Yesterday saw a vital indictation of the viability of the coalition – and it was George Osborne who delivered an extremely good result.
Last week I blogged:
Next week, the EU Council of Ministers plans to adopt strict regulations enforcing transparency on hedge funds and private equity firms and limiting their leverage, ie how much they can gamble. NuLabour resisted these very sensible Franco-German proposals, because NuLabour was 100% bought by the City. The Tory right wants to oppose the plans because they are European regulations. Already we are hearing bleats that hedge fund managers will move abroad. Good. The attitude to these proposals will be an imprtant early indication of whether this government is more progressive than NuLabour.
This is from the lead story on the front page of today’s Financial Times:
The approval of the controversial rules by finance ministers follows a similar endorsement by a group of EU lawmakers on Monday and brings regulation of the “alternative investment” industry closer.
Mr Osborne decided not to use up political capital in Brussels fighting to dilute an EU directive that has been ferociously pushed by France and Germany
More to the point, these regulations had been ferociously resisted by New Labour, just as Brown and Mandelson had ferociously resisted Franco-German proposals to limit bank bonuses and apply other brakes on casino banking. New Labour’s total defence of even the most extreme practices of most unacceptable faces of capitalism – hedge funds and private equity funds – was sickening.
It was notable in the election campaign that the Tories stance on banking regulation – in their manifesto, their rhetoric and the leaders’ debates – was much stronger than New Labour’s, and closer to the Liberal Democrats. There was room to doubt if this was just election populism. Osborne’s decision yesterday is a welcome sign that he Tories really are willing to take on City interests to which New Labour were slaves.
But the significance does not stop there. This decision also shows Cameron and Osborne are prepared to take on their own Europhobes. There will be fury from the combined forces of private equity millionaires and anti-Europeans, being poured down the lines into Conservative Central Office today.
Osborne in fact cleverly played the pro-EU card in the ECOFIN meeting and used his agreement to fund regulation to push forward the single market in financial services – something which has been disgracefully obstructed on continental Europe.
A friend of mine in UKREP Brussels tells me this morning that the view there is that it is great to have Ministers who do not confuse the interest of the City and the national interest as automatically the same thing.
And the icing of the cake for the coalition is that these very proposals for transparency and limitation of risk of hedge funds and private equity funds were initiated in the European Parliament by Lib Dem MEPs – led by my old mate Graham Watson.