Categories
politicalbetting.com » Blog Archive » Shouldn’t our governments govern?
politicalbetting.com » Blog Archive » Shouldn’t our governments govern?
George Osborne turned lobbyist this week. Despite the fact that he is, in theory, one of the most powerful members of the government, his advocacy of an above-inflation increase in the minimum wage carries virtually no weight. Why? Because he doesn’t set it – and nor, in effect, does anyone else in the government. Rises are done on the recommendation of the Low Pay Commission and while ministe…
0
This discussion has been closed.
Comments
A pleasing way to crack open the weekend ....
A very decent performance from Murray who hasn't lost a set and seems to be playing himself into the tournament rather well.
And if you were a cabinet minister so would you, and so would I, and so would OGH - or any other Peebie. It's human nature to seek to avoid taking responsibility - that's why it's considered morally good to face up to it. If it were as natural as breathing no one would commend it.
What you highlight is part of a wider problem. Politicians organise things to suit themselves (and all parties do it) and even try to pass this off as responsible behaviour. And indeed if the next "plague on all your houses" party - after UKIP implodes - were to run on a platform of abolishing politics and politicians by creating a technocracy of "impartial experts" would you really be surprised to see it polling at 20% or even 30%? I wouldn't...
The Swiss system casts light on this too. There, nearly all important decisions (and many unimportant ones) are delegated to the electorate. Huge efforts are made to see that voters are thoroughly-informed - every household gets a booklet with pros and cons written by each side, almost worthy of a Civil Service briefing, and the media discuss the issues in depth. Turnout in the quarterly referenda is often fairly low (30%ish), not necessarily because of lack of interest but because the culture is to vote only on issues you think you have an informed view about. Extreme groups have a chance to put ideas and sometimes win, adding risk but giving them a stake in the system: even a communist or a fascist can hope to get a modest idea through.
The big downside is that even a well-educated population schooled in responsibility isn't expert in whatever they're looking at (but then nor are British polticians, though they are at least full-time). The upside is that people take responsibility for policy in a way that just doesn't happen here, even when they lose - people say "Regrettably, we have decided..." like a dissenting cabinet minister. A side-effect is that political parties and MPs turn into think-tanks - their main role is to advise voters who like their general philosophy about how it applies in this case. Politics becomes low-key, intellectualised and mostly less partisan.
But, in David's ternms, the government are governing - it's just that the government is the electorate. Farming out the decisions to commissions would be seen as quite alien.
So it's not just about political courage and responsibility, it's also about the mechanics of making a decision which can withstand the inevitable legal challenge. HS2 has got off fairly well on this, who doesn't think the Heathrow decision will end up the courts? Our council made a difficult decision recently which was overturned by judicial review on a technicality. frustrating ( as I supported it!) but also because this was an example of the public reps trying to take respnsibility but being denied the power to do this. So we need a legal revolution as well.
Couple of questions, if I may, on Swiss referenda.
First, who decides which questions to put, and second - does Switzerland have the death penalty?
Curzon turning up with the draft to cabinet is related in Duff Cooper's diaries - Cooper at the time was an official in the section of the Foreign Office dealing with Egypt. He wrote on 11 July 1921 "We circulated to the Cabinet this morning the final draft of the Egypt Treaty chiefly written by Curzon himself. The [Egyptian] delegation arrive this evening."
In the end, the negotiations were inconclusive so no treaty was signed and Britain unilaterally declared Egypt's independence on Britain's terms in February 1922:
http://en.wikipedia.org/wiki/Unilateral_Declaration_of_Egyptian_Independence
I also agree with @tpfkar that our modern practice of imposing bizarre obligations of consultation etc on such bodies and then opposing parties getting lawyered up and challenging those decisions through courts who are far too willing to intervene is an absurd way of seeking to weed out poor decisions. In my opinion it far too often results in those with the deepest pockets having too much of a say.
So governments need to simplify, get rid of quangos and be careful about the legal requirements on decisions. In fairness the Coalition did a significant chunk of this in their early days in office but the mindset is deep set in Westminster and there has been slippage since.
