Political Reform May Be Dull But Its Vital For a Fair,Successful Society

Political Reform May Be Dull But Its Vital For a Fair,Successful Society 

In this post I’d like to say something about why political reform matters and some ideas to take it forward. By political reform I mean changes to our system of politics in the UK with the aim to improve democracy, accountability, and transparency.

I take as a given that we need to reform the House of Lords, that eventually we should be a republic not a monarchy and that our voting system needs to be transformed to a system such as Single Transferable Voting. These are all big issues and one day perhaps I’ll return to them, but for now I wanted to delve into more detail on some other aspects of the political system we have and why it needs reforming. For now, let me leave this picture as to why the voting system needs to be reformed.

 

Political System Chat Is Boring Geekdom Isn’t It? Why Does It Matter?

Regular readers will know that I consider it essential for any liberal society that is fair, just and successful for citizens to feel that they are all equal, that we are indeed ‘all in it together’, and that they can execute their life plan as an equal member of society with the resources and dignity they need to do so. I set out the reasoning for that in a previous blog here, and here but most especially here.

So, when we look at our political system, we need to make sure that it engenders these feelings- that in theory and practice it looks and feels like it is fair, that it treats all citizens equally, and that the rules for one are the rules for all, and that equality of treatment is real in practice, taking account of the differing resources that citizens have.

Put more bluntly, we want our system of voting, of representative democracy, of access to power and decisions, and of campaign contribution and lobbying, to follow clear rules. We want and need to make sure, crudely, that money can’t buy laws, access to politicians or deliver unwarranted special treatment. We need to make sure that the system isn’t seen as a closed club, an old boys network of patronage and privilege and favours for favours. We need to make sure that it doesn’t feel like this picture:

 

I think for too many, both in actuality and in appearance, we are not meeting these principles. And it matters because for the reasons I have blogged on before, citizens can become cynical, disheartened and susceptible to populists and blame-seekers if the economic and political system taken together don’t look or feel fair.

So, how do we fare against those tests of clear rules, equal access, transparency, removing money from politics and opening up the system of power? In the UK, not so well, is my argument, and so I want to set out ideas to improve things. Normally at this point I’d give unsuspecting readers a blizzard of links to show why money saturates politics, why the system is unfair etc. but I’m going to assume you believe me on that and want to know what possible answers exist.

 

Ok If I Accept We Need Reform, What Do You Propose?

Taking a chance and assuming you agree with me on the need for reform, let me list some areas to zone in on and what i think needs to be done.

 

(1) Political Parties, Voting,Funding and Access to Power 

 

We do, rather later in the day, have detailed rules and regulation about political parties and our system of voting and funding. The Electoral Commission, amazingly only established less than 20 years ago, is the main regulator and enforcer of the rules, and its website also provides useful information to aid transparency.

But the Electoral Commission can only enforce the rules it is given so what else do we need? Firstly, it is unacceptable that rich men and women can still give enormous donations to political parties and be allowed to do so. We clearly need to legislate to limit individual and organisational donations to a maximum limit each year- I would argue that £10,000 per annum is more than adequate. If you think as a rich person your human rights are being impacted by not being able to massively fund political parties, then the answer is no, we are removing a concern that you are buying access, and unfairly impacting on the freedoms and dignity of others.

As it happens the Committee on Standards in Public Life agrees with me- see this for more and for a general update on funding. We need to exempt union donations that are made via affiliation fees where members have consciously agreed to donate. If anything, we need to consider further how to allow smaller citizen focussed donations.

We have a system of declaring donations that works reasonably well, but we need to tighten that up as well to remove the loophole where local donations via ‘members associations’ that are basically of one political party, can donate £7500 to a local campaign without declaring it. All donations above £1500, made by an individual or organisation, to any local or national campaign, need to be declared.

If you worry that that creates too much bureaucracy, my rather blunt answer is so what? This is an area where public trust is low, and better to err on the side of caution.

A rather better objection to limiting donations is that parties will be starved of finance. This matters because we want our political parties to flourish and to have the capacity to develop proper political ideas and policies, without having to rely on rich donors, vested interest think tanks, and secondments from well-off companies hoping to influence an up and coming party or politician. We already have a system where political parties receive some money depending on how many elected representatives they get, but we need to go further and give out public funding as well dependent on the number of votes. I’d argue strongly that it is in all of our interests to both remove big money from politics, but also to ensure our political parties have proper advice, and capacity to develop sensible ideas. Again the Committee on Standards in Public Life proposed this. I’d go further and, copying an idea from Vernon Bogdanor, offer public funding on number of votes received and donations made,but on a matching basis i.e. £1 of public money for every £1 of donations received, plus a matching sum dependent on number of votes received and number of representatives elected. This will of course disadvantage the Conservative Party- but I am pretty sure that the donations made to it unduly influence policies towards those with money and power and vested interest, and away from public good and equal concern for all citizens, so I’m not worried.

 

(2) Access to Power, The Behaviour of Elected Representatives and Lobbying Reform

“Reform parliament? It’s more than my second job’s worth!”

In my day job I sign a clause both requiring me to seek permission for outside work, and to ensure that whatever I do does not put at risk the organisation I work for, or the aims of my job. The expectation is that some (many? most?) requests would be declined, as I have a day job to do and a set of requirements and expectations for me to uphold.

Sadly, this basic common sense does not apply to our elected representatives, who not only can receive all kinds of ‘hospitality’ and ‘support’ from lobbyists, but who also can even be paid by the same people. Again, I am tempted to, but won’t list all the areas of activity where people have clearly failed in their duty to their representatives, but let me just list ‘cash for questions’, ‘cash for honours’ and ‘cash for influence’ and ‘cash for Lords influence’ scandals .

People who donated getting honours. People who donated paying for parliamentary questions. People who donated apparently getting new laws amended or added. It matters not one jot if on fact no one was breaking the rules or even if no one was acting unethically or against the public interest or their solemn elected duty. It looks awful, it sounds awful, it stinks and it has to stop.

