29.04.2021

Behind the Lulu Lytle wallpaper

Sleaze stories about the Downing Street flat and Boris Johnson’s character aim to protect the general regime of corruption. Mike Macnair paints the bigger picture

The last week has seen a series of stories about Boris Johnson’s personal character and conduct. Allegations of cronyism in the handing out of Covid-related contracts have been superseded by, in turn, a story about how a refurb of the No11 Downing Street flat used by the prime minister was paid for; and, perhaps most damaging, Dominic Cummings’ allegation that Johnson said he would prefer to “let coronavirus rip” and “let the bodies pile high” rather than see a third lockdown.

The Daily Mail (April 27) headlined, overdramatically, ‘Boris on the ropes’, and several other papers on the same day had front-page headlines adverse to Johnson. Some journo has coined the phrase, ‘Wallpapergate’, for the Lulu Lytle Downing Street refurb story (and The Times of April 28 gives two pages to this headline).

The Labour front bench - as usual falling into Tory news management traps - has zeroed in on the £840 a roll wallpaper, the £9,800 Baby Bear sofa and the £3,000 Lily Drum table.¹ This is, frankly, a ‘who cares?’ story. There may well be a technical breach of donation disclosure rules involved; but it is clear enough that public money was not spent on this refurb beyond what Johnson was authorised to spend, and it does not seem from immediately available information that either the planned indirect donor, Lord Brownlow, or his governance-consultancy firm, Huntswood, or his general investment vehicle, Havisham, are in line for major contracts - or are comparable to Greensill Finance (with which the whole current sleaze story started), or to outsourcers Carillion (which collapsed in 2018) or Interserve (collapsed 2019). This is merely a Tory peer stepping up to help out the party, which was in turn planning to help out its leader with potential embarrassment from an expenses overspend problem.

The “let coronavirus rip” story is more important; but what is new in it is only the callousness of Johnson’s language. It became clear in spring 2020 that ‘the horse had bolted’: ie, the business model of air travel, together with Chinese news management, had prevented any effective steps to corral the disease geographically, except for a few relatively isolated places (eg, New Zealand). Events in Italy then demonstrated that the business model of ‘efficiency gains’ in health services (and behind these, International Monetary Fund and European Union debt control rules and private health insurers’ margin calculations) meant that there was not enough spare capacity in hospitals, and so on, to handle large numbers of people ill with the disease.

It has been clear from that moment on that brutal triage decisions about who should live and who should die would be unavoidable; and, indeed, the British government quietly made such a triage decision by dumping the elderly sick out of hospitals into care homes.²

It was equally clear that part of the input into this decision-making has to be ‘the economy’ - because, as Karl Marx observed in 1868, “Every child knows a nation which ceased to work, I will not say for a year, but even for a few weeks, would perish”.³ For the present, the government is printing/borrowing money to keep things running; but at the end of the day the financial claims so created will have to be rescaled onto actual productive activities. This means either new austerity (which implies a crash on the scale of Germany 1931), or managed default on the debts so far incurred - a ‘creditor haircut’. At the end of the day default will happen - austerity on this scale merely implies collapse of the legitimacy of the liberal order, the creation of (more) hard-nationalist regimes (like Germany 1933), and a more rapid drift towards great-power war and hence default through war.

In this context, more immediately, the economic consequences of lockdowns and ‘social distancing’ are particularly hard on the Tory Party’s activist support base among the petty bourgeoisie, and more opposition to the lockdowns and ‘social distancing’ regime has come from the ‘libertarian right’ element of the Tories than elsewhere. And, the longer special measures go on, the larger will have to be the ‘haircut’ of debts and rent claims affecting landlords and creditor interests (the Tories’ main financial backers) if the small businesses are not to be wiped out. There will thus be some sympathy for Johnson’s hostility to a new lockdown among Tory supporters. And Johnson’s public persona, ‘Boris’, is a licensed gaffe-maker, like the late Philip Windsor. Hence, it is questionable how far even Johnson’s callous language (which ministers continue to deny in the face of media assertions that the claim is corroborated) will actually hit Tory support in the coming Scots and local elections and Hartlepool by-election.

