Lords in limbo: apply the Salisbury Convention in spirit as well as letter, please

Lords reform has been fairly heavily trailed for some time now, and we’ve had a bit more confirmation that the White Paper is on the way in the past couple of days.  I’ll be glad to see the Government make headway on this: despite the outcome of the AV referendum, Lords reform has been a longstanding commitment from politicians of all parties and the evidence has always been pretty clear that a majority of the public believe our second chamber should be (at least predominantly) elected.

Personally, I think this really should be a fairly cut-and-dried issue.  Members of the House of Lords are not primarily independent experts, sources of warnings or nods to tradition.  These are all understandable things to want, and we ought to think much harder about how we integrate expertise into our legislative process, but they are not the primary role of the people who vote in the second chamber.  They are, first and foremost, legislators – and legislators whose record of changing Bills and therefore policy is significant and growing.  If we want expertise, we should make sure we have it in the right committees and the right debates for the right issues.  (Could some experts even sit on Select Committees, in the Commons and in a new second chamber, as non-voting, co-opted members?)

The people who actually do make our laws should be democratically accountable.  In an ideal world, therefore, we should finish up with nothing less than a 100% elected second chamber.  I’m relatively relaxed about the finer points of STV versus open lists (lists where you can choose a candidate within a party list rather than just opting for a party): so long as it’s a proportional system where voters don’t just have to tick a party box, I’ll settle for it.

With regard to the likely plans to come from the Government: I’m not ecstatic about the idea of 15-year terms and I have fairly serious reservations about single terms – I think it’s an important principle that legislators should have to at least consider the possibility that they might want to face the electorate again, and if we’re serious about democracy then we have to accept that that requires accountability.  Electing by thirds (or halves, or quarters) is sensible, though: our new Senate should be a more continuous body than the House of Commons, and a combination of PR and staggered elections would help to make sure it fits the bill.  In terms of dealing with the current members of the Lords, I think an arrangement along the lines of the Cranborne deal might make sense – which would mean that we’d have 200 left in 2015, 100 left in 2020 and none by 2025 (when the full complement of Senators would have been elected).

But I’m enough of a pragmatist to understand that, if you want Lords reform at all, you can’t let the best be the enemy of the good.  The fact that people haven’t recognised that is exactly why Lords reform hasn’t happened, even with a Labour government who said they wanted it in charge for 13 years.  So if Nick Clegg can even secure an 80% elected second chamber, even with twelve voting bishops (though the latter will cause me real pain …) and even with all the other peers staying until 2025, then I’ll see that as a major step forwards and a real achievement.  Of course, that depends on his Coalition partners voting it through.  Whether the Conservatives will choose to live up to the spirit, as well as the letter, of the Coalition Agreement remains to be seen: if they choose not to, no doubt Liberal Democrats will feel even more betrayed than many of them do already.

The other question is how fiercely the House of Lords will resist being reformed.  Everyone seems to agree that they will fight tooth and nail against reform.  I do appreciate that, when people find themselves on the red benches, they have an uncanny knack of seeing the wisdom of allowing the nation to carry on benefiting from their wisdom.  The Cross Benches’ reluctance is understandable, given that there would undoubtedly be pretty few (if any) of them in a 100% elected second chamber and that their role would inevitably be questioned in an 80% elected one.  In any case, the difficulties the Lords could cause for reform, and for large areas of Government business, are very substantial indeed.

It’ll eventually be a question of whether the Coalition has the political will to push change through, whether peers like it or not.  But one thing I really don’t understand is: on what basis do the Lords think they have any right to derail this legislation at all?  All three main party manifestos called for a wholly or mainly elected second chamber.  All parties have been reasonably clear, with some wobbling from the Conservatives in the past, that the second chamber would need to be elected by some sort of proportional system.  In 2005, both Conservatives and Liberal Democrats also called for a wholly or majority elected second chamber too.

It seems to me that, if a pledge won the support of both parties in the Coalition when they went to the country (as well as the Opposition and a number of the smaller parties), we have a pretty clear case of the Salisbury Convention in action.  I can see why the Lords might query some Coalition compromises in that regard: no one got to vote for the Coalition Agreement.  But on this one, I just can’t see where the ambiguity lies.  It was proposed: it was in the manifestos: it’s now in the process of being turned into a White Paper, and hopefully a Bill.  If there’s any defence, it’s surely of the most technical kind.  Where exactly did the Salisbury Convention include a bit saying the Lords didn’t have to apply it to their own seats?

