Politics UK – Page 39 – thinking liberal

UK constitution: Westminster’s elite still doesn’t get it

“Nor do the English seem to want any kind of devolution for themselves”. Thus does this week’s Economist dismiss any chance of far-reaching constitutional reform for England and the UK as a whole. It offers a couple of tepid ideas as “promising” ways forward to relieve the tension. A committee of English MPs to vet legislation in parliament; devolving more powers to city regions in England. An English parliament or giving English regions equivalent powers to those mooted for Scotland, if it votes No, are dismissed as too difficult, in the absence of a serious clamour from the voters. I have every reason to believe that the thinking expressed in this article is typical of Westminster politicians in the Conservative, Labour and Liberal Democrat parties. If something doesn’t feature amongst the top issues that voters highlight as concerns to pollsters, it’s not worth worrying about.

This, of course, is exactly the type of short-term thinking that got them into a mess with Scotland – which may very well vote to separate from the UK this week. The politicians checked the opinion polls, and there didn’t seem to be too much to worry about. They did not have the imagination to see that the separatists would cash in on the national disillusionment with politics. They cannot understand that the current national mood gives politics an inherent instability that the normal polling will not help them with. As the public yearns for leadership, all they get is followership.

It reminds me of those doomed companies, who once ruled their world, and who thought that product development was a matter of following market research. Nokia, Blackberry or Kodak, for example (there are plenty of non high tech examples – but it is difficult even to recall their names now). Like these doomed businesses Westminster politicians (and their many hangers on) do not want to do anything that might upset their existing ecosystem too much. Or to put the business parallel in better perspective, if Apple had followed market research, it would never have invented the iPod or the iPhone. Or IBM had to pull its existing business apart in order to survive and prosper as the world changed. Unfortunately the professionalization of politics does not make politicians immune from the same sort of progressive entombment that overcomes big businesses from time to time. There are times when it pays to be visionary and move ahead of public opinion.

Britain is lurching from one constitutional crisis to another. If it isn’t Scotland leaving the Union, it will be the UK leaving the EU. Quite possibly it will be both. The Westminster machine is quite likely to get bogged down in years of negotiation to unpick highly complex constitutional, financial and trading arrangements, which will advance solutions to the substantive problems of the economy, public services and national security not at all. By avoiding proper constitutional reform because voters don’t mention it to pollsters, they may in fact find their lives dominated by constitutional problems as a result of referendums conceded too easily.

Britain needs a new constitutional settlement to distribute political power to its most appropriate level. This means more than devolution. The word conjures the picture of a superior power throwing scraps to the lower orders. We should think of power residing with the people, and delegated upwards to the most appropriate level – and not devolved downwards. When a US city wants to build a metro system, it just goes ahead and does it, subject only to its power to raise taxes, fees and loans. If a British city tries, it has to grovel to several central government departments for permission, with the all-powerful Treasury liable to squash the whole thing with a shrug. Westminster is prepared to tweak this system a bit, but not to change the balance of power fundamentally. When they do offer concessions for devolution, these are so feeble that they fail to command popular support.

It is time to stop the sleepwalking, and for our leaders to wake up and see what is happening to our beloved country. The English may not be agitating for constitutional reform, but if they don’t get it the country will progressively come apart.

As Scotland decides, the recriminations in Westminster begin

I make no apologies for the third post in a week on Scotland’s referendum next week. A political story this big is rare. This time I want to consider Westminster’s reaction to the episode. There is, of course, shock. The story has departed from its script. And with that shock comes recrimination. This sort of reaction is only human, of course – but the reactions miss the point. Britain, with its unwritten constitution, is uniquely vulnerable to this kind of sleepwalking disaster.

The most extreme reaction comes from John Major, who was Prime Minister from 1990 to 1997, at a time when the move towards devolution in Scotland developed unstoppable momentum. He is basically saying “told you so”. He said that the whole devolution idea was a mistake, as he said at the time, and it is ending just as he forecast. Well, he is right that simply devolving power to Scotland (and Wales and eventually Northern Ireland) without considering the impact on the wider United Kingdom constitution was asking for trouble. But the resentment felt by the Scots over remote rule from Westminster was overwhelming. Something had to be done in the name of democracy. Besides, devolution seems to have been a success, for Scotland at least. Outside London and the South East Scotland is the most successful region in the UK. This kind of success is about a lot more than public subsidy. No doubt the oil industry has helped, but Scotland has seen the sort of economic dynamism that is sadly lacking in other regions of the country.

But Mr Major’s is a lonely voice. Many more are saying that it was foolish of David Cameron, and the Scottish Secretary of the time Michael Moore, not to agree to Alex Salmond’s wish for a three-way referendum, with “Devo-max” as a third option. But almost nobody outside the SNP thought that a three way referendum was a good idea at the time. I personally could not get my head around it. Referendums are a blunt instrument, not suited to complex questions. The whole thing looked like a sly manoeuvre on the part of the SNP to get more devolved powers, from which to launch a future bid to independence. If they had wanted Devo-max rather than full independence, they should have negotiated that explicitly.

A third line of recrimination, and the loudest, is against the No campaign. It is accused of being lacklustre, pessimistic and negative. It focused too much on the practical problems of separation. This is true. But negative campaigning is the Westminster way. Our politicians, advised by sophisticated professionals, find negative messages more useful than positive ones when it comes to campaigning for votes. They have two basic types of strategy: one is to rally the core vote, and the other is to swing marginal voters. Nothing rallies the core vote better than distrust of the other side. And swing voters are often cautious types who make up their mind on small things. This was certainly the view of the No campaign, which went for the second strategy, sensibly given the likely high turnout. Their polling showed that it was worries about the practicalities that was bothering the swing voters – so it addressed its energies to them. Such negative tactics worked triumphantly well in the referendum on the Alternative Vote in 2011; the No vote campaign was simply doing things the Westminster way. But that left the feeling that the argument for union was hollow at its core – something that besets Westminster’s other campaigns.

