Student Loans Swindle 2: Cash from chaos

A month ago I wrote about the weird world of Student Loans and how they are accounted for by the Government.

/https://jon-chadwick.com/2018/11/17/the-great-student-loans-swindle-its-a-swindle-a-swindle/

Today the Office of National Statistics published their review of Student Loans accounting, which makes some big changes to how the Government calculates the deficit (but not national debt)

https://blog.ons.gov.uk/2018/12/17/accounting-for-student-loans-how-we-are-improving-the-recording-of-student-loans-in-government-accounts/

In short an extra £12bn will be added to the deficit, increasing it from £40bn to £52bn.   After 8 years of austerity to discover that we have calculated the deficit wrong, and that a huge chunk of the deficit reduction was just accounting measures is a huge disappointment.  

Adding up all of the other wriggles and wheezes the Government has used to make the numbers look better my guess is that the actual deficit reduction was only about half the Governments claims.

Just think of all of the hardship caused for such a piss poor return.  

Took my apprenticeship levy, but the levy was dry

My last full length blog was a deep dive into the weird world of student loans financing, a mess so big that it will take years to unwind.

Two people separately approached me and raised the issue of the Apprenticeship levy.  You know who you are.

For those who don’t follow education policy the levy was introduced by George Osborne in his 2015 budget to raise funds for expansion of apprenticeships.   All businesses with a payroll over £3m pay at a rate of 0.5%.  In case you hadn’t spotted it’s another pay roll tax.   

The funds raised go into an account for the employer which they can access to pay for apprenticeship training. The money stays in the account for 2 years after which it goes back to the Treasury. 

The training which can be funded from the account is tightly controlled. This is a consequence of previous scandals where Government funds for training were alleged to have been spent fraudulently.    You may remember David Cameron appointing Emma Harrison from A4E as his Tsar for something that even I can’t remember.

https://www.telegraph.co.uk/news/politics/9101766/David-Camerons-back-to-work-tsar-Emma-Harrison-quits-amid-fraud-allegations.html

The massive problem is that the rules are so strict that it is almost impossible for businesses to access it.     A year in the Treasury has raised over £2.5bn, but had spent only £180m on training. The rest of it is still sat with the Government.   As a consequence the Government is getting a benefit when it does the public accounts of over £2.5bn a year, which makes the progress in reducing the deficit look better than it really is.

Eventually companies will get better at accessing the cash, but it looks as if the system is designed to make it impossible for all the money to be spent.  

This might sound like a scam, but the Tories aren’t the only ones doing odd things like this.   The Labour Party has a rather eye catching policy to force companies with more than 250 employees to create an employee share ownership scheme.  Employees would get up to £500 a year each as a dividend, with the rest going to the Treasury.   This sounds great but for lots of companies the majority of the dividend will go HMG not the workers.  It is essentially another pay roll tax.   Some of the modelling done by the FT shows 90% of the money going to the Government rather than the workers.

I don’t mind Governments raising more money to supplement the tax take.  We need to find ways of increasing the flow of money into the Treasury if we want to have things like the NHS.  But maybe there is a more honest way of doing it rather than schemes like this, which rig the rules in the Treasury’s favour.

We can’t condemn Companies for working the system on tax if HMG does the same thing.

Interserve Overdrive

A few months ago I wrote about the collapse of Carillion, and drew comparisons between their collapse and the Government outsourcing industry in general.

This week Interserve have announced they are negotiating a financial recovery package.  This news led their shares to slump to 24p each, down from 660p 3 years ago.  

Interserve turn over roughly £3.5bn a year, a bit smaller than Carillion, which had revenues of £5.5bn before it went under.  Like Carillion, they have a huge book of future contracts worth £7.5bn, and they operate in the same outsourcing/PFI space.  Interserve’s revenues come largely form Government contracts, including school meals, hospital cleaning contracts, school building programmes.  Most of this work is often called facilities management (FM).  Hard FM is stuff like buildings maintenance.  Soft FM is cleaning contracts.    

Its also a big part of the consortium building new Colleges for Durham University.  

Some of Interserve’s problems stem from the risk in their contracts.   Costs and revenues in areas like facilities management are stable and predictable, but as public bodies have squeezed contracts profit margins have fallen.   

Interserve’s response has been to move into other areas of Government business.   They are the UK’s largest provider of outsourced probation and criminal justice services, areas where costs are being squeezed and penalties for performance are starting to bite.   It is just tougher to make the kind of predictable profits that investors like from services like probation than from FM.  This is essentially the same problem that Circle Healthcare had with running an NHS Acute Hospital – the techniques that the private sector use to control cost, drive efficiency and build profit don’t really work with volatile public services. 

They also made a bold attempt to diversify their revenues borrowing heavily to invest in an energy from waste business.  This business area was a disaster for them, and it has taken them years to unwind these investments.  It was problems with these deals that prompted the most recent fall in their share price.  This is an area where the Government tried to encourage investment in EFW to reduce the amounts of landfill, but ended up with a lot more capacity than the UK needs. 

