Plus ça change at Westminster!

Now here's a conundrum of Unionist principles vs UK nations

It's not been a huge while since a Conservative Government famously imposed its will on Scotland and the result was a massive revolt. And no - I'm not talking about the Independence Referendum. Under Margaret Thatcher they made the mistake of piloting the Community Charge (nicknamed the Poll Tax) in Scotland ahead of introduction in the rest of the UK. What resulted was a schism of major proportions between the Scottish electorate and the Tory party that has got deeper ever since.

Let's move forward to today and we hear Philip Hammond the new Chancellor of the Exchequer declaring that there will be no special deal for Scotland in the Brexit negotiations. For someone who is a Unionist to the core that is simply a ridiculous position to take. The outcome will be untenable and indicates that either the upper echelons of Government are stupid or that they are trying to force another Independence Referendum. Being kind and assuming the former is not the case then one is left with the inevitable conclusion that there is some strategy afoot to displace the SNP's position via the Brexit negotiations.

Do they really think that is going to work with an electorate that after two referenda has come to realise that they are being consistently lied to? Project Fear won't work a second time around. A clear majority of Scotland wants to stay in the EU (just as in Thatcher's day they wanted to keep the domestic rates as a form of taxation).

So we have a Unionist stance that de facto is heading to split the United Kingdom into at least two fragments. (What will happen in Northern Ireland is uncertain - although at least one commentator has remarked that their long-term future might be re-unification with the Republic.)


Martin Schulz comments that the UK Cabinet... is based on solving internal splits in the ruling centre-right Conservative Party rather than promoting the national interest.

Whilst the media coverage would have us believe that the new May administration is about competence and coming together there are enough indicators in the wind to hint this might not work out. As one wag put it - we had Thatcherism - are we now headed for Mayhem? Or maybe it is simply a case of The Darling Buddies of May with the EU taking the role of the Tax Inspector who is strung along ad infinitum.

Worst event since 1776

Is Cameron doomed to the same fate as Gordon Brown?

Why do seemingly infallible politicians tend to come unstuck?

There seems to be something about senior people in (British) Politics who get wrapped up in self-belief and a mantra of infallibility. For years we were told repeatedly that Gordon Brown was the "Iron Chancellor" and one of the best Finance Ministers we ever had. Except closer scrutiny reveals that his raid on Pension Funds by taxing their income from dividends helped precipitate a calamitous collapse of the UK pensions sector. Millions of people have paid the price in loss of income into retirement - in some cases loss of jobs as well. Numerous corporate bankruptcies cite the cost of pension fund deficits as being core to their problems. Arguably the long-term impacts on the UK economy overall show that in fact Brown was one of the worst Chancellors of the Exchequer post-war. During a period when we should have been replenishing the coffers they remained empty. Cue the events of 2008 and disaster struck.

Now we see another iteration of this cycle, only this time a Prime Minister who thought he could maintain his position of power by offering a Referendum he was sure he would win. As other commentators have noted the mechanism was flawed. The complexity of the argument was way beyond the comprehension of the average UK voter and a deliberative approach would have been far better. As Matthew Taylor (Chief Executive of the RSA, broadcaster and former Political Strategy Adviser to Tony Blair inside No.10) recently noted - the idea of giving a problem to citizens and allowing them to come up with a reasoned solution is anathema to the political masters. Yet the Icelandic people recently did just that when rewriting their Constitution post the banking collapse and although the outcome wasn't implemented as designed the people were much better informed about their governance.

This time around Cameron appears not only to have thought he would win fairly easily but, when it became obvious that he wasn't guaranteed to succeed, stuck with his existing formula of running a campaign highlighting the Risks. It may have worked against the SNP in the Scottish Referendum in 2014 when he had the press on his side but it was not supported by the media on this occasion. The outcome is arguably the biggest negative impact on the UK in hundreds of years. Not only is there serious risk that a large slice of London's financial services will move to another EU centre but also the political implosion of UK society is likely to result in at least the secession of Scotland from the Union. What may happen in Ulster is anyone's guess.

So overall foreseeable outcomes (and anyone doing a proper risk analysis of this would have worked those through) were never properly factored in to the initial approach. A classic case of not thinking through the consequences of actions from the Top down.

Brown and Cameron may be decent individuals and family men. They both had a good education. So why is it that they simply never got it when it comes to understanding how to operate the levers of power? History is likely to view both of them with a critical eye.