Clearly, UK banks actively hinder SMEs. That may be one of the main reasons why this country is so bad at nurturing SMEs - especially cost-heavy ones - and helping them to grow into something larger. This may also help to explain why comparatively UK business has such a dreadful record in investing in research, IP creation and product development: it's a risky upfront cost that is unlikely to yield returns for a while; so it is something that banks will not help to fund.
Thus, the banks are one of the main reasons why we find it so hard to compete internationally in so many areas, despite the export advantages the decline in the value of the pound has brought us over recent years. This means they help to sustain and encourage the culture of marginal cost savings above all else that blights this country's management ethos. After all, it's not as if we do not have the raw resources to be a global innovation engine - our universities continue to be among the best in the world and, silly immigration rules not withstanding, continue to attract top class talent. But all too often the brightest and the best are forced to move on elsewhere.
In short, although he may not yet have the detailed answers, banking reform is something that EdM is absolutely right to be highlighting. Hopefully, once again, he will force the government into looking seriously at it too. Instead of sniping about his lunacy, his Marxism and his all-round crapness, Tory supporters here and elsewhere (especially those in business) would do better to take on the baton and develop their own solutions to what is clearly a major problem.
We are never going to win a race to the bottom in terms of salaries, hours worked and job security - whatever some would like - so we have to compete globally in different ways. If the banks are hindering this - and the evidence is that they are - then they need to be reformed.
Some related food for thought:
http://www.iam-magazine.com/Blog/Detail.aspx?g=dfe5e27b-8630-4a4a-be32-66284ec7936f
Ofgem, for example, takes the detailed decisions on energy market regulation. That's not surprising - it's an expert task, seeking to understand hugely complex contractual relationships, and to balance incentives to invest in infrastructure and costs to consumers. Because they publish full reasons, make decisions by committee, and can be appealed, it limits (although doesn't eliminate) the risk of money in brown envelopes and favours for friends.
But, to the extent Ofgem is perceived to have failed, that's a problem for the elected Government. Nobody absolves them of responsibility - the argument is they should have supervised better, put feet to the fire, given more appropriate tools to regulate the industry and so on (and should fix it for the future).
On the minimum wage, this is complicated by the fact that the ministerial approval (or not) sits with Cable. That, in itself, limits Osborne and is about coalition rather than technocracy (although in this case, Cable probably broadly agrees with Osborne and this is an Osborne strategy to get credit for his own party when the rate increases).
But I don't really think it wrong that the Low Pay Commission makes the initial recommendation - it isn't a "finger in the air" question; it draws on economic evidence about the strength of the labour market, and possible employment and competitiveness impacts in particular industries. But, if the recommendation is less than generous, people on the minimum wage won't get furious with the LPC - it'll be the Government, and Cable will be under pressure to overrule.
"Those who support the transfer of power from here to supranational institutions should logically accept that our pay should reflect the diminution of our responsibilities. But, strangely, all the Euro-enthusiasts whom I asked to sponsor the Bill declined to do so without explaining why. Too many Members are happy to avert their eyes from what is happening, so long as they retain the prestige and emoluments that were appropriate to a fully sovereign Parliament."
http://www.publications.parliament.uk/pa/cm200708/cmhansrd/cm080603/debtext/80603-0004.htm
If, on the other hand, banks start taking shareholdings in their clients to improve the risk/reward ratio there are several other downsides. From the bank's point of view there is the conflict of interests which can arise clouding investment decisions. From the clients' point of view there is banking capture where changing banks becomes very difficult.
In my view the solution to these problems is a much greater choice of bankers willing to provide facilities at short notice if required. Rather than getting bogged down with long term relationships that do not necessarily benefit either party businesses should think of their banking in the same way as they do their electricity supply or suppliers of raw materials. They should be constantly checking if the service and facilities they are being provided with are what the business requires at this point in time and whether there are better options available.