This is starting to look like an endemic problem with the outsourcing market.   There isn’t enough profit to be made from outsourced facilities management contracts to support all of the big players.   Once these companies expand outside of traditional FM work they take on risks that they don’t really understand, and debts they can’t service.  A lot of the contracts involve a large capital investment up front (funded through borrowing) so secure future revenues,

Call me a heretic but I don’t really have a problem with the public sector outsourcing FM services.   Interserve probably have a really good FM business somewhere under all of these other debts and contracts.  But there are too many companies trying to do outsourced FM and not enough profits to support them all.   

There will be a shake up, and companies who can divest of their too risky bits of business will survive, others won’t.

Underpinning all of this is the concept of what outsourcing of public services means.   It is often regarded as the epitome of free market neo-liberalism but in reality when the Government incentivises companies to invest in areas like EFW it is actively distorting markets in a which that is contrary to neo-liberalism.  It is more like old fashioned Keynesianism.  But you have to wonder when the state can borrow at tiny interest rates why it should pay a risk premium to a private company?  Particularly a private company than now finds itself sinking under that same debt?

The Great Student Loans Swindle. It’s a Swindle. A Swindle.

I’ve had a few people suggest that I should write a blog on the economics of Higher Education, and the impact of University expansion.  I am guessing that this reflects the age of my readership – our children are filling in UCAS forms, and buying IKEA starter sets of crockery in preparation of moving out of the family home.

Each person suggested a different aspect that they wanted to read about.   Impact on the housing market, student poverty, prostitution.

Yes, prostitution.

I’m going to disappoint most people by instead focussing on the weird and wonderful world of student loans accounting, specifically how the Government accounts for student loans in the public finances.

This is without doubt the strangest bit of public finance I have ever encountered.   Something beyond even the Child Support Agency’s ever lasting debt pile, or the plans for Universal Credit.

Before we go any further here are some basic concepts about public finance.  I’ve put them in a special text so if you feel that we have gone over this before you can skip it:

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If you think that the difference between debt and deficit is boring in a few weeks time I will try and explain the difference between the Annually Managed Expenditure spend and the Departmental Expenditure Limit.

I was the first generation of student loans.  We still had maintenance grants, and no tuition fees, so the loan was a small proportion over-all.   The Governments decision to nationalise my over-draft was an unexpected socialist triumph in an otherwise bleakly Thatcherite era.  I drank the lot in the Cambridge pub.

Before the introduction of student loans all of the spending on Higher Education, grants, tuition costs, etc. was funded out the budget agreed by Parliament for the Department for Education (the Departmental Expenditure Limit).   As the Government was running a deficit at the time the cost of my student grant and the costs of teaching me counted towards the deficit, and added to Government debt.

The loan bit was different.   Because it was a loan it was classed as a financial instrument, so it didn’t count as government spending, or count towards the deficit, but it did count towards the pile of Government debt.  The expectation was that this loan would be repaid in full, and the only time at which the loan impacted on Government spending (and the deficit) was if the loan was defaulted on.

Due to these rules, there is no impact on the deficit when student loans are issued. If the Government gave grants to cover this spending it would count towards the deficit, but because they are loans they don’t count.

This might sound weird, and a bit of a scam, but the national accounts of the UK are compiled to international standards. These accounting standards are very clear on the treatment of loans and the Government is accounting for them correctly.

Let’s just go over that one more time to be really clear:

Student loans don’t count against Government spending and therefore don’t count against any deficit the Government is running, but they do count as Government debt.  

Unless they are defaulted on, in which case the default counts towards the deficit.  As they are repaid Government debt falls.

While I was drinking in the Cambridge the Student Loans company  was set up as a Non-Departmental Public Body to oversee the system.  In 1990, the year I got my loan it lent an average of £380 to 180,000 students, a total of £684m.  This was a drop in the ocean of Government spending, but at the time the then Conservative Government was running a deficit, and the shift of £0.6bn off the books helped make the numbers look a little better.

The value of these loans crept up over the 1990s, and when Labour got back into power the annual value was just under £1bn.  The departing Tory Government left behind the Dearing review which recommended changes to HE funding.  

The incoming Labour Government wanted to expand HE, but at the same time wanted to keep a tight grip on Government spending.   The result was the  1998 Teaching and Education Act, which introduced Tuition Fees and replaced maintenance grants with loans for all but the poorest students.  The amount loaned increased to £1.3bn.

The 2004 Act increased tuitions fees to £3000 a year, and by 2005/06 the amount loaned was £2.79bn.

None of this mattered from the debt/deficit perspective, because the Labour Government was running a primary budget surplus.   It mattered a lot to people borrowing the money, but didn’t impact on the deficit, because there was no deficit.

Lets just bask for a moment in those halcyon days of a Government with a primary budget surplus and no deficit. 

Things changed after the credit crunch and Peter Mandelson, restored to Government after more scandals than anyone can remember, commissioned the Browne review into HE spending.

I found this great quote about the Browne review from Wes Streeting, then President of the NUS, and now one of my favourite Labour back bench irritants:

“there is a real danger that this review will pave the way for higher fees and a market in prices that would see poorer students priced out of more prestigious universities and other students and universities consigned to the ‘bargain basement’”

Smart chap Wes.