In the present circumstances maybe the analogy would be with the leaders of the Weimar Republic. They (as opposed to the war-time leaders) were blamed for the economic and social failings in Germany during the Depression. This time around blame has been laid at the foot of the immigrants and EU bureaucrats rather than the (US) bankers who caused the crisis of 2008. Sticking with the demise of the Weimar Reupblic for a moment we know that the result was the rise of National Socialism and all that entailed. Now I'm not suggesting that in the 21st Century things are definitely going that way - but nevertheless it's getting uncomfortably like it. The result was the destruction of a large part of Europe and it has taken more than 70 years to rebuild if one takes into account the impact on the eastern bloc.

Sucking up to a political faction (in this instance the Euro-sceptic wing of the Conservative Party) is not a strategy for the success of the UK. They could have been defused legitimately with some deliberative democracy. The risks to the UK would have been mitigated. It's interesting to note that any large Public Sector project is required by Treasury Rules to have in place a formal Risk Management plan with costed mitigations and detailed analysis. What made Cameron think this approach is fine for building HS2 but not for possibly wrecking the Union?

In my book he is likely to go down in history as one of the worst Prime Ministers ever along with Lord North (who led us into the American War of Independence). A triumph of self-belief over common sense. Cameron has overseen three referenda since 2011. AV Voting, Scottish independence and EU membership. In the first and third instances intelligence suggests that he got the arguments dreadfully wrong and has failed to move the UK forward as a representative democracy. As for the second - a rerun is likely with a markedly different outcome as the population will have had the veil lifted on the truth.

And what of the outcome for the rest of us? It is likely this has accelerated the decline of the UK in the rest of the world. Scottish independence is likely to result in Trident not being replaced and hence a seat as Permanent Member of the UN Security Council might be questioned. We won't disappear but are more likely to be viewed alongside Canada and Australia in terms of economic and political importance. We will effectively be steadily losing our seat at the top table and the shift of economic power towards Asia-Pacific is irreversible for the next few generations.

We were on a huge interconnected multi-player game and have taken back control - only to realise we have cut the connections and are limited to playing anyone who is in the same building. And whilst Cameron and Brown may suffer the same fate when it comes to historical commentary the population of the UK and across Europe is left with a legacy of cost, uncertainty, civil unrest, legal wrangling and bitterness. If losing the American War of Independence was followed by Civil War - what might be the consequences of losing the battle for a better EU with the UK at its heart?

So what do the fates consider?

Worst Chancellor of the Exchequer since 1945?
Worst British Prime Minister since 1782?

As for Cameron's successor be it Boris or someone else the runes aren't good. They are likely to be viewed as populists with little if any statesmanship. Future historians will have a field day - pity someone didn't think about this up front.

UK - EU? : The Civilised Answer

LEAVE are offering a very selfish view. REMAIN are trying to scare the daylights out of everyone. Where is the CIVILISED DEBATE?

It seems as though the two sides of the Referendum argument are of the opinion that the British people are entirely selfish and will only respond on the basis of What's in it for me? Are we really such an inward-looking nation despite the history of the last 100 years?

LEAVE the EU and we get to keep out the people we don't like (well actually we can already do that if they are criminals). Xenophobia has no place in the modern world - just look at where it got us in 1914 and 1939 - never mind Kosovo and latterly the Middle East. And, as I've pointed out elsewhere, the much-vaunted Aussie immigration points system has marginal effect - even in Australia

Their argument also focuses strongly on being selfish with our resources. Really? Don't we accept the principle of taxation to spread the costs of welfare to the poorest amongst us. Should that stop at the village boundary like it did with the Parish Poor Laws? Of course not. And since we are about the 5th richest economy on the planet it is ridiculous to suggest we cannot spread a little wealth at least to our European neighbours to enable them to come up in the world.

REMAIN would have us believe that we cannot afford to leave. Whilst that may contain some element of truth in the short term it completely ignores the long-term impact of UK involvement at the EU table. Don't the Hungarians the Romanians and the Poles deserve some moderating civilised inputs to stop their own countries swinging to the far right. The rise of reactionary forces across swathes of the Continent is dangerous for us all and we should be arguing for a positive contribution from the UK to help prevent the darker side coming to the fore. We could and should be working with the likes of Germany, Denmark and Sweden as civilising influencers not running away and yet where is this argument being made from the REMAIN campaign?

