Thursday, 8 September 2011

Planning for our future

In an excellent piece in the Guardian (Monday 5 September 2011;, George Monbiot wrote the following:
Impervious to experience, strangers to reason: the communities secretary, Eric Pickles, and the chancellor, George Osborne, have learned nothing from the economic crisis. They claim that laxer town planning ‘is key to our economic recovery’. But the European countries hit hardest by the economic crisis – Greece, Italy, Spain and Ireland – have weak planning controls and urban sprawl. The nations that have proved most resilient have tougher laws and compact settlements.
Strong planning is one of many factors, but it is symptomatic of a political culture that puts the national interest above the self-interest of the rich and the long view above the quick buck. Pickles and Osborne are seeking to rip up England's planning system for the same reasons that they want to drop the proposed new banking rules: corporate power, cronyism and plutocracy, the forces that got us into this mess.
Weak planning exacerbates economic problems because capital is diverted from productive uses into speculative ventures; cities decline as they hollow out; and badly sited businesses, disaggregated settlements and long travel times drag down economic efficiency. On Sunday the New York Times reported that doubling urban density raises productivity by between 6% and 28%.
Economic growth should not be the purpose of the planning system. It should ensure that human needs are met while the environment is protected. But if growth is your aim, strong planning is more likely to deliver it than weak planning. The government's attack on planning is likely to deliver the worst of both worlds: trashing the environment while trashing the economy.
In Malvern, we are being asked to consider the South Worcestershire Development Plan, the successor to the plan developed under the last government’s regional spatial strategy. It is a plan that seems to be grounded on the belief that building houses – whether or not they are needed, whether or not they are of the right kind, whether or not they are affordable, whether or not they are sustainable, and with no reference to any other policies to promote the local economy – is in itself sufficient to ease the worse effects of the financial crisis.

Very quickly, a consensus seems to have emerged – on the Town Council, the District Council and, judging by the Gazette features this week, among the Malvern population more generally – that the current ‘preferred’ option is seriously flawed, in that the density of housing that Malvern has been allocated cannot be supported by the current infrastructure (not only road transport, but shops, schools, health service and so on), and that the planners are unable to offer any guarantees that such infrastructure will be put in place any time soon. There is also a perception that housing is being planned with no clear indication that it will be required as a result of economic/industrial growth within the town – that in effect it is being planned in a vacuum.

That being the case, we have a number of options:

1) We can plan to put in place the infrastructure, namely the roads, that will support the planned development. Each one of us might have our own ideas about what roads need to be improved or built and where any new roads should be routed. I suspect that such a proposal will find a lot of support locally – there is already a perception that the traffic situation in Malvern generally (and along the routes to Worcester in particular) has deteriorated and that ‘something needs to be done’. An assumption that more housing will mean better roads will be welcomed by many.

I have a number of reservations about this approach. Firstly, putting in new routes to support such housing simply allows us to plant a large urban development on the outskirts of the town, and to move the population of that development in and out of Malvern more easily. In other words, the assumption that we would be making is that such developments would largely be for those working outside the town – perhaps in Worcester, but more likely further afield. (And it assumes that travelling to and from work would largely be by road – as it would take no account of our existing rail or bus network.) So we would be planting a significant development on the edge of town on the basis of supporting a workforce largely based outside the town. Apart from a boost to house builders and in the short term the local council, it would do very little longer term for the economic health and the vitality of the town. Nor would more road building ease our current congestion problems and the concerns of local people. It would simply mean that there was more traffic on more roads – and that traffic density would remain unaltered. This would do little for existing businesses and would not allow us to promote tourism and to bring more visitors into the town.

Perhaps the most important reservation is that plan as we may to build these routes, all the evidence suggests that in the short to medium term (at the most optimistic), those routes are simply not going to be built: budgets are being slashed, services are being cut – there is no political will for significant infrastructure investment. And we must take care not allow ourselves to be burdened with developments on the back of unsubstantiated and unsustainable promises of future investment.

2) If we are to site significant new developments within Malvern, then we must ensure that employment opportunities are included within or as close to those developments as possible – permanent office space for companies or to allow remote working for example – so that those living in such developments have the opportunity to live as close as possible to their working environments and other local amenities – perhaps within walking/cycling range. There must be much greater mixed use development. A seriously forward-thinking and visionary plan would be one that actively promoted a much more integrated approach to development – that would link industrial production with housing (not separate them) – so that the creation and use of energy would be in close proximity with one another (and waste and sewerage treatment too – because that can also become an essential element of a zero carbon energy economy rather than representing another piece of the infrastructure burden to be dealt with). (As an aside the SWDP policy on sustainability and renewable energy seriously lacks ambition and in 20 years’ time will look prehistoric, It needs to be seriously reinforced.) 

The current plan presumes ‘business as usual’ – and you certainly get the impression that 2030 is being treated as though it were just next year, with much the same proportion of the population expected still to be travelling in much the same way from home to the factory or to the office, and to shops in Malvern and Worcester, in their motor cars, and still grumbling about how long it will take because of the traffic congestion, just as they do now.   

It is already apparent that ‘online’ and ‘out-of town’ shopping is changing retail patterns dramatically; and that teleconferencing, the internet and the new generation of electronic communications is set significantly to transform the way we work – with far more work time being likely to be spent remotely from the office – in the ‘home-office’, and that the need for face-to-face meetings – the thing that still takes most of us to work – is steadily being replaced by electronic conferencing and communication. And this is all before the rising costs of transport fuel, as world oil supplies peak, really kicks in and forces more home-working.

