Localism: But what if they’re crap?

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Jon Cruddas has delivered a speech to the New Local Government Network, which acts as a bookend to Labour’s discussions on Public Service reform kicked off by Ed Miliband’s Hugo Young lecture on Monday.

Cruddas’s speech is particularly useful, because it gives good examples of Labour localism in action. As ever, Jon also puts these practical policy choices in a context of Labour history and political theory, which might not appeal to the manifesto pledge hunter, but is interesting.

The case for localism in austere times rests on three foundations.

First, an ideological/philosophical basis: It is better if services are designed with the voice of service users in mind, and in public services their preferences can best be identified through gathering people together in communities of interest and localities, rather than pure marketisation.

Second, there is an argument from cost. Cruddas suggests that localised budgets can save from £9.4 to £20.6 billion. Though he doesn’t source this, the numbers come from an LGA report, which suggests a saving of this magnitude is possible over a five year parliament.  To put this into perspective, the IFS is suggesting that overall fiscal pressure will require real terms departmental budget reductions of £12 to £33 billion a year. So savings of these sort will be necessary, but not sufficient  if services funding is just to stand still.

Finally, there is the argument from expansion. There are new public needs – like adult care, child care, vocational skills training, which left of centre thinkers believe need greater social provision. These services will be best provided in localised, communitarian forms. This is the case even if other ways were attractive, as the tightness of funding will dictate that making such improvements will require the devolutionary savings above to create some fiscal room for such provision.

These are important points, and as I helped to say on Monday, I think there’s broad sympathy with them on the centre left.

But they’re not a complete case, and as with the Big Society it’s in the thickets left unexplored by these speeches that the success or failure of these plans will be decided.

So I want to suggest three simple, practical questions Labour’s big thinkers should be asking themselves as they discuss these ideas further. (more…)

I can stop the Flood debacle.

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I can do it. I can end the bickering and the blame game, and let everyone learn the lessons and pull together to do whatever it takes to solve the crisis.

Yes, when it comes to the floods, I have a plan.

You see the problem isn’t the rain, or the wind, or climate change, or funding cuts to flood defence, or temporary bureaucratic confusion and muddle in the face of unprecedented crisis.

It’s definitely not some tediously complex combination of all the above. That would be crazy, what are you thinking?

The problem is that we don’t know who to blame. Can we blame Chris Smith? No, he’s just a functionary. Probably appointed because somebody’s got to chair a big government agency, and chairing big government agencies means some acquaintance with annoying interest groups who all want money off you, so being a former culture minister is perfect training.

For a bit we thought we could blame Owen Paterson, but then we realised that no-one knew who he was, and then he was stabbed in the retinue and disappeared. Most of us on the left wanted to blame Eric Pickles, but all the fat jokes in the world don’t explain why it was anything much do with him, except that he seems a bit horrible and likes telling people off.

In the wake of this failure (Wake! geddit?) we have been treated to a steady stream (I’m good) of politicians enduring a dunking (Oh, yeah) from the outraged populace. This was a fumbling attempt to make up for the earlier lack of anyone worth blaming. Now, everyone was to blame. If you had wellies and political ambitions, it was mandatory. David Cameron, Nick Clegg, Eric Pickles, Phil Hammond, they were all out there being visibly humble. So many ministers were out and about being insulted, you began to wonder who was actually doing any governing. Probably Chris Smith.

The absence of clear lines of blame meant one poor woman was reduced to blaming Ed Miliband, who not only isn’t responsible for the floods, but is the last person in Britain with any power to resolve anything. Martin McGuinness, the former commander of the provisional IRA, has more executive authority for flood prevention in the United Kingdom than Ed Miliband does. No really. He’s responsible for emergency planning in Northern Ireland.

This must stop. We need to sort out the blame game. I don’t mean stop it. I mean getting it working properly.

What we need is someone who can be held responsible for any and all failures in all government agencies. It can’t be the Prime Minister, obviously, because they’ve got to actually do stuff. You might want them to sort out the economy or something dull like that. The Queen is right out.

What we need is a quango.

The government should immediately set up the Effective Urgent Government Office, or EffUGov. This independent body will be responsible for reviewing and rectifying all emergency and unexpected event plans and responses to emerging failures. They will be tasked to ensure that government is prepared for any and all events that may occur in the indefinite future. Should such an event occur, the Chair of EffUGov will be the locus for the Government response to the crisis, whatever it may be. A staff of five should do it.

Picture the scene. Something terrible has happened. Locusts are eating Hampshire. Boils have taken over Northumberland. People in Hi-Vis jackets are flagrantly tramping the streets in towns across the country right in front of news cameras. Kay Burley is at the scene. Kay Burley is at all the scenes.

Enter the chair of EffUGov, guided ceremonially into the Newsnight studio to explain why this was not foreseen, and why it is not yet solved. Paxman sneers, menacingly.

This is what we want, my friends. More than that, it is what we need. In such an emergency, we might still be flood ridden, locust scoured and boil benighted, but we would know who was to blame, and we would know they could not get out of it. It would be right there, in their job description.

It would be an arduous job. You need the right candidate.

Someone jowly. Someone a bit pasty. Someone who sweats profusely under pressure. Someone who doesn’t look good on TV, who mumbles on radio, and who is rude or cries when questioned assertively. Someone who finds it hard to concentrate on what other people are saying and who yawns when they’re nervous. Someone who giggles inappropriately at others people’s distress, and who dozes off when tired. Someone with no executive experience in practical governance, no democratic credentials, and who was appointed as a political favour on a ludicrously inflated salary far beyond their meagre qualifications.

I would be absolutely bloody perfect.

