Posts Tagged ‘Featured’

It’s still the money, stupid: Britain continues to pay into the EU budget

Although Britain leaves the EU at the end of January 2020, it will continue paying into the EU budget until the end of the implementation period. Iain Begg (LSE) says that although the issue has faded from view, Boris Johnson will still have to decide whether to continue paying in order to secure access to spending programmes such as Erasmus.

“Money is a great servant but a bad master” – Francis Bacon

With the UK on the cusp of formal exit from the EU, the difficult and acrimonious disputes over the ‘backstop’ already seem distant. The revised withdrawal agreement negotiated after Boris Johnson became prime minster is now seen as a success and there is new optimism about the chances of securing a trade deal in line with the political declaration. Oddly, though, the budgetary dimension of UK-EU relations has faded from view. It was once a different story, and thereby hang a few tales.

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Photo: Images Money via a CC BY 2.0 licence

After the 2016 referendum was called, one of the most contentious issues was the scope for the UK to gain from no longer being a net contributor to the EU budget. Everyone remembers the red bus and the controversy around the claim of a £350 million per week windfall for the NHS.

Despite being debunked by the Statistics Authority, the watchdog charged with overseeing the use of official statistics, the £350 million figure continued to resonate with the public and has undoubtedly fomented expectations of a boost to health spending.

In July 2017, Johnson (then Foreign Secretary) agreed with a backbencher’s suggestion that the EU could ‘go whistle’ for the money, although he later back-tracked to say that the government would agree a financial settlement, but ‘not a penny more, not a penny less’ than needed to meet its legal obligations. Even so, he regularly restated the claim. The chair of the Authority, Sir David Norgrove, subsequently wrote to Johnson in September 2017 reproving him for persisting in using the misleading figure.

In the fraught parliamentary battles of autumn 2019, Johnson repeatedly claimed every extra week the UK stayed in the EU was now costing UK taxpayers £400 million – typically adding that it was money that might otherwise have gone to a struggling NHS. He was taken to task by the BBC’s Reality Check for precisely the same reasons as when commentator after commentator deplored his previous insistence on the notorious £350 million per week.

However, this is only part of the story, because the ‘divorce bill’ negotiated as part of the withdrawal agreement meant that the UK had accepted responsibility for continuing to pay into the EU for the whole of 2020. Article 135.1 of the WA is explicit:

“For the years 2019 and 2020, in accordance with Part Four, the United Kingdom shall contribute to and participate in the implementation of the Union budgets.”

The other main part of the settlement covers obligations entered into while the UK was a member state, but for which final payment falls due after the end of 2020. The UK accepts it must pay, but the deal specifies that payments will only be made when required, the last of which (notably for the pensions of former EU staff) may be decades hence.

Given Johnson’s stance on the budget contributions, not to mention that of Dominic Cummings, Number 10 might have been expected to push for a revision of the financial settlement included in the withdrawal agreement. Yet the Johnson version of the withdrawal agreement did not materially alter the terms of the ‘divorce bill’ the UK has agreed to pay. Estimates (and they can only be approximate because some of the obligations may lapse) for the May WA pointed to a headline total of around £39 billion payable after the end of March 2019.

This figure has now fallen because the two extensions to the Article 50 process effectively meant the UK continued to pay into the EU budget as a full member up to the end of January 2020, ten months longer than expected. Quite simply, instead of paying through a divorce bill, the UK has instead paid the same amount as a member state.

Could all this be one of the reasons for the government’s determination not to extend the implementation period? Despite concerns about the compressed timetable for negotiating a new partnership with the EU, the government is adamant that it will not countenance going beyond the end of 2020, even though there is the option to do so. A key clause in the withdrawal agreement is Article 132.2(d) which states: ‘for the period from 1 January 2021 to the end of the transition period, the United Kingdom shall make a contribution to the Union budget, as determined in accordance with paragraph 3’.

The ‘paragraph 3’ wording is quite vague, referring to a decision by the ‘Joint Committee’ on the ‘appropriate amount’, but from a domestic political perspective, the implication is clear: the UK would, in the much-used phrase, still be ‘sending money to Brussels’. Ending the transition promptly would appear to forestall the invocation of this clause.

