Politics UK – Page 53 – thinking liberal

Parliamentary boundary changes: good idea, could be better

People grow attached to the status quo. There used to be a large packing crate in our garden when I was a boy. When my elder brother problem objected that it was unsightly and we should get rid of it, my mother countered that: “But the cat likes to sit on it!”. This was too much for my brother who took an axe to the crate shortly afterwards. An unsightly item was removed, and the cat had no difficulty in adapting.

So it is with the British parliamentary boundary reviews. There’s a lot of fuss, with many saying that fundamental democratic principles are being undermined. But the arguments offered against them are little better than that offered by my mother (who did come to see the humour of it) of our packing crate.

The idea behind the reforms is that all constituencies should have roughly the same number of electors, so that everybody’s vote carries the same weight in the political process. That is a solid democratic principle. The problem is that equal constituency size implies arbitrary boundaries. Under the current arrangements quite a lot of weight is put on natural geographical or administrative boundaries. That can lead to some quite big variations in size. In my local borough of Wandsworth we get three seats, but two of them are 15% bigger than the third. Across the country the variations can be much bigger, even excluding the peripheral highlands and islands (Western Isles is very small; Isle of Wight very big). A further principle is to reduce the number of MPs from 650 to 600, which is still large by international standards.

The main argument offered against the new boundaries is that they are too arbitrary, and, to listen to the rhetoric, you would think they would tear communities apart, with half a village represented by one MP and half by another, say. I really struggle to understand this. MPs may be moderately important community figures, but they hardly define communities. If they did we would already be in deep trouble. In Wandsworth the local parliamentary seats are all very well for the residents of Battersea, Putney and Tooting – but the communities that lie between these (Wandsworth Town and Balham) are carved up between three different constituencies each. Life goes on.

A related issue is that the new seats will cross local authority boundaries much more often. In Wandsworth none of the three current seats crosses a boundary. Under the new proposals the borough will be split between four seats, all shared with neighbouring boroughs. No doubt this will make constituency casework a bit harder. But frankly I’m not sure it is entirely healthy for parliamentarians to get too closely associated with their local governments – they are meant to sit above that layer of government and judge in the common interest. They may even gain from comparing the way different authorities handle things.

Another issue is that boundaries will change more frequently and by larger amounts, to reflect population changes. Locally we have a major development that will be smack in the middle of one of the new seats; when all these new people move in this will cause the boundaries to be changed – knocking on into neighbouring seats. But there’s too much job security with MPs as it is – it’s good for them to have to sell themselves in new areas every so often. There are too many safe seats as it is.

A more subtle argument is that new areas represent equal electorates but not equal populations. Quite a few people aren’t on the register, or don’t count because they aren’t allowed to vote in parliamentary elections (through not being UK citizens). Surely the interests of these people should be represented too? But it is hard to overcome the principle of equal rights for all those entitled to vote. And frankly, those who deliberately avoid being registered (which is in fact illegal) shouldn’t be given weight. The running of a democratic society requires a degree of active engagement by citizens; people have a perfect right to say they aren’t interested and not vote – but if they can’t even be bothered to register, how hard are we to fight for their democratic entitlement? And why should their neighbours be empowered in their place? There is an issue for MPs with a lot of non-voting constituents generating a bigger case load – but if that really is a problem, they should simply be paid more.

Mind you, the Boundary Commission’s current proposals could be less arbitrary. They have created some rather silly looking constituencies. But the consultation and appeal process should help a lot here. It’s not too hard to come up with some better looking alternatives. One idea I have seen in our area does an even better job than the existing boundaries, though this may knock on badly further afield, managing to reunite the currently split communities of Wandsworth Town, Balham and Clapham, while keeping Putney, Tooting and Battersea together.

Better still would be to have a system of proportional presentation, where party representations would be based directly on votes cast. You could have less arbitrary constituencies then. But the British political class has set its face against such radical ideas; they should accept the consequences.

Battersea riots: what can we learn?

Wandsworth Council commissioned an independent review of the disorder in the borough in early August, which is mainly about the riots at Clapham Junction on Monday 8th August. Clapham Junction, of course, is located in Battersea, and not Clapham, which is a couple of miles away and in a another borough. This report, by Neil Kinghan, was published this week. What can we learn?

The most valuable part of the report is its clear description of how events unfolded. It is amazing how quickly garbled stories gain currency, especially since our media aren’t particularly fastidious about factual accuracy. The trouble (at Clapham Junction) started at 8pm, after some earlier incidents in the nearby estates. After about half and hour the local police team was withdrawn, and they did not return until after 10.30pm. The police heavy mob, in their armoured cars, did not arrive until after midnight, when the trouble was pretty much over. The fire at the Party Shop, which was the most spectacular and dangerous part of the episode, happened after an explosion shortly after midnight, and was not part of the main “rioting”.

