Friday 30 September 2022

Letting them know who's boss

 

When George Osborne set up the ‘independent’ Office for Budget Responsibility 12 years ago, he surely intended it as a way of locking in orthodox thinking and making it harder for any future government to follow a significantly different path. That was in the days when the Conservative Party was the upholder of financial orthodoxy, but had only a slim grip on power in coalition with the Lib Dems. The possibility of a Labour government looked realistic and constraining the freedom of movement of that party would have looked, to a Tory, like a really cunning plan. Although Osborne admitted that having an outside body conduct an independent review of his budgets placed limits on him as well, it’s doubtful that it really worried him a great deal (it was, after all, his own fiscal orthodoxy that he was attempting to set in concrete); and it is certain that he never expected that his OBR would find itself in direct conflict with his own party’s government. But fortune-telling has always been a dodgy business at the best of times, and it’s easy to believe that he didn’t expect the fiscal fetishism of the Conservative Party of 2012 to turn into the doomsday cult of 2022.

In any event the ‘independence’ is more illusion than reality, when push comes to shove. The members of the Budget Responsibility Committee are appointed by none other than the Chancellor of the Exchequer, and it’s an iron rule of any power relationship that he who appoints can always find a way of unappointing if he needs to. But recent events have shown the limits of the ‘independence’ in another way as well: it turns out that the OBR can only produce a forecast if the government asks for one, and are expressly forbidden from publishing one if the government does not. And whilst the underpinning legislation requires the government to request that a forecast be produced for any budget, that which might look like a budget is not a budget within the terms of the legislation if the government simply decides to call it something else.

Various apologists for the government have come out with all sorts of excuses as to why the OBR couldn’t have produced a reliable forecast (as though such a thing actually exists in the first place) for this particular package, despite having managed it for previous budgets. The excuses have varying levels of credibility ranging from infinitesimal to zero but the inverse ratio between credibility and the absolute certainty with which some Tories present them is a wonder to behold. Not Truss herself, of course, for whom words are simply words, devoid of any meaning or expression. The OBR itself says it could have produced an analysis – indeed, that it even had one more or less ready for issue which it was not allowed to publish. Whether the government was aware of the content, or could even be bothered to look, is a currently unanswered question; the general assumption is that it wouldn’t have liked what it saw. The Boris Johnson approach to bad news from advisors (hands over ears and hum the English national anthem) is alive and well in Downing Street.

Today’s meeting between the members of the Budget Responsibility Committee and the Chancellor – to which the PM has invited herself as well – has been billed as an attempt to calm the markets by reassuring the OBR that the government is planning to set out how the apparent hole in the government’s finances will be filled. Perhaps. But given the arrogance and the absolute confidence that Truss and Kwarteng have that they know better than anyone else, it’s surely equally possible that their intention is to remind the OBR who’s in charge, and explain to them what they think so that they can go away and write it up as an 'independent' report. Given the way that they’ve reiterated time and time again over the past few days that their plans are the brilliantist ever, it’s hard to believe that there will be any contrition on display. Truss and Kwarteng are still wielding their spades with gusto – the enthusiastic hole-digging seems unlikely to suddenly stop today.

Wednesday 28 September 2022

Seizing the opportunity

 

Traders in the financial markets have coined a new abbreviation this week, MRP. It stands for ‘Moron Risk Premium’, and is the technical term for a situation where holding assets underwritten by a government of morons requires an additional premium to be paid in the form of a reduction in the value of the currency and an increase in interest rates. Apparently, those traders – no, let’s not underestimate the numbers involved – apparently, most of the world outside the ranks of the English Conservative and Unionist Party and the editorial desks of the Mail and the Express thinks that putting morons in charge of the economy is a really, really bad idea. Interestingly, there’s a high level of correlation between the subset of the population which coined the new term and the subset which finances the Tory Party. It turns out that having morons in charge may be bad for most of us, but creates a mega opportunity for a tiny few. And they’re grabbing it with both hands.

Tuesday 27 September 2022

Missing an opportunity

 

One of the ‘successes’ of the Tories over the past four decades has been implanting the idea that the government’s finances are like those of a household; spending should mostly be limited by income and any borrowing should be as short term as possible and repaid as rapidly as possible. It’s always been utter nonsense, and it’s not a paradigm that they’ve ever stuck to themselves, but they’ve succeeded in making it the starting point for all political discussion of economics under which all parties (except the Tories themselves, of course) are obliged to answer the question ‘how will you pay for it?’ in relation to each and every spending commitment, and then ridiculed for any failure to provide an 'acceptable' response. It’s an ideology which last week’s budget completely abandoned, with the results that we’ve seen on the financial markets, and whilst allowing itself to be seduced by the argument was not exactly a brilliant move by the Labour Party, being seen to be the upholders of what is essentially a Thatcherite position which the government have abandoned in favour of a trip to fantasy island will probably do Labour no harm in the short term. Appearing to be the adults in the room is not exactly a bad position to be in.

