In 1984, Conservative MP John Redwood – described as the ‘consumate financial politician’ – birthed a fairy tale “Tilting at Castles” which would come to reshape the City of London, the Conservative Party and Britain. Redwood, the head of Margaret Thatcher’s No.10 Policy Unit told a tale that would result in the Big Bang deregulation of the City of London:
In Redwood’s medieval storyland removing regulations (read: rules which guard against market consolidation and protect consumers from financial rape and pillage) the peasant class would be able to cross the moat and share in the enormous wealth amassed by the Barons of high finance, feasting within the City walls.
Leading figures within Thatcher’s Government – including David Willets MP – warned as the City became more competitive: “the temptation to fraud or to unethical behaviour” would only increase”… “If it leads to scandals and liquidations it will be labelled the unacceptable face of unpopular capitalism.” Cabinet Secretary, Sir Robert Armstrong wrote to Nigel Wicks — Parliamentary Private Secretary (PPS) to Mrs Thatcher — expressing concerns with the “way in which corners are being cut and money is being made in ways that are at the least bordering on the unscrupulous.” In September of 1985 Mr Redwood wrote Thatcher, ensuring her there would be a new principle of ‘fair dealing,’ a duty of skill, care and diligence, and a duty of disclosure, claiming: “The person who has most interest in checking out the investment, and ensuring that he has not been twisted, is the ultimate customer himself.”
New regulation accompanying the Big Bang – notably the 1986 Financial Services Act introduced a system of self-regulation, that gave the finance industry significant autonomy to begin what we know call the financialisation of the British growth model. The harshest critics of the Big Bang contend that the UK peasantry in Redwoods deregulatory fable, face a malignant cancer that choked productive enterprise, redistributed wealth upwards, centralised financial and political power within the City, and which ultimately made the 2008 Financial Crisis and financing the Election Expenses scandal engulfing the Conservatives possible.
The same Big Bang deregulatory fervour is echoed in some versions of the economic case in favour of Brexit: turn the UK into European tax-haven if excluded from the single market by “European elites.” Rather than banishing the Knights and Barons of the City of London and democratising share ownership (the so-called ‘shareholder democracy’ of the “tell Sid” era). If Brexit goes this way it will usher in an era of rampant speculation and financial sector criminality, the likes of which have not been seen since the Wall Street Crash of 1929.
This new generation Knights, Barons, and Dames, whose fortunes (both politically and monetarily) have become increasingly interwoven with the fortunes of the Conservative Party. For example, the establishment of the Conservative Party Foundation in 2009, established to strengthen the financial future of the Tory party ahead of the 2010 election is a fascinating case in point, the Foundation exploits an interesting so-called tax loophole for large (tax free) donations, which the Conservative party has more of than all other parties. Established by ICAP CEO and former Conservative Party Treasurer – Michael Spencer (Chairman) explicitly as a tax free vehicle to accept large donations, including the tax free acceptance of entire wills and estates. This gives the Conservatives a significant advantage over the Labour Party and its supporting unions, whose donations from non-contract, salaried (PAYE) workers are taxed by Government before the donations can be made. This type of financial power gives the Conservative party “full spectrum dominance” over their competitors – leading to some speculation that this could lead to building a “one party state.”
Rather than lowering the draw-bridge, bringing down the walls of the Castle so that the peasantry could feast in the wealth, the Big Bang which ushered in the neoliberal age has enabled the rapid erosion of the labour movement as a political force and natural counterweight to British capital. The scale of the defeat of labour by capital, and its implications for inequality and poverty in society are now so stark, that even those who once staunchly advocated neoliberal policies, such as the former National Party Leader and Prime Minister of New Zealand Jim Bolger have said “neoliberalism has gone too far, and more power must now be given back to the unions.”