Who were the looters (a better description than rioters, I think)? The only hard facts come from the 150 or so that have been arrested. The total number of looters was estimated to have reached a maximum of 450, though more people than this must have been involved as people came and went. Of those arrested, half lived in Wandsworth (nearly half of those in Battersea), 24% were under 18, 66% were black, 29% white – and 88% were already known to the police (i.e. they’d filed their DNA). How representative are these? It’s difficult to know. Most of the arrests were not made at the scene, but through follow up, using things such as CCTV footage and car numberplate reports. These may well be biased towards the more organised elements.

The looting itself seems to have been motivated by the idea of grabbing something for nothing. The sequence of events across London may have started with anger over the shooting of Mark Duggan in Tottenham, but by Monday any political angle was at most vague. It seems to have been led by organised gangs, using social media to focus on one area and overwhelm the local forces there. A lot of opportunists joined in, probably including people who just turned up to see what was going on. There was little actual violence directed towards people.

There’s not much much more I want to say about this aspect. Our society has a criminal fringe; given the opportunity many others will indulge in looting and theft. There’s nothing new in this. Serious though the issue may be, the moral panic is overdone.

The most important public policy issue to arise is the performance of the police. This was a quite straightforward public order issue, and they let us down. At borough level it is easy to overdo the criticism. The social media had forewarned them that there might be trouble through the afternoon – to such an extent that the police convened a meeting with the council at 5pm. Although Clapham Junction figured in this chatter as a likely trouble spot, it was far from the only place, and the meeting decided that the information was not firm enough to do anything with. The obvious solution, to create a mobile reserve of officers to react quickly to events, was surely not within the Borough’s resources. And the issue applied right across London and within the ken of the higher echelons of the force. The decision to abandon the scene at about 8.30pm was surely correct, with only 8 properly equipped and trained men on the spot, as the looters were building up in hundreds.

The failure occurred higher up, and outside the remit of Mr Kinghan’s report. Senior officers at the Metropolitan Police knew that trouble was probable. They could have mobilised enough mobile reserves to respond much more quickly than they did (local police called for help almost as soon as the trouble started). There has been some bleating that there were not officers properly trained. This has been rejected by Lib Dem Mayoral candidate Brian Paddick, a former senior officer at the Met – and indeed sufficient numbers did turn up in sufficient numbers – eventually. And they could have asked for reinforcements earlier in the day from neighbouring forces – as indeed they did on the following day.

The report makes a number of recommendations, mostly worthy enough, but many along the tired old bureaucratic lines of “we should improve our planning and coordination”. But the real issue is leadership. No amount planning and procedure can compensate for that. The Met’s leaders were busy enough wining and dining journalists and and attending to their PR. But we employ them to fight crime and they have repeatedly been found wanting. Not showing decisive leadership themselves, and not allowing their juniors to use their own common sense initiative.

The Met has a new Commissioner, Bernard Hogan-Howe. He has his work cut out, but he’s made a promising start. Here’s hoping.

Lib Dems and the Quality of Life

One of the more entertaining episodes of the last Lib Dem conference was the debate on the party’s new Quality of Life policy paper. This paper had wended a long but largely uncontroversial path through the policy formation process, including extensive consultation, before reaching the conference – and I was a member of the working group – interest declared. And generally policy that has followed this path gets more or less nodded through. Not this time. The motion and paper got the backs up of many representatives, and there were a number of well-delivered and entertaining speeches against. For a flavour of this ire see Alex Wilcock’s blog – scroll down past the Dr Who stuff to 20 September. If you click through to the comments page, you will find Alex describing yours truly as “not so much a thinking liberal as a sneering one”! The paper was passed, but the margin was quite narrow by the usual standards of these things.

And that’s a bit of a problem. This is policy that stands behind other policy – important not so much for its direct recommendations as its influence on subsequent policy. I hesitate to call it philosophical – since it does not attempt to develop the core values of the party, but rather to apply them in a new way. But if it is considered contentious, it may get ignored. And for all that it is official policy, this would be quite easy.

What’s the fuss about? The starting point of the paper is that public policy is too dependent on “hard” economic statistics, such as income and economic growth, to measure success. But these are only intermediate measures – in other words we like them because they lead to good things, rather than being good of themselves. That is because of the difficulty of measuring success in itself – the hitherto rather woolly concepts of wellbeing and quality of life. But social science has been advancing rapidly and it is now possible to measure wellbeing in a rigorous way – mainly through asking people to make subjective judgements on their state of mind.

What the paper recommends is to make wellbeing an explicit policy goal, alongside the traditional economic measures. To ensure this is done rigorously, it recommended that a National Institute of Wellbeing is established to promote standards. Various other devices (a cabinet champion, for example) were recommended to get it embedded into the business of government.

