Denis MacShane's Speech following the Queen's Debate in Parliament

Denis MacShane’s Queen Speech Debate calls for Assault on Inequality

19 November 2009

Rotherham MP and former Europe Minister Denis MacShane has called for a new campaign to combat ever-growing inequality at home and abroad. In a speech in the House of Commons on the Queens Speech, MacShane said inequality was the major problem facing the world. He spoke after an appeal from Tory MP David MacLean urged protection of the rain forests. MacShane said the reason the world’s trees were being chopped down was because of poverty and ever-increasing inequality. That should be the priority for political action in a rapidly changing world.
MacShane put forward an 10 point programme covering both economic inequalities and the inequalities between government and MPs. Speaking on November 18th directly after Brown, Cameron and Clegg he called for:

- Executives and bosses to be paid no more than 20 times the average or median pay in their company;

- A Financial Transaction Tax to be introduced on transnational financial trades. MacShane said this could be a modern equivalent of North Sea oil revenue. MacShane noted he had first made this proposal in 1996 and it was rejected by the then Labour Treasury team. He welcomed the Prime Minister’s conversion to this idea;

- Public sector pay not to outstrip that of the Prime Minister so that all public sector salaries did not exceed £200,000. MacShane challenged the inflated salaries of BBC executives and said that if they left to work in commercial television of radio young people of talent would swiftly fill their shoes and not demand bloated pay as high as £800,000 for the BBC Director General paid for by the compulsory BBC tax on the poorest households in the land;

- Fair pay not just the minimum wage. MacShane said that too many workers did not earn enough to live on. Only strong trade unions could negotiate fair wages. Getting trade unionism back on its feet in the capitalist sector of the economy should now be an important objective;

- Public funding for democratic politics. The £27 million given to the Electoral Commission should be transferred to political parties and all outside funding from Lord Ashcroft and other external donors should be banned;

- A fixed-term for Parliaments. A free vote between either a 4-year or a 5-year Parliament could settle the matter with elections held over a weekend in May or June;

- 15 per cent of all legislation to come from backbenchers working on an all-party basis;

- A limit of two terms in office for the prime minister and ministers

- All working-class lists so that workers could again win selection as candidates and be heard in the Commons

- A Parliament able to debate the big issues of the world which cannot happen if the millionaires who control the Conservative shadow cabinet were allowed to grow in influence.

Key Extracts from Denis MacShane’s Speech are below.

"We are in a fascinating era of monumental political change, and the debate has not entirely risen to that occasion. Change is happening both at international level and nationally. We face one of those watershed elections next year. I am very confident, because I do not believe that the Conservatives are ripe for power. To be blunt, they are in a position similar to that of my party in 1991–92—nearly there, but not quite. I may be wrong, but in any event the British people are willing a new politics into being. They returned 65 Liberal Democrats last time, but I wonder whether we will revert to the old bipolar world that existed until about 10 years ago. We also have strong representation of Scottish and Welsh nationalists. Our representative system is changing before our very eyes, but we are not adapting parliamentary procedures to deal with that change.

The broader issue is the profound changes in the national and the world economy. I sum those changes up with one word: inequality. We see inequality of power between those who have, and those who have not. The right hon. Member for Penrith and The Border (David Maclean) spoke eloquently of the need to combat the slow disappearance of the rainforests, but why is that happening? The poorest of the world are chopping the forest down because it is their only source of heating and cooking fuel. If we do not tackle poverty, we cannot expect people to die of starvation to satisfy the legitimate desire of comfortably off people in this country to retain the rainforests for the protection of the climate.

We also need to look at inequality in our own nation. I am proud of what has happened in the last 12 years. On Monday, I opened a new primary school in my constituency, Herringthorpe, which is spectacularly designed and built. It is of a quality that the working-class residents of that area of Rotherham have never enjoyed before. When I was elected as an MP 15 years ago, that school had rotting roofs and windows falling out of their rotting frames. It was left to rot because of the indifference to the basic core issues of social justice of the then Conservative Government, which did not invest in the poorer parts of the economy. It is those principles that my party represents, while the Conservatives only pay lip service to them. We have to be realistic about the opinion polls, and it is very worrying that we may face the return to power of a party that is of the rich, for the rich and by the rich. There are more millionaires in the shadow Cabinet and political leadership of the Conservatives than any other political party in the world, with the possible exception of Saudi Arabia. It is a party principally of the south, and my constituents in Rotherham fear that if it were to win power they would be ignored, as they were between 1979 and 1997.

My party has to ask questions about why, after 12 years in power, so much inequality remains. Why is the Gini coefficient—one of the measures of inequality—as high, if not higher, now than when we came into power? Like Winston Churchill, I want to see industry more confident and finance less proud. I support the financial services industry, because we need banks; they are the petrol stations of the modern economy. However, perhaps we need more and smaller banks, working in a fully competitive framework, rather than giant behemoths accountable only to themselves.

