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Diary Note /0029
Thursday 28 February 2002
for yesterday's thoughts

Student grants
New solution needed

My Government is wrestling with a classic “Old Labour” problem. Student loans have proved intensely unpopular, and many in the Labour Party want to revert to the former means-tested student grant system, which was simple and principled. Yet even that system had decayed from the fine socialist system which supported me, at Cambridge (1956-59).

At that stage, parental contributions were minimal. The principle was that the State Scholarship student should be independent of his parents, able to “pay his own way” with the grant, coupled with vacation employment. Parents were not expected to sacrifice their own comforts for their undergraduate children, who were being educated in the interests of the whole society. I supplemented my grant by taxi-driving in Cardiff, at Christmas and Easter. I was no burden to my parents, even though they were a middle-class Cardiff couple, and better-off than most. I had my own independence, earned by examination success. But only 3% of each generation reached University.

That simple socialist system, which was equitable for both student and parents, had gone by the 1970s. Parental means-testing, and rising student numbers, destroyed it. I regret its passing. Our children now remain dependent upon their parents for much too long. Parents should not have to constrain their own enjoyment of life, to support eighteen-year-olds. But I am realistic. By 1974, the simple socialism of the 1950s had been forgotten. In 1997, my Government was right to try and “move on”, in the interests of expanding University education.

But we got it wrong. The popularity of the Scottish and Welsh initiatives demonstrates that a simple loan-repayment formula is not acceptable. It is seen as unfair to low-income students, it deters students from poorer, debt-averse households, and penalises graduates committed to public or voluntary sector service. And in the search for a solution, I accept that a blanket graduate tax levied on all graduates would also be widely regarded as unfair, and would cost Labour dearly in electoral support. So conventional loans are out. Outright grants are out. And a graduate tax is out.

I propose a “capped repayment” solution. A student would take out a loan at a reasonable interest-rate, fixed not variable. But repayment of the loan could be required only by way of a small Income Tax surcharge payable up to the age of 35 (say, 2% Can anyone work that out for me? Drop me a line ) Early repayment would of course be possible, at the option of the borrower. But if loan repayment had not been completed by the borrower's 35th birthday, the balance would simply be written off. In the City, this would be described as a convertible loan, convertible retrospectively into an outright grant if not repaid by a given date. The funding shortfall would be met by the State, by way of that write-off. That would square the political circle.

But it’s not socialism, as we knew it.

Smacking Children
A barbaric practice

Parents should not be allowed to use physical force against their children. That is my position. No canes, no slippers, no belts, no smacks. Labour has so far failed to grasp this nettle, and I am ashamed of that failure. The law still permits parents to plead the awful defence of reasonable chastisement, a nasty piece of Victorian viciousness which anachronistically survives.

Surveys now suggest that public opinion may prove more liberal than the Labour Government, thus diminishing the fear of electoral rejection The Observer . Be that as it may, the defence of reasonable chastisement should be removed by Parliament, before the Government is ignominiously overruled by the Court of Human Rights. Tony Blair should be proud to lead a Government capable of taking a principled, moral lead.

Vox populi, vox Dei

Public opinion will also force another policy change. When the Beeb organised its boring NHS Day recently, and trawled public opinion, the verdict was resounding. Top priority was clearly assigned, by vox populi, to a new commitment to meet the costs of treating the elderly. And just in case your Latin should be rusty, “Vox populi, vox Dei” means the voice of the people is the voice of God.

The Survey fascinated me. For the verdict had everything to do with old age, and nothing to do with medicine. We all fear poverty in our old age, as our usefulness and health decline. I believe that primordial fear to be a universal phenomenon, still underpinning the high birth-rate in many impoverished societies. We no longer see children, thankfully, as an old-age support-system, but anxiety about impoverishment in old age remains a powerful societal force. It is a pillar of my 1992 essay Multiple Differential Uncertainty , and I hope that (one of these days) you may have time to dip into that.

The BBC Opinion Survey unleashed that primordial fear. The NHS authorities complain about “bed blocking”, meaning that beds are occupied by older patients who have nowhere else to go. Yet the practice merely reflects the honourable impulse to give proper care to our elderly, without exposing them to financial stress. Bed-blocking reflects great credit on all concerned.

Vox populi, vox Dei. The Government will be forced to retreat on this issue. And surprise, surprise! The right precedent is to be found in the US federal system, which Labour should be encouraged to imitate. US geriatric services are means-tested, but the means-test disregards both ownership of the principal family home and personal savings sufficient to earn an income of Ł9,000 ($16,000). In finding a way of offering assurance against impoverishment in old age, the Americans have skilfully compromised with the instincts of their property-owning democracy. They have strengthened the propensity-to-save during middle age, and delivered justice for the old.

