Identifying the right problem

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There was a report of an opinion poll in the i paper a few days ago on the issue of paying benefits to young people who are not in employment, education or training. The article itself is behind a paywall, but the data is available in Table 53 in this report. The headline figure was that 56% of those questioned believed that all benefits should be stopped for such people. As one might expect, the numbers vary between supporters of different parties, with those supporting parties of ‘the right’ most likely to support the proposition. Asked in isolation, it’s easy to see why so many might support that (why, the implication is, should anyone not seen to be ‘contributing’ expect to be supported?), but I wonder whether the implications have been thought through by those responding to the survey.

For people in that ‘NEET’ category, benefits are likely to be their only direct source of income; removing it implies that those 56% of respondents are quite happy for the young people to go without food, clothing or shelter. In reality, of course, many (but by no means all) in that category will be living with their parents, who would presumably be expected to continue paying the living costs for their adult offspring. The key economic fact to note, though, is that the withdrawal of benefits from anyone means that someone, somewhere, has their own spending power reduced. Maybe it’s the individuals directly affected, maybe it’s their parents who are obliged to divert money from their own discretionary expenditure. In economic terms, it matters little to the basic conclusion: somebody’s spending power would be reduced, with a consequent reduction in overall demand. In fact, there’s a more general point which this underlines – if a government cuts spending or increases taxation in pursuit of the alleged nirvana of a balanced budget, someone, somewhere must always have their spending power reduced.

The political question is that the ‘who’ and the ‘where’ are ultimately choices being made by politicians. The claims that ‘benefits’ or ‘pensions’ are unaffordable are not the result of some iron-clad law of economics; they are the direct result of political choices as to who should pay for the entirely arbitrary need to pursue a balanced budget. Worse, they are framed in such a way as to encourage us to believe that governments have no choice but to act to reduce such expenditure, and that the impact of doing so will be felt by ‘someone else’. But if we ask a rather different question, it’s easy enough to expose the lie. That question is, in simple terms, ‘are there enough resources in the UK to provide every citizen with a decent standard of living?’ The answer, unquestionably, is ‘yes, of course there are’. That we ‘choose’ not to use those resources to achieve that aim is down to ideology, not economics.

None of that, of course, provides an answer to the problem of so-called NEETs – but then neither does simply cutting their benefits. The only ‘problem’ that that solves is how we continue to ensure that resources are concentrated in fewer and fewer hands. But that concentration of wealth is the much bigger economic problem.

Curiosity isn't enough to justify an inquiry

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There is no rule or mechanism which guarantees that members of a political party committed to the pursuit of a cause rather than merely power will be any more honest or less venal than mere careerists; nor that they will be any more resistant to temptation when it is waved in front of their noses. But, somehow, we all want to believe that ‘our’ side are more inherently honest and genuine than everybody else. As a result, the conviction, last week, of the former CEO of the SNP (and ex-husband of the former First Minister) somehow comes as more of a shock, to say nothing of disappointment, than the secret £5 million payment to Farage, or a whole host of financial scandals relating to other politicians in recent years.

Having been Treasurer of a party for five years in the 1980s, I’ll admit that I’m somewhat mystified as to how it can have happened. The level of scrutiny to which accounts were submitted back then was intense, and I distinctly remember lengthy meetings examining the budgets line by line looking for potential savings for a party which was perpetually cash-strapped. Things are different now: the advent of devolution has transformed the finances of parties which are now at the centre of events rather than eternally on the periphery. But still… The defence that the auditors had signed off the accounts looks rather weak to me. A thorough audit would surely have checked that expenditure (for large items as a minimum) was properly authorised and had an appropriate ‘paper’ trail in terms of invoices and receipts, but it’s hard to believe that to have been the case in relation to some of the items on the list. I find myself with a number of serious unanswered questions.

It’s true, as some of the SNP’s opponents have suggested, that the guilty plea means that those questions will never be aired in open court. That’s a pity – as much for the members of the party, who are the victims here, as for the wider public – but the idea that that justifies some sort of public inquiry is a strange one. I can see the attraction to the SNP’s opponents of demanding such an inquiry; keeping the scandal running for as long as possible has its political attractions for parties which have been unable to make a serious dent in the SNP’s popularity. But public inquiries are not cheap, and if one were to be set up for every resolved crime that left the curious with some unanswered questions, there would be an awful lot more public inquiries being held. Good news for the lawyers, I suppose, but probably not for the rest of us.