The 2010 Coalition Government entered power with a big pile of ambition, a smaller pile of talent, and no plans worth speaking about.  After 13 years in the political wilderness you would have expected the Tories to come back into power with a pile of polices all neatly assembled in ring binders, with coloured post-its on the best bits, but all they had was an book David Cameron had bought at an airport about nudge theory, and some stuff Michael Gove had written for The Times about stuff.

When it was clear that the policy cupboard was bare a whole lot of old Labour policies discarded by Gordon Brown as too expensive or too crazy were dragged out from behind the filing cabinet by Senior Civil Servants desperate to feed any policies at all to the random assortment of Ministers and Special Political Advisors who they now had to work with.   

Do you remember John Selwyn Gummer feeding an unhappy child a greasy burger in order to prove that the BSE crisis was some awful rumour whipped up ghastly lefties?  She  ended up as the SPAd who signed off Universal Credits, the Caravan Tax, and the Pasty Tax. 

The Browne review was voted through Parliament in December 2010. People had hoped that Vince Cable, once a liberal hero with a fedora hat, would stop this, but he was too busy with the Christmas edition of Strictly Come Dancing.

There were riots in the streets, and an unsuccessful judicial review, but the deal was done. Tuition fees went up to £9000 a year.  Students who weren’t rich enough to pay these fees were forced to borrow to fund their education.

This meant that the total amount loaned by the SLC took a huge leap upwards.  In their most recent set of accounts the Student Loans Company loaned £18bn.  That is a massive shift.  To give you a comparator the capital budget for the NHS is £6bn this year.   The current UK budget deficit is roughly £40bn.

This means that pretty much the entire UK HE budget is now accounted for as loans rather than Government spending.  It counts towards debt, but not deficits, in an era where the deficit is the most controversial part of public spending.  This is a huge story which no-one really understands.   

There is so much complexity in Government finance that it is hard to get a grip on how much of George Osborn’s deficit reduction was due to the 2010 vote on tuition fees, but my guess is that if we returned to a world of grants and tuition fees the deficit would go up by about 50%.

This is bad.But it’s not the end of it.

Student loans are very different to a normal loan, which is repaid come what may.  Student Loans are conditional – that is they are only repaid under certain circumstances, and as the size of the loan has gone up Parliament has added lots of conditions to the repayment terms.   A number of people I know who have these loans believe that they will never repay them in their working life. 

As we discovered earlier if the loan isn’t repaid in the year in which it is due then this difference is counted towards the deficit.  Because the default rate is getting higher this means that the deficit will be higher decades into the future because of the high default rate on the loans.  The value of the assets as they sit on the Governments books is almost certainly a lot less than currently shown, and the future cash flows expected from them will be lower too.  The deficit will be higher in the future as the rate of repayments falls.

There is, however a way that this future negative impact can be removed.  National Accounts accounting rules stipulate that if student loans are sold off at a loss before they are written off after 30 years, there is no impact on the deficit whatsoever.

“The policy of selling off student loans prior to their write-off allows the Government to spend billions of pounds of public money without any negative impact on its deficit target at all, creating a huge incentive for the Government to finance higher education through loans that can be sold off”. Treasury Select Committee Feb 18 2018

This would have been an academic debate of interest only to dullards like me except that over the last year the Government has been trying to price and sell Student Debt in order to improve public finances. 

The context to this is pretty obvious – George Osborne inflicted lots of pain upon the UK to bring down the deficit, but failed to hit any of his targets by miles, and ended up taking advantage of the accounting rules around student loans to create a notional deficit reduction, even though he was still spending the same amount of money.   

On 6 December 2017 the Government sold part of the student loan “book” for  £3.5 billion, writing off £1.8 billion (51 per cent) of those loans in the process.  The write off of the value of these loads reflects the potential future default on them.  Generally Governments are better able to manage exposure to long term risks than the private sector.  As a result, private sector investors require a large risk margin when taking on student loan assets from Government. As a consequence the debt had to be sold at a large loss to reflect that risk margin. 

This reduced the size of Government debt, but it also reduced the in year deficit by roughly the same amount (because a whole bucket load of cash flowed into the Government’s coffers).  The Government plans to sell off £12 billion of loans over the next five years. If the rate of losses on these sales is maintained, billions of pounds of student loan losses will be crystallised without having any impact on the deficit.  The size of these losses are greater than if they remained on the Government’s books, because of the large risk premium that private sector investors require. 

So despite taking a massive hit on the losses Government debt still falls, as does the deficit as a result of the transaction.

I’m not the only person who thinks there is something weird about this.   Really really weird.

In February this year the Treasury Select Committee admitted that they aren’t really sure how these conditional loans should be accounted for either.  The extent to which these loans will never be repaid clearly affects their value, but there is no accepted International accounting convention that covers this.   The TSC has actually written to other countries with similar contingent student loads to try and come up with an accepted international way to account for loans which will never be repaid.