Of course what the critics are unwilling to do is look at the wider picture, and recognise the vulnerabilities of the British system of government. Our highly centralised ways are bound to cause disaffection at the periphery. Devolving spending powers faster than taxation powers is not a stable solution to this: it just sets up a tension between the central government and the devolved one. And asymmetric devolution, favouring some areas over others, creates further tensions – tending to focus the tension in some areas rather than across the country.

There is a tried and tested method for containing and managing such tensions, that almost every other democracy uses. That is a written constitution, which defines the powers clearly at each level of government, and sets out clear ways of how the balance of these powers can be changed. The constitution usually has its roots in a process of consensus building at an important, nation-defining moment, giving it moral authority.

But Westminster dislikes written constitutions. It loves the flexibility of Britain’s looser arrangements, whereby Parliament adopts the powers of a Renaissance monarch, bolstered by a sort democratic myth in place of the divine right of kings. And indeed such flexibility has its advantages. But it has vulnerabilities too. The constitution becomes a plaything of ordinary short-term politics; small changes are made that create further tensions that require more short-term changes. Or some constitutional problems are deemed too difficult, and not addressed, allowing very destructive tensions to build. Devolution to Scotland is a case of the former. Devolution within England is a case of the latter. The country sleepwalks into constitutional disasters. Scottish independence is one such potential disaster; departure from the European Union is another.

It requires some kind of national shock to give momentum to comprehensive constitutional change. The referendum in Scotland, whatever the result, is a big enough shock to set such a movement in motion. Time for a Constitutional Convention.

As Scotland debates, what about England?

The referendum in Scotland is the most interesting thing to hit British politics for a long time. Last night the unionist side wheeled in former Prime Minster Gordon Brown. Mr Brown vindicated my judgement of him last week as being a cut above our current, mediocre political leaders. But how is this drama playing down here in England? After all the outcome involves us too.

The first point is that we are bit late on the game. The Scots have been arguing about the matter intensely for many months. The English, taking their cue from their politicians and media, have largely treated the matter as a foregone conclusion for the union. Only now is the terrible truth dawning. That lack of debate has left thinking very underdeveloped. But I have detected some new trends, at least in the rather non-typical, liberal circles that I inhabit.

Firstly there is envy. People in Scotland are having a real debate and vote on something that clearly matters. If they vote Yes it will make a real difference to the ruling political elite. Usually all that seems to be at stake is the recycling of the same group of usual suspects. Scottish people are talking about the country they want to be. It’s no wonder people are registering to vote and a high turnout is expected. We aren’t getting that here. And the thought of giving that elite, not just the politicians but the media pack, civil servants and lobbyists that cling to them, a bloody nose is distinctly tempting. It becomes rather less tempting when you think that it empowers an Edinburgh political elite, who, to say the least, do not look a trustworthy bunch. But that’s another matter.

The next thing is a common hope. Surely, after a Yes vote, or the near-death experience of a narrow No vote, a shake-up will follow in England? This referendum could be good for all of us. But that will only be true if a grassroots movement, from outside the Westminster elite, demands it. That is possible, though I see no sign of it yet. That movement needs something to ask for – some sort of constitutional change – but I see no evidence of the English developing enthusiasm for that. Without a grassroots movement, Westminster will simply drop back into its usual complacency.

A further response is a rather depressing one. Without the Scottish MPs the House of Commons will be weighted much more towards the Conservatives. There is a much greater chance of a referendum on Britain’s future in the EU. For many this is just the sort of constitutional change that will shake things up – even though its outcome will be to concentrate more power amongst the Westminster elite, rather than take them down a peg. The odds of the country leaving the EU will surely rise. Actually we should be a little careful here. The environment after a Scottish Yes vote will be so different that we cannot make predictions about how political attitudes will shift. The Conservatives may not find it so easy to win in the rump UK.

But what if Scotland stays in the union? The Westminster leaders are already promising the country a greater level devolution on our behalf. But they are silent about how this will affect the rest of us in England. That is no doubt because they are hoping people won’t care enough create much of a fuss. But it leaves us with the English Question. This is referred in Westminster pompously as the “West Lothian Question”, after the very pompous former MP for West Lothian, Tam Dalyell. This is no doubt their way of trying to minimise its significance and I refuse to accept this nomenclature.

The English Question is this. If Westminster has devolved powers to Scotland, along with Wales and Northern Ireland, it means that Scottish MPs can vote on a whole range of important questions of English policy, without English MPs being able to influence the same issues in Scotland (or Wales or Northern Ireland). It is a very awkward conundrum for Westminster types, because it is difficult to deal with without undermining their own power. Their typical reaction, when it is posed, it to mutter something about it being very difficult, and then to change the subject.

How might the English question be solved? There are three lines of attack The first is to somehow stop non-English MPs from voting on English matters. This is invariably the way Westminster politicians think of solving it. But it gets very messy. How do you, precisely, differentiate between English and British affairs without an explicitly federal constitution? What if the British PM does not command a majority in England? The second appraoch is to devolve powers to local governments in England. But, to be anything like equivalent to the Scots or Welsh devolution, there would need to be some kind of regional level of government. This only exists for London, though other metropolitan areas are inching towards such structures. The regions defined for European elections and statistical purposes have no resonance with public identity and are not fit for this purpose.

