Friday 28 August 2009

Useless bankers

Lord Turner's criticism of "much of the City's activities" as being "socially useless" is something with which I can disagree only in the sense that it is too mild. "Socially useless" suggests only that it doesn't achieve anything of value to the wider society; I think that it is positively damaging to the wider society, and the phrase which I have used repeatedly is that the activities are the high finance equivalent of anti-social behaviour - except it typically gets rewarded rather than punished.

Still, given the background and role of Lord Turner, it's a pretty stinging criticism, even if he doesn't go as far as I would.

Even if the activities themselves are 'merely' "useless", the fact that so many people are involved in activities which contribute nothing of any social value is in itself damaging. But it's actually much worse than that, for those activities have contributed to undermining, and eventually came close to destroying, the whole economic system. Whilst a few have enriched themselves through gambling and irresponsible risk-taking, they have done so at the direct expense of those who depend on pension funds and stability.

The response of some of those involved was pretty predictable. But I don't understand why they expect us to be frightened by their threat to go and destroy someone else's economy if we don't let them destroy ours. It sounds to me like the most socially useful idea that they've come up with to date. My biggest problem with it as a solution is that I wouldn't wish them on anyone else either.

Paradise for Lord Ashcroft?

As an update to yesterday's post, it seems that it's not only here in the UK that people have doubts about the way the tycoon's money is used to impact on politics. His adopted homeland of Belize is having second thoughts as well.

Thursday 27 August 2009

The Ashcroft Connection

It wasn't just the membership figures which made interesting reading in the Tories' annual report for this constituency - there's a host of financial figures as well.

Given the largesse which has been distributed to a number of Tory constituency associations by Belize-based tycoon Lord Ashcroft, it's surprised me for some time that there has been no obvious connection between him and the Tories in this area.

I knew, of course, that they were not really short of a bob or two from fox-hunting hedge fund managers. Indeed, far from being financially challenged, their latest accounts show that they have a very healthy bank balance with £50,000 on deposit for a rainy day, and a further £35,000 in cash and bank accounts available to spend as and when they wish. It's the sort of resources which most parties in most constituencies can only dream of. Investment income alone contributes almost £4,000 to their annual income.

Nevertheless, pre-existing bank balances haven't stopped Lord Ashcroft 'investing' in a range of constituencies, and then keeping a close eye on what happens to his little investments. The noble lord himself may or may not be a tax exile; his party have consistently declined to confirm whether he is or is not a UK resident and tax-payer, as was promised at the time of his ennoblement. His donations are, however, all legal, of course. Although tax exiles cannot donate directly to political parties, UK-based companies can - and Lord Ashcroft seems to have a few convenient UK companies through which to channel his funding.

There are, as far as I can trace, no direct donations from Ashcroft to the Conservatives in Carmarthen West and South Pembs – none that have been declared to the Electoral Commission at any rate. It was interesting, therefore, to read in their annual report to the Electoral Commission that representatives from Lord Ashcroft's office regularly attended local campaign meetings. Perhaps some of the £8,600 which they received from HQ was actually Ashcroft money?

It surprised me that Ashcroft has 'an office' which can send staff to meetings all over the country. I assume that this is declared somewhere as a notional donation from one or other of his companies, but haven't so far been able to find it.

I'm jealous of their funding, of course – who wouldn't be? But my real concern is twofold. Firstly, no party should be able to try and 'buy' an election by out-resourcing its opponents. That's one of the worst aspects of US politics. And secondly, when campaigns are being funded on the back of anti-social behaviour such as short-selling bank shares and sterling, and possibly tax avoidance as well, it is simply not enough to say that 'it's within the rules'. As MPs of all parties have found out recently, that excuse simply won't wash – they need to be able to justify it in moral terms as well.

Wednesday 26 August 2009

Who decides what is a white elephant?