This may seem like a dry accounting point, but changes to the value of the Student Loan book have a big impact on the size of the national debt. Changes to the accounting treatment of Student debt changes the size of the deficit too

Lets just pause for a moment.  After 8 years of bringing down the deficit we don’t actually know how big the deficit is, and we don’t really know how big the pile of debt is either.  As the Treasury Select Committee remarked this year: 

There is no effective control over the increasing fiscal cost of the student loan regime”    

Ouch. 

The total pile of student debt is now over £100bn, which even in the big numbers of Government spending is a massive amount.   By comparison the Child Support Agency maintenance arrears mountain is £3.7bn.  This however is only the debt on the student side.  Wes Streeting’s vision of a competitive market in students has come to pass.  Liverpool University recently borrowed £250m from capital markets by a rights issue.  Oxford University raised £750m by the same route.   Rumours are that there are unpopular former Polytechnics trading at a loss, with debt they can no longer service due to lower than expected income from students. 

There is a pretty obvious solution to this from an accounting perspective – if the full value of the loan isn’t to be repaid it should be treated as a partially repayable grant, particularly because the write off is a feature of the system, not an accident. Which means that the deficit will go up, but at least we will have a set of accounts which realistically reflect the financial status of the entity that the accounts represent.

But the consequences aren’t so easily dealt with.   Large amounts of individual debt to be serviced will hang over UK graduates for decades to come, changing their economic behaviour.  HE institutions will struggle to service debt they can afford if they can’t attract students.

This is more the weird.   These are clear signs of market failure affecting a key part of our national infrastructure. And rather than deal with that market failure the Government is taking advantage of it to disguise the true extent of it’s borrowing.

This isn’t just weird.   It’s dangerous, and dishonest.

https://www.ifs.org.uk/publications/10531

www.ifs.org.uk/publications/13061

https://publications.parliament.uk/pa/ld201719/ldselect/ldeconaf/139/13902.htm

https://publications.parliament.uk/pa/ld201719/ldselect/ldeconaf/139/13914.htm#_idTextAnchor130

https://www.slc.co.uk/media/10152/2017-18-annual-report.pdf

https://news.liverpool.ac.uk/2015/06/22/the-university-of-liverpool-announces-the-issue-of-250-million-3-375-bonds-due-2055/

North East Nazis and Anti-Fascist doo-wop

A few weeks ago I wrote about the way that the 1930s has become a ubiquitous metaphor for people who want to make a point about modern politics.  Not just any 1930s but the Hitler/Mussolini version.   Simon Sharma, who knows better, referred to Trump as a “Yankee Duce” in this weekends FT.

Tonight we’re going to party like it’s 1939?

I made the off hand remark that Newcastle was a more fertile ground for Fascism in the 30s than Wearside.  I’ll admit that this was based partly on historical fact – the BUF offices were in Newcastle, and lasted a lot longer than they did in Durham.  It’s also based partly on my own recollections of the NF skins who followed Newcastle United in the 1970s.

I decided to test how accurate my views on Newcastle fascists were, and came up with the story of George Johnson Armstrong, a marine engineer from Newcastle, which was too good not to write about.

Armstrong had become radicalised by the BUF in the 1930s, and had strong Nazi sympathies.  He was probably recruited by a German agent Dr Carl Klein some time before the outbreak of war.

Armstrong travelled to the still neutral USA during 1940.  Here he approached the German consul in Boston and offered his services as a spy.   His mission seems to have been to betray shipping movements between the US and the UK to the Germans, and also to try and support US neutrality.

He was arrested by the US Immigration Service and held pending deportation. Apparently British authorities were tipped off by their American counterparts, because Armstrong was arrested on his return to Britain on the 23rd of February 1941.

Armstrong was tried on 8th of May 1941, before Mr. Justice Lewis, at the Old Bailey. The proceedings were held “in camera”.  He was charged with the following offence under the newly enacted Treachery Act 1940:

“On or about 19 November 1940, being a British subject in the U.S.A, with intent to help the enemy, did an act designed or likely to give assistance to the Naval, Military or Air operations of the enemy or to endanger life, to wit did write and endeavour to send a letter to Dr. Herbert Scholz, German Consul at Boston, Massachusetts, U.S.A, offering his services, information and assistance to the said Dr. Herbert Scholz.”

Armstrong was found guilty.

He appealed his conviction  at the Court of Criminal Appeal 23rd of June 1941 and lost.

The story of what happens next is pretty grim, but given that today’s Sunday Express includes a call to bring back the death penalty it seems appropriate to give the details, so we are under no illusions what the death penalty means.

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He was hanged by Thomas Pierrepoint, who kept meticulous records of everyone he executed.  Pierrepoints’ records show that Armstrong weighed 154 lbs and was thus given a drop of 7’ 3”.   British bureaucracy has a form for every eventuality, and form LPC4 was used to authorise and record executions.

Armstrong’s LPC4 records:

“Separation of the medulla from spinal cord. Fracture of hyoid and thyroid. Extensive injury to the medulla and brain stem. Spine dislocated between 5th and 6th vertebrae.”

He was the first traitor to be executed in World War 2.

If this is too bleak and ending for a Sunday morning cheer yourself up with this great bit of Anti-fascist doo-wop.

