True liberal: I will miss Paddy Ashdown

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Like many I was shocked by the recent death of Paddy Ashdown, the former Liberal Democrat leader, at 75. Having seen him in only September I thought that he had a lot more to give. That’s cancer. He was a very special person.

I only met him a couple of times. The most substantial was early in his leadership in 1989 when he held a reception for local party chairs at the House of Commons. I remember little of our conversation, except that he had that way of giving you his total attention… and then he was whisked on to the next person by a colleague. After that I was in the same room as Paddy many times, but rarely got beyond a handshake. Unlike many of my Lib Dem friends I have no photo of him and me.

I first became aware of him after he entered Parliament as a Liberal in 1983. But his main impact came when he became the first Liberal Democrat leader in 1988, following the merger between his Liberals and my SDP. He was inspirational. His speeches to conference were thought-provoking and inspiring. Looking back on it, a couple of things stand out. First, he really did seem to be in it to promote a cause rather than pursue a successful career. It was typical of him that he saw that the purpose of the party was to achieve real political ends, rather than just being a feel-good place for liberal activists. After saving the party from the oblivion that faced it in 1988 (its standing was even worse than it is now), he therefore engaged with Tony Blair’s New Labour project, looking to a possible coalition. This gave rise to a sort of non-aggression pact which helped crush the Conservatives in 1997 and, with over 40 seats, took the party into the political second division – still the happiest election night I can remember, even though the party lost vote share. The size of the New Labour victory, and ongoing Labour tribalism, meant that coalition was in fact out of the question. But a degree of collaboration with Mr Blair’s government achieved a number of things, especially in the area of electoral reform: establishing a regulatory framework for political parties, which in turn allowed proper disclosure of donations; proportional representation in the Scottish and Welsh parliaments and the London Assembly (and the European Parliament too, though that had less to do with the Lib Dems). The collaboration was quickly dropped by his successor, Charles Kennedy, in 1999, who was much less focused.

A second characteristic was his willingness to engage with people. While he did not have much patience with formal consultative processes, he was very happy to listen to people that disagreed with him. He managed to engage with the party’s conference Glee Club, a notorious hotbed of party whingers, while leader and afterwards. No other leader has come close to managing this.

Towards the end of his leadership the chorus of whingers was becoming ever stronger. Members struggled to keep up with his bright ideas, and he tended to run roughshod of the party’s internal structures. By the time he stepped down the party was ready to move on to a less charismatic leader who would be more comfortable to be around. He then disappeared from party politics as he was awarded tough diplomatic jobs in the former Yugoslavia, especially as UN High Representative in Bosnia. He impressed many with his energy and toughness, though he inevitably attracted snipers. The contrast between him and his SDP counterpart David Owen, who had earlier also taken on an international role in the former Yugoslavia, showed the latter to be a much less effective operator, for all his clever talk. Paddy was nominated to an equivalent role in Afghanistan, but was vetoed by Hamid Khazai, the Afghan president, doubtless because he knew that Paddy would call out the corruption in his regime. That tells you all you need to know about the failure of western policy in that country.

Paddy then returned to Lib Dem politics as an elder statesman, where his role was quite selfless. He supported the party leadership in the difficult coalition years of 2010 to 2015, though he must have had reservations. The then leader, Nick Clegg, then put him in charge of the 2015 General Election campaign. This was not Paddy’s finest hour. He was dynamic and focused, but badly misjudged the Conservative campaign. Whether anybody could have saved the party from its relegation to the political 4th division in that campaign is open to question, but others might have less the party in a less weakened state afterwards.

But the really striking thing about this dismal episode was how quickly he bounced back. Unexpectedly the party’s membership surged after the 2015 election, and grew some more with its unequivocal stance for Remain in the EU referendum. Paddy made it his business to engage with and encourage this flood of new members, which had done so much to encourage him. A new generation found him inspirational.

By 2016 Paddy’s political judgement was much more realistic. A couple of weeks before the referendum he came to visit us in Tooting, where we were fighting a hopeless by election. He was very gloomy about the probable outcome of the referendum: he had seen the writing on the wall. And, he said, if the referendum was lost then exit would almost certainly follow. He said that it was possible that a Leave result could be reversed, in the event of a constitutional crisis, but that would be so bitter and messy that “it was not to be wished for”. How right he is proving to be. Brexit might yet be averted, but the mess that would leave does not bear thinking about, even if it pales beside the mess a no-deal Brexit would create.

Above all I remember Paddy as a liberal whose values I share. A loyal servant to his country, he hated nationalism. He saw that our Westminster-based politics was failing most people, and needed radical surgery. He was not afraid to speak bold ideas, even if many of them did not stand up to close examination. I will miss him a lot.

Extraction to sustainability: Australia is at a crossroads

Bushfire Dreaming (2003) by Ronnie Tjampitjimpa

Every nation is riven by historical tensions that are overlooked by their boosters, and yet come to define them. In Britain, the island’s relationship with the rest of Europe, an especially visible problem now, is just the latest iteration in an unresolvable conflict that has been playing since before Julius Caesar. In America we see the conflict between the individualism and vigilantism of the frontier playing out against a worship of the rule of law. Australia, from where I have returned after a six week visit, is no exception. And it approaches a decisive moment.