Immigration, political honesty and the limits of the possible

Despite being a leftist, I’m going to be fair-minded and make some kinder comments about David Cameron’s speech on immigration (initially).  Firstly, he is of course entering into a legitimate debate about migration.  While the question of asylum is separate, economic migration is a debatable good: it’s perfectly fair to ask how much migration is desirable and what the overall pros and cons are for Britain.  Furthermore, Cameron was explicit that migrants can create jobs as well as filling them, taking on the idea that there’s some sort of lump sum of labour in an economy.  And he did attempt to draw some key distinctions (e.g. about the speed of change, rather than necessarily the principle): this was not on a par with Michael Howard’s 2005 campaign.

The fact remains, though, that there are lots of straw men lurking in the speech.  Anyone who’s listened to Jack StrawDavid Blunkett or Phil Woolas will be a bit surprised to hear that the last Labour government gave the impression that it was racist to talk about immigration, for instance.  Nor is it particularly helpful to claim that the government which brought in a points system promoted the view that any attempt to control immigration was madness.  And was there really a ‘mass relativism’ about sham marriages?  This isn’t on the scale of 2005, but there are still nasty undertones here – in the run-up to elections, at a time when the economy is in a grim state and voters are angry.  Politicians who declaim loudly about how ‘we aren’t allowed to say anything about immigration’ are playing a dangerous game.

Cameron was also making dubious use of statistics at best.  For a start, while looking at EU migration, he got his figures wrong.  Long-term net EU immigration ran at 57,000 from June 2009 to June 2010, not 27,000 – if I’d written this earlier, I’d have been able to show that I’d noticed this before it came out on the news!  The choice of year was also misleading at best, at a time when there has been partial unwind of the post-2004 migration from eastern Europe.  Note, I’m not complaining about that migration: but in this instance, Cameron is underplaying it in order to argue that his proposed cap will be effective when, in recent years, it would have usually had little effect.  And by the way, if you’re worried about destabilisation and impacts on local services, net long-term migration is not the only possible concern: the ‘churn’ of migration, causing rapid fluctuations for councils, can also cause problems – not to mention internal migration within the UK.

The statistical details matter because the misuse of figures contributes to a wider argument: that we can meaningfully control immigration, in the sense of reliably determining a net total migration figure for the UK.  For the purposes of this post, I’m going to sidestep my views on preferred migration levels (fluctuating depending on economic circumstances, but probably on the liberal end of the spectrum, if you’re interested).  As a simple matter of fact, irrespective of what we’d like to do, it is not the case that we can control immigration.  We can, perhaps, manage migration, in the sense of knowing (broadly) who’s coming in and making sure the system works better.  But EU migration is a very large part of the whole, and we can’t restrict that (transitional controls on new members are just that – transitional).  Free movement of labour is, rightly, central to the EU Single Market – and we can’t have one without the other.  So economically, we haven’t got much alternative in terms of EU migration.

Furthermore, our borders are always going to be fairly porous: how could it be otherwise in a country with quite so many visa waiver agreements, for example?  (And one of the biggest categories of overstayers is from those countries, by the way.)  The fact that we have something like 400,000 illegal residents in the UK says something about the difficulty of enforcing border controls.  I’m sure we can do a fair bit to make them more effective, but I also suspect that there is a direct relationship between how restrictive our overall policy is and how much illegal migration we end up with.

Ultimately, Britain is a small island near a bigger continent in a world of mass travel.  We are lying to our voters if we pretend that immigration can be fundamentally controlled: or at least, controlled without unacceptable consequences in terms of civil liberties and day-to-day life.  We can affect levels at the margins, we can monitor what’s happening, we can try and affect the drivers of demand for migration – beefing up HMRC’s minimum wage compliance would be a start.  But if we’re being honest, that’s about it.

That is a very unpopular statement, but it’s also true – and an honest conversation about immigration will, at some point, have to include an admission of that basic fact.  How do we go about admitting that migration is, in this sense, ‘out of control’ and unavoidably so?  And where should immigration policy go from that admission?  I don’t have anything like a full answer.  I suspect we probably have to talk about pull factors in the UK: has immigration been encouraged by low wages at the bottom of the labour market, making it more difficult for UK citizens to leave the benefit trap?  Would a living wage mean more British citizens could fill jobs in Britain?  Would greater regulation of the labour market – in at least some areas, some of the time – play a role?  And should we be thinking about ways of harnessing some revenue from immigration (work permit fees, in particular) and investing it in training British citizens?  (The Liberal Democrats had a policy along these lines at one point.)

I’m sure there are other, better suggestions to be discussed: these are mainly starters for ten.  But sometime, somehow, we need to have a more honest conversation about this – and stop pretending either that the establishment is conspiring to shut us all up or that we could buck the trend if we wanted to, if only we were a bit more competent.  Because if we carry on arguing that migration levels can be reliably determined as a matter of political choice, and keep failing to deliver a given level of migration, more and more people will reasonably ask why we’re not delivering.  And those answers could produce some ugly results.