And yet… Their continued adherence to the Thatcherite view of the economy does them no favours in the longer term, and helps to sustain the household comparison. At a minor level, it leaves them open to a charge of inconsistency. For example, from the ‘household’ perspective, Labour's promise to reverse the unfunded abolition of the 45% rate of income tax and then use the ‘extra’ money for increasing expenditure in the NHS looks an awful lot like spending the same money twice. The open abandonment by the Tories of the position which they have imposed on everyone else for decades could – and should – be a real opportunity to have a serious discussion with the electorate about the way the economy really works. They could instead be spelling out that the problem isn’t the extent of Kwarteng’s borrowing per se, it’s that he’s using the borrowed money to reduce taxes on the rich: a move which few respectable economists believe will generate anything like the assumed level of growth which is required to make the numbers add up. Had he instead announced that he would be borrowing consistently more for some years to come in order to invest in infrastructure (which most economists would agree does contribute to growth), we would probably not have seen the panic which set in in the financial markets. Failure to even broach the argument that it’s not about borrowing, but how it’s used, is a serious constraint on Labour’s freedom to promise the investment which we need.

It's a failure which is understandable in a sense; in an environment where politics has been reduced to simple slogans, preferably no longer then three words long, and against a backdrop where the household analogy has become established ‘truth’, it’s a very difficult argument to make. And to paraphrase Bonaparte somewhat, “never divert attention from your enemy when he’s making a mistake”. They don’t need to win the argument about the ‘right kind of borrowing’ to win an election which the Tories seem determined to lose, so why get bogged down in a debate which many may not understand? It’s short term thinking, though: after they win an election, how radical can they be in economic terms if the ground hasn’t been prepared in advance? Most worrying of all is the suspicion that they don’t really want to be radical; they’ll be happy just to be ‘in power’ and carry on with the sort of economic policies which (Truss and Kwarteng might be asking some of the right questions here, even if they’ve come up with the wrong answers) have led us to where we are.

Monday 26 September 2022

Giving with one hand and giving with the other

 

The theoretical basis for reducing taxes on the highest paid is that they will invest the money saved in ways which boost economic growth. It’s a sweeping assumption. There is no doubt that ‘some’ of the money will be invested like that, but no-one knows how much, and it isn’t the only option. Some will simply be spent, which is another way in which the economy might be boosted a bit. But some will be saved, and no doubt a significant amount will find its way into secretive offshore tax havens. One of the big unknowns at the heart of the gamble is how the money ends up being split between those four options. That in turn depends on the calculations that those in receipt of the unexpected windfall make before deciding what is in their own best interests. And one of the factors in those calculations will be expectations about the future, which make it unlikely that much of the money will end up being used as the government might wish.

Investing in new businesses and innovation is a long term decision, so one obvious question is whether those making the decisions really believe that this is a good time to be taking long term decisions. With a government which looks as though it might, just about, limp through to an election in two years time, but which has an obvious potential for collapse a lot sooner than that if things go horribly wrong; with a major war raging in Europe, whose progress and outcome, to say nothing of its effect on energy availability and prices, remains highly unpredictable; and a pandemic which is far from being over with the potential for large new waves, many are likely to conclude that ‘certainty’ is a little lacking at present. Major investments look to be riskier than they have been in the past, and the rate of return on savings may be a better bet for many.

We know that interest rates on both borrowing and saving are likely to be rising, a trend which the not-a-budget-at-all will only accelerate, whilst the volatility of the pound adds to uncertainty. All that also has a negative impact on a willingness to take investment risk, and provides a positive incentive to find a safe haven for cash, whether overseas or in the UK itself. And one of the safest havens of all in the UK is government bonds, the interest rate on which rose sharply in the aftermath of the ‘fiscal event’. There is a common belief that when the UK government borrows money, it borrows it from other countries or overseas investors; but in reality, most borrowing is on the domestic market. Most is, effectively, borrowed from UK citizens; sometimes directly, but more often through financial institutions, such as pension funds, investment funds, banks and insurance companies. In a sense, therefore, most of us (through our pension funds etc.) are actually lending money to the government, even if we don’t realise it. This is, on the whole, something which benefits most of us. It’s worth noting, though, that the wealthier people are, the more money they are likely to have in their pension pots (as well as insurance, investment funds, banks etc.), and the more, therefore, that they lend the government. The interest on those loans, however, is paid by all taxpayers, even those who have loaned precisely nothing, either directly or indirectly, to the government. It’s one of the hidden ways in which wealth is transferred from those who have little to those who already have a lot, and that transfer is far more significant than the intergenerational transfer as which it’s sometimes inaccurately painted (the nonsense about future generations paying for today’s borrowing), because future generations, collectively, will inherit not only the liability but also the asset. The issue is that the people inheriting the asset aren’t the same ones who inherit the liability; it’s an inequality issue, not a generational one.

There is another effect here. Those traders who have been betting so substantially against the pound in expectation that the budget would lead to a crash have not only made small fortunes for their banks, they have also made it certain that interest rates will go up – maybe this week, and possibly even as soon as today. The traders can now receive bumper bonuses for their efforts, pay less tax than they previously would have done, lend the difference to the government, and be paid for the privilege at the higher rates of interest which they themselves have done so much to bring about. Verily, this is a government which giveth with one hand and then giveth a bit more, just to be certain, with the other. To the select few.

Saturday 24 September 2022

Half a cheer for the Lib Dems

 

In political circles, the things for which the Lib Dems are most famous, and not necessarily in a good way, are dodgy bar charts and an astounding ability to promote completely contradictory policies in neighbouring areas – or even as they move from one house to the next in a street. To give them their due, they’re also quite good at mobilising large numbers of people to deliver a deluge of leaflets to flood voters’ homes in target areas, particularly during by-elections. Long term plans carefully and consistently executed have not, however, generally been seen as a strong point.