Whether the initial investigation was politically-motivated or not isn’t entirely clear – but the way it was handled, with a ‘murder tent’ outside the house and so forth, certainly looked a lot like a political act. Even the stated cause for the investigation, that money had been raised for one purpose and then spent on another, looked more than a little dodgy; the idea that specific pounds and pennies would somehow be locked away in a special account doesn’t look like a realistic expectation. It seems, though, that they found a real crime, even if it wasn’t quite the one they were looking for. It’s a disappointment, of course – but to return to my starting point, there is no rule which guarantees honesty, even amongst those apparently committed to a cause. Clay feet can appear even where they’re least expected.

Five million unanswered questions

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Labour’s decision to report the alleged hacking of Farage’s phone to the police is a gimmick, of course. Given the reluctance / inability (delete as applicable) of the boys in blue to investigate a whole host of crimes, diverting resources to a crime which the ‘victim’ himself has not seen fit to report is an unlikely prospect. But if the objective is to keep the story about Farage’s receipt of a £5 million gift running for a day or two longer, it is at least an effective gimmick. It’s reasonable to suppose that the attempt by Farage to turn the story into one about an illegal action performed against him was itself an attempt to divert attention from the £5 million, a generous gift which he continues to maintain is an entirely personal matter between friends.

But the ‘hacking’ story raises more questions as well. Farage is claiming that the ‘hacking’ was the result of a spear-phishing exercise. Assuming that to be true, then it wasn’t really what most of us would call ‘hacking’ at all: it means that he was conned into giving the attackers access to his phone and/or data. Still a crime, of course, just not quite the one which is being alleged. We’ve not been told what the messages were which induced him to part with the access codes to his data, but the possibility that revealing them might just be embarrassing could be one explanation for his coyness in involving the appropriate authorities. We also don’t know who the cyber-security experts were who have concluded that it was a “hostile state actor” behind the plot but, again, those experts seem not to have been the ones employed by the British state precisely to counter such actions against politicians and others.

It’s easy to see why, tactically, Farage might want to blame Russia. Given the suggestions that he and his party are too friendly by far towards Putin, putting some distance between him and the Kremlin looks like a reasonable plan. But hold on a moment – let’s look at this from the other side. Why exactly would Russia want to bring down Farage (and it’s reasonable to suppose that to be the aim of the leak of information)? Looked at from the Kremlin, the best chance of getting a more Russia-friendly government in the UK at the next General Election is through getting Reform Ltd elected, and all the conventional wisdom suggests that is more likely under Farage than under any alternative leader. That must surely be as obvious to Putin as it is to me, so why sabotage the campaign?

There are still far too many unanswered questions about that mysterious £5 million and the events surrounding it.

Irrelevance may be infectious

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If there is a single UK politician who should understand what political irrelevance looks and feels like, it is surely ex-PM Tony Blair, and it’s tempting to dismiss his critique of the way the UK is becoming irrelevant under the leadership of his own party on that basis. That would, though, miss the point, because for all the robust rebuttals of that critique by current-day Labour figures, the whole episode serves to emphasise not the difference between the Blair generation and the Starmer generation but the intrinsic similarities.

It is clear, for instance, that both what Blair had to say and what Starmer has been doing are predicated on an idea of the UK as a great global power, with influence way beyond its size and economic importance to the world. It’s a sort of post-imperial delusion on the part of people who can’t quite get their heads around the idea of the UK as a medium-sized offshore European archipelago, and expect the rest of the world to somehow take them at their own evaluation of their relevance.

Some have been surprised at the similarity between the responses of Burnham and Streeting, with their insistence that the idea of inequality is missing from Blair’s response. But both men, like Blair himself, are wedded to the neoliberal economic creed that ‘the markets’ can solve every problem and that governments must do, fiscally, whatever they interpret the bond markets as demanding. Increasing inequality is not only baked into that creed, it is its main driving force. In his failure to pretend that he thinks it important, Blair is simply being more honest than either. There is no great ‘battle of ideas’ going on between the Labour leadership hopefuls, just a beauty contest between two over-ambitious wannabe Messiahs. Irrelevant is quite an apt description.

Holes, spades, and generous gifts

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The first law of holes states that when you’re in one, you should stop digging. Like most laws, rules, regulations and probably gravity itself, it’s one that Farage seems to think somehow doesn’t apply to him. The more answers he gives about that dodgy donation of £5 million, the more difficult questions arise. He claims that he didn’t use any part of the £5 million to buy the £1.4 million house that he bought in 2024, and that he actually purchased that out of his £1.5 million fee for appearing on I’m a Celebrity. It didn’t take a lot of financial forensics for journalists to demonstrate that that wasn’t exactly true – that money remained in the account into which it was paid.