The third approach it to set up a separate English parliament, and English government, leaving a federal government to govern the residual issues of the UK itself. To me this looks the most promising way forward. But it raises many questions.

But the most important point for now is that there is no consensus in England about the right way forward, and the issues have not been aired enough. The next step, surely, is to convene a constitutional convention to develop proposals, which can then be put to the whole country in a further referendum or referendums. This convention could be convened either at the English level, or for the whole of the UK. The latter, of course, is the only way of dealing adequately with how a federal level of government could work, and what to do with such institutions as the House of Lords. But the big requirement is political momentum – and it may be easier to get this at the English level, and to deal with the wider consequences later. After all this whole process was set in motion by a Scottish Constitutional Convention in the 1990s.

It is, of course, unutterably depressing that our political leaders, including the Liberal Democrats leader Nick Clegg, who should know better, are not calling for such a convention. But we English should be demanding it.

Why neoliberals will be voting Yes to Scottish separation

Scotland votes for independence or not from the rest of the UK in just ten days time. Until now the complacent Westminster establishment, politicians and media alike, hasn’t taken the debate seriously. In the last week more opinions polls have been commissioned for the Clacton by election than on the referendum question – one reason that it is hard to tell how opinion is shifting. But the Yes campaign now seems to have the wind in its sails, and Westminster has to take the issue seriously. They are completely unready. Westminster types understand why a Scots breakaway is bad for them, but are struggling to understand why it should be bad for the Scots. Or to show that Westminster complacency has been dented by anything more substantive than temporary panic. The latest idea is to promise Scotland more devolution within the UK if it votes No; but the idea of a constitutional convention for all of the UK still seems to be off limits.

And yet there is muddle on the Yes side too. Independence supporters are making real headway with the argument that separation is the best way to preserve the Scots’ social democratic heritage. Scottish people have tended to be more left leaning than the English, and treasure such institutions as the NHS and social security. But this is under threat from “neoliberals” in Westminster, who want to shrink the state and run Scotland more like Texas. A Yes vote means No to the neoliberals.

At first sight this line of argument looks plausible. Most neutrals think that separation would be financially neutral; the extra social security transfers that Scotland gets compared to England will be made up for by extra oil revenues. This being so, an independent Scotland should have little difficulty in keeping the current level of state generosity going. And anyway, look at Sweden, Denmark or Norway, notable for very generous social security, in spite of being of similar size to Scotland.

All this follows the popularity of deciding political questions on “facts”. But there are two problems with factual analysis. First factual analysis is backward looking, when political decisions must be based on the future; second is that our usual factual analysis is based on aggregates and averages – concealing important fluctuations and details within. Both issues affect any analysis of Scotland’s future prospects.

The first point is that bigger ships make for a smoother ride. Look at northern Europe’s smaller nations, from Ireland in the west (or we could include Iceland) to Finland in the east. Their economic history of the last 40 years has been marked by deep economic crises, striking deeper than anything that the UK has experienced (Denmark may be an exception, admittedly) – even as they might experience headier booms. This rougher ride makes generous provision of state services more difficult to manage over the long term. During periods of crisis governments find it difficult to borrow and they are forced to make deep cuts.

But the Scandinavian countries have achieved a generous welfare state, haven’t they? Yes, but at the cost of much higher levels of tax. According to the Heritage Foundation, the UK tax take in 2012 was 39% of income; in Finland and Norway it was nearly 44%, in Sweden nearly 46%, and in Denmark it was 49%. Funnily enough Scotland’s First Minister Alex Salmond’s main idea for economic growth is to reduce taxes, modelling his policies on Ireland (2012 tax take nearly 31% and a weak welfare system to match). Danish welfare based on Irish taxes doesn’t add up.

But can’t Scotland just follow the Danes and Swedes and ratchet up taxes? Ignoring the economic issues with this (which these states have managed to overcome), the political tide in Scandinavia is rightwards. It seems that the higher taxes were acceptable to homogenous, inward-looking societies where people were less worried about freeloaders – but that the pressures of a modern economy undermine that. Surely Scotland will find it impossible to recreate the conditions of a past Scandinavia; it will be politically hard to raise taxes.

And meanwhile Scotland faces the same demographic challenges of an aging population, and rising healthcare costs, as the rest of the developed world with the added challenge of having to reallocate jobs, infrastructure and taxes as its oil resources are depleted.

Scotland faces a much more bracing climate as an independent country than within the UK. This is not a bad thing in itself, of course. It will help the Scots break out of a victim culture, where too often problems are blamed on the English. But the political movement that will most welcome this state of affairs is that despised breed: neoliberals. Independence would give them a shot in the arm. Scotland’s cherished social democracy depends on being part of a larger system of taxes and transfers that absorbs shocks more easily, and makes financing on world markets easier. Big states are more sustainable in big countries.

Would a Miliband victory be good for the Lib Dems?

Here’s a paradox. Britain’s political party leaders are the most mediocre, as a set, that I can remember. At least in 2010 we had Gordon Brown: a disastrous prime minister, but one who at least had the moral authority to help lead the world from economic disaster in 2009. But next year’s General Election looks to be the most interesting contest for a very long time. The shame for Liberal Democrats like myself is that we are bit part players, hoping to hang on to most of our parliamentary seats, but without playing much part in the national debate. But the rise of Ukip means that three-party dynamics remains potent. But perhaps the Lib Dems longer term prospects are better?

