The Royal Family is a factory of human misery

How I hate the British fascination with royalty. I will not watch That Interview. But the Royal family is a critical link in my country’s constitution and we can’t ignore it entirely, much as we might want to. Both sides in this spat are making the case for the family’s release from its constitutional role; the grubby business of elections and politics can’t be worse than this.

For somebody that affects uninterest in the royals, I have a guilty secret. I immensely enjoyed the Netflix series The Crown. I only started to watch last autumn, but I have now seen all four series. Before the last series I was interested to read the criticism of it in the press, from royal experts. This is a class of people who make my flesh creep, as they try to exploit the social cachet of knowing the royals. Mostly this criticism was pretty weak – a lot of trivial things (but none that made as annoyed as the use of a Crusader III tank in Suez in 1956; this vehicle was obsolete in 1943). More serious were the conflations and exaggerations in the drama, and events that never happened. These often annoy me too (machine-guns at the Curragh, etc) , and I’m very wary of the defence that the dramas are following a higher historical truth. But to my surprise, I found that I felt that the makers of the series had a point in this case. There was another category of criticism, the knowing “they wouldn’t do that” about some or other misbehaviour, such as the mistreatment of the Thatchers when they visited Balmoral. And yet the drama made it clear that this arose from a gulf of misunderstanding, not intention, and it is all too credible.

The strength of The Crown is that it has a clear and consistent theme, and that theme is clearly true. The institution of the monarchy overpowers the individuals in the Royal Family, and crushes all those who attempt to assert their individuality. Although the drama starts with the last days of George VI, its real beginning is the Abdication Crisis of 1936, when Edward VIII had tried to rebel against the system. This casts a heavy shadow over the first two of the series. The drama shows how the Queen herself came to terms with not being in control, and how pretty much everybody else in the family was crushed and became very unhappy. It focuses on Prince Philip, Princess Margaret, Prince Charles and Princess Diana. But we know that the unhappiness doesn’t end there. Funnily enough the series doesn’t make a big deal out of the tabloid press, the big focus of Prince Harry’s anger – but they point to the contradictions of the institution itself.

The fourth series of the Crown ends in the early 1990s. But we all know that the same drama has been continuing at the same pace in the quarter-century since. And That Interview is only the latest twist. What to make of it? The most explosive claim, about remarks over the colour of Harry and Meghan’s baby is quite hard to take seriously without more context. Was is overt racism, or was somebody being a twit? We may never know – but sensitivities differ across the Atlantic. The broader claim is more serious though: that much of the British public struggled to accept an interracial marriage, which was stoked by the British press. This was part of the toxic atmosphere that the couple felt they had to escape; Prince Harry feels that the Royal Family machine ran for cover rather than fight their corner. The Crown suggests that this was always so, but that this is out of necessity. Another serious charge was that Meghan was not offered help, or help that she felt she could use, when she complained of suicidal thoughts. This echoes, consciously perhaps, of the Palace’s neglect of Princess Diana. In that case the usual secret sources suggested that The Crown was being unfair and one-sided, and that Diana was pretty difficult to deal with. That defence reveals an incomprehension of the problem; the television portrayal was all too convincing. In Meghan’s case the story is likely to be more complicated – but establishing the truth feels like an intrusion.

But the big picture is clear; it is another variation on a theme that has been played out many times. A younger member of the Royal Family feels they can freshen things up. The ‘Firm” feels that this is intolerable and will undermine the monarchy, and crushes the troublemaker. The interesting thing is that The Firm could well be right: the moderniser may do much more harm than good, given the ambiguous nature of the institution, being an upholder of democratic values while being deeply undemocratic itself.

Is it worth it? The British Monarchy does a reasonable job of being the ceremonial head of state. It has its weaknesses. In 2019 the Queen could do nothing to stop several months of Boris Johnson controlling the considerable executive powers of the state with no parliamentary or democratic mandate – a constitutional and democratic outrage. It was the Supreme Court, not the Monarch, that stopped the most outrageous element of this: the attempt to prorogue parliament.

But this constitutional arrangement comes at a huge human cost to the family at the centre of it. By and large they don’t choose to be members. If we had an elected head of state, they at least would have chosen it as a career. The Monarchy has turned the Royal Family into a factory of human misery. There are better ways. Alas reform is unlikely to be a political priority. The misery of one family is not worth the time and trouble.

A federal UK: a solution that is worse than the problem

In a world where people choose facts to suit their prejudices, and dismiss challenge as the work of a sinister enemy, it is still important to seek out views that make you uncomfortable. This is how I felt when I read this article in The Times by Matthew Parris. I like Mr Parris, but I often disagree with him; I think his views on lockdowns and the virus border on irresponsible. But this article, on creating a federal UK constitution to head off the threat of Scottish independence did what reading newspaper columns should.. It made me very uncomfortable because it challenged a long-held position of mine that the UK should move to federal system of government, with regional states. It made especially uncomfortable because he is right.

