Saturday 25 June 2011

Public sector/Private sector

When I was at school the external examinations we took were set by the Northern Universities Joint Matriculation Board, and that continued to be the case during much of my teaching career. I presume the Universities of Leeds, Liverpool, Manchester, Sheffield and Birmingham tried to cover their costs but I doubt if they tried to make much profit out of the operation.

I don't recall any great fusses abut errors and unanswerable questions, though occasionally the question papers were accompanied by a "correction" slip putting right some mistake in the printed paper. These caused no problems to those sitting the exam (indeed, the invigilators made such a performance of making sure everyone understood the correction that they gave us useful extra time to think) though they could cause a bit of a nuisance if the correction slip had been forgotten or misplaced when the papers were used in future years for examination preparation.

Now the examination boards have been merged and privatised and the media are full of a record number of errors and unanswerable questions. Presumably the errors are unspotted because the profit maximising boards are reluctant to incur the additional costs necessary for thorough checking. The deterioration in standards does not give much credence to the "market forces" mantra of private sector good public sector bad.

To be strictly fair public examinations are a much bigger and more highly publicised operation today than in the "good old days" when they covered a much smaller proportion of the population and examinations were more of a private matter between the student, parents and the teachers. Whilst having no wish to reduce the number of people gaining meaningful qualifications I do feel that the annual round of publicity is rather overdone, especially when, errors and omissions apart, it tends to be limited to moans that the standards of the students are are falling if the percentage passing falls, and the standards of the examinations are falling if the percentage passing rises.

Friday 24 June 2011

Short Termism

One of the greatest problems of the UK economy is short termism: that our investors are far more concerned with making a quick profit in the City than with long term investment in enterprises that will create a stream of income in the future, along with employment, innovation and general prosperity. As Harold Wilson put it, it is easier in this economy to make money rather than to earn it. In half a century nothing much has changed.

The same short termism exists in our politics. After less than a year as Labour leader Ed Miliband is being battered from all sides, including his own, by accusations of ineffectiveness. In my view he would be wise to ignore them. To quote Wilson yet again,"A week is a long time in politics," and the likely four years before the next election is a very long time indeed. Miliband is therefore right, in my view, to have set up commissions for comprehensive reviews of Labour's policies in all areas and we can hope that his party will put a series of distinctive and credible programme for us to consider at the next election. In the meantime my advice to him is to keep as low a profile as possible, cut down on the sniping at Prime Minister's questions and elsewhere, concentrate on getting Labour's policies right and relevant, and in general play the long game.

I sincerely hope that we Liberal Democrats will do much the same. Last weekend's opinion polls showed us down to 12%, but a week is a long time in politics for us too. I hope we are not so obsessed with the short term problems of taking the minor role in the governing of the country that there is not time and energy left over for looking ahead. When Nick Clegg achieved the miracle of getting the media and public to pay some attention to us at the last election, out policies were found to be wanting. We need to be able to put forward a more robust package next time, viable, relevant and in keeping with our Liberal ethos.

Nick Clegg's suggestion that the government equity in RBS and Lloyds TSB should be shared among all adults, to the tune of about £700 apiece, so I've read, seems to me to have short rather than long term consequences. In the short term it might produce a bit of popularity but, as with the demutualisation of the building societies, most of the shares would be quickly cashed in, go into the hands of the existing financial institutions and wealth holders and nothing much would change. Better in my view to turn the banks into the equivalent of those German ones charged with a duty to provide credit to enterprises for long term investment at low rates of interest.

Thursday 23 June 2011

Ashdown Redeemend

I have never been a great fan of Paddy Ashdown. I voted for Alan Beith when they both contested the party leadership, and any confidence I had in Ashdown ebbed away when, in our hour of need (the 1989 European Election when we candidates had our backs to the wall after a nasty row with the SDP,) instead of staying to support us he beggared off to Hong Kong.

However, his speech in the House of Lords on the 21st June was a gem which I quote in full.