I almost hesitate to say this, but that might be a little unfair. Someone who suddenly finds himself £1.5 million richer can afford to spend £1.5 million more than he would otherwise have been able to spend: it doesn’t have to be the exact same pounds and pennies or come from the same account. That concept is one with which most of us will probably be familiar, albeit on a much smaller scale. A windfall of £50 might do nicely for a meal out, we might think, even if that £50 is initially used to pay a bill and the meal out comes a month or so later.

The problem for Farage in using that explanation is that what is true for £1.5 million is also true for £5 million, and adds to the need for him to explain that other little windfall. Whether it was for his security (as he originally claimed) or a reward for campaigning for Brexit, as he is now claiming, matters little (apparently, being paid handsomely for delivering a result which might benefit a donor only counts as proper corruption if the quid pro quo was spelled out in advance – a rather curious, not to say large, loophole). The bottom line is that a politician paid £5 million by someone (who just might benefit by rather more than that if said politician reaches a position of power) gives that politician an extra £5 million of spending power. Whether Farage did or did not spend it on security (and the change of rationale rather suggests that he cannot demonstrate that he did) is irrelevant to that basic fact – he had an extra £5 million to spend, unconditionally according to him, on whatever he wanted. And, on the basis of his latest attempt to ‘explain’ the basis of the gift, it was directly related to his political activity over a lengthy period. I find it hard to believe that even the UK could really dream up a set of rules which means that rewarding a politician for taking a particular political position is somehow a non-declarable gift, but I guess the investigation will tell us the answer to that.

In the meantime, if he didn’t own the company, surely someone would be trying to relieve him of his spade.

Principles and virtue-signalling

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Principled stands are all very well, and something for which politicians are generally happy to be credited. Until, that is, the cost of taking such a stand is perceived to outweigh the advantages gained. We saw it in Starmer’s ‘principled stand’ against the US bombing campaign in Iran, which was principled until he decided that allowing the US to use UK bases for ‘purely defensive’ bombing raids (an oxymoron if ever there was one) was a less costly option. And he’s never explained exactly how the purpose and target of each bombing raid was verified to determine whether it met the unspecified criteria for being ‘purely defensive’ – the suspicion remains that the ‘principled stand’ amounted to making a grand statement and then turning a blind eye.

Starmer also took a ‘principled stand’ over Ukraine, backing strong sanctions against unwarranted Russian aggression. Until unwarranted US aggression against Iran caused a potential lack of jet fuel and diesel, at which point the principles got lost. Principles which last only until those espousing them conclude that they are costing themselves too much aren’t really principles at all; they’re more about virtue-signalling.

Whether sanctions actually achieve very much is another question entirely. The theory is that by denying a country access to goods from outside the country and denying that country access to markets for its own goods, then pressure is placed on the economy to such an extent that the government can no longer sustain itself and must collapse/ surrender/ stop a war (delete as applicable). The truth of the proposition depends on three assumptions. The first is that the country being sanctioned cannot sustain itself entirely on the basis of its own resources and productive capacity, the second is the neoliberal economic dogma that the limiting factor on any government’s actions is the amount of money available to it, and the third is that all other countries buy into the sanctions regime.

In the case of Russia, none of those three assumptions are valid. Russia may not have the climate to grow certain crops, which might limit the population’s dietary choices (although after decades of Soviet rule, that might not be as novel as one might think), but the country’s resources are vast and varied, and they have the people and skills to exploit them. As long as they don’t need foreign currency, the idea that the money supply is somehow limited is a myth anyway: the constraint on government action is the availability of real resources, not the means of exchange to buy them. And in any event, there are significant other powers prepared to ignore the sanctions regime. Sanctions have the ring of the old adage, which runs ‘something must be done, this is something, we must do this’.

The conclusion – that sanctions are largely symbolic statements by those applying them, and little more than irritations to those to whom they are applied – is depressing. Failure to recognise that fact is even more so – it simply encourages people to continue to pursue a failed path. There is no quick or easy solution. Universal adherence to agreed international law is our only hope in the long term, but achieving it is another matter entirely. Perhaps we never will, but that doesn’t mean we shouldn’t try. In the meantime, pretend principles achieve little except to divert attention from the real issue.

The five stages of Messiahdom

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Political parties finding themselves in difficulty whilst retaining an absolute conviction that they are right about everything have a tendency to start to believe in the idea of a Messiah. If only, the story goes, we had a different leader, all would be well. That’s the first stage of messiahdom.

