The story of the Northern Counties Building Society is instructive. Established in 1850 in the North East by dispossessed workers who pooled their funds to retrieve a home in the world it grew steadily over the years. It was part of the local economy and society, that most precious civic inheritance, a trusted financial institution. In 1965 it merged with another local institution, the Rock Building Society to become Northern Rock Building Society. It demutualised in 1997 and became Northern Rock, which sponsored Newcastle United and became the fifth biggest lender in the UK market. An institution that was founded by local people for local people and had partnered its region in good times and bad for a hundred and forty seven years, that had weathered four serious depressions and emerged stronger from each could not last through New Labour’s period in Government.

Regional Banks that are constrained to lend within a particular area are a necessary part of the institutional ecology in that they resist the centralising power of capital, allow a more stable access to credit for regional and smaller businesses and encourage relationships and reciprocity to constrain the demand for higher rates of return that have decimated the mutual bank sector in Britain. They also offer an alternative to usurious lending, one of the great growth areas in our economy. Any serious reflection on ‘employment policies’ must confront the centralisation of capital and the state and seek to constrain both through the endowment of decentralised regional and sectoral institutions that constrain centralisation and preserve and renew traditions of virtue within the economy through resisting the commodification of human beings, nature and knowledge demanded by the maximum return on investment. It allows initiative and enterprise to be oriented towards the future.

Over a period of 500 years the City has supported deregulation at every turn. The consequences of this are massive. You had fraudulent products – the cause of the crash – debt being repackaged as an asset and then being used as leverage. The assets they held and credit they generated were on a ratio of 50-1. There was no effective regulation of this, no effective oversight. They have been exposed by the bailout. They have refused more than ten years of requests from us [London Citizens UK organisation] and suddenly they agree to meet. I think they are concerned that the political parties will move to a more manufacturing, less financially-based economy.

The challenge for Labour is that there’s huge support for working class, from mining communities, from northern working class communities for UKIP, which wouldn’t be the case if they were a straightforward Thatcherite party. So an ability to engage with the rage and dispossession people feel is absolutely necessary for constructive politics. And how do you build a common good between locals and immigrants? How do you build a common good between north and south, between the small towns and cities? We’re not thinking of the levels of abandonment that people feel, and UKIP express that.

We must completely support the civil resistance throughout the Arab world. Corrupt secular nationalist rulers are as bad as corrupt undemocratic religious rulers. We must support the people all over the Muslim world with friendship and solidarity in support of democracy. We should be their partner in building mass popular trade unions to prevent them from exploitation in the market storm they are moving towards in their modernisation plans. Who on the left in Italy is working with the resistance to Gaddafi? I don’t know the answer to that but my suspicion is that there are not many. Again, you are on the wrong side of history on that. Support for democracy, for a democratic organised society, for resistance to capitalist domination and state despotism. That is the Blue Labour position. It goes without saying that China is the worst of all worlds, it combines market exploitation with state dictatorship. Blue Labour places unreserved solidity and support to the free democratic trade unions in China, and that is an important struggle for the Labour Movement all over the world.

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I was involved with organising migrant worker nannies, domestic workers, in New York State with the IAF. We flew them to a hotel, got them together, and got them to talk to each other about what their issues were. What was incredible was that out of those 300 nannies all of them were prepared to pay a not insubstantial part of their wages to join a union that could articulate their concerns. They were getting sexual harassment, exploitation. It only grew out of them meeting each other, they had to have that initial investment to get them together. They came from all over the world but what they found when they got together was they had the same issues. If people knew you could join a union, get on, and protect each other it would be transformative – we’ve got to find a way, to put it bluntly, of supporting good work. There needs to be a complete transformation of the language and agenda of unions.

I realised that over a few years through these London Citizens campaigns we’d developed a more radical political economy than the Labour Party. For me, it was catch up, catch up, catch up. I was always a Labour, secular, left-winger and this was all new. One of the big lessons for me was which people would turn up. If the mosque said 50 people, the Catholic church says 50 people, the local black church says 50 people, they turn up. When the trade unions said 50 people, no-one turns up. So suddenly the crisis of secular institutions and their reproduction came to me.

