One more try is still needed

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Just under a week ago, I wondered which would happen first – the Chancellor presenting his fourth attempt at a budget or the Prime Minister imposing the sort of lockdown of which his spokesperson claimed there was ‘zero prospect’.  In the event, it wasn’t even a close-run thing – the PM changed tack within two days, whilst the Chancellor took a whole five days to come up with his fourth effort.

Having seen the content of his fourth budget, we can but hope that it will be no more than a few days more before he presents his fifth, because he still hasn’t got it right.  It’s not that he’s got the scale of things wrong (there is a broad realization of just how much needs to be done) and it’s not that there is anything wrong with the principles underlying it (although there are always details which need to be sorted), it’s just that he seems not to have the remotest understanding of the need for urgency.  By demanding that systems and processes be designed to prevent potential overpayments or outright fraud (and I don’t simply dismiss those concerns), he has ended up with a set of proposals which mean that individuals and companies have to go through an application and assessment process and then get paid in arrears.  That assumes that people and companies either have, or can get access to, sufficient resources to cover their costs for at least a month, and potentially three to four months, with no certainty that they’ll receive anything at the end.  Who’d want to take on extra debt on that basis – even if they can?

It displays a complete lack of understanding of the financial situation of many companies (especially small to medium enterprises) and individuals (whether employed or self-employed), and it still excludes those who may be new to the labour market and have no pre-existing tax records to on which claims can be based.  The cash is needed now, not in a few months’ time, if the government were serious about standing with people rather than simply parroting propaganda and spin about how much they’re doing which seemed to be Sunak’s core message yesterday.  Of course paying out money now without validating claims contains an element of risk, and it’s undoubtedly anathema to a governing class which suspects that everyone is out to get something for nothing at other people’s expense (a suspicion which tells us more about their own modus operandi than it does about the population at large).  But now, today, those risks are lower than the risk of leaving people unable to pay for food and essentials – and any excess can always be clawed back later.

I really do hope that his fifth attempt at a budget will come soon, and that it will respond to the real world of ordinary people rather than the imagined world of the rich and powerful.

Setting the narrative for the future

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One of the problems with any action taken by large numbers of people is that it is difficult to know whether, or to what extent, there is a common underlying motivation.  And one of the results of that is that people looking at the same events from different perspectives can and do project their own interpretation on those events, to suit their own ends.  We saw it with Brexit, which some chose to claim was all about immigration, some blamed on xenophobia whilst yet others saw it as about ‘taking back control’.  There’s been something of a parallel this week.

The response to the English government’s appeal for volunteers (and in this context, it is an England-only scheme, set up by the English Health Minister to assist the English NHS, although one wouldn’t know that from news reports) has been staggering, and encouraging for those of us who believe in people’s better nature, especially at a time when we are seeing incidents which might cause one to doubt that.  We cannot know the motivations of all those involved, but it does seem to me to be a desire to help other people, and fill gaps in service provision.  It’s not the only possible interpretation, though – the Prime Minister’s language seems to suggest that he sees it as a great outpouring of (British) patriotism, as people are influenced by what he, no doubt, sees as his stirring Churchillian words (although others might see them as anything but).

For the time being it matters not what the actual motivation is nor the way that motivation is interpreted; the key thing is that as many gaps as possible get plugged and that help gets to those who need it.  The hows and the whys are questions for a later date. They will be important, though.  Many are already arguing that when the current crisis is over, things can’t go back to the old normal.  We can be certain, however, that some will want to take us back to that point – there are plenty of vested interests in ensuring that happens.  The outcome if this week’s surge of volunteers is interpreted as an expression of social solidarity and a desire to help others will be very different from the outcome if it is seen as a patriotic effort to overcome a short term crisis – an interpretation which could even lead some to conclude that austerity cuts to public services can continue, because volunteers will fill the gaps in an emergency.

In the longer term, it matters a great deal who does the interpreting and who sets the narrative.

Still they struggle with their own ideology

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In his latest statement to MPs today, the Chancellor has excused his failure to provide any safety net for the self-employed by arguing that finding a way to help only those who need it is proving too complicated, because some help might go to those who don't need it.  But, in a crisis which is going to leave some people desperate, which is better: providing immediate support for all the people in that group and risk some of that help being unnecessary (with the possibility of clawing it back after the event always being available), or abandoning all the people in that group to their fate until such time as the bureaucrats can work out a watertight system of rules and application processes?  Tory ideology is still getting in the way of doing what is right and necessary.

