Monthly Archives: January 2012

Why aren’t landlords “in this together” as well?

The government’s response to its defeat in the Lords last night over benefit caps has been notable for its lack of substance. Iain Duncan Smith has taken two lines: that the policy is enormously popular, and that Bishops and left-leaning peers ought to be as concerned by the people paying for the benefits as they are of the people who receive them.

The popularity argument is, well, true. But it is a pretty hollow one. It is hardly surprising that public attitudes have hardened following years of rightwing propaganda emanating from what passes for the British press and, given the small amounts of money involved, this is rather a bread and circuses argument. Throw a couple more Christians to the lions to keep the plebs happy.

They are on stronger ground when they argue that peers ought to consider the needs of hardworking taxpayers more. But this looks like crocodile tears from the Conservatives who appear only willing to raise regressive taxes like VAT, are pressing to cut the upper rate of income tax and won’t even consider the introduction of wealth taxes. The fact that Vince Cable’s Mansion Tax is considered radical within the cabinet, which would only be levied on properties worth over £2 million, shows you how far we need to go to make the case for a fundamental shift from income to wealth taxation.

Fundamentally, this cap saves very little (and may even cost money), applies only to especially large families and undermines the concept of a universal child benefit. It is ironic that Iain Duncan Smith, the great proponent of symbolic taxes designed to encourage marriage is attempting to force through a benefit change which would give the poorest a major financial incentive to break up their families. It is a complete distraction from the real debate which is needed about benefits reform.

One thing that appears to be getting lost in this debate about the benefits bill is how much money is being wasted not to help the poor but to subsidise the privileged. I touched on the way the welfare state subisidises large companies who refuse to pay decent wages – thus ramping up the tax credit bill – last week. When it comes to housing benefit, too few politicians seem prepared to question why we are shelling out so much money which goes straight into the pockets of private landlords and only propose to tackle this issue by forcing people into worse accommodation.

This blind spot isn’t limited to the coalition; after all the housing benefit explosion continued unabated throughout the Labour years. The only justification for it appears to be that policies designed to tackle this problem at the landlord end of the telescope might harm property prices. And property prices help drive the economy.

There is some truth to this: no-one doubts that a collapse in property prices would damage growth. But it does rather bring all this talk of “ethical capitalism” into perspective. Because who is actually benefiting from this racket? Not taxpayers, who have to pay inflated housing benefit bills. Not the poor on welfare, who don’t see a penny from this spending. Not hard working people struggling (and mostly failing) to get onto the first rung of the property ladder. The beneficiaries are, once again, the very people who have managed to insulate themselves from every other aspect of the economic downturn.

If the introduction of land value taxation – which would discourage the speculative ramping up of rents – is not to be contemplated, then the very least we should be considering is the return of rent controls. The introduction of such a policy would mean many more winners than losers. The only real barriers to doing so is dogma about distorting the housing market (which one could argue has already failed chronicly) and fear about how the financial sector might react in its customary intimidatory way.

Instead, we seem hellbent on driving through policies designed to stigmatise the poor and provide everyone with less security. Until politicians on all sides are prepared to take on this beggar-thy-neighbour form of rentier capitalism, I won’t be getting too excited by this ‘new ethics’.

Why Zoe Williams’ tale of Tesco subsidies only tells half the story

Zoe Williams makes a good point in the Guardian when she questions why the taxpayer effectively subsidises companies like Tesco by paying out tax credits which would be unnecessary if they paid decent wages, whilst executives reward themselves massive bonuses from the profits they make as a consequence. There is clearly something wrong here.

But she only tells half of the story.

Yes, allowing highly “profitable” companies pay low wages is a scandal, but so is artificially increasing those wages by imposing income taxes on low incomes. This is effectively a dead weight cost on labour; neither the employer or employee benefits from it. It artificially raises the minimum wage which, in turn, strengthens the hand of those who would have you believe that the national minimum wage is an unacceptable burden on employers. And it undermines Zoe’s argument; that subsidy she alleges is at least in part coming out of the very low wages she is so critical of.

For this reason, it is absolutely crucial that personal allowance is raised to ensure that, eventually, no one on a living wage should be paying income tax. The coalition government has already made a start on this, and should be encouraged to move as swiftly as possible.