So far, so good, perhaps – but for liberals some loud alarm bells should be ringing by now. This could be a charter for highly paternalistic government. And especially when you come up against the evidence that many people seem to have a poor understanding of what is good for their wellbeing. So the beating heart of this policy paper is the insight that individual autonomy (“agency” in wonks’ jargon) is central to wellbeing. The idea is to help people help themselves, and not bullying and cajoling them into making better choices.

Education is central. And, to make a small digression, this takes you in a very interesting direction. A lot more is understood about life skills – emotional intelligence, resilience, and such – and the wellbeing insight gives these a much higher priority at all levels of education.

Fortunately there is a wealth of evidence to support the liberal view. There one further thing – the measurement mechanism of choice for social sciencists, self-reported wellbeing, is a thoroughly liberal idea. Wellbeing is what the population says it is, and not an arbitrary idea imposed by policymakers. It’s like voting.

What were people objecting to? One faction distrusted anything with so little in the way of concrete recommendations – especially when those few recommendations sounded like more bureaucracy and a new quango. At best they interpreted it as harmless, and so a cost-free policy to rebel against; at worst they thought it was opening the party up to being criticised for being irrelevant in times of widespread economic hardship. Others, Alex was amongst these though he was not called to speak, understood how dangerous the the quality of life idea could be in the wrong hands, and felt that it was too toxic to touch. Or, possibly, that the detail of the policy paper did not live up to its liberal intent. At any rate that is my reading of what they were saying.

All this put the promoters of the motion in a bit of a difficulty – it is really quite difficult to push abstract ideas in this kind of debate. In a short speech you don’t really have much opportunity to say more than “I think this is a good idea” rather than why you think it is good – at least not in a way that will connect to more than a minority of the audience.

Does it matter? The problem is that the wellbeing agenda is slowly but surely infiltrating itself into the public policy process already. The word (or “well-being”, the spell-check compliant variant which I don’t like) and quality of life come up with increasing frequency in all kinds of public policy contexts, and especially in health. The concepts, if not the measurements, lay behind so much of the last government’s meddling in people’s lives. And David Cameron is an enthusiast too, though with an entirely different agenda -but no doubt paternalist in a different way. Liberals need to get into this debate and push back hard against paternalism – but using the language of wellbeing, and not just pronouncing the plague on all its works.

And there is something else, even more important in my view, which the paper doesn’t really touch. And this is the usefulness of the idea in promoting a more environmentally sustainable economy. It is important to break through the tyranny of current economic measurements to show that a more sustainable way of life does not equate to poverty – and indeed that it can be better for everybody. This is why the New Economics Foundation is so interested in wellbeing. I particularly like their paper on Measuring our Progress.

So we need to keep pushing. As one of the motion’s supporters said to me afterwards “Who remembers how close Nick Clegg’s margin of victory was for the party leadership?”. Still, we that understand and support the policy have a selling job on our hands.

Time the British woke up to the crisis in Europe

It is a commonplace for Britain’s politicos to sadly shake their heads and complain that the Euro crisis demonstrates a woeful lack of political leadership. Regardless of the fairness of this charge in respect of Angela Merkel, say, it clearly has resonance for Britain’s own leaders. There seem to be two camps: ravingly impractical Eurosceptics, and sheer paralysis from everybody else. The mood amongst Europhiles (as I witnessed at fringe meeting at the Lib Dem conference) is akin to deep depression. It is time for this to change.

To be fair some key players have been showing something less than paralysis – George Osborne and Nick Clegg have both been conspicuous in raising the seriousness of the situation with their international colleagues – but their pronouncements are hardly more helpful than anybody else’s. They aren’t bringing anything to the party and they aren’t trying bring our own public alongside.

The first point is that the Euro crisis has serious implications for Britain, much though most people seem to think it is happening to somebody else. This is for two main reasons. First is that this country would be caught up in any financial disaster. Our oversized banks are deep in the mess; Euro zone countries are vital trading partners for a country very dependent on trade – especially given that international financial services are so important to us. Our fragile attempts at recovery risk being completely blown off course. Forget Plan B if this lot breaks.

The second reason it matters to Britain is that resolution of the crisis could take the European Union in a direction that is against our interests. Britain leads the single market wing of the union: the chief Euro zone countries are more protectionist in their instincts. We risk being shut out of the design of critical architecture – much as the Common Agriculture Policy was put together in our absence.

How to proceed? We need to tackle the dark spectre head on: the best resolution of the crisis involves changes to the European treaties. To change the treaties will require a referendum here (let’s not weasel out of it this time). If we face up to that challenge now, it will show real courage, and help get things moving.

