Fairness is probably best associated in the British mind (or, that is, how some of us at least would like to perceive ourselves as associated) with an inherent and traditional sense of fair play, using as an example the sporting analogy of equal conditions (or a level playing field) for all within the agreed rules for a particular game. Indeed, it has been suggested that this is one of the reasons for the British being the initiators of many of the organised games and sports with popular appeal around the world. Whether within the multi-cultural Britain of today a common understanding of, and general adherence to, such a sense of fair play still applies is open to debate. However, the Conservative party is associated with certain traditional values and its current image in the public mind is embodied by David Cameron its leader and the Prime Minister. His image is that of a patrician commanding respect through his bearing, complemented by good manners (although perhaps considered rather old fashioned in the Britain of today), born to lead with a self-confident and business-like approach; together with all this, however, must come a traditional sense of responsibility with respect to public trust, to ensure that the rhetoric of the Coalition on fairness is not specious or proven lacking in reality underneath the fine words.
Therefore, it was careless of the Chancellor of the Exchequer, after insisting his budget cuts were both fair and progressive, to be caught out so easily by the Institute of Fiscal Studies (IFS). The IFS was able to point out that the distributive effects of the tax and welfare measures of the Coalition, when the tax increases on high earners adopted from the last Labour government are excluded, are in fact not progressive but more regressive with the poorest unfairly suffering cuts proportionally greater than the better off.
It is ironic that the Chancellor has just announced today that he has appointed Robert Chote the Director of the IFS as the new Chairman of the Office for Budget Responsibility, the putative independent watchdog over Treasury fiscal projections.
Fairness
septembre 9th, 2010Electoral Bias
août 31st, 2010A number of elements within a voting system can contribute to electoral bias (i.e. when two or more parties obtain similar levels of voter support but receive significantly different shares of parliamentary seats). Such elements include:
1. Unequal electorate size (mal-apportionment)
2. Voter distribution (geography)
3. Different levels of turnout (abstention or under-registration).
4. Competition from smaller parties
The current UK electoral system favours the Labour party (worth 63 seats at the last election) and the Coalition government sees an urgent need for new parliamentary constituency boundaries to remove the advantage Labour is perceived to gain from unequal electorate size (1. above). The Conservatives prefer a House of Commons reduced to 600 seats (-7.7%) – a smaller Commons also saving taxpayer money – and a single electoral quota of around 76,000 electors per constituency.
However, Colin Rallings and Michael Thrasher, directors of The Elections Centre, University of Plymouth, consider that the effect of such mal-apportionment (1. above) on the Labour advantage is much less than the way in which the Labour vote is more efficiently distributed (2. above) across the Country, turnout (3. above) in Labour seats also being lower. Labour is, therefore, accusing the Coalition of trying to fix constituency boundaries for political purposes and pointing out that of the around 3.5 million UK residents qualifying for a parliamentary vote but missing from electoral registers, very many are in Labour ?supporting areas, one reason why Labour MPs represent smaller constituencies on average.
In a reduced Commons, Labour could lose 27 (11%) of its current 258 seats, the Liberal Democrats 6 (11%) of their 57 seats and the Conservatives 13 (4%) of their 307 seats, the latter then still short of an overall majority (of 301 seats out of 600) despite being well ahead of Labour in the popular vote. It should be noted, however, that although the boundary review will solve the problem of mal-apportionment (1.), ignoring the bias produced by the other important elements (2. and 3. above) may result in Labour only losing around 10 ? 12 % (i.e. – 27 + 13 + 6 seats) out of its total advantage of 63 seats.
Alternative Vote (AV)
août 27th, 2010The Alternative Vote (AV) system in Australia produced a hung parliament in their recent election, whilst first-past-the-post (in contrast to the UK election) would have resulted in a clear Conservative victory.
AV changes voter and Party behaviour. In the UK the Liberal Democrats would expect to win a lot of second preference votes under an AV system but AV can also encourage votes for other parties such as the Greens (now the third force in Australian politics with Labour owing 8 of its 70 or so seats to the second preferences of Green voters). This is because such voters have the luxury under AV of significantly reducing the possibility of a wasted vote by e.g. choosing a Green candidate first and a mainstream party as their second choice. The main parties also have more flexibility to move towards the centre e.g. the Conservatives could be more confident of securing most right wing second preferences and can compete more actively for the middle political ground. Similarly, Labour could count on being the second choice of e.g. left wing Liberal Democrat voters, as it targets voters in the centre.