We should do the same. The rest of society would certainly be willing to pick up the tab. In confronting old age, every citizen should have the assurance that the family home will not have to be sold, or personal savings run right down, simply to enable them to stay alive. The Americans have got it right. And my Government should change tack decisively, before the 2005 Election.

Down with Britishness

The Guardian and The Observer ordinarily reflect my view of the world. But I am appalled at their current national media survey encouraging young people to “Express their views on what it means to be a British citizen in 21st century multi-cultural Britain”. The winners will be invited to lead out the competing teams at the Commonwealth Games in Manchester on 25 July 2002 - horrors!

This promotional "survey" is entirely misconceived. Because it promotes the idea that some form of “national identity” is a necessary component of UK citizenship.
I quote

“The competition aims to stimulate a wider debate among teachers and students about the importance of Citizenship and the nature of national identity in a diverse and multi-cultural society”

I reject entirely the idea that the status of “UK citizen” imports any concept of identity at all. The connection is itself a primitive and retrograde one, which also permeates David Blunkett’s new naturalisation procedures Blunkett's Migration . The very concept of “national identity” is destructive and divisive, deeply anachronistic. We should not be perpetuating such thinking, among our young people. Hitler’s poisonous use of national identity (Deutsches Volk, Deutsche Kultur, Deutsche Sprache) still bedevils German politics, crippling German society in its adaptation to multi-cultural pressures. “National identity” is a nasty residue of 19th century nationalism, and we ought to be putting it decisively behind us. It represents the Flat Earth Theory of modern politics.

I am mortified by the error of judgment which this "Survey" represents. My hope is that it proves a failure. If there are any teachers reading this, or anyone related to a teacher, I ask the profession to ignore it.

News from the Corporate Jungle III

“Spinning”is presented as a Government phenomenon, a nasty new development. But spinning by the corporate sector is all-pervasive, and highly-skilled. The corporations do not like UK Government’s plan to step-up the use of criminal sanctions for managers who rig markets, fixing cartels Financial Times The problem, they cunningly say, is that “European law” does not use criminal sanctions, treating such corruption as a mere civil peccadillo. If the UK persists with it plans, European investigations will be hampered, because UK managers will resist self-incrimination.

This is clever special pleading by corporate interests, including the Confederation of British Industry. The Government should stick to its guns. Wrongful corporate behaviour must be outlawed, and punished. We should not be deflected by corporate spin.

The Enron saga continues to unravel stricken corporate systems. We now know much more about the global structure of Andersen, the auditors arraigned for negligent accounting. Andersen is not a conventional network of “companies”, or incorporated firms. It takes the form of a loose association of 84 (yes, eighty-four) different national partnerships, whose partners share unlimited liability for liabilities incurred by their local firm. Every single partnership firm is independent of the others, without any cross-liabilities.

The Enron claims will have to be made against the US firm only. None of the other 83 national Andersens will have to share the burden of the US failure. And the US firm takes the unusual form of a “Limited Liability Partnership”, a legal format also available in the UK, under an Act of 1907. Working partners of an LLP are personally liable for the firm’s debts, just like normal partners. But there are also investment-only partners, who are by law given the protection of limited liability, just like ordinary company shareholders. The format is not used widely, and is probably limited to the professional sector.

The full weight of the Enron claims will therefore be carried on the shoulders of the working partners in the US firm subject to D&O insurance, check that out These networks are intriguing, in their global complexity, and would ordinarily remain secret. The Enron affair is lifting the stones, to reveal the real life just beneath the surface.

Ł50 is a lorra money, for a book. That is the price of The Control of Corporate Europe, a new tome from the Oxford University Press reviewed in the Financial Times under the headline “Good governance is hard to find”. I agree. The book scours Europe for examples of good models of corporate management, acknowledging that they all have real flaws. It is fashionable in the UK, however, to parade the apparent success of other systems, as part of a critique of our own.

But the corporate sector suffers internationally from the very same faults as our own, and my analysis is the same Autocracy, Secrecy, and Abuse of Rights . The UK and the US were in the forefront of the development of company law from 1870 onwards, and the same defects interpenetrate all contemporary company-law systems.

The historic mission of the Left is to confront corporate power, and tame the corporations Taming the Corporations

News from the Corporate Jungle, Earlier Editions > see Corporate Jungle I and Corporate Jungle II

PS Professor C Wright Mills was one of the great American sociologists of the 1950s, indeed I met him on one of my student trips to the United States, when I was a sociologist. His primary theme was the power of “elites”, and his work generated many valuable insights. Now, Professor Karel Williams of Manchester is reviving Wright Mills’ elite theories, as a means of illuminating the extraordinary success of the Enron management – interesting stuff, argued fully in The Guardian - check it out

What do you think? Drop me a line.

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