Nevertheless, despite withdrawing, the UK is likely to want to remain part of certain EU spending programmes, beyond those for international development aid (the European Development Fund) already included in the withdrawal agreement. The two most obvious ones are future EU research programmes and the Erasmus scheme which supports mobility of younger people. Indeed, a recent editorial in The Times reminded readers how Boris Johnson, when Mayor of London, had welcomed foreign students. As the Thunderer opined, ‘there is no reason why Brexit should lead to Britain quitting Erasmus.’

To sum up, the renegotiation of the withdrawal bill has not reduced the transfer of money to the EU, even though the eventual headline total will have diminished. There are also unresolved matters about future UK payments to Brussels. These may be politically touchy, but demonstrably in the national interest. Is this a case where the large Tory majority should allow the government to avoid grandstanding in favour of rational decisions? Perhaps Boris, given his fondness for the classics, should reflect on what Sophocles said: “There’s nothing in the world so demoralising as money”.

This post represents the views of the author and not those of the Brexit blog, nor LSE. It first appeared at UK in a Changing Europe.

Getting Brexit done? We are still a long way off the certainty that business craves

There has been a lot of discussion recently about “getting Brexit done”, which the government at least seeks to use to give the impression that this also includes the trade deal with the EU, and the ability to move on to trade deals with the rest of the world. There are however several reasons why the reality is somewhat removed from this, writes Nigel Driffield (Warwick Business School).

Firstly, the political declaration has very little detail on trade, except for some understanding that there will have to be some frictions in trade between Northern Ireland and the rest of the UK (something that the prime minister seems happy to deny, even in the face of documentary evidence). The CBI this week urged caution that “sustainable economic growth will be risked if there is a needless rush for a bare bones Brexit deal that would slow down our domestic progress for a generation.”  – recognising the reality that this deal is some way off providing any certainty to business, especially in terms of stimulating investment. The prime minister claimed before the election that there was “£150 billion” of inward investment waiting to flood into the UK once he “gets Brexit done”. Leaving aside the size of this number (roughly 50% more than last years total, which is admittedly 40% down on the year before), many of these issues, plus certainty over exchange rates, inflation will have to be addressed before the UK becomes as attractive for investors 

In my opinion, the current situation affords an utter lack of clarity in at least three areas:

1.           “WTO terms”. People assume that this provides some sort of multilateral agreement that in some sense replaces our existing trade deal. Instead, it simply offers a baseline of anticompetitive behaviour countries can not stoop below while retaining membership. As with all matters to do with trade, large countries and large trading blocks use the WTO as they see fit. America, for example, loses roughly half of the cases that it brings to the WTO, and then, when it has lost, largely carries on as before.

2.           Rules of Origin. To my mind, it is shocking how little attention this has received. In order to have “free trade agreements” one has to abide by what are called “Rules of Origin”. That is to say that if a product (or service) is stamped as “made in the UK”, a certain percent of the total value must have been generated in the UK – or imported and been subject to tariffs paid (under WTO rules) at the point of importing them. At present, UK goods need to meet the requirements as “made in the EU”, but once we are independent much higher proportions of goods will have to have been produced here. Brexiters argue that this will lead to activities being brought back to the UK, but given then existence of trade costs, one would ask, if we could produce these inputs as efficiently as foreign producers, then why are we not doing it already. Those advocating “free trade” see the solution as cutting all our import tariffs to zero, but that is likely to risk many more jobs.

3.           Quality assurance for exporting. This is likely to hit sectors such as food and drink. At the moment, participation in the single market requires the UK to carry out a certain level of quality assurance of goods exported to the EU. At the moment we just about meet this threshold (and get some leeway due to our market size and contribution). As a third country, we would need to do roughly three times as much checking, and at present, we do not have sufficient trained people. This can be addressed over time, but will cause significant difficulties in the medium term, especially if other countries – such as Canada or Australia demand the same. Again, one wonders if this is why certain brexiters have advocated us adopting the same standards as certain developing countries.