Overall, therefore, although AV could still favour the Liberal Democrats in the UK, the party might also find itself pushed further from the centre ground by both Labour and the Conservatives, opening up the fracture between its right and left wings.
Sir Philip Green
août 20th, 2010A division has emerged in the coalition over the appointment by David Cameron of Sir Philip Green as an unpaid financial trouble-shooter, tasked with making recommendations on how to make the public sector more efficient. Lib Dem MPs who campaigned against tax avoidance in the election are demanding a review of the tax arrangements of this businessman who has avoided tax on the personal fortune made from his business empire by handing ownership to his wife, now living in the tax haven of Monaco and legally avoiding tax on dividends from his companies.
Under pressure from his MPs, Nick Clegg has said that they are looking at the case for an anti-avoidance rule to ensure that wealthy individuals pay their fair share of tax. Lib Dem MPs add that tax avoidance costs the Country far more than benefit fraud, the latter of such major concern to the Conservatives.
In defence of Sir Philip his companies are registered to pay tax in the UK, his large number of employees all pay tax and his personal tax avoidance scheme via his wife is not illegal. He and his team will also only be making recommendations and he will not be in government making laws. He is unfortunately like Lord Ashcroft a prominent example of the flexibility that wealthy individuals have to minimise their tax exposure under the current UK
tax laws. However, the Coalition agreement also commits the government to make every effort to tackle tax avoidance including detailed development of Liberal Democrat proposals, although in principle no decision has been taken on whether to support a general rule outlawing tax avoidance.
It is good that the Coalition is pulling in such experience and talent to help sort out the Country and also moving away from the dogmatic politics of yesterday by inviting others such as Frank Field and Alan Milburn from the Labour party to provide their expertise e.g. on respectively poverty and social mobility. However, a further question has now been raised on the judgement of David Cameron with the resignation of David Rowland the new Conservative party treasurer, who was only appointed in June having returned from tax exile last year and given £2.7 million to the Conservative election campaign. Apparently Mr Cameron ignored warnings that he was not the man for the job. Whether the internal strains within the Coalition from the appointment of Sir Philip Green will prove to be worth it should be judged together with the practical effectiveness of the actual recommendations resulting from the efforts of him and his team.
Council Housing Reforms
août 13th, 2010A Sunday Times poll on the reforms to council housing suggested last week by David Cameron, found 62% in favour versus 32% against. It was proposed that, in future, people moving into council homes could be put on short-term leases, renewable every five years.
The risk for the Conservative party is in alienating the type of person once won over as a voter by the chance to buy their council house and representing those with aspirations on the council estates. Without the stability from longer term security of tenure, there will also be no incentive for council tenants to improve and add value to their housing through their own efforts. There is a certain mismatch perhaps between those on one side who regard a house purely as an asset to trade profitably up the property ladder when the market allows and those for whom a house or flat is very personal and valued as their home, even a council home.
However, the council housing market would benefit from being made more flexible such as via the proposed freedom pass database of the reforms, to allow council tenants in complementary circumstances to exchange houses e.g. to find work elsewhere. Housing associations and councils already try and encourage tenants whose children have left home to exchange their house for a smaller flat. They also endeavour to cut down on abuses of the system such as sub-letting of council properties.
This council housing debate overlaps with the one on more control over immigration. One of the consequences of mass immigration doing the recent Labour years is that of the 1.8 million on the council house waiting list, rather a large proportion particularly in London are from immigrant communities. The positive contribution to society of such communities, therefore, also needs to be offset against the resources and services they require such as access to scarce council homes.
Trident Challenge
août 6th, 2010France and the UK similar but now only medium-sized powers, still occupy two seats on the UN Security Council along with the US, Russia and China, the main and victorious allies from the second world war. Both have retained their own nuclear deterrent capability which would appear to be based on an assumed although non-existent Cold War threat of a surprise attack, but which also serves to reinforce their otherwise diminished claims to remain at the Security Council table, when challenged by e.g. the more economically powerful Germany or Japan and the rapidly emerging India or Brazil.
In the case of the UK, the defence strategy for conventional forces assumes the opposite to the nuclear option i.e. that there is no immediate threat of an attack by another state. Also, contrary to the independence of the French nuclear deterrent, the UK relies on the US for its technology and now faces a decision on renewal of its Trident seaborne deterrent, a £20 billion or more commitment over the next 15 years. The governing coalition has pledged to maintain this deterrent but both parties have agreed that the case for Trident be re-examined to ensure continuing value for money and that the Liberal Democrats can also propose an alternative for consideration. Trident itself has been specifically excluded from the Strategic Defence and Security review but the Conservative Defence Minister Liam Fox has been landed with the hot potato of not only producing budget savings of 10% or so within the Ministry of Defence but also finding an extra £20 billion to replace Trident. He is faced, therefore, with either budgeting for a straight Trident replacement and comprehensively cutting back on the conventional defence portion or choosing a cost-reduced, alternative deterrent and a new defence strategy.