Look, I’m not saying it would be easy. It’d be stressful, never knowing when the next disaster would hit, or exactly when you’d be given a cursory briefing from someone with second-hand knowledge of what was actually happening, then sent out to face hostile questioning from journalists who’d been held in a cold village hall for an hour waiting for you. Perfecting a garbled non-apology in such circumstances takes skill.

I’m just saying I have these skills. In abundance.

Now, whoever takes on this vital role needs to be compensated. I’d argue £200k and a knighthood should do it. Sure, the knighthood would be stripped after I flailed helplessly over my crisis and was forced to resign in disgrace. But the money would be a comfort, and right up until the locusts, and boils, it would be a pleasant, relaxed existence. I would endure it. For you.

These roles go the heart of democratic governance. They have a fine pedigree.

In ancient Athens, the integrity of the Polis in crisis was secured by the ritual abuse of the Pharmakos. Those fellows founded democracy, so they knew how important it was to have someone disposable to blame when things inexplicably went wrong.

We’re more civilised today, of course. We wouldn’t stone a Pharmakos to death  after fattening them up, like they did in Marseille, back in the day. We’d just feed them to a ravenous press pack, and watch them be eviscerated. Then after a decent interval, we would let them do the Sky paper review, or go on Question-Time.

It’s noble of me, I know. But if we can reach a decent compensation package, I will serve.

Picket Lines: A Labour party peculiarity

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Last week, there was a strike on the London Underground. Like a lot of other people, I ended up taking the tube, and wrote a meandering post about why I had felt a little guilty about this, and why I decided that guilt was misplaced and it was fine.

Essentially, my argument was that if a one, or two day strike is effectively a symbolic action to display potential extended inconvenience and so leverage power over negotiations, this removes the obligation to ‘honour’ a picket line. It’s a bit involved, and some felt it was too instrumentalist an approach, but there you go.

No-one really seemed to care whether I took the tube or not, which is only right and proper, but this morning we discovered that Shadow Education Secretary Tristram Hunt had also crossed a picket line, and various people on the left found this unsatisfactory behaviour, and wagged their finger reprovingly at the naughty MP for not honouring the solidarity of the Labour movement.

To which I say, oh sod off. That’s cobblers. (more…)

Death to ‘Public Service Reform’! Long live public service reform!

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I1 have a short pamphlet out with Progress on the vexed topic of Public Service Reform.

What with this, Ed Miliband’s speech, the upcoming IPPR report, the work the RSA are doing and Jon Cruddas and Rachel Reeves speeches later this week, you might think that there was some sort of co-ordinated effort to debate how a Labour government would change public services.

The best summary of the approach being taken by Ed Miliband and advocates of the ‘relational state’ on the centre left is ‘Neither Stalin nor Serco, but local co-ooperation‘. (Credit to Jonathan Derbyshire for the original formulation).

This is a valuable insight, but our pamphlet suggests it is not a complete answer to the challenges of public services. The old SWP slogan was a rhetorical trick, after all, contrasting a choice between two uncomfortable realities with a longing for an unrealistic utopia. Public Services reformer cannot use such a trick!

First, we have to recognise how much public services have already changed.

The reforms of the last two decades have already shifted the plates of services delivery. An academy is, more or less, a local, autonomous, independent deliverer of public services. You can argue, reasonably, about where accountability should sit for such schools, and how the enforcement of minimum standards should apply, but the basic thrust is there. If there are any ‘bog standard comprehensives’ left, they’re a variety, not a dominant majority, of British schools.

In many services the challenge today isn’t reform to create the potential for locally autonomous delivery, but the nature of the accountability of such bodies. For example, the centre-left critique of Free Schools is that they are not locally accountable enough, not that there should be no right to establish them at all. So they would be replaced by ‘parent led academies’, which would be free schools with a less corporate management structure.  ((There is a separate debate about free schools in areas with an over-supply of places. Here, I think the question becomes why demand exists for new schools in areas with lots of places. If the answer is because parents don’t think the existing schools are any good, that is a different situation than if the answer is ‘because the new school will get the only new money in the system’)). In effect, in these areas, the reforms Labour would propose here would be institutional and accountability based, rather than about defining acceptable and non-acceptable deliverers of services.))

Recognising the victory of past public sector reform clarifies the new challenge. If the new reform is focussed on institutional and accountability issues of local autonomous bodies, this must assume real freedoms for such bodies. If a clinical commissioning group wants to contract a private provider of a service, on what basis could an advocate of a relational state argue against this? Presumably the only one would be that if the users of the service were not in favour of it. That will therefore be on a case by case, individual, specific basis, not a central ideological rule. There cannot, be any such over-arching rule, as it would undermine the very premise of devolution to autonomous bodies.

Naturally, centre-left advocates of relational thinking deny they wish to marketise public services. Such market devolution is seen as the hallmark of the ‘Big Society’, but I think this is to misread the intent of tory reformers.

When reading current centre left thinking on public services you get the sense that the Big Society never happened, which of course it didn’t. Understanding why it didn’t matters. It isn’t simply that the Tories were useless, though they were, it’s also that there is an issue with giving local institutions freedom that the left also has to face. While both Big Society and relational state supporters  wish to encourage other modes of service delivery, they can’t mandate it. Otherwise the autonomy idea would collapse, with a minister for relationality in Whitehall dictating to local bodies what services it is appropriate to commission from who. Now, a Labour government would undoubtedly encourage such new forms of services more than the Tories have done, but the difference is one of degree, not of kind.

Now, at this point, it might be sounding a bit like I’m dismissive of this agenda. I’m not.

The emphasis on building institutions that are properly connected to local needs and the demands of service users is, potentially, very powerful. What it doesn’t do, however, is get you out of the ‘tired old debate’ about who provides. It just swerves round it. When I was researching our pamphlet, I was quite surprised to see that devolution and flexibility were two of New Labour’s four principles of public services reform. There’s nothing new under the sun.