It would be nice to think that such a policy measure would be entirely uncontroversial; sadly it is not. In 2010, Left Foot Forward teamed up with the Fabian Society to produce a series of articles designed to prove that such a policy was one of the least fair and most regressive policies ever devised. On the narrow point about higher income earners gaining more from the policy than lower income earners, they had a point – although their manufactured outrage rings hollow in light of the new Labour orthodoxy about sticking up for the “squeezed middle”. In any case, this could e easily solved merely by lowering the higher tax rate bracket by the same amount as the personal allowance increase, which is indeed what George Osborne has done.

But it represents a wider failure of imagination on the part of Labour thinkers; that is to restrict their definition of fairness to purely one of income distribution. I strongly agree this is an important factor, but it would be a profound mistake to make this the only fairness test in public policy. Any tax policy which has the effect of making it more affordable for employers to pay people a decent wage should be championed; the public purse should indeed be used as a safety net, but it is simply madness to create a system such as the one built by Gordon Brown in which money unduly paid out on low incomes is recycled to top up the pay of people on low incomes. This is Alice in Wonderland economics – and that is even before you consider the billions in unclaimed benefits that this shockingly complex system effectively deprives people of each year. Surely even the most staunch statist cannot rationally argue against the inland revenue butting out at this point?

In short, we have a right to expect corporations like Tesco to pay decent wages to their employees – but Tesco have a right to expect the state not to have policies in place which actively discourage them from doing so. Both the government and corporate sector need to take action here, while Labour needs to decide which side they are really on.

Why Charlotte Henry’s purity test of “real” liberalism is misguided

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Charlotte Henry has a curious article on the Total Politics blog, suggesting that Clegg’s speech on a more participatory form of industrial democracy will help us to seperate the “real liberals” from the “SDP-statist-sandal wearers”.

There are several problems with this diagnosis. For one thing, the famed “sandal wearers” and the SDP members are very different people. Indeed, when I joined the party in the mid-90s, the two were at daggers drawn. The “sandal wearers” – a term generally used to describe the aging young liberals “red guard” of the 60s and 70s would cling to their copies of Liberator, openly mocking the “sogs” who had produced their own Reformer (which eventually became the house organ of the Centre for Reform) in response. The two groups could not have been more different; indeed, if anything it was the SDPers – with their support for “the Project” – who were perceived as more rightwing than the basket weaving liberals, the latter with whom I personally identified more closely with at the time. Indeed, the forerunner to Liberal Vision and the Orange Book, Liberal Future, was an odd hodge-podge of SDPers and former pro-Euro Conservatives.

A decade and a half later, the people on both sides of that rather silly schism have moved on. A great many SDPers now identify closely with the what is lazily known as Orange Book tendency as well as the Social Liberal Forum. The people from the liberal wing of the party find themselves on both sides of the debate as well.

But is there a disagreement with them on employee-ownership schemes? I don’t see it. The first Social Liberal Forum Chair Richard Grayson, who is quite proud of his SDP heritage, was especially keen that we take on the task of reviving industrial democracy as a central plank of the Lib Dem platform, and argued to this effect when the party was drawing up its last manifesto (indeed, one of the SLF’s first meetings was on this topic).

Much as I might like to pretend that the more classical liberally inclined members of the party would have a problem with Clegg’s speech, I doubt it very much. I would humbly suggest that this is probably for two reasons: 1) the people Charlotte feels free to take potshots at may be rather more liberal than she assumes and 2) there is probably rather more to unite the party than some of our more factional members like to think.

As David Howarth points out in Reinventing the State, the party is essentially social liberal – the only real dispute between groups like the SLF and the Orange Book tendency is a rather pragmatic one about what method of public service delivery works best (admittedly, this is a debate which can get pretty heated at times; rightly so, given the stakes). There certainly is a fairly deep schism between those who identify with a narrowly defined view of classical liberalism and the rest of the party, but you can count the number of these people on the fingers of one hand.

Calling people out on some kind of “real” liberal purity test is self-destructive at best and claiming employee-ownership is likely to be a sticking point is to fundamentally misunderstand the real debate within the party. Let’s not try to make up disagreements which aren’t there.

The Unions are “too big to bail”

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Even by Ed Balls’ standards, the mess he has got himself into explaining Labour’s economic policy really is quite spectacular.

As far as I understand it, Labour’s policy hasn’t actually changed. They are opposed to the way the government is tackling deficit reduction but accept they are unlikely to be able to reverse all the cuts they oppose after the next election. But Balls appeared to somewhat overegg the pudding over the weekend when he stated that his “starting point” is that Labour would have to “keep all these cuts”.