But, of course, we would need to see something in return. Changes to the treaties that would further our interests. These need to be to promote the single market, to protect London (and Edinburgh) as centres for financial infrastructure, and to reduce unsightly bureaucracy and/or operating costs of the Union (the siting of the European Parliamnet at Strasbourg needs to go on the table, at least). Given our understanding of finance, we might well have useful things to say on the Eurozone architecture too – even though we clearly can’t be part of it.

To do this our leaders (the Prime Minister and the Deputy Prime Minister in the lead) need to build two sets of alliances. The first is within the British body politic, so that the referendum can be won. This needs to cover Tory pragmatists (David Cameron, George Osborne and William Hague), the Labour leadership and, preferably, the SNP. The Lib Dems have an important role in making this hold together since, by and large, they understand the Union the best. Mr Clegg’s experience of deal-making in the European parliament counts for a lot. The next set of alliances is within the Union itself, to create a Single Market bloc. The obvious candidates are the Nordic countries, Ireland and the Netherlands, together with many of the newer members in central and eastern Europe.

This will be very difficult. That’s the point, almost. The reward is a stabler EU, constructed more to our taste, even if we must concede some powers to an inner core of Euro area countries. Everybody wins. And by taking on the wilder Eurosceptic fringe, including their newspaper backers, it will cheer all right-thinking people up. It’s time we stopped being paralysed by fear and came out fighting.

Memo to Miliband: break some eggs

As a political insider it’s very easy to be carried away by partisan emotions, but very dangerous. Thus I have been watching (not literally) the Labour conference with a great deal of caution. I want to scoff, but my better self tells me to be more careful. And that applied especially the Labour leader Ed Miliband’s speech delivered yesterday. After reading the commentary in the papers I decided that I had to read the text of it too.

Let’s start with the good bits. It set out a clear narrative for the past present and future. His starting point was Mrs Thatcher and the 1980s. Some good reforms but she started a culture of heedless self-advancement. New Labour was a step forward because it invested heavily in public services and in tackling poverty – but it didn’t do enough (anything?) to change a reckless business culture, and this brought the whole system down in the financial crash of 2008-09. After the crash the current government is doing nothing to address this underlying sickness, and its austerity policies are choking off growth and making things worse. For the future, Mr Miliband wants to transform society by making government more moral, and finally taming the monster that Mrs Thatcher unleashed.

Mr Miliband’s core constituency, the “squeezed middle”, remained firmly at the centre of his narrative – although he wisely did not use that phrase. These are people who are neither rich nor poor, and whose living standards are being steadily squeezed, as government largesse is focused on those who are poorer. Mr Miliband identified this key group at the start of his leadership, and he is maintaining his aim. He is clearly more successful in this than the Liberal Democrat leader Nick Clegg, who has identified the same group as decisive (using the phrase “Alarm Clock Britain” to describe them, to general derision), but has struggled to hit the right note.

It is easy to pick holes in the narrative, but that would only hint at its main weaknesses. Firstly that to most people it will sound abstract and irrelevant, and second that he failed to tackle the hard choices that would show he meant business.

Irrelevance? Britain stands in the middle of a global financial crisis, lurching towards another episode on a par with the crisis of 2008. The Euro zone is at the heart of this crisis, and thus the European Union, this country’s main diplomatic and economic partner, is facing the biggest challenge in its history. And Mr Miliband’s answer to this global challenge? To fiddle with VAT rates and implement the government’s cuts a bit slower. The world situation got hardly a mention. No doubt the idea is to set a time-bomb for the government, so that as the economy fails to approve he can say “told you so”. But since Labour’s explanation of the 2008 crisis was the world economic situation, what answer do they have if this government says the same thing? As George Osborne and David Cameron scurry round the globe trying to stave off disaster, Labour stays at home and whinges about VAT. This doesn’t look very convincing.

And he did not have much else to say that would help his squeezed middle voters in the pocket, rather than replicating their complaints about benefit cheats and fatcats. In fact he did not have much to say on specific policies at all. He wants to cut university tuition fees (which would in fact help the better off more than anybody) and that’s about it.

The problem is this: change hurts. People know that instinctively, so that to convince them that you are serious you have to do painful things. Tony Blair did so by taking on a number of Labour shibboleths: Clause 4 of the party constitution, not raising income taxes and (as few now remember) sticking to the then Tory government’s austerity plans to tackle the deficit. David Cameron did similar things on socially liberal issues, while eschewing tax cuts. What will Mr Miliband do to show that he is serious about his mission to transform Britain, and win back trust?

Here are some things he might do:

Accept more publicly the logic of the Government’s austerity policies in order to create the funds for tax cuts to the squeezed middle as the economy improves. We did get statements that they could not reinstate all the government’s cuts, but the delivery of these was so muffled that I don’t think most Labour activists noticed them, still less become angry.
Call for reform of the European Union so as to address the unfolding financial crisis, throwing down the gauntlet to Tory Eurosceptics.
Pick a serious fight with the trade unions about public sector strikes and participation in Labour politics.
Call on the government to get serious about coasting schools and sub-standard health services by in the first case getting tougher on teachers and the second closing sub-critical hospitals and putting serious heat onto GPs.
Challenging ordinary voters by pointing out that they also contributed to the crisis by living off credit cards and going for ever bigger mortgages.