The idea is that the threat of Scottish independence needs a radical constitutional answer, and that such a proposal would allow unionists to grab back the initiative. And a Federal UK is thought to be that radical answer. It would allow further powers to be devolved while ending the muddle where Scottish MPs vote on English questions. It would all be so much tidier. There is nothing inherently un-British about a federal system. The US constitution has firm Anglo-Saxon underpinnings; the ex-colonial states states of Australia and Canada were set up with federal constitutions, in systems which are otherwise modelled on the UK. And a polity with 3-10 million people is often very efficient, if other European countries are anything to go by, with strong political cohesion (usually – let’s not talk about Belgium).

The problem is England. There are two ways it can be incorporated into a federal UK. First is to set up a separate English parliament. But this would so dominate the whole federal entity that it would be at permanent loggerheads with the UK parliament. I don’t think there are any good examples out there in the world where such a lopsided federation has worked. Russia has gone down this route, both in in Soviet days and afterwards, and it hasn’t been a triumph of empowerment and democracy. I have advocated this, with a new English or UK capital in Birmingham, but even then I wasn’t convinced. Mr Parris rightly dismisses it. The second route is to turn English regions into states. This is elegant in theory, but it is a top-down solution that would be imposed on a sceptical public.

This is a hard truth for people like me to bear. I am inspired by European states, such as Germany, Switzerland and Austria, which operate a regional federal system. These are amongst the best-run states in Europe. Compare that to the over centralised Britain and France. France, of course, has tried to impose regional government, as has Spain (an interesting parallel because the motivation is similar: to head off separatism). Mr Parris dismisses the Spanish solution as comprising made-up states with little political purpose. I don’t know whether he is fair on that, but it certainly hasn’t solved the Catalonian question. The problem in England is that there is little or no regional culture or identity for regional government to lock into. Like one of the more singing criticisms of the European Union: there is no demos. This is unlike the situation of the USA, Australia and Canada, which were agglomerations of separate colonies, often physically far apart.

This is the end result of nearly a thousand years of English history. Ever since the Norman invasion of 1066 the national government (which quickly moved to London) has sought to undermine any serious regional political strength. The English failed to extend their rule into Scotland, and their rule in Ireland was never entirely secure. Wales came into the realm in medieval times, but its culture never quite integrated with England’s. But in England itself, this political integration was a success. This history is unlike that of Germany and Austria, where for hundreds of years the much-derided Holy Roman Empire held sway, allowing a multiplicity of local identities to coexist.

Things can change, of course. The most successful era of local government and initiative was not all that long ago, in the Victorian era. This left some wonderful civic architecture in Britain’s great cities. That followed local economic success, which depended on local natural resources (especially coal) and surplus rural labour. In the 21st Century successive governments have tried to build on this by developing “city regions” based on these old industrial centres, and led by “mayors”. These often uncover fierce local rivalries, and can’t be said to be fully rooted.

Still the city regions were better than the Whitehall-devised regions used for EU regional policy, which had almost no popular traction, except in London itself, perhaps. The city regions, and building on existing local authority structures, remain the most hopeful avenue for developing a more devolved political structure in England. It is a long, hard road. Almost everybody seems to favour more localised decision-making in theory, but in practice they undermine it at every turn, dismissing it as a “postcode lottery”. Fighting the covid-19 epidemic was a major opportunity to develop locally coordinated structures, but the government didn’t have the patience, and has not paid any discernible political price.

What is not going to work, though, is a hastily put together federal structure for UK government based on English regions, or England as a whole, for that matter. It would quickly fall into disrepute and be widely regarded s a shambles and waste of public money, at best.

Where does this lead? Well perhaps Scottish independence is not such a bad idea after all. A separation would be yet more painful and chaotic than the UK’s separation from the EU. But that other region of good governance and civic success in Europe, Scandinavia, is based one a community of independent nations not dissimilar in size to Scotland. Separation would make me very sad, but let us not try to head it off with constitutional reforms that are just going to make things worse in the longer run.

The real meaning of the controversy over the House of Lords

This week Britain’s House of Lords voted to delay the reduction of tax credits for Britain’s poorest working families. Parliamentarians from the ruling Conservative Party are apoplectic at what they say is constitutional outrage – an unelected chamber challenging an elected one. There is an important constitutional issue here, but as usual the Conservatives are pointing to the trees so that we miss the wood. The key issue is not whether the upper chamber is elected; it is how the executive power of the British government should be held accountable, and prevented from excess.

Britain does not have a written constitution. There is no charter of sacred principles which sets out the rights and responsibilities of each part of government and of its citizens. What we have is the result of a very messy process of evolution. It is the result of a struggle between those who want unlimited executive power, and those who want to limit it. We can date this struggle back to King John in 1215 at least. Some may push this back to the time of King Alfred the Great in the late 800s.

Initially the kings claimed their authority from the Divine. They competed for power with their nobles and with the Church. Things have moved on. The power of the Church was crushed by Henry VIII, and the hold of the Divine withered. The House of Lords retains, nominally, the last vestiges of the rights of the nobles. Instead both the divine and the nobility have been replaced by an idea of the Will of the People. But that is just as slippery an idea as that of the Divine.

