How to nationalise, and not nationalise, the banks.
Nationalising can take many forms. But the obvious one is to install civil servants on to boards of Directors. This mild form of nationalisation has not been taken by recent Labour Party policy. Instead the proposal is to ask the Competition and Markets Authority to investigate the possibility of a form of cartel between the big 5 banks.
By removing this technical task from the Labour Party, there will appear to be an objective set of recommendations that have apolitical legitimacy. The next step would be for the above Authority to implement these recommendations on the banks. This leaves the banks as private companies maximising their profits for their shareholders. This is how not to nationalise.
In the current political climate, with an election to win in 2015, there is a need for some creative thinking about nationalisation, and it’s implementation. If the Labour Party retains some distance from actual implementation this may be wise in terms of getting votes. Also, it avoids the traditional fear that the Party is not seen as very efficient in managing the economy.
However, what the Party does after winning an election in using it’s new authority is crucial. Depending on the technical recommendations, it could implement, some, none, or even add new controls. This may yet not be seen as nationalisation. But it is on the way!
The detail of which controls to adopt is important. But more important is to have at least some controls that have a good chance of working in the short term. This begins to deal with the traditional scepticism about Labour managing the economy. Then more radical controls can be attempted. For example, taking a share of banks’ profits annually would produce capital for a government controlled bank. With this annual income the government could do various popular things; reduce income tax for the low paid, give money to local authorities to build new houses etc.. Also the new bank would be seen as increasing competition.