Uncharted Territory

September 22, 2016

After the Brexit Referendum (4) – Why UK-Resident EU Citizens Should Get the Vote

Filed under: Brexit, Migration, Politics, UK — Tim Joslin @ 7:15 pm

I’ve mentioned in my previous posts (Free Movement vs Migration; Free Movement vs Work Permit Schemes and the Mobile Classes vs the Rooted Classes) in this so far fortnightly series that EU citizens living in the UK should be fully enfranchised, that is, able to vote in General Elections as well as local and regional ones, not to mention in any referenda that may be held.  In this post I want to approach the issue from a different angle.

To be crystal clear, my proposal is that anyone – EU citizen or not – who has legally lived and worked in the UK for a qualifying period of let’s say 3 years should be entitled to vote in all elections and any referenda, the same as UK and Commonwealth citizens.  Essentially I agree with the “If you live here, you can vote here” position advocated by Jon Danzig, a man who clearly has more than the one blog.

Simple arithmetic suggests it may well be the case that the Brexit Referendum would not have been lost had EU citizens had the vote.  But I believe the disenfranchisement has had much more insidious effects on our political discourse.  As Danzig notes, we’ve been “talking about them as if they’re not in the room”, during the referendum campaign, even more so afterwards, but also for years before.  Had politicians had to take UK resident EU citizens’ votes into account the tone of election campaigning over the years might well have been very different and we might never have had the Brexit referendum at all.

We’ve become accustomed to talking about EU citizens as separate from our “communities” – thereby undoing half a century of community relations effort, as I’ll explain another time – but exactly how can we justify denying them the vote?

Do EU citizens living in the UK have less of a stake in the country’s future than do UK citizens?  Well, they are living here, paying their taxes and reliant on the rule of British law and the provision of state services exactly the same as UK citizens, though of course the details depend on everyone’s individual situation.

Are they here only temporarily?  Well, they might be, but the 3 year qualifying period for a vote suggests at least some commitment to the UK.  The majority will most likely stay considerably longer, not least because most of them are in work.  On the other hand, some UK citizens may emigrate, maybe to retire abroad.  We don’t deny categories of UK citizens the vote on the basis that they’re statistically more likely to move overseas.  Even if EU citizens are more likely to leave the UK in the 5 years after a General Election, the number leaving will be only a fraction of those who have been here 3 years or more already, many of them for a decade or more, so the possibility hardly seems to justify denying all of them the vote.  Besides, I could even argue that the EU citizens who leave the UK during the 5 years after a General Election in some sense “speak for” the EU citizens who may move to the UK after that election, not having had a vote.

So there doesn’t seem to be a rational justification for denying EU citizens a vote in General Elections (or referenda) on the basis that they have less stake in the outcome – or less responsibility for the decisions taken by the elected government, for example in terms of paying taxes.

What about other responsibilities?  I’m thinking of the Colonel Blimps who “fought for this country” or rather whose parents or grandparents did.  Well, many EU citizens could argue that their parents or grandparents fought on the same side in the same wars.  More fundamentally, do we really want to grant the vote only to those who pass some test as to the contribution of previous generations?

OK, so what about future responsibilities for the defence of the realm?  For the vast majority of us that simply comes down to paying the taxes that pay for professional armed forces, taxes that apply to EU migrant workers as much as to UK citizens.  We don’t have conscription any more, but even if we did, would it even exclude the 18 year old children of EU citizens who’ve settled in the UK, children who may well be British citizens?

So there doesn’t seem to be a case for denying the vote to EU citizens living in the UK on the basis that they have less responsibility towards the country or have done less for it in the past.

What about ancestry, then?  On one talk-show during the referendum campaign I heard a woman suggest that her family had been in the UK for 700 years and that this gave her greater rights than her interlocutor, who, as I recollect, could only claim a century or two.  Well, I rather suspect everyone’s ancestry is more complex than that, judging by my own family history and that of those celebs who’ve explored theirs on some TV programme, the name of which escapes me just now.  The practicality of DNA tests to measure Britishness would be undermined by the mongrel nature of our nation, as well as, perhaps, by the political need to ensure the Royal Family score highly.  The blood-line idea is twaddle, isn’t it?

That leaves us with the idea of citizenship.  But that is undermined on two counts:

First, EU citizens resident in the UK have never had to apply for UK citizenship.  They have been treated equally with UK citizens under EU treaties (incorporated into UK law), for example, in their entitlement to grants and loans for higher education.  They haven’t even had to apply for Indefinite Leave to Remain (ILTR) as some foreign residents need to.

And, as I mentioned in previous posts, people don’t change their citizenship unless they have to.  Doing so may involve giving up some rights in their country of origin.  People don’t necessarily make a decision to stay permanently – that is something that just happens.  And they may reason that, depending on how the UK and other economies do, they might need to look for work in another EU country, Germany say, sometime in the future.  It wouldn’t make sense applying for a UK passport.  Besides, it costs around £1000 (for EU citizens) in the UK nowadays (an agenda item for the Brexit discussions, perhaps) and you have to do a stupid test, involving, I understand, the need to memorise the names of the Eastenders and Coronation Street pubs.  If the only advantage is getting a vote, the price is too high for most people.

The right to participate in the democratic process is surely a right, not something you may have to pay for.

Second, and here’s the kicker, other UK residents born overseas do get a vote, even if they’ve been here less time than EU citizens.  In general, non-EU citizens who want to reside in the UK either have to become UK citizens, giving them the right to vote, or apply for ILTR, which doesn’t confer the right to vote but is usually a necessary step to naturalisation.

So an EU citizen may have lived and worked in the UK for 10 years, the same as an American.  But the American has had more incentive to naturalise, since doing so may be necessary to ensure continued residency, for example, if they wish to spend time outside the UK (which could result in ILTR status lapsing).  Though, as I said at the outset, the American should have the right to vote even if they haven’t taken UK citizenship or even obtained ILTR.

And while we’re at it, why should one American living in the UK with ILTR status (or even without such status) not have a vote, while another who has become a UK citizen does have one?  Especially if the American who has become a UK citizen has done so because they wished to spend a few years abroad before returning to the UK?!

It’s absurd that the right to participate in the UK’s democracy depends on the details of the process you have to follow to maintain residency rights.

The big inconsistency, though, is with Commonwealth and Irish citizens.  When I first looked into this I thought Commonwealth citizens needed ILTR status in order to vote.  I now realise when I read the relevant explanation more carefully that they only need to be in the UK legally:

“A qualifying Commonwealth citizen is someone who has leave to enter or remain in the UK, or does not require such leave.”

So, not only are Commonwealth-born UK residents more likely to have become UK citizens – in order to lock-in their right to reside in the UK – than are those from the EU who’ve come to live here under the EU’s free movement provisions and who haven’t needed to lock-in residency rights (at least up until the Brexit referendum), they don’t need to become a citizen to get a vote anyway.

It might be worth pointing out that the Commonwealth now includes some countries – Rwanda and Mozambique – that have no particular historic connection to the UK.  They’ve merely joined the Commonwealth, perhaps out of dissatisfaction with their own former colonial power or simply to enhance their international profile or even just to create more competitive opportunities for their sportspeople!  Of course, in terms of affecting the outcome of elections or referenda, the number of UK resident Rwandan and Mozambique citizens is insignificant.  But it’s the principle that counts.

The franchise for UK general elections and national referenda is not only illogical but also discriminatory.

It should be amended forthwith on the principle of “If you live here, you can vote here”.

Furthermore, carelessness over this one detail may very well have cost us our EU membership, a disaster the scale of which only history will be able to judge, though perhaps they should place the portrait of David Cameron that, following tradition, will soon adorn the walls of No 10, right next to that of Lord North.

