Bankers’ bonuses
Bankers’ bonuses had been capped in 2014, in the aftermath of the Credit Crunch six years before. It was an EU policy, adopted by the UK government. The cap was intended to try and limit the incentive for bankers taking irresponsible risks to pursue high profits - deemed to be a cause of the financial crisis. Generally speaking, a banker could not receive a bonus of more than 100% of their salary. Thinking this was restricting growth, Liz Truss decided to remove the cap. This was one of the only policies that was not dumped by Jeremy Hunt and Sunak once Truss was deposed, and on 31st October 2022 it came into effect.
Of course, when Truss was proposing the measure, along with the cuts to corporation tax and the high tax rate, Labour were outraged. Darren Jones, a nondescript thought to be some kind of rising star in Labour, said: "this decision tells you everything you need to know about the priorities of this out of touch Conservative government". There was talk of bringing back the cap when they got into office. However, following Labour's well-publicised courting of big business and the banking sector, Rachel Reeves recently announced Labour had no intention of doing so. On January 31st this year she said: "The cap on bankers’ bonuses was brought in in the aftermath of the global financial crisis and that was the right thing to do to rebuild the public finances. But that has gone now and as chancellor of the exchequer, I would want to be a champion of a successful and thriving financial services industry in the UK”. Again, this was sold as a pragmatic decision in a changing situation, rather than a point of principle. Many Labour supporters - and even shadow ministers off the record - were unhappy with the decision. As usual though, in the pursuit of power, they will probably just accept it.
The announcement was part of a wider package of banking deregulation, as well as a promise not to put a windfall tax on bank profits. Labour seem to love windfall taxes on energy companies and VAT on private school fees, but the poor bankers - of all people - are not to be touched. Indeed, it took a Conservative government to cap the bonuses in the first place.
It's amusing, also, that when Truss was pushing for 'growth' using the banking sector, lower taxes for the wealthy and deregulation, Labour acted as if she'd killed a litter of puppies. But now that is their plan, it's sensible third-way politics.
Gaza
The conflict in Gaza has exposed real divisions within Labour, and once more has been a prime example of Starmer's flip-flopping and poor judgement. When the October 7th attacks on Israel happened, he supported Israel in cutting off water and power supplies in preparation for their military operation. “They absolutely have that right”, he replied when the specific question was put to him. Later, when criticism of the policy mounted he tried to pretend he hadn't said that and had merely said Israel had the right to defend itself. It's a shame there was video evidence to the contrary.
Concerned that his keen support of Israel was alienating Labour's vital Muslim voter base, he embarked on damage limitation. A farcical situation occurred with a Cardiff mosque, where Starmer hijacked a Welsh Labour event to meet with an imam and his congregation. In the Tweet promoting the photo opp, Starmer said he had called for 'all hostages to be released', inadvertently implying these random Muslims had a hotline with Hamas. The mosque, fearful for its own PR, then released an statement apologising to Muslims for hosting Starmer. They angrily claimed he had misrepresented the nature of the visit and had turned up at very short notice, catching them off guard. A few hours later on from his original Tweet, Starmer added he had 'made clear' he never held the view Israel could withhold water and power. In other words he confirmed he had lied to the congregation.
It was later reported by a Muslim journalist that the iman, who was Egyptian and didn't speak much English or know anything about UK politics (!), was highly upset that he and his mosque had been used for 'propaganda purposes' by the Labour leader. It was a complete shambles from start to finish. Nineteen Labour councillors soon quit over Starmer's handling of the Gaza issue, with 150 signing a letter pushing for a ceasefire.
