Banking excess may save us from the police state

As the Government surveys the wreckage of its long struggle to imprison people for 42 days without charge, the defeat should bring a re-think on security every bit as profound and as necessary as the one about finance a few ministries to the east.

The bankers took risks with our economy out of corporate and personal greed for profits, bonuses and sports cars. But the securocrats risked something even more important, our very freedom as a society, out of political and bureaucratic greed for power, results and the imprimatur of toughness.

The bankers blindsided us with incomprehensible financial instruments. The securocrats traded in off-the-record mumblings about unspecified dastardly threats. Whenever the alleged threats were scrutinised in court, or by a judicial inquiry such as Lord Butler's, they always turned out somewhat less dastardly than claimed.

It all started with the security industry's own, only too horribly literal Big Bang September 11, 2001. Exactly as al Qaeda planned, 9/11 led the Government down a slippery slope, gradually dismantling ever more of the liberal, democratic state the terrorists so loathed.

So they gave us control orders where first foreign, and then British, nationals could be locked up indefinitely without even knowing the evidence against them. They gave us extraordinary rendition; the CIA snatch planes, taking suspects to be tortured, used British soil, despite repeated ministerial denials.

They gave us no-proof-required asset confiscation orders, which ended up being used against Icelandic banks; no-evidence-needed extradition treaties which ended up being used against people in the City; and detention powers which ended up being used against peaceful demonstrators, such as a pensioner who shouted "Shame" during the Labour conference.

Above all, they kept trying to give us extended detention-without-charge, the everlasting Duracell bunny of anti-terror legislation, the one based not on the European Convention on Human Rights but on the Wile E Coyote Law of Cartoon Physics (every time it was flattened in a head-on collision with Parliament, it would simply pop straight back to life).

The power was first demanded, as 90 days, in August 2005. It was excessive; no other democracy asked for anything like it. The struggle has consumed more than three years of ministerial and official time. And at no point over that period has any minister or official ever been able convincingly to explain why.

It has damaged two prime ministers, three home secretaries and a Metropolitan Police commissioner, Sir Ian Blair, whose decision to send his officers into the Commons to lobby for 90 days marked the beginning of the end for him.

Just as the financial crisis is raising Gordon Brown's stock, at least for now, so the 7/7 bombings briefly restored Tony Blair's authority. But within weeks the then PM had squandered the mood of national unity, and his own revival, by playing politics over 90 days.

It has caused more important damage to the entire system, alienating the law enforcement authorities from the people whose co-operation they need, and undermining their credibility. Because the police spent too much of their time campaigning for harsher powers, it made necessary and justified arrests look like part of the campaign, even if they weren't.

At least the banks made a few people rich. By the Government's own admission, its anti-terror measures have made no difference at all to the terrorist threat level, which remains "severe", meaning that an attack is "highly likely". There has also, according to MI5, been a "significant growth in the number of people involved in Islamist extremism".

Nor is extended detention the only part of the state's security philosophy to collapse. All the other measures I mentioned are gradually being unravelled, too, by the courts, by media exposés and by their sheer impracticality. Control orders have been downgraded to house arrest. It has become harder to lay out the welcome mat for torture flights.

Detention without charge, a policy designed almost entirely to make politicians look tough, has ended up instead making them look stupid. It is the third rail of British politics; anyone who touches it ends up hurt. It exemplifies how anti-terror policy has come to rest on the totally mistaken focus of demanding ever more powers and passing ever more laws: not just wrong in principle but at best a distraction, at worst an impediment, to the real struggle. 

The battle against terrorism must be fought in hearts and minds, schools, mosques and prisons, and the best weapon against its manifestations is the ordinary criminal law. Terrorism thrives on a sense of persecution; we must deny it that dignity. The new philosophy must focus not on grand, divisive attempts to seize blanket powers, treating everyone as a suspect, but on boring, proportionate street-level policing and intelligence-gathering.

But does the security establishment realise that its old approach is bankrupt, and it's time to stop? I'm not sure it does. Even as the Home Secretary conceded defeat over 42 days, she said another attack could bring it back out for yet another run around the course. And even as they licked their wounds, the securocrats unveiled their grandest Big Brother project yet, a £12 billion database of everyone's calls and emails.

Quite apart from the privacy invasion, it is surely mad to search for a few dozen terrorists by swamping yourself with billions of messages sent by the innocent. The Government is about to add an enormous haystack to its collection of needles.

It may, in the end, be the excesses of the bankers that save us from the excesses of the police state. Buying RBS and HBOS won't leave much over for email databases, ID cards and the other horrors on the Home Office wish-list. And now Gordon has a real economic crisis to be Churchillian about, he won't need a security blanket to make him look tough.