September 9, 2016

After the Brexit Referendum (3) – the Mobile Classes vs the Rooted Classes

Filed under: Brexit, Migration, Politics, Reflections, UK — Tim Joslin @ 9:53 pm

I’ve worked out why I’m overcome with rage whenever I hear Frank Field championing the needs of the “ordinary white working class”, in the Guardian’s words (it’s not clear whether Field actually said “white”), besides, that is, his uncanny resemblance to Ian Richardson’s Francis Urquhart in the original UK early 1990s House of Cards series.  I suspect that Field and I see the world quite differently.  Hence my irritation.

The contrast between Field and, for example, Gordon Brown could not be more stark.  It seems to me that Brown, and Blair for that matter, both share my view that, when in power, whilst they represented the British people – and they are patriotic – their concerns were not limited to the welfare of the British.  Others, Poles and Romanians, say, deserve no more or less than us Brits.  You could say that Brown, Blair and the many others who supported the Remain side, including myself, are internationalists, but there may be a more fundamental distinction – between open and closed thinking.  An example of closed system thinking is to carefully conduct a laboratory experiment, varying only one factor at a time; but the real world is an open system, with numerous uncontrollable variables.  Closed thinkers only want to worry about their own area of concern; open system thinkers grapple with complexity.  I’m sure Frank Field believes Poles deserve a good life just as much as Brits do.  I presume he just doesn’t think it’s his problem.

But that means Field has to ignore many of the people who make up today’s British society.  And it seems to me that the specific closed way in which he is thinking is to consider only what I will term the “rooted” classes, the people Labour has historically represented.  Perhaps this form of closed thinking explains in part why there’s not only a divide down the middle of the Conservative Party, but also a damaging – because the issue is so fundamental – schism in the Labour Party, the majority enthusiastic for Remain on one side and Field, Gisela Stuart, Kate Hoey, John Mann and Dennis Skinner, to name the most high-profile Brexiteers – assuming we take Corbyn’s Remain stance at face value – on the other.

Just because the Tories are divided over Europe doesn’t mean Labour has to be.  The vocal minority of Labour Brexiteers (4% of their MPs said Field) have done untold damage to the Party, as well as skewed the referendum debate by portraying Labour as more evenly split on the issue than it in fact is.  I expect many enthusiastic Remainers will transfer their allegiance to the Lib Dems, especially if Corbyn stays on as Labour leader.

So, to the point I wanted to make in this post.  It seems to me that we have to begin with the observation that within each social class, in the UK specifically, but also elsewhere – however many classes you want to define – we have a significant subdivision that I would describe as “mobile”.  For simplicity’s sake, I contrast these people with those we might term “rooted”.  So we have skilled and unskilled or “blue collar” and “white collar” working class who will seek employment only near where they live, which is most likely where their parents live.  “Community” – a term which I find to be another source of irritation, since it is far too often glibly used to refer to all those living in an area, whether they ever talk to their neighbours or not – is all important to them.  But we also have skilled and unskilled, “blue collar” and “white collar” working class, however you want to divide them, who are prepared to travel across continents for employment.

Many of the uber-rich are extremely mobile, seemingly basing themselves in multiple global centres or even, to rub in the point, on £200m yachts, though some are undoubtedly more rooted than others.  Though having said that, it occurs to me that it’s not unknown for even royal families to spend a generation or two in exile.

For large numbers of professionals – the middle classes, if you like – the employment market is national, if not international or even global.  In fact, given the custom in the UK of leaving home to attend university, many of us relocate, at least temporarily, while still in education.

Some industries are so concentrated in small numbers of geographical clusters – consider Hollywood, the City of London, the English Premier League – that, if you want work, you’re pretty much obliged to relocate.  Great cities, such as London and New York, are magnets for the aspirational. Companies increasingly require employees to relocate, often across borders – I’ve been told myself that “international experience” may be necessary for career progression.

Of course, not everyone, not even a majority, move to another country, but mobility has been a feature of the last few decades of globalisation.

Although many have emigrated for centuries, in particular to the New World, to some extent renewed mobility has recently trickled down to what Frank Field would call the working classes.  Or let’s put it another way.  Many families have become rooted over the last century or so, particularly in those former industrial heartlands we hear about that voted Brexit so strongly.  Their ancestors, several generations ago, left the countryside during the era of urbanisation ushered in by the Industrial Revolution.

Other families, such as my own, have moved intermittently for generations, around the country and around the world.  For many, moving for work, or for personal reasons, is just something you do.  You make a life where you find yourself.  I have never had any expectation of remaining in the same locality for my whole life.

Here’s my proposition.  At the present time there is a conflict of interests, at least in the UK, between the rooted classes and the mobile classes.  This was a critical divide between Remainers and Leavers in the Brexit referendum.  The rooted classes see the mobile classes as a threat.  This is particularly the case amongst Field’s “ordinary white working class”.  And, indeed, in some ways they are a threat, since as a society we have allowed rights and privileges to accrue to the rooted classes, in particular entitlement to housing.  But, as in the Industrial Revolution, as in the urbanisation of modern China, economic growth and development has always thrived on mobility.  And the economy never stands still.  You can’t make a decision to freeze the economy as it is – you’ll be destroyed by competition.  The mobile classes are essential to the process of economic renewal, to support technological change.  That’s why it’s a mistake for policy to be determined solely by the needs of the rooted classes.

A large part of the reason for the schism in the Labour Party, then, is that the Brexiteers, particularly the likes of Frank Field, see themselves as representing the rooted “ordinary white working class”.  And, to be honest, they have a point, if they take the narrow view that they represent those who vote for them.  Because we – the UK and the EU – have shamefully allowed the mobile classes to become disenfranchised.  Not only were citizens of other EU countries living, working and paying taxes in the UK denied a vote in the Brexit referendum, so, ludicrously, were UK citizens living overseas, even in Europe, if they’d left this country more than the arbitrary number of 15 years ago.

In part this disenfranchisement has occurred because the rooted classes are seen as privileged.  And see themselves that way too, no doubt – I’m sure there is a certain kind of Brit who would be apoplectic at the idea of giving the vote to “EU migrant workers”.  It’s this idea of the “nation” as a people, rather than a place, of course – an idea which perhaps another time I will argue is unsustainable, though I doubt I have anything new to say on such a longstanding and tediously emotive question – together with the idea of citizenship, which rather ignores the fact that a large part of the point of free movement of labour in the EU was to avoid the bureaucracy and emotional hurdle of the citizenship process.  The aim of course was to create a mobile workforce, with individuals perhaps working in the UK today and Germany tomorrow – something Brexit will no doubt make a more common experience!

But citizenship is only a piece of paper (or a bit in a Home Office computer these days, I suppose).  Granting citizenship to immigrants doesn’t necessarily reflect either commitment on the part of the new arrival, though of course it may often do so, nor assimilation into British society.  People become citizens in large part because they need to or perceive that they need to, especially given the significant cost involved to apply in the UK nowadays.  And EU citizens living in the UK under free movement provisions in EU treaties haven’t needed to become citizens, even though they may be just as committed to the UK and integrated into our society than arrivals from elsewhere who have taken citizenship.  In fact, EU citizens have not up to now had to apply for “indefinite leave to remain” in the UK, a status which gives citizens of Commonwealth countries the right to vote in General Elections and referenda.

Thus recent immigrants to the UK from non-EU countries who became UK citizens soon after arrival in this country were able to vote in the Brexit referendum, whereas citizens of EU countries who’d lived here for decades were not.  Compounding the problem, citizens of Commonwealth countries with UK residency status were also allowed to vote, even from those Commonwealth countries which were never British colonies, as in the case of francophone Rwanda and Mozambique, who seemingly joined the Commonwealth out of dissatisfaction with their own former colonial power.  And the status of citizens of Zimbabwe, suspended from the Commonwealth, was so unclear, I had considerable trouble finding out whether or not they were allowed a vote (for the record, I’m pretty sure they were)!  Most of these enfranchised non-UK citizens were also non-EU citizens, but there is in fact overlap between the Commonwealth and the EU, so citizens of Malta and Cyprus could vote.  As could many hundreds of thousands of Irish citizens living the in the UK, for separate historical reasons.  You could hardly make it up.