 

http://discovery.nationalarchives.gov.uk/details/r/C10887416

https://www.ft.com/content/0b189030-ddd1-11e8-9f04-38d397e6661c

Post script:

In the previous blog I made some jokes about daft Hitler documentaries on the History Channel.  This of course, is a real documentary broadcast last week:

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Kids in America

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I love America.

It’s one of my favourite places in the world. I have lost count of the number of times I have visited, and I still love it just as much.

Admittedly I only really go to the East and West Coast, and hardly ever to the bits in the middle, but I am not unusual in that.  Lots of Americans don’t go there either.

This isn’t a universally popular opinion among my middle class leftie friends, some of whom view the US as a wicked global imperialist power hell bent on taking over the world.  I don’t share that view at all.

I did claim rashly that I wouldn’t visit the US while Trump was in office, but my principles weren’t as strong as the allure of driving a Dodge Charger around Illinois.

This Dodge Charger in fact:

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Ladbrokes don’t think much of Trump’s chance in 2020, which means that this might be my only visit to America during Trump’s term in office.

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The big shock is that Trump is much less visible in Chicago than he is in the UK.   He was less talked about and less in the news that he is among my left wing friends in the UK.  Trump’s great talent it seems is to use social media to make himself the centre of attention.  Across Chicago people seemed just disinterested.  It was refreshing not to have to the constant Trump noise buzzing around. 

The only spontaneous conversation about Trump I had in the Chicago was with a cab driver. I asked if the Megan Markle story was still big in the US news:

“Oh yes” he said “Megan – that’s some story. She married a Prince”

He then added

“And Ivanka – that’s some story too. She married a frog. Shee-it that Trump’s ugly”

Apparently if he had caught a cat fish as ugly as Trump he would throw it back.

There wasn’t much sign of Trumps policies having an impact either.  His 2 key commitments  – to repeal Obamacare and build a wall – haven’t happened, and the economy isn’t much different to how it was when Obama left power.

This lack of impact is puzzling because so far he has controlled both Houses, and soon the Supreme Court too.  This lack of impact is either because:

  1. He came to power hopelessly unprepared, and it took him a long time to work out what his agenda was beyond some slogans about walls
  2. Cities like Chicago with Democrat Mayors, and Democrat controlled state legislatures have been successful in resisting his policies – for example Sanctuary cities
  3. Trump’s administration is even more chaotic and ineffectual in real life than we have heard, and they have struggled to progress any of their key policies (build a wall, repeal Obamacare) despite controlling both Houses.

I bought Bob Woodward’s book on the Trump White House while I was over there, which seems to re-inforce the idea of a shambolic mess.

With regard to point 2 there does seem to be a lot of passive resistance quietly behind the scenes often by the old Democrat establishment, with some success.  The problem is that this probably isn’t enough for some of the anti-Trump groups, and this passive resistance hasn’t produced an obvious candidate that the different factions can rally round. There are some talented and interesting politicians emerging from the younger generation of Democrats, but 2020 is probably too soon for them. 

When we got to Detroit the indifference to Trump was just as noticeable.   Detroit has a Democrat Mayor too, but unlike Illinois the state legislature is held by the Republicans,

Things changed markedly the day before we left.   Luke Bryan was playing a gig in town.  Bryan is a big thing in country and western music, which means that no-one in the UK knows who he is.   Bryan’s fanbase were white, and from rural Michigan and surrounding areas.   This was a constituency much more favourable towards Trump.

I saw the only actual incidence of racism that I had seen in a very long time, with white concert goers closing lift doors to avoid sharing with a black woman.   I also saw my first MAGA hat.  It’s hard to tell whether Trump has encouraged these behaviours, or whether Trump has brought attention to behaviours which were always there.

My overall impression is that the vast majority of Americans aren’t interested in the current culture wars, sometimes to the extent of being actively turned off by them.   They are more interested in changes to healthcare provision, and the overall state of the economy.

That’s not to say that all Americans don’t like cultural warfare.  It is still a significant motivator for a noisy group of Republican voters, and also for a smaller (but equally noisy) group of left wing political activists.

Despite the country fans with the MAGA hats I came away reassured about the future of the US from my admittedly brief holiday.

The USA is a lot bigger and tougher than Donald Trump.   And it will take more than some tweeting to change it.

The parting on the left. Is now parting on the right. And the beards have all grown longer overnight

Over the last few years I have had a few arguments with people on social media.  You might have spotted this.  I might even have politely explained to you why I am right, and you are foolish.

Over and over again I have had the same, odd experience.

Someone has angrily told me that they are loads more left wing than I am while simultaneously expressing a very right wing opinion.  At it’s most extreme people who self identify as left wing have shared with me material from the far right, including from US neo-nazis, in the profound belief that this material is left wing.

I’m not a great believer in the horseshoe theory of politics that is sometimes taught in GCSE History and Politics classes.  The left and the right are different philosophies, and the only similarities at the extremes are between the tactics of the authoritarian varieties

But sometimes ideas switch from right to left and vice versa.