The tension that runs through the Australian nation is that between the people who have migrated there and the natural environment and indigenous people they found. Those immigrants are the people that made the Australian nation as we understand it. Before that the continent was a complex tapestry of indigenous tribes with much commonality but no national identity. Those immigrants have treated the land they found as resources to be pillaged for their greater wealth, and indigenous peoples as an obstacle to be cleared. The artist William Ricketts had this searing indictment:

From William Ricketts Sanctuary, Mount Dandenong, Victoria

And yet Australians love their country and all the things that make it unique in the world – its breathtaking series of natural marvels; its unique plant and animal life; the astonishing landscapes; the incredible Barrier Reef. They are philosophical about the dangers they bring: poisonous snakes and spiders, bushfires and so on. They are even coming to incorporate aspects of aboriginal culture, especially its art, into their own identity. (Indeed in my view the work of modern aboriginal artists, like the one at the top of this piece, are the country’s most striking contribution to the world art scene). All these things are part of what it is to be a modern Australian. Ricketts’s diatribe and the reserve it is displayed in are as Australian as an open-cast coal mine.

And yet the culture of extraction remains dominant. Recently the Economist produced a special report on Australia praising what is, in conventional terms, a very successful economy. But dig deeper and a darker picture emerges. This economic record has been driven by very successful export industries in mining and agriculture. In conventional economic analysis these are highly productive. So much so that they have driven up the Australian dollar to kill off a lot of more traditional industries. In the 1980s most vehicles on Australia’s roads were manufactured domestically. Now local motor manufacturing has ceased to exist. But the conventional analysis does not include damage to the environment. This damage is pretty obvious in mining, which destroys whole landscapes, but it is also severe in agriculture. Australian agribusinesses (I can’t call them farms) are highly mechanised and dependent on artificial inputs such as fertilisers. Earth is left bare for long periods, often allowing the soil to blow away (we experienced a big dust storm in New South Wales). Ideas such as soil rotation are for nostalgic romantics. Meanwhile many of these agribusinesses are being bought by Chinese corporations with no stake in the country’s long term future. Agricultural (and mining) run-off is killing coastal eco-systems, including the Barrier Reef. Meanwhile wasteful agricultural use of water (for example in growing cotton) is also placing huge strains on the landscape. The Murray River runs dry before it reaches the sea.

Nobody is more aware of this than the Australians themselves. But the current political leadership, from the Liberal and National coalition, are indifferent. For them the focus is on short term living standards and low taxes. They deny that climate change is anything Australians should do anything about. They readily give permission for new coal mines, even in prime agricultural land. These policies command widespread support, and the coalition’s leaders seem to think that by following Trumpian tactics they can mobilise this support to stay in power.

And yet this may well fail. Australia is no America. The coalition has become very unpopular after they ditched a moderate Prime Minister, Malcolm Turnbull, who sought compromises to face up to environmental challenges. The Liberals were crushed in a recent state election in Victoria. Most Australians, it seems, want to find a different way.

Actually a more sustainable Australian economy should be perfectly feasible. There is plenty of sunshine and wind to produce renewable energy. The masses of agricultural land could easily be farmed more sustainably. Australians are well-educated, technically savvy and commercially enterprising. They could make more themselves rather than import, using modern AI and robotics.

But moving towards such a path would be a shock. It would require a much lower exchange rate, and doubtless a cut to nominal living standards. Are they really ready for it? Perhaps it will require an economic shock. That may happen. Changes to the Chinese economy could weaken the country’s terms of trade. Excessive property prices and personal borrowing may also force a crisis.

Australians have come a long way to facing up to their demons. But they now face some important and difficult choices. Australia’s national identity could be o the threshold of a transformation.

Will 2019 be the year of the liberal backlash?

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As I finally overcome the effects of flu and Christmas celebrations, it is a moment to reflect on 2018 and what 2019 might bring. In common with most liberals (I hesitate to say all…), I am not feeling cheerful. But surely there is hope?

The anti-liberal wave continued through 2018. I will come back to Donald Trump and Brexit in a moment, but the trend has been visibly much more widely. In Europe we had the rise of anti-establishment parties in Italy and Germany, with the former achieving power (though to be fair the 5-Star movement does have some liberal elements). Anti-liberalism is well entrenched in Poland and Hungary, and the one apparent liberal bright spot, France, has now hit a big bump in the road with the gilet jaune movement. Outside Europe things look no better, with Erdogan in Turkey, Putin in Russia and Assad in Syria all looking unstoppable. And then there was the election in Brazil. At least the kleptocrat Jacob Zuma was finally thrown out in South Africa.

So the soul-searching amongst liberals continues. Critics from left and right attack a liberal establishment that just doesn’t get it. To those on the right, what liberals don’t get is patriotism and standing up for national interests in a wicked world. From the left, with its love of abstract nouns, liberals don’t get that “neoliberal” economics and “austerity” are total failures. And, of course, there is something to both critiques – though right’s answer of crony capitalism, and the left’s of extending the central state’s reach, both leave liberals as sceptical as ever. Liberals are clear about elements of a new narrative – environmental sustainability and internationalism, for example – but can’t string it together coherently.