To most politicians in both Britain’s main ruling parties, the Conservatives and Labour, the Will of the People is represented by a majority in the House of Commons, elected every five years using single member constituencies under the First Past the Post (FPTP) electoral system. In their eyes theses elections confer rights on the House of Commons akin to the old doctrine of the Divine Right of Kings, or the Chinese one of the Mandate of Heaven. This doctrine is often referred to as the Sovereignty of Parliament. The usual practice is that the Commons is controlled my a majority of members from one party, who approve an executive and are expected to support it all of the time. Checks on the executive are regarded as both inefficient and undemocratic. Checks by the judiciary are tolerated (less so if they are at the European level), since most accept that the rule of law is essential to an orderly democratic state. But even that has its limits; the executive chafes at laws that confer rights on ordinary citizens, especially human rights and rights to information. Other checks on power are not accepted. The House of Lords is more there for decoration than anything: a useful political tool to reward politicians for good behaviour, or political donors. There may also be value in the minor revisions to legislation that it proposes from time to time. Hence the anger at this week’s challenge.

And yet many observers feel that this leaves an inadequate check on the executive. There is an argument that unlimited executive power is dangerous rather than efficient, and should be subject to checks and balances. The most famous example of this, of course, is the constitution of the United States of America. The political system there often seems stuck in gridlock, and yet we can hardly call that country a failure, or less democratic than ours. There are three classic ways in which executive power might be limited. A written constitution allowing government actions to be challenged in the courts; a federal constitution that distributes powers between federal and state levels; or an “upper” chamber of the legislature to form a check on the main, popularly elected one. Britain has elements of all three, but they are all weak. The Conservatives want to keep it that way, and weaken the second chamber further.

Is this a bad thing? Conservatives would argue that a strong executive offers decisive government, that is able to develop the economy and protect its citizens better. In particular it is better placed to push through hard but necessary reforms. These reforms may not have been explicit at the time of the government was elected (one of the key arguments against the tax credit proposals), but there is also a sense that the next election casts a verdict on the past government, as well as electing the new one – so there is accountability in the end. Labour politicians are sympathetic to that line of argument, since they want the minimum limits on power when it is their turn.

Liberals oppose this on the basis that it is undemocratic, too beholden to vested interests, and centralises too much power at the national level. These are familiar arguments that I will not try to develop today.

Liberals do have a problem when it comes to the House of Lords though. It is manifestly undemocratic, but simply replacing it with an elected upper chamber with similar powers looks a bit of a nonsense. How would the new upper chamber’s mandate differ from that of the Commons? it could set itself up an an alternative “Will of the People” and simply create deadlock. Wouldn’t it be better to have a single chamber and make that work more effectively? Many liberals might accept that argument in theory, but fear in practice that abolition would not be linked to reforms of the Commons, for example to be elected on a proportional voting system. That fear is well-founded, but it leaves them arguing for something that looks inadequate.

A better way out is surely to come at the problem form a new angle: that of federalism. The new upper chamber might represent the interests of elected governments below the top level. There are many ways that this can be approached, and it would serve a wider purpose. The would help secure a better distribution of power within the country by strengthening local and regional levels of government (I dislike calling this idea “devolution” because it suggests a top-down process). It may also present a more robust solution for Scots’ demands for more self-rule than the unbalanced solutions now on offer. And it is the urgency of the Scotland problem that might give the idea political traction, alongside the widespread recognition that government in England is over-centralised.

That will require some form of constitutional convention to resolve. That is what liberals should be calling for -a not an elected upper chamber by itself.

Political reform is the acid test for Corbyn’s Labour

Jeremy_CorbynBritish politics has suffered a massive earthquake with the election of Jeremy Corbyn as Labour leader. There is a lot of dust; there will be aftershocks. But what can liberals say at this point?

Let us for now take this development at face value. There is an upsurge of public support for Mr Corbyn amongst people desperate an alternative narrative to “austerity”, and for a political party with real left-wing values. Let us say that the half a million or so people who took part in the party’s election process are not mainly London clictivists, but will join Labour’s campaigning by making phone calls, knocking on doors and donating money, from London to Leeds and from Bristol to Glasgow. Let us also say that Labour will not be riven my infighting but will mobilise behind a concerted attack on government policies.

If this happens there will be real momentum  behind Labour. It will take the wind from the sails of the Green Party; Tim Farron, the Liberal Democrats’ new leader will find it very difficult to attract people to his party through returning to left-wing campaigning. Many working class Ukip voters will consider returning to Labour, now that it has rejected the establishment consensus. Labour will start winning by elections against all comers.

All this would throw down the gauntlet to liberals who reject the government’s creed of economic liberalism. If it looks as if this reinvigorated Labour party might make headway against the Conservatives, do liberals support them in the hope that a transfer of power will be good for the country? Or do they think this new movement is fundamentally wrong, and has to be stopped at all costs? There seem to be three groups of issues that could decide this.

