy, long, withdrawing roar, Retreating…”

But then I shake myself and notice, first, reasons for optimism and, second, all those areas where politicians and parties can reclaim our interest, if not our loyalty. Far away from Westminster, we have a better-informed and more vigorously active political debate than at any time in my lifetime. In Scotland, the Yes campaign has achieved a note of social radicalism which goes beyond any of the established parties, including the Scottish National Party. Although limited to Scotland just now, that distaste for the old Westminster ways will surely express itself south of the border in due course. A growth in support for independent candidates, Ukip and other non-traditional parties are small straws in the first gusts of what may be a new wind.

The new campaigning over welfare, gender rights and so forth doesn’t connect happily to the Westminster party political system, but that’s largely the fault of the parties. Outdated notions of discipline, Byzantine hierarchies and rules which exclude most voters—all of these things could be tackled by reformers, and one day will be.

Politicians haven’t yet given up on trying to tax and tame the big international forces. Fair taxation of corporations is a cause which unites Tory, Labour and Liberal Democrat politicians; it can only be won in alliance with other nations but it’s a battle that democratic politicians cannot afford to lose. It’s existential.

When it comes to Scotland, the very fact of the referendum has already changed things for ever. If Scotland votes to leave the UK, our entire political system will have to radically change, and very fast. But if it doesn’t, further devolved powers, particularly over tax, which will eventually be matched in Wales, are already reshaping the British state.

Over the next few years we are going to see fights about the shape of Britain, its place in the world, our security from terrorism and the sustainability of our economy. It’s going to be an exciting time for politicians, and all of us who are parasitic upon them. The old, closed, self-important, smug state is falling away, and from Scotland to London to the anti-EU revolt, we are just beginning to see new kinds of politics emerging from the wreckage. Will the new world be kinder, fairer and give us a stronger sense of our own identities? Many of us may feel some underlying unease—but these are the arguments for the next 20 years. The tide goes out but, as Matthew Arnold apparently hadn’t spotted, it always comes in again.