We need a new rule that says, if you are are an elected member of parliament or a member of the House of Lords (which of course should be elected) then you simply cannot take a salary from someone else. If that means you don’t take your seat, or go for election then so be it. I am not sympathetic to the argument that says by excluding those who can’t live on £100,000 a year or so then we are thinning the fabric of democracy. Sorry, we have too much influence from rich people already, not too little. If you want to serve and you’re rich, I trust you to find a way.

We have one of the largest lobbying industries in the world, and whilst lobbying can be valuable, it is clearly another area where we need new rules and a greater transparency and sense of fair access. Again, it is vanishingly unlikely that all those lobbyists are there to ensure that the weakest in society, the poorest and those lacking in opportunity get their fair share, so I am not at all concerned if we introduce onerous new requirements.

For a start, the 2014 Lobbying Act clearly needs adjustment. Whilst we do need to regulate political campaigns from NGOs and other charities, we do NOT want one of the few active voices for social and environmental justice silenced, so we need to look at that again. Secondly the Act only sets up a register for full time lobbying companies for hire, and not for corporate lobbyists working of big companies. This is clearly a nonsense and a huge loophole which we need to fill- all lobbyists should be covered and we can work out the exact rules and ask the regulator to figure out a proportionate response.

Speaking of the regulator, the current one for lobbyists is, as I understand it, that the Register is kept by the Registrar of Consultant Lobbyists (the “Registrar”) (currently, Alison White) and the Office of the Registrar of Consultant Lobbyists (the “ORCL”) is sponsored by the UK Cabinet Office. never heard of them? No, me either.

Yet another aspect of disastrous behaviour which corrodes public faith is the so-called revolving door which operates between lobbyists, former ministers, special advisers, senior civil servants and corporations. Many former senior people and ministers go on to advise companies or join lobbyists. Sometimes they don’t even wait to step down before taking up positions. But even if they do wait, how can we be sure that they didn’t create policy to suit the people they might be joining? How can we accept at face value that our senior civil servants and ministers are working in our name when weeks after leaving office some major corporation offers to pay them large sums for their ‘knowledge’, ‘experience’ or ‘access to contacts’. How can we know that these ex-ministers and civil servants won’t use their contacts inappropriately to influence policy in a way you or I can’t?

Now, dont get me wrong. I think most senior people and elected representatives are honourable and do need to earn a living after serving their time. But again, this is all about appearances and whether the system is stacked in favour of, or against ordinary citizens. Have you heard of the body that regulates the appointments that former senior civil servants or ministers are allowed? No, neither had I

It seems clear to me that we need two more things to make our system fair, and obviously fair:

  • a ban on senior civil servants, agents of the crown or ministers and special advisers taking a paid role with a company, lobbyist or other party working in the areas that were previously their area of responsibility, within a defined period after leaving. I’d suggest at least 5 years, but perhaps it should be 10. If that is considered too strict, I think its worth it, and is explicitly an attempt to change the otherwise overly incestuous rules of the game
  • we need a need regulator here- too often it is poorly funded, obscure and timid bodies that we have never heard of dealing with these matters. Too often Sir-Something-Something is the regulator being asked whether Lady Something-Something or SirSomethingSomething has broken and whether we should feel let down or jolly cross. That’s not good enough- the evidence seems clear to me that the regulators in their area are almost always part of the same circle of well off, white and privileged people that they seek to regulate, with the same assumptions about what is reasonable, what is fair, and what is acceptable, but which are far from what ordinary citizens might feel. I’d like to see a real regulator appointed, maybe we might have some fun if an ex-benefits inspector with a harsh eye, or an investigative journalist was appointed!

I would personally bring together into one ‘House of Parliament and Civil Service Ethics Office’ the rules about appointments and revolving doors, about access, about reporting who is meeting what, about a statutory register of lobbyists, about hospitality, about declarations of conflicts of interest, about paid appointments, about a host of ethical rules about second homes and so. By my count that would sweep up the Registrar of Consultant Lobbyists, the Advisory Committee on Business Appointments, IPSA , the Parliamentary Commissioner for Standards, and the equivalent bodies in the House of Lords. No doubt a similar case can be made for the devolved legislatures.

Finally we need better and tighter rules around the relationship between lobbyists and law makers. If I told you that passes which give access to the heart of parliament are given to researchers of parliamentarians, you’d think nothing of it. But if I then said that those same passes are passed on to actual lobbyists, that they can access places and people you and I can’t, that are supposed to be reserved for parliamentary workers, you might change your mind. We need all lobbyists’ meetings and entrance to/from parliament to be logged and recorded. We need to ensure that lobbyists cannot be the paid researchers of parliamentarians. We need to end the practice of parliamentarians accepting paid hotel rooms, paid trips for ‘fact finding’ and paid for expenses, whilst allowing for modest entertaining and hospitality. Again, if politicians need to travel to learn more, we can create a modest ‘travel fund’ paid for from public funds, and administered by the new ethics office.

 

Conclusion 

 

I wouldn’t want readers to get me wrong- I don’t think our political system is rife with corruption and overt bribery, though it is perhaps more common than some might believe. What I think is common is an inappropriate blurring of the lines, a lack of transparency and rigour when it comes to who has access to power, and what the role of money and networks are in decision making and policy. We need stronger rules, we need stronger regulation, we need to cut away the parts of the system that invite cynicism and we need it to be seen to be whiter than white. Fortunately this is one area where action would bring results, and at minimal cost and maximum public gain.

 

 

 

 

Scotland And Europe- How Realistic Are The Scottish Government’s Ambitions?

Scotland And Europe- How Realistic Are The Scottish Government’s Ambitions?

It has been a very interesting week in Scottish and UK politics, with constitutional issues and relationships-between the UK, Scotland and Europe- very much to the fore. Scotland’s First Minister has indicated in her speech to her party’s conference that there should be another referendum on Scottish independence. The First Minister, to the delight of some and the despair of others, has claimed that she has been forced into this action as Scottish Government proposals on Europe, published in December 2016, have not been taken seriously. In response, Prime Minister Teresa May has said ‘now is not the time’ with Brexit negotiations ongoing until at least 2019 and likely beyond, plus presumably a need for transition.