The problem with distrust

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A lot of people are condemning those who have been stripping supermarket shelves for being greedy and selfish.  There’s obviously an element of truth in that, but it isn’t the whole story, and it overlooks the vital question of trust – or rather distrust.

Many years ago, I was on a management training course where the attendees were split into three groups to play a game which was a variation on the well-known ‘Prisoner’s Dilemma’.  In three separate rooms, and able to communicate only via an intermediary, the three teams had the choice in each round to decide whether to try and co-operate or compete; if all teams co-operated every round then the total number of points gained would be maximised.  My team (and I claim some credit for influencing things in this direction) opted to play the co-operative route every round, but the other teams went for competition.  My team ended up with ‘nul points’, whilst both the other teams scored well.  But the total number of points gained by both the other teams was less than could have been achieved by a more collaborative approach which shared rather than accumulated the points.  I suspect that different people learned different lessons from the exercise – some learned that co-operation benefits all, whilst others learned only that people seeking to co-operate are displaying a weakness which can be exploited.  I’m not sure that the game really contributed much to the objective of the course.

The parallel with panic-buying is this: after the first round, those who chose to believe that there was plenty of food and that they should think of others have been left with very little, whilst those who bought everything in sight have more than they can eat.  So, what card should we play in the second round?  It’s important to note that whilst greed and selfishness might be motivating some, the more important motivation is the belief that ‘others’ will be so motivated; even those whose instinct is to act for the collective good can find themselves doing the opposite because they cannot depend on everyone else to think the same way.  And when ‘nul points’ = no food, it’s not easy to condemn that.  Distrust is a pervasive and corrosive thought process.

An appeal to people to behave differently coming from politicians who’ve been telling us for decades that there’s nothing wrong with greed, that everyone should look after themselves, and that the state has no, or only a limited, role in ensuring fairness cannot resonate.  It’s at odds with everything that they’ve said before.  Some politicians have been trying to evoke the so-called blitz spirit by way of precedent for the way we should act in a crisis.  It’s a very poor comparison based on a rose-tinted view of events, which overlooks the fact that an approximation to food equality came about not because of an outbreak of collectivism, but because rationing was imposed by central government.  And alongside that, there were widespread black markets where those with the wherewithal could still get more than their share. 

I instinctively want to play the co-operative game, and I have long believed that humanity can achieve more overall by working together than by competing, but the idea that collectivism can be born suddenly because a bumbling congenital liar expresses a vague hope that people will ‘do the right thing’ is very much one for the birds.  Dissembling optimism from someone who’s never been short of anything in his life, coupled with government inaction – or, at best, ineffective action – which ignores the ground truth of empty shelves is only going to push more people into the ‘get as much as we can when it’s available’ way of thinking.  And, much as I’d like to, I can’t really argue that that is an irrational reaction – forcing the whole population to play prisoner’s dilemma won’t end well.

Still not quite there

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Yesterday, in his third attempt at presenting a crisis budget, the Chancellor at last showed some sign of understanding the scale of the problem and the nature of the response required.  As long as people get a mortgage / rent ‘holiday’, and given the reduced opportunities to spend, a level of 80% of normal salary doesn’t look unreasonable in most cases, although there are some details not yet provided, and there will be some people to whom it can’t easily be applied.  But it’s still unlikely to be enough – I suspect he’ll be back for attempt number 4 very soon.  The problem is that, despite abandoning many policy positions, there’s still one shibboleth of the Tory Party to which he is adhering.

The government has abandoned all that nonsense about balanced budgets and admitted that there really is a giant money tree which can provide all the cash required to keep things running.  We’ve even had the PM telling people to forget the individualism which his party has promoted for decades and embrace a collectivist approach, although there’s some doubt about how sincere he really is on that one.  It doesn’t help that, with his small beady eyes in a well-fed face he bears at least a passing resemblance to Napoleon (the pig, not the emperor), and coming from him collectivism sounds more like ‘I’ve spent three weeks digging this hole, it’s up to the rest of you to get me out’ than a slogan from the early days of the Labour Party before that party abandoned any pretence of socialism.

There’s one big ideological problem remaining, though – their aversion to universality, and to anyone getting ‘something for nothing’.  Instead of simply implementing their wage support plan, immediately, for all companies, the result is that there is an application process; and processing applications – by a civil service which is likely to be hit by sickness absence, self-isolation and a host of other priorities – inevitably means a delay.  For companies facing a sudden and complete loss of income, with no certainty about when or even whether that income will be restored, delay means laying staff off today, not next week.  They can’t even legally borrow money to tide them over – borrowing money with no guarantee of any income stream would be unlawfully trading whilst technically insolvent, and because there is an application process even the government payments are not guaranteed.