Perhaps we’ve all misjudged them. Liz Truss’s ability to pivot from one deeply-held policy position to deeply holding the complete reverse view makes her a classic Lib Dem. No surprise that was her initial choice of party. Infiltrating such an obvious Lib Dem into the Conservative Party with the sole aim of destroying that party from within is something of a master stroke, which shows clear signs of long term planning and organisation. After spending twelve years as a minister supporting the policies of three successive Prime Ministers, it turns out she never agreed with anything they (or she herself) did or said, another giveaway about her true allegiance. From upholding the idea that there is no magic money tree to claiming that she controls a complete enchanted forest, without even pausing for breath, is a manoeuvre which must have taken the breath away from even the most experienced Lib Dem candidate. A party which has spent 40 years telling us that they believe that spending must always be balanced by income suddenly decides to trash the very basis of its reputation by arguing that the bigger the gap the better; that’s on a completely different order of magnitude to merely overturning policy on student fees.

So, why only half a cheer for such an astounding achievement? Whilst the success of the cunning plot has almost certainly exceeded the wildest expectations of the plotters, they really don’t seem to have anticipated quite how much collateral damage would be caused for the rest of us when the bomb exploded. Perhaps they thought that she might get to a senior position but assumed that the Tories would never be stupid enough to make her leader. It’s an easy enough mistake to make (who wouldn’t have made a similar assumption?) but catastrophic for many of the least well-off in society. Next time, stick to dodgy bar charts. Please.

Friday 23 September 2022

Games, not answers

 

There is an old joke from the Soviet era that workers used to say “We pretend to work, and they pretend to pay us”. It tells us something about the economic processes of that time and place. The UK has its very own equivalent, and it’s found in Westminster where it’s known as ‘Question Time’, or, in its grandest form where the Prime Minister him or herself is the subject, ‘Prime Minister’s Questions’. Sometimes, the same process is repeated after a ministerial statement, a difference of nomenclature rather than substance. More of a game than the process of enlightenment which any of those names suggests, the objective is for the opposition to pretend to ask questions (whilst actually trying to make a political point), whilst the relevant minister pretends to answer them (whilst actually attacking the questioner, his or her party, and any bystanders who might be easy game). In a functional democracy, it would have been abandoned years ago as being utterly unfit for purpose, but that initial caveat rules out any prospect of abolition for the foreseeable future.

Yesterday, it was Jake’s turn to take questions on the subject of fracking. Faced with a fairly simple and straightforward question from Plaid’s Hywel Williams (“will the Secretary of State confirm that licencing powers on fracking remain with our Senedd, and that he has no intention of trying to return those powers to Westminster?”) he could have chosen to give a really simple, one word answer, ‘yes’. That would be cheating, though; the rules of the game require that he must never give a straight answer. Instead, he chose to say, “I am not seeking to upset the devolution settlement”, a response which could have at least three different interpretations. The first is the way in which it has been widely interpreted – simply a verbose way of saying ‘yes’. The second is that he means ‘no, and using parliament’s powers to over-ride those of the Senedd does not upset the devolution settlement because the right to do so is part of that settlement’. And the third is ‘no, I don’t want to merely upset the devolution settlement, I want to tear it up’. I don’t know what he actually meant – but then, we’re not supposed to – but on the basis of his record and that of the current government, the first of those somehow seems the least likely.

He was similarly evasive when it came to how the government was planning to honour the commitment given by Truss just a few weeks ago that fracking in England would only go ahead with local consent. All he could say was that it comes down to money and is up to the companies wanting to undertake fracking to offer sufficiently large sums of money to communities (or those individuals in them deemed to be most negatively impacted) to ensure that there is only minimal opposition. Who decides what is sufficient and how much opposition remains was left deliberately unanswered, but the suspicion must surely be that he, Jacob Rees-Mogg, will decide. It certainly won’t be determined by any democratic process on the ground (making it, stunningly, even less democratic than the Russian approach to referendums, which involves sending armed men door to door demanding that people complete the ballot papers under their gaze). In a strange way, we should probably welcome his statement. Formalising the fact that bribery is a key part of the way the current government takes decisions, and is much more important than any type of democratic vote, is a rare display of honesty, even if that might not have been entirely intentional.  

Wednesday 21 September 2022

Escaping from the laboratory

 

Attempting to make a virtue out of inevitability is not a wholly unreasonable starting point for a PM who seems to be going out of her way to take decisions which will be unpopular. However, deliberately setting out to make herself unpopular is what Sir Humphrey would call a “brave decision” and it may turn out to be rather too brave for those Tory MPs sitting on small majorities whose votes she seems to be taking for granted. There are major questions about whether the strategy of going for growth at all costs will work or not but, even supposing that it does, it is unlikely to produce much success in the two and a bit years which remain of her premiership. Growth is more like a giant tanker than a tap; it can’t just be turned on or off at a moment’s notice. Whether her backbenchers will be prepared to hold back until the ship is irreversibly sinking before acting, or whether they will follow the more traditional Tory approach of looking after their own interests is an open question, and not one on which she would be wise to stake her future.

It's far from clear that she’s really as committed to economic growth as she claims anyway. There is one single decision that she could take which would do more than anything else to reboot the UK’s economic prospects, which most economists and businesses would support, which would be largely painless to most people, and might even prove relatively popular (except among her own backbenchers), and that is to negotiate a closer trading arrangement with the EU’s Single Market. Given her own past commitment to membership of the EU, it surely can’t even be ideology which holds her back – it’s not clear that she has any ideology other than pleasing those she needs to please to keep her job. So, whatever she says, "growth at any cost" is clearly not on her agenda.