Now as regular readers will know, I’m no fan of the cause of independence, but rather than simply address the raw politics, I wanted to look in detail at the Scottish Government’s proposals. Ostensibly at least, the rejection of, and failure to seriously consider the Scottish Government’s proposals for a differentiated relationship for Scotland with Europe, is at the heart of the First Ministers’ desire for a fresh referendum.  But are those proposals credible or possible? Is this indeed UK government intransigence, or is it the Scottish Government making unrealistic demands in the first place? After all, if they are serious, then perhaps the First Minister has a point. But if there are not credible, then that in my opinion, shows the demands for ‘IndyRef2’ in a new light.

This blog therefore, delves into the complicated world of single markets, customs unions and trade barriers, and tries to answer the question ‘Just how realistic are the Scottish Government’s proposals on Europe’. I hope this will provide some contribution to inform the debate.

 

(Trying To) Explain Single Markets, Customs Unions and Economic Integration and Trade

I’m not a trade negotiator, nor am I a business person, nor have I ever had to export goods or services. So in what follows, I have done my best to tease out some key points amidst the complexity. But if you see something  that’s wrong, or too simplistic, let me know and I’ll try and correct if I agree.

I thought to kick off we should define a few terms, as understanding these is key to understanding the Scottish Government’s proposals.

There are varying degrees of economic integration, from a free trade agreement, right up to a unitary state. Free trade agreements (FTAs) are the basic starting points, giving states freedom on lots of issues denied them as members of say the European Union, but still seeking to remove trade barriers. The UK government currently wishes to negotiate lots of new FTAs when it leaves the EU, which currently the common approaches to such things as a member of the EU prevents.

Next on the ascending ladder of integration are Customs Unions– members of a Customs Union take a common approach to external tariffs with other countries, whilst allowing the free movement of goods within members of the Union. Countries can be members of a Customs Union but not a common market, or vice-versa. If you’re not in a customs unions, then customs checks on your imports, tariffs and compliance with complicated ‘rules of origin‘ likely become a time consuming and potentially expensive issue. If you have complex multi-country supply chains or rely on just-in-time systems, you’ll want to avoid rules of origin and customs checks if you can.

Next, we have a Common Market, the sort of arrangement that the EEC was developing in the 1990s prior to morphing into the EU. Common markets seek to remove most but not all barriers to trade including tariffs, harmonising of product and production standards and freeing up movement of goods, services, capital and people.

Next we have a single market, a combination of a common market with a customs union, and looking to remove both tariff and non-tariff barriers to trade, along with free movement of people across the market. The EU is a single market and the largest in the world with 500 million people, as is the EEA which includes EFTA members. Now EFTA countries (Norway, Iceland, Liechtenstein and Switzerland) are members of the EEA along with the EU members- and in return for complying with the rules and paying a fee, are full members of the single market ( though their ability to shape the rules is severely limited).

The single market, in order to work requires that members fully adopt a set of what is known as the ‘four freedoms’- free movement of goods, services, people and capital.

Finally, some members of the EU (but not all) are members of a further integrated economic and monetary union, whereby they have adopted a single currency.

If you’re still with me, we need to also remember about movement of people, facilitated by borders unions, of which the Schengen Area is the main one in Europe. Neither the UK nor Ireland are members of Schengen, mostly due to the pre-existing agreement following Irish independence, known as the Common Travel Area.

As we can see, it is complicated, with some EU members being full members of the single market and currency union, others outside the currency union, with the single market also having non-EU members in the single market via the European Economic Area and with some non-EU members having harmonised border arrangements, but not others.

Key points are that there is a ‘ladder’ of integration, starting with free trade, moving through customs unions and integration of standards, towards a full single market and currency union, and ultimately of course, a single unified state. As I understand it, the direction of travel of both the EU and of trade negotiation generally, is to move beyond merely eliminating tariffs on goods, towards removal of non-tariff barriers to trade in goods and services, such as the harmonisation of technical and product standards, intellectual property, labelling, licensing and removing services market barriers to enable financial and digital markets.

Actually, the former Deputy Prime Minister Nick Clegg, as part of his ‘Brexit Challenge’ series, lays this out rather well.

 

Brexit Issues and Economics 

Now I should note in passing that I voted to remain, that I think exiting the EU is a very bad idea, that the challenges are immense, and that we seem to be creating the potential for economic self-harm without being likely to realise the promised benefits. But that is a whole other story so I won’t dwell on it. If you are interested then try this from the IFS, this from Wren-Lewis and to explain the background try these excellent papers from Nick Clegg, for example this on food and agriculture, or this on the complexities of the Brexit negotiation. 

For the avoidance of doubt, I agree with those who think Brexit is a bad idea, but the purpose of this blog isn’t to discuss Brexit per se, but rather whether the Scottish Government has made viable alternative proposals.

So, what is the Scottish Government proposing?

 

The Scottish Government Proposals 

The Scottish Government’s proposals on Europe are contained in a 62 page paper published in December 2016. The thrust of the First Minister’s case for a referendum is that the proposals in the paper haven’t been taken seriously. So what does the paper propose?

The first two chapters of the paper explain how we have arrived at this point, and the importance of the single market to Scotland’s interests. It is worth noting that the paper (para 34) suggests that a range of fundamental rights and interests of working people, social and environmental interests and wider common challenges such as climate change,may be under threat as the loss of the overarching framework increases the chances of a current or future UK government removing these protections and agreements.

Chapter 3 moves onto ‘protecting Scotland’s interests’ either by keeping the UK in the single market, or by examine ‘differentiated solutions for Scotland’. Chapter 4 then discusses a range of devolution and constitutional consequences of Brexit for Scotland and the UK, some of that discussion assuming that chapter 3 proposals are going ahead, before Chapter 5 summarises.

The paper initially hopes that the UK will seek to remain part of the single market and customs union as the best option for both the UK and for Scotland (and I agree with that). However since the paper was written in December 2016, the Prime Minister in her speech on Brexit, made clear that the option of staying as a member of the single market and customs union was not on the table, although somewhat mysteriously ‘access’ and ‘association’ were. Regardless of what we think of the UK government’s negotiation objectives, this does mean that the Scottish Government’s ‘differentiated proposals’ come into play.