The biggest surprise to me over 2019 has been the success of Donald Trump. I had assumed that his regime would collapse into incompetence. The incompetence is there, evidenced by its inability to deal with anything complicated, like healthcare, but there is method in Mr Trump’s madness. He is slowly developing a coherent narrative and a government team that believes in it. This includes the pursuit narrow US interests (and maybe Israel’s too…) abroad, an attack on free trade, stimulus to the US economy, and stirring the pot on immigration. He is getting some grudging credit even from critics for his robust handling of China, for example. His claim that he is keeping his promises has currency and, through rose-tinted spectacles, it is possible to accept his claim of a transformative administration. Then you remember the growing healthcare quagmire, the roll back of environmental protection and the malign effect of tariffs on the domestic economy, and a more realistic assessment beckons. 2018 has been a fortunate year for Mr Trump. His trade war has been well-timed, and the tax stimulus too.

Brexit played out closer to my expectations. The government has been forced into a deal that keeps a customs union going for the time being at least. I am taken aback, though, by the strength of resistance from hard Brexiteers. I would have thought a tactical retreat was in order: get past 29 March 2019 and into formal exit with relatively little dislocation, and then start work on dismantling the hated compromises. We have taken back control after all. This is clearly the calculation of those still in the cabinet, like Michael Gove; but many others seem happy to contemplate a no-deal Brexit instead. But Theresa May is rapidly making that option untenable. Bexiteers like to talk of a “managed” no-deal, with a series of side-deals to handle the bigger problems, like air flights and medicines. They assume that the EU would play ball because, after all, they export so much to us. But we are rapidly running out of time, never mind goodwill. Others seem attracted to the idea of a hard landing, in order to bring out a “Blitz spirit” in plucky Britons. I get fed up with Remainers jumping on every scare story that gets dreamt up, but the shear delusionality of the more extreme Brexiteers is unbelievable.

Still, with the current tactics of both Mrs May and Jeremy Corbyn the chances of a no-deal crash are much higher than they should be. There is, alas for my Lib Dem friends, almost no chance of a further referendum. If Mr Corbyn supported the idea it might have been feasible, but he clearly doesn’t. He wants a bad Brexit that can be blamed on the Tories to Labour’s advantage.

So what hope in this dismal picture? I am waiting for the backlash (against the backlash, if you will). This liberal backlash is based on two things. Firstly that younger people don’t hold with the anti-liberal movement. For them global warming is a real threat, and diversity a real asset. This needs qualification: less educated youngsters are picking up on the right-wing attack, and indeed they are behind a lot of the associated violence. But they form a lower proportion than they used to, and are prone to apathy. Meanwhile a large part of the original backlash comes from older people. This gives the potential for the pendulum to swing back. Time may be on the liberals’ side.

Secondly, it is clear that the anti-liberal populists don’t have long term solutions for the main problems afflicting society. In fact, beyond the headlines, their solutions involve the breaking down of democratic institutions to provide cover for crony capitalism in league with a crony state. Where those institutions are relatively weak in the first place, they may succeed in entrenching themselves well enough to head off any backlash (look at Venezuela for an example of where things can go). But in most developed countries, including the United States and Britain, I think the institutions are too strong.

How might the backlash play out? In the US the most obvious way is for a full Democratic victory across all branches of government in 2020. We had a hint of this in the mid-term elections in 2018, but the backlash has to develop further for this to happen. And yet Mr Trump’s end could be hastened if senior Republican politicians and donors start to panic. Trump’s confrontational, insurgent game has produced brilliant success but it does not make for secure political alliances. This could happen in 2019.

In Britain? Things are harder to call. Labour are currently trying to combine a liberal backlash with an anti-liberal left backlash. This is creating a lot of stress, and a well-led, well-prepared and well-funded Conservative party (to say nothing of the continuing appeal of the SNP), could well be enough to keep them at bay. And the impact of Brexit on our politics is unknowable. A wider realignment is possible.

That is my hope and maybe 2019 will see the turn of the tide. But one thing is clear about any liberal backlash. It will not be led by reheated liberal politicians from the past. It will depend on appeal to younger voters, and that will need something fresher. And that is something all the mainstream political parties, in Britain anyway, are struggling to do. There will have to be changes at the top. Happy New Year!

Britain’s fate is in the hands of two people: Theresa May and Jeremy Corbyn. Which is the problem.

I’m back from Australia, but alas recovering from a bout of flu combined with tooth trouble. What with Christmas coming, normal service will not resume for a while. But I can’t help myself from commenting on  Britain’s Brexit drama. 

It is striking that so much of what happens next depends on just two individuals, the Prime Minister, Theresa May, and the Leader of the Opposition, Jeremy Corbyn. This is not a comforting observation.

First, and most obvious, is Mrs May. She is in charge of the Government – and when it comes to taking the initiative, the Government has the upper hand over Parliament, even though the latter is technically sovereign. Parliament has tried to wrest some control over the process, with need for a “meaningful vote”, but Mrs May has easily outmanoeuvred it. She alone dictates when the vote will take place, and simply postponed it a month when things weren’t going her way. She still needs parliamentary consent though, which leaves a deadlock.

Meanwhile, Mrs May has fended off an ill-advised attempt from within her parliamentary party to unseat her as their leader. There’s nothing much they can do now to remove her. She’s in complete control.

