Reality check for Labour

This week we have had the amusing sideshow of the Lib Dem conference, accompanied by a much-derided apology from Nick Clegg over the tuition fees vote.

Which rather begs the question, why not a whole phalanx of apologies, starting with why they decided to go into coalition with the Tories in the first place?

Instead, as is their wont, the Lib Dems have passed a few motions vaguely distancing themselves from some of the nastiest aspects of the coalition - on secret courts, for example, and aspects of the benefit changes.

In a straw-grabbing show of populism, they also claimed that they want a redistribution of wealth. Just forget that they voted, to an MP, to cut tax rates for the wealthiest.

It seems incredible to note that not so long ago the Lib Dems were appealing to disenchanted Labour voters to come over to them. "We're to the left of Labour," "we offer a radical alternative," you may remember.

Despite the best efforts of much of the commentariat's finest, the election did not really work for them. They lost seats, ended up holding the balance in Parliament and opted for a coalition.

And just look at where we've come to since.

Despite occasional socially progressive-sounding noises from Britain's "third party," the coalition agreement owes more to the Lib Dem Orange Book than any other Lib Dem tradition. It's no surprise that their poll ratings continue to freefall.

However, as Labour prepares for its Manchester conference next week, it should not be too complacent. The results of the next election are no foregone conclusion.

The Tories are quite capable of mounting a populist campaign on Europe and immigration, presenting their austerity packages as "responsible" and spending the next two years blaming the poor for their poverty.

So a clear-eyed, dispassionate look back at the 2008 economic crisis is essential. Labour was still in office then. Its policies shaped events.

The banking meltdown was a combination of inadequate investment, weak banking controls and dubious credit and lending off the back of a property bubble in the US and Europe.

The government responded by pouring money into the banking system and printing more money - bizarrely termed "quantitative easing."

Yet what some referred to as "public ownership" of the banks was little more than a mirage.

The bank shares are held by a holding company and the government exercises very little, if any, control over the banks. It is required to sell the shares when a suitable opportunity arises - hardly nationalisation in the public interest.

The first example of all this was the government's sale of Northern Rock to Virgin Money for a mere £747 million.

It resolutely resisted any suggestion that the bank return to being mutual, as it was before new Labour permitted its entrance into the private sector under the leadership of its ex-CEO Adam Applegarth (salary £760k plus benefits), a close associate of Tony Blair.

If the Northern Rock example is followed by other "state-owned" banks, the assets will be quickly snaffled up and the debts will remain with the public.

Labour should demand that the banks be run in the public interest, that directors be appointed in the public interest and that banks invest in the public interest - in industry and infrastructure.

It shouldn't be necessary for Vince Cable to establish some sort of investment bank when, theoretically, we already own many of the banks.

The second conundrum Labour must confront is the funding of public services.

New Labour heavily promoted the private finance initiative. As a result, hospitals and schools have been left in the mire as the financiers take priority over patients and pupils.

PFI is a massive hidden debt. The advantage for government is that the debt is "off its books," but this is scant consolation for those who rely on Britain's public services, which are now struggling to keep their heads above water.

This week there have been huge demonstrations in Spain and Greece against yet another round of austerity. The jobless totals inexorably climb, the number of out-of-work young people is approaching the 50 per cent mark and their economies are contracting.

The suffocating austerity conditions imposed by the European Central Bank and IMF are not just about cuts but about rebalancing society against the poor in favour of the money men. Swathes of public assets are being flogged off for an old song.

Yes, Spain and Greece are different from Britain, but only by degree, not in the intentions of government. And the poverty and injustice remain the same in whichever country you care to look at.

There are lessons for Labour to learn here, too - the formerly all-powerful Pasok in Greece and PSOE in Spain were heavily trounced in the elections as they tried, and failed, to implement all that the ECB wanted.

So Labour prepares for the 2015 election knowing the hopes of millions are pinned to a fair and decent society that protects the welfare state and reverses the cuts and attacks on the most vulnerable.

The Lib Dems have enabled the Tories to enrich the wealthiest and most powerful and destroy much of the NHS and our welfare state - and their poll ratings need a magnifying glass to be seen.

When the labour movement turns out in force on October 20, they will not be asking for "fewer cuts and later" but rather a total rebalancing of society, away from the money men and in favour of the many. The Labour Party must take note.

Jeremy Corbyn is Labour MP for Islington North.