Also where are the positive suggestions about working with the increasing numbers of people across the EU who are dissatisfied with the status quo? Surely that is Democracy in action? Are we arguing about fear or should we be considering positive democratic change for the benefit of all EU citizens?

CIVILISED is what the UK prides itself on being. We speak often of how we brought modern civilisation to great tracts of the planet (admittedly with varying degrees of success) and have left behind a string of modern democracies from Wellington and Singapore to New Delhi and Ottawa. Do we want to build on that? Look at the modern Germany and reflect on just how much that is a result of our influence in rebuilding their society after 1945. The UK has a lot to be proud of and a massive amount to offer. What we get in return is soft power and friendship. You simply can't buy those commodities and yet their worth is huge to both the giver and the receiver.

Surely the focus of the present debate should be on what sort of world we want to contribute towards. What will make Europe more civilised and democratic and lead to a better world?

Accountability & Brexit

2 different but significant points about the general debate on this.

FIRSTLY The existing UK Government is far from accountable on many things.

Take Immigration as a major example. When the last changes were made introducing the Tier-based system for non-EU immigrants the primary legislation essentially made three key demands.
a) That the immigrant could prove who they were and didn't have a nasty/criminal track record.
b) That they had a job to go to or (in the case of students) were attending a bona fide college that had itself been certified.
c) They should have no recourse to the Public Purse.

The RULES were then devised under Statutory Instrument (no vote in Parliament) by the Civil Service Policy Directorate and they built a system they wanted, not one which is either fair or equitable. (Look at the case with the Aussie couple in Scotland who are being deported after August.) So the present LEAVE insistence that we would have a fairer immigration system is garbage. Even the Australian points system only affects a small percentage of their immigration - the rest is largely like our own non-EU requirements. The free movement of EU citizens is far less degrading and much more transparent. I had major experience of working with the Immigration Service and they simply cannot be trusted to develop anything that is fair or reasonable (the reasons are historic and a lot to do with constant meddling by politicians as this is such a sensitive topic.)

On a different tack - does BIS do anything to improve accountability towards business? In my experience the answer is a definite "NO" (I was an adviser to the former DTI) - go to a meeting with Ministers and they only want to listen to their mates from big business. That has nothing to do with being IN or OUT of Europe - it's the way they operate. At least being IN means there is some fall back on the European Court that can override a percentage of the idiocy. I had to fight extremely hard to be heard over big business on the design of Workplace Pensions. UK Big Business didn't want any of the legal requirements that have resulted in a large proportion of the electorate being put into a pension scheme beyond State provision for the first time (to the ultimate benefit of us all because over the years they are less dependent on the State). That wasn't subject to EU guidance or anything else but merely illustrates that government tends to favour large corporate over the micro economy all the time. Being inside the EU at least offers the chance that more small interests can be heard.

A good example of this is the way in which minority languages such as Catalan, Basque or Friesian as well as the Celtic languages have benefitted from EU-wide insistence on improving minority cultural rights. Individually very small but taken together they add up to a reasonable-sized row of beans and this matters to people.

SECONDLY I've heard nobody standing up and explaining WHY this particular issue (IN vs OUT) deserves a different treatment from any other political decision that has been made over the last 70+ years. On our behalf various governments have negotiated treaties that have effectively committed the British people for eternity. The general principle is that a Treaty once made is not broken (we've moved on from the grand games of the 18th/19th Centuries). Ask yourself whether you are prepared to accept that we committed to NATO or the UN or WTO or Nuclear Non-Proliferation or Climate Change or bilaterals with places like Australia and whether they should be the subject of a recurrent YES/NO debate?

The way to change the European experiment is from within - just as we have to change our own politics from within. Takes a very long time and is imperfect but at least it is non-violent in both economic and physical terms. Do we want happiness at someone else's expense (the old colonial model) or do we want to bring everyone forward slowly to a better place?


These are more cogent arguments to make than the isolationist, short-term economic or pseudo-democratic ones we have been hearing from all sides. Now go figure ...

Morality? What Morality?

A true tale of a global financial services organisation that offers wealth management facilities to private investors. In so doing they charge fees to deal with the paperwork and accounting associated with running a portfolio.

Imagine then the scenario where, following a withdrawal instruction, they pay out the cash but singularly fail to account for this in the online valuation and paperwork. Some 3 months later the investor decides to review his portfolio and believes that there is some £18,000 of cash lying around he hadn’t noticed. He then invests this in a series of companies over the ensuing 4 months. Still no warning from the managers that something is awry.