The Trident challenge for Prime Minister David Cameron is that strong defence of the realm is the default position traditionally adopted by the Conservative Party and its supporters going back to Mrs Thatcher and her nuclear deterrent commitment in the 1980s.The harsh realities of coalition government have already meant that core Conservative beliefs in e.g. low taxes and first past the post voting etc. have already been compromised. The future of Trident could be viewed as challenging what the Conservative Party fundamentally stands for and Mr Cameron might do well, therefore, to spend more time reconnecting with traditional Conservative voters, activists and MPs on the issue of core Conservative values.
Green Economy
juillet 30th, 2010Chris Huhne, the Energy Secretary, has been pressing his fellow environment ministers to increase the already challenging carbon emissions reduction target of the European Union. However, across Europe countries under severe budget constraints are already cutting back on their expensive carbon reduction programmes or modifying them. The Spanish and German governments for example are reducing their subsidies to solar power by some 30%. In Britain, the governing Coalition has scrapped plans for a third runway at Heathrow airport, supposedly on environmental grounds, but has abolished the Sustainable Development Commission, the official watchdog originally created to oversee the drive to a so-called Green Economy. It seems that the government is also abandoning the previous Labour plan to invest £1 billion raised by the sale of state assets, such as the Channel tunnel link, into a so-called Green Investment Bank and instead use the money to reduce the budget deficit.
To meet the carbon emissions reduction target, major subsidies will be needed to enable the electricity supply industry to switch from fossil fuels (which currently are used to generate some 70% of UK demand) to renewable sources of energy such as solar or wind power. Mr Huhne favours renewable energy but seems to dislike the thought of nuclear generated energy (and its associated toxic waste disposal problem) which at source can be recycled and has stated that there is no money in the budget for nuclear power stations. Currently nuclear power stations provide some 22% of UK demand with renewable energy sources only producing around 5%. The remainder is imported (via a sub-Channel power cable) from France which, for energy security reasons following the oil crisis in the 1970s, produces around 80% of its electricity output from 50 nuclear power stations and around 50% of its total energy needs.
The current generation of nuclear power stations in the UK will be completely phased out by 2020 and 10 sites have been identified for construction of the next generation, which with planning and procurement delays together with a typical 4-5 year construction phase would still not come fully into service until late in the decade. Although a nuclear power station could cost an additional 50% or more of a conventional gas-powered equivalent, the more stable prices and supply sources for the uranium fuel with station operating costs at 10% of total capital, offer major savings compared with the 80% operating costs of the fossil fuel alternative, which in the case of gas is much less predictable in price and sources of supply. The latest, more fuel efficient, nuclear reactors over their design lives are also said to generate only 10% of the waste produced by the entire UK nuclear sector to date.
Given then the non-constant nature of renewable energy supplies e.g. from less predictable wind power (as of 1st August, 2010 there were 264 wind farms in the UK producing nearly 4.5 gigawatt of electricity) and that the McKinsey consulting firm has calculated renewable investments could cost £430 to save one tonne of carbon dioxide compared with the £8 per tonne offered by nuclear the latter, granted an appropriate in-feed tariff to the national grid, should play a major role in meeting the future energy demand of the UK and the carbon emissions reduction target of its green economy.
NHS Reforms
juillet 24th, 2010Last week Andrew Lansley, the Health Secretary, published his white paper on reform of the National Health Service (NHS).This sets out a policy framework aimed at abolishing Primary Care Trusts (PCTs), giving General Practitioners (GPs) instead the responsibility for commissioning treatment for their patients. Having thus empowered GPs, the Health Secretary then expects them to proactively respond in making informed decisions without seemingly further guidance from the Department of Health. This could lead to the creation of large US-style, privately owned Health Maintenance Organisations (HMOs) which in practice have driven up costs without correspondingly fair and reasonable improvements in US healthcare.
