Labour Party News

Cooper: “The Conservatives have proved slow to keep up with seismic events”

Labour’s Yvette Cooper has attacked Conservative failure over the banking crisis saying that they have recently “proved slow to keep up with seismic events,” and suggesting that repeated bad calls by the Conservative leadership are the result of conflicting ideology and not the “inexperience of opposition”.

“The Conservatives have resisted many of the measures needed to get us through the worst of the financial storm. They opposed Northern Rock nationalisation on principle. Last week George Osborne defended short selling, even amidst signs speculators wouldn’t flinch from pushing a fragile market over the edge,” she wrote yesterday in The Telegraph.

“Were this simply the odd bad call, it could be put down to the inexperience of opposition. But I think it’s more than that. Underpinning the Conservatives’ economic approach is a wider philosophy on “rolling back the state” and replacing it with the politics of “nudge,” where government steps back and simply encourages social values instead.

“Of course there are plenty of fields where social values are far better than state intervention, or where government action is not in the public interest. But sometimes only governments are big enough and legitimate enough to protect the public interest when markets spectacularly fail. Nudging speculators isn’t a fat lot of use when the stability of the entire banking system is at stake,” the Chief Secretary to the Treasury explained.

Yvette Cooper then blasted Cameron’s Conservatives for ducking the new reality of the economic times saying:
“The problem for the Conservatives is that they want to claim all the market problems are the result of failure of government. As a result they are blinding themselves to the importance of government solutions to the failure of markets. So rather than face up to the crisis in global private sector credit, they are desperate to claim the real problem is UK public sector debt.

“As well as being bad economics, this is a dangerous game for the Conservatives. Given the current pressures on our economy, it is right to increase borrowing this year — and we can do so exactly because we cut debt from the levels we inherited in 1997. The alternative Conservative plan of cutting borrowing right now and pursuing a balanced budget would hit the economy hard and seriously threaten public services too.”

Stressing that the times had changed, Cooper said:
“Totems are tumbling, shibboleths lie shattered. When the US Republican administration proposes buying banking assets worth more than several European countries put together, you know the normal rules are being torn up,” but that Labour is responding appropriately.

“Destructive speculative short selling has been suspended. We have changed competition rules to support financial stability too. And we will need to go further both to respond to fast moving events and to restore functioning markets in the public interest. Worried savers are angry. City reform is needed. Tougher regulation is being introduced,” she explained.

“No government can prevent global slowdown. But we can take the decisions to support financial stability, to help businesses and families through the tougher times, to support those who are hardest hit, and promote markets that function in the public interest to support growth for the future.

“But that depends on government playing a sensible role, not pulling out as the Conservatives have suggested.”

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