Each of these would require a lot of courage – but that’s the point; he must make a lot of people in his party angry. Instead we get some rather bland ideas about favouring “good” rather than “bad” businesses. But these sound rather like things that the coalition is already putting forward on banking reform and reshaping the economy towards manufacturing and green businesses – Mr Miliband even quoted Lib Dem Business Secretary Vince Cable in his support on the radio this morning. Other ideas sound like more bureaucracy.

To make an omelette, they say, you have to break some eggs. Until Mr Miliband starts breaking eggs nobody will take him seriously.

The strange cheerfulness of the Liberal Democrats

I returned from the Liberal Democrat conference in Birmingham yesterday. After the March conference, when things were already looking bad, I blogged under the title of “The Strange Cohesion of the Liberal Democrats”. The cohesion is still there, but to that was added widespread cheerfulness. This was not expected, but widely commented on .

This is strange for a number of reasons. The party’s situation remains dire. The Independent’s cartoonist depicts the party’s bird logo as a dodo. Though I naturally believe the opinion polls showing the party at 17%, this still isn’t that much better than what was achieved at the calamitous local elections last May. And plenty of polls show a much lower rating, down to 10%. Some party leaders (notably Paddy Ashdown) made much of some improved results in local by elections; but these are nearly meaningless, a fortunate confluence of favourable local factors.

And there’s plenty of anger about too, especially over NHS and education reforms, which worry many activists a lot. And not everybody buys the leadership line that there is no alternative to the government’s austerity policy. As Steve Richards of the Independent points out, the second conference after a general election should be when it is safest to display dissent in public; so why was it so muted?

Party conferences are always bubbles where attendees can cheer each other up without too much intrusion from the outside world. And there was undoubtedly an element of this. One reason for both the cohesion and the at times positively aggressive cheerfulness was a response to adversity. As a party that is just one step away from oblivion, people did not have the confidence to display of too much disagreement; we are much more vulnerable than the Labour or Conservative parties when in similar straits. This is not a bad sign; it shows a degree of maturity and survival instinct – in contrast to the response of the SDP in particular to the 1987 election, which resulted the party’s poll ratings dropping into the margin of error of nothing.

Party outsiders will not be convinced that the party’s fortunes are on the mend. But for insiders there are some reasons for cheer. First, of course, the thrill of being in government remains strong. For so long the only hope of getting pet policies into action was that other parties might steal them. Direct access to the levers of power is the ultimate reward for any serious political party. It still feels good; almost nobody says that going into coalition with the Tories was a bad idea.

Further, the threat from the other parties does seem to have receded somewhat. The Left’s rampant anger at the cuts and Lib Dem “betrayal” seems to be burning out. Compared to Sheffield the demos outside the conference were pathetic. And Labour’s poll rating are stuck in a rut. And as for the Conservatives, only last May it looked as if their “human shield” strategy was working to a tee. Our presence in the government was supposed to help de-toxify the Tory brand, while we took the full brunt of the anger at government policies. Since then the party has managed its PR better, so that the opposite seems to be the case: that the Lib Dems get credit for anything progressive that the government does. For example quite a lot was made of the government’s commitment to increasing foreign aid; and yet David Cameron gave this policy much more prominence than we did before the election. In this, ironically, the party has been greatly helped by the Tory right, and their friends in the press. The more they complain about Lib Dem influence, the easier it is for the Lib Dems to take credit for the nice bits.

All this gives credence to Nick Clegg’s “centre ground” strategy, first unveiled in March (I think) to widespread scepticism. That means the party defines itself by what others do, the complaint ran. But neither of the other parties can win a majority without the centre, so denying it to them improves the chances of a hung parliament. And there may just be enough votes there so that the party can hang onto enough seats to be a real influence in the subsequent bargaining. And who knows, if the party stays the course they may even get a little grudging respect from the electorate that so despises it now.

And of course, there is the attention. The party have never had this degree of scrutiny before, leading to the widespread complaint that nobody knew what the party stood for. They still don’t, by and large, but as the party learns how to present its distinctive profile in government this is changing. But will the public like what they see? Or is liberalism just a middle class hobby? Getting people to understand what liberalism is, and persuading them that it is good for them is the real challenge ahead.

It’s time for the Lib Dems to grow up

I had wanted to include the phrase “growing pains” in the title of this post, but growing is not what is happening to the Lib Dems at the moment. Not in the sense of membership or votes, a small summer bounce in both notwithstanding. It is about becoming a more mature political party – and becoming more mature is always painful.