Freedom of movement across the EU started out on the far right as a way of using free markets to erode workers rights and deregulate labour markets.   Today the same right wingers denounce the policy they championed only 20 years ago, while the left, who once opposed it, give speeches defending it.  Universal Basic Income made the same shift.   Universal Credits was developed as a Labour policy, and ended up as a millstone round the neck of the Tories.

The rise of left wing antisemitism is the most extreme example.   When I was a teenager the kind of antisemitism that relishes ideas of Jewish conspiracies and believes the mainstream media is in the pay of the Israel lobby were only found among a particular variety of right wing weirdo – the kind with a complete collection of Sven Hassel novels

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I can pretty much guarantee that anyone who owns more than one Sven Hassel book is a massive arsehole and has crazy right wing politics, no matter how ironic they think they are being.

I wrote last week about Durham’s brief flirtation with the far right:

Tonight we’re going to party like it’s 1939?

Antisemitism in Britain didn’t start with Mosley, but the anti-semitic tropes which occur in modern politics do.

This is Mosley’s Stop The War campaign.  As you can see he chose to make his anti-war campaign pledges on the side of a bus, which definitely doesn’t remind me of anyone in modern politics.  Not at all.

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Mosley was a demagogue, not an ideologue, and he relied upon others to do his thinking for him.  I have read “The Coming of the Corporate State” by Alexander Raven Thompson so that you don’t have to.

The BUF platform was:

Anti-capitalist

Anti-Zionist – in particular believing that Zionism is the biggest issue in foreign relations

Corporatist – the state organised by industrial and occupational groups

Pro-Environmentalist – the BUF were the first political party with an environmentalist policy.  In particular they believed that capitalism and environmental protection were incompatible and an environmental crisis was inevitable

Anti-elitist – they claimed that Britain is ruled by a small self serving elite, a 1% who run the country for their own ends.  Mosley argued this noisily despite being a Baronet himself.  Again this in no way reminds me of any contemporary politicians.

Anti-mainstream media, which they believed served the interests of Zionists

Anti-war, particularly linking pacifism and anti-war movements with anti-Zionism

Pro-Monarchy, pro-Empire

Quite a lot of this sounds more like left wing politics than right, particularly if you ignore the Monarchy and Empire stuff.  State corporatism is often mistaken for a programme of nationalisation.   As long as you stuck to the slogans and ignored the details it would be easy to mistake this for a left wing programme, which it very definitely isn’t.

Above all the the BUF fascist ideology is a form of secular gnosticism – the world is an awful place, the truth is known only to a select few, a crisis is coming which will transform the world and this can be seized upon by the gnostics to remake the world in their image.

Mosley always denied that his anti-zionism was really antisemitism, but I don’t believe him.  This is Mosley, after the war, denying he is an antisemite:

“The anti-Semitic view that all Jews are born wicked, or that all Jews should be the sacred objects of the system, seems to me equal nonsense. I am neither an anti-Semite, nor a sycophant of Semites….. I believed that certain great Jewish interests were trying to involve us in war, not in a British, but in a Jewish quarrel: I still believe it”

Mosley also argues that the British Empire was inherently anti-racist because it contained lots of different people who it ruled over equally.  Daftie.

By the time Mosley made these claims he was a disgraced individual, abandoned by even the Daily Mail.  Very few British fascists escaped involvement with him without huge reputational damage.

The only notable exception to this was Jorian Jenks.

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Jenks was one of the founders of the environmental movement in Britain, maybe even the most significant figure in it’s early history.  Jenks was an enthusiastic fascist and most of his early work was published in fascist journals.  He was the soil in blood and soil fascism.  His 1939 book Spring Comes Again combined agriculture, environmentalism, fascism and anti-semitism.

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Jenks was also a protectionist who supported the idea of agricultural autarky – reducing our reliance on foreign imports of food.   The current ideas of self-sufficiency post-Brexit are the direct ancestors of Jenk’s ideas, which linger on among the anti-immigrant right.

Jenks was imprisoned in Walton Jail as a traitor, but was released in 1941.

Post-War Jenks became the President of the Soil Association, Britains oldest environmentalist campaign group.  He edited Mother Earth, the Soil Associations journal, and Rural Economy, alongside other fascists like Rolf Gardiner.   Both of these publications promoted a Mosleyite world view – anti-capitalist, anti-war, pro-environmentalist, antisemitic.  From the 40s to the 50s the Soil Association promoted far right politics as much as mainstream environmentalism, and on occasion included articles written by actual Nazis.

Green politics is so tied up with modern left wing politics that we forget that for most of the C20th environmentalism was a far right pre-occupation.

Jenks died in 1963 only a few months after Silent Spring by Rachel Carson was published.   Silent Spring included many of the ideas that Jenks had campaigned on, in particular around banning pesticides, and it took these ideas to a much wider audience, particularly on the left.

At the time a new faction was emerging in the British left, which made anti-imperialism it’s key virtue.  Inspired by the growing conflicts in South East Asia and Latin America the far left began arguing that the cause of the world’s wars and, in particular, its ethnic conflicts, originated with Western imperialism and the lines drawn on maps by conquering powers.