At the heart of her policy is the utterly discredited (see, for instance, IMF report from 2015) notion of ‘trickle-down economics’, under which allowing the richest to get even richer means that they spend and invest their extra wealth in ways from which we all benefit. It’s an ideological standpoint which requires its adherents to argue both that paying the poorest more makes them idle whilst paying the richest more makes them work harder, and to believe that people who already want for nothing will buy more goods and services, and invest in potentially risky startups, rather than simply locking the money away in some offshore tax haven. They also argue that companies which already have piles of money available for investment if the opportunity arises – and which, even if they don’t, can easily borrow money currently at what are still historically low interest rates – will use any tax cuts to invest in new capacity and innovation rather than distribute the money to shareholders through dividends and share buy-backs. And they regularly fall back on the infamous Laffer Curve, which purports to show that cutting taxes increases government revenue rather than reducing it. The problem is that there is no – zilch, zero, nada – empirical evidence to back up Laffer’s theory; it is just an interesting, abstract theory. That doesn’t prevent those who have a vested interest in reducing their own tax bills from quoting it as though it were gospel, but convincing people that a theory which benefits them is wrong is never going to be an easy proposition. Indeed, such evidence as is available on the operation of trickle-down economics shows that giving a bigger share to the rich ends up with the rich getting richer and increases inequality. Common sense trumps abstract economic theory. The argument that the size of the cake is more important than how it is shared out has a superficial ring of authenticity to it but if the extra cake all goes to those who already have the biggest pieces, then growing the cake is of no benefit to most people.

When in trouble, double down on the original proposition seems to be the order of the day for Truss, as it was for Johnson. But calling for all other major economies to follow her example and implement a similar approach is something of a classic. Not only does it betray (again) that special sense of exceptionalism which leads English nationalists to believe that they know best and the rest of the world should follow suit, it is also utterly self-defeating. The whole point of reducing taxation and regulation is, allegedly, to create competitive advantage (although there are serious doubts as to whether it would do so in practice; trade agreements which ban unfair advantages might make it difficult in practice to exploit such changes), but if everyone does the same those already dubious advantages are wiped out. All that’s left is growing inequality under which the rich get richer and the gap between rich and poor grows ever larger.

We – all of us who live in the UK – are about to be turned into a gigantic experiment in economics in the expectation that an experiment which has produced a consistent result when tried elsewhere will for some strange reason produce a different result here. The most rational response is to make a quick exit from the laboratory.

Tuesday 20 September 2022

Silly numbers and extraordinary claims

 

Interpreting crowds is never easy, not least because in any crowd there are likely to be many different reasons for the participation of individuals. In 2019, it was estimated that more than 100,000 people joined a march through the streets of Edinburgh in support of Scottish independence. The march was regarded as a huge success by its organisers and gave a huge fillip to independentistas in Scotland. In the same way, marches here in Wales attended by thousands, even if not (yet) on the same scale as those in Scotland have encouraged independentistas here as well. It’s important, though, to put the numbers in context: 100,000 is around 1.8% of the Scottish population (for a Welsh march to achieve the same level would require around 54,000 marchers), and given that it’s a self-selecting subset, it tells us little about what the other 98% think on the issue. Projecting numbers of marchers into an assumption of majority support for their aim is a risky business, to say the least. No matter how impressive the sight might be, no assembly of people can, in itself, tell us much about the opinions of those who are not present. For that, we need opinion polls – as well as real polls at election time.

The same is true – although from the media coverage, one wouldn’t know it – about the huge crowds turning out to watch the monarch’s coffin on its progress from the place of death to its final resting place. Motives for doing so vary. In addition to monarchists, fans of individual royals and lovers of pageantry, vox pops have shown a good sprinkling of republicans as well as others who just felt that the event was historic and wanted to be in some way part of it. Projecting that into an outpouring of love for the Union, and claiming that those taking part are an entirely representative sample of the population as a whole is as silly as claiming that 100,000 marchers for independence are entirely representative of the Scottish population. That hasn’t stopped the unionists, though. To them, the crowds are a clear indication that the idea of Scottish (and Welsh) independence is finished; a dream relegated to the past. We should probably be grateful for the over-simplicity of their analysis and the resultant complacency which it engenders but certainly should not believe it.

At the weekend, there was one estimate that, as well as the huge numbers turning out to physically watch the coffin being moved from one place to another, around 4.1 billion people – more than half the world’s population – would tune in to watch the funeral. I don’t know how they’ve calculated that and I’d like to see their workings, but it reminded me of my old maths teacher talking about the importance of subjecting the result of any calculation to the ‘common sense’ test. By that he meant asking the question ‘does it feel right’? And it simply doesn’t. The best estimate that I’ve seen suggests that of the world’s population of around 7.8 billion, around 5.4 billion are television watchers (in around 1.7 billion households with a tv). We can probably discount most of the 1.4 billion Chinese (where an astonishing close to 100% have access to a television), to say nothing of the 144 million Russians or 84 million Iranians, as well as a goodly proportion of the 1.4 billion Indians and 220 million Pakistanis (the latter of which have other things on their minds at the moment, although one would scarcely noticed from television news reports). There are other places one could add to the list; the point is that, if 4.1 billion of those remaining were glued to their tv sets, it means that rather more than 100% of those with both the facilities and desire to watch proceedings had to have been tuned in.