The electoral bias against the mobile classes arises not just from the electoral franchise, though.  Even when they have the vote, people may not know who to vote for.  They are likely to be unfamiliar with the UK’s political parties.  And our political structures are geographically based, favouring the rooted classes.  Those who have lived in an area for many years are much more likely to join political parties.  Not only will they have an understanding of local issues, they are also much more likely to see their involvement as a worthwhile investment of time.  The political agenda is consequently driven by the rooted classes.

The idea of the Brexit referendum, indeed, any electoral process, was to weigh the views of all those affected by the decision – in this case all those with a direct stake in the UK’s membership of the EU.  Excluding large numbers of the mobile classes simply biased the vote.  For the mobile classes the opportunities provided by the EU may outweigh any downsides, whereas for the rooted classes aspects of the EU may seem a threat, perhaps one not sufficiently counterbalanced by the benefits to the UK economy.  To reach the right decision all these individual experiences need to be taken into account.  And since the outcome was 52% plays 48% – a difference of a bit over a million votes – somewhat less than the number of EU citizens living in the UK but denied a vote, let alone the total if we also took into account the UK citizens who’ve been living abroad for more than 15 years, it’s very likely that we’ve actually reached the wrong answer as to what is best for the UK.

March 18, 2013

When Politicians Go Mad (Part 1): The UK’s Press Royal Charter

Filed under: 2010 General Election, Media, Politics, UK — Tim Joslin @ 5:30 pm

What is it about Clegg, Cameron and now Miliband? Who the hell do they think they are to repeatedly attempt to make constitutional decisions for all time?

I refer, of course, to the clause in the proposed Royal Charter for the Recognition Panel for UK press regulation (pdf) that allows the Charter to be changed (or terminated) only by a 2/3 majority in both Houses of Parliament.

The last time I became agitated about the UK political process was in a couple of posts, It’s the Executive, Stupid and (presciently) Adieu, AV, both written shortly after the 2010 election when inter alia Clegg and Cameron were attempting to lock us into 5 year fixed term parliaments for all time. It seems Miliband has now joined the party as well, since (as far as I can gather) he’s all for the 2/3 majority clause.

Quite apart from the merits of the particular media “legislation” represented by the proposed Royal Charter, it seems to me fairly obvious that all legislation should be under continual and periodic review, in the same way as an organisation’s Business Plan or a Project Plan. Are the organisational structures and processes that have been established actually meeting their objectives? Not that our politicians ever define any objectives or goals in the first place, as I might have mentioned before.

And – to continue stating the obvious – circumstances may change in future. After all, the media domain is evolving at a rapid pace.

And to claim that the current mediocre generation of politicians have a level of wisdom and insight that will never be exceeded in future would be to invite ridicule.

What we’re about to get is a “Royal Charter for the Recognition Panel for UK press regulation”. Yeap, Parliament is going to be two removes away from what amounts to Press Complaints Commission (PCC) 2.0. Instead of defining the terms of reference of a press regulator, a “Recognition Panel” is being set up to “recognise”, that is (as I understand it), license one or more potential regulators. The Charter includes some vague guidelines as to the recognition criteria.

The idea of the Royal Charter rather than normal legislation is to somehow make it seem that government isn’t “interfering” with press regulation. Come on! What exactly is Parliament there for if it’s not to make laws? We elect our MPs, not our media barons. And who’s being fooled by the Royal Charter device anyway? The irony is that a Royal Charter can – again, if I understand the arcane procedures correctly – be modified more easily than normal legislation, i.e. by the Privy Council who (it seems) advise the monarch who is obliged to take heed, thereby making any future government interference possible without consulting Parliament! Hence the need for a clause requiring the approval of the House for any changes. Which makes it legislation for those who don’t think it is already. Except, of course, for those still claiming it’s not legislation.

The Parliamentary response to Leveson seems to me to have degenerated into insanity. A bandwagon (that would be – surprise, surprise! – in the mainstream media, not through widespread mass-participation campaigning) has developed around a bizarre idea that the Press (or “free speech”) should not be limited by law. Even though “free speech” is already constrained, most notably by laws against libel and contempt of court. When people invoke vague principles, in this case “the right to free speech”, you can be pretty sure that’s cover for another interest. To state the obvious, the media are simply trying to preserve as much of the status quo as possible. And Cameron is taking their side to keep them sweet and because the status quo serves the Tories quite nicely thank you.

I want Parliament to do its job and debate and agree what the Press can and can’t do. To lay down in law, in as much detail as required, how the right to free speech is limited by the need to preserve other rights. And to fix the law in future as and when further problems arise.

For me the issue is privacy. I’d like a right to privacy enacted in law, not subject to interpretation by a Regulator accountable to a Recognition Board established by unamendable Royal Charter. Remember, the papers are allegedly in trouble not for allegedly invading privacy per se, but for allegedly doing it in ways that happened to allegedly be illegal (and allegedly getting caught), i.e. by allegedly hacking phones, allegedly buying information from alleged public officials and so on. In some alleged cases they might have been able to obtain the same information by legal means, e.g. kiss and tell.

The real danger with the Royal Charter is that the press regulation it produces will be ineffective (which is quite likely as, if my understanding is correct*, the actual regulatory board(s) will be 2/3* industry – inevitably acting in their common interest – and only 1/3* lay) and, with a 2/3 majority for change required in both Houses, either of the two main political parties will be able to veto any changes to fix the problem, for their own narrow ends.

PS I see the Guardian’s political blog has just posted news of a dissenting voice in Parliament:

“Charles Walker, the Conservative MP who chairs the Commons procedure committee, told PoliticsHome he was unhappy about the provision in the royal charter saying it could only be changed by two-thirds majority in the Commons and in the Lords.

‘It’s not how we do things in this country. It should be a 50% plus one majority. Parliament could pass a bill to overturn it anyway. The only precedent for this is the fixed term parliaments, and I voted against that on the same basis.’ ”

Hear! Hear!

——–
* This is incorrect. It’s the committee drawing up the media standards code that is weighted towards the industry. According to the latest (18th March) version of the Charter (pdf), Schedule 3, clause 5, the Board itself must:

“b) comprise a majority of people who are independent of the press;
c) include a sufficient number of people with experience of the industry who may include former editors and senior or academic journalists;
d)not include any serving editor;”

Clause 7 keeps changing and now reads:

“The standards code which is the responsibility of the Code Committee, must be approved by the Board or remitted to the Code Committee with reasons. The Code Committee will be appointed by the Board, in accordance with best practices for public appointments, and comprised of equal proportions of independent members, serving journalists (being national or regional journalists, or, where relevant to the membership of the self-regulatory body, local or on-line journalists) and serving editors. There will be a biennial public consultation by the Code Committee, the results of which must be considered openly with the Board.”

Sorry for any confusion.

July 19, 2012

We Need Rules, not Rulers: Culture, Bankers and the Mervyn King Question

Filed under: Barclays, Business practices, Concepts, Credit crisis, Economics, LIBOR, Politics, Regulation, UK — Tim Joslin @ 4:18 pm

The aim of any self-respecting blogger is to make original points. I’m no exception, so it is time to start to wind down this thread on the Libor “scandal” (previous instalments: Saint Mervyn: King by Name, King by Nature; Bashing Barclays Badly and Battling for Mount LIBOR, the Moral High Ground), for the world has in many respects come round to my way of thinking.

