Diary Note /0025
Wednesday 13 February 2002

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Oligarchy v. Democracy

Could this be the line-up, at the next Election? Alan Watkins, writing in the Independent on Sunday, has awakened suspicions that have troubled me for some months. Might a Lib-Tory Alliance win the next Election? Alan Watkins (a must-read for me, every weekend) argues that Charles Kennedy is moving towards Duncan-Smith in order to strengthen his chances of stealing seats where the LibDems currently trail the Tories, offering his candidates as a Tories-with-human-face, and filching Tory votes. "There are 42 Conservative MPs,” argues Watkins,”who won with less than 50% of the vote, and had a Liberal Democrat in second-place".

But what if the game-plan is different? What if it were a voting pact (like the historic Liberal pact which first brought Labour to Parliament in January 1906) providing for LibDems to soft-pedal in those 42 seats, in return for comparable Tory favours elsewhere? And some kind of provisional coalition understanding?

Duncan-Smith has clearly decided, in the privacy of his own boudoir, that his Party must follow Portillo without Portillo, championing individual rights, sensitivity to the poor, and the maintenance of adequate public services. In Oliver Letwin, he has a Shadow Home Secretary of brilliance, who is a true liberal at heart and a principled political thinker. Duncan-Smith can afford to ignore his xenophobic dinosaurs, either because they are personally ineffective or because they are dying-off anyway. He has opted for a democratic formula for the House of Lords, while Blair embraces oligarchy. And the LibDems, without any inconvenient socialist principles or experience of office to get in the way, would make acceptable bed-fellows for his New Tory Party. The stage seems well set, to me.

Is oligarchy too strong a word for this Labour Administration, which I call my own? Judge for yourself. An oligarchy simply means “government by a small exclusive class: a state so governed: a small body of men who have the supreme power of a state in their hands”(Chambers). By that test, we have a democratic oligarchy, more oligarchy than democracy, with a high degree of power concentration.

The oligarchy of which I speak is not, of course, the Cabinet. It is the entire cadre of salaried politicians comprising perhaps some 3,500 souls made up as follows -

653 Members of Parliament
250 say, active Lords
2,400 say, Local Council Cabinet Members (400 x 6)
220 or so members of Scots, Welsh and London “assemblies”

rising to perhaps 4000 salary-persons, once regional English Assemblies are in place, and excluding Northern Ireland. Local Council backbenchers can be written off, following the Local Government Act 2000. They will not figure in the cadre, however assiduously they may aspire to earn their living within it.

These 4000 men and women now take the form of full-time salaried political cadre for whom public office is a primary career. And it is in the interests of that 4,000 to keep the reins of power close, in the hands of the few and not the many. There is no serious discussion in any Party about involving a higher proportion of our citizens in the governance of their country, their communities. Local government is being decimated, in terms of democratic participation. School governorship, once heralded as a real exercise in popular community governance, is stifled by the teaching profession and local administrators. Community Health Councils are being abolished. There has been no bonfire of the quangoes. Proportional representation is merely a self-serving device for improving the legitimacy of the oligarchy, that’s all. Against this background, might not a Lib-Tory Alliance yet develop an effective critique, even branding it as autocracy (Chambers: “absolute government by one man”) . It would be unfair, but it might stick.

My own agenda will be to rescue my Party from such a fate. That is why the Socialist Civil Liberties Association has been formed. That is why I have contended for a seat on the Board of LIBERTY, the former National Council of Civil Liberties. That is why I serve as a Community Councillor in my home city of Swansea and champion the cause of community governance, which my Party has hitherto studiously ignored. That is why I launched a local Community Council website The Mumbles Book a volunteer publication for my local community, and why I am still its Managing Editor. That is why, as Director of the City Region Campaign, I continue to contend for stronger democratic city government, within a framework of elected regional assemblies. That is why I seek to play an active part in the drugs-law reform movement, to help my Party get off the hook of populist authoritarianism.

It would be a tragedy if Labour were outflanked by a “liberal” Lib/Tory Alliance - not to the Left or to the Right, but simply occupying an abandoned part of the middle ground.

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Enron: Nick Cohen misses the mark

The Observer’s caustic Nick Cohen is another must-read for me. His intelligence, and his coruscating prose, illuminate every attack. But like others trying to get to grips with the aftermath of Enron, the real target eludes him. This week, he flounders in the shallows of the argument, criticising the accountancy profession, and their audit role.

The real problems lie much deeper: see my earlier comments Enron: Missing the Point and the early-January Taming the Corporations .

The auditing profession was, quite literally, invented by the Victorians. When they launched the “limited liability company” by way of the Companies Act 1856, they built-in a number of checks and balances upon these new artificial legal persons. One of those was the office of “auditor”. The role of the auditor was to check the annual accounts prepared by the Directors for the shareholders, and to ensure that they represented a fair and accurate picture of the company’s business. Auditors were not sleuths or policemen, they simply checked the books, particularly for fraud and misappropriation of funds. They owed a duty of care only to the shareholders, not to the State or the general public. They were bean-counters par excellence .

The mighty global accountancy profession of today has grown from those humble book-keeping beginnings. They are lowly creatures of the Companies Acts. It is not surprising that, to earn a decent living, they have had to escape from the restrictions of the auditing role. Audit is notoriously fiddling, boring, and unremunerative: most young accountants long to get away from the Audit Department, into “management consultancy”. The auditing role has atrophied, at the very time when it is most needed. The dogs have stopped barking.