Instead, I think the two really important contributions that the relational strand in current Labour thinking offers is an emphasis on institutions and context sensitivity. In part, this was because New Labour had to rip away a whole series of structures and institutions, and spent rather less time thinking about what should replace them, trusting instead in individual user demand. That might not work for accountability, quality commissioning and national standards purposes.

Next, by context sensitivity, I mean that there’s an important recognition in much of the current work on services that if we accept that ‘what matters is what works’, then it follows that ‘what works’ is very likely to be different in any particular service. In the pamphlet we try to explain that in relation to the balance between local institutions and national frameworks in the NHS and Skills provision –  it is perfectly coherent to argue that in the NHS we need more local variation, while in Skills provision we need stronger national standards.

Equally, one could argue both for centralising refuse and recycling collection across all of South London, while seeking greater devolution and independent provision of after school clubs. Now the principle of provision by all is established, ‘Public Service reform’ as a single uni-directional concept is dead. Establishing that there is no single, ‘correct’ model for all public services was the great victory of New Labour.

What remains is the vital debate about how to find the right model to replace it, school by school, service by service, locality by locality. That is no small deal, it is the difference between reform that works, and reform that doesn’t. This process has to be an institutionally aware, sensitive and localised one, backed by strong political will from the centre to make it happen against a whole range of interests resistant to such changes. This makes post-New Labour public service reform about the journey, not the destination.

I have one warning about that journey. Simply devolving responsibility isn’t a panacea for deficit reduction. Yes, there are clear ways in which by combining and linking services you can execute greater synergies and therefore save money, but equally, as reformers have found before, if you take the budgetary reins off local bodies, you can find yourself exposed.  There is a risk that in devolving power and responsibility to local bodies, and then radically reducing their budgets, we could prevent them being successful.  They would find new ways of doing things, but some of them could be pretty horrible. Or they could decide not to cut services, suspecting they would be bailed out in the end. What happens when autonomous local services providers go bust?

Further, there are very few public service reforms that have been successful without substantial extra investment. As the IFS and many others have made abundantly clear, there will not be much of that for the next few years.

So to increase the chances of such reforms happening successfully, it’s important that the central state attacks the resources question head on, not dodge it by giving local bodies of the hospital pass of a) responsibility to reform services, b) radically reduced budgets, and c) a duty to involve service users who might be very cross about b).

This means identifying those areas where a Labour government might want to extend the state – like Childcare, Social care and adult skills, identify where the money is coming from to pay for that structural shift and begin the process of reform there.

In other services, it might well be good statecraft to leave the fundamental structures of the moment in place, and instead focus on the accountability and standards gaps, while trying to get the most of the resources we have available. This would have the benefit of giving the current provision system a little time to bed down, and the chance to see in more detail where the flaws and gaps really are.

This means ‘Public Service reform’ is dead. What remains is reforming public services, a less capitalised, but just as intense and significant process.

  1. along with several others with more knowledge of the topic. I did the commas. There are too many commas. []

I am a blackleg scab.

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I got the tube today, oh boy.

I didn’t particularly want to. But I did, and in doing so, I crossed a picket line.

Some readers on reading this will be somewhat envious and a little baffled. Envious, because I got a tube, on strike day. Baffled because ‘so what’? I doubt many of London’s commuters regarded striding past the bedraggled people at their local tube station wearing a slightly different hi-vis to normal as a moral quandry.

But my friends, I am part of the Labour tribe, and for us, walking past a worker in an armband marked ‘Picket’ is making yourself a direct heir to gutless cowards being driven into pits in metal reinforced buses. Even if you don’t agree with the strike, or don’t understand why it’s needed, or think that the whole thing is a gigantic error, you don’t cross picket lines.

To be fair to me, I didn’t want to be a scab. I tried not to, I really did.

First, I arranged to travel into work late. Then, I tried to get a train to work. But South-East Trains rose magnificently to the challenge the strike presented to their reputation as the worst transport company in the world. On a Strike day, they cancelled all their local train services. One can only admire, really.

Then I tried to get the bus. But the bus wasn’t coming for half an hour, having been replaced by a service that did not stop anywhere near me. It was pouring down, so when it did come it would be rammed, would possibly sail by, and I would be decidedly wet and extremely late, which is not a good career move.  Sadly, the market for mordant, long-winded speech-writers has not yet reached the pre-crisis peak.

So I gave up, and got the tube, muttering ‘scab’ at myself all the way.  I even got a seat. Distractedly muttering under your breath is a useful life skill for a London commuter.

Moistly recumbent, I wondered why I was thinking this way. Faced by large amounts of inconvenience, I’d chosen to add a dollop of annoyance. Why?

The strike was going ahead. If every tube was full to the brim, it would make not the slightest difference to its success. The whole purpose of the strike was to discommode, and by so doing, put pressure on management.  I had been very effectively discommoded, and lo, all was well.

Further, why did I feel obliged to not use the services of a company undergoing strike action in the first place?

Let’s say Beer company X recognises a union, who go on strike. Beer company Y does not, and faces no strike ever. If I don’t buy the products of beer company X, but do buy the products of beer Y, I’m giving the non-union recognising company a massive competitive advantage. As it’s impossible to know whether a product is entirely, partially or not at all union-made, I’m basically scabbing every day.

Let’s not even talk about buying clothes made in Bangladesh or phones made in China.

The best argument is that you don’t cross a picket line simply because you were asked not to.

Someone who works for a company says that they have been mistreated, and is asking for you not to patronise that firm while they withdraw their labour. You are being asked to respect their sacrifice.