To start with, we have an unknown effect from the Scottish referendum later this month. Whatever the result, this will surely change dynamics north of the border in ways that it is difficult to predict. The Westminster elite hardly dare confront the possibility of a Yes vote, though the race is tightening and this is a real possibility. They have contented themselves with promising extra devolution for the Scots, without addressing the implications for England. If the Yes result comes, the Westminster politicians will have nobody but themselves to blame.

The constitution of the UK (note this not a “Scots question” – it affects us all) remains the most important issue hanging over our politics, including next year’s election. But for a moment I want to join the Westminster chatterers and put this to one side (the chatteres’ favourite website politicalbetting.com seems to think that the forthcoming Clacton by-election is more important than the referendum), and consider other dynamics.

Over the summer the Conservatives had looked quietly confident, and I shared that confidence on their behalf. They faced a strong challenge from Ukip, whose message appeals to many of their activists, but they seemed ready for that. David Cameron’s promise of a referendum on the EU is highly credible, and it is good bone to throw to potential Ukip defectors. Meanwhile they can promote scare stories about letting Labour in, and also blame the government’s more unpopular policies (to the right) on their coalition partners, the Lib Dems. The Euro election results in May seemed to support this confidence; Ukip were rampant, but Labour’s performance outside London looked lacklustre. Ukip were as much a problem for Labour as the Tories, and Labour’s message to Ukip supporters was (and remains) confused, unlike the Tory one.

Alas for the Conservatives their plan seems to be falling apart. The Tory MP for Clacton, Douglas Carswell, defected to Ukip, resigned his seat, and has caused a by election which he intends to contest under his new party’s banner. Clacton is a stronghold of the disaffected, white, aging, excluded working classes that is Ukip’s core constituency; a victory for Ukip looks certain. This gives Ukip real momentum. But, worse, it emphasises the divisions within Tory ranks between the more sensible moderate types represented by David Cameron, and what liberals regard as a lunatic fringe, whose strength has grown. This will encourage Tory voters to defect to Ukip, and discipline within the party to break down. That could scare off donors. Add this to the fact that the electoral system is weighted against the Conservatives, and they party’s challenge is looking steep indeed.

Which shifts the focus to Labour. That party has a clear hope that it will win the 2015 election by default. They have swept up a lot of former Lib Dem voters, and it seems certain that they will hang on to them. If the Tory vote sags because it is undermined by Ukip it looks good for the party. Labour faces its own challenge against Ukip, but generally in areas where they have very large majorities. There is an excellent article in today’s FT by Matthew Goodwin, who has been following Ukip’s rise closely. He may well be right that Ukip poses a severe long-term challenge to Labour in its northern heartlands, where its organisation is weak. But even he admits that this is more of a problem for 2020 than 2015.

So Ed Miliband’s Labour party could secure an outright majority after next election. And then his problems will really start. He is bound to disappoint his left wing supporters, including those Lib Dem defectors. The British economy remains fundamentally weak and unable to support the size of public sector that these supporters seem to feel is their birthright. There are no quick answers to this underlying weakness, and many of Mr Miliband’s ideas will make things worse, not better. Neither will he please the grumpy working class voters to whom Ukip is appealing. There will be a sense of betrayal among one group of their supporters, and panic amongst the Labour machine politicians in northern towns, who have taken their power base for granted. And the question of Scottish devolution’s affect on England will need to be faced, or, worse, the impact of Scottish independence. The party would surely be overwhelmed, rather like the Conservatives were after 1992.

But the Conservatives will not be much better off. They will remain divided between pragmatists, who lean towards EU membership, and idealists for whom the EU represents all that is bad. The party is likely either to lurch to the right or fall apart. Ukip, feeding off disillusioned Labour voters, will rise relentlessly.

You could hardly define more propitious circumstances for the Liberal Democrats, provided they stay away from any temptation to form a coalition with Labour. Labour will end up by prolonging many hated coalition policies, vindicating the party’s record in coalition. Meanwhile the rise of Ukip will create a strong anti-Ukip political backlash. As the Tories fail to contain their right, and Labour panics over its loss of working class votes to Ukip – this backlash will present a real opportunity for the Lib Dems, in a highly dynamic four-party play. This opportunity would be best exploited by a new leader. It would be ideal if this was a commonsense, well-grounded female – a Birgitte Nyborg. Alas I cannot see such a choice being available (my preference, Dorothy Thornhill, Mayor for Watford, is unlikely to be in contention). But the opportunity for a comeback is palpable.

What should the Lib Dems do now though? It has little choice but to stick to its guns in the coalition, and concentrate on winning any parliamentary seat where local strength is sufficient to make it winnable. This will mainly be about denying seats to the Conservatives. If things go very badly for the Tories, they may start to pick up some centrist voters from them generally – though that’s a long shot. But they must remember: the opportunities will be after 2015, they should do nothing that will make that comeback harder.

Interesting times indeed!

Learning from the Rotherham scandal – this should be a moment for humility

The big story in the British news media this week is the Rotherham child abuse scandal. This was occasioned by a detailed report from Professor Alexis Jay. This revealed that some 1,400 children and teenagers had been sexually abused from the 1990s by gangs in this Yorkshire town. The perpetrators were largely from the Pakistani and Kashmiri community and the victims were vulnerable white girls, many in care. Council officials and police ignored repeated reports of this abuse. Similar things seem to have been occurring in other northern towns, as well as further south. The revelations have provoked anger.

But instead of trying to understand the implications of this many-faceted issue, most commentators have used it as a battering ram to push forward their own political agendas.