Lord Ashdown of Norton-sub-Hamdon
:I think it was Oscar Wilde who said that in a democracy the minority is always right. That thought has given me much comfort over the years as a Liberal, and it appears that it will have to give me comfort in this debate as well. I spent an engaging hour and a half yesterday in the House of Lords Library, looking through opposition speeches made in December 1831 to the Great Reform Act 1832 and to the Reform Act 1867. Five arguments were put forward. The first was: there is no public call for such reform beyond those mad radicals of Manchester. The second was: we should not be wasting our time and money on these matters; there are more important things to discuss such as the Schleswig-Holstein problem, the repeal of the corn laws or the crisis in the City that caused Anthony Trollope to write his wonderful novel.
A noble Lord: Not in 1832.
Lord Ashdown of Norton-sub-Hamdon: No, but in 1867.
The third argument, which was put so powerfully—indeed, in bloodcurdling terms—by the noble Baroness, Lady Boothroyd, was that if we were to embark on this constitutional terra incognita, the delicate balance of the constitution would collapse around us; mere anarchy would rule upon the world.
The fourth argument put forward in those debates was, “No, no, let us not disturb the quiet groves of wisdom within which we decide the future of the nation by letting in the rude representatives of an even ruder republic. God knows what damage we shall do if such a thing should happen”. The last and fifth argument was the argument actually used by the noble Baroness, Lady Boothroyd, just a moment ago: “if it ain’t broke, don’t mend it”.
Those are the arguments that were put forward against the 1832 Act, the 1867 Act, the 1911 Act—every single reform that we have ever had—and they are the arguments that are being put forward now. They were wrong then and they are wrong now. Perhaps I might explain before I come to the substance of the argument.
The first argument is that there is no public interest in this matter. Of course there is not; it is our business, not the public’s. The public have made it very clear that they do not trust our electoral system in its present form. Is there anyone in this Chamber who does not realise that the dangerous and growing gap between government and governed that is undermining the confidence in our democracy must be bridged? It must be bridged by the reform and modernisation of our democratic institutions, and we have a part to play in that too. This is not about what the public want, it is about us putting our House in order.
The second issue is that there are more important things to discuss. I do not think so. Frankly, we have been very fortunate to have lived through the period of the politics of contentment. The fragility of our democratic system has not been challenged because the business of government and democracy has been to redistribute increasing wealth. If we now come to the point at which we must redistribute retrenchment, difficult decisions, hard choices, I suspect it will come to something rather different, as we see on the streets of Greece today and as we saw on the streets of London not very long ago. This is very important.
The third is that we are embarking on a constitutional journey into terra incognita. Of course we are. We do not have a written constitution in this country. I wish we did, but we are told that the genius of our constitution is that it is unwritten, that it responds to events, that it develops, that it takes its challenges and moves forward. Oliver Cromwell did not have to say, “We will delay the Civil War until we have worked out the proper constitutional relationship between Parliament and the King”. In 1832 they did not say, “Let us hold this up until we have decided what proper constitutional balances would be achieved”. If you believe in the miracle of the unwritten constitution, you must believe that our constitution will adapt. You cannot argue that that is a good thing and then say that we cannot move forward unless we know precisely and in exact detail what will happen next. Of course this will change the balance between us and the other Chamber. It will not challenge the primacy of the other Chamber, but it will challenge the absolute supremacy of the other Chamber—that is called check and balance.
The fourth argument is that this will disturb the gentle climate of wisdom in this place. I have no doubt that there is unique wisdom here, although I have to say that I do not believe it is necessarily evenly distributed—maybe in some places it is, but not everywhere. However, I am not persuaded that there is less wisdom in the 61 second chambers that are elected, that there is less wisdom in the Senate of the United States, or the Sénat in France or the Bundesrat in Germany. I do not believe that the business of election will produce less wisdom than we have here now—rather the contrary. It is not wisdom that we lack; it is legitimacy. My old friend, Lord Conrad Russell—much missed—used to say, “I would happily exchange wisdom for legitimacy”, and I will tell your Lordships why.
This is where we come to the final point—the point made by the noble Baroness, Lady Boothroyd: “If it ain’t broke, let’s not fix it”. It is broke; it is broke in two fashions. First, our democracy now and our institutions of democracy in this country do not enjoy the confidence of our people in the way they did. That confidence is declining. We have to be part of the reform that reconnects politics with people in this country. If we do not, our democratic institutions will fall into atrophy and may suffer further in the decline of the confidence of the people of this country. If noble Lords do not realise that, they do not realise just how difficult the current situation is in Britain.
We in this Chamber cannot leave this to others to do. We must be part of that reform, modernisation, reconnection and democracy. It is said that this House does its job as a revising Chamber well. So it does. It is allowed to revise, change, amend legislation, but is it allowed to deal with the really big things? It does the small things well, but is it constructed in a way that would prevent a Government with an overwhelming majority in the other place taking this country to an unwise and, as we now know, probably illegal war? No, it would not because it did not. I cannot imagine that the decision to introduce the poll tax and the decision to take this country to war would have got through a Chamber elected on a different mandate and in a different period, or if there had been a different set of political weights in this Chamber from the one down the other end.
The truth of the matter is that we perform the function of a revising Chamber well, but that is not our only function. We are also part of the checks and balances in this country. The fact that we do not have democratic legitimacy undermines our capacity to act as a check and balance on the excessive power of the Executive backed by an excessive majority in the House of Commons. That is where we are deficient and what must be mended.
The case is very simple to argue. In a democracy, power should derive from the ballot box and nowhere else. Our democracy is diminished because this place does not derive its power from democracy and the ballot box but from political patronage—the patronage of the powerful. Is it acceptable in a democracy that the membership of this place depends on the patronage of the powerful at the time? We are diminished in two ways. We are diminished because we do not perform the function that we need to perform of acting as a check and a balance on the Government, and we do not do so because we are a creature of the Government’s patronage. I cannot believe that noble Lords find that acceptable in this Chamber .
A noble Lord: Time.
Lord Ashdown of Norton-sub-Hamdon: Perhaps noble Lords will forgive me, I will finish now. I have already strained my time but I ask for patience. The Leader of the House is right. We have spent 100 years addressing reform in this House. It is time to understand why that is necessary—both to make our place in modern democracy and to fulfil our proper function to provide a check and balance on an Executive who may get too powerful. We turned our hand to this 100 years ago; it is time to finish it now