All that, of course, is a comment on trends that we know are going on.  But the other big problem with this Development Plan is that it does not seem to allow for ‘the uncertain’ or for the unknown changes – changes that history tells us surely to expect, but which we don’t yet know much about. So if we have to do 20 year land-use plans then at least we should be: a) more imaginative in anticipating and responding to change; b) more flexible in relation to changes in technology about which we don’t yet know; and c) more committed in embedding ‘sustainability’ into the pattern of development – which implies a much widely distributed pattern of additional housing across South Worcestershire – not just more urban extensions to Worcester and Malvern and the like.

Which brings me to the third option.

3) While not wanting to drill down too far into the numbers, there is a real question to be asked (and answered) as to whether the numbers of houses proposed for Malvern is not only wrong for our town, but whether it is the best way to ensure the viability of the many local communities in the countryside around our town. Opting for more urban extensions/bolt-ons (like Newland), providing cotton-wool protection for the ‘open countryside’, and allowing for only very limited development in the villages, may seem the safest and most comfortable choice when viewed from today’s context and sets of assumptions – but it is surely to be questioned whether it is sufficiently far-sighted in terms of achieving real sustainability for communities over the next twenty years. There is significant evidence to suggest that allocating a small number of houses to a far greater number of outlying communities will not only relieve the pressure on Malvern, but will boost the local economies of those communities without putting a significant strain on their current infrastructure. Some of these communities are struggling to survive – with post offices, local shops and pubs, garages and so on closing. A small number of additional housing would provide a much needed boost to those local economies. And it would allow us to plan realistic and sustainable growth for Malvern that would benefit existing citizens and businesses.

Sunday, 17 April 2011

Go Green … For a Change

On Thursday 5th May, I will be standing for the first time as the Green Party candidate for Malvern Link. Elected, I will campaign for the following:
        More spending on services for people and less on council management
        Keeping our local government local
        Improving community transport
        Preserving waste collection services and improving recycling
        More local housing options
        Regular consultation on the issues that matter to you

More spending on services for people and less on council management
Under this council, you are getting less for your money. While the council has been required by national government to hold the level of council tax at its current rate, the council is now offering far fewer services for that money. It has shed responsibility for a range of services (customer services, revenues and benefits, regulatory services, building control, IT, personnel, licensing), started to charge for services that once were free (e.g. planning advice and pest control), and has spent on services that were not required (CCTV cameras, which were installed at great expense and have now been removed, when the money could have been spent on bobbies on the beat).  Yet at a time of low frontline investment, the council continues to pay high salaries to its senior managerial team and is withholding a significant proportion of council tax revenue – more than £1.5m of your money – ‘for a rainy day’! I will campaign against further erosion of local services and ensure that council tax money is spent on the people of Malvern – amenities and services for the young, the old, families, those in work, those on benefit – rather than on layers of wasteful council bureaucracy.

Keeping our local government local
The people of Malvern best understand how Malvern should be governed, yet this council has been negotiating with Stratford on Avon to share its officers and services. Council staff travelling backwards and forwards would waste money, energy and time – as well as being environmentally damaging.  Malvern should not be governed part-time from a council almost 40 miles away. We should resist more sharing of council services and management with other local authorities because it involves loss of control and undermining of local government. The Green Party wants to revive local government, with the introduction of proportional representation and with grassroots democracy spreading through the use of smaller community and district councils. Such authorities should have enhanced powers, and in due course new tax-raising powers. There should be referenda on local government decisions if called for by 20% of the local electorate.

Improving community transport
Our roads and footpaths have fallen into disrepair, every day becoming more congested and dangerous. This council has dispensed with its transport officer and handed control of transport to Worcester. There is no longer any locally co-ordinated strategy. We need fresh impetus to develop community transport schemes to provide more reliable and timely access to vital facilities such as shops, railway stations, surgeries. People need community transport services to get to doctors’ surgeries, the hospital, town centre shops, the retail park, the Theatres, children’s parks, and so on.  The council must once again take responsibility for local transport, and seek green transport solutions – easing congestion and parking problems by reducing the number of vehicles on our roads.  For example we should promote community transport through low or zero fares, the use of electric vehicles, dial-a-ride and pooled car schemes. Ultimately, we need to make streets safe; make them public spaces again. We need to plan for mixed-use developments where shops, housing and businesses are closely located and connected by pavements and cycleways.

Preserving waste collection services and improving recycling
Recycling has certainly improved, but there is a long way to go to achieve international levels and to get everyone participating fully. People want to recycle, but it has to be made as easy as possible. Therefore, I will campaign to increase the range of materials (e.g. glass) that can be collected at the kerbside and recycled.  I will work to set up more localised recycling centres to allow people to minimise waste and reduce the number of car journeys to Newland Recycling Depot. We should do the simple things, like providing a free compost bin and composting advice for anyone who wants them. And we must allow councils to integrate locally the domestic and commercial waste systems.

More local housing options
The council is preparing a new local plan and I will work to ensure that the current policy of tacking more estates around the fringes of Malvern is replaced by one of building new ‘low carbon’ self-sufficient communities, with higher standards of thermal insulation and greater use of renewable energy sources. The emphasis must be on more affordable starter homes for young people and on smaller properties for older people who want to retain their independence but wish to down-size.  Homes should be built on the basis of need, not profit, and in areas that can sustain such development – with schools, shops, surgeries and green spaces. We must minimise encroachment onto undeveloped ‘greenfield sites’ wherever possible by reusing previously developed sites that have fallen into disuse. We should introduce a free home insulation programme for all homes that need it, with priority for pensioners and those living in fuel poverty. And we must introduce incentives to encourage homes to become more energy self-sufficient. We should also set building regulations to require excellent energy standards on a points-based system, which will cover embodied energy of building materials, energy used in construction, energy consumption in use, on-site energy generation

Regular consultation on the issues that matter to you
Councillors are your local representatives and should be seen and heard all year round, not just at election time. I would consider it a privilege, not a right, to represent you and, if elected, I will consult you regularly on the issues that matter to you. I intend to hold fortnightly surgeries, held at times convenient to you – weekdays, evenings and weekends. It is the very least that we can expect of the councillors in whom we put our trust that they consult us on the issues that matter, and I aim to redress this if elected.