The shadow Chancellor, in his party conference speech, said, "We’re all in this together," but that is not the impression that my constituents have as they look at the Conservatives’ policies of removing death duties for the richest people in the country, abolishing the tax credits that have so helped the poorer hard-working families in my constituency, and getting rid of the Sure Start programme that has made such a difference to working-class families. We see the incessant clamour for anti-Keynesian public investment cuts, when every other country and every reputable economist—from Nobel prize winners to members of the Monetary Policy Committee—are saying that there must be a continued level of public investment in our economy if we are to come out of this recession.

When that happens, we need to look at the inequalities in our country. We are not all in this together. I was a BBC trainee after university. How I wish I had stayed to polish that seat at the BBC. I could now be paid £300,000, £400,000 or even £500,000. Mark Thompson, the director-general of the BBC, who is on £800,000, put forward the preposterous proposition that he and his mates have to be paid these huge amounts of money—which come from my hard-working, low-income constituents—to attract enough talent to run the BBC. I suggest that he put that proposition to the test. We should reduce all public sector pay to no more than the Prime Minister earns—£190,000—and if the people at the top of the BBC do not like that, let them go and work in the private sector. We would see who applied for their jobs. I have a sneaking suspicion that many young people out there—unpaid interns and other exploited and poorly paid people—would do those jobs every bit as well as the gentlemen of the BBC and other public sector bodies.

We cannot apply that argument to the public sector alone, and accept the idea that the private sector should have grotesque salary differentials. In 1996 I tabled a ten-minute Bill that proposed not so much a statutory minimum wage as a statutory maximum wage. I suggested that it should be set at a ratio of 20:1, between the top earner in any company and the average or median wage of employees in that company. That would still allow handsome salaries to be paid. Of course it was regarded as far too left-wing in those days and not adopted as Government policy, but if we want everyone to be in this together, we have to start thinking more seriously about high pay.

If our country is permanently divided between those with huge salaries, or the gold-plated, index-linked pensions of our top Whitehall mandarins—Sir Thomas this and Sir Christopher that—and the rest of the community who struggle to achieve a decent life in retirement, we will not all be in this together. We have to discuss these tricky issues. I support aspiration and good pay levels, but we have to put a stop to ever-growing inequality.

In 1996 I was a member of the Committee considering the Budget. I tabled an amendment that proposed a modest financial transaction tax on trades, sometimes referred to loosely as the Tobin tax. I showed my amendment to the then shadow Chancellor—I cannot quite remember what happened to him—and his chief lieutenant, now the Chancellor. It came back scrawled over with red ink, "No new taxes".

I was a loyal Labour man, so I immediately dropped my proposed amendment, but what a pleasure it was, two years ago, to hear my friend Poul Nyrup Rasmussen—the former Danish Prime Minister, now the president of the Party of European Socialists—proposing in a strong paper the need for a financial transaction tax. It was an even greater pleasure, last Wednesday, to hear my right hon. Friend the Prime Minister at the Dispatch Box insist that this was a good and necessary idea. It has taken him 12 years to adopt a MacShane policy, but slowly, bit by bit, we are getting there.

We will need that and other measures, because another problem that we have to be honest about is that although the minimum wage has brought about a great deal of social justice, it has fixed far too many people on a very low wage. We need fairer pay for employees across the board, but that cannot be achieved without agencies and agents to represent their interests. That in turn means the rebirth of our trade union movement, which is now too focused on the public sector and too absent in the private, capitalist market economy sector of the world, here and in other countries.

So, there are three measures. We need to take a look at high pay. We need to consider a financial transaction tax, which could be for the next generation what North sea oil was in the 1980s. We also need a mechanism that would allow the Labour party—I would also invite support from other progressives in the House—to see what we can do to strengthen the right of workers to obtain a fairer share of the value that their labour creates, thus ensuring that they do not become dependent on benefits and credits. They should have fair pay for a fair day’s work.

Mr. Phil Willis (Harrogate and Knaresborough) (LD): It is wonderful to see the revival of socialism at the end of this Government’s period in office. Does the right hon. Gentleman not feel acutely embarrassed, however, that after 12 years of a Labour Government we now have the most unjust, inequitable taxation system to be found anywhere in Europe, under which the poor pay a greater proportion of their income through direct taxation than the wealthy?

Mr. MacShane: Technically, I do not agree with the hon. Gentleman. Knowing Europe quite well, I can assure him that the social justice and full employment measures that we have introduced—including the huge investment in our NHS and in the schools in my constituency that I have mentioned—represent a remarkable social democratic achievement, of which we on these Benches should be much more proud. I do not wish to see the Liberal Democrats being replaced by flinty millionaire Tories at the next election, but they have only a very short period in which to come to terms with the fact that we can shape a progressive alliance in this country and stop the return of the most reactionary, ideological Conservative party for many years. However, if all that the Liberal Democrats are capable of doing between now and the next election is to snipe and moan at those on the Labour Benches, they will be playing right into the hands of Mr. Rupert Murdoch and the Conservatives.