I’ve seen a meme on social media suggesting that large companies don’t need bailouts because they can simply borrow against their assets.  This ignores the effects of decades of financial engineering – many companies have no assets to speak of.  We have airlines which lease rather than own their planes; hotel companies which lease rather than own their buildings, transport and haulage companies (including the railway operators) which lease rather than own their vehicles, and services companies which lease rather than own their offices and most of the equipment in them – even down to the water coolers.  The capital is owned by banks and other financial services companies, not by the businesses themselves; the only ‘asset’ against which they can borrow is anticipated future income.  And for many companies, that ‘asset’ has just been instantly wiped out, whilst for many others in a whole range of sectors it is diminishing rapidly.

If they are serious about ‘doing whatever it takes’, the Chancellor will bring forward a fourth attempt, which embraces universality and makes the payments automatically to all private companies, in a range of sectors at least, immediately, based on their HMRC reporting in previous months.  He can always come back later, if he really wants to, when there is more time to consider the matter thoroughly, and claw back any payments subsequently deemed to have been unnecessary by taxing any excess profits.

Protecting pater?

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According to the PM’s office yesterday, there is ‘zero prospect’ of a lockdown on movement in London.  Given the PM’s performance to date, my guess is that that is code for ‘about the middle of next week, then’.  With the Chancellor due to deliver his third budget in ten days later today, the only real question is probably whether the PM’s lockdown comes before or after the Chancellor’s fourth budget next week.

The PM and the entire government look to be increasingly out of their depth, completely unable to explain why it is both essential that we all avoid restaurants, pubs etc and not essential for the government to take steps to ban people from doing so, leaving staff obliged to travel to work in almost empty premises.  Could it really be as simple as trying to avoid having his father locked up?

Ideology succumbs to viral infection

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One of the emerging themes of the current crisis is the way in which the Tories are abandoning past positions one after another as reality shows that they were never as necessary as had been claimed.

In his first budget last week, the Chancellor abandoned all pretence that there was ever any necessity to plan for a balanced budget within a specified time scale – or, indeed, ever.  It was always an ideological choice.

In his second budget yesterday, he abandoned the claim that ‘there is no money’, demonstrating instead that there’s as much money as we need.  (And it’s a pretty safe prediction that he’ll do that on an even greater scale in his third budget, which will probably be delivered within a week when the flaws in yesterday's become more obvious.)  

He also abandoned another ideological pretence that was used to rubbish Labour’s nationalisation plans in the recent election, even if he didn’t put it in such blunt terms.  There is a great deal wrong with his plans to make £330 billion available for loans to businesses, even if there were a thought-through process for applying, which there isn’t.  (Prof Richard Murphy explains in detail here why it would be illegal under company law and the Insolvency Act for companies to borrow money when they are already, or are about to become, technically insolvent.)  The Chancellor claims that this money makes no difference to the government’s total debt because the expenditure is balanced in the accounts by an ‘asset’ in the form of debt to the government by the companies which are expected to repay any sums loaned.  The wonders of double-entry book-keeping!  They argued during the election that a Labour government could not afford to nationalise any large companies (and I leave to one side here the question of whether that is actually desirable; I’m purely looking at the political economics) because it would increase the national debt.  In truth, of course, any ‘debt’ incurred to buy companies would be matched by an ‘asset’ and would therefore make no difference to the overall total debt – as the Tories have now effectively admitted.  The main difference between the two is that Labour’s plans would have involved real, tangible assets to balance the expenditure, whilst the Tories’ plans involve a whole pile of notional debt, much of which would never be repaid.

And then there’s the appeal, entirely correct and justifiable, by the government for shoppers to be less selfish and to think of others, especially the most vulnerable.  But this is the party which – aided and abetted by ‘New’ Labour, it should be said – has been telling us for the last four decades that ‘the markets’ will solve all problems, that individual actions in pursuit of individual interests are what drive the economy, and that, dare I say it, ‘there is no such thing as society’.  It turns out that, in a crisis, co-operation and collectivism make for a more resilient and kinder society than competition and individualism.  Who'd have guessed it?