The second stage comes when they alight upon the Chosen One. He (and it’s invariably a ‘he’) might not be immediately available: perhaps he’s overseas or at the very least stuck in political exile in the frozen and inhospitable north. These are simply obstacles to be overcome.

The third stage is when the Chosen One himself starts to believe that he really is the Messiah, the one the whole world has been waiting for, and the only one who can put right those things which need to be put right and lead his party to the sunlit uplands. That seems to be about the point at which the Labour Party has now arrived.

The fourth stage is the anointment of the new leader, and it’s the trickiest of all. It’s far from clear at this point whether Labour will overcome this particular hurdle. There will be those who lay obstacles in his route, such as re-opening a debate which makes it harder to persuade ordinary people outside the party to vote for him, whilst smiling sweetly and uttering welcoming words. Maybe his silvery northern tongue will win round the doubters, both inside the party membership and amongst the wider electorate, maybe not. I have a suspicion that at least some will feel more than a little p****d off at being taken for granted in the power games being played with and around them.

Whether the Labour Party gets through stage 4 or not might be an open question, but if they do, then stage 5 has a degree of inevitability about it. This is when it becomes clear that he’s not the Messiah at all, just a very naughty boy. Heroes almost invariably turn out to have feet of clay. The chances that a change of leadership will solve the problems of the Labour Party are slim; the historical record (particularly over the past decade) does not exactly convince me that switching out the person at the top will change any of the fundamentals, even if it may deliver a short term boost based more on hope than experience. A glib tongue and a chameleon-like ability to change position are no substitute for substance, and a few years spent in the political wilderness do not necessarily equip someone to succeed in the top job.

The potential for doing more harm than good is high, particularly if he falls off the horse at the next hurdle. Still, as spectator sports go, it’s better than a lot of politics.

Vigilantes are the problem, not the solution

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It must have been sometime in the 1950s that I used to watch Mr Pastry on the television, and I’m sure that I remember one episode in which he wanted to be a ‘village auntie’; but my memory also told me that Mr Pastry was Clive Dunn rather than Richard Hearne, so maybe it was a different programme. Anyway, the plot line was that our hero had completely failed to understand what a vigilante was. The media and commentators seem to be suffering from a similar lack of understanding every time that they refer to the dreaded ‘bond vigilantes’ who are apparently forcing interest rates up because they’re worried that the Labour government might in any way deviate from the Tory financial straightjacket rectitude to which they’ve been stupid enough to commit themselves.

It’s not true; the participants in the bond markets really don’t give a damn about what government policy is, and are not trying (as true vigilantes would) to exercise extra-judicial powers over perceived miscreants. They care only about extracting maximum benefit for themselves, and see the widespread belief that a change in government policy might make UK bonds a riskier prospect as an opportunity to line their own pockets. It’s a form of self-fulfilling prophecy. Those paying the interest might well want a stable low level, but that isn't necessarily true of those receiving it.

That doesn’t mean that paying higher interest rates on government ‘debt’ isn’t a potential problem for the public finances. The extent of that problem is somewhat exaggerated though: part of the ‘debt’ is held by the government-owned Bank of England, so the government is paying interest to itself in an exercise which is more about book-keeping than debt management, and the higher interest rates only apply to new ‘debt’, not to the money which has been ‘borrowed’ previously. It’s also true that around 30% of the 'debt' is owed to banks, financial institutions and governments outside the UK, but that is offset by the fact that governments outside the UK also owe large amounts (almost £900 billion in the case of the US alone) to UK banks and financial institutions, and to the UK government itself, and interest comes into the UK as well as flowing out.

The bigger problem with the conventional analysis is that it looks at only one side of the equation, to wit the financial impact on government finances. But we need to look at the other side of the equation – after all, if one body is paying interest, someone else is receiving it, and those recipients are the holders of those bonds, and they are mostly based in the UK. They include a small number of wealthy individuals who directly buy bonds and a much larger number of indirect holders, mostly current and future pensioners. And since the benefit received through interest payments is proportional to the amount of bonds held, the benefits will flow disproportionately to the most well-off. In short, government bonds are a mechanism by which wealth is transferred from the many to the few (Richard Murphy has a fuller explanation of that here), and it is the few (or their representatives) who are manipulating the markets to maximise that flow.

Bowing to the perceived pressure from ‘the markets’ is outsourcing financial policy to those to whom wealth is being transferred. Understanding that is a key first step to debating alternatives – but not one that the political representatives of the few, whether Tory, Labour, Reform UK or whatever, are keen on promoting.