I want briefly to comment on political change, along lines similar to those explored by my right hon. Friend the Member for Norwich, South (Mr. Clarke), who opened the debate from the Labour Back Benches. I agree with him that we need transparent party funding. I will not make any detailed comments about the £2.4 million sitting in the Liberal Democrats’ party coffers that belongs to other people, because I do not think that that would be fair. It would also breach my spirit of seeking co-operation and consensus. However, every other country in the world has had to move to a form of publicly available funding for political parties, in order to stop the corruption that has sent people to prison in France, Germany and elsewhere. We are the last country in the democratic world to hold out against allowing democracy to pay for democracy.

We have the money to do this: we voted £27 million a year to the Electoral Commission. I have to say, however, that since that body was set up, it has increased its pay and its staff, but it has decreased voter participation and confidence in the broad democratic political parties. Coincidentally—it is not responsible for this in any way—that period has seen the rise of extremist, anti-Semitic, racist politics in the form of the British National party and the horrible xenophobia of the United Kingdom Independence party, whose leader boasted of being paid £2 million in expenses by the European Parliament. That £27 million could be allocated pro rata, under supervision, to our political parties. That would stop our search for funds from those such as Lord Ashcroft, or the dubious investors who are now in prison, such as the one from whom the Liberal Democrats have taken money—or funds such as, I have to say in all honesty, some of the big-ticket trade union money that comes to my party.

My second suggestion is that we should support the call for fixed-term Parliaments. I have put forward this argument consistently for some time now. That measure could result in as significant a change as changing the voting system. We could vote on whether our fixed-term Parliaments would last for four years, as in America, Germany and Spain, or for five years, as in France. There could be a free vote in the House on the question. I earnestly suggest that other political parties adopt this policy, so that we would really know where we stand. We could nominate the first Thursday—although I would move the election day to Saturday or Sunday—of May or June, when the weather is nicer, and we would know that there would be an election on that day. We would not then have to play the endless, pointless political game of trying to put forward this or that measure simply to gain a bit of political support.

I also suggest that 15 to 20 per cent. of the legislation introduced in this House should come from Back-Bench MPs on a bipartisan, cross-party basis. It has been suggested that electing the Chairs of Select Committee will somehow provide a miracle cure for the so-called disregard in which many people now hold the House of Commons. I am not sure about that, however. I know of no governing deliberative assembly, from the Roman Senate to our own House of Commons, including the US Congress, where there is no party political management. That is simply the norm. There is a notion that a free vote, in which names would suddenly appear for consideration as Chairpersons of our Select Committees, would miraculously transform things, but I am not sure that that is the case. However, if a coalition of members of at least two or three parties introduced a Bill, and the Bill had to be given a Second Reading, that might begin to make this House more of a legislature, and not simply a group of followers of the Executive plus an Opposition who have their say but never get their way.

I also want to suggest fixed terms for Prime Ministers and Ministers—perhaps a maximum of two Parliaments for a PM or a Minister. Ministers often make the best Back Benchers when they return from being Ministers, because they know how things work. They know the dodges and the diddles of Whitehall. The eternal Minister, with his or her car and red box, however, devalues our ability to make this more of a debating legislature with real supervisory powers over the Government. I think that there is real problem with our representativeness. Thanks to Labour’s policy of all-women shortlists, we have many more women in the House. I congratulate the non-neanderthal Conservatives of Norfolk in seeing off what was obviously an unpleasant misogynist challenge there.

However, I worry considerably that as we search for more women, and the Conservatives search for more millionaires, the one group that is excluded is the one that used to be called "the workers". I wonder whether it is only my own party that needs all-worker shortlists to be introduced, so that people who once came to the House of Commons through the trade union movement and from a working-class background—and then made a huge contribution—will get another chance to be represented here. I am conscious that I had the privilege of a university education, even if I have worked with trade unionists for most of my life.
Let me finish by saying that as a House, we are not rising to the geopolitical and national economic and social changes that face us. As Horace put it:
"Parturient montes, nascetur ridiculus mus".

The mountains laboured, and gave birth to a ridiculous little mouse, or rat. I want this House to be where the needs of a changing nation are heard and reflected. I am not sure that our party political system or our parliamentary system delivers that. I believe profoundly that if the Conservatives were allowed to form their millionaires’ Cabinet, it would be disastrous for our nation.

I congratulate the Prime Minister on a workmanlike Queen’s Speech, but let us now go out and make the argument for new thinking on equality, new thinking on fairness, new thinking on the rights of workers, new thinking on Parliament and new thinking on politics. We have to rise to the occasion, because if we do not, it will be Mr. Rupert Murdoch who continues to have too much influence and say over the affairs of our country.