The first is Britain’s place in the wider world and defence. At this point it is very unclear what Labour’s new stance will be. Mr Corbyn himself has been associated with some very extreme views, such as that Britain should leave NATO. It’s pretty safe to say, though, that Labour’s policy line will be more moderate than this.  But surely it will oppose just about any foreign military intervention, and the the odds are it will come out against renewal of Britain’s Trident nuclear weapons systems. Not so long ago these views would have been considered so extreme that no respectable politician should entertain them. But now there is a good case to be made. There seems to be little point in such  heavy-duty and expensive nuclear armaments, which will be dependent on US support. There is a respectable case for more limited nuclear weapons, or even complete nuclear disarmament. Likewise foreign military intervention doesn’t seem to be making the world a safer place. They provide no answers to filling the political vacuums that are the real threat to stability. If Labour starts to support leftist regimes that do not support political pluralism, such as those in Cuba or Venezuela, then that will be another matter. But I don’t think Mr Corbyn will be able to take his party to those positions. So liberals may not be given enough reason here to oppose the movement.

The second groups of issues is economics. This is central to Labour’s new appeal, as cn be seen by Mr Corbyn’s appointment of left-winger John McDonnell to the role of Shadow Chancellor. It will define itself through a bitter a bitter opposition to “austerity”. It will oppose this they mean cutbacks to benefits or public services, or raising taxes on anybody but a rich elite. They are also opposed to any serious reform of public services, apart from moves to a model of state-owned command and control organisations, staffed by union members on permanent contracts. Two ideas are offered to make this economically viable. The first is a sort of semi-digested Keynesianism, which suggests that their policies will stimulate demand and so economic growth and, through this, extra tax revenues. The second is that there are vast amounts of extra tax available from taxing the rich more, clamping down on tax avoidance and evasion, and attacking “corporate welfare” – tax breaks and subsidies for businesses.

I have commented on these ideas before. For now all I need to say is that there are two paradoxes at the heart of this economic programme. The first is that, almost by definition, rowing back on austerity means a greater dependence on global financial markets to provide funding – printing money is not a long term strategy. And yet these markets are treated with contempt. The second paradox is that their policies depend on a healthy private sector economy to deliver economic growth and tax revenues, and yet they also want to make life more difficult for the private sector, and encourage businesses to take their investment elsewhere. No left wing government, from Francois Hollande’s Socialists in France to Alexis Tsipras’s Syriza in Greece, has found an answer to these paradoxes. The anti-austerity programmes of the former were sunk by the need to attract private sector investment, and the latter by the need to keep borrowing money from abroad without a clear prospectus for paying that money back.

But, if in the end governments will be forced to their senses by the dictates of markets, perhaps we can tolerate a little short-term economic chaos? We can, after all, be sympathetic with the idea of using the tax system to effect redistribution of wealth. That depends on the third group of issues: political reform.

The Conservatives now control the government because the current political system is weighted in their favour. Liberals favour a more pluralistic system, with greater checks and balances. To achieve this we need political reform in a number of areas. Will Mr Corbyn’s Labour Party support these, or simply offer vague platitudes like his predecessor, Tony Blair? That will be, or should be, the defining issue for liberals. What are these areas?

  1. The first is political finance and the reach of big money. The UK is not anything like as bad as the US – but that country points to the dangers. Laws start to be dictated by corporate vested interests – a particular problem in public services outsourcing, and intellectual property. Mr Corbyn’s Labour Party will surely be much more serious about this than its predecessors.
  2. Next is devolution. This means not just protecting the settlements in Scotland and Wales, but promoting further devolution to English regions and councils – including revenue raising powers, and the coordination of public services. There is reason to be suspicious of Labour intentions here – though since Labour also control England’s major cities, there might be some constructive tension. I have not forgiven Andy Burnham’s scepticism of the devolution of health services to greater Manchester.
  3. Then there is the House of Lords. Will Labour support complete abolition, or replacement by an upper chamber with real powers? Personally I think a new upper chamber should be part of a new constitutional settlement for the UK, taking it to a more federal structure. But a proportionally elected revising chamber would be acceptable. Which brings us to:
  4. Electoral reform. This really is the only way of promoting political pluralism in the long run. We need a system based on some form of proportionality, such as the Single Transferable Vote (used in Northern Ireland, and indeed the Irish Republic) or the Alternative Member system (used for the Scottish and Welsh Parliaments and the London Assembly). We have to be careful here; there is real public scepticism about this. And moving to PR at national elections is a big step. But a firm commitment to PR for local elections is an essential accompaniment to serious progress on devolution.

Will Labour deliver on these? I would be most surprised if we get anything more than a few warm but vague words. For the hard left consolidating political power is the whole point and purpose of politics, and they want to monopolise it. They don’t accept pluralism except as a way of identifying enemies. The can’t accept that empowering the people can mean anything other than conferring the mandate of heaven to their own political elite. There are pluralists in Labour, but on political matters the Blairites and the hard left are remarkably close together. If Jeremy Corbyn strikes out on a different line, then the movement he has started may yet be a worthy revolution.