It’s about manners. Left wing manners, but manners all the same.

On the left, we call good manners ‘solidarity’ because manners sounds a bit bourgeois. Whatever you call it, it’s a good argument.

If a strike was a permanent withdrawal of Labour until the resolution of a dispute, I’d agree with it.  Strikes used to be like that. In that scenario, working for that company, or patronising it, would help prevent the strike from ever succeeding.

Ye, neither strikes nor manners are what they were, and so the response to them changes.

Withdrawing labour for a day or two  is not designed to bring a negotiating partner to their knees.  Instead, the argument is that the cost of the dispute is greater than the cost of settling. Call a day of action, or two, and the implicit argument is ‘we can do this again and again’, and so you would be well advised to negotiate.

The strike then, no longer exists as a weapon that might destroy a company, but as a method of temporarily inconveniencing the company.

Nor is the sacrifice others are asked to respect as high. On Friday, Union members will be back at work, even though the dispute is unsettled. No-one in their right mind would boycott the tube on Friday, so why on earth do so today?

I think the changing nature of the strike changes the manner of the request. Instead of ‘We are in dispute with a company. Do not help it prosper while it refuses to settle with us on reasonable terms‘, the request becomes ‘We are in a dispute with a company. Do not help it prosper while we demonstrate this discontent today, but feel free to do so the rest of the time, whether or not the dispute is settled‘.

This second request is much less compelling.

Imagine you were a TfL contractor, a rather more important role than mere customer when it comes to scabbing.

Observe the strike, and you lose your contract for good, while the employees are back at work the next day. That’s bad manners. I don’t think it’d be fair to expect a contractor to endure that level of uneven sacrifice, so I wouldn’t have any problem with them crossing a picket line, strike or no.

As the nature of a strike changes, the nature of the obligations it puts on others also changes.

So what of my own tiny bit of strike breaking?

Since this strike is about discommoding TfL temporarily, I think it’s perfectly reasonable to find a middle way.

The RMT and TSSA are striking today and tomorrow, because (quite reasonably) this demonstrates the anger of their members without endangering their jobs.

So I shall boycott the Tube on Saturday and Sunday, because it demonstrates my sympathy without endangering my job.

On the challenges of opposition, for both Labour and Tories.

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I sometimes forget to post articles I’ve written elsewhere. So here are a couple, in case you haven’t had enough of my insufferable self-regard and bloviating.

Here’s me, for Policy Network, on what the wrong kind of growth means for Labour’s economic strategy. I make the case that Labour faces a debate on how far we level with the voters, and ourselves, about what a Labour government would be like.

“It would be politically awkward for Labour to lay out now the ‘turn rigour’ it would have to implement in office, annoying natural supporters. Yet without such detail, Labour will find their plan painted as an irresponsible addiction to taxing, spending and borrowing, just as Britain is recovering from the previous binge.”

And here I am in the latest edition of Progress magazine, debating what happens to the Tories if they lose the next election. They’d need to change, but would they be able to?

When a political party endures extended failure, it often emerges transformed. So it was for the Liberals at the turn of the 20th century, and for Labour after the 1930s and 1980s. The party that finally reclaimed power was substantially different to the party that had lost it.

“Today’s Conservative party is largely the same party the voters threw out back in 1997. As Francis Maude wrote in his foreword to Modernisation 2.0, a recent manifesto published by the Tory moderate group Bright Blue: ‘I remain a fiscal conservative and an economic liberal; I’m realistically Eurosceptic and a defender of civil liberties and freedoms.’

He is right. Today’s economically liberal, free-market, low-tax, pro-business, anti-regulation, tough-on-immigration and tortured-over-Europe Tory party is extremely familiar. The truth is that Conservative modernisation was not a rejection of Thatcherism, but its continuation by other means.”

Let me know what you think!

Labour reforms: The good you can do

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The process of the reforms to the Labour party demonstrates what is wrong our internal structures. Despite that, the reforms are well worth supporting.

I’ve not talked much about the Labour reform process, because I had no idea what the reforms were actually going to be.

That is symbolic of what is wrong with Labour’s decision-making. The Leader of the Labour party announces that he wishes to make some positive sounding changes. Instead of this being debated by party members, we then quietly awaited the result of private negotiations between the Labour party and the Trade Union movement to discover what the proposals would be.

Today, less than a month before the special conference that will decide the reforms, we have a picture of what the reforms will be only through media interviews, off the record briefings and interviews with Trade Union General Secretaries.

The most official account of the reforms so far is a press release on the party website.

The National Executive is meeting tomorrow to discuss the reforms, and there may still be changes. When we do get the final document, it will be a fait accompli ((One small point about the process: As an ordinary Labour party member, I’m not quite sure how my view on the proposals is supposed to be taken into account. The NEC will presumably agree a document tomorrow, I’m assuming this will then be published, and my CLP delegate will get a vote at the March Conference. How they will work out if local members agree in the intervening three weeks, I don’t know. Perhaps there’ll be a GC meeting, but that doesn’t give anyone much time, and I’m not a member of my GC anyway. In any case, it doesn’t matter, because if the Union leaders back it, it’ll go through)).

Why did it happen like that? Not because Ed Miliband’s team are control freaks, or have capitulated to the unions or whatever.

We’ve got a sucky process because that’s how the Labour party has always works.

Any reform in the party needs to get the approval of at least some Trade Unions. John Smith won his OMOV party reforms at conference more because MSF agreed to abstain than because of John Prescott’s rhetoric. Even when Constituency parties vote 9 to 1 to support a measure, as they did with New Clause IV, it required some trade unions to *shockingly* ask their members’ views to secure victory.