I suspect we shall be turning and returning to Paddy's excellent summary of the case for completing the reform as, during the next few years Neanderthals on all sides (including, alas, David Steel) make spurious defences of this scar on Britain's claim to be democratic.

Incidentally Wednesday, August 10th this year is the 100th anniversary of the passage of the first reform of the House of Lords, pushed through in 1911 by Asquith's Liberal government in order pass Lloyd George's Peoples' Budget which laid the foundations of the modern welfare state. There are to be commemorative demonstrations in Leeds and, I hope, elsewhere.

Tuesday 21 June 2011

Greece is not UK

To illustrate John Cole's point in yesterday's post (immediately below) that the plight UK's economy is in no way comparable to that of Greece, here are some figures from Larry Elliott's column in yesterday's Guardian.

The UK last year ran a budget deficit of about £140bn.
This pushed the national debt up to more than £900bn.
The output of the economy was just short of £1.5tn.
So the national debt is about 60% of GDP.

"For Greece," writes Elliott,, "the position is far worse. By late 2010 national debt was more than 140% of GDP"

What Elliott doesn't say is that the qualifying rate during the 1990s for joining the Euro was that the Debt to GDP ratio should be no more than 60%, so the UK is still within what are regarded as "respectable" limits. Under the early part of Gordon Brown's stewardship the Debt:GDP ratio was brought down to about 40%.

For good measure it is worth noting that very little of the UK's national debt is held abroad: most is held by UK institutions such as insurance and pension funds. They lend money to the government, which pays them interest which is used to pay our pensions - a nice cosy and perfectly respectable relationship which has been in go since the Bank of England was founded in 1694.

One similarity between Greece and the UK is, however, the reluctance, particularity of the rich, to pay taxes. The Greeks have developed this to a fine art as all visitors who have observed the "unfinished" (and therefore tax free) buildings with no proper roofs on them will appreciate. If all Greeks paid their full dues in tax the Greek government wouldn't have a problem. By comparison we in Britain are, of course, amateurs at the game, but our much publicised current deficit in the government's accounts would be much smaller if tax evasion were stopped and avoidance reduced to the level encouraged (eg on ISAs and gift aid) by the government.

Monday 20 June 2011

काले व् Alexander

I was away on a walking (or, rather, paddling) holiday in Wales last week so missed a visit by Danny Alexander Chief Secretary to the Treasury,and Tim Farron, Party President, to Bradford for a "question, answer and comment session" with Liberal Democrat members

However, my friend John Cole (the काले in the title)took the opportunity to state: "I think the budget policy is wrong-headed: David Blanchflower says it is "abysmal" and ask " Why are we supporting a 1920s Treasury View policy and not a Keynesian one?

John followed up Alexander's response with the following letter:

Baildon June 17th

Dear Danny Alexander,

To reintroduce myself, we met at the Bingley Rugby Club on 16th June when you & Tim Farron had a dialogue with Yorkshire members. I am the retired school teacher of an unreconstructed Keynesian disposition.