Like many estimates of the numbers in a crowd, the number is obviously something of an over-statement. Does it matter? In itself, no, not really. The basic fact is that there would have been a very large audience; there was no need to exaggerate that by putting a silly number on it.  As even most republicans must surely acknowledge, the event was a historically significant one – more so for the UK than for any other part of the world, although numbers never reached 100% here. The number does, though, tell us something though about those English nationalist exceptionalists and their belief that what happens on these offshore islands must be equally significant for everyone else as well. And it isn’t just about the belief itself; it’s about the fact that they have a desperate need to believe in their own country’s specialness. One of the best illustrations came from the Speaker of the House of Commons who made the truly extraordinary claim that the funeral of the Queen will be “the most important event the world will ever see”.  That it is a highly significant occasion for the UK cannot be doubted. It marks the end of an era, and it would be wrong to underestimate the importance of that. But “ever”, and for the “world”? That indicates the very exaggerated sense of self-importance which is sadly endemic amongst our rulers. They have a deep need to exaggerate the importance of their little corner of the world and what happens here; everything has to be portrayed as world-leading or world-beating. Being a large and important event isn’t enough: it has to be the largest and most important to validate their own self-belief. It is an essential element of their deeply nationalistic ‘non-nationalism’ that everything about their country is both the best and the most important. As with so much that happens in the UK these days, mere facts will never be allowed to get in the way of such self-aggrandisement.

Friday 16 September 2022

The wrong type of growth

 

Yesterday, the government floated the idea that the EU-imposed cap on bankers’ bonuses might be lifted. It was well-timed; with most of the Labour Party observing an entirely unnecessary self-imposed ordinance not to indulge in politics, and most of the media dedicated to broadcasting live images, almost 24/7, of a crowd which is barely moving filing past a coffin which is not moving at all, it’s a good time for the government to carry on as normal, just with less criticism. They haven’t managed to avoid the criticism altogether, but they’ve had a lot less than the proposal deserves.

Much of the criticism which has been voiced has concentrated on the apparent injustice of allowing huge increases in the remuneration of bankers whilst everyone else’s pay is held down because of fears of inflation. It’s fair criticism, and it’s true that allowing the fattest cats to get fatter will look like appalling politics to many. It misses the point, though. There are two far bigger concerns than how much bankers get paid.

The first of those is about what they do to earn those bonuses. The reason for imposing the cap in the first place was because large bonuses were incentivising reckless and short term patterns of behaviour, which ultimately caused a major meltdown of the banking sector. I see no indications from a government that also wants to reduce regulatory control over banks that the implicit dangers of that have been understood. Hatred of EU rules and a desire to steal business and jobs which might otherwise be located in the EU seem to have trumped caution.

But the even bigger problem is the notion that they’ve got into their heads that this is somehow going to address the problem of the UK’s low economic growth. There’s no doubt that, as a result of the way GDP is calculated, an increase in banking activity in the City of London will lead to an increase in GDP, and the statistics will mechanistically report that as economic growth. The problem with headline figures for growth is that the detail is ignored; but in this case, that detail matters. Only a tiny minority in a very small corner of the UK will benefit from any growth which follows from uncapped bankers’ bonuses, and it won’t feel much like economic growth in the left-behind areas, such as Wales. What the UK needs is the sort of economic growth which spreads prosperity rather than concentrating it – we could give it a fancy name, such as, I don’t know, how about something like “levelling up”?

The ideology driving the current government claims that higher wages and lower taxes for the already well-off benefit the entire populace rather than only those whose pockets are directly filled. There is, however, absolutely no empirical evidence to justify such an assertion; such studies as have been performed all tell us that the result of putting more money in the hands of those who already have most simply leads to the rich getting richer and inequality increasing. It turns out that simple common sense predicts the outcome of giving more money to the richest better than any ideologically-driven economic theory. Who’d have thought it?

Wednesday 14 September 2022

The leaders we deserve

 

One thing that the English establishment take great pride in is their ability to organise great events, with everything planned down to the last tiny detail. Like much of English exceptionalism, the ability is more imagined than real, although that may be partly because those doing the organising have so little connection with the real world outside their own little bubble. The Queen’s coffin was manufactured more than 30 years ago. No-one knows precisely when or by whom, apparently, since it was passed from one official royal undertaker to another some 30 years ago, and records predating that have been lost or mislaid in the mists of time. Anyway, the point is that with great foresight about the event (if not its date), the box was ready when required, along with detailed plans for its route (with separate plans depending on the place of death). So far, so good, so meticulous.

But one of the problems with plans laid down so long ago, and rehearsed so frequently, is that they may not always allow for the fact that society didn’t stand still in the meantime; and plans prepared in a degree of secrecy don’t always include all the possible reactions from people who haven’t been part of them. And then there’s personalities. Who could ever have predicted that a well-known petulant like the new king, who insists that everything be just so, might get annoyed at a misplaced pen rack or a leaky pen? Those are comparatively minor little hitches, whatever they may reveal about the short temper of the new monarch. But there was an underlying assumption by those doing the planning that the outpouring of grief would be universal; there appears to have been little by way of briefing the police, for instance, about how to handle any republicans who might want to make their feelings known, with some individual officers coming close to declaring that holding up a blank piece of paper amounts to a crime. It’s not what it says, it’s what it might have said.

One might have thought that at least someone involved in the planning might have considered whether winding up one royal household as its incumbent moved to a different abode might have a few implications for the staff, and thought about how that should be handled, but issuing redundancy notices to some of those involved in smoothing the transition while a thanksgiving church service was in progress is not exactly testament to great foresight. It suggests, rather, that the fate of the little people wasn’t even an afterthought to the planners.