I suspect that current events are something after which ‘normal’ will look very different from what ‘normal’ looked like just a few short weeks ago.  The same is true of ideology – as long as we all remember the lessons learnt.  It might be a crisis which is exposing the failure of an ideology, but it was failing anyway, just less obviously.  We can hope to minimise the number of human fatalities caused by coronavirus but let no-one grieve for the ideology to which it is also delivering a series of, hopefully fatal, blows.

Don't wait for London

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At the moment, the PM is refusing to acknowledge the obvious fact that current events are going to have a major impact on the progress of trade talks with the EU.  At its simplest, governments have bigger things to worry about.  Perhaps he doesn’t care – if his real objective is to leave without a deal on 31^st December, the failure to progress will make no difference to the outcome anyway.  On the other hand, perhaps he will, eventually, bow to the inevitable and accept that no-one involved really has the time to devote to negotiating, and then ask for a delay.  I can see, though, how attractive it would be for him to continue to reject any delay.  Muddying the waters is always useful – being able to blame the virus for the economic damage imposed by his approach to Brexit is, at the least, politically convenient for him.

Few of us know with certainty exactly what the scientific advice he is receiving says, but from such information as is publicly available, it appears that the main elements are:

1.    That most people will get only a mild form from which they will fully recover

2.    That having been infected once, people will develop a degree of immunity to further infections

3.    That once a degree of immunity has been built up in the population, future outbreaks will be more localised and controllable

4.    That even if the current outbreak is brought under control by draconian measures, as soon as controls are relaxed the virus will flare up again

5.    That, one way or another, sooner or later, up to 80% of the population are likely to be infected, meaning around 40 million people in the UK, and that between 0.5% and 1.0% of those (200,000 – 400,000 people) will die prematurely as a result.

I cannot believe that other governments are getting significantly different advice, and with a few caveats, it doesn’t look like an entirely unreasonable assessment to me.  (The caveats include: that for a new virus, we don’t yet know whether infection provides subsequent immunity; that viruses mutate and immunity against one strain doesn’t necessarily provide immunity against others; and that there are already some early indications that a ‘full’ recovery isn’t as complete as is generally suggested.)  But if the advice is the same and the response is different, that can only be down to the application of different political judgements to the raw probabilities.

There may well be at least an element – as the UK Government has itself suggested – of other governments doing things that they suspect will be of limited impact in order to be seen to be doing something.  They may even be placing more store in the hope that if things can be delayed long enough the same degree of immunity can be built up by a vaccine rather than by actual infection with the live virus, something which may or may not turn out to be the case.  If it weren’t for the fact that large numbers of real people are dying, it would be an interesting experiment in trying different approaches to see which works best in the long term.

However sincere the UK Government may be in its belief that its approach will turn out to be the best (and I think that the scientific advisors, at least, are sincere even if I don’t trust the politicians), there is no escaping the perception that they are doing less than other governments to try and protect the population at large.  And, coming back to the politics, the perception is all-important.  One worried Tory has already highlighted that the demographic of those dying means that they are likely to be predominantly Tory voters, but the political implications go further than that.  If, when this is all over, there is a feeling that large numbers of people have died unnecessarily as a result of the government failing to take actions which were taken elsewhere, who are their families going to blame?  It isn’t just the votes of the deceased that are at risk.

Purely as a result of such cynical political calculations, my own expectation is that, slowly but surely, the UK government will fall into line and follow the lead taken elsewhere.  They’d need to be supremely confident in their judgement of what are, after all, only probabilities in mathematical terms, to do otherwise.  For someone who so desperately wants to remain PM, political considerations will always win out in the end.  A more politically astute Welsh Government would be anticipating this and acting now without waiting for ‘guidance’ from London.

Which is most important - people or money?

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At yesterday’s press conference on the virus pandemic, both the Medical Officer for England and the Government’s Scientific Advisor looked and sounded like people we could and should trust.  Although with a bumbler of a PM, who looks totally out of his depth when faced with a crisis about which he can’t simply crack a few jokes, standing between them, some might argue that the bar was set quite low to start with.  Nevertheless, the other two gave every impression of knowing what they were talking about – and also admitting what they don’t know, something which seems to be a cardinal sin for a politician.  And neither immediately struck me as people who would be prepared to bend their scientific advice to fit political convenience.  Alternative experts are, of course, available; some of them with a much gloomier tale to tell, although it’s always possible that they don’t have the same access to the latest data as the two brave men who agreed to flank Boris Johnson.