Today, Network Rail have announced their proposals for a high speed rail link between London and Scotland. It's disappointing, to say the least, that they have rejected the option of a line through Bristol to Cardiff, and I hope that the government's own review will correct that omission, and ensure that plans are brought forward for both.

Last week, by way of contrast, the Reform think tank produced a report opposing investment in high speed rail projects, referring to them as 'white elephants'. Two very different views on the same subject – obviously coming at the subject from quite different starting points.

Although formally an 'independent' think tank, one of the founders of Reform is now a Tory MP, and the other is a former head of the Political Section in the Conservative Research Department. The report's conclusions are clearly based on at least a degree of political preconception.

Reform seem to start from a position of believing that the job of government is simply to respond to demand rather than seek to influence the nature of that demand. The result is that, in their view, spending on roads should be increased and spending on rail decreased, since 90% of all journeys are made by road. And they would abandon any attempt to build a high-speed rail network.

It is a logical conclusion for people who believe that individuals should have maximum freedom to use resources as they wish and can afford, and that the free market should reign supreme. It is not, however, a sensible position to adopt if we want to seriously reduce our ecological footprint and build a more sustainable society for the long term.

Some people have talked in recent years as though the age of ideological differences is dead. I don't think that is true, but it is sometimes harder to find the dividing lines when much of what passes for politic discourse is reduced to sound bites. The divergence in views over high speed rail highlights for me one of the key dividing lines in politics for the future - do we plan to allocate resources, including access to mobility, on the basis of competition and ability to pay, or do we plan to meet transport needs in a more co-operative and collective fashion?

Tuesday 25 August 2009


There were a number of stories some time ago about the sudden surge in membership of the local constituency of the Conservatives in Wales. Both the membership secretary at the time and a former chairman of the Conservatives' Wales area committee drew very public attention to the fact. The allegation was that the party was the victim of entryism by supporters of hunting, determined to get their preferred candidate selected on the basis of this one issue.

Their former membership secretary, who was himself Assembly candidate for the constituency for about 24 hours, talked in February 2007 of there being '400 members' in the constituency. With the infiltrators having achieved their desired aim, it seems that the party is now suffering from exitism, as people leave the party in droves. By the end of 2007, the total had fallen to 323, and by the end of 2008, it had plummeted to 200 according to their report to the Electoral Commission. I wouldn't be in the least surprised to see a further fall next year.

I've been surprised at how sanguine the party's hierarchy have been about the whole situation – to the extent of expelling the complainants rather than the infiltrators. If a Plaid Cymru constituency reported a large increase in membership just before a key selection, followed by an equally sharp drop after the event, I'd be instituting some sort of internal investigation.

Monday 24 August 2009

Still digging

The more the Tories try and 'clarify' their position on the NHS in the wake of Dan Hannan's comments, the deeper they seem to be digging themselves.

Last week, Cameron himself pledged his support for the NHS - by promising to open the NHS to "new providers". This is clearly an indication of an intention to move elements of health care from the public sector to the private sector. Promising to privatise parts of the NHS seems to be a curious way of showing support for it.

On the same day, the spokesman for the Conservatives in Wales in the National Assembly wrote a letter to the Western Mail in which he said that they would not scrap the policy of free prescriptions. They would, however, only safeguard the policy for 'most people', and would 'allow' others to make a 'small contribution' to the cost. To me 'allowing' people to pay sounds like it would be voluntary; somehow I doubt that is what he means, since they are counting on generating a net saving of £30million.

In yesterday's Sunday Times, there was a report of a survey by ComRes, which indicated that some two thirds of Tory MPs want to privatise at least some elements of the NHS, and move away from a system funded by taxes to an insurance-based system.

So, it seems that they plan to support the NHS by privatising parts of it, maintain the policy of free prescriptions by making some people pay for them, and deep down, many of them are opposed to the whole principle on which the NHS is based. Hannan managed to open a very large can of worms with his interview on US television – and we haven't got to the bottom if it yet.