Whilst there will certainly be many who wish to mourn the death of their divinely-appointed ruler, that subset of the population is certainly less than 100%. Ideas about how people might react seem to have been based heavily on assumptions that little has changed since the more subservient, not to say servile, attitudes of the 1950s. Failing to give guidance to people and organisations about what they should or should not do was probably wise; reactions to being told not to do a whole series of normal activities might have been fun to watch, but would hardly have added to the solemnity of the occasion. The result, though, is that many organisations have over-reacted, from Center Parcs initially saying they would throw all their guests out for the night (although they’ve now backtracked and said that people can stay as long as they don’t expect to eat or enjoy themselves in any way) to a Labour Party instructing its MPs not to talk about minor issues such as poverty or the cost of energy but instead to restrict all public comment to their own grovelling tributes to the late monarch, and a range of sports organisations reaching different and contradictory conclusions about what should go ahead and what should not. Fortunately, the lack of detailed guidance on how we must all grieve at least means that we won’t have police travelling door to door to check that we’re all watching television all day on Monday. Unless, that is, another poorly briefed individual officer takes it into his or her head to do so.

There is an old saying that we get the leadership we deserve. A country where people have to be told that piling marmalade sandwiches outside royal residences as a mark of ‘respect’ is really not a very good idea might just be proving the truth of that saying.

Monday 12 September 2022

Like it or not, there will be change

 

Even for a hardened old republican like me, it is clear that last week marked the end of an era. TV news references to “The King” felt a bit like watching crackly old black-and-white Pathé newsreels, and similar references in the print media felt like being trapped in a newspaper archive. The very word "king" seems out of place and out of date, reflecting those same attributes back onto the institution of monarchy in a way that references to “The Queen” somehow never did. The sense of anachronism is heightened by the arcane rituals surrounding the succession – the fancy dress, the archaic wording, the trumpet fanfares, the displays of subservience – coupled with what feels like an attempt almost to compel people to mourn, and the rush of politicians to take a wholly unnecessary renewed semi-feudal oath of loyalty. The BBC’s coverage seems designed to suggest that the only thing that has changed since the last time it happened, at the beginning of the 1950s, is the more ubiquitous presence of cameras. In truth, however, very much more than that has changed over the past 70 years – a reign being presented as one of stability and continuity has actually occurred in parallel with the fastest period of change – technical, social and economic – in human history, even if none of that change has had anything much to do with either the institution of monarchy or the person of the monarch.

In any rational world, the end of such a long era would be an ideal time for reflection about the future (rather than just about the past, which is where most of the coverage seems to be stuck); the future, after all, is where we are all going to be living, no matter how much some would apparently prefer to live in their own, somewhat rose-tinted, version of the past. Many have questioned whether the new king should really have rushed into ‘giving’ Wales a new prince. Whilst that questioning is an entirely rational response, it ignores the reality that rationality has no role here: the point about a hereditary monarchy is that what the people choose doesn’t enter the equation. The mechanics of primogeniture have a logic of their own in appointing the monarch, and the dispensation of titles thereafter is solely a matter for the monarch himself. The idea that ‘Wales’ – whatever its collective opinion might be, and however that is expressed – could choose whether to not to have a new prince, let alone who it might be, would undermine the whole principle of a hereditary monarchy. That also explains why the institution could never allow the end of one era to become an opportunity to discuss roles and purposes: merely asking questions about its role and purpose endangers the institution itself, since it would struggle to justify its existence on rational grounds. Instead, the imperative is to rush on, and do what they can to ensure that what happens is presented as an entirely natural and normal phenomenon, to which there can be no challenge. The unwritten constitution declares that the monarch is appointed by God himself, and not just any old god at that: it is very much the Protestant God whose divine will gives Charles his status and powers. That is illustrated by the fact that the coronation is a religious service in which an archbishop of one denomination of one of the world’s faiths anoints the monarch in the name of his god, whilst members of another denomination of the same religion are barred absolutely from the throne because of a religious dispute which occurred more than three centuries ago.

Does it matter? At one level, no, not really. I’ve always been clear in my own mind that independence means that sovereignty lies with the people and is expressed through a democratically elected parliament rather than with the monarch on whose behalf parliament exercises it, and as long as the transfer of power does not lead to any retained ‘royal prerogatives’, it is the practicality of where power lies which is more important than the constitutional myth underlying it. At another level, though, it does matter. Hereditary power and influence based on the assumption of a divine right to rule is a negation of the concept of popular sovereignty, to say nothing of the idea of a meritocracy. For those who rather like the idea of a divine right to rule – and that includes not only the monarchy itself, but also the political rulers who depend on the power that it gives them – now is not the time to debate the issue. But that’s hiding behind the events of the day – there will never be a ‘right’ time as far as they are concerned; there will always be some excuse to postpone any discussion.

The English/British establishment are proceeding on the basis that the succession is done and dusted; there may be a few ceremonials to follow over the next year or so, but the accession of a new monarch is now safely accomplished. I doubt that history will record that things are as simple as that: they confuse affection – or, at the very least, acceptance – of an individual with affection for the institution itself, but there is a significant gulf between the two. The unravelling will be slow, and is likely to start outside the UK itself as the various dominions and possessions begin to question how independent they really are if someone else appoints their head of state. The process of converting to republics is likely to accelerate; for those states which will need to change their constitution to reflect the accession of a new monarch, the opportunity for that conversation is both immediate and pressing. The bad news for Charles III is that there is little he can do to stop the inevitable drift towards republicanism; the good news for him as an individual is that at least the process will not require the separation of his head from the rest of his body as happened to the first monarch to rule as Charles as well as many foreign monarchs. There are suggestions that we should not even discuss such issues out of ‘respect’ for the deceased queen. But there’s nothing at all disrespectful about noting that change is coming, whether they like it or not – or in hoping that her successor will enjoy a long, happy, and preferably early, retirement.