And yet…  There’s inevitably still a nagging doubt in many minds when we see other governments taking more drastic action and taking it sooner, with the WHO also being critical of countries which leave the implementation of measures until too late.  I doubt that other political leaders are being given radically different advice than that being given to the UK Government.  Even if the nationalistic prejudice of Johnson to assume that ‘our’ scientists are better than everybody else’s were based in fact, the ‘best’ scientific knowledge would never stay only in one country; that simply isn’t the way that modern science works.  It’s therefore reasonable to assume that all governments are getting the same or similar scientific advice, and if they’re reaching different conclusions, it’s reasonable to assume that they are weighting the arguments rather differently.

The assertion that “the […] two crucial goals – reducing the mortality rate and economic impact – are incompatible” is an entirely reasonable one to make, and although they didn’t put it quite as starkly as that, the two wise men and their not-so-wise host basically admitted as much in the press conference yesterday: it is clear that different governments are placing different emphases on those two goals.  In essence, the more a government prioritises the economy, the more premature deaths it is explicitly accepting.  In this article in the New York Times following the budget, its authors argued that the UK had, effectively, decided to protect businesses rather than people – a decision which means more deaths due to the virus than would otherwise be the case.

The PM himself has argued that one option for responding to the virus is to simply “take it on the chin”, although he did (as this fact check makes clear) also say that it would be better to take some steps to reduce the burden on the NHS.  His comments did, though, leave many wondering whether that he hadn’t been expressing his basic instinct, even if he didn’t go as far as one journalist in the Telegraph who suggested that.  “…COVID-19 might even prove mildly beneficial in the long term by disproportionately culling elderly dependents”.  For those who see just about everything in economic terms, allowing the virus to do its worst whilst mitigating the pressures on the NHS to the best extent possible is an entirely rational response; it just isn’t one that most of us share.  But it does seem that, in balancing the two objectives of saving the economy and saving people, the UK Government has erred more in the direction of the economy than most other governments.  (Trump is, of course, another exception, although his motivation seems to be about neither people nor the economy, but about protecting his own business interests and ensuring his own re-election.)  The Scottish Government has moved a bit further in the other direction (earning the First Minister an entirely unworthy barb from the PM about the alleged lower resilience of Scottish public services), although the Welsh Government has disappointed to date.

The problem with a government which lies instinctively and unhesitatingly is that people won’t trust it when it is telling the truth.  Even during this crisis, we’ve had ministers making things up as they go along, such as the health minister talking about contacts with the large supermarkets which simply hadn’t happened.  I want to be able to trust the experts, and I have an instinctive faith in science, but I can’t help feeling that being out of step with other major European countries is not a comfortable place to be, particularly given the suspicion that the reason for being an outlier is the PM’s desire to prioritise business over people.

Chancellor admits independence affordable

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Amongst the political responses to yesterday’s budget announcements, the leader of the Tory group in the Senedd described it as being “exactly what the country needs”.  This would have been more credible if we didn’t all know that (a) he would have said exactly the same thing if the Chancellor had stood up and doubled down on austerity, and (b) he would have been apoplectic with rage had the same budget been announced by a Labour Chancellor.  He’s not really expressing an opinion on the content of the budget at all – merely reaffirming his desire that it should always be delivered by a Tory.

Labour were inevitably wrong-footed to a degree – a massive increase in spending is exactly what they have been arguing for, and that is what we are going to get (although there is always scope to argue about the detail – and I suspect, given the Chancellor’s assertion that it meets his own unnecessary and irrelevant fiscal rules, that there is a sting in the tail to come, perhaps in the ‘proper’ budget in the autumn, or even in the ‘emergency’ budget which is likely to be presented in a few months’ time).  Corbyn’s claim that the budget is an admission that austerity has failed is fair comment, but it doesn’t go nearly far enough.  It’s much more than that – it’s also an admission that austerity was also both unnecessary and inappropriate as a policy choice.  I suppose, though, that it would be difficult for Labour to make that point, given that, at the time austerity was introduced in 2010, Labour’s own policy was also for austerity, just a little less and a little slower.

We should also note that a budget which deliberately increases the budget deficit year on year, and which abandons any pretence that the UK needs to have a plan to return to a balanced budget at some foreseeable future date, blows a massive hole in the main, repeated, argument of unionists against Welsh independence.  If the UK can run a more-or-less permanent budget deficit, then so could an independent Wales.  An argument of principle (“You can’t run a permanent deficit”) becomes an argument of degree (“There is a limit to the size of the deficit you can sustain”), which is a much easier argument to have, not least because most independentistas would agree with it.  Of course there are limits; but the factors governing those limits are complex and there are no hard and fast rules.