Back then, there were a lot of unions, and quite a few different views among them. Today though, many of the unions that took those decisions, like the MSF, no longer exist. That gives the Labour leadership a headache when it comes to party reform. The union movement has, by mergers, created a small number of mega-unions. This means that the approval of the General Secretaries of Unison, the GMB and Unite is needed to secure passage of any party reform. If they share a common position,it’s game over.

Internal negotiation therefore has to take precedence over open debate. The Union leaders’ views matter more than members opinions because the party constitution makes it so.

Now, I’m no great admirer of the current leadership of the Trade Union movement, but it would be stupid to pretend they are utterly inflexible. They are Trade Unionists, and Trade Unionism is all about collective representation and negotiation. The General Secretaries are willing to negotiate. However, they will not simply roll over to a Labour Leader’s demands, and given the structure of the party, they cannot be made to, even if the overwhelming view of the rest of the membership is against them.

It’s against this imperfect background that any reform of the party must be judged.

When it comes to party reform, I want a hell of a lot.

I find Labour’s selection processes ridiculous – primarily the farce of union branch nominations, which effectively guarantees a union backed candidate a place on the shortlist, and is usually settled by a quiet regional political committee stitch ups, guided by a Union officer working to the agenda of a political faction.  Then there’s the fact the resources available to such candidates can massively outdo that of non-wealthy alternative candidates. Equally, because the leadership want to get round this, you end up with a lot of late selections where the shortlist is effectively a negotiation between the leadership and the unions. This is a bad joke.1.

Even worse, there’s the total farcical irrelevance of Conference, where half of the votes are decided by a tiny group of union leaders, which effectively strangles party democracy and policy debate. It also means that the leadership can simply, as New Labour often did, shrug off policy defeats as an irrelevance. Even when the Leadership is out of touch with members, the madness of Conference structure means no-one cares or pays any attention.

So in my model party, MP selections would be pure OMOV on a tight spending limit, with no nominations by distant affiliates. I’d make one exception: where the party was small, primaries could be used.

I’d remove the trade union vote from party conference entirely, making Conference a members-only body, but make up for this by retaining Union seats in the NEC (though with more members representation than the derisory six we have at the moment) and in return giving affiliated unions a bigger say in the NPF, where the policy decisions that go before conference are supposed to be decided.

As for leadership elections, I’d make them a national primary (They do these things so well in France and Italy), with a parliamentarian voice in making nominations.

Like I said, I’m an ultra.

My model Labour party is very far from what we’ve got now, or what the (almost) announced reforms will apparently give us.

But the current reforms are still well worth supporting.

Ed’s team have secured important changes.

First, all Union members will be asked individually if they want to affiliate. Those that do will then be asked if they want to join a sort of ‘associate members’ scheme, which will give them votes in any leadership election. Crucially, the party will hold the ‘associates’ details, so sending out ballot papers in an envelope telling people who to vote for will be stopped.

The right to vote for leader would also be extended to ‘registered supporters’ so the vote won’t be expanded only by union members. In essence, the reforms would turn a leadership election into a closed primary, which would be pretty damn good.

Nor am I bothered by the idea that hundreds of thousands of trade union members will become ‘associates’, swamping the ‘full’ membership. Partly, that’s because I doubt it’ll happen, but mostly it’s because, absent dodgy envelopes, Union members political judgement will be similar to that of most Labour supporters. Further, to the extent that union members are unrepresentative (too public sector, too old, too white, too professional) that could be balanced by the registered supporters scheme, which would finally become meaningful.

On top of that, there are hints that there will be tougher spending limits on selection campaigns. I hope that the free breakfasts, drinks receptions and speaker meetings with food we’ve seen in recent selections from candidates with well-funded campaigns will get banned. Treating is illegal in elections, and should be illegal in selections too.

So far, so good.

Unfortunately, the reforms don’t appear to touch is the internal decision-making structures of the party themselves. There’s no proposal for more member representatives on the National Executive, and Conference seems to be unchanged.

However, the reforms will eventually make the existing structures untenable.

There are probably around three and a half million potential union-affiliated members.2.

You’d expect between a twentieth and a tenth of those to affiliate, which would mean that the Unions affiliation fee would be around a million pounds a year, representing around two or three hundred thousand people. For that, Union General Secretaries would effectively get a veto on Conference votes and party rules, with no requirement to consult those voters on their opinions, even though they’ve chosen, as individuals, to participate in the party.

I just don’t see that as credible – for a start, a Labour leader could demand that Union leader’s ask their members opinions, and reflect that in their voting.  Or the leadership could just ask those union members who have become associates themselves, and point out the difference between the members views and that of their leaders.

The other element that might be a concern is if affiliation money drops dramatically, Trade Unions would simply make an top-up donation from their political fund to the party to make up the difference. The risk is that this donation would become conditional.

However, if I were Len McCluskey, and my union had the financial problems Unite does, the chance to save a few million by keeping the political fund in the union coffers would be very attractive. I’m not sure that money would be handed over. Second, if it did happen, the political damage would be so great, I doubt it would happen twice. The image of Paul and Len dangling a cheque before a Labour leader during some NPF away day would be politically fatal, and no Leader would fall into that trap a second time.

Instead, I think Labour is going to become a lot more positive about capping donations and providing state funding, and be willing to force through change along these lines in government, probably strongly supported by the LibDems, even in the face of Tory opposition. Labour has hinted at this before in it’s changing attitude to various party funding proposals. The big sticking point in previous negotiations was treating Trade Union’s differently to other donations. If that objection falls as a result of these changes, that opens the door to a politics where Labour affiliation income would be smaller, no further big donations would be accepted by anyone, with the difference made up by state funding (or less likely, small donations).

All this means that these reforms will deliver useful changes in the next few years, and make further changes inevitable in future.