Just before we get to the specifics though, let me say that in general terms the paper undermines its own credibility by not really addressing a fundamental point- the relative size and importance of the UK single market for Scottish trade, relative to the European market. Not only is Scottish trade with the UK market 4 times bigger, but trade with England has been growing far faster for Scotland than trade with the EU over the last 10 years- not the message that either the First Minister, nor the paper itself, seems willing to make clear. I’m sure the authors will point to mentions at various places of the UK single market, but it hardly makes it clear that one is 4 times bigger than the other nor the recent dynamics.

In my opinion this is yet again an example of the problem with the blindness of the independence argument- point out the problems with ‘thing A’ (in this case Brexit) whilst ignoring the problems with thing B (independence). This chart makes the point:

But back to the proposals.

 

What Is the Differentiated Proposal for Scotland?

 

If we accept that the UK is leaving the single market and Customs Union, then the Scottish Government essentially calls for Scotland to be allowed to stay in the single market (but not the Customs Union). This is called for based on the chapter two list of the benefits of membership, and the problems for Scotland if it leaves. I find these claims slightly overdone but convincing.

The key sections start at para 106. The Scottish Government says it is ‘essential’ that Scotland can ‘remain within the EEA and the European Single Market even if the rest of the UK leaves’. The paper claims that there are already differentiated arrangements within the EU and single market framework, nothing that parts of Denmark (Greenland,Faroes) have different relationships, as do the Svalbard Islands in Norway. Similarly the Channel Islands are mentioned, as is Liechtenstein. The paper also makes a version of the argument ‘well everything is already going to change because of Brexit so…’

The core of the proposal (para 117) is membership of the European Single Market, and collaboration with EU partners on key aspects of policy and participation in EU programmes just as Horizon 2020, energy and justice. Para 126 is explicit in suggesting that the proposal will give a comparative advantage to Scottish companies. Para 130 appears to suggest that as a price of single market membership, the ‘four freedoms’ would have to be upheld, implying that EU rules would be paramount in Scotland compared to UK rules (if they weren’t, the four freedoms would be breached and misalignment with the single market rules created over time)

The paper notes the challenges that this option presents- the status of Scotland in international law,legislative and regulatory compliance, free movement of people within the UK and continued free trade within the UK (as part of the UK single market).

The paper notes that only states can become members of EFTA and so proposes that either Scotland becomes an ‘associate’ member or that the UK retains membership of EFTA but then applies a ‘territorial exemption’ to all of its territory except Scotland. The paper appears to suggest this is possible because the Svalbard Islands have some elements of EFTA rules disapplied.

The paper notes that to be a member of EFTA, Scotland would need to attend international fora to ensure compliance and also submit to the jurisdiction of the EFTA Court, and to both ensure UK regulation and policy on competition, procurement and state aid rules complied with EFTA (and therefore single market rules) in Scotland, or that new powers are granted to Scotland (see below).

On free movement of goods and services, the paper appears to suggest that two legal and trade regimes will be operating without undue problems. Firstly, Scottish goods exported to the single market will comply with single market rules, but secondly Scottish goods exported to the rest of the UK will comply with UK rules. Apparently, any changes in trade relations with England will be frictionless.

On free movement, the key problem of course is that much of the Brexit debate was about reducing free movement of people, but the paper appears to suggest that again, two systems can be operated. Scotland will have an open relationship with 500 million people in the single market and accept free movement of people. However at the same time, no hard border for people will exist with England. The explanation for this relies on the precedent set by the Common Travel area I mentioned above, where Irish citizens can travel freely across the UK.

Finally, in order to make all this happen, the paper suggests a long-list of new powers are required for the Scottish Government and Scottish Parliament. Actually new powers are of 3 types:-

– matters which are no longer subject to EU law and that currently are devolved to Scotland (e.g. fishing, agriculture, marine environment, civil law, justice)

– other areas of EU competence that need to be devolved to Scotland to protect over-arching key rights such as health and safety or employment law and workers rights, equalities law, consumer protection

– new powers needed to make the differentiated arrangement work

This latter list is surprisingly long and includes import and export control; immigration; competition policy,product standards and intellectual property; company law and insolvency; social security; professional regulation; energy regulation; financial services; telecommunications; postal services and the full devolution of transport. In addition, Scotland needs the power to take part in trade negotiations, international fora including EFTA mechanisms, and cooperation.

 

Is All This Remotely Credible or Feasible?

 

What are we to make of all this?

Firstly, I think we can safely say that the politics look challenging. The idea that a UK government will proceed to complex negotiations with 27 member states on the terms of Brexit, plus a range of negotiations with countries around the world, whilst also granting one part of its territory an set of exemptions, looks implausible. Not to mention that immigration and control of free movement was a key aspect of the Brexit discussion, but the Scottish Government suggests that will remain for Scotland. Add in the explicit suggestion that differentiation gives a competitive advantage to Scots companies, plus the suggestion that under the deal Scotland takex ovrr its ‘share’ of the previous EU funding contribution and it starts to look almost impossible.

Beyond the politics though, I think there are more serious flaws. All of the territorial exemptions mentioned above are very small- Svalbard, Liechtenstein, Faeroe Islands- and are very small in trade terms whereas Scotland is a top 50 world economy on its own. Secondly, I find the idea of a territorial exemption applied to 90+% of the UK population- remember the idea is that UK stays but exempts itself from EFTA except Scotland- to be implausible in the extreme. Thirdly, the idea of an ‘association’ from a non-state member seems a non-starter, as Iceland said recently. 

So on political and legal grounds, things look shaky.

But let’s keep going. The paper appears to suggest that in order to stay in the single market, UK rules would have to defer to single market rules and that great swathes of what it is to be a UK unified state would not apply. Remember this affects things as diverse as competition law, energy, production standards and a host more. I find that this strains credibility. I also find that the idea that a single unified state can apply two sets of trade rules across its geography, but also maintain an internal free open border for people, goods and services, to be implausible . The paper says that if the UK succeeds in its Brexit goals, then there should be minimal differentiation between the existing regimes, and the new UK relationships. But of course if that was true, then that removes much of the argument for the differentiated solution. So either, things will be the same (in which case why bother with the complex Scottish solution) or things will be very different indeed, in which case operating two very different systems seems a non-starter.