How does Mrs May choose to use this power? She clearly wants the deal she has negotiated with the EU to be ratified, allowing the UK to formally leave on 29 March, and to get on with the next phase of the negotiations about the trading relationship with minimal disruption to commerce and daily life. She interprets this, fairly enough, as fulfilling both the mandate given by the 2016 referendum to parliament, and the election promises she made in 2017. What if she can’t get that consent? She says that there are two alternatives which are No Deal or No Brexit. But she has not expanded on what exactly she means by this, except to rule out a further referendum to decide between two or more of the options.

The closer we get to No Deal the more horrifically it looms, completely giving the lie to Mrs May’s earlier mantra that “No deal is better than a bad deal”. She consider this to be a realistic option – but it is still what happens if parliament does not consent to an alternative. So what does she mean by “No Brexit”? If she rules out a referendum then that means a unilateral decision by parliament to revoke the Article 50 Notice to leave the EU. This has been shown to be legally feasible, but only if it is a complete revocation, and not shenanigans to simply resubmit the notice a bit later. That idea looks horrific too. Even the most ardent Remainers feel that Article 50 should only be revoked if a further referendum endorses it.

This is highly unsatisfactory, but Mrs May is the person in charge and we must play to her rules, even if she doesn’t explain fully what they are. Only one person has the power to break the deadlock: Mr Corbyn. The most obvious way would be for him to throw his weight behind Mrs May’s deal, mobilising enough Labour MPs to neutralise Tory rebels and the DUP. It would be very easy to argue that this is in the national interest, and Labour committed to Brexit in the 2017 election. However, he has spent so much energy rubbishing the deal that the effect on his authority would be catastrophic. 

There is another way. As Leader of the Opposition he can table a confidence motion allowing parliament to bring the government down, either leading to a new government or an election. This is what he says he wants to do, to force an election, which he hopes Labour would win. But it is hard to see how he would win an election at this point in the process, without a clear policy on Brexit of his own. Even a deeply split Tory party should be able to see him off. Anyway, if he won he would not have time to renegotiate Mrs May’s deal, so it does little to resolve matters.

But there is a bigger problem with using a confidence motion: neither the Tory rebels nor the DUP would support it. They do not want an election on Mr Corbyn’s terms, or, heaven forbid, risk a Corbyn-led Labour government.

So what else could Mr Corbyn do? He could put forward a confidence motion with plan to replace the current government with a cross-party one with the single aim of resolving the Brexit deadlock through a referendum. This would require cooperation with Tory rebels (though different ones from the hard Brexiteers that are causing Mrs May her main problem). I think this idea has been referred to as a government of “national unity”, though it is hard to see that it would do anything but promote yet more national discord, even if that may be necessary.

That would leave the rather tricky question of who would lead it. It couldn’t be a party leader. It would help to bring as many parties on board as possible: the SNP for sure, but the Lib Dems, Greens and Plaid Cymru too. There would also need to be clarity on where it would end and how. It would need to resign pretty much s soon as Brexit formally happened, or Article 50 was revoked. Would the Conservatives and the DUP be given another chance after that? Or would there be an election, with the Conservatives irretrievably split?

This final option is a very long shot, but these are desperate times as the prospect of No Deal looms. But the real problem is that I don’t think that Mr Corbyn has the vision or ability to pull it off, even if he wanted t, which is doubtful. And without Mr Corbyn it cannot work.

Which leaves us with Mrs. May’s grim brinkmanship. At a time needing great, visionary and persuasive leaders, Britain’s don’t measure up.

Why I’m pausing for reflection

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I have been trying to post articles twice a week. In the last few weeks that has slowed down. This week I have struggled to post anything at all.  On reflection I think it’s time to pause for a while, and reduce postings to a trickle.

Why? Partly it is plain depression – though the non-political side of my life is going well enough. After multiple shocks to the political system, that is not be surprising. I still struggle to accept that Britain is leaving the European Union, that Donald Trump is the US president, and that liberal attitudes are being thrown out in favour of nothing very coherent.

But I think it is deeper than an emotional reaction – I’m afraid I’m an Enlightenment spirit that believes that reason should rule emotion. The world has changed, and the balance of political forces has altered in ways that I have not yet understood. It is tempting to impose oversimplified models on this. For example, it is commonplace to ascribe changes to a reaction of the white working classes. But that can only be a partial explanation – there just aren’t enough white working class people for it to be more than that. All successful political movements are coalitions – and it is the unnoticed elements of that coalition that may hold the key. Guilt by liberals over the struggles of many white working class people is being used as a cover for more sinister forces – and some not so sinister ones too.

And if I don’t understand what is driving this change, the consequences of change are also obscure. Many bad things are happening as a result of the Trump presidency and Brexit – but some good things might happen too through the law of unintended consequences. Breaking up the old complacent order will force many things to be rethought – and it will not just be liberals who are discombobulated. For example, Mr Trump’s recent questioning of the two-state approach to peace in Israel may be no bad thing -as it will force Israel’s politicians to be clearer about what it is they actually want – rather than just getting in the way of US policy. In another example, Russia’s propaganda narrative about confronting western liberalism loses its power if western liberalism is in retreat. The Russians are having to be careful about what they wish for. And is it too much to hope that ethnic minority campaigners, so long dependent on a narrative of victimhood and guilt, might freshen up their story when the main competing narrative is also one of victimhood and guilt? Perhaps they might spend more time campaigning on problems that they share, rather than on what sets them apart?