Some reports yesterday suggested that bond markets were ‘unfazed’ by the planned increase in borrowing – and, indeed, that what surprised them most was that the figure for planned new debt is lower than they were expecting.  But why would they be fazed by this – new government debt is exactly what the markets need.  What is debt for the government is a safe haven for funds, even at effectively negative interest rates.  The funds being released by the stock market sell-off have to go somewhere and lending the money to the government is far and away the safest option.  Not only are they ‘unfazed’, they are delighted that the government is going to borrow more.  Indeed, Professor Richard Murphy argued a few days ago that, as the borrower of last resort, the government had a duty to issue more bonds (i.e. borrow money).  It all underlines what some have been saying for a long time – one person’s debt is another person’s asset.  Most of the debt which the government accrues on behalf of the population is owed to the same population (much of it through pension funds), and if the government repays ‘our’ debt, it is a case of us repaying ourselves.  (Yes, there is a question of distribution of assets and debt which needs to be addressed, but I’m just considering accounting principles here.)  If we can only get that understanding clear, the debate about how much ‘debt’ governments can ‘afford’ becomes a lot clearer.  If independence was ‘unaffordable’ on the basis of deficit budgets, then the UK would have to declare itself un unviable state on the same basis.  Neither is true.

Extreme anti-Europeanism doesn't help

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The ‘logic’ of English nationalism continues unabated as the UK Government seeks to self-isolate the whole territory from contact with any unwanted foreign influence, especially if it looks even vaguely ‘European’.  In recent days, we’ve had the Transport Secretary explaining how an ‘independent nation’ cannot possibly follow the same air safety rules as the rest of Europe, and that “Being a member of the European Aviation Safety Agency is not compatible with the UK having genuine economic and political independence”.

Last week, we were told that the UK would be withdrawing from the EU’s Early Warning and Response System for pandemics, despite the opposition of many experts and practitioners in the field.  And this week the PM told us that each country had to follow its own scientific advice in dealing with the virus epidemic, as though scientific truth is somehow based on nationality.  Arguing that ‘our’ experts are best placed to consider what might be best in the specific context of the UK is one thing, but I suspect (given many of his previous statements) that he’s rather too attached to the idea that ‘our’ experts are better than anyone else’s, which is a wholly different proposition.

If anyone rational were asked to list issues on which simple common sense suggests that international co-operation and agreement would be better than working to a range of different standards and processes, surely rules governing the safety of aeroplanes travelling between countries and approaches to managing widespread epidemics would be close to the top of most people’s lists.  And there are few factors more likely to ensure that things can go wrong in both fields than deliberately increasing the number of different regulatory regimes for managing the issues.  Yet that, apparently, is exactly what must happen, because ‘Brexit means Brexit’.

Reality is irrelevant

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It’s very unfair and completely irrelevant for unkind people to point out that the Tories seem to be the principal beneficiaries of the Senedd ‘gravy train’ which they’ve pledged to abolish in the unlikely event of them ever being elected.  It also misses the point – the ‘gravy train’ that they want to abolish isn’t the actual one from which they benefit but the perceived one from which all the other parties benefit and which they know all voters hate.  Mere facts are irrelevant in this approach to politics - and pointing out their hypocrisy serves only to reinforce the preconceptions to which they are playing.

The Tory mindset isn't complicated enough for conspiracy

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It’s often said that there are always two possible explanations of events – the conspiracy theory and the cock-up theory.  Conspiracies are much more fun for pundits and soothsayers, but observation, experience of life, and judicious application of Occam’s Razor have long since led me to the conclusion that there are very few actual conspiracies in the real world.  The alternative explanation is much more probable.

That brings me to the curious statement by Paul Davies, leader of the Conservative group in the Senedd, today that if he becomes First Minister (and it’s not even the 1^st of April yet), then he will clamp down on the Senedd ‘gravy train’, a euphemism which appears to be a reference to having the resources to do its job properly.  Ifan Morgan Jones, over at Nation.Cymru, suggests that this is evidence that Davies has realised that his only hope of being a part of any government is via some sort of arrangement with Plaid and that such an arrangement is so unlikely that he can ignore the possibility and concentrate on trying to get the Tories into first place so that they can label the inevitable Labour-Plaid government which would follow as a “losers’ coalition”.  Alternatively, it could be an even more cunning plan in which “Paul Davies loves devolution so much that he’s willing to sacrifice any hope of government in order to preserve the Senedd, by becoming a safe repository for anti-devolution votes”.  They’re both good and interesting theories and speculation is always good fun, but as an attempt to read the mind of a Tory in 2020, I wonder whether they might both be overcomplex and wide of the mark.