But how can we afford any of this?
We are living in extremely difficult economic times. In an effort to tackle the national debt – whether it was caused by the last Labour administration or by global economic factors– we are daily being told that we must tighten our belts. As a consequence the government has made drastic cuts to public services on which we all rely, including cuts to our police and armed forces, is intending a root and branch reform of the NHS that no-one wants, has tripled tuition fees that will lead to a brain-drain from this country of our finest young people, has increased VAT and national insurance, which has had a crippling effect on small and medium sized enterprises. These and other measures that the Coalition has taken have seen unemployment increase, tax revenues fall while the welfare bill has increased, people’s spending power decrease and confidence hit an all-time low. But, these are tough times, and they require tough measures, right? We are ‘all in it together’. But how true is that? 

The fact is that the level of national debt as a proportion of gross domestic product is lower today than it was under the Major Government – and lower than many other countries in the developed world. The level of interest on that debt is lower than it was under Mrs Thatcher. But while the Coalition Government seeks to reduce the national debt by shifting it to every man, woman and child, the banks that were largely responsible for the crisis – banks that the taxpayer had to bail out costing each one of us tens of thousands of pounds – have returned to such a level of profitability that they are able to offer their staff £7bn in bonuses. Before repaying the British taxpayer, they have chosen to reward staff who would not have had jobs had we not saved them. And the Coalition’s response to this – David Cameron telling us it was time to stop ‘bashing the banks’, and proposed reforms that will do nothing to stop the crisis of three years ago recurring.

The truth is that the cut backs in the public sector are ideologically driven – a desire to roll back the state – and would have happened had we been in recession or not. The hope that the Liberal Democrats would temper the very worst excesses of the Tory Right have, sadly, proved groundless.

The debt does need to be tackled – but far more gradually and in a measured way that will not see public services slashed to pay for the excesses of the banks. It is time that we got tough with the financial sector which has got out of control. Among other measures, the Green Party supports the idea of a Robin Hood Tax, sometimes called a Financial Transactions Tax. It would involve a very small tax (maybe 0.05%) on the value of every financial transaction between financial institutions worldwide. Globally this tax has the potential to raise as much as £250 billion, as well as help stabilise the financial markets. We would crack down on tax havens and other methods of tax evasion and avoidance. And the Green Party wants to rehabilitate progressive taxation. This requires two things: raising taxes fairly and explaining them honestly. The Green Party is open about what we would cut, what we would defend, and about the fact that we need to raise taxation from 36 per cent of GDP in 2009–10 to around 45 per cent in 2013 (by among other things introducing a new higher rate of income tax of 50% for the most well off). This would halve the gap between Government expenditure and revenues by 2013–14 and progressively close the gap thereafter. 

There is an alternative to the Coalition’s austerity drive. There is an alternative to the cuts in the services on which you rely. And it is only the Green Party that has had the courage to stand up and say so. If you want to defend public services, then do not vote for the Coalition parties that are driving home the cuts. If you believe that people should have a say in how their lives are run, then do not stay at home on polling day. Instead, Go Green … for a change.

Sunday, 3 April 2011

Why The Tories Fear AV

In recent weeks, the No to AV campaign has launched a series of extrordianry attacks on AV that smack somewhat of desperation. One is forced to wonder why they are going to such extremes (eg, if we adopt AV specialist baby units will have to close - something the Government seems perfectly capable of doing without AV) to defend an outmoded electoral system.

I do not want here to rehearse all the arguments in favour of ditching first past the post - the current system that allows a small minority of voters in a small minority of seats to decide the result of election after election. The corollary between the existence of so many safe seats and so much corruption (duck house, moats and chandeliers), and the disengagement of the electorate - why so many voters just choose to stay at home - is not a difficult one to draw.

No, what I want to focus on here is the argument put forward by the No campaign that AV will allow minority extremist parties to gain representation, that they will be given a disproportionate amount of power, that a vote for AV is tantamount to welcoming the BNP to the House of Commons. On so many levels, this is completely absurd.

Many countries that use PR (let's leave aside for now whether AV is PR) employ a quota system to ensure that such an eventuality does not occur - unless a party receives, say, 5% of the national vote, then it is not entitled to national representation. As many minority parties stand in only a small proportion of the seats that they could stand in, then they are likely to be unable to clear this hurdle. This is a crude mechanism for keeping out the extremists - but an effective one.

I would not employ such a quota, because, as with first past the post, it is fundamentally dishonest. To take the BNP as an example. If they are able to persuade 15% of the people of Bury, Blackburn, Burnley, Bradford etc to support them - then there is a reason for that. Most members of the electorate will rightly find the views of such parties repugnant and distasteful - but if they have managed to persuade a significant minority to support them, then this is something that we all have to deal with. It is puerile to do so by rigging the electoral system - first past the post or quotas - to ensure that these parties are not represented. We need to grow up and confront them head on and make the absurdities of their policies plain for all to see. More than that, we need to deal with the root causes - whatever it is that has lead to a proportion of the electorate - albeit a small one - voting the way they have. First past the post allows us to bury our heads in the sand. AV will force us to address the issues. It is grown-up politics.

