Repo 2011

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In January, Falkirk Council announced that, as a response to fiscal austerity measures, it would be turning over control of certain community services – public libraries and the like – to a charitable trust, a move meant to "bring community benefits and save money". This got my attention. You see, despite my icy libertarian exterior I am quite a fan of the Third Sector, and have been known to drift off into daydreams of the Metropolitan Museum of Art and leafy New England boarding schools at the slightest mention of the word "trust." Plus, with the Big Society project heating up, charity and individual empowerment are hip. So, full of hope and wonder, I set off across the internet to learn about this innovative way of delivering public services.

I was sorely disappointed. As it turns out, Falkirk Council estimates that the nearly £1 million it will save will be due, primarily, to favourable tax treatment unavailable to it, but available to charities, on property rates and VAT (reflect for a moment on the fact that councils collect tax in order to pay tax). Furthermore, the primary source of funding for the services will remain virtually unchanged, as costs will continue to be met primarily through a council grant and user fees, as before. In the scheme's sole redeeming feature, however, the trust will permit the council to make use of external funding sources that would otherwise be unavailable to it. Nor is Falkirk Council the only council to use this structure- 23 other Scottish councils have done the same.

One cannot fault Falkirk Council for following this course of action: from their standpoint, they are providing the same services for less money. However, if the Council were a private sector company, we would call it by another name: tax avoidance. At a national level, no "community benefit" is brought, and no money is being "saved"- the entire country, paying 20% VAT and sky-high levels of income tax, is left holding the bill. This begs the question: what are we to make of a country where even the public sector is required to invent its own accounting gimmicks in order to escape excessive taxation? What are the implications of the fact that such tactics can force a family in Falmouth to effectively bear the cost of a library in Falkirk? I struggle to find words-- tragic, pathetic, even Kafkaesque. But one thing is for sure: something has gone very, very wrong.

Looking back on the quango cull

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Was the Coalition’s first cull of the quangos quite as botched as the House of Commons Public Administration Select Committee’s (PASC’s) report of 20th December suggests? On reflection, it was probably worse. The PASC’s main complaints were about poor drafting of legislation and process including the lack of consultation and implementation plans. The tests used to determine the taxpayer value of a quango “were not clearly defined”. The PASC is being polite: they were not defined at all. This cull of 192 quangos was an arbitrary, seat of the pants, affair.

Before the election, the Tories claimed that a quango cull could release £1bn of public money. When Francis Maude, the Coalition Minster responsible, was quizzed on the Today programme (Friday 31st December) about the savings achieved, he refused to answer. The impression was left that no money would be saved, beyond the general cutback of government spending. Possibly, the cull would create even greater costs. Much of the reduction of numbers comes from merging quangos, yet we know that larger quangos with more diffuse responsibilities provide worse taxpayer value.

The other departing quangos are being merged back into departments. The Coalition’s rationale is that this will provide greater accountability and transparency. Wouldn’t it be wonderful if Ministers had just a little knowledge of history? Quangos were originally created to take responsibilities OUT of departments precisely to achieve greater accountability and transparency. The taxpayer would be able to see what was, or was not, going on. Now the same argument is being made for the reverse. Departmental units are more accountable and transparent to Ministers but LESS accountable and transparent to the rest of us. Using this argument to justify the reorganisation is dishonest.

In terms of taxpayer value, we need to compare the costs of departments and quangos doing the same things. Maybe one is cheaper for some and the other cheaper for others, as is the case for lay and professional magistrates. If these figures have been calculated, we have not seen them. So much for accountability and transparency.

Reorganisation provides the illusion of progress but it always costs more unless the work itself is reduced. If implementing a government policy takes either 9 mandarins or 10 quangocrats earning much the same money, who does the work is not material. No one would expect mandarins and quangocrats to be wildly different in terms of productivity. The quango vs. department discussion obscures the rationale behind the whole exercise, namely that the State will only be rolled back if it ceases to do some of the things it now does.

We should not ask “is this quango necessary?” but “what would be the consequences if this work was not done at all?” If something really needs doing and the State stops doing it, private enterprise will step in. If no one is prepared to pay for it, then maybe no one wants it that much. In other words, the Coalition’s approach to the cull of the quangos was fundamentally wrong. There are a mass of things the State can simply stop doing, notably things within the MoD which the armed forces could better do for themselves.