And so my reaction to unfolding events is, so often, “wait and see”.  The interesting stuff has yet to emerge. Here I am departing from many other liberal observers – who are content to vent a very understandable anger. I cling to an optimism. Liberalism is experiencing a backlash that is similar in some ways to that endured in the later 19th Century. That led to calamity – a nationalist blind alley that only ended in 1945 after countless millions were killed. This time I think it is different. There are many more liberals now; our values are more deeply embedded. The forces of darkness are weaker than they look. We will turn the tide. But how, and where? That remains unclear. It will require new ideas – and a new coalition.

And so I want to spend more time reflecting, and less time simply reacting to events. I will post, but less frequently.

I started this blog almost exactly six years ago. Looking back at it, that has been six years of political retreat. The crushing loss of the British referendum on changing the electoral system in 2011 now looks like a portent. I need to need to rearm and rethink to get ahead of the game.

Why WTO-plus is better than EEA-minus as Britain negotiates Brexit

It’s still very wounding to think of the UK leaving the European Union. The Leave campaign was based largely on lies and wishful thinking; those who voted to leave fell well below 40% of the electorate, which might be a reasonable threshold for such a major change. But Theresa May, our new Prime Minister, has said “Brexit means Brexit”. This is surely the best way forward. Rather than try to undermine the referendum result, it is better in the long run to test it to destruction.

Calls to rerun the referendum are understandable but unrealistic. The Conservative Party is overwhelmingly Eurosceptic amongst its membership, if not amongst its MPs. The party must rally to that cause. Members and MPs who don’t like it should leave the party. Politically it needs to rebuild its appeal to the working and lower middle classes outside London, who overwhelming voted for Brexit. Mrs May stands a better chance of succeeding here that the duo of David Cameron and George Osborne.

Labour is in an impossible position. Though its MPs overwhelmingly support membership of the EU, most of them had large Leave majorities in their constituencies. They will be unable to ignore this. So with neither the Tories nor most of Labour ready to fight to overturn the referendum result, that leaves the SNP, the Liberal Democrats and an assortment of Northern Ireland MPs to take up the fight. They are impossibly outnumbered. Which does not mean that they should stop putting the case. But that fight is the first step in a very long road. It may be possible that the UK could limp back into the EU as its negotiating position collapses and it faces a deep economic crisis. This would leave a bitter legacy and it is not to be wished for.

That leaves the question of what Britain should aim for in its negotiations for exit. Many advocate something referred to as “EEA-minus”. EEA is the European Economic Area, which consists of the EU plus Norway and Iceland and one or more tiny statelets.  EEA members have access to the Single market, but must also abide by the three key freedoms of movement: goods, capital and labour. The idea behind EEA-minus is that the UK would negotiate exceptions to freedom of movement of labour – as immigration was easily the most successful argument used by Leave campaigners. It feels like a pragmatic compromise between the 48% who wanted continued membership and the 52% who wanted to do something about immigration. It would reduce economic disruption. But it is a shabby compromise that would please almost nobody. Leave supporters would still find the country bound by EU laws and courts, and making budget contributions, with the indignity of not being able to influence them. It is hard to argue that it isn’t a net backward step on practical sovereignty. Remain supporters would look at the whole exercise as being pointless. And any fudge on free movement of labour is guaranteed to disappoint.

Actually, there is a deeper problem. Free movement of labour goes to the heart of the EU’s sense of itself. It is precisely what excites most younger EU enthusiasts about the union. And it is hard to understand why the other EU governments would want to fudge it – the risks for them would be enormous. Any negotiation is practically bound to collapse or at least prove an enormous disappointment.

The opposite possibility is hard Brexit. This means that Britain would be unambiguously outside the EU, without an overarching treaty to bind it in at all.  Trade would be covered by the World Trade Organisation (WTO) framework, guaranteeing some minimum standards. This is by no means as straightforward as many Brexit campaigners claimed in the referendum campaign – it actually requires significant amounts of negotiation in its own right (as the FT explains). But it is a robust baseline, and there is much merit in making this the main focus of the UK’s rather limited negotiating resources. The UK would then need to identify a series of priority issues to negotiate with the EU to add on top. Top amongst these are the rights of residence and labour market participation of EU citizens living in Britain, and vice versa. Also there is the passporting of financial services, though this is not an issue to die in the ditch over.

There are three advantages to a “WTO plus” approach, over “EEA minus”. First is that it presents a tough negotiating position, which will help to win concessions on critical issues. Second is that it follows the picture painted by Leave campaigners most closely; in the long run it is critical to call their bluff – they are either right in their optimism – in which case the EU needs to rethink itself – or they are wrong, in which case they will be undermined as the major political force they have become. And third it helps get the bad news out of the way quickly. There remains a lot of denial about the impact of leaving the EU; the announcement of WTO-plus would administer a second shock to the system, causing further losses to the pound and inward investment. But then it should hit bottom, and the momentum might be back upwards. This would be healthier in the long run than a drawn out series of disappointments that would erode confidence in the British economy and make it look the sick man of Europe. Getting the bad news over with is something the Americans usually do much better than Europeans – and we should learn from them.