This is an indication of a wider problem with first past the post - it is a fundamentally dishonest voting system. The Tory No campaigners are wrapping themselves a cloak of respectability by justifying their opposition to change by a need to silence the extremists. Yet the electoral system that we have hides the extent to which they may draw support from those same extremists. They are either hiding their heads in the sand, or else they are glad to accept that support - so long as it is not obvious where that support is coming from. At present, the electoral system is rigged so that no-one who supports a minority/extremist party can hope to gain representation in parliament; they know that a vote for their candidate in a general election will be ‘wasted’ - their man or woman will lose come what may. They can chose to vote for that candidate anyway, or else they can choose to stay at home, or else they can choose to vote for a candidate that has a chance of winning that most nearly reflects their views. And it is the degree of support that winning candidates receive from extremist voters that is perhaps key to why the Tory No campaigners are so vociferous. Let me give you an example from the last election, from my own seat, West Worcestershire.

West Worcs is a traditionally Tory seat, but one where the Lib Dems have recently run the Tories close. Labour usually pick up a few thousand votes - but are never in contention - and UKIP are a little way behind them.  In the 2010 election, there was every possibility that the result would be a close one - that it would go right down to the wire - but in the end the Tories won by nearly 6000 votes. Both Labour and UKIP performed rather more poorly than might have been expected. So what happened?

On the morning of the general election, a trailer sponsored by UKIP toured the constituency with a poster suggesting that if the LibDems were elected, the floodgates to immigration would be flung open. This was a scurrilous attack, but in the week leading up to the election, immigration had become a ‘hot’ topic. So, what effect would this message – vote LibDem and let in the immigrants – have had on those who had been intending to vote for UKIP? Given that the result was expected to be a close on, anyone voting UKIP in West Worcs would have had to accept that voting for their woman may have allowed the Lib Dem candidate to inch past his Tory opponent and win the seat. How could they stop something that they so obviously did not want? By switching their support to the Tory candidate, to ensure that she beat the LibDem.

So, how many of them voted tactically in this way - voting not for their woman but for the Tory, to deny the Lib Dems victory? Well, of course we have no way of telling, because to stop the LibDems they had no choice but to cast their vote for the Tory candidate. And the Tory candidate and now MP is able to claim a disproportionate level of support - even though she must know that some of those who voted for her would rather have voted for their own party – an extremist one at that. In other words the vote was fundamentally dishonest - and tells us nothing about the sort of support that secured the winning MP her seat.

Under AV, it is quite possible that the final result would have been the same - the Tory would have won. But it would have been a more transparent result. In the first round of voting, the natural UKIP supporters could still have ‘done the honest thing’ and voted for their candidate, knowing that in common with just about every seat in the country no candidate would achieve an outright victory in the first round. They would then, perhaps, have expressed a second preference for the Tory candidate - and it is those votes that would see the Tory candidate home and dry.

The upshot of using AV is that the electorate are able - in the first instance - to vote for the candidate who best represents their interests, and should that candidate not be elected, then express their preference for the candidate who best represents their interests from those who remain in the race. And we as an electorate are able to see the exact make-up of the vote secured by the winning candidate - from where they have drawn their support in the first and subsequent rounds.

It is this sort of transparency that I suspect the Tory party fears. I suspect too that the old Labour opponents of AV are also averse to such openness with the electorate. If they wish to remain the passive beneficiaries of extremism, they will have to accept that that will be a matter of public record. If they do not wish to be such a recipient, then they will have to make it clear to the extremists that they do not welcome their support. This will lead to honest campaigning and honest voting. Who could possibly object?

Friday, 11 March 2011

Holding Our MPs to Account

Our public services face the severest cuts in living memory – to be replaced by a sound bite ‘The Big Society’. The NHS is being effectively privatised, as the higher education sector was when the government decided to withdraw funding and allow universities to triple tuition fees. Welfare reforms will hit the most vulnerable, as has the VAT rise, which additionally has put a strain on small businesses and put the brakes on an economic recovery the first signs of which were showing when the coalition came to office. Police numbers are being reduced, serviceman have been told by email that they are being laid off. And as we are told that we are ‘all in it together’, one sector, that which caused this chaos in the first place – continues to act with reckless abandon as if the past three years had not happened. The banking industry, returned to profit after the biggest bail-out in history, is shamelessly rewarding its top earners with seven-figure bonuses. The coalition government has refused to call the bankers to account: indeed the reverse is true. Mr Cameron lectures us that it is time to lay off the criticism, and all the signs are that he and his Chancellor are planning less regulation of a sector that has shown beyond doubt that it is incapable of self-control.

In these circumstances, it is important that our elected representatives are called to account for what they are allowing to happen. I have tried engaging my MP – newly elected Tory MP Harriet Baldwin, arriving at the House after a career in the City – on the issue of the banking sector. To date it has not been as illuminating as I had hoped.

