Following Ed Balls' appointment, the two coalition parties have been quick to point to Labour's regulatory failures. But the consensus on light touch regulation came from all three parties.
Following Ed Balls’ appointment as shadow chancellor, the two coalition parties have been quick to point to regulatory failures made by the Labour government in office. But the consensus on light touch regulation came from all three parties.
The Financial Times quotes Michael Fallon, Tory deputy chairman and their attack dog on economic matters:
“Ed Miliband and Douglas Alexander can complain all they like about Labour’s terrible record on banks, but Ed Balls, the man responsible for 13 years of regulatory failure, is now back in charge of their economic policy.”
Yet in June 2006, George Osborne wrote in the Telegraph:
“Many of the regulations that affect the City, such as the Markets in Financial Instruments Directive, originate with the European Commission.
“I fear that much of this regulation has been burdensome, complex and makes cross-border market penetration more difficult. This is exactly the wrong direction in which Europe should be heading and it threatens the global competitiveness of the City of London.”
Indeed, as late as August 2007 – when credit market were starting to freeze – the Sunday Telegraph revealed that the Tories had “a radical programme of cuts in red tape and regulation aimed at saving British businesses £14 billion a year”.
The Lib Dems like to claim that Vince Cable saw the crash coming giving Nick Clegg more license to make claims such as:
“If you ask yourself who was in charge of the City when they were gorging themselves on bonuses and lending irresponsibly … who was whispering into Gordon Brown’s ear budget after budget, creating this huge fiscal deficit – the answer to all of those questions is Ed Balls.”
But as Channel 4 Fact Check has documented, Vince Cable had been a supporter of Gordon Brown’s light touch economic policy. Speaking in the House of Commons in support of the Labour government’s Financial Services and Markets Bill which established the Financial Services Authority:
“I want to express broad support for the bill, whose philosophy and whose architecture of financial regulation reflect a broad consensus.”
According to the New Statesman, Cable said “No one is arguing for an increasingly severe, more onerous and dirigiste system of regulation.” Any regulation, he said, should be “done on a light-touch basis”.
On the regulation of the City before the financial crash, politicians of all parties certainly were all in this together.
45 Responses to “Lib Dem, Tory and Labour all in this together on financial regulation”
Mike Thomas
Is this blog evidence-based or opinion-based?
There is plenty of evidence to show that despite the best attempts of either a Labour death-grip on the Tories or a exculpation by misleading statistics that Brown, Darling, Cooper and Balls must take the lion share of blame for the mess we are in.
No-one was discussing the deficit or reducing business red tape – this was a discussion on financial regulation which Labour got wrong to start with, never corrected it, adapted it or improved it until it seriously failed the economy.
The IMF and OECD were warning Brown on his deficit and asset bubbles as early as 2005 – Brown turned a deaf ear to the warnings and carried on.
Will Straw
Mike, Anon – The point of this article is not to defend Labour. The point is to show that the Tories, in particular, and Lib Dems to some extent don’t have a leg to stand on in terms of their criticism.
matthew fox
Considering Osborne was looking West in 2006, praising Ireland for de-regulating and accusing Gordon Brown as being an impediment to reform, all this nonsense coming from the Conservative movement is political point-scoring.
william
Will Straw,to be reelected , at some future date ,Labour, our party, has to be honest about the dire mistakes it made,whatever the then opposition were saying,because the electorate will never forget the Brown /Balls bullshit of no more boom and bust.
Nionios
The real test for the Tories and the Lib Dems is what they do now that they are in power, not what they were saying when New Labour had a crashing majority in the House of Commons and people like Blair, Brown and Balls were simply refusing to hear any proposals (e.g. from continental European sister parties) about the regulation of the banks. New Labour’s (i.e. Balls’ too) mistake is even more significant given the fundamental importance of the financial services industry for the economy of this country. While we are discussing policy issues, is Balls happy about the fact that the formula used by the Bank of England (given to it by the New Labour government) excludes housing costs? Did this not contribute to the housing bubble and why does it take a Tory Chancellor to raise the issue (as Osborne did, to his credit) and start taking steps to correct this error?
Appointing Balls to the job of the shadow chancellor is like asking the wolf to look after the sheep and can be taken to imply that as long as the coalition is getting less and less popular people will simply have to vote Labour irrespective of who is on the front bench. I fear Ed Miliband will find out that this is an erroneous assumption.