 

 

The SNP are on manoeuvres. Westminster politicians should be afraid.

Scottish politics is an exercise in asymmetric warfare. The Scottish Nicola SturgeonNational Party (SNP) are steeped in the nation’s own political culture, and focus on their objective of obtaining its independence. The unionist parties are more concerned with the politics of UK as a whole, and push their policies concerning Scotland and the Union into the “too difficult” pile until too late. This has been stark in the last few years. The SNP won their referendum on independence (i.e. holding the referendum, rather than the outcome, which they lost). At first Westminster politicians did not take the campaign seriously, relying on comforting opinion polls. Then, as the No campaign went awry and they woke up to the implications, they panicked. The main party leaders made an ill-thought through pledge (referred to as “The Vow”) on devolving more powers. When the referendum was over, the main party leaders could only see the issue in terms of their own struggles for supremacy in Westminster. The Conservative sought to embarrass Labour with a call for “English votes for English laws”. Labour called for a Constitutional Convention to head this off, but offered no vision of how the thought the union should be run. The SNP are now about to make both parties pay dearly for their negligence.

The SNP lost their referendum, but far from being depressed and demoralised, they have treated the affair as a sort of reconnaissance in force preliminary to a longer campaign. They have made a sharp change in strategy. First their long-standing leader, and Scottish First Minister, Alec Salmond  stepped down, to be replaced by his very capable and popular deputy Nicola Sturgeon. Then Mr Salmond said that he would stand for the Westminster parliament in the May election, meaning that Westminster would have one of the party’s biggest hitters. Then yesterday Ms Sturgeon dropped a bombshell. She said that the SNP at Westminster would happily vote on the English NHS. Until now the SNP at Westminster have stayed clear on voting on matters, like the NHS, which have been devolved to the Scottish parliament. The reason offered is that Scotland’s funding formula (“the Barnett formula”) means that their funding might be affected by England’s health policies. There is practically no aspect of devolved policy that this argument could not be applied to. The SNP are now offering themselves as a fully fledged coalition partner to the Labour Party, should the latter fail to win an outright majority. The three main Westminster Parties hadn’t seen this coming, and they are in utter disarray.

For Labour this is unmitigated disaster. The SNP’s sudden interest in Westminster politics makes a large number of their MPs in Scottish seats vulnerable. The current polling is awful; the party could lose 30 seats. Labour has taken Scots voters for granted ever since the Conservatives’ Scottish presence collapsed under Mrs Thatcher. Their ineptitude was on full display during the No campaign. They have no idea how to construct a persuasive, coherent message and stick to it: their preferred method is just crude menace.  Their campaign message so far is to threaten Scots voters with another Tory-led government. “Don’t worry,” say the SNP “if you vote for us instead we can stop the Tories too.” Labour are left with just emptiness in return. They have no vision of Scotland’s place in the union beyond panicky responses to nationalist pressure.

Intelligent Tories (there are some) should be troubled too. The purpose behind the “English votes for English laws” idea was simply to embarrass Labour in England by pointing out how much they depended on blocks of Scots and Welsh MPs. There is no coherent, workable model of a well-functioning UK constitution behind it. But it carries the risk of destabilising the Union by stoking up English resentment without offering an answer. The SNP have just made that much worse. What about the fate of England’s NHS being dictated by SNP MPs? Conservatives (mainly) support the Union. Scottish independence would be seen as national humiliation and a bitter blow. And yet they are playing into the nationalists’ hands.

Things aren’t much better for the Liberal Democrats. Their main problem is political weakness, resulting from a backlash for going into coalition with the Conservatives. This is at least as strong in Scotland as it is elsewhere in the UK. The party has thought through its vision of the UK constitution more than the other parties, and its solutions are much more robust. But its softly-softly approach to devolution within England, and rejection of the idea of an English Parliament and government, look constructed for a gentler pace of politics than is in prospect if the SNP do well. Still there are some silver linings to the very dark clouds. Labour are retreating from seats they were hoping to take from the Lib Dems, in order to face off the SNP in their own backyard. And Christine Jardine, their feisty candidate in Gordon, the seat Mr Salmond hopes to win, will be no pushover, as she rallies the anti-SNP vote.

But each of the main unionist parties need to take a step back, and form coherent ideas on how the constitution of the Union should look. It isn’t enough to call for a Constitutional Convention; each party must spell out a clear vision that looks sustainable in the face of mischief-making by the SNP. Even if such ideas have short-term political costs. The people of this United Kingdom deserve no less.

 

Real devolution is about taxes

The Scottish referendum was supposed to change everything. It was supposed to have created a constitutional crisis that Westminster politicians could not ignore. Well, the Labour and Conservative party conferences have been doing their very best to resurrect a different narrative, with a rapid return to the usual political nonsense. But before long the House of Commons will have to consider further devolution to Scotland, which will bring matters back into focus. It is still worth thinking about the practical issues of devolution. And the biggest issue that needs clearer thinking is tax.