I have had many meetings with clients wanting to complain and sue their banks in recent times. In many cases the banks have indeed behaved very badly indeed. But the mindset of the clients is that the banks owe them some sort of a moral duty or responsibility to be fair when they simply don't. Many are genuinely shocked when I point out that there is no obligation on a bank to roll over a lending facility or not to enforce the terms of the contract the client signed if it is in the bank's interests and they simply want to reduce lending.
These experiences suggest to me that the problem is that the businesses had no other options. They were trapped by an environment where a struggling business simply has almost no chance of obtaining alternative banking and is stuck with the terms being offered no matter how penal. In my view that is what is what needs to change. Pretending bankers are ever going to be nice is a delusion. They have no more obligation to be nice than any other business.
This takes us to David Herdson's piece - EdM has put his head above the parapet and identified a significant problem; even before he did it those who oppose him politically were lambasting him for doing so and identifying all the reasons why change is so difficult. And, to be fair, when the right makes a case, the left jumps down its throat immediately. Is it any wonder that politicians delay decisions or push them onto other "experts"?
I did not see Miliband's contribution enormously helping with this although I do agree that a first staging point to a more competitive banking structure is an increase in the number of banks. I also agree that the Lloyds TSB coalition was a mistake and needs to be undone. RBS in my opinion should have been split up years ago and the reluctance on the part of the government to accept the pain (in terms of a capital loss) and to ignore Hester has significantly delayed the recovery as that bank has correctly (from its own perspective) focussed on reducing its balance sheet.
I am disappointed with Cable's contribution to this. Banking reform has been too cautious and too slow. Osborne eventually faced down and removed Hester but it took too long. Politicians that were more used to taking decisions and accepting the consequences for good or ill on their own account might have moved faster. Isn't hindsight wonderful? No wonder politicians are cautious.
The culture is that if a referendum narrowly fails, the Government should try to adapt policy to give some comfort to its supporters. For example, a proposal by a pacifist group to abolish the armed forces (in view of the lack of conceivable opponents) surprised people by getting 40%. The Government responded by cutting spending on defence, so the supporters felt they'd got something out of it.
Another part of the culture is to look at the idea, not its proponents. The Basel Communist Party (typically <0.5% of the voters) proposed a ban on new inner-city multi-story carparks, to discourage people from driving instead of using the trams and buses. People thought this was a reasonable idea, albeit from a group they would never consider supporting, and it passed and is now Basel city policy.
By doing this, it is making parliament and MP's more responsible for decisions taken, which would hopefully reduce the power of the executive.
I think Ed is a poor leader who all too often reaches for the comfort blanket, but he really is onto something with this idea of the current system not working for anyone but an elite. And that's largely because it is true, not least because the government he was part of so spectacularly failed to do anything about it. Where Ed should be is behind the scenes, developing this theme, for a better, more convincing politician to build on. But as he is out front, what I hope is that others in Labour and in other parties will see this as an opportunity to engage in a real debate, rather than to throw brickbats.
Again in my own field, in parts of Asia governments are looking much more closely at financing on the back of IP. It is complicated because it is highly technical and valuation is very difficult - but it is not impossible. Because of the way things work over there they can lean on banks to take the issue seriously and to investigate. Similar things are beginning to happen in Germany and soon we'll see it in France too, I believe. Over in the US, a number of new IP-based investment vehicles are emerging. Lending against IP might make sense for a lot of small businesses whose principal assets are tied up in know-how, patents and R&D, but in the UK because of the way the banks work there is no incentive for anyone to look at it closely - even though the IP Office (well done Vince) has produced a really interesting paper on the subject:
http://www.ipo.gov.uk/ipresearch-bankingip.pdf
Many thanks for a very cogent piece.
We seem to be in an age of selling independent thought/opinion/facts to the public when it is in fact usually biased.
For example, all these Comparison sites that are so heavily advertised are biased (I know the person who set up Uswitch) as they only advertise providers from whom they receive a commission.
In the same way there are panels of 'experts' who are used to study a certain matter or inquire into it and in fact often rely on such expertise for their income. If such expertise is reliant on HMG funding, then the conclusions of such panels is very often biased.