I emailed Ms Baldwin about bankers’ bonuses on 30 January and, having received no reply, emailed her assistant on 8 February, as follows:
I contacted Ms Baldwin over a week ago, pointing out that if the £7bn that the government is allowing banks to pay its senior staff in bonuses were instead paid to offset the cost of the tuition fees imposed by this government, then it would pay for 250,000 students to receive three years’ university education. And I asked her whether she thought the government had got its priorities right. I wonder if and when I might get a response to my enquiry?
Additionally, I wonder whether she would be willing to comment on government plans to exempt from UK corporation tax the profits of large companies (though not small companies) earned abroad when that money returns to this jurisdiction (the practice being at present to tax the difference between the UK and overseas rate), while allowing those companies to offset against UK tax the cost of running those overseas branches. This will not only deprive the Treasury of a significant tranche of revenue, but will encourage the export of jobs to those overseas jurisdictions. This seems a particularly surprising move in these austere times. Will Ms Baldwin be supporting these plans?
I would be grateful if, when responding, no reference were made to the plans of the previous administration, or to what Labour might have done had they won the last election. I am not a Labour voter and am interested in what the Tory-led coalition are doing, and not in the hypotheticals of a Labour administration.
On 10 February I received in the post the following reply from Ms Baldwin.
Thank you for your emails of 30 January 2011 and 8 February about bank bonuses and the profit of large companies aboard and UK Corporation Tax. 
HB: Last year, there was a one-off tax on bank bonuses. Can the Chancellor confirm that this year the higher bonuses will attract the 50% income tax and 12.8% employer’s national insurance rates.
Mr O: Of course it is right that they attract both income tax and employers’ national insurance contributions.
You imply in your question that you would rather see bankers’ bonuses taxed at 100% or perhaps set at £0. I hope that you were pleased by today’s announcement on bank taxes and bonuses which will see banks pay more taxes, pay less bonuses and lend more to business and society.
With reference to your additional technical question about UK corporation tax, it is the first I had heard about this matter. I am not aware of any tax changes in advance of next month’s budget but I will write to the Chancellor with your questions.
On 14 February, I replied to that letter as follows:
I would like to thank you for your letter of 9 February, responding to my emailed enquiry concerning bankers’ bonuses and the taxation of profits, earned by oversea branches, but later repatriated to the UK, of companies based in the UK. On this latter point, I look forward to hearing how the Chancellor responds to your query.
I did indeed listen to the Chancellor’s announcement on the ‘deal’ reached with the banks. Given that the taxpayer bailed out the finance sector, costing every man, women and child in this country tens of thousands of pounds, I was disappointed to hear that there were no new taxes on bankers’ bonuses (the fact that they will be subject to existing income tax rates was not a cause for celebration), and that in return for an unenforceable undertaking that the banks will lend more (of our) money to small businesses (presumably at commercial interest rates: see further below), they will reveal just how much is being earned by a handful of their best paid employees.
I will not be alone in being surprised that, just two years after the bail-out to rescue this sector, the banks are now able to report profits of such magnitude as to justify bonuses of £7bn. Given that the country has been suffering a recession that has required the coalition government, among other things, to require the trebling of university tuition fees, and massively reduce grants to local councils that will require the public sector to lay off large numbers of staff and cut frontline services to the most vulnerable in society, how have the banks managed to perform so spectacularly well? One is entitled to ask whether, in fact, these profits are a reflection of continued public subsidy rather than outstanding performance.
Therefore, could I ask whether you would support a call that the Independent Commission on Banking investigate fully whether there are in fact hidden public subsidies (or perhaps ‘stealth’ subsidies, to use a phrase beloved of the Conservatives in Opposition), along the following lines:
        The ‘Too Big to Fail’ subsidy: The government now provides a public guarantee, effectively insurance against banks going bust. This gives banks a huge commercial advantage over other firms in a market system. It means banks are able to borrow money much more cheaply than if they were not ultimately underwritten by the public. Exchanges with leading auditors in front of the House of Lords Select Committee on Economic Affairs in January 2011 confirm this. A conservative analysis reveals that this hidden subsidy could be worth £30 billion annually. It means that bonuses to senior staff for ‘performance’ and dividends to institutional investors are at least in part a straight transfer from the taxpayer.
        The quantitative easing windfall subsidy: When it was decided that the economy needed more liquidity, the Bank of England pumped in money using ‘quantitative easing’. To meet various, and sometimes self-imposed, requirements, it did so by purchasing government bonds through investment banks. Merely for being passive conduits for this ‘risk-free’ arrangement the banks took a cut of every trade. Banks enjoyed a significant windfall, but that lack of transparency keeps the likely amount hidden.
        The ‘make the customer pay’ subsidy: Looked at sympathetically, the banks have been put in a difficult position. At the same time as being required to rebuild their capital, they are also under pressure to lend. In response, the banks have tried to manage this by increasing the gap between what they have to pay to borrow money, and what they charge people to borrow from them: the so-called interest rate ‘spread’. But of course the banks have a choice. They could recapitalise by reducing or eliminating bonus and dividend payments until their capital base is rebuilt. As it is, the taxpayer is subsidising the banks twice over: once through taxpayer funded public support to the banks, and secondly through paying much higher interest to borrow than the banks do at a time when small and medium sized businesses need money to be leant at competitive rates. This hidden subsidy to retail banking and one part of the investment banking world amounts to at least another £2.5 billion each year.
Finally, are you in a position to confirm recent reports that half of the funding for the Conservative Party emanates from the City?
Having received no reply, on 1 March I emailed Ms Baldwin asking whether George Osborne had responded to her query on corporation tax. I received no response, so I emailed Ms Baldwin again on 9 March – but this time copying the email to my local newspaper. I received a response from Ms Baldwin's office a few hours later, saying that I could expect a reply shortly.
I shall post a further blog to report its content. Given it has taken five weeks for Ms Baldwin to reply, I look forward to a detailed and illuminating response.

Monday, 21 February 2011

In defence of the public sector

David Cameron's assault on public services-  his declaration that he wants to open them up to the private sector - is something that should bring us all out onto the streets. We have saved our forests - but this is a far greater and more critical battle. He is attempting to sell us the idea that the cuts in public services that the coalition government is forcing upon us gives us the 'opportunity' to revolutionise the provision of those services by bringing in the private sector. It does nothing of the sort. 