I am going up to the party’s conference in Birmingham tomorrow; I don’t know what I’ll find. Evidence of pain is everywhere. There was a moment in April 2010, after the first party leaders’ debate when we dared to hope for something spectacular. And this wasn’t just a media frenzy – it was palpable on the doorstep and in the streets. It has been downhill ever since, apart from the brief thrill of seeing the party enter government – though this left the voters unmoved, as opposed to party insiders.

Last May’s local election results were a massive trauma. Many of the party’s activists were in the process of winning the country over “one ward at a time”. They thought that by being relentlessly local, and doing a good job for their local voters, they would be insulated from the national tumult – something that has been by and large true in the past. So it was a really rude shock. Many blame the party’s MPs as shameless opportunitists who are out of touch with the voters and activists. And of course, it showed the party that oblivion is just around the corner.

And there’s everything else. Endless criticism on the papers; being the butt of comedians’ jokes (and worse) on the radio and TV. Taking responsibility for unpopular reforms in the NHS and education. I have an email today from a very long standing member who is about to resign because of the NHS bill.

And yet. These are all vicissitudes that Britain’s two most successful political parties, Labour and the Conservatives, (leaving aside the SNP for now) have long learned to take in their stride. It is part of being a grown up political party. It is part of mattering. At members’ meetings one of Nick Clegg’s favourite stories is what happened when the party went back to talk to the many voters that slipped out of the party’s grasp in last week of the General Election campaign. It amounted to, “These are tough times, and we need a grown up political party.” Enduring this type of pain is a necessary step to breaking through to the next stage of the party’s advance.

The trauma could kill the party, of course. But if you are part of it you need to be positive, and ensure that it doesn’t. The opportunity is palpable. Neither Labour nor the Conservatives are flourishing. If the party can hang on to something like its current number of seats, especially in a smaller parliament, then another hung parliament, and coalition opportunity, is odds on. Who needs electoral reform?

And the whole nation is in trauma. The good times just aren’t coming back. The apparent economic achievements of the last decade are proving hollow. Property prices will not rise endlessly to make everybody rich. We haven’t got the money for the public services we used to have – just as the demographic challenge is about to get much worse. Labour still haven’t come to terms with their failure, and seem to be stuck somewhere between anger and denial. The Tories are riven by divisions between a rampant but lunatic right, and the leadership’s more paternalistic vision.

If the Liberal Democrats can get their story straight, there is all to play for. There are signs that the party is slowly addressing this. The conference motions don’t really do this, with the Facing the Future motion on strategy (with its 17 priorities) a particular disappointment. The Quality of Life and Community Politics motions offer some light, though. But behind the scenes there is a furious discussion over the party’s narrative. Some good ideas are emerging.

Labour’s vision of a benign and overpowering government, aligned with rampant capitalism, has let the country down badly. The Tories are chasing after a fantasy of a little England run by an unfettered middle class. The Lib Dems can offer a sustainable future based on real empowerment of the people, in a proper international context. Go for it!

Taming the banks: two views from the FT

Oh the shame of the FT’s paywall! Yesterday the paper presented a wonderful view of the debate on the UK banking reforms proposed by the Vickers Commission with two opinion pieces under the title Taming the banks, long overdue or utter folly? For the reforms was regular columnist John Kay. Mr Kay (though I’m sure he’s not really a mere Mr) is one of my favourite FT columnists. His articles do come out on his website in due course, but not this one yet, I’m afraid. It is a very lucid article, pointing out the massive size of UK banks balance sheets: at £6 trillion, four times the size of the country’s income. Of these but a tiny fraction is lending to industry, and a rather larger fraction is domestic lending such as mortgages. The bulk of it is to the finance industry pumping up the great game of leverage. The idea of ringfencing, the critical part of the proposed reforms, is to stop the small fraction of balance sheets that matters to individuals and “real” businesses from being poisoned by financial engineering gone wrong; or to put it another way, to stop the British state from having to underwrite the latter to protect the former. Mr Kay’s only criticism is that the reforms are being implemented too slowly.

The opposing article is from Sir Martin Jacomb. Sir Martin is no more a banker than Mr Kay, that is to say he’s done non-executive directorships but not much more; he’s a lawyer and chiefly famous for saying that universities should be independent of government, and that Oxford University should cut its ties with the state. The bankers are in fact rather quiet on the reforms, after some rather clumsy lobbying to get the implementation delayed, which appears to have been quite successful. The weakness of their case seems reinforced by Sir Martin’s article, which nearly nonsense. Is this really the best the FT could find?

Sir Martin reiterates a familiar litany:

The reforms advocate breaking up “universal banks”, but this model “can be perfectly safe”.
It will hurt the City’s international position. “There must be universal bankers in Frankfurt rubbing their hands.”
It will cause the loss of jobs and taxes.
the new banks will not able to offer helpful products to industry.
It does not address the immediate problems besetting European banking, “which result not from mistakes by bankers so much as blunders by European Union governments in the management of the euro.”