My alternative hypothesis would be that he’s identified a pool of disillusioned voters who, if he could get them all to support his party, could potentially give that party its best ever result, and that he hasn’t even begun to think beyond that about what happens after the election.  But then, why would he bother to think that far ahead?  If there’s one thing that the EU referendum, Trump’s victory, and last December’s election have taught us, it is that politicians don’t need to worry about any conflict between what they say to win a vote and what they do afterwards; not even their own core supporters will expect that of them.

Defining viability

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Flybe may be the first major company to be tipped over the edge by a drop in sales as a result of the coronavirus, but it won’t be the last.  And it seems that the probability of company failures is likely to mirror the probability of a fatal infection in humans, in that it is the most vulnerable which are most at risk.  Flybe was certainly in the vulnerable category anyway; how long the company would have survived even without the drop in revenue resulting from the virus is an open question.  We may well see coronavirus becoming another convenient excuse for failures which might well have happened anyway.

That makes it harder for government – whether in Cardiff or in London – to decide when and how to intervene to support failing companies.  Whilst it’s clear that government intervention is the only way of preventing some failures during the probable epidemic facing us, governments are historically not very good at identifying which companies are good bets and which are poor ones.  At the level of individual companies, that may not always matter a great deal – after all, if a company was a good bet, it would usually be able to obtain commercial finance, and needing government action to fill a commercial gap is a sure sign that the commercial case isn’t as strong as it might be.  Expecting the same proportion of success from government investment as one might expect from commercial investment is wholly unrealistic; the more marginal the cases being assisted, the greater the probability of failure, a point not well understood by some critics of government policy, especially here in Wales.

That’s no excuse, though, for throwing public money into hopeless cases, especially where the public purse ends up carrying all the risk and all the potential reward flows to the company’s owners.  At its simplest, a company which cannot sell a sufficient quantity of its goods or services at a high enough price to at least cover its costs and liabilities (and preferably to make a profit on top) is not viable, and tax payment holidays or government grants cannot change that underlying picture.  A company which claims that it would be viable if only it didn’t have to pay one or other form of tax really isn’t viable in the real world within which companies must operate.  From all the news stories which have appeared in recent months, I rather suspect that Flybe is not a viable proposition, with or without coronavirus.  On many – perhaps most – of its routes, it is simply not selling enough seats at a high enough price to cover its costs.  As with vulnerable humans, the virus has merely brought the end forward a little.  I’m not sure that some of the politicians bemoaning the impact on Cardiff Airport fully understand that economic reality.

The question that needs to be asked now is not ‘how do we rescue Flybe or find another operator to take over the routes?’ so much as ‘why is the demand for the routes being flown insufficient to cover the costs of operating them?’.  Paying people to run loss-making and environmentally damaging flights in order to boost the fortunes of a loss-making airport doesn’t immediately strike me as the best way of meeting what appears to be a very limited demand for travel between the relevant places.

Compromise is inevitable

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The BBC’s St David’s Day poll isn’t the first to suggest that the Conservatives are attracting more support in Wales than has traditionally been the case. It has now happened several times in the past few years, most often in polls taken a long way before elections, but the apparent surge in support has ebbed away to some extent when people have to put crosses in boxes. According to the latest poll, the next Senedd elections could see something akin to a three-way dead heat.  That doesn’t look like an impossible outcome to me, although history suggests that it may not be quite as close as that in the end, and that Labour may end up with more of an edge than the polls currently indicate.

I’m not convinced that that amounts to the sort of ‘turmoil’ which would rapidly lead to an election re-run, as suggested by Vaughan Roderick in the BBC’s report, although that depends on the extent to which the parties are prepared to behave like adults rather than children in responding to any election result remotely resembling the outcome of this poll.  Despite two decades of a devolved administration elected by a more proportional system than that used for Westminster, the parties still seem to want to behave as though the outcome of an election should reflect the Westminster model and lead to single party government, and as though elections are some sort of polarisation between ‘us’ and ‘them’.  But that isn’t the reality of even the current proportional system, let alone an even more proportional system such as STV.