Thank you for the considered reply which you gave to the points of concern I raised re. the deficit reduction strategy. I hope I made clear at the meeting that I am not a “deficit denier” and I fully acknowledge that the structural deficit within the budget (which has been allowed to exist for far too long) needs to be stripped out. Where we disagree is on the timing of the stripping out, and what should be the government’s fiscal (and monetary) stance in the interim.

If I understood your response to me correctly, the coalition’s main reason for not pursuing a Keynesian contra-cyclical reflationary policy is that “the markets” would not wear it. You mentioned credit rating agencies, presumably hinting at the danger of the UK losing its AAA status. This becomes, I feel, a counsel of despair. If national governments, either individually or in concert, are prevented from pursuing a reflationary economic policy (which might be their preferred policy) because of the say-so of Moody & Poor etc. then in effect national governments have ceded their economic sovereignty.

There were other parts of your response with which I was perfectly happy – where you spoke of green investment, other infrastructural investment and funds for regional investment. However, the monies in the latter are significantly smaller than those provided by the Labour government through the RDAs. We agreed, these funds should be bigger.

In short, supply side measures are not enough. We need to concentrate on the “C” word – “confidence”. At present both consumer confidence and business confidence (on all sorts of measures) are low. This is a classic situation for the government to take the lead with infrastructural investment (giving a legacy for future generations) financed by deficit spending. Keynesian policy may be counter-intuitive to those brought up on the “household expenditure” model of macro-economic management, but Osborne, Cameron and “the markets” need to get their minds round it. If we, as Liberal Democrats of the lineage of Keynes, continue to support what is essentially a throw-back to 1920s thinking then we are simply validating ignorance.

Yours sincerely

John Cole

P.S. A couple of technical points: (i) When we talk of credit rating agencies, are these the same ones which gave Icelandic banks AAA status until very shortly before those banks crashed? (ii) Given the long term s of much UK government debt and the UK’s track record for being able to achieve negative PSBR – see the period around 2000 - this danger of debt-default has been over-egged. The UK is NOT comparable to Greece!

Well done, John.

Just to demonstrate that this blog is even handed in its attitude to Liberal Democrats in government I do believe that, in contrast, Danny Alexander got things right when he outlined the government's proposals for public service pension reform. Provided the lower paid are protected, and they seem to be, I see no reason why the higher paid, chief executives, head teachers and so on, should be given final salary pensions lavish beyond the dreams of avarice. Pensions based on average salary seems to me to be more than adequate to stave off penury . (see posts on Teachers' Pensions and Mists and Mysteries about Pensions

Friday 10 June 2011

चुर्च एंड State

The title is "Church and State."

When Prince Charles came to enhance the independence celebrations in Papua New Guinea in 1975 the lesson he read at the official service was from Romans Chapter 13 (The powers that be are ordained by God.) When Prince Phillip read the lesson a this year's Maundy service it was all about looking after the poor.

The Church therefore fulfils this dual role of adding to the legitimacy of the government (and therefore acting as an instrument of social control) whilst at the same time reminding the government of the limits to its authority and its responsibility towards the weaker members of society.

Rowan Williams is therefore fulfilling the church's historic role in challenging the governments' systematic attack on the welfare state, for which, as he says, no-one voted, and in such a hasty manner that there is time neither for proper thought nor public discussion.

However, I find the Archbishop's language as aggressive and unhelpful as is much parliamentary debate. He writes of "anger" and "plain fear." True, a minority may be angry and fearful, but the vast majority seem to be either supportive (those who welcome what Williams rightly describes as "the quiet resurgence of the seductive language of 'deserving. and 'undeserving' poor"), indifferent or resigned.

Combative language, and the hysterical jeering of "U turn" when the government does have a re-think, do not encourage the public to engage positively with the political process. Rather it is a turn off: it remains "old politics" rather than the "new politics" we were promised.

Politicians, the Archbishop and the media would do well to bear in mind item 17 of the Quakers' "Advices and Queries":

Listen patiently and seek the truth which other people's opinions may contain for you. Avoid hurtful criticisms and provocative language. Do no allow the strength of your convictions to betray you into making statements or allegations that are unfair or untrue. Think it possible that you may be mistaken.

Here endeth the lesson.

Thursday 9 June 2011

तवो स्टेप्स फॉरवर्ड एंड ओने स्टेप back

Vince Cable seems to take two steps forwards and then one step back (that is what the title is meant to say: I'm still hoping for a translation of what it actually does say and in what language, and for advice on ho to stop it.)