Friday 21 August 2009

Multi-tiered health

I'm not convinced that it's entirely fair to use Dan Hannan's words as evidence of some sort of secret agenda by Cameron to destroy the NHS, although some seem to have been trying to make that leap. I do believe that it is entirely fair to point out, however, that Hannan is far from being alone in his views, and that there are a number of people in the Tory Party who really do want to dismantle the NHS. And I suspect that their views are rather more widespread in that party than the official line would suggest.

What remains unclear is how much influence that line of thinking has within the party – and to what extent that would be strengthened by an influx of new Tory MPs if they win a number of additional seats at the next election. Will Cameron be able to make his own views on the NHS stick?

More worryingly, Hannan's outburst has led to a number of people who ought to be natural defenders of the NHS to start considering the idea of replacing a tax-funded service with an NHS funded through compulsory health insurance. I think they are wrong, for a number of reasons.

In the first place, a service funded by insurance payments would be a fundamentally different kind of service. It is a complete shift away from a service 'free at the point of use', since it would mean that each and every use of the service was accompanied by an invoice. The invoices would be sent direct to the insurance companies rather than paid by the individuals, which means that it might not look that different from the point of view of the patient, but it would represent a completely different approach to running and administering the service. It doesn't necessarily mean a full-scale privatisation of the NHS, but that would be the likeliest outcome for an organisation delivering services for which it then charges.

Secondly, funding the service through insurance premiums would not, of itself, bring one extra penny into the funding of the service. The only way of increasing the funding by such a move is if the total payments made in insurance premiums exceed the amount paid from general taxation revenue at present. And of course, they'd need to exceed that sum by at least the amount of profit to be creamed off by the insurance companies, just to stand still.

What it would do, of course, is to change the basis of payment from a tax system which has an element of progressiveness about it (the amount paid depends at least in part on ability to pay) to a system which takes no account of ability to pay, except in the minority of cases where a basic safety net provision is put in place.

The third reason is that, even with a state-guaranteed minimum level of provision for the most needy, different people would have different levels of cover bought from different insurance companies. We would have at least a two-tier – and probably a multi-tiered – system of provision of health care, based not on health need, but on the level of premium paid.

In effect, the most well-off would pay less for a better standard of health care than they get currently; whilst the less well off would pay more for a lower standard. The Hannans of the Tory party know this – and also know who their target audience is.

Tuesday 18 August 2009

Payment for what

I'm not entirely convinced of the argument for imposing a national maximum wage. It's not an unattractive idea, and there is a certain symmetry about having both a minimum and a maximum; but I'm not sure what it would achieve or whether it's entirely practicable.

I'm more attracted by the idea of tying the maximum wage payable by any organisation to a multiple of the average wage in the same organisation, although there are still a number of problems with that approach as well. The difference, though, is that tying the maximum to the average creates a direct incentive to ensure that the average goes up - in short, the interests of the few at the top are related directly to the interests of the many lower down.

And that, in a sense, is what concerns me about the high level of wages paid to some individuals. It's not the amount as such, but the activities for which they are getting rewarded. Paying high rewards for actions which benefit society as a whole is one thing; paying high rewards for actions which maximise the short term benefit to the few at the direct expense of the long term benefit of the many is little short of rewarding a form of anti-social behaviour.

The problem with the culture of bonuses in our banks is that it has encouraged the 'wrong' type of activity and risk-taking. A small number of people have made fortunes as a result; but most of the rest of us have suffered from the destruction and collapse of the banking system. On balance, I'm more interested in ensuring that the rewards of the people at the top are tied into the long-term economic advantage of society as a whole, and that we have a suitably progressive tax regime on those rewards, than in setting artificial limits on them.

Saturday 15 August 2009

Tory eccentrics

Hearing Cameron dismiss one of his MEPs as 'eccentric' had echoes of John Major's comment that whenever the names of certain of his own backbenchers were mentioned, he heard 'the flapping of white coats'. Cameron, like Major, has been seriously embarrassed by comments made by someone on his own side. I suspect that, again like Major, he will have difficulty in controlling the individual concerned.