Starmer's position on Gaza softened when the vast scale of Israel's retaliation became clear. He soon started calling for a 'humanitarian pause' in the fighting. The lawyer was well and truly back, splitting hairs. He wasn't saying 'ceasefire', because that would be not supportive enough of Israel, but he had to suggest some variation of ceasefire because otherwise he would anger Muslim voters. Labour frontbenchers were then triumphant as many of the hostages were released and their leader was vindicated, but some then started to express 'concern' that the fighting started again a few days later. Of course it started again! They had asked for a 'pause', not a permanent truce. Recently Labour have joined the government in favouring a 'sustainable' ceasefire reached through negotiation. On February 18th this was upgraded to a 'permanent' ceasefire. "The fighting must stop now," shouted a righteous Starmer, as if he'd never thought any different. Labour also (correctly) pushed back against Netanyahu rejecting the 'two state solution', and voiced concerns about the planned assault on Rafah.
The reality of modern Labour is that it is riding two horses. The pro-Israel lobby is strong within it, and Starmer is desperately trying to move on from the Corbyn tenure - which was frosty towards Israel to say the least (and the lobby hit back by gradually forcing him out). Also strong within Labour, of course, is the Muslim contingent, and Muslims make up a sizeable section of the electorate that typically votes for them. The phrase ‘how do you square the circle?’ comes to mind.
On one hand you could say Starmer, like the government, has a sensible approach. It is fair to have a position which believes Israel has the right to exist and defend itself, yet also needs to be proportionate in its military actions. The situation has changed into something which should have been expected, but is nevertheless an epic tragedy. That justifies a changing stance to some degree. The 'two state solution' is still a valid aim to have, despite the kicking it has taken from both sides. However, Starmer seems to veer around depending on which audience he's talking to, and you cannot just lie about something you've previously said. His support of Israel cutting off water and power was still ill-judged. Neither should he have undertaken cynical PR stunts connected with such a serious issue.
The fact he was so quick to back Israel's blockade does rather betray that he favours that side, because its supporters have more influence over the Labour Party than the Muslim contingent does. Some may say that is no bad thing, while others are furious about it. Suffice to say it will present a significant challenge to him as the conflict steamrollers on and the death toll soars.
Someone who clearly takes the anti-Israel position is Labour's candidate for the Rochdale by-election, Afzar Ali, who was recorded at a party meeting saying that Israel had deliberately let the Hamas attacks happen so they could "do whatever they bloody want". This caused a massive row and was most embarrassing for Labour. The story broke in The Daily Mail on the evening of 10th February, and the next day the party made Ali give a grovelling and unconvincing apology. Despite Ali's comments, Labour said they would continue to campaign for their candidate. Lisa Nandy and Annelise Dodds had already done so, after the comments had come to light.
This policy contradicted Starmer's hard-line stance against anti-Semitism in the party, which has seen members, MPs and councillors thrown out for anything deemed anti-Semitic - even if it's merely critical of Israel or Israeli policy. Here, however, there was guarded forgiveness - clearly because the nomination window had closed and if they dumped him they would be throwing a seat away in a vital by-election. Hilarious spin attempted to justify this, including very pro-Israel Labour supporters saying Ali was the lesser of two evils when compared to his rival candidate George Galloway. You should, according to them, still vote for Labour's anti-Semite rather than the notorious far-leftist, who was a really bad anti-Semite.
The following day, however, it was announced the Mail would publish more remarks Ali had made. The full recording featured him saying 'Jewish quarters' of the media had helped get the Labour whip removed from Andy MacDonald MP (for speaking at a pro-Palestine demo when instructed not to). He also boasted that, in his capacity as a councillor, he had stopped Israeli flags and colours being shown on local town halls after the Hamas attacks. Labour realised their support of the candidate was untenable, and in the evening announced they were withdrawing support from him. They would throw away the seat after all.
It has been a ludicrous episode, calling into question Labour's selection criteria and exposing hypocrisy in Starmer's running of the party. It was sensible to finally withdraw support, but it took too long considering how robust Sir Keir is meant to be on anti-Semitism and the Israel issue. The worst thing Ali said was the first thing that was reported, so it's pertinent to ask why that didn't prompt the nuclear option straight away. Starmer was breaking his own rules, and clearly the only reason was that Labour needed to win that seat. On the brink of a General Election, with hundreds of selections up and down the country, how many other candidates will have such views? How often will this situation happen again?
Our Labour saga will continue soon.