Friday 9 September 2022

Tories demand UK becomes landlocked

 

The issue with the Northern Ireland Protocol is, and has been from the outset, that two areas with different regulatory and customs regimes need to have a border between them to control smuggling and tax and customs evasion. It’s a simple enough concept, although one which the Brexiteers are still struggling to understand, largely because many of them actually favour tax evasion and smuggling. Buccaneering, aka piracy, is what they’ve openly admitted that they want.

But the issue doesn’t just apply to the question of Northern Ireland – it also applies to so-called freeports. Logically, there has to be a customs border between any freeport and its immediate hinterland because two different customs regimes apply; without controls over what passes across that border, goods imported tariff-free into a freeport can simply end up in the rest of the UK, potentially undercutting legitimately imported goods. The proposal from a group of Tories that the whole coastline of the UK should become a freeport thus effectively amounts to a demand that the rest of the UK should become an entirely landlocked customs area. The fact that they are proposing, effectively, not to police the border doesn’t mean it isn’t there, just that crimes such as tax evasion, money laundering, and smuggling become easier to commit. If one of the problems with the border between the Republic and the North is its length and the number of crossing points, just imagine the consequences of a border which maps the entire UK coastline, but a few miles inland.

There is certainly evidence that establishing a freeport promotes the development of industry and jobs within its area, but there is no hard evidence to suggest that that economic activity is extra, rather than merely relocated. From the perspective of a capitalist, who wouldn’t prefer to operate in an area where they pay less tax and are subject to fewer regulatory restraints? Whether it actually benefits the economy as a whole, as opposed to only those who can easily relocate their businesses, is another question entirely. The evidence and experience is not good, which is why the government of the day – a Tory government – closed down the UK’s freeports in 2012. There is no obvious evidence that the current crop of Tories have learned anything from the problems of the past, and every reason to believe that it’s a get-rich-quick scheme for those prepared to play fast and loose with the rules.

There is another parallel with the Northern Ireland Protocol here, though. Those who believe that it is possible to set up separate customs regimes within a territory without policing the borders can’t understand why the EU doesn’t see things in the same light. The EU believes that borders between customs areas should be controlled; the UK government considers such controls unnecessary. That’s how they want to implement their promise that the UK outside the EU would pursue a policy of global piracy, although they preferred the rather vaguer term ‘buccaneering’. Same thing, though. One man’s criminal is another man’s ‘entrepreneur’; it’s hard to see how that gap between perspectives can ever be bridged.

Thursday 8 September 2022

Honesty from a government spokesperson

 

Yesterday, the new spokesperson for the new Prime Minister told us that the new cabinet represents the "depth and breadth of talent” in Tory party. Rarely has a truer word been spoken by an official spokesperson, although it’s not entirely clear why they felt they needed to spell out just how bad the situation is; most of us had already worked that out for ourselves. It’s a refreshing level of honesty which one suspects is unlikely to last.

Wednesday 7 September 2022

How it could have been done

 

Yesterday’s pantomime in two acts as one PM flew off to Scotland to resign and his successor flew separately off to Scotland almost immediately afterwards to be appointed in his stead has been reported more than adequately. It seems that they needed to take two separate flights in case anything happened to one of them on the way there, and the outgoing one wasn't allowed to go in to see the Queen until the incoming one was in the building, just in case. How they would have coped if anything happened to the new one on the way home doesn’t seem to be recorded anywhere.

Not much of the reporting seems to have asked whether it was all really necessary. Whilst it’s true that ‘tradition’ dictates that PMs are appointed in person, and, leaving aside the question of what sort of functional state depends on the health of a 96 year old who has been in post for more than 70 years already, it would certainly be asking a bit much to ask her to travel from Scotland to London for two meetings neither of which needed to be longer than five minutes. But it doesn’t follow that two expensive separate return flights were required. Traditionally, PMs have to kiss the monarch’s hand in a demonstration of fealty in order to be appointed, but that ritual was replaced some years ago by a handshake, and the sky didn’t fall in as a result. It’s equally unlikely that it would fall in if the handshake was replaced by a Zoom-carried cheery wave, or even a simple old-fashioned telephone call. First Ministers of the devolved administrations are also appointed by the monarch, but it doesn’t happen in person – why should the PM of England be an exception?

It could even have been done by a few swift tweets:

@BoJo: Dear @RoyalLiz, I resign #PM #Quit #Butillbeback

@RoyalLiz: Goodbye @Bojo #PM #Quit #Hesfinallygone #Royalrelief #Noyouwont

@RoyalLiz: Will you @CommonerLiz form a government? #PM #Quit #Apparentlyonehasnochoice

@CommonerLiz: Yes #PM #LizforLeader

@RoyalLiz: Then you @CommonerLiz are hereby appointed. #PM #Whatdidwedotodeservethis

@RoyalLiz: PS: Just let me know when you @CommonerLiz are ready to resign. I’ve got enough time for another two PMs at this rate. #PM #Quit #Onecanhope

It could all have been over in about 30 seconds, and saved tens of thousands of pounds. For a new PM elected on pledges to challenge orthodoxy and keep a tight control on government spending, starting off by spending a whole day on this pantomime ‘because that’s how it’s done’ is not an auspicious start.