Yesterday’s City a.m. egged on the politicians with the momentarily confusing headline:

MPs CALL FOR CAP ON KING’S POWER

and opening salvo:

“REGULATORS grossly overreached themselves by forcing Bob Diamond out of the top job at Barclays, top backbench MP Andrew Tyrie declared yesterday…”

And the refrain “Who will guard the guards?” echoes through the land (and I noticed has even seeped, with the rapid mutation typical of memes, into the consciousness of the brigade of the commentariat more concerned with the easy target of the G4S Olympic security fiasco).

One of our heroes, already mentioned in despatches from the front-line, Hugo Dixon, has another piece on his Reuters blog, discussing how the Governor might be reined in:

“Holding the next governor accountable will be as important as choosing one. The Bank of England was rightly given considerable independence in 1997 to prevent politicians meddling in monetary policy in order to advance their electoral interests. But the institution and its leader have slipped up on enough occasions that leaving them entirely to their own devices isn’t a good option either.

For example, King didn’t sound the alarm loudly enough during the credit bubble and was slow to act when there was a run on Northern Rock, the mortgage bank, in 2007. He then long resisted any investigations into the Bank of England’s own failings in managing the crisis. Now its hands-off approach to the Libor scandal is being revealed.

Based purely on its record, the central bank wouldn’t be receiving extra powers. However, the Conservative-led government has tried to pin the blame for the credit crunch on the previous Labour government’s policies – in particular, its decision to take away the central bank’s responsibility for banking supervision. Hence, it has become politically convenient to reverse that move.

Given this, the priority should be to enhance the Bank of England’s accountability. Under the current system, the government sets inflation targets and picks the governor. It also chooses the deputy governors and members of two committees: the monetary policy committee which sets interest rates; and the financial policy committee which will soon be responsible for financial stability. Their independent members help prevent the governor becoming too dominant.

The Bank of England also has a board, called the Court. But this has been largely ineffective. Though it has recently stepped up its scrutiny of the central bank’s executives, it is hamstrung because it rightly has no say over policy or who is the governor.

Meanwhile, parliament can call the governor and other senior officials in to give evidence. Although this is a potentially important check to the central bank’s power, MPs haven’t yet used this tool effectively.

One way of improving democratic control would be to give MPs the right to hold nomination hearings and, in extremis, reject the government’s choice for governor and other top positions. Indeed, that’s what parliamentarians want. But the government is resisting. If MPs are to change its mind, they must first show they are up to the job.”

Let’s come back to this when we’ve diagnosed the problem.

Because I still feel I haven’t made my point fully.

What the Libor affair shows us is that regulation must be mechanical, not moral.

This is a lesson we failed to learn from King’s behaviour during the financial crisis, despite his starving the UK banks of liquidity in a misguided attempt at preventing “moral hazard”; his expressed desire to stitch up Lloyds shareholders with a backroom deal to take over Northern Rock; and the actual outrageous stitch-up of Lloyds shareholders with a backroom deal to take over HBoS without adequate due diligence, to which he must at least have given a nod.

My first post on the Libor-fiddling topic touched on the subject of culture:

“The excuse for laying into Diamond seems to be some problem with the ‘culture’ at Barclays. Is it any different to that at any other investment bank? Doesn’t the ‘culture’ in any occupation go with the turf? Presumably they don’t want traders to behave like, say, Premier League footballers, or Hollywood actors. Something less flash perhaps: doctors, say or IT guys. But would they still be able to do the job? These occupations surely require quite different qualities and aptitudes. Maybe something a little more sales oriented, perhaps, then: used car dealers or estate agents. Or politicians! But are these professions more or less honest than investment banking? I’m stuck. Perhaps our politicians could spell out exactly how they want investment bankers to behave.”

The aim of yesterday’s post was to develop the idea that the “scandal” is being treated as a moral issue. There’s something “bad” about Barclays, we’re told, and the Bank of England Governor, with ex officio moral authority, judges it comes from the top and fires the Chief Executive.

But what is “culture”?

This is what an editorial, “Culture shock”, in yesterday’s FT (I’m getting my full £2.50 worth!) suggested:

“Culture is not a fluffy chimera of business how-to books or self-congratulatory corporate reports. Culture, real and unnoticed as the air we breathe, is the web of unspoken mutual understandings that frame what people expect from others and think is expected of them. This web shapes the fortunes of any organisation or social group. Bob Diamond, Barclays’ disgraced ex-chief executive, knew this; he once declared ‘the evidence of culture is how people behave when no one is watching’. He was right…

… [non sequiturs omitted]

A culture cannot be heavy-handedly ‘managed’ by legislation or compliance rules alone. It must be more subtly cultivated and tended.”

OK, we can all agree that behaviour within an organisation is determined by executive example and communications; organisational stories; dress code; building architecture, location and decoration; the presence or absence of game rooms; and so on and so forth – as well as the nature and demands of the work, as I previously stressed. But within all that complexity, all we’re really concerned about here is that rules are followed. There may be indirect ways of achieving this goal by means of some kind of arcane cultural alchemy – would Fairtrade coffee, beanbags and dress-down days work? who knows? – but most people would consider it sensible to simply focus on the outcome.

Obviously the “rules alone” are not enough. There also needs to be an expectation of enforcement. A rooting out of dishonesty. And maybe by spending £100m on investigating Libor-fixing rather than, say, carrying out some “routine email housekeeping” (didn’t something like that come up with News International?), Barclays have shown a willingness to steer their internal culture in the direction of obeying the rules.

With this unsatisfactory view of “culture” in mind, let’s consider the crucial question for the future, the “Mervyn King Question”: Is it possible for the Governor to both exercise moral authority AND for there to be effective oversight of the role?

No, of course not. The Governor can’t both exercise his judgement AND explain the detailed reasons for a decision. If he can explain the precise reasons to whoever he, the Governor is accountable, for example those for firing Bob Diamond (“he broke rule 44b clause 3, which is a sacking offence”), then by definition he isn’t exercising judgement.

The Mervyn King Question suggests then that we have to decide which way we jump. Do we want, in the modern world, to trust the personal judgement of an unelected official, or do we want a team expert in banking regulation to ensure that the rules and sanctions for breaking them are clear to banks and that bank behaviour is monitored and the rules enforced?

Do we want a ruler or do we want rules?

The traditional role of the Governor of the Bank of England was one of arbitrary power. This is where Mervyn King believes we should return. No wonder the job of Governor is so coveted.

But there’s a different path. Surely we’d be better off rejecting the moral approach and focusing on the technical aspects of the role of Governor of the Bank of England?

Let’s take as an example the critical case, where it all started to go wrong, when I first became concerned about the outlook of Mervyn King. Instead of arbitrarily allowing banks (such as Northern Rock) to fail to try to prevent “moral hazard” shouldn’t the Bank have made the rules absolutely clear in advance? NR would not, I’m sure, have relied on interbank funding had it’s executives known that funding may be allowed to dry up and they would have to retire in disgrace.

I would suggest that the Bank start by announcing that it will not allow any Bank to fail due to systemic problems (as opposed to Baring-style sudden catastrophic losses), but will provide liquidity as lender of last resort. What constitutes “systemic” would need clear definition, as would the cost of such support which would include a requirement for banks to raise capital. We have to recognise that we can never allow banks to fail under stress – such failures simply cascade through the economy – and dismiss the nonsense that such a backstop is some kind of subsidy for institutions that are “too big to fail”. This is like saying that Tesco is subsidised because the State provides resources for the prosecution and punishment of shop-lifters.