Politics is not just about creating, changing or abolishing laws. It is about balancing revenues and expenditures. In fact, in modern politics, this latter is probably the most important job of politics. How much to tax? Where to spend the money? Unfortunately, the British model of devolution shies away from the taxation side of things. Central government passes on cash grants to the devolved authorities, who have very limited tax-raising powers of their own. Devolution is about spending priorities, not about how much to spend overall. To get more money, a devolved authority has to apply political pressure to the central government, who may or may not grant it. This creates a very unhealthy tension between the various levels of government. Or, to put it another way, if the devolved government finds itself short of funding, it can just blame the central government.

And the Scottish National Party (SNP) has been skilfully exploiting this tension to undermine the union. Scotland does have a rather fudged right to vary the rate of income tax – but is has never used it. Instead, it is blaming the UK government, and hence the union itself, for imposing “neoliberal” policies on Scotland. In the referendum there was a highly mendacious, but effective, claim that the NHS would be safer in an independent Scotland – in spite of the fact that the local NHS is already run by the Scottish government.

But the ability to raise taxes is one of the essential things that defines what a government is. Meaningful devolution, whether to the British nations, regions or local authorities, must involve the freedom to tax. There are many ways in which this is done in the various systems across the world. The most extreme is in the United States, where the states have almost unlimited freedom to tax, and where local taxes are clearly separate from federal taxes. That latter point is very important to achieve democratic accountability. In other countries the freedoms of devolved authorities is much more tightly defined. It is well worth thinking about what sorts of tax it is practical to devolve.

The classic economic answer to this is that the more geographically tied a tax is, the easier it is to devolve. So taxes on property are good to devolve; taxes on financial investments and capital are not. Let’s look at the British tax system in this light.

There are four main types of property tax. Council Tax, Business rates, Stamp Duty and Capital Gains Tax (CGT). The revenue from Council Tax already goes to local authorities, but its structure is set at national level, and powers to vary it are heavily constrained (though the Scottish government has fewer restrictions). Business rates were highly centralised, but this is being released back to local authorities in the typical sort of fudged British way that makes accountability unclear. Stamp Duty and CGT are tangled up with the same taxes on highly mobile assets, and are centralised. It would be quite easy to disentangle Stamp Duty on property transactions and devolve them – but much more difficult for CGT. But we have to be careful; financial engineers can blur the distinction between property and financial investment (the property can be held by an investment trust, for example), so anti-avoidance provisions would need to be designed.

At the other extreme we have capital taxes. These are Income Tax on the income derived, Stamp Duty and CGT again, and Corporation Tax. I will come back to Income Tax. Corporation Tax is the most contentious issue. Both the Scottish and Northern Irish governments want to be able to set their own rates. But this is usually dismissed as being impractical, or leading to tax avoidance in a sort of negative-sum game. Nothing is more mobile than capital, after all, and Corporation Tax is a quintessential tax on capital. This line of argument is overdone. One idea might be to determine profits at a UK level, but allocate using some variation of the “Massachusetts formula” using property, employment and sales as the basis of regional allocation. This works well enough in the USA, and I have long advocated its use internationally too. If all a company has in Scotland is a brass plate on a registered office, the Scottish Government would not be able to tax it.

In between capital and property we have people – or more properly income earned through employment, whether directly or deferred, though pensions. These are taxed through Income Tax and National Insurance. Income Tax is the most politically accountable of all taxes, and so it is quite natural that most debate centres around how this might be delegated. But this is very messy. It is also levied on investment income, and then you have the complexities associated with rate bands and tax free allowances. It would be much better to devolve National Insurance, either just that paid by employers, or including the Employee tax too. It could be renamed “Local Income Tax”. The tax was originally set up to fund social benefits such as pensions and unemployment benefit – but the Treasury has long since broken that link. There is one important issue with it though: it is not levied on pensions. But pensions should be a UK issue that is not devolved. Regions with a high density of pensioners would suffer from a low tax base: but this can be equalised – and I don’t think it is unhealthy for regions and localities to have an incentive to encourage employment, rather than just property ownership.

Two other areas of taxation are important. First is VAT (and theoretically, any sales tax). This could be localised, but there are two difficulties. First is that with the development of online sales, it is increasingly difficult to locate a sales geographically – something that has become a big problem in the US. The second is that VAT is tangled up in European Union treaties and law. It is best left alone. The other area of taxation is natural resources, and especially oil and gas. This can be geographically isolated, though most oil extracted in English waters is landed in Scotland. This is the biggest bone of contention between Scotland and Westminster. But I would be tempted to call the Scots bluff and devolve it. After all most of the issues of infrastructure that go with resource extraction fall on the Scots government.