The right wing agenda, promoted by the press, is to blame “political correctness”. This is because the allegations were initially treated as racist, and treated circumspectly for the sake of “community cohesion”. Implicitly they suggest that the problem was the fault of an immigrant community that was not dealt with robustly enough. Behind this lies a distinctly racist, anti-immigration agenda. But this narrative is at best incomplete. One of the main reasons that allegations were not taken seriously was that the authorities had a shockingly low opinion of the victims, who were treated as “sluts” and authors of their own fate. There is nothing politically correct about such old-fashioned, macho attitudes.

The left wing agenda is well expressed by this article by Suzanne Moore in the Guardian. This downplays the racial dimension, which she says is but one part of a much wider problem of powerful men abusing and denigrating powerless women. Perpetrators are from all races, as are the victims. She then goes on to blame the “neoliberals” for running down children’s services – in spite of providing evidence from her own experience that shows the problem dates back to well before the neoliberals got going. And you would hardly describe Rotherham’s council leaders and the South Yorkshire Police as part of the neoliberal establishment.

But while both lines of attack are self-serving, both also have a grounding in truth. The paternalist, we would say misogynist, attitudes of the rural communities from which the perpetrators were descended were part of the problem. And fear of allegations of racism clearly influenced the authorities. Abuse of young girls goes much wider than this ethnic minority, as does a reluctance for the authorities to act. Overstretch in social services hardly helps.

And it is very easy to use the scandal to go after your favourite villains. In my case it would be the Labour elites of northern cities who run their fiefs on a clientalist basis – including with the self-appointed leaders of ethnic minority groups. And weak and incompetent police leadership. There is plenty to go on for such a line of attack.

But that too would be incomplete. I think we owe it to the victims to question our own attitudes and practices, not just those of people we don’t like. A large part of the problem also lay with middle-class liberals. Getting to grips with this problem involved crossing two boundaries that we hate to cross. First is criticism of ethnic minority groups, which we fear will be seized on by racists to stir prejudice. And second, about which comment has been strangely silent, crossing a class barrier. Victims and perpetrators are largely working class, and these formed the power base of council leadership that failed to act. We are reluctant to get involved across the class barrier, and treat working class communities with general incomprehension.

And that is one reason why it took so long for the problem to be taken seriously at national, as opposed to local level. This is clear from an interview given by Andrew Norfolk, the Times journalist who eventually brought the story to light, on BBC Radio 4’s Media Show . The liberal elites did not want to know, and accused him of racism. This account is backed up by others at the fringe of the story, consider this piece by television journalist Samira Ahmed.

The lesson is this: we are all part of the same, cosmopolitan community. We should not let the barriers of class, religion or ethnic heritage stop interchange and conversation, based on facts. Showing respect is not about treating people with kid gloves and not asking too many questions. We should be open to criticisms of our own values and practices; but we should not be shy of challenging others in an appropriate way. And above all, no individual, of whatever class or ethnic origin, should be treated as “trash”. Even if we don’t like them.

The revenge of the 50-somethings. Is this why productivity is sinking?

Last weekend I met up with a number of other 50-somethings. Only one of us was still working. The universal advice to her was that she should stop as soon as she could. It wasn’t worth it. Anecdote is no substitute for serious analysis, but it can offer some interesting insights. Economists usually ignore the idea of satiation – that enough is enough – because this wrecks their mathematical models. But it is a growing fact of life in the developed world, and one reason why it is unrealistic to expect everlasting economic growth.

Of course, many 50-somethings are not as lucky as me and my friends. They have inadequate pensions and other savings; they are forced to keep working, and may well have to do so long after their state pension kicks in at 65 to 67. There were two common factors to our group: no children and property ownership – though by no means all of us had had well-paid jobs. There are plenty of others in the same boat, even if we are a minority.

What was striking was how we had found that work had become demoralising, across a spectrum that covered high-flying project management through to ordinary clerical. And looking for new jobs is even worse. The youngsters are pushing ahead, with all their politics and superficiality. Competence and people skills are devalued compared to bluff and fast-talking. Age prejudice is rife in recruitment markets, but impossible to prove case by case. Such sentiments are largely “grumpy old man” (though most of us were female…), rather than substantive; no doubt our predecessors felt the same about us. But work used to be the centre of our lives, providing us with purpose, a social life and the wherewithal to consume.

But now we’d rather move on. Even if that means constraining our consumption somewhat – though our generation are the ones sitting on high value property, which helps quite a bit. We will retire early if we can. Many of us are winding down, into part-time work, often thinly disguised as self-employment. This pattern of reduced work level can continue until well into the 60s and even beyond.

Is this showing up in the economic statistics? This is difficult to say. Overall workforce participation is increasing, including the older age groups. This suggests that the number of people who have dropped right out of the workforce is less than those who struggle on after retirement. But the number of self-employed has been rising sharply, and we have what economists call the productivity puzzle. Labour productivity is not rising in the way technological progress suggests it should. Perhaps the winding-down of the 50-somethings is part this.

Economists stress about this. They had assumed that steady economic growth, arising from improved productivity, was simply a law of nature. When growth fails to materialise, they condemn this as a policy failure, looking to fiscal or monetary policy to correct it. But when low growth arises from free choices made by the public to produce and consume less, this is not a policy failure. But it does create policy problems – especially over the affordability of debt. It would be better for all if economists would stop whinging and help us to understand and address these policy challenges. Low growth future is here to stay. Because that’s what people want.

Austria: a social democracy that works

I have been on holiday to St Wolfgang in Austria in the last two weeks, which explains why I have not posted anything recently (NB the picture is of nearby Hallstatt, not St Wolfgang). This holiday was mainly about fresh air and relaxation. Political reflection was not on the agenda – but I just can’t help myself. Austria is a very interesting political case study.