The Libor-fiddling that mattered – that before the financial crisis – was arguably criminality, pure and simple. It was orchestrated by a small group of traders who knew they were breaking the rules, as their emails make clear: “I would prefer this not be in any book!”, “if you breathe a word of this I’m not telling you anything else” and so on. It became a “scandal” because politicians – principally Ed Miliband – immediately made hay. But business isn’t politics. It’s not primarily about character (neither should politics be, of course, but the UK political process is becoming ever more Presidential and less policy-driven). The danger of allowing the political process to drive banking or other business regulation is that there is no satisfactory answer to the Mervyn King question. Even were we to confer moral authority on the Governor as we do the Prime Minister (who is not only elected, but easier to get rid of than the Governor – men in grey suits and all that), business is not hierarchical like government. It is fundamentally about choice and competition. Differences in outlook are necessary.

Dismissing company bosses in an attempt to change the corporate “culture” would seem to necessarily worsen group-think. If all our banks had been the same perhaps they’d all be part owned by the State now. Perhaps they’d all been like HBoS. As it is, Barclays managed to recapitalise without calling on government funds, Santander expanded and the “elephant” HSBC simply marched on barely affected. Diversity matters.

At worst, of course, there is no difference between condemning a bank’s culture and firing the boss simply because you don’t like the cut of his jib.

I promised I’d return to the points Hugo Dixon made. We may well need some or all of the means Dixon suggests for holding the Governor to account. But before we can do that, Parliament needs to step back and look at how the Governor’s role is defined. They need to review his Terms of Reference. Make sure he’s clear what the rules are.

July 18, 2012

Battling for Mount LIBOR, the Moral High Ground

Filed under: Barclays, Business practices, Credit crisis, Economics, FT, LIBOR, Media, Politics, Regulation, UK — Tim Joslin @ 4:17 pm

If you’re going to watch one film about the Vietnam War then I recommend Hamburger Hill. The point of the film for me at least (other discussions of the movie fail to stress this point) was that the battle was not about the strategic value of the eponymous high ground. Rather, both sides were trying to demonstrate their determination.

Catching up with an episode of Mock the Week last evening, I chanced on a rant by the one I would refer to as the tall, skinny panelist with dark curly hair, had the internet not been invented purely to allow me to remind myself that his name is, in fact, Chris Addison. The comic – who I always feel differs from his generally less hirsute colleagues in looking less like a funny-man, and more like a particularly tedious sociology lecturer – observed at some length that everyone is furious about the Libor “scandal”, even though most of them they don’t have a clue what it’s about. Well observed, in my opinion.

My first post on the Libor topic attempted to convey this moral dimension – and the battle for authority – with its title, Saint Mervyn: King by Name, King by Nature, but perhaps I wandered slightly off the theme, in favour of providing a narrative.

It seems clear after Mervyn King’s appearance before the Treasury Select Committee yesterday, though, that the Governor chose the Libor issue as the ground on which to continue a war with the City, and in particular with Bob Diamond. We’re told that Diamond’s sacking was not just about the Libor issue, but about Barclays’ “culture”, and a “pattern of behaviour”, as discussed in correspondence between Lord Turner, head of the FSA and Marcus Agius, Barclays’ Chairman. It seems clear that nothing new had emerged to implicate Bob Diamond personally and that King therefore simply seized the opportunity to get rid of him. Here’s how the Guardian puts it in an editorial:

“And why exactly was Mr Diamond pushed out? Not for any direct involvement in the Libor scandal but, in the words of Mr King yesterday: ‘They [the bank] have been sailing too close to the wind across a wide number of areas.’ No actual infraction; just a general sense of having gone too far for too long. … The impression left is of rather rough justice.”

Indeed, I’m reminded, the Libor scandal itself is nothing new. Although I now seem to have run out of free views of FT.com pages (so pushed the boat out and bought a copy this morning – £2.50, they’re having a laugh!), I did manage to access an old story that I’d bookmarked:

Banks served subpoenas in Libor case

By Brooke Masters and Patrick Jenkins in London and Justin Baer in New York

Regulators probing alleged manipulation of a key interbank lending rate have focused their demands for information and interviews on five global banks, according to people familiar with the investigation.

UBS, Bank of America, Citigroup and Barclays have received subpoenas from US regulators probing the setting of the London interbank offered rate, or Libor, for US dollars between 2006 and 2008. …”

Who says bookmarking thousands of interesting news stories is a waste of time, eh?

And this one FT story contained links to pieces in the FT’s Lex and Lombard columns, as well as another story the previous day:

“Big banks investigated over Libor

By Brooke Masters and Patrick Jenkins in London and Justin Baer in New York

Regulators in the US, Japan and UK are investigating whether some of the biggest banks conspired to ‘manipulate’ the benchmark interest rate used to calculate the cost of billions of dollars of debt.

The investigation centres on the panel of 16 banks that help the British Bankers’ Association set the London interbank offered rate, or Libor – the estimated cost of borrowing for banks between each other.

In particular, the investigation was looking at how Libor was set for US dollars during 2006 to 2008, immediately before and during the financial crisis, people familiar with the probes said.

The probe came to light on Tuesday when the Swiss bank UBS disclosed in its annual report that it had received subpoenas from three US agencies and an information demand from the Japanese Financial Supervisory Agency. …”

When were these stories published? 15th and 16th March, 2011.

Now, I may not be willing to fork out for an FT subscription, but I’m sure Bob Diamond and Mervyn King are. In fact, they probably receive the “Pink’un” as a perk of their jobs.

Regular readers will know that I’m very guarded in anything resembling an accusation that I may occasionally make on here, but it does indeed beggar belief that everyone involved is claiming to have been unaware of the brewing Libor scandal – a matter relevant to banks’ annual company reports – until the last few weeks, since even I knew about it, and the Libor-setting process was, until this month, of course, of somewhat peripheral interest to me, and even that overstates my curiosity. My £2.50 copy of the FT quotes Mervyn King on the front page as saying:

“The first I knew of any alleged wrongdoing was when the reports came out two weeks ago.”

Doesn’t the Governor read the FT? If not, why not?

To the extent I worried about it, I assumed the likelihood of fines over Libor-rigging was “in the price” of bank shares (we must be at the point where banks start assuming a few hundred mill in fines each year as part of their business plans, and therefore product-pricing). Active investors must have also thought bank share prices took account of the Libor investigation, as otherwise they would have sold the banks, short if necessary.

As I mentioned yesterday, Libor manipulation – much of which occurred during the financial crisis when the numbers were guesses anyway – would seem to be less serious than HSBC’s desultory attitude towards controls to prevent money-laundering. (Rather predictably, HSBC have seemingly gone overnight from one extreme to the other: I have recently had an HSBC account, to which I log in online 2 or 3 times a month, locked down – “suspended” so I can’t even pay into it – for no apparent reason).

No, Libor has been chosen as a battleground.

Sacking Bob Diamond makes no sense otherwise. Barclays report that they spent £100m “to ensure no stone has been left unturned” in their internal investigation and have settled early with the regulators. Since this has not been enough to keep the top guys in their jobs, perhaps their successors will adopt a different strategy next time!

And, like a misjudged military intervention, the battle threatens to turn into a war, consuming its instigators.

Mervyn King has clearly over-stepped his authority and threatened his legacy: “It is the BoE that finds itself most directly in the line of fire”, writes the FT’s Chris Giles. Not only are more and more awkward questions being asked in the UK, the regulators across the Pond are now playing holier than thou. That FT front-page lead (taking precedence over a report of the HSBC compliance chief quitting during a US Senate hearing!) is titled: “Bernanke calls Libor a ‘flawed’ benchmark”, and observes that “Mr Bernanke’s description of how the US reacted [earlier, in 2007] to claims that banks were understating the rates at which they could borrow contrasted with testimony yesterday from Sir Mervyn King.”