One massive issue is that [in government] we did not promote regional flourishing. To put it bluntly there was not enough private sector growth in the north east, the north west, the midlands and south west, and the south east was financially driven which had its own problems. I share your disposition about capitalism, but I look at Tesco and think, it’s cheap, healthy food, and it has transformed the lives of the poor. Yet we hate them. When London Citizens did a living wage campaign against Tesco what we found was enormous middle class loathing while the working class had a love for Tesco. They love the fact that the food was fresh and cheap and the environment was safe. And when they bought a small package of mince they didn’t have a butcher going, ‘Ah, tough week, eh?’ They didn’t feel humiliated. That’s just a tough example I put out there to say we’ve got to build alliances and relationships with the powers. We’ve got to look at how we can get Tesco to foster regional diversity.

The big thing that happened in the early to mid-90s was the last big discussion about political economy. Roughly speaking we went for endogenous growth, for flexible labour markets and the financial sector, and that was considered modern. The book that I wrote at that time was arguing that the German system – which had worker representation on boards, very strong vocational training, regional banks, very strong federal forms of democratic government – was actually better suited to globalisation because it preserved knowledge, trust, institutions, skills … Now, I think the results of our experiment are in and we really got it wrong.

Labour should be robust in supporting free and democratic trade unions throughout Europe, in championing a balance of interests in corporate governance and strong civic self-government with a deep partnership between universities, cities and firms. The question is whether being part of the EU hinders this. Britain is already outside the Eurozone and the Schengen agreement. It is gratuitous to remain part of a political union that is so hostile to diversity and democracy and so disposed to the consolidation of big capital that it has become a remorseless machine for the liberalisation of trade and the disintegration of society, in which the demand for liquidity has dissolved solidarity.

Labour was different to other European Social Democratic Parties in that it was never aggressively secular and was not divided by confessional fissures. Its founding act, the Dock Strike of 1889 was brokered by the Salvation Army and Cardinal Manning. It was never a revolutionary party that became more peaceable but was, from the start, committed to extending democracy within the inherited constitution. It also had a base of support among the working class that secured British democracy from Fascism and Communism and that was because of its paradoxical nature, as conservative as it was radical, as patriotic as it was nationalist. The greatest failure of New Labour is that it led rather than resisted the definition of the European Union as a neo-liberal project and did not develop a constructive alternative to the status quo. It seemed incapable of distinguishing between internationalism and globalisation.

The vision pursued by the founders of the EU was one of economic self interest, (subsidies, protection and investment) and lofty aspiration, (peace, prosperity and justice). It was predicated on a Europe without borders where mutual economic interests would lead to perpetual peace. A soft Kantian Marxism underpinned the European Union from the start, in which economic interests and a legal order would displace local institutions and national politics.

Labour has always been a coalition between workerist and progressive elements, liberals and conservatives, mediated by socialism. It was held together by the belief that we are social beings who resist the domination of capital through democracy; and by the refusal to accept that human beings are a commodity or that our inheritance is exclusively monetary.

Unfortunately, the comments were misconstrued. I was saying that we needed to speak to the supporters of the EDL, not, as some people made out, that we should speak to the EDL itself. The idea that we should speak to upset, angry and dispossessed people, to try build a better life together, must be addressed and historically the Labour movement has been the vehicle to do this. It is a broad-based approach. Where there are mass outpourings of discontent, you have two choices, either you demonise them or you break them.

This conference has a very weird atmosphere – it’s a different atmosphere. It’s an atmosphere of a superannuated student union. They’ve just stayed in the student union through a lifetime. Until we have the maturity and generosity to have a genuine understanding of New Labour our growth will be stunted. The present criminalisation and demonisation of Blair doesn’t help us get to that place.