Rebalancing the circumstances of the richest and the poorest is not in Boris Johnson’s DNA, says TJ Coles
The government’s long-awaited white paper on ‘race to the top’ has finally arrived. The scheme promises to invest billions of pounds in neglected and deprived areas across the UK, supposedly taking advantage of post-Brexit deregulation in the process.
The seriousness of the proposals can perhaps be gauged from the fact that parts of the document appear to have been taken from Wikipedia.
Aside from that, the document calls for a new era of infrastructure and investment, but the focus is on attracting new investment to the stock market outside of London. For example, one passage reads: “Equity gaps are greatest in the East Midlands, Yorkshire and the Humber, and the West Midlands, where demand is more than six times greater than equity funding flow. equity”.
In 2019, Bloomberg headline: “It’s all about private equity now”. The article explains that “the core of their business is to use debt to acquire businesses and sell them later.” Last August, the New York Times ran with: “Private equity firms all want the same thing: British companies”. ASDA, AA, Bourne Leisure (owner of Butlin’s) and Debenhams are just some of the big UK brands recently acquired by private equity firms and asset managers.
Will this new dominant economic force help Britain “level up”? A US Securities and Exchange Commission article praises private equity while unwittingly admitting these companies’ contributions to lowering worker standards. They “changed the infrastructure of the nation [labour] force, ushering in the so-called ‘gig’ worker,” the article read.
Private equity firms see investment opportunities in real estate, transport upgrades and building plans promised in the government’s white paper.
Hollow MonumentsThe reality of Boris JohnsonUpgrade plan
Standard Life Aberdeen is part of the Phoenix Group, which manages over £300 billion in assets. In September 2020, the company submitted evidence to Parliament on the supposed benefits of “race to the top” in relation to productivity.
Legal and General (L&G) has over £1 trillion in UK assets under management. He also kept a close eye on the ‘upgrading’ programme, even creating a ‘Britain Rebuilding Index’. Last year’s report, for example, said: “Investment is needed across the UK, but how that investment is made requires a local lens working on local priorities.”
Sumit Mehta, head of investment solutions at L&G, is delighted with the “very good match between what these [infrastructure] supply of assets and what they need in terms of capital to support them”.
More recently, Roger Pim, a multi-billion pound senior investment manager, said of infrastructure: “We look to find very stable businesses with predictable long-term cash flows that generate attractive and reasonable return”.
Lower, steady returns from construction projects, he said, are “perfect for pension funds.”
The inequality agenda
The commercial agenda of mainstream financial institutions is politically implemented via an ideology that is deeply embedded in the Conservative Party: inequality. Another reason for the likely failure of the leveling-up agenda is that over the past decade, as hedge funds and private equity firms have become major financial players and conservative donors, the belief in the inherent merits of inequality has become entrenched in the party.
In 2012, Baronetcy Sir Humphry Wakefield, father-in-law of Dominic Cummings, said: “To be elitist, I think [that] quality climbs the tree of life”. He added that “in general, things high in the tree of life have quality, have skills, they get wonderful degrees in college, and if they get married, that’s even better. “. Wakefield concluded: “There are very few first-generation geniuses [among the poor]”.
A year later, Cummings, then an adviser to the Department of Education in the Conservative-Liberal Democrat coalition, wrote: “Most of those who now dominate discussions of issues such as ‘social mobility’ ignore genetics and , therefore, their arguments are misleading at best and often worthless”.
During his 2013 speech at the Center for Policy Studies Thatcher, Boris Johnson himself said: “I insist: I do not believe that economic equality is possible; indeed, a certain measure of inequality is essential for the spirit of envy and for following neighbors which is, like greed, a valuable stimulus to economic activity”.
He continued: “Whatever you think of the value of IQ tests, it is certainly relevant to a conversation about equality that up to 16% of our species have an IQ below 85, while around 2% have an IQ over 130. The harder you shake the pack, the easier it will be for some cornflakes to reach the top.”
A new era of austerity is calling
Wholesale privatization is a way to ‘shake the pack’, as workers are forced to compete with their wealthier peers and institutions – from schools and hospitals to councils and transport services – are whipped to corporate entities. private.
Reducing structural inequalities would require taking some of the privilege of the elite and sharing it with the disadvantaged. It is therefore convenient for financially well-off people to claim that their superior cultural capital is the product of good genes rather than good fortune.
So, in their worldview, public assets should not be deployed to even the scales – but rather should strive to let the brightest succeed, no matter where they come from.
Race to the top, if done by private equity firms and their asset managers, will therefore fail on its own. It will be another way for Johnson to try to shake up the pack – allowing the wealthy to thrive, along with a few lucky lower-class interlopers, while the vast majority are tied to the circumstances into which they were born.
There is of course an alternative. Over the past decade, Preston Council has offered public contracts to local businesses rather than outsourcing giants or hedge fund capitalists. This localist approach – the ‘Preston model’ – has been widely acclaimed, providing good services to locals and boosting the local economy.
Practical solutions exist. The ownership model is neither desirable nor inevitable, nor are endemic inequalities.
OUR JOURNALISM DEPENDS ON YOU
Signing time is funded by its subscribers. Receive our monthly print edition and help support independent, fearless journalism.
new to Signing time? Please find here more information about us
SUBSCRIBE TO THE PRINT EDITION
A new type of journal – independent, fearless, outside the system. Fund better media.
Don’t miss any story…
Our main investigations include: empire and the culture wars, Brexit, crony contracts, Russian interference, the coronavirus pandemic, democracy in danger and the crisis in British journalism. We are also introducing new color voices to Our Lives Matter.