Mervyn King’s “pattern of behaviour” suggests to me that he may have been bullied at school. If not, I rather suspect he’s now going to find out what it’s like at his regular central-banker get-togethers.

July 12, 2012

The Pensioners’ Crusade

Filed under: Complex decisions, Economics, Inequality, Politics, Public spending, Reflections, UK — Tim Joslin @ 12:06 pm

I noted on Tuesday Nick Boles’ suggestion in a keynote speech at the Resolution Foundation (pdf) to limit certain pensioner benefits to the less well-off:

“Spending on universal benefits for the elderly (the Winter Fuel Allowance, free prescriptions, free bus travel and free TV licenses for the over 75s) reached roughly £4 billion in 2010/11.

I know that this help is vitally important for many older people – and a step away from universal provision of these benefits after the next election would need to be handled very carefully as many members of this generation are admirably reluctant to make a fuss, even when they really need help.

But, does anyone here think it would be responsible for a country in our financial position to go on giving a free TV license to Michael Winner, free prescriptions to Lord Sugar and a winter fuel allowance to Sir Paul McCartney after 2015?”

A point well made.  But, I strongly suspect, to no avail.

I diligently provided links to reaction at the BBC, Guardian, Independent and Mail which all headlined Boles’ hardly original elderly means-testing proposal, even though it would only save £1.5bn of the £8.5bn he says we need to save:

“If we are to achieve stability in our public finances AND make crucial investments in improving productivity and competitiveness, we must find a way to save at least £8.5 billion from the £145 billion we currently spend on benefits other than pensions.”

Popping into Tesco yesterday, though, I noticed that I’d jumped the gun in my headline search.  The Express is going to war on the issue.  Holy war.  Here’s their front page:

I love that capital C in Crusade.  “Upper-case there”, the editor must have ordered.  “We’re not being figurative here.  This is official.  It’ll be there in the history books alongside Richard the Lionheart vs Saladin and, of course, the Children.”

The headline’s a classic as well.  Whereas the Mail and the Independent implicitly accepted the government’s right to cut benefits, but signalled with the A-word (“axe”) that targeting elderly benefits might be a cut too far, the Express went several steps further.  “Secret Plot to Rob Pensioners”.  Hmm.  Not really “secret” is it?  Which means it doesn’t really qualify as a “plot”.  And I think most would agree that discontinuing the provision of a benefit hardly counts as “robbery” (which, strictly speaking, involves violence or the threat of violence, as opposed to theft, which doesn’t).  One might even quibble that it is “pensioners” being “robbed”.  The word “pensioners” has connotations of those struggling to get by on a meagre stipend, and the qualification for the benefits in question is on the basis of age, not – as Boles’ examples of Winner, Sugar and McCartney might suggest – dependency on an annuity.

Boles’ whole point was that benefits would only be withheld from the wealthier elderly, a subtlety somewhat glossed over in the scene-setting opening sentences of the story on the front page of yesterday’s Express:

“A THREAT to strip Britain’s pensioners of benefits such as free bus passes and prescriptions triggered outrage last night.

A key ally of David Cameron yesterday called for strict means testing of claims that also include winter fuel payments and TV licences.

But the move was immediately condemned by charities and OAP groups – and today the Daily Express adds its voice by launching a Fair Deal For Our Pensioners Crusade.

This newspaper urges readers and campaigners alike to support its demand that the Government honours its pledges to pensioners in full, and does nothing to chip away at their universal welfare entitlements. Tory MP Nick Boles caused ­fury after saying the Government could save £4billion a year by stopping better-off pensioners from getting the benefits.”

£4bn/yr is in fact the total cost of the benefits.  Boles hopes to save £1.5bn/yr.

But Cameron’s calculation will be whether £1.5bn is worth the potential electoral damage in 2015 (if the Coalition lasts that long).  He’ll be looking for media outrage at “giving a free TV license to Michael Winner, free prescriptions to Lord Sugar and a winter fuel allowance to Sir Paul McCartney”.  And not finding it.

On one side is most favourable headline to the proposal at the BBC, which reports that the “Rich elderly should lose benefits, says David Cameron ally”.

And on the other is a lot of axeing and the Express’s army of pensioners ready to march against the heathens in Downing Street.

You have to admire the Express.  They understand their constituency.  As, I’m sure, does Cameron.  This kite’s not going to fly.

July 10, 2012

Nick Boles’ Resolutions

Filed under: Complex decisions, Inequality, Media, Politics, Public spending, Reflections, UK — Tim Joslin @ 5:04 pm

Note (12:15 11/7/12): Corrected in 2nd paragraph following a communication from the Resolution Foundation – they are focussed on issues rather than party politics (like the E3 Foundation – I approve) and do not “describe themselves” as “centre-left in outlook”, as I said in the initial version of this post that they “might” do.

I wrote last time that I would try to report on events I attend. For once, I’m keeping my word.

This morning, the Resolution Foundation (RF) hosted the latest in a series of meetings making up its “Commission on Living Standards”, which constitutes a large part of the analysis and policy debate around what Ed Miliband loves to call the “squeezed middle”, that is, as RF put it, “the economic decline of low to middle income Britain”. Heck, the Commission even has its own website, full of bells and whistles. Whilst the RF seems centre-left in outlook, they are politically independent and engaged with all three mainstream political parties. Today was the turn of the Tory and Cameron loyalist Nick Boles, with Lord Adonis chipping in as responder.

Many Resolution Foundation events are heavily trailed and reported in the media, and Nick Boles’ pitch on Raising Living Standards this morning was no exception. Trouble is, the mainstream media inevitably focus on whatever aspect they believe will catch the attention of their readers, so we have “Tories plan to axe pensioners’ benefits” in the Independent, “Limit winter fuel allowance and Sure Start, says Cameron ally” in the Guardian, the more accurate headline “Rich elderly should lose benefits, says David Cameron ally” at the BBC, not to mention the A-word again at the Mail: “Axe free prescriptions and bus passes for the better-off elderly, says Cameron ally”.

Clearly the media would rather scare the horses (check out the comments – and the voting on them – on that BBC story) than present some reasoned argument. No wonder we end up with swathes of incoherent policies.

The Independent’s report gives the best summary of the politics of the situation. Cameron doesn’t want to “axe” benefits for the well-off elderly, because he promised not to in 2010. Will he be able to avoid repeating such a promise in 2015? The question was asked this morning. Although Boles made a good point about how none of the parties faced up to the impending fiscal crisis in 2010, I’m not convinced. I reckon Paul McCartney’s bus-pass is safe for some time yet.

But Boles’ talk was not titled “Pensioner’s perks”. It was much more wide-ranging than that. Indeed, there was much more discussion in the Q&A this morning of tax credits, youth unemployment and even the comparative advantages of the German education system (better for technical students) and that in the UK (better for the academically inclined).

If there was a takeaway policy message from Boles, it was not that the government might try to claw back around £1.5bn/yr from well-off pensioners, it was that they want to find £8.5bn of savings (at 2012 prices) from the welfare budget as a whole by 2016 (by which time that £8.5bn will have inflated to £10.5bn). And my impression was that if it was up to Boles most of the saving would come from child-related benefits, especially those paid to parents (i.e. Child Tax Credits and Child Benefit), as opposed to schools, and Sure Start, which Boles seems to have it in for.

Since the hard-working families demographic is up there in electoral importance with the pensioners-who’ve-earned-the-right, it’s hard to see where any of the £8.5bn is coming from.

The strength – and weakness – of Boles’ approach is that he aims to be ruthlessly analytical. So he laid down 4 principles:
(1) Only those areas of spending that measurably increase the competitiveness of the economy should be allowed to increase faster than GDP.
(2) As implied by (1), spending on other areas (police, defence, environment etc) must fall relative to GDP.
(3) Areas of recent public-spending growth must decline relative to GDP.
(4) There should be no new areas of spending.