Outsourcing fails

The big stories which the journos ought to be pursuing are Greensill, and cronyism in handing out Covid contracts. The Financial Times still has the Greensill story as its front page headline, but in a ‘diversionary’ form, which reduces it to formal irregularities in Lex Greensill’s appointment as an advisor to Cameron’s administration.⁴ And the latest op-eds in both that paper and The Times are by 1990s-2010s ‘insiders’: William Hague, Tory opposition leader 1997-2001 and foreign secretary 2010-14 in The Times; and Gus O’Donnell, cabinet secretary and head of the civil service 2005-11 in the FT - arguing that the Greensill story should not lead to increased distance between government and business.⁵

Greensill - the company, not the individual - collapsed in early March after its insurers refused to renew its insurance cover, following queries raised by Credit Suisse about the viability of parts of the business.⁶ As is usual in a financial collapse, turning over a previously undisturbed stone produces information about dodgy practices which would pass unqueried in a solvent enterprise. Here, the issue was David Cameron’s involvement with Greensill (the individual) during his premiership, and with the company after he ceased to be PM; the ‘revolving door’ for both advisors and ex-ministers; and even for civil servants in the form of Bill Crothers, who was allowed to work for Greensill even before he stopped working for the civil service.⁷

It is this issue - cosy relationships between government and ‘business’ (meaning, mainly, financial services operations) - which Hague and O’Donnell defend. They do so while saying that appearances must change. Hague argues:

The triumph of bringing together university innovation, commercial drive and nimble regulation on the vaccine rollout is needed right across the economy …

This requires the state to be much better at understanding business issues than it has been in the past …

Such fine-tuning of policies can happen only if the civil service can recruit from the business world without fear of conflict of interest, if public-private task forces can work without being regarded with superstition, and if ministers hear at first hand the opinions of business leaders.⁸

In other words, we have to stop worrying about the revolving door, conflicts of interest, cronyism and corruption. If we get rid of the rules, by giving secretive committees “more scope to make and enforce judgments about what is appropriate”, we get rid of the political embarrassments caused by rule-breaking.

O’Donnell offers a similar argument: “The rules governing lobbying are a classic example of bad reform following a scandal” (the Bell Pottinger scandal in 2011, and the Con-Dem coalition’s use of it to legislate against non-commercial lobbyists). But the “most important question” is “what is the optimal relationship between government and the private sector that allows for the infusion of expertise …”⁹

In this context, O’Donnell does at least admit that that Greensill’s “expertise” failed, at great cost to investors, creditors and - presumably - clients, including government: “Innovation means risk and with Greensill this seems not to have paid off.” But this is treated as a single failure: “It would be quite wrong if it led to government freezing out ideas from the private sector.”

But, of course, Greensill is by no means the only failure of the outsourcing model: Carillion in 2018 and Interserve in 2019 have already been referred to; Capita is still in business, but had serious problems in 2018.¹⁰ The problems with supply of personal protective equipment in the early stages of the Covid crisis reflected an earlier contracting-out.¹¹

The larger general model is the claim that sufficiently sophisticated financial engineering can do better than government subsidy and regulation. It is on this basis that Hague (“understanding business issues”) and O’Donnell (“infusion of expertise”) call for the revolving-door regime.

But then we have to take into account, in judging the balance-sheet, other large-scale failures of financial engineering as an alternative to public provision. Student loans in the UK are a running government subsidy to the lenders, with real issues about how far they are repayable, and in the USA a creditor haircut in this field is a live political issue.¹²

The 2001 collapses of Enron (financial engineering in power supply) and of Railtrack (privatised rail infrastructure) are relatively small beer compared to the ‘biggies’. The 2008 financial crisis was driven by financial engineering in order to supply access to housing for the relatively poor in the US. In the UK, ‘market rents’ have produced a £23 billion per annum bill to the taxpayer to subsidise landlords - 17% of the adult welfare budget.¹³ I have already referred to the extreme difficulties of governments in trying to contain and to deal with the Covid pandemic. Underlying these are the financial engineering arrangements, which drive the air travel industry’s business model that depends on high passenger throughput, and which have driven cost-cutting and high bed-occupancy planning in health services.

Greensill and the exposure of the revolving-door relations involved ought to be the ‘last straw that breaks the camel’s back’ for the model of financial engineering as an alternative to public provision and for the revolving door between government and financial services. But it is unlikely to be.

Institutional

Unlikely, but not impossible. ‘Unlikely’ because, as Derek James argued in this paper three weeks ago, and I argued back in 2006 in response to a ‘sleaze’ story about the then Labour government, ‘sleaze’/corruption is an institutional form of the capitalist state.¹⁴ It exists as one of the mechanisms which hold the state power in subordination to the capitalist class.

It is one of several such mechanisms.