And for us EU supporters, we need to understand that freedom of movement of people is at the very heart of what we want, and we must recognise that we have, for now, lost the argument. But we must rebuild the case, using the traumas of Brexit as evidence. Meanwhile we must think about the sort of EU that we want. We are now witnessing an unholy mess as the Italian government and the EU Commission wrangle about rescuing Italy’s banks. The EU’s rules on state aid look much too restrictive.  The EU will survive, and one day Britain will rejoin it. But it will be a different Britain and a different EU. We must work to change both.


4 liberal themes on economics and public services: my contribution to Lib Dem Agenda 2020

Agenda 2020 is the consultation exercise being carried out by the Liberal Democrats to set the framework of policy in the period up to 2020, when we next expect parliamentary elections. At this stage the idea is to keep the thinking at quite a high level. This is always quite hard for political activists. We somehow got onto VAT on tampons in the consultation exercise in Bournemouth. Then again, I’m always saying that political types on the left are too abstract. I haven’t submitted the following contribution yet, but the idea is to be strong on general direction, with only a few pointers on the detail. I’m afraid that it’s still a bit longer than my normal posts.

Economics, public services and wider Liberal Democrat policy

Economics and public services should be at the heart of any political narrative. Too often in the Liberal Democrats both topics have been neglected. The party has opted for a simple middle ground between the Conservatives and Labour. The 2015 General Election was no exception, at least as far as the headlines went. The time has come for a much more robust narrative. Here are some ideas on what this might look like.

The story so far

After 1945 the great Liberal thinkers Maynard Keynes and William Beveridge founded a post war consensus on economic management and public services. This was based on the state taking responsibility for managing the business cycle through fiscal policy, and a greatly expanded set of state services, funded by much higher taxes (compared to pre-war levels), to fulfil a series of new entitlements, designed to ensure that everybody obtained a basic level of wellbeing. These ideas were taken on by the Labour and Conservative Parties, and developed into an overbearing state, which also took over a series of failing businesses, from railways, to steel, to even aero engines.

By the 1970s the state had lost control of its finances and the country was heading for towards economic collapse. Public services had been captured by vested interests, with very little regard for their users. In reaction to this emerged a new conventional wisdom, initiated by Margaret Thatcher and expanded by Tony Blair. This new thinking was again based on liberal principles, and it is often referred to as “neoliberalism”.  The idea was that citizens should be empowered as buyers in a market economy, with the state stepping back to provide only basic services and a basic safety net. Much of the regulation of the business cycle would be taken up by monetary policy, so as to reduce the role of the state. Marginal rates of tax on income were cut, though overall levels of tax increased, if anything.

Probably not coincidentally, this change to public policy was accompanied by dramatic shifts in technology and global trade. Society changed substantially, mostly for the better. Living standards advanced, life expectancy improved, and pollution was cut. But now the country, in common with the rest of the developed world, seems stuck. Most economic growth just benefits a rich elite; businesses hoard excess earnings rather than invest or pay their workers more; property prices escalate. The number of badly paid jobs rises; most younger people are shut out of decent jobs and decent homes. Demand for health and care services grows, while public resources do not keep pace. And prosperity is restricted to a small number better-off areas, especially in the south east of England.

Liberals should worry. Power is being concentrated among a wealthy elite of people connected to big businesses. This trend Is abetted by a highly centralised national government that would rather deal with these large businesses, or else large public agencies like the NHS, than directly with the public. The power of the markets works for many people, but it is failing many more. Many people have inadequate leverage in the markets for jobs and homes in particular, leaving an unequal power balance in both domains. This state of affairs breeds fear and insecurity, which in turn leads to the rise of the political extremes of right and left, which threaten social cohesion.

In the meantime thinking on economic policy has not caught up with these profound changes. Most economists still think of the economy in a highly centralised way, in terms of aggregates across the whole economy, rather than the fate of its component parts. And thinking about productivity is stuck with ideas appropriate to manufacturing industry and economies of scale – and not to the efficient use of the human resources the country actually has to hand, in an economy increasingly dominated by personal services. The left rails against a series of pantomime villains, but resists any serious progressive reform of public services. This old thinking simply concentrates more power and wealth into the hands of a well-connected elite. Public services are dominated by functional silos based on political empires, not people’s actual needs.

We need fresh thinking, and my suggestion is to organise this around four liberal themes.

Liberal theme 1: green growth

Green growth means the advancement of human wellbeing while reducing the consumption of physical resources, especially non-renewable energy. The twin objectives are to ensure that everybody has the chance to live a healthy and fulfilling life in a comfortable environment, while easing the stress on the local and global environment.  There are two aspects to this: developing and implementing technologies that are more environmentally efficient, and breaking the idea that ever increasing consumption is the path to improved wellbeing. This requires a profound change in outlook – though one that is already taking place.