This leads to some overly-rigid thinking, in my opinion. For example, principle (4) seems to preclude a resolution of the elderly care issue, which has revived this week (apparently all-party talks broke down some time ago – like Adonis, I despair at the Westminster political process). And principle (1) relies on measurements, which are not simple in practice – this seems to be why Boles doesn’t like Sure Start.

During the Q&A though, it became clear that Boles has another principle:
(5) Public spending must decline as a proportion of GDP.
Boles said he didn’t go as far as David Laws, who has apparently called for a reduction in public spending as a proportion of GDP to 35%, from 45% after the financial crisis, but implied 40% was a ceiling (Osborne is trying to get it back down to around 39%, similar to the level under New Labour).

Of course, as Adonis pointed out, growth is key, and could reduce the tax-take percentage simply by increasing the denominator (GDP).

But the real weakness in Boles’ thinking is that it ascribes a cost to money that is simply paid to the Exchequer and then paid back out again. This is illogical. A perk is still a perk whether it is a free bus pass (counts towards the public spending percentage) or preferable tax treatment (doesn’t count). You could save money by taking away free bus passes for well-off over 65s or by requiring over 65s to pay National Insurance (NI). Now you or I would weigh up the pros and cons of both these measures. But Nick Boles doesn’t look at it that way. He’s wrong – the public only care about the rate of tax they pay (and to be honest even that’s irrational – they should only care when it changes, as pay rates adjust to the tax regime over time). People certainly don’t give a monkey’s whether UK public-spending is 29% or 45% of GDP – or 25% or 50% for that matter.

So Boles would be wise to reflect on the last question asked this morning, by Gavin Kelly, the RF CEO and Chair of the meeting. Gavin reckoned that the £8.5bn could be saved by requiring over 65s to pay NI (which all agree should be consolidated with income tax – it would be a bit illogical to pay insurance for when you can’t work when you’re over retirement age!) and (probably the biggie) reduce tax relief on pension contributions to basic rate tax only.

I suspect there are other tax allowances that really apply only to the better off that could be looked at – some of those for buy-to-let landlords look rather generous to me, and do we really need to allow new savings to be added to ISA tax shelters every year? Are we really serious about reducing the deficit?

It would seem to be less painful to reduce tax allowances than cut public spending. Consideration should at least be given to tax measures that don’t commit the political cardinal sin of raising headline rates of tax. Come on guys, even Brown was bold enough to raise the NI rate!

Let’s hope ideology doesn’t trump pragmatism in the Coalition’s forthcoming Spending Review. Perhaps they should start by renaming it a Budget (or even Deficit Reduction) Review. Or simply reclassify tax allowances as “spending”!

May 11, 2011

You’ve Got to AV a Laugh

Filed under: 2010 General Election, Politics, UK — Tim Joslin @ 12:41 pm

Well, laugh or cry, because AV would have made a huge difference to UK politics. Perhaps not immediately, but over the long-term it would have made it possible for a broader political debate, with a larger number of parties.

Today is the first anniversary of the LibCon coalition. Here’s what I wrote precisely one year ago:

“…it seems to me that Clegg is a self-deluding fool. I therefore expect him to go into coalition with Cameron and destroy his party. The pretext will be ‘the national interest’, but the real reason will be the desire for power.

…Clegg’s probably already lost the Lib Dems any chance of AV, let alone PR, for a generation.

Here’s why. Think about it. The Tories have said they will campaign against AV in any referendum they grant the Lib Dems. What incentive will Labour have to support the proposal? None. Sure, they might pay lip-service, since AV was in the Labour manifesto, but, unlike if they were in coalition with the Lib Dems, they will not expend political capital whipping their significant dissenting elements into line. And they’re hardly likely to spend a lot of money on a referendum campaign when they could be saving their pennies for the next election. I simply can’t see the Lib Dems winning a referendum on anything against the Tories, their toadying media supporters AND elements of the Labour party.”

So the outcome of the referendum was totally predictable. I suppose that at least the £200m or whatever it cost provided a small economic stimulus.

I can’t claim to be totally prescient, though. I certainly didn’t expect the mind-blowing incompetence of the Yes campaign.

First, I can still scarcely believe that the Yes campaign failed to get across one simple point. It’s daft to have an electoral system where the outcome depends on whether or not a 3rd or 4th (or other additional) candidate happens to stand.

This is currently the case in every UK constituency. But you don’t have to look back too far for graphic historical examples. Dubya Bush in 2000 benefited from Ralph Nader’s candidature, representing the Green Party, which disproportionately drew votes from, ironically, Al Gore, environmentalist and potential competent President. And maybe the Yes campaign could even have allowed some maverick to point out that divided opposition let the Nazis in.

Second, the timing was absurd. Why the referendum was held so early is a complete mystery to me. The Tories had signalled their opposition and, newly in power for the first time in 13 years, were bound to be speaking with one voice. If time had been allowed for a few Tory splits on the issue to develop (and for Labour to get over the election and be a bit more united) that might have made all the difference. The damage done to the Yes campaign by John Reid wasn’t mirrored on the other side.

Third, the agreement with the Tories should have forced Cameron to declare neutrality. Allowing the office of the Prime Minister to be used could only help the Noes.

Strangely none of these reasons appear in the Guardian Top 10.

But the underlying problem is far more fundamental. There’s no point having a proportional voting system if Parliament doesn’t work in a proportional manner.

Our elections don’t have to be winner takes all. In the long run greater separation of the executive and legislative arms of government is needed, as I also wrote precisely one year ago. This would allow the House of Commons to debate issues without the outcome having been predetermined by the whips, as happened in the dim and distant past.

But Clegg could have made a start. He could have said he’d support Cameron as PM and vote on the merits of bills put before the House. This is pretty much the position he’s now been forced into, but sometimes it’s not about where you are, but how you got there! He could even have relaxed the Lib Dem whip, since, as is now clear, the Lib Dems – having tried to be all things to all men over the years, and respond to local issues around the country – represent a broader spectrum of opinion than either Labour or the Tories.

It is indeed laughable that the Lib Dems thought they could win a referendum on a more proportional voting system at the very same time as they are giving coalition government a bad name. Do they really think the British public is stupid?

Without a broader vision for the evolution of the Westminster political process, we’re not going to see PR in this country for a century, never mind a generation!

May 20, 2010

Dodging Difficult Decisions

Filed under: 2010 General Election, Politics, UK — Tim Joslin @ 6:24 pm

Imagine yourself house-hunting, or just cast your mind back. You’ve worked hard all week, have your normal chores to carry out, but have managed to free up a few hours of your precious weekend. You window-shop, review sheets of details and finally book a time to see some properties. You spend Sunday thinking about them, agonising over your budget, and on Monday take the plunge. Sorry, says the estate agent, the vendor has decided to take that one of the market. Or maybe they’re not so decisive. You arrange a mortgage, pay for surveys, and only then are you given the bad news: sorry, no deal.

This is the awful situation prospective purchasers will once more be in as a result of the abolition of (Home Information Packs) HIPs, by the incoming LibDem Con government. And on the radio at lunchtime I heard a smarmy voice – it seemed to be a politician, but logic tells me it must have been an estate agent or other housing market parasite – justifying the decision as removing an obstacle to homeowners “testing the market”. Look, you twat, Tesco doesn’t let you get to the checkout before saying, sorry, we’ve decided not to sell those today, we might get a better price tomorrow.

I recollect painfully my first attempt to buy property, jointly. If I recollect correctly, we had 5 surveys done and were gazumped in most cases, never buying at that time, in the end. It cost us a fortune in time and effort, yet the (non-)sellers never spent a penny.

