Wednesday, 27 May 2009

Banking problems

Amid the expenses scandal the Treasury Select Committee published its latest findings on the problems in the banking system. It was generally a good report - it is generally a good and thorough committee - which identified many causes, including Governance, Auditors and Credit Rating Agencies. But its headline factor was problems in the bonus system, suggesting that the regulators were not taking this aspect seriously enough. I can’t see this as being the main reason. Human beings will always push the envelope, be it in banking innovation or expense claims, and unquestionably the asymmetric nature of rewards (reward for success, reward for failure) was a factor.

But because it is human nature to push, it is critical that there is a good legal or regulatory framework. The real problem was the lack of proper controls on bank (and quasi-bank) balance sheets so they over-expanded and created significant off-balance sheet exposure, and that the tri-partite regulatory framework meant no-one had a combination of overall responsibility, market knowledge or experience.

This aspect is to be covered in the next report from the Committee but in the meantime it would be wrong to let jealousy make the focus on remuneration rather than flaws in the regulatory system.

Saturday, 16 May 2009


I've been in Suffolk to help a friend who is standing for Suffolk County Council, although I haven’t yet found anyone to pay my expenses. I then went to the Chelsea flower show in the hope of finding out how to spend them. If I get them.

We were mainly delivering leaflets, stopping occasionally to interact with voters. I had wondered about the abuse we would receive as representatives of a flawed political system. But as I had found before, people were remarkably polite and on the whole pleased to see a candidate.

Northumberland has much to learn from Suffolk. Yes, there was the same enormous variety of care in gardens and houses, beautiful next to non-maintained, the same fascinating insights into people's lives: the hall filled with a 10-piece drum kit, the leopardskin cat-suit casually flung over the stairs, the stuffed dog in the window. But almost all the houses had letterboxes. Almost all clearly said what name or number they were. The passion for anonymity must be a Northumbrian thing.

Will my friend win? Well, he's a Tory standing against a sitting LibDem, with about a 10% swing needed. And Suffolk is a successful Tory council. I am biased, but I think the Tories have come out of the recent sleaze headlines marginally better than the other main parties. The main hassle is that a couple of local landowners have formed an independent party to protest against the development of an entertainment and indoor ski-complex on their doorstep. And although its real nimby stuff, an independent party could well get a lot of disaffected votes. I hope not: such votes, while sending a message, do not help effective management of a County Council.

The second part of my trip was to the Chelsea Flower Show. As always a combination of inspirational and depressing. The show gardens don't seem to have powerful perennial weeds; their wild gardens are so perfectly wild; their flowers are impervious to being battered by wind and rain. The highlights for me were James May's plasticene garden, the three major show gardens (Daily Telegraph, Laurent Perrier and the Perfumed Garden), and the smaller cottage gardens.

As always it is interesting how so many of the designers have the same drifts of green and purple perennials, the same blocks of limestone and water. In some ways its like fashion: the same influences emerge at the same time to form a trend. But actually, the gardens have looked very similar for a number of years. Nigel Havers had a guest spot on the BBC suggesting that all the designers used common blocks of plants and landscape and just took it in turns to move them around each year.

Perhaps, to quote David Cameron, its time for a change.

One other thing: the general mood seemed pretty optimistic, especially from the sculptor I saw opening a bottle of champagne for the customer who had just bought the five-figure sum sculpture. There was no shortage of people wandering around, no shortage of money being spent in the nearby bars although there was a shortage of taxis.

Tuesday, 12 May 2009

Four legs good, two legs better (2)

I nearly commented last year on the antics by some MPs (encouraged by the Speaker's committee) to try to stop information about their expenses and addresses being available to the public (despite their forcing of similar information about Councillors). I couldn't be bothered in the end because it all seemed so inevitable. Any anger at their hypocrisy and self centredness was smothered by their blatant lack of interest in their electors views.

But happily a combination of public interest, the efforts of a few good MPs, dedicated digging by some bloggers and a newspaper trying to increase its circulation has brought the whole sorry saga into the open. It's really satisfying to see MPs being scared: they and the main party leaders have to realise how they are regarded by the public before they institute necessary reforms. My main worry is that the public humiliation will be so great that we will all get tired of it and forget the reform bit.

I think one reason the public are so angry is that they have seen Government impose more and more controls and irritants on our lives. In most cases any mistakes we make in our dealings with Government, even unintentional or minor, are punished by instant and non discretionary fines. Its therefore galling to see MPs assuming they will be let off their mistakes if they just say sorry.

Here's a selection of thoughts:

- You've got to admire someone who can claim for clearing a moat. I noticed during my campaign last year that Tories tended to have the best gardens, and similarly Tory MPs tend to have the classier expense claims. Moats, landscaping, chandeliers are surely preferable to porn films and wide screen TVs. And I do think Cameron responded as a leader more quickly and firmly than Brown.

- The current Speaker is a block on reform (as well as being out of his depth). Things won't start to get sorted out until he goes.

- I don't think most people go into politics to screw the public. I think they do want to serve. Our Tory candidate wants to make a difference; to her potential constitutents, not herself. Our MP, albeit largely ineffective, does not come across as venal and has genuinely helped individuals. But its easy to get absorbed into "the system". As it is in any job. Like journalism. Or banking. (I wrote earlier on why the bank bonus culture delevolped and got out of line. I think there are similarities between MPs and bankers, which makes it even more satisfying to see the MPs who whinged about bonuses being shown up as hypocrites). So they need a control mechanism, a framework, to keep them in line.

- Paying back the expenses is fashionable. BUT: where are they getting the money from? Not many people can write a cheque for tens of thousands immediately. I suspect there must be some loans from party funds. And Hazel Blears paying the taxman the tax she would have paid on her house sale: if the sale was valid for tax purposes - as it probably was - then the payment she is now making will be treated as an advance on tax she owes. So she is misrepresenting the true picture again.