The old HoL (and no attendance allowance) had a lot of merit as the members were able to use their experience in a financially unbiased manner.
I agree with DH, that our MPs should take more decisions and not leave these in effect to unelected panels or boards. If our MPs do not want to take such decisions then their continued presence in the HoC and their remuneration should be questioned.
The national credit register idea for SMEs might, depending on the details, be a step in the direction I have indicated of a more liquid market for bank lending. The transfer of branches strikes me as more problematic and somewhat simplistic.
I would agree with you though that this is an area where the Coalition has moved too slowly and it is the sort of thing an opposition should be looking at as a result.
My number one criticism of Ed would be that he spins out these thoughts as a sort of policy wonk and then they seem to disappear. The hard work of developing practical policies around them is not being done, at least anywhere the public can see the results.
http://www.bbc.co.uk/news/health-25055444
If not why not? Was it never previously available? Or was it something they never did?
For the record I'm pleased they do it holds people to account.
Betting PostBacked Robredo to beat Wawrinka at 3.4 with Ladbrokes. He has a 6:1 record, 2:1 on hard courts and has won their last three meetings (two of which were last year).
The US goes a bit far the other way - the Government can't get most proposals considered unless the relevant committees clear them. Allowing both to put forward proposals would be a happy medium.
DavidL - the point about detailed policy apparently not being carried out by the opposition is partly the same issue that we discussed over the European Parliament: the media are not intereted in detail, so anything after the initial broadbrush announcement simply doesn't get reported. There is quite a lot of policy work going on. That said, Oppositions do tend to set out broad brush ideas which then get honed down (or indeed changed) by the civil service if/when they get into office.
Kinky Knickers firm goes into administration.
http://www.bbc.co.uk/news/business-25781549
Purely coincidental with the decline of the alleged activities of a LD peer?
Unite Looks After Its Own
The Unite union has confirmed that it has employed Stevie Deans, the former union convenor at the Ineos petrochemicals plant in Grangemouth.
Mr Deans was at the centre of a dispute at the facility at the end of last year which almost led to its closure.
He had been the subject of an internal company disciplinary procedure linked to the selection of the Labour Party candidate for the Falkirk constituency.
He resigned from his position at the plant following the dispute.
Unite said Mr Deans had started work on a temporary basis to cover the duties of an official on secondment.
It said it has been trying to get Mr Deans to work for the union for a number of years.
http://www.bbc.co.uk/news/uk-scotland-25787095
1) No titles since 2008
2) No podium at all in 2013
3) Whitmarsh seen as too nice/soft
4) senior technical staff leaving (Fry, Lowe)
It was coincidence, almost certainly, that he took back the CEO position on the same day that Ecclestone's German trouble was announced, but one imagines Dennis was rather pleased all the same.
No direct comment yet, but everyone seems to think Whitmarsh will be shifted sideways within McLaren and someone else (Brawn's possible but perhaps not probable) will become team principal. It'd make an already intriguing story even more interesting if Brawn did become McLaren's team principal, but I suspect it won't happen.
http://hitchensblog.mailonsunday.co.uk/2014/01/blairite-openly-endorses-cameron.html
http://www.bbc.co.uk/news/uk-politics-25792289
"Oh my god we're top price, and we're laying a huge bet"
"How much ?"
"Massive, should we approve it or not ?"
"I'm not sure, you'll have to ask a senior trader to come over"
"Wow thats the biggest bet we've had in on that horse."
"OK We'll approve it this time but put the account on the watch list"
"£2.50 e/w approved..."
I am thinking of a situation analogous to that of the BNP winning seats in East London a few years ago and the very high turnout at the next election to get rid of them.
http://www.telegraph.co.uk/news/politics/labour/10581343/Labour-MEP-candidate-Del-Singh-killed-in-Kabul-suicide-bomb-attack.html
The lack of precision over dates is rather curious, and there is no reference to his successful court case to clear his name.