The country is an overlooked success story. The area that we visited, the Salzkammergut, was pristine. Everything was neat and tidy. The state of public infrastructure, from roads to public footpaths, was excellent as well as highly extensive (hot water is supplied communally, for example – not to mention all those well marked and maintained foot and cycle paths)). This was a major tourist region, but no Cornwall, with tourist affluence co-existing alongside poverty. There was plenty of local industry, and quality medium-level jobs, tucked away on the edges of the villages.

Economic statistics bear this success story out. Income per head in 2013 was 11th highest in the world, according to the IMF – behind the USA, but comfortably ahead of Britain. Unemployment is low (4.7%), the trade balance is positive (2.9% of GDP), and there is a reasonable level of growth (1.4%). The government is in deficit, but the level of 2.8% of GDP looks much better than Britain (4.6%). This is in spite of a high tax take (43% in 2012 according to the Heritage Foundation, compared to 39% in Britain and 27% in the USA). According to the OECD the Gini coefficient, measuring income inequality, was 0.261 after taxes and transfers, one of the lowest (i.e. most equal) in that group (Britain is 0.345, the US 0.378). The really interesting thing about this statistic is that this level of equality has been attained through redistribution. Before tax and transfers Austria’s Gini is 0.472, similar to that of the USA (0.486) and Britain (0.456). Austria taxes the wealthy highly and has a generous level of social security. It is a beacon of social democracy.

This is interesting because we are constantly told by economic liberals that high taxes and high social security is the path to doom and poverty. And, to challenge another piece of received economic wisdom, it does not even have its own currency, being part of the Euro zone. In America, you only have to mention “Europe” to a Republican, and it conjures up an image of economic failure. And yet Austria is no economic failure. It is not like France or Italy, whose economies are struggling. Why is Austria so successful? Well, I don’t know the country that well – but let me make three observations.

The first is that power is highly decentralised. Austria itself is not a large country, with 8.5 million people. It nevertheless has a Federal constitution, with nine states. These are highly visible on the ground (we were staying within a few hundred metres of the boundary between Upper Austria and Salzburg; we also visited Styria), on car number plates, and so forth. Local municipalities levy a payroll tax (about 3%) and as well as property taxes. In Britain, at least, there is a tendency to think that social democracy implies highly centralised governance, as shown by the last Labour governments highly prescriptive diktats on local government.

The second observation is that civic society is clearly very strong. You don’t achieve Austrian levels of order by government diktat and regulations alone. This requires active civic engagement – a bit like David Cameron’s “Big Society”. But what Mr Cameron failed to grasp is that big government (if highly localised) and high civic engagement work well together. Indeed, Austria’s political system looks like a bit of a stitch-up (two dull establishment parties, challenged by right-wing mavericks) – I am sure that it is high civic engagement that holds government services and public infrastructure to account, rather than the electoral process by itself. Again, Britain’s social democrats tend to view civic society as interfering busybodies with a NIMBYist agenda.

So far, this picture reinforces Liberal Democrats conventional wisdom: strong local government, linked to a high level of community engagement. The catch is my third observation: Austrian political culture is not liberal. In fact we would regard it as distinctly nasty. Ukip supporters would feel comfortable here (if you exclude the small government types). Unlike Germany, there is no public angst about Austria’s Nazi episode – though the country was highly complicit (Hitler was an Austrian after all). Immigrants face hostility. Austrians are very hospitable to visitors (more so, in my direct experience, than the Swiss, for example); but visitors go home and do not challenge for jobs and political influence. We did not see much sign of foreign staff in the restaurants and hotels – you meet more Poles in Cornwall. The EU is regarded with suspicion, if not hostility – even if it is accepted as an inevitability. Social attitudes tend to be conservative. In the hotels, the men tended to have the more authoritative jobs, with women running around as skivvies – though the shops tended to be run by highly capable women.

Perhaps the biggest question for British liberals is this. A fairer distribution of wealth and jobs seems to flow from strong local government, based on strong local communities; but is this compatible with more fluid liberal, human-rights based values? Or must strong liberal social values lead to economic liberalism, and the unequal, hollowed out society that seems to be taking root in the US, for example. Can you be both social democratic and liberal at the same time? To that critical question Austria does not provide an answer.

We need a UK Constitutional Convention and a Federal government

What happens when your normal existence comes under threat? We seem to alternate between two extremes. One is paranoia. We see this now with Jihadi extremists, where many Britons see the threat of terrorism everywhere, and are happy to vastly expand the surveillance powers of the state so that any plot can be intercepted before execution. I remember a similar paranoia over Soviet Communism in my youth, in the 1970s. But the more common response is denial. We keep going with our ordinary daily lives without thinking about it, dismissing the threat with half-baked arguments that don’t stand up to scrutiny. We see that with the threat posed by rampant global carbon emissions.

Perhaps to the English the possibility that the United Kingdom breaks up, with Scotland ploughing its own furrow, does not have the sort of existential quality of global meltdown, communist takeover or even terrorist attack. That may be so, but we underestimate its significance at our peril. If nothing else, if the Scots vote Yes in their referendum in September, the negotiations over separation will dominate the political agenda for at least four years. The Union is so deeply embedded into our governance that separating the countries will have a host of unforeseen complications. And the complications that are clearly visible are bad enough: membership of the EU and NATO; Britain’s nuclear weapons; managing the currency; spitting the national debt; splitting oil revenues; and so on. Our governing classes will scarcely have time to do anything else, while the publics on both sides of the border will be inflamed by populists claiming that their country is getting the rough end of the deal. And at the end of it all England will be dominate nonsense of a country that can’t convincingly even lay claim to its traditional names of “United Kingdom” or “Great Britain”. It will be left with a tangle of Imperial era commitments, from membership of the UN Security Council, to responsibility for the Falkland Islands, without the joint enterprise of Scotland and the other British nations that brought these about. The loss of international prestige would be incalculable. It is often said that the loss of Ireland was the first step in the break up of Britain’s empire – the point at which Britain’s sense of confidence and authority fatally started to ebb away. The departure of Scotland would end aspirations to be even a second-rank world power, and no doubt poison the country’s politics for generations to come.