Milliband, Balls and Harman have since clarified, ad nauseum, that that this doesn’t mean keeping every single cut, just that they can’t all be reversed. But nobody seems to be listening. It would appear that half the Labour party are up in arms over what they perceive to be a massive u-turn. The reality is that Balls has spent the last 18 months looking in every direction on the economy while saying nothing of substance; this is merely the latest iteration.

It is the lack of substance that ought to be worrying Labour supporters; instead it is a statement of the bleeding obvious that is exercising them. Rightly or wrongly, if they won the next election they would be inheriting a deficit which they were committed to reducing even before the last election. The idea that they could do that while spending all their time reversing the previous half-decade’s worth of cuts is laughable. Yet a great many people appear to have seriously believed that was Labour’s policy.

Chief among them are the union general secretaries, with first Unite’s Len McClusky and then the GMB’s Paul Kenny putting the boot in today. Paul Kenny’s intervention was the most silly, threatening as he did to disaffiliate from Labour altogether.

Let’s get this right: a far left union which tolerated Tony Blair for a decade is seriously considering leaving Labour in the lurch having imposed on the party a leader which most of its MPs and member didn’t actually want. Seriously?

The truth of the matter is that the unions are, to coin a phrase, too big to bail. It’s their own fault. Back when the Labour-union link actually meant anything, there were hundreds of unions all vying for attention. Now, due to a series of mergers and, let’s face it, a decline in union membership, the unions have become dominated by just four mega unions.

The theory of this drive towards gigantism was that the larger the unions became the more powerful they would be. What they failed to appreciate was that it was their very diversity which gave them strength. A diverse union movement spoke to the working public in a way that these super unions never could. Smaller unions would understand a specific trade or industry; now they are all lumped together in a one-size-fits-all format.

In terms of influencing Labour, if there were 100 equally sized unions all tussling for influence right now, disaffiliation threats would really mean something. Each individual union could walk knowing that by doing so they’re absense would be felt by Labour but wouldn’t be fatal. But imagine if a super union like the GMB or Unite left? Given the current financial situation of the party, it would enter a death spiral from which it would struggle to recover.

Paul Kenny knows this, and knows that killing Labour is not in his union’s interest; therefore his threat is hollow. What we have instead is a pantomime game in which he threatens to pull out, the Labour front bench stick to their guns, he gains some totemic concession, and we return to business as usual. We’ve seen this so many times before, it is barely worth commenting on.

The Tories are wrong in this respect to say that Labour is in hock to the unions; that is to play down how fundamentally disfunctional the relationship truly is. It is a loveless marriage in which neither side can bare the caress of the other, yet both are dependent on keeping the relationship alive.

What could they do to move forward? The simple thing would be to accept the recommendations of the Committee on Standards in Public Life’s report on party funding and allow union funding only if each affiliation fee is subject to each union member agreeing to it; in essence treating it like an individual donation. The move to such a system would mean that instead of having to court the union secretaries, Labour leaders would have to appeal to members directly.
Far from hurting Labour, this would transform its relationship with the unions. Instead of empty threats from general secretaries, a leader’s performance would be measured by quite how many union members chose to affiliate. No individual member would kill the party by opting out, and Labour would have to decide whether they could cope with the decline in union membership caused by an unpopular decision or whether they needed to respond. The relationship would be far more real and rooted in what ordinary workers actually think rather than what their general secretaries claim they think.

Of course, those self-same general secretaries have up until now managed to block this and similar reforms, because it is their influence which is under threat. The result has not only meant a stagnant Labour-union relationship but has meant that it has not been possible to take action on limiting donations from rich donors either.

The bottom line is that the current Labour-union relationship is a toxic one which has rendered the union movement an irrelevance and the party with an unwelcome albatross around its neck. Historians will puzzle why people on both sides are so determined to see it continue.

Labour Needs A Plan B

It has been odd watching the Labour party over the last 18 months. If ever an opposition has had a golden opportunity, it has surely been this. With the economy in a mess, any government would be forced to make tough, unpopular decisions right now. Combine that with the nature of coalition, and scoring some palpable hits should be a cynch.