From the perspective of the late 60s this probably looked like a reasonable proposition, and many middle class British lefties started styling themselves in the manner of Latin American or South East Asian revolutionaries.   Environmentalism and anti-imperialism became key elements of a left wing political world view alongside anti-capitalism and anti-war.  Spring Comes Again sold well, on the back of Silent Spring, and the left absorbed it’s messages.

When I was writing this blog and the previous one I had to track down some pretty odd publications (Alexander Raven Thompson’s book above for example), and visit some rather unpleasant websites, mostly on the right, but also some promoting weird left wing conspiracy theories.   There still exists a small group of Mosleyites on the right who keep his memory.   When I tried to track down Spring Comes Again, and work out how popular it was in the 60s I discovered, disturbingly it is still in print, still popular, and easily available on Amazon:

https://www.amazon.co.uk/Spring-Comes-Again-Jorian-Jenks/dp/1908476850

Into the ferment of 60s revolutionary politics come 2 figures from the very right wing of the Labour Party: Ernest Bevin and Christopher Mayhew.

Today Christopher Mayhew is remembered only for taking LSD on the BBC, an event commemorated in this single by The Shamen:

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https://www.youtube.com/watch?v=3MiFV2ukz-w

In the 1960s he was on the right of the Labour Party and a junior Minister.   

Ernest Bevin was a big gun in the Labour Party, a former Foreign Secretary.  He was also, according to Mayhew, an anti-semite:

There is no doubt, to my mind, that Ernest detests Jews.” 

In 1969 Mayhew established the Labour Middle East Council (LMEC) with Bevin’s help with the express aim of turning the Labour Party from a proudly pro-Zionist party to an anti-Zionist one.

Mayhew and Bevin believed that they would find fertile ground for their ideas on the right of the Labour Party, and weren’t shy of deploying the kind of rhetoric that blurred the lines between anti-Zionism and anti-semitism in a way similar to Jenks.   LMEC is just Jenks repackaged for the left.

They were shocked that the people who rallied to their cause were exclusively on the far left. The newly emerged anti-imperialist left, which had already absorbed elements of Jenksian pro-environmentalism also embraced Mayhew’s anti-zionism and Bevin’s antisemitism.

Not only did LMEC tread the same ground as Jenks, but they added some new unpleasant ideas of their own.  Mayhew was the first person to advance the argument that Israel was an apartheid state, in an article for Venture in 1971, and Mayhew and the LMEC actively promoted the idea that British Jews had divided loyalties.

By 1974 Mayhew left the Labour Party outright in protest at the rise of the far left, and by the 80s would refuse to attend anti-war and anti-Zionist events due to the the presence of communists and trotskyists.

The LMEC spawned a host of pro-Palestinian and anti-Zionist groups throughout the 70s and 80s, which mixed left wing anti-Imperialism and Jenksian anti-semitism.  George Galloway’s Trade Union Friends of Palestine, and Ken Livingstone’s Labour Committee on Palestine, and Labour Friends of Palestine.  These groups competed between themselves to see who could be the most extreme.

Labour Herald edited by Livingstone introduced the Israel = Nazis trope in the early 80s.

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This is probably the point at which I went to my first pro-Palestine meeting, at Fowler’s Yard in Durham

If I recall correctly the meeting took place immediately before a Red London gig, and I admit that I was probably as interested in the music as the politics

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https://www.youtube.com/watch?v=r4qyuChgfoc

The meeting, if I am honest, had no angry racism, and no anti-semitism, but no real facts either.  Me and Phil King were the classic rebels without a clue.

Around the same time I first encountered the anti-imperialist left.  The 1980s weren’t a good time for middle class lefties in the UK and the US.  Thatcher and Reagan were ascendent, and were drawing support from working class voters.   Struggles in Latin America offered hope to the left as well as inspiring a rambling Clash triple album

Looking back Sandinista isn’t as awful as it sounded at the time, but not as good as the Clash clearly thought it was.

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https://www.youtube.com/watch?v=COZY27cBR2I

But it is a good indication about how trendy it was to name check non-European radical movements.  At times this was a bit comical.   By the 80s it was vogueish to name check some obscure anti-imperialist faction in any political debate, just as it was essential to name check a rare dub reggae act or 70s German Avant Garde rock band.

Dr Alimantado. Sendero Luminoso. Cluster.

There was however a huge problem with this world view.   Too many of the anti-imperialist movements we were cheering on weren’t very left wing.   Many of them, particularly in the Arab World, were right wing nationalist movements fighting the West, some of which were homophobic, misogynist and racist.   We rationalised these strange alliances either as enemies of our enemies, or with some wooly ideas that once in power they would somehow stop being reactionaries.

The Sandinista themselves turned out to be right wing socially conservative Catholics and authoritarians, not left wing Clash fans after all.

I gave up on the anti-imperialist far left in the early 90s and rejoined Labour.  I continued to go to pro-Palestine events however for a few years longer.  I eventually lost interest, mainly because it was pretty clear that we weren’t achieving anything.  The same speeches, the same people, nothing changing.