And yet the British establishment is taking this threat very calmly. People talk about the referendum here in England, but with little sense of its implications. And when conversation moves to next year’s General Election, the impact of the referendum on our politics is quickly forgotten. The half-baked argument used to dismiss such thoughts is that a Yes vote looks unlikely. But the Yes campaign has all the momentum. The No campaign depends on narrow, conservative arguments, put forward by second-rank politicians. Even if the Noes win, the threat of breakup remains. Supporters of the Union, on both sides of the border, need to recover the initiative. There is no more important issue in British politics.

Let us try to understand were the threat is coming from. It started in the 1970s as North Sea oil was discovered, and gave the Scots a sense that their country could be economically prosperous, even as industrial decline blighted it, along the rest of the UK outside the southern counties of England. The establishment response was Devolution: the setting up of a separate Scots parliament, to which progressively more power has been given. This may have delayed the crisis, but it has not solved it. In devolved Scottish politics the Nationalists field their best politicians against those of the unionist parties of second and third rank. An ambitious Scots politician who belongs to the Labour, Liberal Democrat or Conservative parties seeks to get elected to the Westminster parliament to make his or (less commonly) her career there. Here they happily take a hand in running England’s affairs. Gradually the Nationalists have come to dominate local politics in Scotland. Meanwhile at Westminster one of two situations occurs: a Conservative led government is elected that the Scots did not vote for, or a Labour government which does not have a majority of English MPs. This inflames politics, especially north of the border when there is a Conservative government.

At the heart of the problem is the way in which the ruling Westminster elite sees itself. The British Parliament, with especial reference to the House of Commons, is sovereign. It secures the consent of the people at General Elections, but in between times its authority should be unchallenged. It is an evolution of the medieval and Renaissance idea that kings should be absolute rulers. Our elite becomes troubled when authority seeps away to institutions such as the European Union under treaty obligations. But it would rather not think about the idea that Parliament itself lacks the popular consent that its sovereign status implies. The Scots challenge this legitimacy openly, but increasing other British people feel it too, even if they articulate it less well.

There is an obvious solution: federalism. In a federal structure sovereignty is shared between the different levels of government. The higher levels are not self-evidently more “sovereign” than lower ones. The best known example is, of course, the United States of America. There the states are not the artificial creations of the national government, only allowed to do what the national government says. In theory it is the opposite, though in practice it is a jockeying match, arbitrated by a written constitution and the Supreme Court.

In Britain this means that you would have a federal, UK government, with a number of state governments below it. What would those states be? Scotland, Wales and Northern Ireland, obviously. But what about England? Many people, when first considering the problem, want to establish a series of new regional states in England, of approximately the same size as Scotland, in population terms. But this really doesn’t fly. That is not how the English view themselves; such localised identities could emerge in time. The great conurbations of London, Manchester, Birmingham, Leeds, Liverpool, Newcastle, Sheffield and Bristol show some signs of developing such identities. But what of the rest? Cornwall, though rather small in size, has a sharp (and non-English) identity and has a strong claim for statehood. But elsewhere it means drawing arbitrary boundaries which, even if they follow ancient identities like Wessex, Mercia or Northumbria, really won’t work. That is not how modern England is.

The English state would have to be England itself, with maybe only Cornwall separate. That presents some big problems of its own, of course, but I think these are more soluble than muddling on as we currently are. I will only say that the critical thing is for the seats Federal and English parliaments should be located in different cities. Only then will the separation between the two be properly credible.

There are two main ways in which such a system might be implemented. The best is for the current British Parliament to become the new English Parliament, with a new Federal Assembly located outside London, operating within a new, written Federal Constitution. But such a step is too revolutionary for our country, that likes to evolve its constitution in small steps. I suspect the number of minor legal complications that would follow would be almost as bad as those that would flow from a Scottish breakaway. I would still vote for it if offered the chance – but grumpy as the British electorate is, I don’t think they are in such a revolutionary mood.

So the other way forward is for the British Parliament to downsize and become the new Federal legislature. The House of Lords might be replaced by a Senate with members appointed by the state legislatures (which would need to incorporate sub-state governments in the case of England, perhaps). A new English parliament and English First Minister would be established, located outside London. The whole thing would be constitutionally protected by a British Bill of Rights, which might, for good measure, establish the limits of European authority, in the way that Germany’s Basic Law does. That is revolutionary enough. But I can’t see any middle way between this and the current muddle.

And how to implement such a radical proposal? The first step must be to call a Constitutional Convention in the wake of the Scottish referendum result if there is the expected No result. And perhaps even if there is a Yes and a backlash as the difficulties emerge (although if that happens, only the first of my two solutions would be viable). That is what English politicians should be calling for.