In support of his prediction of turmoil, Vaughan states that “Plaid Cymru would be unlikely to support a newly-humbled Labour Party while supporting a Conservative-led administration would be all but politically impossible for both Labour and Plaid.”  It’s not an unreasonable supposition from which to start based on the currently displayed attitudes of all three parties, but it doesn’t say anything good about either Plaid or the Labour Party.  It paints one of them as arguing that the party which comes out on top has somehow lost all right to lead a government just because it’s lost a few seats, and both of them as rejecting the right of the chosen representatives of around one third of the electorate to play any part in government.  It’s almost a case of both saying that ‘our one third of the electorate is more important than someone else’s one third’. It almost implies that in some vague sense the combined two-thirds who vote for Labour and Plaid are in some way collectively voting against the other third – and I wonder if that isn’t, at some level, the thought process which is at work.  It certainly fits the anti-Tory rhetoric of both parties.

Many of us might prefer that the Tories didn’t attract anything like one third of the votes in Wales, and there are plenty of people prepared to blame inward migration or media-driven anglicisation.  Both of those might well be contributors, but we cannot and should not overlook the fact that there has always been a more significant level of Tory support in Wales than results of a first-past-the-post electoral system have generally suggested.  And in a proportional system, unless an alternative party can persuade those voters to switch (and treating their current choice of party as some sort of pariah doesn’t immediately strike me as the most productive approach to doing that), then that party is going to remain a significant player in the Senedd.  That in turn means that, unless either Plaid or Labour can land a knock-out punch on the other (as the SNP have done to Labour in Scotland, but which currently looks highly unlikely to happen in Wales), then any alternative to including Labour in any conceivable government of Wales requires some sort of accommodation imvolving the Tories. 

Whether that’s through a coalition or some other sort of arrangement is a more open question, but a non-Labour government without such an understanding looks impossible on the current polling numbers, and it’s hard to see what is suddenly going to change those numbers. Parties which rule things out too forcibly in advance of an election (although I well understand the electoral imperative for doing that) will only find that they either have to do the opposite after the election or else leave themselves with no room for manoeuvre. Post-election negotiations boil down to one of two things – the detail of a programme for government, or the grubby business of securing power at whatever the price may be.  In a mature proportional system, the necessity for coalitions or arrangements would be accepted in advance and parties would be talking about what compromises they might be willing to make in relation to their own manifestos and what compromises they would expect from others. For all parties to fight the Senedd election as though an outright victory for each of them is a credible outcome is a sign that we have some way to go before we reach that level of maturity.

Hold back the popcorn, for the time being

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The constructive dismissal hearing for the former Permanent Secretary at the Home Office looks like being a spectator event not to be missed, if it actually goes ahead.  I’m assuming that the grieved party has lots of juicy evidence about the way the Home Secretary has behaved; the sort of stuff which would embarrass any normal Prime Minister in ordinary times but which, in this case, is likely only (in his own eyes at least) to confirm his good judgement in appointing Patel to the role.  It’s a big ‘if’ though.

At the moment, he’s clearly very angry and looking forward to his day in court but the intensity of anger fades over time, and pragmatic considerations usually kick in eventually.  It was reported that he’s already been in negotiations over a payoff but that those negotiations have foundered – apparently over the lack of an assurance from Johnson and Patel that they would issue a supportive statement if he were to be the subject of further negative briefings.  Unless he can demonstrate that the situation has arisen as a result of discrimination against him on the grounds of one of the ‘protected characteristics’ (race, gender, etc), the amount of money he could win at any tribunal is capped – and that cap is probably significantly lower than any amount he’s already been offered, let alone any new offer which may now be forthcoming.  It is a misconception that UK law protects people against unfair dismissal – it does not.  It allows any employer to sack people at random, with only two provisos – that they avoid doing so on the basis of the protected characteristics (when damages can be unlimited), and that they are willing to open their cheque books and pay a sum significantly in excess of what the sacked employee could ever win at a tribunal.  Faced with the stress and uncertainty of a tribunal in which the employee might not win, or at best win only a smaller uncertain sum of money, the attraction of settling for the certainty of a larger sum usually proves too strong to resist. 

I’m surprised that Johnson and Patel have been unwilling to give him the assurance that he seeks.  After all, giving cast-iron assurances is almost a Johnson specialism – it’s keeping them, rather than giving them, which always seems to cause him a problem.  I’m even more surprised that Rutnam has asked for such an assurance; on the basis of his own personal experience he’d have to be out of his mind to trust one, even if it were given.  If negotiations to arrive at a settlement fail as a result, and the case does indeed get to be heard before a tribunal, there would be a delicious irony if that were to be the direct result of the PM’s serial untrustworthiness.  But it’s too early to break out the popcorn for this particular spectacle yet.