He's worked hard to try and give the impression that the NHS would be safe in his hands, but lingering doubts remain in the minds of many of us. Not so much because of what Cameron himself actually says, but because of two other factors.

Firstly, history - what they are saying officially now is at odds with what they've said and done in the past. They did after all attempt to get the NHS to run on the basis of an internal market, a change which Edwina Hart is only now, belatedly, starting to unravel in Wales, and which remains in operation in England.

The second is probably more important - it's always been clear that there is a sizeable group of people within the Conservative Party who simply do not accept the principle of the NHS. They haven't gone away under Cameron; they've merely been persuaded to bite their tongues - until now.

Of course Cameron wants to give the impression that Hannan is a maverick, an eccentric - it's a natural reaction when he sees his carefully laid strategy being very publicly unpicked. But Hannan has merely expressed publicly, and in graphic terms, what I suspect a number of his party colleagues also think. The unanswered question is how many of them think like Hannan - and how much influence would that school of thought have on a Cameron government?

Friday 14 August 2009

Ruled out?

Labour's very own Prince of Darkness has apparently ruled out ever being the leader of his party. But I've always felt that 'Never' is a word to be treated with caution when it comes from any politician - didn't Heseltine say something similar at one point? One of the other phrases Mandelson used was that there was 'no prospect' of him running for the leadership. The use of the word 'prospect' sparked a distant memory for me.

Too many years ago, as a member of a youth club, I played the lead when we performed an extract from what thespians are apparently supposed to refer to only as 'the Scottish play'. I can still remember some of my lines, including the one which goes "…and to be King stands not within the prospect of belief".

I'm certain that Mandelson, like Shakespeare before him, understands the difference between a prospect and an outcome. Could he simply be waiting for someone else to play the role of Lady Macbeth?

Friday 7 August 2009


This week's 'news' about the fact that there are no plans to abolish pensioners' free bus passes has been something of a controversy about nothing. A ministerial advisory group recommended looking at the issue again; the government said a firm 'no'. End of story.

Amanwy is amongst those who pointed out that the BBC were about three weeks late in drawing attention to the report concerned. The delay in responding is surprising, certainly; but I was also surprised at the time about the lack of attention given to a number of significant decisions made by the government in relation to the recommendations of the Ministerial Adisory Group. There is a sense in which the rejection of certain recommendations was actually more newsworthy than the acceptance of those which found their way into the national transport plan.

The bus pass policy has been both popular and successful, but in a time of budget cuts, universal benefits were always going to come under greater scrutiny, and there were always going to be those who would start to argue for cuts. The leading cutters of public services in general, the Tories, have responded by supporting the idea of curtailing, if not scrapping, the scheme, having already proposed scrapping the system of free prescriptions in Wales.

The word 'free' itself is actually a misnomer, of course - nothing is 'free' in the widest sense. The underlying question is whether certain goods or services are paid for individually as and when required, or collectively, so as to be available when required. And that difference in approach is more fundamental than some seem to realise.

Those who would use the current economic crisis as a reason for cutting back on things like bus passes and prescriptions fall into two categories. The enthusiastic cutters are those who have never believed that such things should be free in the first place; the reluctant cutters are those who would prefer to keep current arranmgements, but believe them to be a lower priority when less cash is available for government spending.

Those in the second category need to be careful that they don't end up becoming the instruments by which the first category deliver their agenda. There is more than mere pragmatism involved in this debate; there is also, as Adam Price has pointed out, a difference in ideological standpoint.

Adam puts forward a particularly robust defence of the principle of universality on his blog, with his usual clarity of expression. It's a welcome contribution; there is a real dividing line in politics here which is far too often treated as merely a debate about priorities. One thing of which we can be certain is that if we find ourselves with the Tories in power in Westminster after the next election, universality is going to need a lot of defending. Conceding the argument in advance, as some seem to be doing, is hardly the best way of defending public services.