This lot is readily disposed of:

Universal banks did not come out the recent crisis well. It is true that some of the better managed ones did not need direct government rescue (Barclays and HSBC in the UK, BNP Paribas, JP Morgan), though still benefited from implicit and explicit guarantees. But far too many did, especially in America (notably Citigroup and Bank of America), here (Natwest and HBOS) and Switzerland (both UBS and SBC).
This is yet another cry of “Wolf!” from the City. I remember how us not joining the Euro was supposed to kill the City in favour of Frankfurt. The City’s standing is based on network effects of people, skills and time zones. Most of its activity is from foreign owned institutions already. If the UK owned activity shrinks, it is because the public liabilities that go with it are too large. It best that we adapt.
This sort of answers the jobs and taxes bit. As Mr Kay points out, lending to job-creating non-financial businesses should not be affected, and might even benefit if they do not have to compete for attention with gearing up of financial products. It is much healthier if our economy is less dependent on highly paid bankers’ jobs.
Sir Martin uses the example of a currency hedging, which might be useful for an exporter with a long term contract. But surely his ordinary banker can introduce him to an investment banker at little extra cost?
This is true; it’s a separate issue. But is quite astonishing for him to suggest that the Euro area problems are the fault of politicians rather than bankers. It was the bankers that bankrolled the Italian, Portuguese and Greek governments at absurdly cheap prices. It was its banking industry that laid the Irish government low. It was bankers from across the zone that pumped up the Spanish property bubble. This kind of “it wasn’t us” defence from bankers simply shows how little they have learned from the disaster.

Apart this whingeing, Sir Martin makes a more subtle point. We should be promoting more competent management amongst banks, and excessive regulation does the opposite. Well, we must ask what caused the rampant incompetence in the most of the world’s banks before the crisis. Surely it was the thought that if things went bad governments would come to the rescue, and it would all then be somebody else’s problem? This is exactly what the reform seeks to address. By separating the investment banking side out, it means that failure from that side will be easier to tolerate, and should not require the UK tax payer to stump up. The retail side would be bailed out in the event of a failure, true, but it will be more difficult for these banks to pump themselves up to create a massive hole.

There is an irony behind all this. The point about banking reform is to make banking more, not less risky, for bankers anyway. We need to see more bank failures, not less. The by-line to Sir Martin’s article is perhaps its most cogent bit: “Beware the paradox that a system to limit risk invariably increases it”. But risk to whom?

Time for Plan B?

Predictably, the heat is mounting on the British government to soften its fiscal policy in light of weak economic growth. Today the new IMF chief Christine Lagarde seems to be adding to the pressure, even if she wasn’t explicit. The code for changing this policy is referred to by political types as “Plan B”. I am now convinced that some sort of Plan B may now be a good idea – but it would not take the form that a lot of Plan B advocates, especially the Labour opposition propose.

First, why? I have been progressively convinced by the FT’s economics editor Martin Wolf. I have found him to be easily the most cogent commentator on the current economic situation, better than any number of economics Nobel Laureates or former members of the Bank of England monetary policy committee, who seem to think that their past glories can compensate for the shallowness of their analysis. Paul Krugman, Ken Rogoff, Joseph Stiglitz, to name a few, have disappointed somebody that has respected their weightier works; David Blanchflower has turned downright silly in order to widen his audience. Mr Wolf has been consistent, logical, and has gone further than most to try and understand all facets of the arguments.

The problem in the UK economy is not lack of consumer demand, since consumers are right to pay down debt as a priority right now. The problem is lack of business investment, and a weak world economy, and hence potential export markets. And excessively tight fiscal policy may send investment into a doom-loop, since so much depends on confidence. Add to that the fact that current levels of public expenditure are unsustainable, and the massive size of the public deficit, and you will understand that most versions of Plan B are unconvincing. Reducing the cuts simply creates problems for later, and builds up a false confidence in what this nation can afford. Cutting VAT temporarily, as advocated by Labour, addresses the wrong problem.

The answer must be to promote investment. As Mr Wolf points out (here but behind the FT paywall), there is a golden opportunity for the government to do so because its borrowing costs are so low. The trick is finding projects that deliver a convincing financial return; borrowing against such projects does not undermine the country’s finances. Unfortunately this is easier said than done. A lot of public projects make extravagant claims about their worth, but are in reality wasteful prestige initiatives – think of the Building Schools for the Future programme. Or else they turn out to be so badly managed that promised returns are never delivered – think of NHS IT, or Edinburgh trams, or anything undertaken by the Ministry of Defence.