• The free market in legal services, and the associated mechanisms of appointing senior judges from ‘successful’ (ie, well-paid) barristers, which amount to the sale and denial of justice for the benefit of those with deep pockets;
• The advertising-funded media, which right now is demonstrating very clearly that ‘freedom of the press’ means ‘freedom of the press barons’, not freedom of public speech. In the present ‘scandal’, I started with the fact that the media have moved away from the real scandal - Greensill - towards much less serious stories. The radical shift away from the core of the Greensill story - the revolving door and the financial failure - is news management for the benefit of the regime.
• The monarchy, with the armed forces swearing loyalty to the queen, stands as a back-stop against a government really unacceptable to capital - in case the mechanisms of direct corruption, the judicial power and news management break down.
• More fundamental still, and more regularly used, is the existence of multiple capitalist states and the threat to withdraw capital from countries which pursue unacceptable policies - used even against the very mild reformism of president François Hollande in France in 2012-13.¹⁵

In this context, the point is that the financial services sector has been dominant among British capitals since at least the Thatcher administration. Indeed, the underlying dynamics have been trending towards dominance of the financial sector ever since other countries began to catch up with Britain in industrial production and shipping in the later 19th century. Dominance of the financial sector then naturally implies the defence of that sector’s interests by the media and the main political parties. Hence, as long as this holds, a succession of stories like Carillion, Interserve, Greensill and the PPE scandal will continue.

‘Not impossible’ for two reasons.

Firstly, the Biden administration is proposing a ‘Rooseveltian turn’ with a large stimulus package, and so on. It is probable that this is mere posturing in the knowledge that most of the substance will be defeated in the Senate. But if it actually passes, we might be seeing a real turn of US policy away from support for financial globalisation - the policy the US has pursued since the Carter administration. If so, Hague and O’Donnell would be defending the old order against the new.

We should not imagine that such a turn will be in the actual interests of the working class. The original ‘new deal’ led to war - and the Biden administration is combining stimulus rhetoric with plain aggression towards Russia and China.

The second reason is at present a marginal possibility, but the only one which offers a strategic alternative. That is for the working class to organise its own political party and its own media, independent - unlike today’s Labour Party - of the advertising-funded media and so on, and openly opposed to the constitutional order of sleaze.

To get rid of sleaze altogether would require overthrowing the constitution; but even the existence of a minority independent and anti-constitutional workers’ party, ie, a principled mass Communist Party, could mitigate the ability of the ‘professional politicians’ to get away with selling policies and contracts, of the lawyers to get away with selling justice, and of the media to manage the bad news of capitalist failures out of public existence.

mike.macnair@weeklyworker.co.uk

1. ‘Labour accuses Boris Johnson of lying over flat renovation costs’ BBC News April 27.↩︎

2. amnesty.org/en/latest/news/2020/10/uk-older-people-in-care-homes-abandoned-to-die-amid-government-failures-during-covid-19-pandemic. This carries a link to the full report (October 4 2020).↩︎

3. ‘Marx to Kugelmann in Hanover’ (July 11 1868): marxists.org/archive/marx/works/1868/letters/68_07_11-abs.htm.↩︎

4. ‘Failed financier Greensill had no contract while working at No 10’ Financial Times April 27.↩︎

5. Hague, ‘Sleaze returns to haunt the Conservatives’ The Times April 27; O’Donnell, ‘Britain should reform the way politicians handle business’ Financial Times April 27.↩︎

6. gtreview.com/magazine/volume-19-issue-2/greensill-empire-collapses.↩︎

7. ‘Civil servant advised Greensill while working in Whitehall, says watchdog’ The Guardian April 13.↩︎

8. ‘Sleaze returns to haunt the Conservatives’ The Times April 27.↩︎

9. ‘How we should reform how politicians handle business’ The Financial Times April 26.↩︎

10. N Fletcher, ‘Is outsourcing still bad news? It seems to be for Capita’ The Observer July 29 2018.↩︎

11. papers.ssrn.com/sol3/papers.cfm?abstract_id=3711526.↩︎

12. UK: commonslibrary.parliament.uk/research-briefings/sn01079/ (published Dec 9 2020); US: ‘The student loan bubble 'is going to burst'’ BBC News April 14.↩︎

13. obr.uk/forecasts-in-depth/tax-by-tax-spend-by-spend/welfare-spending-housing-benefit/ (2018).↩︎

14. D James, ‘Tip of an iceberg’ Weekly Worker April 8: weeklyworker.co.uk/worker/1342/tip-of-an-iceberg; M Macnair, ‘Sleaze is back’ Weekly Worker July 19 2006: weeklyworker.co.uk/worker/634/sleaze-is-back.↩︎

15. Eg, A Evans Prichard, ‘French capital flight spikes as Hollande hits business’ The Daily Telegraph January 13 2013.↩︎