Considering the limits on what could practically be achieved given our party structure, they probably represent a near-maximum3.

On that basis, they deserve full support, even though, amusingly, the support of ordinary members is of absolutely no consequence to their special conference success, which is one big reason reform is  needed.

  1. I once got onto a parliamentary shortlist as a result of a failed fix by the then Leadership in favour of another person []
  2. Unite has just over a million members (they claim more, but many don’t pay subs), Unison slightly more at one point two million subs payersThe GMB has just over 600,000 members. USDAW have 400,000. Adding in the smaller unions, that gives around three and bit million potential ‘associates’. That’s more than TULO claim now, mostly because the Union’s don’t affiliate all their members now []
  3. Assuming they are as advertised []

Demolition men; or the quiet value of craven spending.

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I blame Emma Burnell. A throwaway line of hers this morning set me off. She probably didn’t even notice she’d written it. After all, she was writing about something completely different.

The line that got to me was

“On a raft of policy measures, the leadership struck out to places the party didn’t want to go – be that 40 day detention, the Iraq war or our craven failure to invest in social housing(my emphasis)

Now, I’m sure there are lots of people who would agree with the first two. But the latter?

Not only did the last Labour government fail to invest in social housing, it cravenly failed to invest out of fear, cowardice, or a general unwillingness to stand up for what is right and proper.

Which is a bit unfair. Because the last Labour government spent an absolute shit-ton of money investing in social housing.

As the York University Housing Review put it, by the end of the Labour government:

“Overall gross social housing investment in Great Britain rose.. to the highest level in real terms for almost 20 years – up by over 80 per cent since the previous decade”

But wait, there’s more.

That figure excludes investment  both from private sector finance schemes, and investment by arms lengths bodies, like housing associations.

Include those, and

“…the last two years have seen overall investment in social housing at its highest sustained level (in real terms) for three decades.

So, like I said, a shit-ton of money went was spent on social housing.

Why? Because investment was needed on a huge scale. As Inside Housing put as Labour left office:

“Decades of under-investment under both Conservative and Labour administrations had left more than half of all social tenant households – 2.3 million – living in unfit homes in England. Finding the £19 billion for the repairs backlog was widely considered an impossible task.”

What’s the situation after the money went in? Well, as Inside Housing points out:

“At the last count 86 per cent of all social homes had met the standard, compared with less than half in 1997, and the government has agreed revised deadlines for the 8 per cent due to miss this year’s decent homes deadline”

The Chief Executive of the Chartered Institute of Housing called the turn around ‘amazing’ and ‘real leadership and state support at it’s best’.

Of course there were still huge problems – especially in private renting and among poorer homeowners, but the change was major, and real.

So how come Emma, and many, many, many, many others in the Labour party, sincerely believe this money was not spent, and was not spent out of cowardice?

Two reasons, I think.

First, because that spending took time.

As Inside Housing rightly noted the first few years of the Labour government were marked by low investment levels. It took until the 2000 spending review before the taps got turned on. That meant that for a considerable period of time, Labour people were impatient for investment.

But I think the more important reason, is because this money was spent primarily on refurbishing the existing housing stock, not on new build.

Putting in new kitchens, double glazing and bathrooms doesn’t get noticed in the same way a big new estate does.

I was reminded of this the other week, when this chart from a London Review of Books article went round twitter.

Look at all that huge new build! Why can’t we do that again, eh?

As Stewart Wood, a leading adviser to Ed Miliband, tweeted

Well, up to a point my Lord. It’s not quite the whole story. That graph doesn’t show all the houses we knocked down first.

You see, the one bit of Britain’s post war house building boom that gets neglected in the accounts of Britain’s postwar building boom  is that in the 50s, 60s and 70s we knocked down an awful lot of homes. If the German’s hadn’t bombed it, we demolished it. We called it Slum Clearance.

In 1971-75, for example, the peak of the above graph, for every five new homes that were built in Britain, one was demolished as a slum.

So the story of Britain’s post war home building is also the story of Britain’s post war home demolition.

Now this isn’t the time or place to get into whether slum clearance itself was a good or bad idea. You can watch programmes like this one about Deptford, and make your own mind up about that.

But the post 1997 emphasis on home refurbishment was influenced by a reaction against the earlier policy of demolish and new build.

Even where Labour tended to push for demolition, such as the ‘pathfinder’ projects in inner cities, ministers met substantial local opposition. Even in famously unpopular estates.

So today, when we talk of housing investment, but only mean house building, we ignore something important.

Further, if you take the post war housebuilding graph above, but make allowances for demolitions of slums, the growth in post war housing stock looks very different.

Here’s my attempt to do just that1.

As you can see, the peak period for house building was also the peak period for demolitions. If you ignore demolitions, you get a scale of house building that isn’t actually reflected in extra places for people to live in.

You do get Better dwellings, with inside toilets and better insulation, but then the refurbished homes of the last decade are also better.

Just for fun, if you map the impact of demolitions onto the earlier graph from the LRB, it begins to looks something like this. (this is NOT accurate, just me messing with MS paint to demonstrate scale of difference!)

meek01_3601_01

The post war house building peak suddenly looks a lot less impressive.

This should be a reminder that simply taking raw house building data is only ever going to be a partial story.

If the last government had spent their billions on demolishing and rebuilding poor housing, it would probably have increased the house building rate but reduced the number of liveable social homes2.

It’s very easy to ignore the positive role of renovating homes, rather than demolishing them.

It’s just as easy to forget the consequences of demolishing homes, not renovating them.

After all, if the governments of the sixties and seventies had refurbished, not demolished, we’ve have a lot more victorian terraced houses in our inner cities, and a much less impressive set of house building data to compare ourselves with today! Whether that’s a good or bad thing is up to you.