Thursday 6 August 2009

Labour mask slips again

According to a report which went to the Executive Board of Carmarthenshire County Council recently, "The upsurge in demand for Welsh-medium places" (in primary schools) "in Llanelli has arrived with little warning…".

Given that the proportion of children receiving a primarily English-medium education is higher in Llanelli than anywhere else in the county, and given that the demand for Welsh-medium education has been growing across the whole of Wales for many years, I found it surprising that anyone could really be caught unawares by the upsurge. It looks to me more like a natural correction of an unexpected anomaly.

Being surprised by the upsurge seems particularly strange for an authority which is formally committed to actively promoting Welsh-medium education in the county; although, of course, that's one of those commitments which is more honoured in the breach than in the observance.

The council is now struggling to respond to the demand, but has laid plans for some significant increases in capacity at existing schools, and has also recognised that there will be a need to open one or more new Welsh-medium schools in the town.

What was quite astounding during the discussion was to find that old Labour attitudes towards the language linger so long. The leader of the Labour group on the council (who is also deputy leader of the council) managed to trot out the old line about the "Welsh language education elite". He seems unable, or unwilling, to recognise that the demand for Welsh-medium education comes from right across the social spectrum - or that the attitude towards the language has changed dramatically in recent years.

It's no coincidence that Labour have lost so much ground in areas like Carmarthenshire, and as long as they remain unable to understand how out of touch they are on the issue of the language, that's a trend which will only continue.

Monday 3 August 2009

Conflcting priorities

It's struck me for some time that the drive to provide more affordable homes, particularly for young people trying to get onto the housing ladder, is at odds with the drive to build low-carbon homes. Both are very worthy aims, and governments are right to seek to do both, but I'm not convinced that they've entirely worked out as yet how to achieve both aims.

"Affordable Homes" is unquestionably a major issue in this part of the world. Carmarthenshire and Pembrokeshire are attractive places for people to live, and people selling up in the major cities in England can often afford to 'outbid' local people. Coupled with a quite tight control over planning – particularly in the National Park – the result can be that housing becomes both scarce and expensive when compared to the needs of local people.

Meeting targets for reduction of emissions of greenhouse gases is not something which should be optional, and a target of ensuring the new homes are carbon-neutral is the sort of radical step which we need to be taking. But there seems to be little doubt that, in the short term at least, and probably in the longer term as well, meeting the necessary standards is likely to lead to increased building costs.

So the objectives are in conflict, and I just don't see, at present, that enough is being done to enable the achievement of both. This story in yesterday's Sunday Times suggests one way around the dilemma – it seems some developers are thinking in terms of ignoring the rules, and simply paying the fines for non-compliance, seeking that as a cheaper alternative for them.

That can hardly be a sensible outcome for government policy; but it underlines the fact that merely turning entirely worthy aspirations into planning regulations is never going to be enough.

The problem is, at heart, a financial one. Owners of low- or no-carbon housing will have to pay more for the homes, but will then pay less to run them as their energy bills will be so much lower. Are the financial institutions geared up to take this into account when deciding how large a mortgage to give? Traditional income ratios presumably implicitly assume a level of running costs which should no longer be correct.

Are the government willing – or even able given current financial constraints – to make additional finance available for eco-friendly homes? That doesn't have to be in the form of grants – a differential form of council tax, or some other form of tax incentive might be a part of any solution. More part-ownership schemes would be another; but still require finance to be available from somewhere at the outset.

Perhaps we should even be looking at different types of house purchase - setting the price on the basis of 'lifetime cost' for instance, which would have the effect of making eco-friendly homes financially more attractive than current conventional housing.

Whatever solutions are adopted, failure to deal with the financial question will become a failure to deliver on either aspiration.