The support that the remaining anti-imperialist factions on the far left, including some of the current labour leadership, gave to Milosevic and other ghastly people ended in the Living Marxism trial.  From that point on the tolerance that the rest of the left had towards them evaporated, and they ended as an angry rump on the margins.  On the few occasions I got back in touch with Palestinian Solidarity they were getting odder and odder.  I think by then most people realised that we were failing, but rather than accept that our tactics (in particular BDS) weren’t working, a lot of people were starting to adopt odd conspiracy theories.   The CIA, Mossad, the mainstream media were all plotting to thwart the plucky efforts of brave middle class Marxists.  I think by this point pro-Palestine groups and the rump of the anti-Imperialist left were pretty much the same thing, the same people going to the same meetings.

I honestly thought at this point that the increasingly odd group of ageing lefties would die out, and their ideas with them, and I wouldn’t miss them.  Their ideas were rarely deeper than slogans, and the slogans were a jumble of ideas from the right and the left, including a strong under-current of antisemitism.

What changed was the Iraq war.

I am more sympathetic than most people towards the decision to go war, mainly because I have seen an Iraqi weapon of mass destruction.  In the 80s the Thatcher Government had conspired illegally to help Saddam Hussain acquire WMDs, one of which – the supergun – had been seized by Customs and Excise and rusted in a yard at Tees Port. When I first worked on Teesside you could see it from the Docks road. I’m also pretty happy that Saddam Hussain has gone.  But there is no doubt that the case for war was not properly made, the consequences of war weren’t properly thought out, and a lot of misery resulted.    Given what has happened in Syria it is not certain that non-intervention would have been a better plan, but that doesn’t make things better for the Iraqis’ who suffered.

The Stop The War coalition brought together the old anti-imperialist left, pro-Palestinian activists, and younger campaigners, some of whom were from a socially conservative Muslim background.  For the first time this gruesome mess of ideas was allowed to present itself as the moral highground, and somehow as a pure tradition of leftism, nobler than the nipping and tucking of the then Labour government.

The way that this group of oddballs came to run the Labour Party is partly a tale of their ability to control a political movement through bureaucratic control of it’s committees, as it is  about the popularity of their ideas.

The current Labour leadership do also have a secular gnostic world view.  The world is an awful place, the truth is known only to a select few, a crisis is coming which will transform the world and this can be seized upon by the gnostics to remake the world in their image.

The current crisis of antisemitism and the Labour Party’s inability to put an end to it is due entirely to the crowd of people that the Labour leadership have surrounded themselves with, and the awful set of ideas that they hold to.

None of this is meant to suggest that Jeremy Corbyn or anyone on the British left is a fascist.  I don’t believe that for a moment.   But I do think that Corbynism (if there is such a thing) is a hopeless jumble – a mess of ideas from the far left and the far right, all filtered through the worldview of a bossy privileged middle class public school boy.

But if we were put together a list of the most offensive views that the modern left hold about Jews or Israel we can trace most of these back through Galloway and Livingstone to Mayhew and Bevan, and all the way back to Jenks and Mosley.

I am sure that my pro-Green Party friends will be appalled that I have foregrounded Jorian Jenks, a figure who most modern Greens would rather forget.  But the story of Jenks reminds us how similar the ideas of Paleo-Conservatives like Prince Charles are to the ideas of newt loving Ken Livingstone and Jeremy Corbyn on his allotment.

They would get on like a house on fire, 3 posh chaps making jam, talking to plants and moaning about the awfulness of capitalism.  George Monbiot in the Guardian alternates between progressive leftism and reactionary conservatism on a weekly basis (increasingly on the reactionary side).

This is from another one of the Clashes less fancied albums “Give ‘Em Enough Dope Rope”

https://www.youtube.com/watch?v=2GxL6OA8Srw

The Clash here explore the same sentiment that Arthur Koestler did in “Darkness at Noon” when he compared left wing fellow travellers to peeping toms, “peering through a hole in the wall at history while not having to experience it themselves”.

I think that nothing really distanced my ideas from the middle class anti-imperialist left than spending time outside of Western Europe, particularly in countries like India.   For all the marches against the evils of globalisation it is clear that living standards aren’t falling around the world, this isn’t the age of inequality.   Life expectancy and living standards across Asia are rising, driven not by the campaigns of the left, but by the kind of economics they like to denounce as neo-liberalism or neo-colonialism.

The US isn’t an Imperial hegemon (although China might be about to become one), Russia isn’t our friend, and Israel isn’t an apartheid state.

I wanted to end with a joke, a funny way of describing my erstwhile middle class anti-imperialists with their endless ill informed solidarity for people in countries they will never visit or ever meet.   People who see their own struggle to find a non-Israeli organic kumquat somehow the same as the struggles of Mandela, or Gandhi or Martin Luther King

But the best I could come up with was Talcum X.

 

https://ia802307.us.archive.org/25/items/pdfy-Xm3KNoxQuBK9mHlX/Thompson%20-%20The%20Coming%20Corporate%20State%20%28British%20Fascism%29%20%281938%29.pdf

https://www.lobster-magazine.co.uk/free/lobster75/lob75-farming-fascism-ecology.pdf

https://www.haaretz.com/opinion/.premium-u-k-labour-partys-zionist-problem-1.5420578