There is no doubt some scope for increasing funding to standard public projects. But actually what needs to be done is to provide more support for medium sized and small businesses, especially growing ones. The banks are not stepping up to the plate, demanding ludicrous returns for their efforts. Surely there is scope for the government to beef up regional development funds and increase funding for institutions such as the Green Investment Bank. This will not open the floodgates to usher in an era of rapid growth. But surely it would help.

Is the Ebacc such a bad idea?

Michael Gove, the Education Secretary for England (his remit not extending elsewhere in the UK, so far as I know), is one of the more controversial figures in the government. I haven’t met anybody that works in or with the education sector that approves of him. But amongst politicos and journalists, especially right-wing ones, he is considered one of the government’s best performers. He is widely reviled by Liberal Democrats. But not everything he says is nonsense. And indeed the controversy he stirs up reveals some uncomfortable things about our educational establishment. Today I am looking at one of his many controversial ideas: the English Baccalaureate, commonly referred to as the “Ebacc”.

What is it? In principle the Ebacc is a certificate awarded to pupils who get C or better grades in five or more GCSE subjects, which must include maths, English, a foreign language (including Latin or ancient Greek), science, and history or geography (for more details see the link above). Actually I’m not sure that it is a certificate yet; it was introduced last year as a performance target to show how well schools were doing in teaching these “core” academic subjects.

Why is it so controversial? In the first place because it was dropped on schools out of nowhere last year, before they had a chance to plan for it. Critics say that it should have been “tested” and phased in. There may be some pupils who suffer because employers will be looking for their Ebacc when the school had put them in for some other subjects before they knew about it. There is a lot of upset from schools who had looked good in earlier league tables that don’t look so good under this one. This is mainly whinging by professionals who spend too much energy gaming the system to look good in league tables rather than considering what is best for their pupils. To be fair, of course, many of the people I am dismissing as whingers actually have a more fundamental disagreement with the idea. I am coming to that.

Also there are some more practical issues about how schools will respond. One blogger (Anastasia de Waal of Civitas, quite sympathetic to the idea of a more academic curriculum) worries that schools won’t bother with pupils that they don’t think are going to reach C grades in one or more of these subjects. This goes to the heart of another question: that of the use of league tables and performance measures. A big topic for another day.

But the real controversy is about the subjects that aren’t included. There are some subjects, such as religious studies and philosophy, that are (or should be) quite academic. Why not include these if they test the same skills? But the real issue is a whole swathe of “applied” or “vocational” subjects which have found their way into the GCSE. These include applied sciences, applied languages (don’t ask), and things such as ICT (information and communications technology) and media studies. These subjects were designed for pupils characterised as less academic, and were popular in schools because it was easier for students to get better grades. By focusing on the more academic topics, the critics say, you are letting down all these less academic pupils from typically poorer backgrounds.

But the problem is that these “less academic” subjects are a major failure. They are based on a misconception of what secondary school education at that age should be about. They are, or so I understand, largely based on knowledge transfer, and not deeper understanding. Pupils learn answers by rote and splurge them out as required. But even supposing retention is good for this type of study, this knowledge is soon out of date. What higher education recruiters and employers want, even for practical jobs, is understanding. The “academic” subjects are much better at teaching this. A college running a technology course would much rather its pupils were taught mathematics to a decent standard than any amount of ICT teaching (though schools have long been required to focus on maths and English).

This criticism makes a lot of sense to me, though I have only been involved in secondary education as a pupil, and that a long time ago. For accountancy it has long been said that good basics (especially maths) is all that you really need from school – the rest can be picked up pretty quickly later. When recruiting staff, I must admit that I didn’t take all that much interest in school qualifications if there was anything else (such as work experience) to go on. And I find the idea of doing an applied subject without doing the theory alongside it to be equally flawed.

What am I saying? At GCSE level a broad choice of subjects does not make for good education. You need to focus on a range of basics and do them well. Some regard the choice of subjects in the Ebacc as perverse, when other topics are equally as good. I’m really not sure about that. I don’t see that either religious studies or philosophy are good candidates to push out history or geography, or still less a foreign language. Philosophy surely best after GCSE; I just don’t believe that religious studies is as stretching or socially inclusive as history or geography. In my day I did a standard set of O levels, all in the Ebacc range (except English Literature); I never found that limiting.

What of the pupils who don’t make the Ebacc standard? A very real problem – but the “applied” and “vocational” GCSEs were never the answer. Better teaching and higher expectations are. The more I see of the educational establishment, the more I am convinced that too many are content with the mediocre.

There is a final irony. Mr Gove and his supporters often criticise modern education for lacking a focus on facts. Actually the more academic subjects they advocate are mainly about skills, not facts. They teach you how to think. The less academic subjects fail because they are too focused on facts. Of course you might argue that history and geography are, or should be, fact-based – but don’t get me started on that!