Rethinking Liberalism 6: reinventing the state

So far in my series of essays my conclusions have been quite conventional, if a little left of centre. We need to keep capitalism in a mixed economy; the state will need to get bigger to cope with the demographic challenge; we will have to tax the rich more as middle incomes are squeezed. There’s nothing here that would upset the denizens of Whitehall unduly, notwithstanding the economic liberal tendencies of some. But I think we are badly let down by our system of government. It will have to change radically – and yet the complacency of the Westminster elite is overwhelming. Liberals must rally to challenge it.

Unfortunately one of the best examples of this establishment complacency comes from our own Liberal Democrats. Back in the 1990s I was inspired by anti-establishment rhetoric from our then leader, Paddy Ashdown. The whole system was rotten, he said; we were the outsiders and only we could change it. Then, in 1997 the party arrived as a serious force in Westminster politics. But, somehow, under the leaderships of Charles Kennedy and Nick Clegg (or the brief leadership of Ming Campbell, come to that) this radicalism came to be toned down. In spite of some radical language from both of these leaders, policy was more about trimming the Westminster policy agenda here and there without counting too much controversy. Ideas, such as a local income tax, which might have meant a decisive break from the Westminster-centred way of the world, were quietly buried. By the time Lib Dems took up cabinet jobs in the current coalition, they looked very comfortable in their new Westminster ministries, with the possible exception of Vince cable, the industry minister.

And the public could sense this. My heating engineer, classic old-school lower middle-class, told me that the Lib Dems had sacrificed their principles to get their hands on the prestige of power. Mr Clegg looked as if he was enjoying themselves too much. This feels very unfair, of course. There was a national crisis in 2010, and the compromises of coalition were needed for the country’s sake. And the Liberal Democrats have stopped the Conservatives doing a lot of silly things, like cutting Inheritance Tax. But there’s a grain of truth in the accusation; what about the promise to really shake-up British politics? It’s not clear that senior Lib Dems ever wanted to do more than change the standard Westminster priorities a bit, by pushing education and redistribution up the agenda and making the odd stand on behalf of civil liberties, unless real heat got applied. If there has been any reinventing of government, it is mainly Tory ideas that are driving it. And they are about keeping the basic Westminster architecture in place, but diversifying the delivery (more private contractors and Quangos in place of top-down state hierarchies). The attempt to devolve more power to democratically accountable local bodies has been a particular disappointment. Each step forward is accompanied by at least one step back. The malign orthodoxy of the Treasury, with its insistence on a highly centralised model of power, remains unchallenged by key Liberal Democrats – or so it appears.

Why does this matter? Firstly because the pressures caused by the demographic shift have only started. I have already written about pensions. Health costs will rise too as the ratio of older people increases. And then economic growth will continue to stagnate, for a variety of reasons, including the increasing number of people entering retirement, but for other reasons too. Meanwhile the twin (and related) economic deficits of government finances and trade are unsustainable in the long run. The government has to tax more and spend less. It has to become much more efficient and effective.

The country’s direction of travel is not encouraging. Government cuts have been very painful, and the public is tiring of them. Endless privatisations are affecting the quality of service. The fiscal deficit creeps down, but it is still very large, and he trade deficit is getting worse. This shows that the underlying economy remains weak, and that growth is hardly more sustainable than it was under the last Labour government. No sooner does the economy grow, than does Sterling appreciate to undermine all the rebalancing. Meanwhile the country is sleepwalking into the breakup of the United Kingdom (even if Scotland votes No in September) and exit from the European Union, as political dissatisfaction with the status quo grows. Pulling all the usual levers of power in Westminster seems to be doing not much good.

What have liberals to say about this advancing gloom? The first point is that we want people to have as much power as possible over their own lives. That means we dislike people being dependent on the state. It is here that we differ from the socialist left, who don’t mind if the public has a permanent client relationship to state agencies, as this creates a political constituency both amongst the dependents and the employees who serve them. Liberals should recognise that in a modern society the state must play a very big role – but we also need to push back on dependency. The state should fix problems so that demand for state services reduces.

The second point is that we believe that as far as possible state structures should be fully and democratically accountable to the people they serve. The state does not devolve power to citizens, but citizens delegate power to the various levels of government. This too is difficult in the modern world. Many problems are complex and must be solved at a national and international level – and the further up power is delegated, the weaker accountability becomes.

Have we delegated too much power to transnational bodies like the European Union and the World Trade Organisation – with the threat of more as part of a transatlantic trade deal? I don’t think so – these structures merely recognise the transnational nature of problems and the need to agree international standards and laws. Countries that opt out of these structures don’t seem conspicuously better off as a result. Is Australia, for example, really a better and happier place than Britain? Its recent economic success is as much down to the luck of geography and natural resources as anything else. Does having to dig up vast amounts of prime farmland to get at the coal beneath, while poisoning the great natural wonder of the Barrier Reef, really look like freedom?

No. I think the main problem is that we have delegated too much power to Westminster, and that the Westminster elite is protecting itself rather than solving the countries’ problems. It has created a series of administrative silos that perpetuate problems rather than solving them. To tackle this we need to do three things.

Establish a federal system for United Kingdom, by creating a new English parliament and English government, based outside London, and taking to itself the same set of administrative responsibilities as the Scottish government has.
Radically reform the way public services are commissioned to ensure that solving problems for their clients becomes their prime driving force. This will entail a radically increased role for locally accountable agencies.
Reform the country’s tax system to follow this radical redistribution of responsibilities so that every level of government controls more of its own revenues – alongside a system of transfers to ensure a fair distribution of resources.

Each of these three depends on the others. Federalism is required to break up Westminster complacency; public services will only be properly remodelled if it is not controlled from Westminster; power cannot be decentralised unless tax is decentralised too. I will pick up each of these themes in future essays.