Monday 5 September 2022

Calculating a majority

 

The proposal to require a majority of the whole electorate in any future independence referendum is just one example of the tendency for the Tories to announce a policy without thinking through the implications and the practicalities.

In terms of the politics of it, it is a fact that, had such a requirement been implemented for the referendum on leaving the EU, the UK would still be a member. And it’s noteworthy that the people now demanding a 50%+1 majority for Scottish independence are, in many cases, the same people who would be protesting bitterly had a simple majority of those voting not been considered enough on that occasion. That’s just politics, though; they can and will bluster their way through that one. The fact that the proposed rule can award a resounding ‘win’ to a minority of those voting is, equally, just politics; it doesn’t matter because it would be the ‘right’ side winning. Assuming a turnout of around 80% (and it will never be 100%, for a variety of reasons: some people forget to vote, some can’t be bothered, some are away, some are ill, and some even have the temerity to die before polling day), then if 49.9% of the electorate votes yes, only a maximum of 30.1% (allowing for spoiled or invalidated ballots) can vote no. The patent unfairness under which a split of 62:38 of those who vote is considered insufficiently enthusiastic to justify independence, whilst 29% of the electorate voting against is considered to be resounding support for the union is, again, just politics.

No, for a government whose majority is based on English votes, and which is prepared to impose its will on the Scots and face them down, using the full power of the absolute sovereignty of Westminster, none of these political problems matter, and the policy will appeal to the English nationalists on whose votes the Tory Party now depends. It’s more the practical issues of implementing it which it seems to me that they haven’t really thought about.

In the first place, the UK does not have a constitution, which means that the constitution can’t be amended to introduce the new rule. That in turn means that it can only be done by Act of Parliament, and in the arcane world of Westminster, no Act can ever bind any future government. At some future point, a more pragmatic and less dogmatic government, faced with a situation in which it becomes politically impossible to resist the demand for a new referendum could, and probably would, simply delete or amend the requirement. Without a written constitution, accepted by the population at large, loose rhetoric about making Scottish independence impossible, ever, by changing the rules is just that – loose rhetoric.

Secondly, what form would this proposed legislation take? It would be a curious act of parliament which said something along the lines of “if there’s ever going to be a referendum, which there isn’t because we won’t allow it, then the rules for considering a majority to be binding shall be as follows:…”.  Very Ruritanian. Passing a law to define the rules for a hypothetical future referendum is also seriously damaging to the hypotheticality of it.

There’s another problem with enacting such a law as well. I don’t doubt that there would be a clear parliamentary majority in favour of it – and it wouldn’t surprise me at all to see Labour and the Lib Dems piling in in support of the government, making the parliamentary majority a very healthy one. But at the last election, Scotland elected 48 SNP MPs out of 59 – a total of 81% - and current polling suggests that they may well do even better next time round. Whilst there’s no doubt about the legality of the outcome of the parliamentary vote, using an English majority to over-ride 81% or more of the duly-elected Scottish MPs doesn’t immediately strike me as the most brilliant way of winning Scottish hearts and minds. It plays, instead, to the narrative that Scottish wishes are being ignored – more likely to help the independentistas than the unionists.

And then there’s one other little complication, the one that they regularly forget about – Ireland. The question of a border poll and how the results should be interpreted is, as I understand it, set out in the Good Friday Agreement, and requires the Secretary of State to arrange a border poll “…if at any time it appears likely to him that a majority of those voting would express a wish that Northern Ireland should cease to be part of the UK and form part of a united Ireland” (my emphasis). Whilst it’s hard to rule anything out from a Truss government, starting to unilaterally tinker with that international agreement is a matter of a different order of magnitude. That leaves them imposing one rule for Scotland (and Wales) whilst operating to a completely different rule for Northern Ireland. Good luck to the government lawyers on arguing that case when it comes before a court, as it almost certainly will. From the Government’s perspective, they have the power and they make the rules. But wiser heads might well wonder whether somebody shouldn’t take their spades away before they dig much deeper.

Sunday 4 September 2022

The Omigod variant

 

It’s not clear precisely when the disease first struck. Theresa May suffered from an early onset variant with her proposal for what became known as a dementia tax, a proposal so poorly thought through that it was abandoned within days of making contact with the real world. The disease, which manifests itself as a tendency to announce policies first and think about the implications later, spread rapidly under Johnson and seems destined to reach its zenith under Truss. The disease vector seems to be the Conservative Party; there is no known cure and no hope of a vaccine, not least because all those who offered any such hope were promptly driven out. The prognosis (for the patient) varies from bad (a lengthy period in opposition) to worse (political oblivion). For the rest of us, that’s the good news.

The bad news is that we have a remaining period of up to two and a half years when the disease will continue to work its way through the body of the Conservative Party and during which we will have increasingly bizarre announcements made. Whilst Johnson seemed to have developed a curious form of semi-immunity under which policies would be announced and then simply forgotten (bridges, anyone?), it appears that Truss has a bad case and enjoys no such immunity. Instead of quietly abandoning mad proposals, it is believed that she will actually attempt to implement them, egged on by the fringe elements in her party which have caught the even more serious Omigod variant.

The medical experts are clear that the disease is unlikely to spread outside the confines of the Conservative Party as long as we all attempt to retain some sort of hold on reality and truth, but are unable to offer us much by way of protection from the consequences of the actions of the infected. It is thought possible, however, that concerted collective action might help. Escaping the asylum would be a good start.