So, taking this together, one can see that we are still a long way off the certainty that business craves. There appears to be a clear division now between the political need to announce both a trade deal with the EU, and one with the US, and any desire to understand the benefits (and costs) associated with that deal. There is some suggestion this week that access to UK fishing waters is a concession the EU will demand in exchange for bank passporting. The government will then have to trade off the political fallout of this with the economic fallout should the city find EU access restricted. Such tradeoffs have hitherto been ones the government have sought to deny that they even exist, and it will be interesting to see if economic expediency trumps political posturing.

This post represents the views of the author and not those of the Brexit blog, nor the LSE. Image: Pixabay License.

Young people and the post-crisis precarity: the abnormality of the ‘new normal’

Craig Berry and Sean McDaniel draw upon research with focus groups and an online community exercise to examine the attitudes of young people in relation to the apparent ‘normalisation’ of precarity in the post-2008 economy. They find that although young people recognise the abnormality of labour market conditions, they nevertheless fail to see value in conventional forms of trade union organisation.

The 2008 crisis crystallised the trend towards ‘precarious’ labour market conditions – stagnation in earnings growth, skills under-utilisation, labour market ‘hollowing out’, and the emergence of ‘gig economy’ practices – which disproportionately affect young people. Insecure employment is not new, especially in lower-skilled occupations, although it may have reached a new peak since the crisis. Indeed, two decades ago, Richard Sennett warned of ‘flexible capitalism’, wherein uncertainty and instability were becoming ‘woven into the everyday practices of a vigorous capitalism’.

However, today’s young people are perhaps the first cohort to have experienced the shift towards precarity on a large scale, across occupational groups. In a landmark 2018 book, the late Andy Furlong et al. refer to the spread of precarious labour market conditions in recent decades in the UK as a ‘new normal’, which has built up over decades and accelerated in the context of the crisis from 2008.

Yet the perspective of young people themselves has been relatively absent from academic debates on the advance of precarious work. Our research seeks to develop our understanding of this new normality of precarity by inquiring how it has been internalised into the attitudes of today’s young workers. Too often, young people’s understanding of their economic circumstances is assumed rather than investigated; or, a relatively politically engaged and media-savvy minority of young people is assumed to be representative of the cohort as a whole.

We conducted a series of focus groups with 18-25 year-olds (in Manchester, Grantham and London, supplemented by a nationwide online discussion forum) in October 2017. The groups had a mix of male and female, and graduate and non-graduate participants, with the exception of one of the sessions in London, which was composed of only graduates (this reflects our interest in distinguishing between different groups of young people – we must be careful not assume the young think, and act, as one).

We investigated their attitudes to work, the economy and, importantly, industrial relations. Drawing a link between wider labour market processes and young people’s attitudes to trade unions, we interrogated the notion of ‘normalisation’ itself by considering if, how, and why young people seek to operate and succeed (or simply survive) within this economic environment, rather than resist it (through, for example, forms of collective action).

We found that young people’s experience of the ‘new normal’ of precarious labour market conditions has been internalised within their attitudes to a significant degree. This does not mean, however, that changes have been accepted passively or unknowingly. Rather, there is a recognition amongst these people of the novelty of their socio-economic circumstances, and thus frustration and disquiet at the nature of these circumstances. The ‘new normal’ is in fact recognised as abnormal. There was clear anger expressed at the way in which current economic conditions of the post-crisis environment, including the legacy of the economic crisis and phenomena such as Brexit, have affected the life chances of young people.

Nevertheless, we also found, as others have, that young people feel that insecure labour market conditions are simply ‘part and parcel’ of the economic order they expect to confront throughout their lifecourse. This attitude means they focus on how they can succeed within this inherited structure rather than on pursuing structural change. There is a degree of resignation to a situation wherein precarity is deemed largely immutable. Accordingly, it seems many young people understand the prospect of improving labour market outcomes in terms of personal development and their ability to successfully navigate this more competitive environment (an attitude also identified elsewhere). (We found some attitudinal differences between graduates and non-graduates, with the former more concerned about unmet expectations from their career, for instance, and the latter more concerned by general degradation of economic conditions. Yet these are differences of degree rather than being fundamental in nature.)

Our research shows that antipathy towards trade unions (even if trade unionism is conceived in fairly positive terms) can be associated with this perspective, insofar as membership is not deemed particularly helpful to young people plotting their career while navigating precarious labour market conditions.