In fact, over the past two years under a practice-based commissioning initiative under the last Labour government, GPs have already been encouraged, should they so choose, to take control of part of the local health budget. For example in Cumbria last year, six teams of GPs each serving a population of around 100,000 have worked with a shadow budget and, as of last April, have been responsible for 60% of the £800 million health budget. A mutual-benefit partnership between the public and voluntary sector is foreseen (evoking the Big Society of David Cameron?) which, e.g. in the case of their more elderly patients would involve Age UK, collocated at favourable rates with the GP team, bringing practical assistance aimed at keeping them in their own homes and out of hospital (a potential saving of £3000-4000 per non-hospitalised patient).
However, the experience gained from the earlier GP fund-holding experiment of the Conservative government in the 1990s, when it was unfortunately decided not to evaluate the actual results from the beginning, also needs to be taken into account. Although the general public received no information on whether clinical outcomes and patient safety or the cost-effectiveness of care were improved, there were suggestions that patients of such fund-holders were often reported as less satisfied with their NHS services, felt knowledge of their medical history worse than before and the willingness of their GPs to refer them to specialist treatment diminished. GPs seemed more concerned with keeping costs down rather than improving care. The complexities of contracting could also lead to any efficiency improvements being offset by high transaction costs between GPs and hospitals, the former often forced to make decisions without accurate information about the quality of the contracting services on offer. Overall, fund-holding was unable to achieve major and sustainable improvements in their hospital experience as far as the public were concerned e.g. in reducing waiting times, something that the NHS reforms of Labour did achieve and that matters to patients.
In summary, therefore, it would appear better to first test these proposed NHS reforms via a limited number of carefully selected pilot schemes, with their clinical outcomes, efficiency gains and cost effectiveness measured against predetermined but realistic targets, to foster the subsequent development and sharing of best practices.
Federal EU?
juillet 17th, 2010Further to the question raised in the previous article (Turkey-Realpolitik?) on the future evolution of the EU, the weekend of May 9-10 when the Greek, Portuguese and Spanish government bond markets and banking systems came to the brink of a Lehman-style meltdown, saw European politicians take a further step towards a full-scale fiscal and political union in defence of the Eurozone.
Ignoring the no-bailout clauses of the Maastricht and Lisbon treaties which specifically forbid EU governments from collaborating fiscally to guarantee each others? debts, they created what is essentially a large federal-type, borrowing programme backed by all the Eurozone governments. This has enabled channelling of the results of excess savings from Northern to Southern Europe which, to prove sustainable longer term, should evolve into a full-scale, federal European budget to enable the poorer, less competitive regions to be permanently supported by the richer ones. This would also require the ECB to act as the lender of last resort in the classic role of a central bank, to provide essentially unlimited back-up to any associated emergency lending programmes arranged by European governments. In the longer term, the public spending and tax policies of the weaker Eurozone economies will have to become more aligned with that of Germany to allow the political outfall of such a fiscal union to become more manageable.
Such a fiscal convergence programme as part of a viable single currency union, backed by a European federal budget, is not likely to be put to wide, popular vote particularly in Germany where taxpayers would presumably be unwilling to vote for their money to support other more profligate Eurozone members. Rather this could happen as a result of normal public apathy and acquiescence, managed through political stealth as part of an inexorable but non-democratic process towards the construction of a federal EU.
Turkey-Realpolitik?
juillet 11th, 2010William Hague the British Foreign Secretary, has spoken of Britain championing Turkish membership of the EU as part of the new foreign policy committed to building relationships with emerging economies, particularly if enjoying robust growth. Contrary to the arguments of politicians in France, Germany and other member states, he considers the EU turning its back on the membership aspirations of the predominantly Muslim Turkey as an immense strategic error.
There is concern in the West that Turkey in response, is turning its back on an unwelcoming Europe and embracing the Islamic world e.g. by voting against sanctions on the nuclear programme of Iran and embracing Hamas, considered by the US and the EU as a terrorist organisation. However, compared with the EU, the economy of Turkey is booming with 11.4% growth in the first quarter of 2010, government debt only at 49% of GDP and strong export business due partly to its closer regional ties with Iran, Syria and Russia.
Mr Hague accepts that Turkey needs to improve in areas such as human rights, competition and media freedom to support its case for EU membership but there is potential for a major increase in trade flows, currently £8.6 billion a year between the two countries. Turkey is also a key Nato ally strategically placed between Europe and Asia with channels of communication different from the West. It would also appear that with the West in financial recession, Turkey is looking towards the East to explore opportunities and exert influence with its new financial power.
The British policy towards Turkey, therefore, seems a very pragmatic piece of realpolitik which again calls into question the future evolution of the EU into a common trading bloc or free market of neighbouring nation states, a single political union based on a common Christian heritage or something in between.