So what is my straw man for Scotland, or any other devolved region? First, I think a diversity of sources of revenue is a big help.  I would create a new Local Income Tax in place of or alongside National Insurance, that would initially be structured in the same way. Next I would allow Corporation Tax to be split according to the Massachusetts formula, with variable rates. I would give devolved authorities more powers over Council Tax and Business Rates. I would devolve oil taxation. I would consider establishing a new property gains tax in place of CGT on property.

A fantasy I am afraid. The UK Treasury remains the most powerful force in British government. It has no intention of conceding any of this – and would feel the state would be fatally undermined if it did. It would rather fudge something around Income Tax – the one tax that I think should be entirely “Federal”.

 

The post-referendum Hall of Shame: Cameron, Salmond, Farage, Miliband

Normal politics has been on hold for the last weeks of the Scottish referendum, as nobody from south of the border wanted to rock the boat. But that phoney war is well and truly over, as the party leaders and their followers have pitched in with a free-for-all on the previously little discussed subject of the UK constitution. It is a pretty unedifying spectacle, which demonstrates why politicians in Westminster (and Holyrood for that matter) aren’t trusted by the public. But some are behaving much worse than others.

First place in my Hall of Shame goes to our Prime Minister, the Conservative leader David Cameron. The ballot papers had not been fully counted before he launched into a manoeuvre designed with little other purpose than to embarrass the Labour party, and to protect the more controversial parts of the Coalition government’s reforms. He, along with the other party leaders, has committed to the rapid transfer of powers to the Scottish parliament – having been arm-twisted into doing so by his predecessor as PM, Gordon Brown – who was the star of the No campaign. He then suggested that that the English should get the same rights as the Scots, on the same timetable.

There are three ways in which this is mendacious. Firstly he does not mean giving English people the same rights as the Scots. That would mean a separate English parliament and executive (or perhaps a number of regional ones). It turns out what he means is stopping Scottish MPs from voting on laws in the UK Parliament that only affect England. This may be a good idea in itself, but it falls far short of any idea of devolution of power, or, as I prefer to look at it, the empowerment of voters and intermediate levels of government. Secondly, it is well-known that this is not as simple as it sounds. There is no recognised constitutional distinction between English laws and UK ones, something which becomes particularly difficult when it comes to financing. Which taxes are English, and which are general? This problem has defeated many great minds, so any attempt to ram changes through on a tight timetable is going to end badly. Thirdly, what the Scots have been afforded is many years of deliberation, and a number of referendums, about the sort of government that they want, leading up to the independence referendum, which secured a very high level of political engagement. Mr Cameron has no intention of offering the English any equivalent level of engagement. It’s just a stunt.

What Mr Cameron is trying to do is to highlight Labour’s plan to use their Scottish (and Welsh) MPs to unpick a number of Coalition reforms on English public services, most notably the NHS. That really is all he seems to care about. We should expect more from the holder of such a high and responsible office. But with a bit of luck he will be sabotaged by his own backbenchers, who, on the whole, are more principled, even though they generally scare me.

Second place in my Hall of Shame must go to another holder of an important public office: the Scottish First Minister and SNP leader Alex Salmond. He has announced that he is stepping down, but he as eschewed this opportunity to show any kind of statesmanship. He has accused the Westminster political leaders of backsliding on their promise to devolve more powers to Scotland. This is a very tendentious reading of a very proper argument between the Conservative and Labour leaders over English devolution and the wider UK constitution. Neither have suggested that Scots devolution should be delayed – there is just a concern that these wider issues might delay things. During the campaign Mr Salmond had suggested that if the Scots had voted for independence, then the English political leaders would accept the result with good grace, and enter negotiations with a spirit of peace and light. If that’s what he expects of them, he should apply that standard to his own conduct. It is right an proper that politicians from other parts of the UK should ask how extra Scots devolution affects them. And, indeed, Scottish political leaders should take an active interest in how the UK constitution as a whole works. Scotland is a fully participating member of the UK, and not some foreign power. The First Minister should show some concern that over-hasty constitutional change will affect Scottish interests, and should be demanding a seat at the table – and not acting as if all that mattered was a few extra powers for his government. But, of course, he has no interest in a stable UK constitution, and just wants to exploit the situation to keep discontent amongst Scottish voters bubbling away.

Mr Cameron and Mr Salmond are by some distance the worst culprits. They have responsible public offices and yet are acting like immature student politicians. My next entrant in the Hall of Shame is Nigel Farage, the Ukip leader. He wants to make mischief by stoking up discontent and resentment in England over the role of Scottish MPs in the UK parliament. After a highly divisive referendum, responsible politicians should be promoting reconciliation, and not stoking up resentment. But to his credit Mr Farage is at least advocating the correct way forward, unlike Messrs Cameron and Salmond, which is a UK-wide constitutional convention to promote a measure of agreement on the the shape of the constitution.