Dear ministers: poverty generally means not having enough money

Yesterday’s furore over Nick Clegg’s former interns rather missed the bigger picture.  Yes, it’s not on for MPs (Clegg is, in this respect, pretty typical) to hire de facto labour and not pay for it: equally, Jonny Medland’s tactics aren’t exactly edifying (it’s not as if he suffered from the experience).  The Social Mobility Strategy seems to contain a number of reasonable-in-principle-but-less-than-earth-shattering initiatives, most of which have already been announced and some of which are new.  Fair enough, to a point: all governments try to reframe a whole series of policy announcements from time to time, and goodness knows oppositions like to repackage old policies too.  It’s worth pointing out that much of it rings hollow in the current climate (commitments to Sure Start would be a bit more plausible if Children’s Centres weren’t closing all over the country …), but few of us are going to argue against the general principle.

The Government’s Child Poverty Strategy was also published yesterday.  Of course, it received much less attention: poor children are always of much less interest to the British press than who ends up interning for the Deputy PM.  But a key strand running through it was a commitment to ‘broader’ definitions of poverty.  This ‘broader’ definition seems to stretch through from access to health services to – you guessed it – social mobility and life chances.  Frankly, the Government seems to be in serious danger of confusing the words ‘broader’ and ‘different’: throughout the document, we get references to opportunities, to generational cycles of poverty, to unfair educational outcomes – to anything, in fact, which avoids the question of whether poor families have enough money.

Perhaps I’m narrow-minded, but it seems to me that poverty has rather a lot to do with not having enough money.  It’s all very well to say that poverty isn’t all about money or that poverty plus a pound doesn’t equal fairness (not a statement, I suspect, that anyone who finds themselves one pound above the poverty line would ever make) – but ultimately, if a family struggles to put decent meals on the table, it’s about money.  If an unemployed parent can’t afford the transport to a job interview, it’s about money.  Finding the money for school uniforms is a question of, well, money.  Children whose parents can’t afford enough space for them to study in peace and quiet are struggling with their schoolwork because their parents don’t have enough money.

There’s a cynical conclusion to draw here, which has a large degree of truth to it.  This Government needs to have targets which go broader – and longer-term – than the current set: it knows perfectly well that its chances of the current targets going in anything other than the wrong direction, fast, are vanishingly small.  £18bn of welfare cuts will cut savagely into poor families’ incomes; Housing Benefit cuts will mean that many poor people will find themselves forced to give up jobs as they move out of their reach, one bus ride too many to sustain or one extra half hour too much to juggle with another job; closed Children’s Centres translate into parents who find it that much harder to stay in work.  All in all, income-based targets which can be measured in 2015 are unlikely to hold much comfort for Cameron and Clegg.

But it isn’t just that.  The Government doesn’t really believe that income poverty is the measure of fairness.  It pays lip service to it – it’s obliged to by law, after all – but in its view, as per its Social Mobility Strategy, ‘The true test of fairness is the distribution of opportunities.’  The Child Poverty Strategy trumpets the Fairness Premium for education – and the Child Poverty Commission will now be set up as a Social Mobility and Child Poverty Commission (note the order, by the way) – because the Coalition thinks that poverty and mobility can be elided.  It believes that the question of whether people are poor is basically the same as the question of which people are poor in a generation’s time.

Well, it isn’t.  Poverty is poverty: it is a grinding, day-to-day inability to share in the common life.  As Polly Toynbee said of social exclusion, “It is a No Entry sign on every ordinary pleasure”.  And if we subordinate tackling poverty to promoting mobility, not only will we fail to do either: we will condemn another generation of poor children to growing up in poor housing, without birthday presents, with the fear of falling into debt, with parents trying to make ends meet (often with several jobs at once) and often divided from each other under the strain.  It’s very easy to treat the lack of money as a sideshow when you’ve always had plenty of it.  Our Government ought to remember that.

Afterthought: A partial exception to this, in fairness, is a focus on getting people into work.  This is something the last government worked hard on, and found dauntingly difficult, at a time of economic plenty.  At a time when the best part of a million people are about to be put out of work by government policy, I find it hard to believe that the Universal Credit is going to get us very far towards raising employment in the next few years – especially when no one’s even going to start receiving it until 2013.  Smoothing out some of the kinks of the current system is a good thing: but it’s a smoothing out, not a revolution, and it’s accompanied by plenty of benefit horrors – many of which, like the lowering of the maximum award for childcare from 80% to 70% of costs, will actually make it harder for people to enter or to stay in work.

Housing policy poses similar problems: the arguments around the Coalition’s plans to allow higher social rents in order to create revenue streams for building more homes are complex, but higher rents combined with Housing Benefit tapers mean that the barriers to work rise even higher.  (And the need for this particular expedient might have been reduced had the Government not decided to cut the social housing budget in half.)