In recent years, Lord McAlpine was wrongly implicated in a child abuse scandal, when the allegations were the subject of a BBC Newsnight investigation. The allegations forced the BBC's then director-general, George Entwistle, to quit less than two months into the role.
http://www.bbc.co.uk/news/uk-politics-25792289
http://jamesracing.co.uk/
Whilst I agree with the points you have made through out this two year off and on discussion there are couple of things I don't understand (actually when it comes down to it there are lots and lots of things I don't understand) but let me just put up two for now.
If HMG creates two new banks where will the capital for those banks come from? Will it be new money or will it be seized from the banks from which the new ones have been ripped? If new money where will it come from? If existing how will the stock of funds for lending be significantly increased?
Splitting retail banking from investment banking seems like a jolly good idea and it worked here and abroad for many years. However, will it not lead to the contraction of available credit? If the retail banks are to just do the routine taking in of deposits and loaning the cash and are to be size limited there is going to be quite a low limit on how much they can lend both to businesses and to SMEs. Is there not a danger that we could go back to credit rationing, and thus defeat the supposed objective of the whole exercise?
The days of Arthur Mainwaring as the local bank manager seem very appealing but in reality they weren't that great and the world has changed.
(edited for silly typos)
In no way is it an appropriate way to gather data to present a full picture about hospital performance. People are far more likely to report problems than successes and consequently the results will be badly skewed (at best)
The BBC wants to make news rather than report it.
Where the politicians need to step in that the technocrats sometimes get stuck in their own rut, where there are things that everybody knows need doing but institutional barriers have built up to doing them. At that point the politicians should say they're going to change it, get elected and fire / reorganize / override whichever technocrats they need to.
I'm suggesting we create more than two banks to restore competition we need to back out of a position where two banks ( RBS and LBG )have 40+% of some of our credit markets. Anything above 15% for a company tends to drift towards a monopoly position. We need a series of banks with nor more than say 5%.
The capital for these banks we have already paid in the recession. I'm afraid we've spent the money. The issue we have is do we follow the GO route of leave the big beasts in place and try to privatise them in the short term or sit on the capital longer and restructure them for the wider benefit of the economy. My preference clearly is for the second. As a note I don't think just breaking banks up per se will not solve all our problems, clearly it won't, but I do believe it will lessen them significantly and create an environment where regulation is underpinned by competitive pressure. It's the point I made last night the control of pricing in oligopolies tends to be pricing for profit as opposed to pricing to win business.
As for your second point, yes there is that risk and ultimately that depends on how a split is managed. Clearly the retail banks need to be better capitalised. However I would suggest that if the mega banks have been feeding capital from retail to other operations this has simply been a covert way of gaining access to more funds to play international markets. If the markets they wish to play are that profitable then they should do what they should have done in the first place and raise fresh capital to gamble on their own accounts.
I don't suppose we'll be heading back to the halcyon days of Warmington on Sea, technology and the world have moved on, but the interesting thing of this debate has been the way the banker fans have lined up to defend the producer and have put the needs of the customer to one side. SMEs remain one of the powerhouses of UK jobs, innovation, prosperity and bluntly tax revenues which multinats avoid. That we seem to want to ignore ways of increasing their prosperity seems bizarre to me.
Taken to extremes, this seems just as bad an idea as a government of unelected technocrats
Fair go, Mr. B.,but what if it has been the other way round and I do seem to recall reading it has been that in recent times the profits form the investment banking has been propping up the retail arm.
"Clearly the retail banks need to be better capitalised."
Yup, and that is happening - though quite how banks are supposed to improve their capital holdings and at the same time expand lending has never been explained in a way that I can understand.
The importance of the SME sector to our national well-being cannot be gainsaid, though Vince Cable and the chumps in his department seem to want to do so. However, is there any actual evidence that businesses with a sound plan cannot get credit. I haven't seen any and in my personal experience it has been the reverse with banks trying to push borrowing on to firms that don't need or want it.
The other big issue and probably bigger is cash flow, surely the life blood of any industry and where so many SMEs suffer he most. If HMG really wants to make SMEs a better risk that the banks will take on this is an area that they could, quite cheaply, address. Force the big companies to pay their bills on time and the effects will ripple through the economy very quickly.
.