The last Government weighed up all the pros and cons and realised that it was fair for sellers to bear the cost of collating information about their properties, in part to show they are entering into discussions in good faith. This involved taking on a number of interest groups.

What have the LibDem Cons done? Yes, without thinking about it, they’ve abolished HIPs, making redundant overnight 3,000 people who had been trained to carry them out.

True, energy certificates have been retained, but you can still market your property without one. What’s the point of them, then, if they’re not available until people have decided which house they want?

So, the first way to dodge difficult decisions is to do the easy thing without any serious thought.

As I reflected on this I realised that the LibDem Con government is set on writing the book on dodging difficult decisions. There are other instances of “doing the easy thing without any serious thought”.

The third runway at Heathrow? Cancelled. Additional runways at Gatwick and Stansted? Refused. Um, shouldn’t we look into it a bit? I mean, no-one wants to concrete over villages, but the previous lot looked into this and reached a different conclusion.

Or take ID cards. Abolished. Now, correct me if I’m being a bit thick here, but isn’t the government also planning to clamp down on immigration? Wouldn’t it be useful for foreign nationals to have id cards? In fact, I thought they already had, so perhaps we can’t actually believe that id cards have really been abolished.

Because when we look more closely at the coalition’s statement of their programme for government (pdf), we say that they also employ other strategies for dodging difficult decisions.

Their second strategy is pretend to take difficult decisions but don’t actually do so.

Remember those Regional Development Agencies that received so much flak during the campaign? This is what the LibDem Cons say:

“We will support the creation of Local Enterprise Partnerships – joint local authority-business bodies brought forward by local authorities themselves to promote local economic development – to replace Regional Development Agencies (RDAs). These may take the form of the existing RDAs in areas where they are popular.”

Unsurprisingly, the LibDem Cons are not very clear, but I think we can be fairly sure that we’re not going to be able to tell the new pigs from the old pigs. George Orwell would be proud.

What about other quangos? Read on:

“We will abolish the unelected Infrastructure Planning Commission and replace it with an efficient and democratically accountable system that provides a fast-track process for major infrastructure projects.”

In other words: “We said during the campaign that we don’t need it, so we’re going to abolish it and reinvent it. Britain needs a new kind of government!”

Maybe we need a new word, for abolishing something, and simultaneously retaining it. It would save a lot of effort if Cleggeron simply stood up and said: “We’re going to abolain the RDAs and the Infrastructure Planning Commission”. Ra ra ra!

It goes on. School league tables? They’re being abolained as well!:

“We will reform league tables so that schools are able to focus on, and demonstrate, the progress of children of all abilities.”

And on. Remember the hated SATs?

“We will keep external assessment, but will review how Key Stage 2 tests operate in future.”

Which brings us onto another coping strategy for political parties that don’t know what they stand for in, especially those in coalition with those who stand for something different, though they’re not quite sure what. Announce a review! There are 27, according to the Guardian.

Then, if you can’t really think of anything, you can simply repeat existing government policy:

“We will apply transitional controls as a matter of course in the future for all new EU Member States.”

“We will seek to attract more top science and maths graduates to be teachers.”

You can go even further and state policies that are in fact the normal business of government. Here’s my favourite:

“We will make every effort to tackle tax avoidance, including detailed development of Liberal Democrat proposals.”

Or you can make meaningless statements:

“We will take a range of measures to encourage charitable giving and philanthropy.”

And if you’re in a real mess, you can engage in complete obfuscation. This is my favourite passage, on the rather important topic of taxation:

“We will increase the personal allowance for income tax to help lower and middle income earners. We will announce in the first Budget a substantial increase in the personal allowance from April 2011, with the benefits focused on those with lower and middle incomes. This will be funded with the money that would have been used to pay for the increase in employee National Insurance thresholds proposed by the Conservative Party, as well as revenues from increases in Capital Gains Tax rates for non-business assets as described below. The increase in employer National Insurance thresholds proposed by the Conservatives will go ahead in order to stop the planned jobs tax.” [my emphasis]

That’s right. They’re going to fund a tax cut with money they aren’t spending. “Mummy, can I have that toy?”; “Sorry, darling, we don’t have any money.”; “Can I have some sweets, then?”; “No!”; “Whaaaah! But we’ve saved money by not buying that toy!”.

The most worrying thing about the LibDem Con “programme for governance” is that there are an awful lot of giveaways: an increase in the personal allowance for income tax, reductions in corporation tax, freezing council tax and so on, and very little in the way of clawbacks.

Either there’s something they’re not telling else, or this government’s going to be a dog’s breakfast.

Woof!

May 11, 2010

It’s the Executive, Stupid

Filed under: 2010 General Election, Politics, UK — Tim Joslin @ 8:28 pm

So, I hear on the radio that the Lib Dems are getting into bed with the Tories for – Heaven help us – 3 or 4 years. “For the good of the country”, of course.

The poor dead babies seem to be operating under the delusion that a coalition is about agreeing a set of policies. It isn’t. That’s the easy bit and would result from the parliamentary arithmetic anyway. For example, the Tories are dropping their proposal for an inheritance tax give-away, which only their 306 MPs support.

No, what government is about is the day to day decisions, the responses to events, dear boy, events. In short, the executive.

So if we put the policy horse-trading to one side, Clegg has steered his party into the arms of the Conservatives in return for a referendum on AV. Which, as I pointed out earlier, will very likely be lost, so will be worse than no referendum at all. Much worse.

The last few days, though, have shown that proportional representation will simply not work in the UK. Power is so concentrated in Downing Street that further constitutional changes are needed as well.

In fact, many constitutional changes are needed. I started a blog post a couple of weeks ago listing things wrong with our political system. I never finished it. There was too much to write. The franchise doesn’t even makes sense, for Christ’s sake, with votes for Commonwealth citizens living in the UK, but not for EU and others working here and also profoundly affected by decisions on how their taxes are spent and the services that are provided.

Looking at my draft now, though, I see how I was waxing lyrical about how we have strengthened our presidential system with the TV leaders’ debates. And the Tories won the battle in a shamelessly compliant media that the Prime Minister must be “elected”. Which is meaningless in a parliamentary system.

With all this in mind, here’s my proposal: separation of powers (throughout the whole election campaign I’ve only seen this mentioned by Simon Jenkins in the Guardian).

We should directly elect a Prime Minister – who appoints a cabinet – and, separately, a fully proportional legislature – the House of Commons – which will be free to pursue shifting allegiances.

The executive vote should be by Alternative Vote (AV), since otherwise the outcome depends on which candidates are on offer, as we’ve seen in the US when Ralph Nader ran against Al Gore.

Single Transferable Vote (STV) in multi-member constituencies makes sense for the legislature, since it is desirable for legislators to have some contact with what happens on the ground. To all intents and purposes, the legislators in this proposal would operate in a similar way to back-bench MPs at present.

There’s a lot more that could be done – for example, power, including the right to set the appropriate tax rate could be devolved to departments such as health, and the executives of such departments elected separately – but my point is that electoral reform in isolation makes no sense in the UK.

Other proposals, such as fixed-term parliaments, also make no sense in isolation. The UK’s constitution relies on a Prime Minister with the confidence of the House of Commons. It’s entirely possible that no-one would be able to “command a majority in the House”. We’re not far off that situation now. AV (or PR) plus fixed term parliaments in fact creates an even worse situation.

I’m not sure I agree with fixed-term parliaments anyway – what’s the point of lame-duck government? – but in isolation it makes no sense.

It seems to me that a whole package of constitutional changes needs to be agreed by all the major parties, as a coherent whole, and put to the British people in a referendum.

Changing the voting system alone would simply exchange one unfair system for another, even more unfair system, where Clegg and his successors remain permanently in power! And as far as the vast majority of the electorate are concerned it will still be a case or Tory or Labour.

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