One point that does appear to have force is the argument that if the UK can agree a special deal with Ireland (a foreign state) on the free movement of people across the UK, then ‘there can be no reason whatsoever that it could not continue to operate between Scotland and the rest of the UK, even if Scotland is in the single market’. But I’m afraid this wording reminds me of the now-dead former currency union plan- the gentleman protests too much. In reality I think there are reasons to think that the Irish and Scottish situation would be different:

– firstly the Common Trade Agreement has been in place since the 1920s and has not caused the concern that EU immigration has (or at least not recently)

– second both the EU and UK recognise the pre-existing agreement and seek means to honour it- whilst neither has given any indication they wish to see more such arrangements. In general the direction of travel is to remove special cases not add to them

-thirdly, the risk of conflict in Ireland is fresh in everyone’s minds, so the animus to get an agreement is much stronger

– fourthly, Ireland is a island separated physically, so the ongoing suggestion is too find a free movement solution that involves more checks at airports and ports, rather than the physical contiguous border- and that doesn’t apply to the English-Scottish border

-finally – we don’t actually know if the Brexit negotiations will succeed in generating a solution that avoids a hard border.

Let’s keep going. At first sight, it appears perfectly reasonable to suggest that any powers ‘coming back’ from the EU to the UK that covered devolved matters, should go straight to Scotland. But not to fast- the issue is that these powers are tied up with complex discussions that need to take place on trade and tariffs and market access- not just the policies themselves. So, as Nick Clegg points out, food and farming policy will need to be thought through not just in terms of CAP-replacement, but also on complicated trade and import issues. So, even the initial list of new powers suggested by the Scottish Government needs pause for thought- its not a land-grab for the UK government to want to think it through, it merely reflects the need to for example, retain bargaining power in trade discussions, and ensure maintenance of the UK single market.

But as we move onto the wish list of new powers in the Scottish Government’s paper, things in my view start to become beyond the point that serious proposals are being made. Recall that even before we get to this point, special legal status for Scotland is needed, UK rules and policies will need to be subverted to single market rules for Scotland, free movement of people with no hard border will need to be agreed, and two complex and different bodies of trade rules will need to be accepted. But that’s not all!

Now we find that the UK will have a sub-section part of it that controls not only trade, but also immigration, consumer law, employment law, imports and export rules, intellectual property, social security, professional regulation, energy, telecommunications policy, financial services and a host more.

I won’t go through why that is beyond implausible. At that level of devolution it should be clear that there are three consequences:

– the UK single market and associated rule book will barely apply in Scotland

– distortions between England and Scotland will appear all over the place with massive potential for conflict and political disagreement

-a state with that level of devolution can barely be called a state, and is one step away from breaking up

So I found it hard to take seriously such a wish list, which I felt could only really be put forward in the expectation of being rejected.

 

Time To Summarise 

 

If you made it this far, ‘well done’. The sheer length of this and the range of issues to be considered does I think show how complex Brexit is going to be. I think we can draw a few conclusions:

– Brexit is going to be an undertaking of unprecedented difficulty and complexity

– The consequences of Brexit for the UK and Scottish economies look severe and ongoing and the Scottish Government is surely right to point them out

– At the same time, the proposals for a differentiated solution for Scotland  by remaining part of the single market don’t look politically feasible, but more importantly lack international precedent at the scale proposed

– the proposals surely fail the credibility test – operating differing trade, immigration, free movement of peoples and other regimes within a single state at the scope and scale proposed just doesn’t add up

– either the timing of new powers demanded is wrong (think agriculture or food), or the scope of powers demanded is just not credible within a unified state.

My conclusion is clear- the Scottish Government proposals do not represent a credible package that any government, not just a UK government, could agree. They lack serious international precedent, they destroy the basis of the unified UK state, and they appear to fall foul of international law.

My final comment is this- I do agree with independence supporters on one point at least. Scotland does face a choice, a choice brought on by Brexit. The choice is to stay with the UK and accept a new trading relationship with Europe and the rest of the world, or leave and forge a new state itself. Pretending you have have both is neither sensible not credible.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Brexit White Paper- Big Holes in All the Wrong Places…

The Brexit White Paper- Big Holes in All the Wrong Places…

I have now had a chance to read the Brexit White paper. I’ve read hundreds of these things in my time (not healthy I know!) and this one appears to me nowhere near as bad as the press reports would have led me to believe in terms of its general structure or presentation. More clarity does indeed emerge and some objectives can be gleaned amid the bland generality and optimistic objectives.

Unfortunately the paper suffers from four major weaknesses:

– The tendency to suggest that because there is a mutual interest in succeeding between the UK and the EU, say for example on passporting of financial services, that there is therefore an identical mutual interest. In fact it’s clearly far more important to the UK than the EU on sheer weight of interest and numbers. This tendency to elide common interest into identical interest is a major weakness.Ironically, this flippant blindness is very similar to the SNP/Scottish independence campaign’s approach to UK relations post-separation
– Environmental protection- this is an obvious common and pan-European need to manage effectively- from transboundary air pollution to illegal waste shipments, from common carbon emissions trading schemes to marine planning. However the environment is barely mentioned- an astonishing absence considering that for example, workers’ rights get a chapter to itself, that future food, farming and marine policy will be up for grabs in the largest change in 50 years, that the bulk of UK environment law (80%+) is founded on EU law, and that environment is most at risk from the aggressive free trade open economy ideas that the government has floated
– Devolved nations and the future of the constitution- the paper is very weak indeed and provides neither answers nor ideas for the future relationship suggested between the various parts of the UK, clearly risking the future of the union with its insouciance and arrogance (and with signs that this is moving the poll numbers back towards Scots independence)
– Missing the bigger picture- Ok! We can possibly agree that the EU can be annoying; that the CAP is a nonsense; that the Greeks have been screwed by the Commission, the ECB and a German-led ordo-liberal model; that the loss of control of immigration is not an unreasonable thing to argue over. Yes, on reflection it’s clear that the elites were too arrogant or afraid to seek the people’s consent for the major changes 1986-2010.