What does it mean for the future?

Well, apart from anything else, it’s a reminder that a major housebuilding programme without demolitions will take up an awful lot of space. Where that space is will be pretty important.

Oh, and it’ll cost a lot of money, but that’s an argument for a different day.

  1. what I’ve done is take the GB housing completions data, and subtracted the average annual demolition rate for England and Wales from the above chart, which obviously excludes and Scottish demolitions []
  2. because the housing that would be demolished would have been  higher density than the replacement []

50p, deficit reduction and hiding from the long ugly.

10 comments

Sometimes politics is a total mystery to me. Oh, don’t snigger like that. I’m quite aware of what a remarkable feat it is to have spent as much time as I have working in British politics and to have achieved such a pathetic array of titles and status. I am above all that now. Or below it.

I am reminded of my poor political judgement because of the way Ed Balls’ announcement on Labour’s commitment to run a current budget surplus by 2020 and reintroduce a 50p Tax rate was covered in the media.

One of these policies will effectively decide the course of the next Labour government. The other got all the news coverage.

I was baffled by this, as I thought the 50p tax rate rather small beer in the grand scheme of things, and certainly not an objectionable policy when we face a huge deficit for an extended period. So long, that is, that the rate brings in extra revenue, which it seems very likely to.

Being the political naïf I am, I thought the deficit commitment was far more politically meaningful than the 50p rate, and although no news editor in Britain agrees with me, I still think I am right.

What would hitting Labour’s new deficit targets mean? First, we need to examine what they are.

Ed Balls said the following:

“I am today announcing a binding fiscal commitment. The next Labour government will balance the books and deliver a surplus on the current budget and falling national debt in the next Parliament.”

In fiscal policy the naming of parts is quite important. I’m assuming that by ‘a surplus on the current budget‘ we mean the headline ‘current budget surplus’, rather than say “the cyclically-adjusted current  budget”

I’m also assuming that by ‘falling national debt’ we mean Public Sector Net Debt as a percentage of GDP1.

So, by the end of 2020, a Labour government would achieve both a surplus on the current budget and falling national debt.

Now, this doesn’t rule out ‘borrowing to invest’ as a supplementary policy, but it surely suggests that such a policy will be unlikely to be deliverable at a major level if such borrowing is included in the National Debt figures.

Balls’ pledge also means that  while Labour is committed to repealing the rolling five-year fiscal mandate (and quite right too), he is replacing it with a fixed five-year fiscal mandate, and one not based on the estimates of ‘structural’ deficit. Meanwhile, Osborne’s Supplementary target – that net debt will be reduced as share of GDP by 2015/16 –  is effectively moved back to 2020, with Labour’s pledging the national debt will be falling by 2020.

So what does all this mean for the next Labour government?

The latest OBR projections are:

“The current budget balance, which excludes borrowing to finance net investment spending,  is forecast to show a deficit of £74.2 billion this year (£86.3 billion on an underlying basis),  down from a peak of £109.5 billion in 2009-10. The current balance moves into surplus in 2017-18 and records a surplus of £28.0 billion in 2018-19″

For public sector net debt, the report indicates:

“We forecast public sector net debt (PSND) to rise as a share of GDP in each year up to and including 2015-16, peaking at 80.0 per cent of GDP. It falls by a statistically and fiscally insignificant margin in 2016-17, and more rapidly thereafter, reaching 75.9 per cent of GDP in 2018-19.”

In other words, one way of reading Labour’s pledge is that it gives a Labour chancellor two years extra time on the deficit ‘glide path’, while also creating some space for extra investment, (as long as this means Public Sector Net Debt/GDP  is falling by 2020).

However, if the economy should underperform, there is very little wriggle room on these targets. Labour’s pledge is looser in general, but will bite far harder if the economy is weaker than forecast2.

Assuming the central forecast is correct, does this change in the ‘glide path’ create room for substantial ‘extra’ spending under Labour?

I doubt it. Here, the Fabian Society’s spending review is helpful. Under their ‘scenario two’, a Labour government would be spending some £20bn more than the current government projects by 2017/18. This is more or less what you’d expect if you were looking for £28 billion extra fiscal space around the end of the next parliament.

This does not make life easy for the next government: Here’s the Fabian breakdown of what it would mean:

‘Social security: spending £5bn less than currently forecast….

„„‘Future-oriented’ spending: a £5bn increase in capital investment and ‘flat’ real spending for three key economic budgets: education; business, innovation and skills; and work and pensions.

„„ Health and social care: ‘flat’ real spending for the NHS and for the proportion of local government grants paying for social care. This would still be very challenging for health and care providers.„„

Other department spending: a cut of around 3.5 percent per year.’

So that’s a £5 bn extra cut to social security – over and above what the Coalition is proposing in this parliament- , 3.5% cuts in departments like transport, defence and local government (ex Social care), and flat real spending in the NHS, social care, education, DWP and BIS. That creates £5 billion space for extra capital investment, which frankly isn’t very much.  On top of this would have to come funding for childcare, social care changes, and so on.

These extra cuts are required because in order to meet anything close to the Coalition’s baseline after the election, the post 2015 pending cuts would have to be utterly savage. The IFS have set out how scary some of this is in various presentations.

ScreenshotScreenshot-3

Me, I’ve called this the ‘long ugly’.

The ‘Long Ugly’ means that even ameliorating the deficit reduction targets by two years will still require a very tight budget framework with significant further cuts to be made somewhere.

The Fabian spending commission made the choice to protect current departmental spending, which left little room for further capital spending, but the reverse is just as likely to apply.

Would it be straightforward to simply increase capital spend significantly, and not count this against the current budget? It’s a possibility, but it looks to me as if the pledge to have the national debt falling by the end of the parliament means the room for manoeuvre here is limited.