Green growth may or may not entail economic growth as currently measured. That depends on how advanced wellbeing is reflected in the monetary economy. In the short to medium term it entails a substantial level of investment, in more efficient homes, power infrastructure and transport infrastructure, as well as research and development. If properly carried out these investments will entail improved economic growth. Longer term growth requires the harnessing of human resources more effectively. This means a wider distribution of information management and decision making, or:

Liberal theme 2: small is beautiful

Large organisations, be they businesses or government agencies, are one of the main threats to green growth and liberal values. They concentrate power in the hands of the elites that control them, leaving the majority of their employees disempowered, and unable to react most effectively to the world as they find it. The elites are geographically concentrated, leading to geographic concentrations of power and wealth, and the hollowing out of communities elsewhere. This hollowing out leads to a waste of human resources, which must be tapped if green growth is to take root. Furthermore, large commercial organisations have a tendency to hoard surplus earnings (often abroad) rather than invest them, acting as a further drag on the economy.

Of course large organisations also play a vital role in any efficient economy; they are the best organisational form to take on some functions. But these are not as many as often supposed. A liberal government must change the legal and regulatory environment so that it favours large organisations less. This will include reforms to political structures, banking and taxes.

It will also entail a substantial reform of public services:

Liberal theme 3: public services that solve problems

It should be obvious that the main reason that public services are inefficient is that they do not work together to solve people’s problems. Housing, mental health, addiction, crime and poor physical health are very often bound together in one person’s feeding on each other – and yet we persist in trying to deal with each of these issues separately, in separate chains of command all the way to Cabinet. Often the key is making all the relevant services work together in such a way that the user moves to a better way of life, with less call on the public purse. Usually what happens is that the relevant agencies work against each other.

Public services should be organised to meet the needs of people, and solve problems rather than playing pass the parcel. This should be the foremost area for the development of policy, based on best existing practice. There may be a number of possible approaches.  Some of things are clear, however:

  • Changes will be easier to implement if responsibility for public services is more localised and more integrated.
  • Some form of empowered professional intermediary will usually be required to assess the users’s needs, to coordinate the different agencies and, where needed, to negotiate the compliance of the user. Empowerment will mean some form of budgetary control. This means a step back from the current tendency to disempower and de-skill such intermediaries, like social workers and probation officers.
  • Large scale functional outsourcing will usually take services in the wrong direction. Repeated tendering also leads to a dumbing down, a tendency to gloss over more complex issues. The greater use of local social enterprises may well be a better approach in a framework that ensures proper accountability.

Public services should help with some of the most difficult problems relating to poverty; but this has to be in a wider context wealth and income distriubtion. We also need:

Liberal theme 4: redistribution to correct imbalances

A well-ordered, liberal society might not require the redistribution of income and wealth. And liberals dislike redistribution for its own sake – different levels of wealth may simply reflect freely made choices over how to balance accumulating money with other things life has to offer. But in our society imbalances of wealth and income pose a threat. The less well-off are denied the opportunities that should be theirs. Excessive wealth can be used to buy political influence and monopoly power, reducing choices for others. The accumulation of wealth may also lead to excess savings and economic stagnation. Liberals must embrace redistribution, albeit warily.

Redistribution needs to work at two distinct levels: personal and geographical. The wealthy must be taxed on both income and assets (land, in particular), and the worse off must be compensated through access to benefits and rights to state services, especially housing. Children must be a particular focus of redistribution as early years are critical to life chances.

Also funds must be redistributed from wealthy regions and districts to those less well off, to offset the negative network effects of clusters of wealth.

At both levels redistribution arrangements must be designed so as not to create dependency. Those less well-off should be encouraged to improve their lot – but at the same time the level of redistribution must fall as the need for it falls. Systems of redistribution based on universal rights (like the state pension) have their place, but have limits too. Truly liberal systems of redistribution will require careful design.

A policy programme to match

At this stage the idea is to sketch out broad political priorities, and not detailed policy programmes. I do not believe that in most cases a radical departure is needed from adopted Liberal Democrat policy. The high level emphasis will need to be rethought, however.

The main policy implications of taking forward the four liberal themes are:

  1. Political reform, and especially the devolution of power to regions and districts. This is essential to create the right political environment. This may be combined with a new federal settlement for the UK and reform of the House of Lords. Electoral reform is important to ensure a plurality of power – but the priority must be to implement proportional voting systems at local level rather than at Westminster. A further important strand of political reform should be restricting the influence of wealthy individuals and organisations, especially through political donations.
  2. A programme of green investments must be instituted, including high quality social housing.
  3. With public service reform the emphasis should be on bottom-up initiatives – but national funding structures will have to be reviewed to facilitate this.
  4. The tax and benefits system will need to be re-examined. The Lib Dem commitment to increasing personal allowances must be rethought, as it is inefficient as a redistribution policy. Restoring tax credits is a higher priority. Taxation of land in some shape or form makes sense, though we may get no further than reforming Council Tax.
  5. On overall fiscal policy it is best to manage down expectations of additional government spending – though the principle that the government (including local governments) can borrow to invest must be clear.
  6. The banking system must be reformed to allow new, locally-based lenders to come into play. Investment in the “real economy” should be encouraged to create new assets, While avoiding a merry-go-round of existing assets.
  7. The UK should act internationally through the EU to curb tax avoidance, especially by large corporations. Trade agreements and relations with the EU should be viewed through the prism of promoting smaller businesses, and not simply advancing the interests of large multinationals.