The PASC made a number of excellent points including the confusion between the many types of quango and departmental units. Converting all those that survive to Executive Agencies is a good idea but first we need to eliminate redundant government and quango activities. Cull the work and only then the quangos.

On the eleventh day of Christmas...

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My true love sent to me: eleven pipers piping. It might refer to the eleven loyal apostles. In politics too you can never be sure of the total loyalty of your supporters, particularly since so many of them are vying for a better job. I am not sure that Vince Cable is vying for a better job – indeed, he was very reluctant to take the job of Chancellor of the Exchequer, which was his for the asking. So he became Business Secretary.

Or perhaps Anti-business Secretary. His intended conference speech, trailed as usual well in advance, seemed to hostile to businesspeople that he was forced to justify his remarks by (mis)quoting Adam Smith. Smith did indeed point out that businesspeople seldom got together without trying to rig prices and carve up the market: but he then goes on to say that it is government regulation that encourages them and enables them to succeed. No mention of that from Vince, of course.

Now his disparaging remarks on Rupert Murdoch – who I guess has done more than anybody to drag the UK media out of the Soviet era – have forced his boss to take him off the Sky BSB ownership case. His opinions seem to show him up as the former Labour councillor he is, someone who would have been much happier in coalition with Gordon Brown. And his unguarded criticism, not just about businesspeople but about the whole thrust of the coalition, show him up too as an ex-academic rather than a good politician: it is easy to make bold assertions when you have no power to do anything about them, but in government you have to keep silent occasionally for the good of the whole project.

People say that the coalition need to keep Vince, just as Blair had to keep John Prescott, because he secures the Party's left: 'Vince is Vince', and you just put up with it. I don't think so. Like Syme in 1984, he speaks too plainly. The Party does not like these people. He will be vaporized.

On the tenth day of Christmas...

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My true love sent to me: ten lords a-leaping. This probably refers to the Ten Commandments, but lords today aren't exactly leaping to do anything, particularly to reform the House of Lords. At present it's just an enormous quango, appointed by the party leaders. It should be elected – but definitely not along the same lines as the House of Commons (look what that brings us). We want a system that will elect people of stature, and not career politicians. Perhaps party labels should be banned. Perhaps it should be a one-term-only arrangement of, say, seven years. Perhaps peers should be elected by age groups rather than constituencies. Perhaps they should be chosen at random, like jurors, or in a national referendum.

What we certainly don't want is party lists. Still, I'm beginning to think that there might still be some room for appointed peers too – but only people of indisputable national status, with a ban on former MPs being appointed (though they could be elected). Let's have a Lords that actually represents the people, rather than the political parties.

Today is also a bank holiday; since Christmas, Boxing Day and New Year all fall at a weekend this year, extra holidays have been added during the week. In Scotland, tomorrow will be a bank holiday too, since it takes the Scots a little extra time to recover. Call me a killjoy, but I think bank holidays should be banned. Why should politicians tell us when to take our breaks – which means that we are all stuck in the same getaway traffic jams? Aren't we mature enough to negotiate our own holidays with our employers?

On the eighth day of Christmas...

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My true love sent to me: eight maids a-milking. In the Christmas song, A Partridge in a Pear Tree, these may signify the eight beatitudes or blessings in the Sermon on the mount: blessings to the poor, the meek, those who mourn, the just, the merciful, the clean of heart, the peacemakers, and those who suffer persecution.

Milton Friedman pointed out that when the American colonies were first settled, roughly 95% of the people worked in agriculture, sustaining a population of around three million. Today, less than 5% are in agriculture, yet American agriculture feeds not only a population of 300 million, but millions of other people around the world too. It just showed the kind of rapid technological, productive and distributive productivity growth that relatively free markets could produce, he thought.

Less than 3% of the UK population is involved in agriculture, but we seem to be able to feed ourselves, even without the wine lakes and butter mountains built by an earlier phase of EU agriculture subsidy. No, the people who do most milking these days are those in the political class. Politics and current affairs has become a major industry. The 24-hour news networks need political news, while politicians need the networks to get our their ideas and puff themselves up. Then there are think-tanks and lobby groups, (nearly) all pushing for new laws that help their particular client base. And there are journalists, whose career are made by getting exclusives.