The problem is with the product, not the salesman

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If the election results last week exposed just how much trouble Labour is in, the party’s reaction since then serves only to emphasise the fact. Whilst replacing a failed leader might not, in itself, be an altogether bad idea, believing that doing so will, in itself, ‘solve’ the problems facing the party is a triumph for hope over experience. Even more so when the ‘vision’ of all those being touted as replacements differs little from that of the incumbent. The problem is far more deep-seated than that, and it’s only due to an inadequate and unrepresentative electoral system coupled with a Tory collapse that Starmer was regarded as a ‘winner’ for getting a huge majority of seats in 2024 on 34% of the votes, whilst his predecessor, Jeremy Corbyn, was regarded as a dismal failure for gaining far fewer seats in 2017 on 40% of the vote. Which was the best salesman?

Whether history is made by the actions of prominent individuals or by what Boris Johnson called the ‘movement of the herd’ is one of those unresolved questions to which there is never a definitive answer. Mao, as I recall, once said that ‘the people are the motive force in the making of world history’; but then he also said something about ‘power springing from the barrel of a gun’, so take your pick of apposite quotations. I’ve long suspected that the truth lies somewhere between the two. Leaders come to the fore at a time and in a context which is set by longer term changes. The right person who happens to be in the right place at the right time can articulate things in a way which makes it look like he or she is driving change, but there are almost certainly others who could and would have fulfilled the role. I tend to support Ledru-Rollin with his "There go the people. I must follow them, for I am their leader", or whatever variation on the alleged quote you might prefer.

Whatever, the panicked masses of the Labour Party seem to have convinced themselves that, if only X were in charge, the party’s fortunes would be transformed. They might be in with a marginally better chance if they could agree on a name to insert instead of the X. I can think of few worse outcomes for them at this stage than for an MP to stand down to allow Andy Burnham to contest a parliamentary seat and then lose it (along with the Manchester mayoralty) to the Greens or Reform, but it’s an outcome which they don’t even appear able to foresee. The bottom line, though, is that whoever replaces the X, the party is still stuck in a context where they are expecting any new leader to do a better job of repackaging and selling the existing product rather than improving the product. It’s not an approach which has exactly been universally successful in the world of business. Maybe politics is different. Maybe not.

Electoral change might be boring, but that doesn't mean it's unimportant

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With the dust settling on last week’s Senedd election, it’s opportune to review how well the new system of voting actually worked. No doubt the academics are already hard at work on a detailed analysis of the results and the factors which led people to vote as they did. One obvious weakness is that the system ended up favouring the largest parties, encouraging a degree of polarisation between them, just as first past the post has long done. And for all the talk of ‘every vote counts’, clearly some votes did not count; the lack of an opportunity to express a second or third choice meant that the votes of those whose first choice was rapidly eliminated ultimately counted for nothing. And then there’s the argument about voting for a party rather than a person – I’m personally not convinced of that, although many others are, because years of campaigning told me that most people vote for the party anyway. Overall, it’s produced a more proportional result than the previous system, but it’s not ideal.

Some have criticised Labour and Plaid for introducing the new system, describing it as some sort of stitch-up. Criticism of Labour is fair, but I’m not convinced that the same is true of Plaid. Multi-party politics with no overall majority requires compromise and agreement, and had Plaid not agreed to support Labour on this detail, we probably wouldn’t have had the other changes to the Senedd. With a super-majority required for such a change, it looked like a worthwhile compromise – provided it doesn’t become the norm for the longer term.

Most supporters of Proportional Representation tend to favour the Single Transferable Vote. Looking at the new Senedd, that’s true of Plaid, the Lib Dems, and the Greens – but those three parties together do not have the votes for a supermajority on this issue, and Labour and the Tories are generally opposed. Enter, stage right, Reform Ltd. It’s always hard to know what the company’s policy is on any issue because it keeps changing, but Farage (the ultimate determiner of all policies, as the owner and proprietor) has in the past been supportive of a move to STV. Whether he still supports that (given how well his company did in England under FPTP) is an open question, but if he does, there is a clear supermajority in favour in the new Senedd. It creates a potential opportunity for a change with long-lasting effect.

It’s clearly not going to be the top priority for the incoming government. There are far more urgent priorities in areas such as health and education, where visible change is urgently required. Electoral Reform is top of few people’s lists. I hope, though, that the new government will find time to discuss this with other parties – yes, including Reform Ltd – during the current Senedd term, while the door might be at least ajar. Thursday’s results were historic, there is no doubt about that. But historic isn’t the same as irreversible. Sometimes phoenixes do rise out of the ashes, and the Labour and Conservative parties in Wales might not be quite as moribund as they currently appear to be.