Somehow, however, they appear to have missed almost every target in their path. Liam Byrne’s cynical gaffe, leaving a note to his successor about there being ‘no money left’ may not have single handedly lost Labour the next election but it provided the coalition with a frame they could construct the entire economic debate around (and you can bet it will be used as an election poster in 2015). Ed Miliband’s election has been a disaster, not so much because he is a geek (I, for one, have quite a soft spot for politicians who don’t fit the oleaginous Blair-Cameron mould), but because most of his members and MPs voted against him in the leadership election. That shouldn’t have been a problem for a party which is comfortable with its union links in the way that it so often claims; but it palpably isn’t and so it has proven to be a cancer which has riddled Miliband’s leadership ever since. It was striking at the 2010 conference quite how many people expressed how they felt Miliband had ‘stolen’ the leadership.
As a result, Miliband has spent most of his time forced to disappoint his core supporters in an ultimately futile attempt to appease his detractors. It is hard to see how he can ultimately survive. With so little goodwill within the party, every mistake gets exaggerated in a way that a leader with more respect would never have to worry about.

But the simple fact of the matter is that the mistakes have not been few and far between. On public service reform they have been weak, mainly because the coalition have merely expanded upon Labour’s existing programme. Even on health, which is further from Labour’s position than, say, education, they have been shockingly absent from the debate. I’ve come to terms with the fact that I can never remember the name of Labour’s Shadow Health Secretary before Andy Burnham’s appointment; that’s his fault, not mine. What is very much Miliband’s fault is that he should have been shipped out as soon as it was clear he didn’t have a clue what he was doing. However weak Clegg may have been initially on standing up to Lansley, it was Labour’s responsibility to provide the main voice of opposition here. It has done precious little, too late.

On welfare reform, again, the government has too often merely picked up Labour’s baton and run with it. Liam Byrne’s comments (him again) earlier this week suggest that, if anything, we will now see them attempt to outflank Cameron from the right. It is frankly unbelievable that the main opposition from George Osborne’s plan to further cut benefits in the autumn statement came from David Laws, the loyallest Lib Dem MP in the Commons, not from the Labour front benches.

This should be a source of despair for Liberal Democrats, who predominantly dedicated to mitigating the worst of the Conservative’s reforms. Our ability to wring concessions from Tory ministers is extremely limited when Labour is absent or, worse, on the opposite side of the debate. And this isn’t merely an issue for welfare reform; we have seen echoes of it in terms of government policy on criminal justice and, of course, AV.

Of course, it isn’t Labour’s job to be helpful to the Lib Dems, but one has to question why they have made it their mission to go for them at the expense of targeting Cameron and Osborne. The thinking within Labour circles is that by weakening the Lib Dems they will destabilise the coalition and thus reap an electoral reward. Yet it hasn’t worked out like that.

No-one can pretend that the Lib Dems are in a strong position; Labour’s mission to portray us as pariahs has been largely successful, mainly because they have been aided and abetted by both our own so-called allies and of course our mistakes. But in focusing on this they have largely left it to the Conservatives to frame the debate on all the big issues of the day. They’ve largely stayed ahead in the polls until recently, but on the single biggest issue, the economy, they have lost ground considerably. No great surprise when that agenda has been left to Balls, an arch monetarist masquerading as a Keynesian, who can’t make his mind up whether to focus on reversing spending cuts, introducing tax cuts or pushing for a stimulus package.

Labour needs to get a grip, fast, and end its obsession with undermining the Lib Dems. The lesson of the last 18 months is that the further down in the polls the Lib Dems become, the stronger the Conservatives get. If they insist on killing off initiatives like Lords reform, it won’t be they who benefit but Cameron who will then be free to carry out his threat of appointing hundreds of new cronies. Triangulating on crime and punishment simply emboldens to Tory backbenchers, gaining Labour nothing.

Of course, it has to be said that the Lib Dems could make it easier. Clegg’s tendency to allow the Labour backbenchers provoke him into anti-Labour tirades has not exactly helped, and during the AV referendum it was positively harmful. Tim Farron too, who sitting outside the government has the freedom to articulate things that ministers must be more discreet over, ought to be attempting to rebuild bridges instead of burning them down in interview after interview.

This isn’t a call for a return to Lib-Labbery, merely equidistance. Now we are in coalition it is more important than ever that we make it clear this is an alliance formed of necessity rather than some fundamental shift in position. Nor is it a paean to some sort of ‘progressive alliance’ – if progressive actually meant anything in practice then there’d be no reason to have two seperate parties and if the last 18 months have taught us anything it is that the ‘we’ll know it when we see it’ definition of progressive simply will not do. What we need more recognition of is that a less destructive relationship with Labour would strengthen the party’s hand in terms of both the coalition now and any coalition talks to come. With Labour and the Lib Dems outnumbering the Conservatives in the Commons, Clegg needn’t be negotiating as a junior partner with just 57 MPs under his belt quite as often as he does.