Taxes, taxes, taxes …

I realise very few people see it as an interesting exercise to sit down and work out how the plans for £29 billion of net tax rises break down.  But if you’re going to think about better ways to close the gap between what we spend and what we raise, then it’s not a bad idea to look at what we’re doing at the moment.  And in rough and ready fashion, based on the Emergency Budget* figures, the planned breakdown of net tax rises in 2014-15 is about as follows:

Tax Net revenue raised (£ billion) Tax Net revenue raised (£ billion)
VAT and IPT 13.9 Green taxes 0.7
Pension contribution relief 4.6 Stamp Duty 0.3
National Insurance 3.3 Inheritance Tax 0.3
Income tax 2.5 Other tax rises 0.2
Bank levy 2.4 Other tax cuts -0.2
Other pension tax breaks 2.1 Council Tax -0.6
Capital Gains Tax 0.9 Various business taxes -0.8
Sin taxes 0.8 Corporation Tax -1.3

Those figures conceal significant tax cuts in terms of income tax (£3.9 billion goes to raising the personal allowance by £1,000) and National Insurance (£3.7 billion spent on raising the threshold for employers’ NI to offset some of the increased costs), as well as a number of tax hikes in Corporation Tax to help pay for a headline rate cut. But in terms of where the main burden is falling, you’ll get a fair idea here.

It shouldn’t take too much to work out that any attempt to raise another £26 billion, say, is going to be very politically difficult.  Labour have argued for keeping the bankers’ bonus tax (£3.5 billion or so – assuming revenues don’t fall if the tax stops being a one-off), and they’ve pointed to their National Insurance plans too (£3.7 billion more).  If you were to argue for, say, 5p on the higher rate of income tax (taking a very brave example …), the Treasury’s Ready Reckoner suggests you’d raise about £4.6 billion.  Lowering the starting point for the 50p rate to, say, £100,000 might raise £1.3 billion (or about half that, if you raise the 40p rate to 45p – otherwise you’re double-counting).  The Liberal Democrats’ famous ‘mansion tax’ was intended to raise about £1.7 billion.  If, in another act of extreme bravery, you were to raise Inheritance Tax to 60%, you might net about £1.4 billion.  The exact amount of money you could get from tackling avoidance may very well be substantial – but it’s difficult to bank on, and I wouldn’t envy the Chancellor who tried to rely on it as a main tool for tackling the deficit.

This clearly doesn’t, even in terms of orders of magnitude, add up to a £26 billion alternative to the Coalition’s plans. So in the end, substantially higher taxes will mean that people on moderate incomes will also end up paying more – not just the wealthy and the banks.  In saying that, I’m not arguing against the idea: in almost all cases, tax rises are more progressive than cuts to services – and of course, it’s quite possible to use some revenue to compensate the poor too.  It’s no accident that Scandinavian social democracies pay substantially more VAT than the UK – if you’re serious about social justice, the volume of money for benefits and services will make much more of a difference than the exact degree of redistribution managed through taxes on their own, and the tax burden has to be fairly widely spread in order to be politically accepted.

So not only would a centre-left government almost certainly end up raising VAT at some point, for instance; it would probably be right to do so, though probably not right now.  It makes sense that, in an economy which needs to move towards more saving over time, we might increase taxes on consumption.  The debate over how progressive/regressive VAT is has run and run, but it’s certainly more progressive than even more service cuts – and if it’s difficult enough to find £26 billion extra, try finding £40 billion instead.  In the same way, further income tax/NI rises would be pretty hard to avoid.  Property taxes would be politically very difficult, but probably sensible as policy.  And if the centre-left want to reduce the damage done to public services, welfare benefits and public investment more generally, then we’d better start learning how to argue it’s worthwhile for all of us to pay more taxes in a good cause.

How much of this does Labour need to spell out?  Some of it, at least – at least as an indication.  The Conservatives didn’t give much away on their plans in 2010, but they did highlight plans to raise the retirement age faster and taper tax credits more aggressively.  Not an obvious route to electoral success, in a way, but a manifesto which made no mention at all of any difficult tax/spending changes wouldn’t have been more popular: it would just have made people think they either weren’t being given the full story (even more than they already did!) or that the party in question shouldn’t be trusted with the public finances.  And in reverse, the same applies to any party of the left.

* Figures weren’t provided for revenue raised by the 50p rate, the restriction of the personal allowance from £100,000 or revenue raised from Labour’s changes to ‘sin taxes’ (alcohol, tobacco etc.) – I did find a Treasury figure for 2014-15 for the first, but the other two had to be extrapolated a bit from previous Budgets. But the broad outline stands.