To his credit, the Labour leader, Ed Miliband, is also promoting a constitutional convention, and one with a wide enough scope to tackle broader issues, like the House of Lords. But he needs to overcome a huge legacy of cynicism when it comes to Labour’s record on constitutional reform. In this parliament Mr Miliband talked the talk on reform of the electoral system and the House of Lords, but behind the scenes he has sabotaged both initiatives based on short-term politics. Voters may well feel that he has no more interest in promoting a fair constitutional settlement for the UK than Vladimir Putin has in promoting peace and reconciliation in Ukraine. To bridge this gap of trust he needs to give a clearer picture of the reforms Labour want, and to go along with shorter term initiatives to deal with the question of Scottish MPs. He should call Mr Cameron’s bluff, and not just try to kick the whole issue into the long grass.

But above all Mr Miliband needs to give a clear timetable for his proposed convention, and  promise a referendum on its outcome by a specific date. He must make a promise that would be hard to quietly bury. But instead he wants to change the subject and hope that all this talk of constitutional change will blow over. The Labour Party is intent on pushing ahead with the media plan that accompanies its party conference, evidently planned before its Westminster elite had an inkling that the Scottish referendum might set the political agenda. Therefore he enters the Hall of Shame behind Mr Farage.

And so we come to the last of the main party leaders, Nick Clegg, the leader of the Liberal Democrats and Deputy Prime Minister. I have been highly critical of his record to date on constitutional matters, which been misjudged and piecemeal. He has now set out his views on the Constitution. And they are very creditable. He makes it clear, as Mr Cameron does not, that dealing with wider constitutional matters should not be tangled with the issue of further Scottish devolution: it should be a parallel track, with reforms not dependent on each other. On the matter of Scottish MPs he sensibly suggests following the McKay report, which the Coalition commissioned earlier in the government, only for it to be kicked into the long grass. He correctly points out that devolution in England means devolution from Westminster – and suggests a bottom up process for achieving this (by giving local councils the right to demand powers). Finally, and greatly to my relief, he agrees with the idea of a constitutional convention – which should secure directly public participation as far as it can – he suggests a citizen’s jury. This points to an credible way forward: allowing progress on the most urgent issues, while not losing sight of the big picture. So putting him in my Hall of Shame at all would be harsh. If he belongs there it is for not being clearer about all this a lot earlier. Alas, his real problem is a lack of political clout, though. The Libs Dems are facing a number of years in the political wilderness, though I firmly believe that they will be back.

The referendum on Scotland was a near-death experience for the UK. It would be becoming for the politicians from Britain’s mainstream parties to come together with a plan for updating Britain’s constitution, and consulting its citizens as it does so. Instead the Tories are being blatantly opportunist and Labour is pretending that nothing has changed. Only the darker forces of British politics, Ukip and the SNP in particular, will benefit from this.

#indyref – now is the time for more democracy, not political manoeuvres

So Scotland voted No to independence, and by a margin of nearly 11%. That’s a big relief. A Yes vote would have ushered in three or more years of hard negotiation and uncertainty that would have served no very useful purpose. But what next? There are signs that the political elites both sides of the border are on manoeuvres. But I am backing the Electoral Reform Society’s call for a Constitution Convention. There is a link where you can sign up here – though this is confused by a focus on just Wales; I hope they get their act together o this.

The story so far. Though Scotland voted No, this was only after the main Westminster party leaders, and the hero of the No campaign, former UK Prime Minister Gordon Brown, all promised to deliver Scotland further devolution and protect their funding settlement. Some refer to this off as Devo Max – but others say it falls short of this ideal, whereby the Scottish parliament would be responsible for everything but defence and foreign relations. This promise has to be delivered – but it destabilises the constitution of the UK as a whole.

In particular the Prime Minister, David Cameron, has said that reforms must take account of English government. By this he means the problem that Scottish (and Welsh and Northern Irish) MPs vote on domestic English matters, while having no equivalent powers for their own regions. The Conservatives spy an opportunity to embarrass the Labour Party, who may depend on Scottish and Welsh MPs to deliver their party programme in England. Many Tory MPs are talking a lot of sense (for example John Redwood in the FT) – and this not something I say lightly. But opportunism is not a solid basis for a robust constitutional settlement. Most thinking is half-baked, because we have not had a proper period of deliberation on the matter.

It is right that MPs are asking about the wider constitutional settlement. But it is wrong to neglect the process of democracy. One of the energising aspects of the Scottish vote was that it involved voters in an important decision. The turnout was very high (85%) by our normal standards – securing a level of political engagement that has been most unusual. Any constitutional settlement for the UK needs to similarly democratic, even if it cannot hope to reach such heights. There needs to be a deliberative process that draws people in, a Constitutional Convention, followed by one or more referendums across all of the UK. The Westminster elite don’t seem to want this; the Edinburgh elite seem no better. They don’t want a process that they can’t control. They want a platform for point scoring, not a process of consensus building.

But these are hard questions, which are not susceptible to quick political fixes. If we don’t opt for a proper deliberative and democratic process we are in danger of lurching from one constitutional crisis to the next.

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

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

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

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

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

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

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

 

As Scotland decides, the recriminations in Westminster begin

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

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

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

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

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

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

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

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