Luckily, exclusives are just what politicians want, so they can spin the story their way before it gets into general circulation. So it's you scratch my back and I'll scratch yours. Write some nice pieces about us and we might leak you the unemploymenf figures (with our take on them) a little early. So what if it's public information – it's valuable stuff, and by selling it we can curry favour with a newspaper and get our own spin put out too. Utterly corrupt, of course, but thats how it works. Or has done; but I get the feeling that this too is changing. A bit.

Socialists, always wanting to nationalise things

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It was clearly going to happen of course. Snow falls on the country, airports close for a bit and suddenly there are calls that all airports should be nationalised again. Our lack of surprise comes from the fact that we know very well that there are those who can see the mote of market problems, but not the beam of Government failure. For it simply isn't true that transfering the running of something from those who hope to make a profit from it to those who would preen and posture for the electorate will hve the effect of kissing that scraped knee and making everything better. Despite the childish insistence that it will.

A case in point might be another little weather related story of these past few days, the water situation in Northern Ireland.

Large parts of Northern Ireland have been subjected to water rationing as engineers battle to fix a huge number of leaks.

In the wake of the thaw that followed arctic weather conditions, burst pipes in the main water supply, plus many in private homes and businesses, have left thousands of people without water.

Northern Ireland Water, (NIW) the company that oversees the service, came under fire for failing to cope with the deluge of calls from the public, though it argued it was doing its best to meet needs.

But with water levels running low in reservoirs, officials said supplies would have to be alternated to different locations as work to repair the damage continued.

I'm not quite sure how they've managed it, but they have. An excess of precipitation has led to empty reservoirs: and they've managed to get to a water shortage on the island of Ireland, of all places on the planet to manage it. It's as if someone had contrived to achieve the impossible, a shortage of fools in Parliament.

But why has this happened? It hasn't happened in England, Wales or Scotland, and we've all been subject to much the same weather. The answer would seem to lie in the way that the water system in NI was not bundled up and privatised (each of the four constituent parts of the UK had different arrangements at privatisation), rather, it stayed as a service directly run by government. Not even a not for profit company or a mutual between the politicians and the water coming from the taps (this was finally changed just a year or two back but water is a long term business).

A bit of cold weather, reservoirs emptying, the population quite without water: this would seem to be the result of letting government run something directly rather than selling it off to people who would make a profit.

Of course, I am being extreme: but we really do have to keep reminding everyone that the existence of either market failure or failures of market based organisations does not mean that government is going to do better.

Making it stick

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Among the lessons the coalition should take to heart after a remarkable year in British politics is that reform must be radical to be durable. Too often in the past reforms have been half-hearted and tentative, enabling a subsequent government of a different ideology to reverse them. History abounds with examples.

The 1945-51 Labour government implemented wholesale nationalization of UK industries. The subsequent Conservative government did not reverse this, but contented itself with denationalizing the steel industry. A later Labour government easily reversed this reversal. The 1980s Thatcher reforms were more radical, with systematic and large-scale privatization replacing the hesitant piecemeal denationalization of the past. This was radical enough to be irreversible in practice.

Labour's abolition of the grammar schools was not reversed by subsequent Tory administrations. Instead schools were allowed, after a somewhat fractious process, to opt out of local authority control. This, too, proved easy to overturn.

The Tory health service reforms which enabled GPs to become budget holders were highly successful, but so limited in scope that once again Labour was able to reverse them.

The Conservative part of the coalition has been watching the Swedish school reforms which permitted state funds to be spent in relatively low-cost private schools. This was so popular that the Social Democratic opposition, which had pledged to reverse it, not only U-turned, but even extended the reforms when they regained power.

The lesson of past experience seems to be that if the reform is thoroughgoing, and done swiftly enough and on a large enough scale, it can attract support by its success, and embed itself so firmly that it becomes difficult to overturn.

Many observers supposed the coalition would be a weak and temporary affair, tackling only lowest common denominator things that both parties could agree upon. Instead it had turned out to be quite bold, going for big reforms in the three problem areas of education, health and welfare.

None of these has final proposals yet set in stone, so at the time of year when resolutions are made, our hope is that the coalition will look at the failure of half-hearted measures in the past,and resolve to go for the really radical solutions that could prove to be lasting.

The Big Society void

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I've just finished The Big Society by Jesse Norman. It's a very wide-ranging exposition and assessment of many different strands of political philosophy – here is an MP who actually reads books – and books on important things, indeed. Sometimes his review of different philosophies becomes so wide-ranging that it becomes hard to see the wood for the trees. But Norman's idea is strong and comes through. Human beings are social creatures, he insists. They are neither rational individualists as the economics textbooks often suggest, nor as malleable as the rationalists and communists might have wished. They need, choose to live in and are shaped by, a complex web of social relationships, from families through workplaces to clubs and churches and much, much else.