But overall the elites were surely right in what they sought to achieve- for the real purpose of the EU isn’t economic any more. It is to bring us together in ways that deliver mutual common interest, that prevent war, that give Europe a voice in an increasingly Eastern-facing world, and which grow the common bonds of mutual respect, cultural ties and the ways of peace.

On that measure, the white paper is an enormous failure…

The Dangerous Business of Being Alive – Risks, Citizens and the Liberal State

The Dangerous Business of Being Alive- Risks, Citizens and the Liberal State 

‘The greatest risk in life is to risk nothing. The person who risks nothing, does nothing, has nothing, is nothing, and becomes nothing’ Norman Vincent Peale 

Welcome to the latest entry in my attempt to set out some principles for a liberal state, as a series of building blocks for new ideas for liberalism. This time I want to talk about risks, and citizens and the role of the state in a liberal society.

In an earlier post, I tried to set out what I see as the principles underpinning a fair and equal liberal society. In addition to making the case for freedom and equality (principles 1 and 3) I specifically suggested a role, an obligation for the state around managing risks for its citizens:

Principle 8- Society and its government must ensure a fair and effective management of social risks so that risks imposed by society on its citizens, arising from social-technological risks, or failure to act on foreseeable collective risks, are managed and that effective protection systems are in place.

It is this principle and this area of risk and obligations that I want to expand on now.

 

What Is Risk and What Types of Risk Are There?

The literature on risk is enormous and I have no intention of rehearsing it all here. In general , a risk is an event or choice that has yet to happen but which may happen and has a rough calculus of measurement based on probability times impact. So one risk can be low because although very likely, its impacts are modest. Another risk can be high, because even though its probability is lower, the outcome or impact is extremely serious. Here one might think of the risk of a US housing market crash that was felt to be very low in 2008 but whose consequences were and still are, extremely serious.

In the corporate world, risks are framed around choices that the corporation and its management has, even where the outside environment constrains those choices. However when thinking of citizens, we can quickly see that there will be personal and societal risks that intertwine with the obligations the state owes them.

Personal risks are those that a person freely enters into, having a choice, knowing the consequences and accepting the outcome. Investments, dietary choices, betting, career choices might be examples. Other risks that a citizen faces however, are not freely entered into- an obvious one being ill-health, or a compulsory purchase order on their house by the state.

Another way to think about these two types of risks are as Ronald Dworkin discussed, ‘option bad luck’ and ‘brute bad luck’. Option bad luck corresponds to a risk through choice whereas brute bad luck is trying to capture the idea that despite your best planning as an individual, shit happens.

Yet another way to frame this two-fold typology is based on Thomas Meyer (1), ‘optional risks’ and ‘non-optional risks’ (Meyer p28). Again, optional risks are ones the citizen decides to take to improve their life position, freely entered into and with the acceptance of gains or losses. Non-optional risks are those that happen anyway without the element of individual choice, based perhaps on their physical impediments, societal impositions, ‘acts of god’ or other risks outside their control (including as I will discuss- state choices).

For the moment, I want to focus on risks between the individual, the society they live in, and the role of the state. Clearly, these intra-state risks are not the only type of risks, and risks exist both between states, and between and across generations (sustainability generally and climate change in particular being the obvious examples). But to make things easier, I want to focus on a single state and the relation to its citizens and the obligations the state has.

 

Ok, What’s Your Point Caller 

 

My point is quite a simple one. If we believe in a society where all persons are equal, where we need to ensure they have opportunities to follow their life plans, and where some choices and risks are outwith their control, then we immediately create a role for the state to intervene to manage some of those risks. Another way to look at this is in terms of the difference between having theoretical rights and opportunities, and actual ability to follow through to pursuing them.

Let’s now go back to the quote at the state of this post:

‘The greatest risk in life is to risk nothing. The person who risks nothing, does nothing, has nothing, is nothing, and becomes nothing’ Norman Vincent Peale

Such a quote and hundreds more like it, can be found across the literature of positive thinking and urging people on. However I’ve always thought that the thinking behind such suggestions neglects the element of circumstance, of brute bad luck, of ‘shit happens’. Yes with enough luck, willpower and gumption, some people can overcome any adverse circumstances. But what if you come from a  chaotic family? Or through sheer bad luck lose most of your life savings? Or are dogged with poor health, or born with a disability? Or are a victim of shoddy workmanship or downright business deceit? What if sweeping technological change wipes out the industry you work in, or decimates your local community? Are we really to fall back on exhortation?

No, it seems clear that for some risks, the non-optional risks, the state has an obligation to step in and help its citizens. This idea has been accept for a long time, but is particularly relevant in a new age needed for liberalism, a liberalism ‘5.0’.

Let’s be clear what we’re saying: the state has an obligation to act when its citizens face risks that are outwith their reasonable control, where the state itself through collective societal choice made one choice, amongst a range of choices, and that choice had consequences. The state and its citizens collectively has a duty to consider the consequences of its actions or failure to act, and to ensure that suitable systems and support programmes are in place to compensate and support those citizens affected by such choices. And we are talking very broadly- not just the choice to pursue policy A or law B, but the very decision to use a model of capitalism, to allow for private property, to accept certain features of the basic structure of society. Individual citizens facing bad outcomes, non-optional risks, are unlikely to have had the choice to accept some or all of these ‘macro’ choices, and hence are owed a duty to be looked after and supported.

A useful way to consider some of this is to consider Dworkin’s famous ‘insurance market’ (2)

 

Another Way Of Looking at Risk

Here is a (mercifully briefer) way to look at risks, drawn substantially from Meyer (p29)(1)

  • risks arising from private choices
  • risks including political options (socio-structural)- the state makes decisions (presumably) calculated to promote the common interest by authorising certain economic, social or foreign policies
  • Social-Technological risks-arising from the combined public and private choices about technologies that are made, often in the absence of a proper assessment of their impact on individuals or society (and something Tony Atkinson wished to see addressed)
  • Socio-cultural risks- where no positive actual choice is made, but governments and the state are effectively negligent, failing to take action in the face of foreseeable consequences of government inaction (examples might include unemployment, lack of preparation for automation, systematic discrimination of women or minorities etc.)