While the private sector is best at creating wealth – from which we all benefit in terms of innovation and increased spending from tax revenue among many other things – it is not necessarily the best model for providing public services.

When it comes to the provision of public services, the private sector is unable to look both ways at once – at its customers and at its shareholders. Providing the best possible service to customers is not wholly compatible – or perhaps at all compatible - with providing the ‘greatest benefit’ – the best value – to its shareholders. Could it be argued therefore that to protect their own interests, it is shareholders that will hold boards of private companies to account for the way it deals with customers? All the studies I have read – mainly from the United States, but also from the UK and Europe – suggest that this is not the case. With no effective representation on the board to influence the day-to-day running of companies, shareholders have limited powers to hold boards to account at AGMs. And when it comes to public services, many of the shareholders are institutions with little incentive to look out for the interests of customers. They will have their own shareholder constituency to satisfy: why behave when acting as a shareholder in a way they would not wish their own shareholders to behave? As shareholders, they hold boards to account to the same degree that they would wish to be held to account (ie not very much….). So, can we instead rely on competition between companies running the services to protect the customer. Again, the evidence suggests not. The barriers to entry in these markets are prohibitive and customer ‘choice’ is a very blunt weapon indeed for driving down cost and/or driving up standards when there is effectively a privatised monopoly. And so it is left to governments to regulate. Unfortunately, successive governments have concluded that so long as the ‘shackles’ are removed then the private sector will create so much wealth that it will trickle down to the neediest in society – and that therefore in fact we need less rather than more regulation. (When the Tories tell us how this recession was caused by Labour's recklessness, remember that in opposition they were urging the government to regulate less - to allow the banks to be even more carefree with our money.)  But human nature being what it is (the bonuses row being perhaps the most obvious example), the trickle-down effect cannot be relied upon to provide sufficiently for all.   

Where is the accountability in all this? And how does this allow for the sort of long-term planning that public services require if they are to deliver what this country needs for future generations. We have seen that when it came to privatise the railways, to get round the problems of short-termism that satisfying shareholders necessarily engenders, private companies were awarded long-term contracts - thereby replacing public monopolies with a degree of accountability with privatised monopolies with none.

Do we want public services to be subject to the marketplace? Do we want the provision of our public services to depend on cost or on need? Should the success of public services be measured in terms of its profitability or its quality? Do we want our services to be provided by trained professionals motivated by the desire to serve the public, or by the private sector motivated by profit or the voluntary sector with its lack of resources and accountability. 

In the final analysis, you get what you pay for. This country can afford decent public services. The cuts that are being inflicted on that sector are being driven by ideology and not by cost. The furore over bankers bonuses has demonstrated that the money is there, if only the government had the will to tap into it. Those of you who still support the coalition should ask themselves whether they are prepared to stand by while the state is dismantled all around them, just so that the bankers can continue to pay themselves their bonuses, and so that in the budget that Osborne delivers before the next general election he will be able to deliver tax cut bribes to the electorate. Tax cuts only benefit those in work. Tax cuts are of no help to the elderly, the sick, the unemployed, to the youth - those who depend most on the public services that are now under attack. It is how we treat the neediest in society that is a measure of its worth. 

Tuesday, 11 January 2011

The Dream Dissolves ...

I was a supporter of the Coalition. I believe that the LibDem team that negotiated the coalition agreement and entered government with the Tories was – on the whole – sure footed. There is no doubt that without the LibDems in government we would not have seen (among other things) the triple guarantee on raising state pensions, tax cuts for lower and middle income families, measures bringing corrupt MPs to book, the scrapping of ID cards, and tighter regulation of the banks. And, of course, there will be an opportunity for this country once and for all to ditch its antiquated and unfair voting system (though I fear its recent actions may have seriously jeopardised that vote). It should not be forgotten either that the presence of the LibDems has tempered the worst excesses of the Tory Right – from whom thankfully we have heard barely a squeak so far in this Parliament.

Given that the coalition has been successful on many issues, it is baffling that they have made such an almighty mess of the tuition fees issue. It is this issue that has for me been a tipping point. It is indicative of a wider malaise.

Have the LibDems betrayed their voters? In my opinion, the answer is unequivocally 'yes'. The LibDem party conference – as the policy-making forum of the party – resolved to work towards the abolition of tuition fees by the end of the next parliament. Following the party conference, Nick Clegg said: 'Our message to students is clear: we remain the only party that believes fees are unfair, and the only party with a plan to get rid of them for good.' The party manifesto on which the general election was fought went on to say this:
We will [s]crap unfair university tuition fees for all students taking their first degree, including those studying part-time, saving them over £10,000 each. We have a financially responsible plan to phase fees out over six years, so that the change is affordable even in these difficult economic times, and without cutting university income. We will immediately scrap fees for final year students.
The phrase 'affordable even in these difficult economic times' is critical. We were told before the election that Vince Cable was the one man who understood the economic crisis; nevertheless despite the recession it was possible to make a manifesto commitment to abolish fees. We cannot now say that on entering government that the situation was so much worse than we had realised that it was necessary to move from a position of abolishing fees to one where we supported their being tripled. Unless Vince didn’t understand the recession after all …

And then of course there was the pledge. We decided – for better or worse – to take this one commitment from the manifesto and make it the subject of a specific pledge, 'to vote against any increase in fees in the next Parliament and to pressure the government to introduce a fairer alternative’. We did not have to make this the subject of a specific pledge, but we did so. LibDem candidates did not have to be photographed in their droves signing the pledge, but they did so. And on the back of that pledge, university students – first-time voters all – flocked to the LibDem banner, delivering several key marginals in the general election. There is no doubt that – whether the policy is right or wrong – the electorate had an unequivocal expectation and a right to expect us to oppose tuition fees – certainly to oppose any increase in tuition fees. The fact that a Tory Government would have raised fees in any case (and would probably have adopted Browne's proposal to remove the cap altogether) is irrelevant: the electorate trusted us to do the right thing and we let them down.