Of course there are many more important policies that have a bearing on the economy and public services – not least reducing the level of carbon emissions. But overall such a policy platform should be quite distinctive from the orthodoxies of right and left, and yet fully in tune with modern times.

Why the Conservatives are the coalition of chaos

The choice is simple: “competence and a clear plan” with the Conservatives, or a “coalition of chaos” with Labour. So says the leaflet just delivered on behalf of my Tory MP, and so every Tory spokesperson has been saying in answer to any question from the media. Clearly this has been a carefully researched formula, since it is part of well-prepared election campaign. That’s a bit strange: since political chaos would certainly follow a Conservative victory – and that would overwhelm any governing competence that they may be able to offer.

The proximate cause of that chaos is easy enough to see: Europe. This starts with the uncertainty engendered by the party’s promise of an in-out referendum by 2017.

Not many people have thought seriously about the consequences of a British exit from the EU. Some predict disaster. Others, like Ukip, suggest that it will unlock a bonanza, allowing more expenditure on the NHS and defence, and tax cuts thrown in. A more cynical view is that if the UK left the EU it would make little practical difference to most people, most of the time. The Ukip view is clearly fantasy; the pessimistic view is a possibility, though the more cynical view is the most probable in the longer term.

But that is to step over the sheer complexity of the exit process. The EU reaches so far into the way the country works that negotiating exit would be a massive undertaking with an uncertain outcome. To get an idea of this the best thing to do is the read the prize-winning entry of the Institute of Economic Affairs’ Brexit prize. The IEA, and the essay’s author, advocate departure from the EU – but they are doing everybody a service by outlining what is involved. The range of outcomes runs from a Norway solution, whereby trading would be little impacted, but the country would still have to abide by many EU rules and contribute to EU funds, to total exit, which would get in the way of much of what we now take for granted. The country does not just have to decide whether it wants in or out, but if it leaves it has to decide what kind of relationship it wants with the rest of the EU. And on top of that the process of exit would be the top item of the policy agenda for government for years following any decision, distracting attention from other matters. Amongst the collateral damage of this might well be the breakup of the United Kingdom itself, as Scotland does not share the scepticism of the EU that the rest of the country does.

The referendum outcome is by no means a foregone conclusion. Much of the British establishment favours staying in the EU, and opinion polls show a comfortable lead for staying in. But powerful forces range against it, including most of the country’s influential press, and exit fits the sour political mood of much of the electorate. So chaos and uncertainty would not only follow an exit vote: it would affect the country in the lead-in period. Both domestic and foreign businesses would be tempted to defer investment until the outcome was known – undermining the economic recovery.

But that is not the half of the problems a Conservative government would face. The party itself would be riven from top to bottom. Euroscepticism runs to obsessive levels amongst the party’s grass roots, and increasingly in its parliamentary party. This was on show until quite recently, with repeated rebellions by Tory backbenchers, two of whom defected to Ukip. But much of the party’s respectable wing, including its leader David Cameron, are more pragmatic. Their plan is to present a claim that they have renegotiated Britain’s relationship with the EU, and that the loss of sovereignty has been moderated. And yet such claims will rest on weak foundations. It is now clear that there will be no revisions to the EU treaties. These have become so difficult to push through that only a deep sense of crisis makes that idea feasible. For now, though, the EU has avoided such a deep crisis, and it has shown strong survival instincts. The EU is changing in a manner that suits British wishes – but not as a result of any renegotiation process that Mr Cameron can take credit for.

This would only make Tory divisions worse. There would be against Mr Cameron’s leadership; it is quite possible that he would be ousted as party leader. More  moderate Conservatives could be forced out. Or if the moderates keep the party machinery under their control, there could be mass defections to Ukip. There will simply be no middle ground around which to rally the party. The coalition that is the Conservative party would surely fragment. Such goings on would affect all areas of government. Chaos would not be a bad description of it, and “coalition of chaos” not a bad description of the party itself.

Conservatives like to invoke the 1992 election, when they, under John Major, fought off a strong challenge from Labour to win an overall majority – defying pundits and opinion polls. This blog has made drawn such parallels itself – Labour was likewise undermined by doubts over its economic competence, and its leadership in general. But people would do well to remember what happened next. John Major’s government was perhaps the most disastrous for the party in its history. It suffered its most severe defeat ever in 1997, and has never been able to secure a majority since. Mr Major could not control the party’s Eurosceptic wing, and the whole government suffered drift as a result. Since then the Eurosceptics have grown in strength and confidence; the referendum issue will be yet more polarising. Matters will be much worse.

And yet few commentators on Britain’s election seem to understand any of this (the Economist’s Bagehot column is an exception). Such is the strange culture of denial and short-termism that stifles British politics.

Happy Christmas from Thinking Liberal

Today I was going to post the third in my series of reflections about being the governor of a successful school. But I suspect that too many people will be too busy to read it. Not coincidentally I’m probably too busy to write it anyway. I really should nip down to Waitrose to buy the final Christmas supplies before the shelves are stripped bare. And then wrap a few presents. And so on.

So instead I will just wish all my readers a Happy Christmas. Whether I resume posting next week remains to be seen…