Last month I wrote a post praising an article in the Guardian in which Vince painted an excellent broad brush survey of the real problems facing the British economy (admitting they are nothing much to do with the alleged "mess left by Labour.") Then, in an interview in the New Statesman (I can see another financial bomb going off, 30th May 2011) he is quite clear that the deficit "was the consequence of the bank collapse" (again, nothing about Labour's alleged profligacy) and then, bless him, advocates "a Danish type model , which relates tax to property values." What joy to the hearts of we Liberals who have spent a lifetime advocating land taxes and site-value rating with almost as much enthusiasm as proportional representation by single transferable vote in multi-member constituencies.

Now Vince has blotted his copy-book by telling trade unions that, although he concedes their right to strike, if they use it the right will be further curtailed. For the strong to threaten further bullying of the weak is absurd for a government which claims "we are all in this together." This aspiration will move closer to reality when we introduce traditional Liberal policies to incorporate the interests of employees into management via employee representation, works councils, and, in the private sector, profit sharing. Liberals believe in the politics of co-operation, not confrontation and, if Liberal Democrats in government are to flex their muscles, this is the language we should be hearing. If Vince wants to do some bullying let it be with the bankers:after all that is within his remit.

Wednesday 8 June 2011

केयर Homes

The title of this blog is meant to be "Care" homes. I'd be interested to know from any linguist in what language the first word is written and, from any knowledgeable computer buff, how to stop my machine playing this trick.

A wise economist, probably Will Hutton but I'm not sure, pointed out a few yeas ago that there is no point in privatising something if it cannot be allowed to go bankrupt. This comment was made in relation to vital infrastructure enterprises such as railways and utilities. The care homes run by Southern Cross add a different dimension.

Clearly, this company cannot be allowed to cease trading in the normal way and the 32 000 elderly people it cares for turned out into the streets. So Southern Cross is insulated from the normal rules of the market. How this particular impasse is to be solved remains to be seen - presumably by the public sector picking up the tab as usual after the private sector owners have walked away with the profits.

To avoid similar situations in the future legislation should be introduced which limits the capacity of any care home "chains" to, say, 500 people, so that in the event of business failure the residents can be absorbed by the existing system. Chains with a greater capacity than this, such as Four Seasons, should be broken up.

Better still, bring personal care back into the public realm, as here is no evidence that the private sector performs this funciton more effectively: probably the reverse.

A former pupil with whom I spent last weekend and who has flourished in the law profession explained to me how private firms which take over such facilities from local authorities further enhance their profits and insulate themselves from losses by splitting the "property" part of the acquisition form the operating part, and are very good at flogging off the property when the market is at its peak. For details of this abuse please click here.

Thursday 2 June 2011

Abuse of House of Lords

I can't help feeling a little bit sorry for Lord Taylor, who has been sentenced to 12 months imprisonment for fiddling his expenses to the tune of £11 000, a fleabite compared to the rakeoff the bankers are taking for the results of their incompetence. I suspect Lord Taylor felt that he was only doing what lots of others were doing and that the authorities would connive at his deceptions, but he deceived with rather less circumspection than was required.

However, his case illustrates a more flagrant abuse of authority by the establishment: the use of the House of Lords to over-rule the decisions of the electorate. Taylor was Conservative candidate for Cheltenham in 1992, but was defeated (by a Liberal Democrat, as it happens, but that is not germane to my argument.) But four years later whoever was leader of the Tories at the time said in effect "Sod the electorate, we're going to have him in parliament anyway," and gave him a peerage.

There must be dozens of similar cases, but one that has stayed in my mind for many years is the case of Joe Dean. Dean was MP for Leeds West but was defeated by Michael Meadowcroft in 1983. Yet this man, rejected by the electorate, was back in parliament within weeks as Lord Dean, nominated by no less a hero of the left than Michael Foot himself.

Now that House of Lords reform is once again on the agenda assorted peers, including, alas, some Liberal Democrats, are spouting about how wonderful they are and how the democratic process couldn't possible produce people as useful, clever, disinterested and civic minded as they are. Well, they would, wouldn't they?

Let's hope Nick Clegg sticks firmly to his guns, never ceases to remind both the Labour and Conservative dinosaurs that they too fought the last election on the promise of House of Lords reform, so that, generations after it was proposed and after every other democracy in the world has achieved it, we have a genuinely democratic legislature in the land which claims to a pioneer of democracy.