Of course, this is a coalition – and not a LibDem Government – and in coalitions compromises must be made. You make a series of manifesto commitments, and when a coalition is formed, you ‘trade’ some commitments in return for safeguarding those that are precious to you, to your party, and to its voters. Voting reform is one such ‘line in the sand’ issue (though since the election Nick Clegg has, incredibly, suggested that this is not necessarily so); tuition fees – the one policy that was made the subject of a pledge – was surely another. If that is not so, then which of our promises is inviolable? Of what can we say ‘enough, no more’?

What is worse – far worse – is that LibDem ministers have been the architects of this policy. They could have stood aside on the issue and abstained – better still they could have opposed the changes, as they had campaigned to do. Instead, they championed the change – Clegg, Cable and Alexander were forever seen before the cameras, while Cameroon and Osborne hid in the shadows. What is worse: that they now believe in this policy having been so against it before the election; or that they are misguided Tory ‘stooges’? I don’t know. The ‘revolt’ in the party was half-hearted and there has been no move since the vote to hold the party leadership to account, to get a firm undertaking on those other ‘line in the sand’ issues. When the electorate asks us ‘How can we believe any promise you make when you have broken this promise’, what are we to reply?

Looking at the proposal in policy terms, can a case for a rise be made out? Was it the only alternative? Can we justify letting down the electorate so badly? I don’t think so.

It is true that tuition fees were introduced by the last Labour administration, and that the present Opposition is confused about what it would do if in government. And it is undoubtedly true that the NUS's proposals on the face of it seem little different to what is being proposed by the coalition – certainly in terms of landing graduates with a lifetime of debt. But if we are to measure ourselves against those benchmarks, then we are indeed setting our sights very low.

The LibDem leadership has backed the measures as being more progressive and fairer than the current system, including as they do ending the discrimination against part-time students; making sure that graduates do not start repayments until they are earning a suitable wage at a higher level than they do now; and ensuring that the lowest earning graduates will pay back less overall than they do currently. Elements of what is being proposed are undoubtedly fairer than what is currently in place.

But by introducing fees at all, you immediately put in place obstacles to opportunity: those who go to university will in the first place be chosen (whether by self-selection or by the universities) by their ability to pay and not by their ability to learn. A young person contemplating university will not know in advance whether they will be able to afford the cost in 10 or 20 years’ time. This must operate as a disincentive.

There is an alternative – the one that is current LibDem policy. The fact is if higher education is free at the point of source (paid for by general taxation, or by an increase in corporation tax on larger companies, or a levy on bankers’ bonuses), then everyone has an equal opportunity to take advantage of that education: what could be fairer? And if, as a result of a university education, a graduate gets a better paid job, they will spend their entire working life paying higher income tax and thereby paying back the cost of their education – and contributing a greater proportion than lower paid non-graduates to the cost of educating future generations. How is that not progressive? When it came to making the case for the Coalition policy, that it was a fairer system than that currently in place, none of the LibDem ministers I heard addressed the question whether current LibDem policy was fairer. What the Coalition is asking you now to accept is that graduates should pay twice over – directly by paying back their tuition fees and indirectly by paying higher taxes.

Those who support the rise (particularly those on the Tory Right – and perhaps the fact that they are being so quiet on this issue should set alarm bells ringing) believe there should be a free market in everything, including education. They believe that this move 'empowers' the students/consumers – that universities/suppliers will be forced to become more answerable if the ‘consumer’ is given greater choice. Of course, this does nothing of the sort because – judging on the experience of last year – the demand for courses far outstrips their supply – the consumer is therefore burdened with greater debt without being given any more 'buying power'. There is no marketplace in education where the consumer is king: as we saw when our transport network and public utilities were privatised, we are replacing a state monopoly with a modicum of regulation with a private monopoly where – in the absence of real choice – there is no regulation.

Raising the threshold for when the debt becomes repayable by £6k but the debt by £20k will only serve to burden families with debt for the entire time they are raising their children. Their children will be constrained in their own university hopes by their parent's loan debts. Graduates may well be paying off their loans when they are grandparents. At the same time as being saddled with increased debt, the quality of education will steadily fall year on year as the cost of 'voting with our feet' or 'competition' bites. People will not go to university and aspire to the best course but the cheapest, most likely out of necessity.

A whole generation of students are likely to move abroad rather than saddle themselves with huge debts – to the United States where fees are a third of the current cost in England, and to English-language courses in Germany, Holland and Scandinavia – where fees are a fraction of what they are here. In France, graduates are paid a salary – the future value of well-educated graduates to the well-being of the entire nation is seen as worth the investment. And once our undergraduates are gone, many will not return – a lost generation of research, innovation, wealth generation, revenue creation. The country will be the poorer.

By withdrawing funding for higher education – 80% cuts while those in other areas amount to on average 10% - the government will be abrogating any right it has to a say in the future direction of higher education. It will be abandoning its responsibility for ensuring that the UK has a workforce trained in the way that the country requires.