- People shouldn't let their disgust at how a large number of MPs have behaved stop them from voting, and they should vote for the person or party who most reflects their instincts. Lord Tebbit's intervention - "don't vote for the main parties" - is from a tired man who can't accept his irrelevance in today's world; the main potential beneficiary in the European elections (UKIP) have just as bad a record on expense manipulation as any other party and can offer no help to the development of the UK in Europe.

- The main parties need to ensure there is a review and cull of the worst behaved MPs by local associations so that next year's elections introduce fresh blood into Parliament.

- There should be fewer MPs (with greater equality of numbers of voters) who are paid more; the expense system should be massively simplified. Yes, some office support, travel and overnight accomodation expenses for out of London MPs is fair. But such amounts should be justified, published and according to a simple scale. Which does not include financing a property empire or supporting interior design boutiques.

- MPs shouldn't be prevented from having outside jobs. I can see that a good MP should be busy. But MPs today live in a protective bubble with an increasing number never having had a proper job. Having MPs with outside experience is a good thing. Any restriction on outside jobs should be accompanied by a restriction on the amount of time MPs can serve – perhaps 2 terms. And perhaps that term restriction would be a good thing anyway. It would make MPs more independent and likely to hold the Government to account. But even in that case I'd hate to see a Parliament without people with outside interests. The key is that the time and rewards of such jobs are public.

- Wider reforms to separate the executive from legislature shouldn't be ruled out, but I'd rather see an effort to make what we have work properly rather than postpone improvement by carrying out a long term review.

In the meantime, taken from a Commentator on Guido:

Westminster Ode, sung to the tune of the Strawbs - Part of the Union

Now I’m a Westminster man
Amazed at what I am
I say what I think, that Inland Revenue stinks
Yes I’m a Westminster man
When we meet in Westminster Great Hall
I’ll be voting with them all
With a hell of a shout, it’s “Bail our Banking Brothers out!”
And the rise of the factory’s fall

Oh, you don’t get me, I’m a Parliamentarian
You don’t get me, I’m a Parliamentarian
You don’t get me, I’m a Parliamentarian
Huge pension till I die
Huge pension till I die

Westminster has made me wise
To the lies of the Telegraph spies
And I don’t get fooled by the Parliamentary rules’
cause I always read between the lines
And I always get my way
As I vote for my Brothers higher pay
When I show my MP card to the Scotland Yard
This is what I say:

Oh, oh, you don’t get me, I’m a Parliamentarian
You don’t get me, I’m a Parliamentarian
You don’t get me, I’m a Parliamentarian
Huge pension till I die
Huge pension till I die

Before Westminster did appear
My life was half as clear
Now I’ve got the power, expenses to devour
Each and every day of the year
So though I’m a Parliamentary man
I avoid Revenue’s plan, claim all the expenses that I can
And though I’m not hard, the sight of my MP card
Makes me some kind of superman

Oh, oh, oh, you don’t get me, I’m a Parliamentarian
You don’t get me, I’m a Parliamentarian
You don’t get me, I’m a Parliamentarian
Huge pension till I die
Huge pension till I die
You don’t get me, I’m a Parliamentarian
You don’t get me, I’m a Parliamentarian
You don’t get me, I’m a Parliamentarian
Huge pension till I die
Huge pension till I die

Wednesday, 6 May 2009

Should our word be our bond?

There are no certainties in politics, but it at least looks likely that Labour will not have a majority after the next election. But it is currently committing to expenditure - in other words contracts - which a new Government may not wish to fulfill. Many of those contracts will be multi-year, and a new Government will potentially have to meet them or suffer penalty clauses.

The latest discussion on ID cards prompted this thought, and there are probably other silly projects which we cannot afford even if we wanted them; NHS databases also come to mind.

Is it ever appropriate for an opposition to give notice to potential contractors that it will not be obliged to continue with a contract if it is elected to Government? I see pluses and minuses:

- a contract is a contract, and a Government has to govern. So an opposition should not normally disrupt this.
- a Government can commit future governments to long term expenditure against the wishes of the elctorate and a new Government.

Exceptionally I think an opposition should warn commercial firms that they do not support a long term arrangment and that they cannot expect compensation if it is cancelled. ID cards certainly shoudl be covered by this; I belive some of the PFI contracts should have been. And I would also like to see any partial privatisation of Post Offices reversed - but it looks as though if that happnes it will be on the back of Tory votes.

Monday, 4 May 2009

A sight of summer?

I wrote last year about the benefits of less street furniture and more mutual respect between different types of road user. There's much evidence that making people responsible for their own actions improves road safety. But there's such a big road safety lobby which needs things to be done to justify its existence that we spend without thinking of effectiveness, we react without looking at the real problem: we initiate without implementing.

And of course this applies to many aspects of Government not just road safety. The default option for many years has been to unthinkingly add a raft of rules and processes in an attempt to solve problems. I don't just blame the current Government - remember the dangerous dogs act, never mind poll tax.

I have hoped for a long time that Ronald Reagan's rumoured instruction
"Don't just do something, stand there!"
becomes the default, or at least the initial, response to all problems but the most urgent or life threatening.

I think there are signs that the mood of the people is starting to rebel against the never ending flow of new hassles in their daily lives. This is coupled with the lack of money available for Government initiatives.

And this morning my heart pounded with joy, not with the sight of May blossom, but rather an article in the Times by one of their columnistists who doubles as a BBC presenter which made similar points. These hearts of the establishment have so long encouraged foolish action. It's a delight to see an establishment commentator starting to question the effectiveness of this approach.

One article doesn't make a summer. But could it suggest a trend?