Norman believes that the two competing approaches of the Conservative movement – paternalism and libertarianism – have both lost this plot. One would impose a specific political and moral order that ignores the living dynamism of these social ties; the other exults in the individual but forgets that all individuals are part of, and are shaped by, this social context. I am not sure he is right on this: it seems to me that the paternalists are actually trying to identify what constitutes a good society and to make it law, while the libertarians argue that people should be free to be part of whatever social networks they want, but that these have been distorted by big, intrusive government.

Prune back that intrusion, I would say, and people would find their own 'big society'. Norman believes that part of the problem is that the state has become too big too; but he feels that the social structure we all might dream of will not reassert itself easily, or perhaps at all, when the state withdraws. Hence the need for policies that actively encourage it – not prescribe it as if politicians knew how we should all live, but simply allow it to grow. There is, of course, the localism agenda – 'control shift' in the Tories' PR-talk. Beyond that, it seems to me, there is not much of a programme. Yes, we need to empower people to make the most of their own potential. Yes, we need to encourage non-state alternatives where people have got used to relying on officialdom to intervene. And yes, we shouldn't try to second-guess what society should look like. But I still have yet to see a coherent programme of how to grow a Big Society. The danger of that is that statists might step into the breech and create their own pet version instead.

The terrible shortage of gritting salt

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As is traditional we get a little snow and the country grinds to a halt. And yes, this is sensible and rational: we don't spend the huge sums that Sweden or Russia do on snow proofing the place because we don't get this sort of weather very often.

However, we do have a nice little proof of how we're ruled:

Welsh councils can use 12,000 tonnes of road salt on the roads in 24 hours, while salt mines could only provide the UK with up to 6,000 tonnes in the same period, he said.

"If we get the same [snow] conditions here in Wales, it's going to be extremely difficult to sustain supplies.

"It's up to central government to prioritise where the salt goes, but councils will have to prioritise locally, which could be difficult in some areas."

Well, OK, fair enough: councils can use far more salt in a day than can be supplied in a day. But the salt mines are open 365 days of the year (or they certainly will be once my bureaucrat reallocation plan is brought in) and we need to salt the roads only, what, ten or 12 days a year? So it really shouldn't be beyond the wit of man or committee to get salt in in July and keep it ready for December now, should it?

But apparently it is: which tells us something about government really. If they can't do simple things like this then why are we allowing them to attempt the difficult stuff like health care, crushing inequality and educating the nation? They're simply not competent to deal with them, are they?

We, the taxpayers, need you!

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Last year I said that the principal thing to look forward to from an incoming Conservative government would be its focus on transparency, releasing vast tranches of raw information for Cameron's envisaged "army of armchair auditors" to sift through and interpret. The benefits of releasing raw data would be to increase accountability, reduce government waste and facilitate choice in public services. I argued that the data has to be as raw as possible, without a self-serving government presenting the data as it sees best and potentially skewing it to its own ends. Fortunately, the coalition government chose to keep this vital aspect of Conservative policy.

However, some fans don't quite seem to get it. Mark Easton of the BBC, whilst appreciative of the transparency, seems to lament the recent overload of information, seeing no corresponding increase in accountability. He criticises the fact that the data raises more questions than it answers, broadly along the lines of "This looks odd, but is this money well spent?" To me, those are exactly the right questions to be asking. What else is accountability but asking awkward questions, receiving inadequate answers, and then campaigning for change?

Easton is correct that accountability has not yet appeared, but he is being impatient. He questions the very ability of "armchair auditors" to sift through the data, expressing his own difficulties in doing so. But he's taking Cameron's phrase too literally. If there is any manifestation of the "Big Society", it is the ability of individuals to organise themselves. The "armchair auditors" could be any organisation outside of government, put together to collate the data and make it useful, then allowing us, or perhaps an entirely separate organisation to ask all those awkward questions and drive government expenditure down by questioning every penny spent.

Perhaps it's a role for an organisation like the Taxpayers' Alliance, or perhaps it's a space to be filled by an entirely new "army". In any case the government, by releasing data, has given us the weapons to trim the state. It's up to us to organise ourselves, provide that accountability and do the trimming.