Of course, capital investment can be done outside PSND, but it would have to be structured extremely carefully. (See for example the role of the Green investment bank and PSND.) If it’s done within PSND, you’d probably be looking at a level of overall budget flexibility not much different to the amount I’ve already discussed before you risk breaking your ‘falling National Debt as share of GDP target’3.

In other words, the next Labour government would, under our fiscal rules, be making significant further cuts on top of those this coalition has decided on in this parliament.

This would allow us to  increase capital investment, though if not done off-balance sheet, not by a great deal. Any further significant increase in capital spending would be dependent on either social security cuts, departmental cuts or tax increases.

This is a tough, important strategy for a Labour government to follow, and I fully support it.

I’m surprised though, that all the attention is going on the announcement about the top rate, which is more or less a rounding error when compared to the above.

In other words, the Long Ugly is still coming to get us all.

  1. It’s possible to imagine a different definition for either target , but these seem the most likely, given the language in the speech For example, we could mean the straightforward PSND number must fall. Though that would mean finding an extra 20 billion in savings/taxation than the current coalition forecast, which seems unlikely []
  2. conversely, of course, it is much easier if the economy out-performs the forecast! []
  3. I haven’t done the calculations, because I’m a bit thick, so I welcome any correction to this – I’m basically just looking at table 4.38 in the latest OBR report and trying to work out how much flex a revised PSND target would give []

The strange case of the vanishing rent increases.

1 comment

(I’ve still got a post on the role of slum demolitions in making the post war house building data look better than it really was, but that needs more time to make the charts pretty. This is more immediate!)

It is one of the easiest way to get a hearty cheer at a left-wing meeting. You stand up, condemn rip-off landlords, Rachmanism, rising rents and demand more social housing. I’d advise any aspirant Labour MP to do it at their selection meeting.

It’s easy because it’s true.

There are landlords who are total bastards, and they need to be regulated for the good of both society and tenants. We do need more social housing, though how we pay for it is a lot more complicated than it looks. There are rip-off fees, and too much insecurity of tenure. All of these points are good and right, and need to be addressed.

Unfortunately, that argument often comes wrapped up in a larger argument which states that the whole market is exploitative, that rents are rising rapidly, and therefore rent control is needed to restrain the vicious exploitation of the rentier class.

This doesn’t seem to have much evidence to support it. Today saw the latest release of the ONS’s private sector rent increase data. This showed private sector rents increasing at a rate of just 1% a year. This is, of course, below inflation, and about even with earnings growth.

When I’ve said this before, people have been pretty sceptical.1

Ah, but what about CPI rents? Those are higher, right? So why don’t we look at those?

Well, yes, CPI actual rent data is higher, but that’s been driven by an increase in rents in the social rented sector. The data on the private sector is basically the same. You’d be quite right to blame government policy for increasing rents, of course.

Ah, well, rent increases might be low now, but that’s because we’ve already seen massive rent hikes?

Well, no. For the last eight years or so, English rents haven’t increased by more than 2% a year, and actually fell in late 2009, early 2010.

Ah, but rents are rising faster in London. That’s where we need action.

Well, yes, rents are rising faster in London, up 1.6% last year. However, that represents a sharper downward trend in the rate of increase than in most other English regions, as you can see below.

But hold on, There’s a housing crisis. We need lots more homes. So what’s going on?

We need lots more homes. But remember, the private rented sector is only a small proportion of the UK Housing market. What seems have happened in the last decade is that there has been a major expansion of private renting, (which might have helped keep increases low) while there was a decrease in the number of owner occupiers. See below2

If I was trying to work out what was going on, I’d wonder if we were seeing a lot of people who would like to buy a house, but can’t, who are now renting.

Those that can buy, do, driving up the house price, while landlords move to offer those who can’t afford to buy rental homes3.

This  process seems to have been turbocharged since the great crash, perhaps because ultra-low interest rates make the gap between a mortgage repayment and a rental price quite attractive. (It’ll be interesting if we start to see a fall back in the number of private rented homes, and an increase in the number of owner-occupiers as the economy normalises, more people can buy, and some landlords want to realise their capital gain.)

If I were feeling mordant, I’d add that you often hear that we need much more renting in the UK economy. However, we don’t seem to like it when we get it!

That’s for quite a good reason. In this model the shortage of supply would be seen in higher house prices, not higher rents. House prices are rising, after all. This could create a vicious cycle, where house prices move ever higher, putting ownership out of reach for ever more people, who live in an ever-expanding private rented sector which is, at least relatively, cheap.4

To solve this, you’d probably need both a private owner and social rent home building programme to relieve the tension on supply at both ends of the rental market.

If you were lucky, you’d be able to use one to help pay for the other. However, it’s pretty hard to argue that what we’re seeing is a market that’s all about rip off rent increases.

That’s pretty clearly not the problem, and trying to solve it would be at best a waste of time, at worst, actively harmful.

 

  1. Often they quote indexes of rents supplied by lettings agencies, not the ONS. I suspect that’s when you look for a place to rent, you’re probably seeing rent increases at their worst – a new renter you’re a pretty risky proposition for a landlord, who would rather hold on to an existing tenant who pays their rent than look for a new one. One way to do this is freeze rents for existing tenants, and increase rents when you look for a new tenant, thus ‘hiding’ frozen rents from the letting agents index, which becomes more likely to show increases. That’s just a guess though. []
  2. and don’t be fooled – Private registered providers are social landlords []
  3. perhaps in high density development that are less attractive for tenants than the houses they’d like, but very profitable for developers []
  4. Existing home owners would do quite well out of this, at least until mortgage rates went up []