And aside from the damage in education terms, there will be other knock-on effects for our economy. For example, graduates burdened with loans will have less to spend on consumer goods, thereby damaging our manufacturing base. They will put off taking on a mortgage and will ‘sit tight’ rather than enter the housing market – thereby damaging the UK building industry for generations and driving down house prices. Overall, national revenues will decrease and spending will be constrained – none of which is good for the long-term wealth of the UK. All the evidence suggests that how much a government spends on higher education is directly related to the wealth of the country – wealth from which everyone benefits.

And what will the country gain by this ideologically-driven move effectively to privatise higher education? The loans students are required to take out will be tripled, and students given longer to repay the loan: that means the Government – the lender – will have to take on more borrowing, and more expensive borrowing, to service those loans. This move could actually end up costing more than it will save.

So is this simply the result of the see-saw nature of coalition government – or is there something more significant – more sinister – at work? It is difficult to escape the conclusion that Nick Clegg has imposed a ‘the state is the problem’ mentality on the party. More and more we are hearing – from our leadership and elements within the Tory party – that the traditions we hold dear have much in common with the Tory mantra of the ‘Big Society’ – rolling back the state, devolving power to the lowest possible level, empowering the individual. But while for the Tories this has echoes of ‘there is no such thing as society’ (the ‘creative chaos’ of individual decision-making), that only the strongest deserve to thrive and that the market will provide (hence their reluctance to get tough with the banks and their enthusiasm for deep public sector cuts – a belief that the private sector will do the job so much better, and where it does not do so volunteers will step in to fill the gap), I had thought that for the LibDems there was a belief that this freedom from state control would be tempered by ensuring that the most vulnerable in society would be protected at all costs – a spirit of mutualism, community and solidarity.

But looking just at the headlines from the week following the tuition fees and EMA fiasco gives the lie to this assumption. On Monday, we learned that the pupil premium will not be made up of new funding, but a reallocation of existing resources. On Tuesday, we are told that the poorest councils will suffer cuts of up to 8.9% while some of the richest will get an increase; on Wednesday, we hear that more than 900 primary schools could be closed as they fail to reach ‘standards’ regardless of how good a job they are doing elsewhere in providing an all-round education; on Thursday, 100,000 public sector job losses are forecast and another 100,00 in the private sector (that is meant to absorb those public sector losses); and on Friday, the IFS estimated an extra 400,000 people living in absolute poverty in 2012–3: 200,000 children and 200,000 working age adults (one in five 18–24 year olds is already without work). Recent announcements relating to the health service (eg ‘empowering’ already overworked doctors to make purchasing decisions – a power they will be forced to delegate to the private sector) support the proposition that the Coalition Government believes that all aspects of our lives can be made the subject of market forces – and an unjustifiable belief that equality will inevitably follow in its wake.

The Tories are using the recession to unleash a radical overhaul of the state – zealously cutting with no real idea of what will grow in its place – an experiment in social engineering. They are ideologically committed to this programme, and would have implemented it regardless of the recession – the recession has provided them with a convenient smokescreen. We have allowed ourselves to be swept up in their excitement, with little thought being given to those who will be left behind. We are thrown a few crumbs of comfort – but these have been offered not as considered policies but as an after-thought (EMAs would be replaced by a mysterious ‘something’ more effective). Cut first, ask questions after.

I remain of the view that there are some things that only the state can provide effectively, and that those things should be ring-fenced and paid for regardless: free education, a free health service, a pension that gives the elderly dignity, a robust public housing sector so that every young person has a decent start in life – the list goes on. Are these affordable? Certainly when one considers that income tax revenue is at an all-time low and large companies continue to make mouth-watering profits (just look at the profits announced by the once publicly-owned utility companies, while fuel prices are hiked during the most severe winter on record). We can afford it: it just depends where our priorities lie.

And what of voting reform? The country has seen how coalition government works – and they don’t like it. They don’t like the fact that an unequivocal promise that was a defining issue for many voters can be traded in the back rooms and corridors of Whitehall. They feel disenfranchised. If voting reform promises more of the same, the electorate will decisively vote it down in May.

This week we have had the unedifying sight of Vince Cable boasting that he had so much power that he could ‘bring the government down’ by walking out of the coalition. Well, he has had plenty of opportunities. Not only when the party abandoned its promise to scrap tuition fees in favour of voting through a crippling rise in fees. How about when the party overcame its opposition to nuclear power in October to approve the construction of eight new nuclear power stations? How about when the party compromised on proportional representation to campaign for a watered-down version of electoral reform, in the form of the alternative vote? When Green party MP Caroline Lucas sponsored an amendment, calling for true proportional reform to be included on the ballot paper for the referendum in May, Lib Dem MPs voted unanimously against it. This is yet another example of Lib Dems talking the talk, but not walking the walk. While those in government can plead the need for collective responsibility in these troubled economic times, those on the backbenches have a duty to speak out for Liberal values. They have conspicuously failed to do so. We hear that some are privately unhappy with what has been done in the name of their party – but how many have spoken out in public? How many have been prepared to vote against the government? When we look to David Davis to uphold liberal values, then we know something is seriously amiss.

I know many will share my concerns about some of the decisions that have been taken by the Coalition, and by the LibDem members of that coalition. Many will have been members of the party far longer than I have – and have seen the party – or its leadership – drift from its grassroots supporters – but have remained in the party to remind its leadership of the party’s proud radical tradition. And many will point out that – despite the difficult few weeks we have endured – we are as a party in a far better position than we have been for generations. You may well be right, and you are undoubtedly made of sterner stuff than I am – but I fear that the leadership are consciously taking us in a direction that will lead ultimately to the party’s demise (either at the ballot box or in the smoke-filled rooms of parliament); and in the meantime, I have no convincing argument for why the electorate should continue to support us. Nothing would please me more than to be proved completely wrong.