 

Sorry, I’m Still Not Convinced The State Has A Duty or Even a Role

You may be thinking by this point, if you made it this far, ok I can see a role for the state in providing management of risks, but either this is just a minimal level of protection to provide a basic standard of living, or an option to do so- its not a duty.

Sorry- I don’t agree. If you accepted my earlier principles for a liberal society, then it flows pretty clearly from the commitment to treat citizens equally, to respect their need for positive as well as negative liberty, and their right to follow their own life plan with dignity and the ability to see it through, that the state has a duty to act.

Why? Well firstly because if we accept citizens are equal and have rights, then when the state fails to act on the various risks listed above, it is encroaching on its citizens rights.

A second way to think about this is in terms of a social contract. We can imagine a hypothetical contract where, in return for accepting my responsibilities as a citizen and all that flows from that, I have the right to expect to be insured against the worst risks in life, since my social contract prevents me acting outwith the rules and norms of the society I am in. For example, if I am poor and hungry, I am not allowed (theoretically) to steal from the richer and better endowed and I cannot simply take over private land and begin to grow my own food. So, in return, I am owed some level of protection/insurance in return…

One final way to consider the issue is this- it seems clear that no one is morally entitled to take risks that affect third parties, unless the latter have given their express consent. But in managing the social-structural, socio-technical and socio-cultural risks mentioned above, states do this to their citizens all the time. But it is NOT valid to simply sacrifice the few for the good of the many- this would violate any number of clear liberal principles. So, as soon as it is clear that risks are being imposed, it is equally clear that rights for protection/compensation are activated.

So, the citizen has the right to expect protection, and the state has the duty to provide it.

But what does any of these mean in practice?

 

Types of Collective Risks and Consequences

In very general terms, one might re-cast my 5 ages of liberalism to match the types of risks we are discussing:

Age 1- managing risks arising from lack of religious freedom, arbitrary state or monarchical power and lack of property rights

Age 2- managing risks arising from the growth of capitalism, of pollution and sustainability risks, and lack of political representation

Age 3- managing the social consequences of increasingly collective societal decisions imposed on individuals

Age 4- managing risks associated with life circumstances, industrialisation and post-industrialisation

Age 5- Facing up to today’s risks- immigration, gender inequality, minority rights, accelerated technological change, global environmental degradation, and a realisation that risks exist that flow from the very nature of capitalism and the basic structure of society itself.

So, we are searching for things that the state owes an obligation to its citizens to address, across the full range of socio-structural, socio-technological and socio-cultural risks discussed above.

We are searching for things where the state has made decisions between options, and those decisions have consequences for individuals. We are looking for decisions and risks that violate basic rights, and where something can be done about that. We are excluding on the whole individual decisions where a choice was made and it didn’t work out. We are particularly looking for those risks that, absent substantial wealth and resources, it is difficult for an individual to foresee, to manage via self-help alone, and where reasonable efforts are  or have been already made by the citizen to address the risk.

 

Practical Examples Please!

In one sense, none of the above is new- states have long accepted the need to provide some form of safety net for their citizens. Since 1945 in the UK, a complex and interlocking set of public services have been established to try and provide social protection and social insurance for citizens.

So, some obvious areas where the state has a duty to manage risk are: providing a fair, effective and comprehensive health service. Providing a decent, free and effective education for all, allowing them to take a full part in society. Providing for people in their old age via pensions, and providing a series of protections and wealth transfers for those affected by unemployment, disability, sickness, and so on- the welfare system.

In addition, a whole range of public regulation exists to protect citizens from the inimical consequences of bad products, lying businesspeople, chicanery, shoddy workmanship, and bad advice. Think of the entire systems of legal protection and regulation that now exist in the UK around environmental protection and environmental health, health and safety at work, public health protection and disease prevention, consumer protection and product rules.

But are these enough? I’d suggest very strongly not, and as we enter the fifth age of liberalism, we need to think again about the duties- NOT the political options- that the state owes us.

 

New Risks, New State Obligations

 

I want to finish on a few examples of areas where I feel, going forward, a real liberal state would offer much more than is traditionally accepted as subject to risk management. That’s not to say by not tackling them here, I am agreeing that the UK has a fully effective set of risk management for health, education, welfare and so on. But let me highlight some others:

 

  • Legal Redress, Protection From Libel and Slander

To play a full part in society, it should be obvious in a capital-led, internet savvy, information rich society, that all citizens need adequate ability to pursue redress for illegal action against them, including slander and libel. At the moment, we seem to be cutting back on provision or relying on private insurance often attached to housing insurance or car insurance. But if we really respected our citizens, we’d be seeing this access to legal resource as a right, not a nice (or depending on your politics, nasty!) thing to have

  • Information Security and Identity Protection

In the modern world, your information can come to define you- and your identity can be stolen. At the moment, the state is too often ignoring these foreseeable risks, too often creating risks itself with casual mismanagement of information, or too grasping of information for worthy but overstated ends. Too often, major private companies like Facebook or Google are left to define what is ok, when the state should be picking up the baton, identifying and managing the risks proactively on behalf of its citizens

  • Full employment and Technological Risks

Too often, full employment is see as a thing that governments hope to achieve, based on political choice and/or philosophy. I mean, we might want it but we can’t buck the market right?

I want to suggest that this is a clear socio-structural risk that all political parties should be striving for, as an accepted duty of government. It was in the past, it should be again. Why? Because economical and social evidence and human psychology and dignity demands it- that all citizens have the opportunity to work and to work in ways that give them creativity, agency and purpose. Related to that, a whole swathe of articles on automation and the rise of the robots (something I’ll come back to) point to an overwhelming need to focus on the future and manage these emerging socio-technological risks for citizens

  • Housing and Place

We have clearly gone off-course in the UK when it comes to housing and place making. Our places are too often designed for people with cars, people with wealth, people for whom choices based on resources exist, or designed for the needs of business. Our sense of public place for democracy and civic forces to play out is just too weak. Our plan making relies on the private sector to come forward with house building and we now have a model where most of our public spending on housing subsidies private rental rather than public house building. Too many younger people face enormous obstacles to get on the housing ladder. Too many more citizens, following the signals they are given, are taking advantage of the rental market to drive up prices and rents as a way of providing for their future, in a literally beggar-thy-neighbour approach. These risks are both socio-structural (arising from a combination of open capital flows to and from the UK, tax laws, the retreat from public house building, and lack of regulation) as well as being socio-technological and socio-cultural (especially the lack of questioning as to what might happen when such choices were made, or if we continue to fail to plan for new housing). We must do better.