A full 11 months after the initial withdrawal the wealth managers wake up to their error and ask for their money back. This leaves our investor in a quandary. Does he disinvest the “new” shares or some of his other holdings? He opts for the latter, only to suffer a major setback a few weeks later when the price of one of the new holdings collapses due to unforeseeable circumstances. Overall the exercise has left our customer some £17,000 down on where he would have been if nothing had happened from Day 1.

You might agree with the wealth managers who blame him for the loss and refuse to compensate. But hang on a moment. They have put our investor in the invidious position of having to call heads or tails between two options. Moreover they are effectively saying that if anything goes wrong with that call then they are not to blame.

How can that be? The Financial Ombudsman service operates on the principle that when an error is made, the customer should be put back in the position they were in before it happened. In my view that means the wealth managers should reconstruct the portfolio as it would have been if they had accounted properly for the first withdrawal - thereby disabling the subsequent purchases and switching. They should also compensate for the substantial lost dividends on the holdings that were encashed. Instead they choose to hide behind a legal opinion that absolves them from any responsibility whatsoever.

Who is morally bankrupt here?

How Select should criticisms of banking culture be?

It appears that everyone is running around shouting about the latest financial services scandals (Libor/Euribor, Interest Rate Swaps).  Heads are being demanded on the proverbial platters but that seems to me to miss the underlying issue.

Questioning Bob Diamond (late CEO of Barclays) in front of the Treasury Select Committee, Mark Garnier MP [Conservative, Wyre Forest] highlighted that owing to the culture of Libor Rate Setting within Barclays for years prior to 2007 Rate Setters were not reporting attempts by traders to fix the reported rate (on behalf of the bank).  This depicts a cultural mismatch between attempted criminal behaviour and reporting to senior management or Regulators.

In the USA the Federal Reserve had noted that banks on average were reporting their borrowing costs some 36 basis points below what was being signalled via other measures.  A number of Regulators also noted in various reports at the time of the Financial Crisis in 2008 that there was a mismatch between the reported rates of interest being paid by banks and independent measures - indicating that something was amiss.  However nothing else ensued to ascertain whether something was wrong.  This led Andrew Tyrie MP, the Chairman of the Treasury Select Committee to hint that the Regulators "were asleep at the wheel".

Diamond has acknowledged that the problems (at Barclays and in other Financial Services scandals) have arisen due to the culture in place - but nothing has been said about how that might have been made more robust.

Regulators banks and politicians have missed the fundamental issue that how we allow people to manage culture in large corporations is the seat of this type of problem.  More to the point, there are no natural checks and balances that make it easy for employees (whatever organisation they belong to) to point things up as being adrift from an acceptable standard.  John Mann MP [Labour, Bassetlaw] highlighted that Diamond and his senior team apparently had not even attempted to question the possibility that things might not be OK despite the reports that had been floating around since around 2007.  A teflon response indicated that Diamond and those of his ilk simply don't want to step up and recognise that they have a responsibility to ask questions before things are highlighted as having gone wrong.

The pressure to ask such questions would be more acute if the organisational culture had a clearer set of benchmarks for end-to-end impacts on all stakeholders.  This, in turn, would put pressure on other organisations to behave better.  Transparency is a huge incentive to be seen to be doing things right.  Transparency, however, requires effort to be maintained.  It seems, for the past few years at least, that hasn't been the top priority of those in charge.

When is Co-operative Compleat?

Moving along from the basic discussion about shareholder involvement I notice that David Cameron is now promoting the idea of Co-operatives as part of moral capitalism. Is this really (as he says) historic Conservative Party policy?

Well I think we can leave that question unanswered - the more important point is that fundamentally the political argument is shifting in favour of models that are more integrated with overall societal needs. In general they are becoming more Compleat.

What is missing from all of this is any thought-through guidance as to what that actually means. The Compleat Biz remains one of the few works out there that provide the answers.

I was engaged in dialogue last week with someone who questioned whether it is possible to construct models of business that make the shareholder community more responsive rather than merely being the providers of capital. The answer seems to lie in the political will-power to change the paradigm of the last 60+ years.

On that basis lobbying of politicians should continue unabated to make sure we seize the current opportunity to build a better society for everyone by restructuring the prevailing model of capitalism. (Coincidentally it is likely to be far more profitable as well.)