But ultimately, all Clegg and Farron can do is improve the mood music; it is Labour that needs to revisit its strategy in a more fundamental way. Labour’s approach in 2011 has palpably failed either in terms of opposition or in terms of gaining the party popularity among the electorate, and shows no sign of improving. It is time they looked at a Plan B of their own.

Why does the Advertising Standards Authority regulate e-petition campaigns but not referendums?

It is great to see that the Advertising Standards Authority has cracked down on Paul Staines for misleading advertising as part of his campaign in support of his death penalty e-petition. It is not immediately clear however why the ASA feels it has a regulatory role here while it doesn’t have a role in regulating referendum adverts, on the basis of “freedom of speech”.

Election advertising is at least covered by legislation and the courts, something to which Miranda Grell and Phil Woolas can testify. With referendums however, it is a total free for all. At least in the case of elections however, the ASA does issue guidelines. In the case of the referendum, it refused to do even that.

So why does the ASA feel it doesn’t have a role here? As far as I can tell there is nothing in statute which prevents it from having a role and there is certainly no principled difference between regulating referendum and e-petition ads. Both are about influencing public policy; both are affected by freedom of speech.

What’s more, there is a question of significance. While a misleading advert to promote an e-petition might lead to a few extra signatures, it won’t change government policy. Influencing a referendum result with garbage, by contrast, has a significant impact on legislation and the government of the day. One could understand if the ASA had better things to do than to waste its time with Staines; it is harder to see how a referendum isn’t worth its time.

But perhaps it is Staines’ minnow status which is telling here. Cracking down on a small front organisation is pretty elementary; standing up to the combined Conservative establishment and Labour old guard is an altogether more daunting prospect. The decision is only explicable when you look at it in terms of expediency, but that doesn’t make it any more respectable.

Either way, regardless of what the next referendum happens to be on, this loophole in the law urgently needs sorting out. Because next time, it might be a referendum on the death penalty – in which case expect Stains and company to dredge out all the misleading nonsense they’ve just had their knuckles rapped over and worse.

Diane Abbott: what’s race got to do with it?

NB Sent by phone. I will add links later.

The nowtrage over Diane Abbott’s twitter comment that “White people love playing ‘divide & rule'” has been entirely predictable and lamentable, with people on both sides guilty of exaggerating their positions to the point of absurdity.

I’m not remotely offended by Abbott’s comment; it is simply too absurd a generalisation to take seriously. I find the rush by people to exclaim offence and outrage at the comments frankly embarrassing; especially since, as a rule, they have been quite transparently politically motivated. It is simply too soon after the sentencing of Norris and Dobson to play that game.

Equally however, Abbott’s initial defence that the comment had been taken out of context was weak, because there is simply no context in which bringing race into the point she was trying to make could be acceptable. Many of her defenders have leapt on this, claiming that divide and rule was a feature of white colonialism, but the simple fact is that most white people were not colonialists.

Irish potato farmers were not responsible for the oppression of Africa and India any more than Mancunian clothmakers or Italian winemakers. African monarchs who sold their own people into slavery were. There isn’t much evidence to support claims that ‘white’ empires such as the British and Romans were any more oppressive than the Persians or Mongolians.

To cut to the chase, surely racialising what is, in essence, a matter of the functions of the political-economy throughout history, is far more of an act of ‘divide and rule’ than, to return to the original discussion, questioning the legitimacy of so-called black community leaders?

Diane Abbott’s comments were in response to Bim Adewunmi raising concerns about talk of a single ‘black community’ and the people who purport to lead them. Abbott’s point was that ethnic minority groups who are more united than blacks tend to do better. This is a valid observation, but so too were Adewunmi’s objections to having people speak for her who are often out of touch.

And while Abbott is also correct to suggest that ‘divide and rule’ is one of the oldest tricks in the book, so is the co-option by leaders, of whatever race or background, of the groups they claim to represent.

That’s true of colonial powers, and it is true of people who enjoy the trappings associated with being a ‘community leader’ in a local authority, as anyone who has ever been involved in local politics must surely have observed. And it is true of party leaders working against their parties interests and of trade union leaders making power plays which ultimately work against the workers but which consolidate their own control and influence.

In short, strip race out of it, and there is a very important debate to be had about the nature of power, control and democracy. It suits politicians like Diane Abbott for that debate to be sidetracked by red herrings such as skin colour just as much as her loudest detractors.