I don’t have time and space here, but just as important, and especially in Scotland, is our entire approach to land ownership, common land and common space.

  • Capital and Inequality

In an earlier blog, I ran through the current state of inequality in the world, and why it matters. Following Piketty and others, these socio-structural and socio-cultural risks were, and are, entirely clear and foreseeable. The enormous levels of inequality are bad, foreseeable and preventable, and are a classic example of citizens on their own being unable to either fully foresee the impacts, or fully address them given the macro-economic and financial forces ranged against them. The case for government action, preventative and proactive, to address inequality, could not be clearer.

 

Conclusions

 

As usual, I’ve gone on longer than planned during these early foundational pieces. I hope I have convinced you that, based on liberal principles, there is a right for citizens and a duty on states, for risks to be managed. I’ve talked about those risks and their nature, and why they are to be managed.

I’ve finished by hinting at the areas where, going forward, we need more focus on these risks, not as a nice to have, but as a fundamental component of a liberal, fair and effective society. In future, I’ll return to the individual areas and flesh out the details.

But let me finish with a comment to the sceptical. Almost all triumphs of private business turn out to be underpinned by previous public action (on research, on education, on capital or infrastructure support, on limited liability, on tax rules, or the rule of law). Almost all rich people have a tendency to forget what absence of resources looks and feel like, and why being stuck in the system is so hard. Almost all trapped within a system of low resources, bad services and loss of control can sense the system is not geared to support them. Unless we address these risks, proactively and systematically, we will never have the fair and equal society that we want.

 

Notes

(1) Thomas Meyer ‘The Theory of Social Democracy’ Polity ISBN 978-0-7456-4113-3

(2)Ronald Dworkin ‘Sovereign Virtue’ Harvard University Press ISBN 978-0674-008106

Public Thinking As It Should Be- A Tribute to Tony Atkinson

Public Thinking As It Should Be- A Tribute to Tony Atkinson 

“I don’t care who writes a nation’s laws – or crafts its advanced treatises – if I can write its economics textbooks,”Paul Samuelson,Economics: An Introductory Analysis, 1948

This post I want to take a break from the rather abstract thoughts posted so far, to pay my own brief tribute to a wonderful man Tony Atkinson, who died earlier this month. I didn’t know Mr Atkinson in person but by common agreement he was a giant in his chosen field of academic economics, namely the study of inequality and poverty. Other tributes are here and here.

Not only did he shape the field of poverty and inequality studies with his research, his ability to communicate and his ideas, he also led a series of institutions and approaches that, with for example Thomas Piketty, now shape our discussions of these issues. And he cared about and wanted to solve the issue of poverty, not just research it.

Towards the end of his long career, Mr Atkinson published a work on Inequality that I would highly recommend- ‘Inequality- What Can Be Done?’(1)

The book is not only an excellent primer in how inequality is actually measured, but also how it has changed over the last 50 years, in the UK but in other countries. Most of interest may be the solutions that are offered, born of a life-times thinking about the issues.

You can see him speaking about these ideas here and here 

 

What Did He Call For? 

I won’t comment on these proposals, other than to say this- if we are serious about inequality then these sorts of ideas are what we must debate, and work out how to progress. I would also say they fit very well with the principles I was writing about earlier and that such strong action is justified given the inimical effects of inequality.

 

The 15 Proposals from Tony Atkinson’s ‘Inequality – What can be done?’

Proposal 1: The direction of technological change should be an explicit concern of policy-makers, encouraging innovation in a form that increases the employability of workers and emphasises the human dimension of service provision.

Proposal 2: Public policy should aim at a proper balance of power among stakeholders, and to this end should

  • (a) introduce an explicitly distributional dimension into competition policy;
  • (b) ensure a legal framework that allows trade unions to represent workers on level terms; and
  • (c) establish, where it does not already exist, a Social and Economic Council involving the social partners and other nongovernmental bodies.

Proposal 3: The government should adopt an explicit target for preventing and reducing unemployment and underpin this ambition by offering guaranteed public employment at the minimum wage to those who seek it.

Proposal 4: There should be a national pay policy, consisting of two elements: a statutory minimum wage set at a living wage, and a code of practice for pay above the minimum, agreed as part of a “national conversation” involving the Social and Economic Council.

Proposal 5: The government should offer via national savings bonds a guaranteed positive real rate of interest on savings, with a maximum holding per person.

Proposal 6: There should be a capital endowment (minimum inheritance) paid to all at adulthood.

Proposal 7: A public Investment Authority should be created, operating a sovereign wealth fund with the aim of building up the net worth of the state by holding investments in companies and in property.

Proposal 8: We should return to a more progressive rate structure for the personal income tax, with marginal rates of tax increasing by ranges of taxable income, up to a top rate of 65 per cent, accompanied by a broadening of the tax base.

Proposal 9: The government should introduce into the personal income tax an Earned Income Discount, limited to the first band of earnings.

Proposal 10: Receipts of inheritance and gifts inter vivos should be taxed under a progressive lifetime capital receipts tax.

Proposal 11: There should be a proportional, or progressive, property tax based on up-to-date property assessments.

Proposal 12: Child Benefit should be paid for all children at a substantial rate and should be taxed as income.

Proposal 13: A participation income should be introduced at a national level, complementing existing social protection, with the prospect of an EU-wide child basic income.

Proposal 14 (alternative to 13): There should be a renewal of social insurance, raising the level of benefits and extending their coverage.

Proposal 15: Rich countries should raise their target for Official Development Assistance to 1 per cent of Gross National Income.