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Monday 11 February 2002 What a day that was! I spent the day in London - it was a very full day - I parked my car in Swansea at 0249h on Monday morning, to catch the Fishguard "Boat Train" to London, and picked it up again at 0246h on Tuesday morning, having caught the last train home from Paddington - three minutes short of 24 hours, so I got to pay the single-day parking-rate of £2.30 - lucky, or what?

OA Pensions, again

Taking the three pillars of the modern welfare state – education, health, and pensions – my Government is committed to tackling education and health, but not pensions. From 1996 onwards I worked closely with the great Jack Jones (now retired from the Presidency of the National Pensioners Convention, giving way to Rodney Bickerstaffe) to try and save the Old Age Pension.

Together, we revived the old tradition of celebrating Pensions Day on 24 September. That was the day in 1907 when the very first UK pensioners registered for the very first Old Age Pension, which eventually became payable on 1 January 1908. For four years, I was the Organiser of the Pensions Day March to Trafalgar Square, working with the NPC. I became quite expert Central London crowd management, with the help of the Met officers at Cannon Row. Jack Jones was always "in the chair", and Barbara Castle was always up there on the plinth, between Nelson's magnificent lions. And I always went up to Blackpool. to promote the March, at the preceding Pensioners Parliament. The Labour Cabinet’s insensitivity on the pensions issue was a source of real personal anguish to them both.

We lost. The abandonment of the Old Age Pension can now be seen as one of New Labour’s primary strategic errors. As a Party we will, I think, work our way through current problems in education and health. But our Stakeholder Pension scheme is proving a failure, if an honourable one. On pensions, we are still facing in the wrong direction. We must get back on track, somehow.

We should first recognise that the issue is not one of pensioner poverty. Labour have done well, in ensuring that old people are not actually poor, by providing increased means-tested benefits. The issue is that of prospective confidence in the reliability of future pension provision. What matters is the quality of the “pension promise” made by society to the younger spending generations, the 20s, 30s, and 40s. If they cannot be sure that their income in old age will be reasonably assured by the State they will take evading action, and start saving privately. When added to mortgage commitments, and perhaps school fees, that will decimate their propensity to spend, and may event exacerbate anxiety. That is where the Japanese are at the moment, with a non-existent welfare state: they are worried out of their minds, refusing to spend because things might get worse. We are in the presence of the great paradox, that consumer markets cannot work at all, unless underpinned by appropriate state action.

And the provision of adequate old age pensions ought to be seen as a primary function of the modern state. It is arguable (albeit not by me) that health and education services could be provided by the private sector, if push came to shove. But no combination of private corporations could possibly guarantee old age pensions to 60m people, over a life-span of 85 years. The State is the only institution with the credibility to offer such support. Corporations are increasingly understood to be fragile institutions, incapable of generating saver-confidence over a lifetime. City scandals and commercial scams continue to erode the long-term credibility of private corporations, and those problems are likely to get worse. Labour should realise that, by using the credit-rating of the State to underwrite pensions commitments, they would be playing a knock-out winning political card.

But Tony Blair should also beware. Because, contrary to appearances, the card is not a socialist one. In 1931, the US State used state-guarantees to bolster confidence both in the banking sector and the building-society sector (Savings & Loans). All personal savings in such accounts were guaranteed by the State, against the collapse of the companies holding them. Those guarantees are still in position, seventy years later, and will never be removed. It is one of the great paradoxes of modern politics that consumer confidence in the world’s greatest “free market” is critically underpinned by state guarantees for personal savings. That is why the Americans save so much less than we do, and spend so much more of their disposable income. And that high propensity-to-spend is in turn the lynch-pin of the buoyant American economy.

All the same arguments apply to state-backed old age pensions. A buoyant consumer economy demands that citizens are relieved of the awful fear of poverty in old age. I certainly agree that the pensionable age should rise to 67, as is now mooted. But thereafter, the pensions promise should be for a generous and convincing individual pension, dispensing with the 1927 married-couple abatement. Each person making full NI contributions should be promised the equivalent of £8,000 pa, in today’s money, taking all benefit allowances into account as part of that figure. NI contributions should be adjusted accordingly. If housing or other benefit or concession were receivable the figure would be lower. That would boost middle-age confidence, and enable savings to fall, releasing spending power into the economy.

So Tony, beware. You have been warned. Ian Duncan-Smith is said to be scouring the world for new ideas. He might just pick up this 1931 idea, from the United States. The concept is not essentially a socialist one, although it would be immensely popular with Labour supporters. Traditional values in a modern setting, as John Prescott might say.

Labour should get in first, and dish the Tories.

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Footnote Tuesday 12 February I spent on Community Council business, and in promoting Labour Party participation in community governance. The Mumbles Community Council met on Tuesday evening, and there are elections in the offing.

Parish Council elections are special. They are quite unlike ordinary Borough or County Council elections. When a vacancy occurs (death, resignation, retirement, disqualification), the local Ward electors are given the opportunity to have an election. To requisition an election, 10 (ten) registered voters must file a written request to Electoral Registration Officer. If they do not, the Council itself may simply proceed to coopt a replacement.

Even if an election is called, there is a 24-hour breathing-space following the close of nominations, to allow for candidates' withdrawal: the reasoning is that some wannabees may be interested in joining the Council only if coopted but not if they have to fight an election. These rules will seem strange to many - but they reinforce a long-established democratic tradition in English local life, which should be cultivated and not ignored.

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