Most participants reported that they wanted trade unions to craft an offer more resonant to their individual ambitions for their careers – and were unaware of services offered by unions which might already be meeting this need. They were not particularly interested in being represented by trade unions in the workplace – with some young people particularly critical of unions seeking to represent members’ interests via political engagement, reflective of a wider ‘anti-politics’ sentiment (our fieldwork was conducted just after the so-called ‘youthquake’ election in 2017).

Of course, if young people lack knowledge of trade unions, it is perhaps because the information they are presented with is not deemed salient to their experience of industrial relations. (We detected few differences between graduates and non-graduates regarding specific views on trade unions; interestingly, there were few, if any, explicit suggestions by participants that there might exist social class-based divisions within age cohorts.)

Overall, the 2008 economic crisis underpins much of what young people believe about the economy and their own place within it – investigating the impact on crises on generational identities is an area where further research would be especially welcome. This sense of injustice among today’s young people – dealing with a crisis they did not create – has been compounded by the Brexit vote, which young people report has created manifold uncertainties for their future lives. Our research reveals therefore a relatively strong sense of age-related identity among today’s young people in which, rightly or wrongly, they believe their political and economic experiences are unique, or uniquely difficult, compared to recent cohorts. The long-term implications of such a perspective for industrial relations and political participation – and how progressive political actors might seek to accommodate it – remain uncertain.

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About the Author

Note: the above draws on the authors’ published work in Economic and Industrial Democracy (open access basis). The original research was funded by Unions21.

Craig Berry is Reader in Political Economy at Manchester Metropolitan University.

 

 

 

Sean McDaniel is Senior Lecturer at Manchester Metropolitan University.

 

 

 

All articles posted on this blog give the views of the author(s), and not the position of LSE British Politics and Policy, nor of the London School of Economics and Political Science. Featured image credit: Pixabay (Public Domain).

 

Book Review | Taking the Floor: Models, Morals and Management in a Wall Street Trading Room

In Taking the Floor: Models, Morals and Management in a Wall Street Trading RoomDaniel Beunza analyses how the use of economic models and the moral disengagement this has created have significantly transformed the global financial industry through an ethnographic study conducted at an equity derivatives trading room of an international bank located in New York City. This is a significant contribution to social studies of finance and economic sociology, writes Manuel A. Santana-Turégano.

Taking the Floor: Models, Morals and Management in a Wall Street Trading Room. Daniel Beunza. Princeton University Press. 2019.

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In Taking the Floor: Models, Morals and Management in a Wall Street Trading Room, Daniel Beunza analyses how the use of economic models and the moral disengagement this has created have significantly transformed the global financial industry. The book is based on ethnographic research spanning two decades, and with plenty of valuable insights, it is recommended reading for anybody interested in how the use of economic models shapes contemporary society.

The core idea of Taking the Floor – namely, that the use of economic models and electronic devices in the financial industry leads to the suspension of moral judgement and has profoundly altered the way in which the industry is organised – helps us to better understand the global financial crisis of 2007-2008. The book is based on research that Beunza conducted between 1999 and 2003 at the equity derivatives trading room of an international bank located in Lower Manhattan in New York City (designated by the pseudonym ‘International Securities’), combining participant observation and oral history interviews. From 2003 until 2015, more visits and interviews were conducted; as a result, the research design conforms in part to Michael Burawoy’s concept of a ‘punctuated revisit’, since Beunza returned to the original site over a time period of more than ten years.

The main questions that the book attempts to answer can be boiled down to two. First, how does the use of economic models and information technology affect the organisation of the financial industry? And second, what can we learn from this about the causes of the global financial crisis? The core idea of the book is that the way in which the use of economic models and information technology has been implemented has created a model-based moral disengagement. Beunza analyses how the environment – what he calls ‘organizational strategies’ – shape moral judgement and the way decisions are made, from how desks are arranged to how managers set objectives. As he sees it, the organisational strategies adopted by the financial industry have created a moral disengagement that disabled the mechanisms of self-condemnation associated with immoral conduct and therefore encouraged the unrestrained pursuit of self-interest.

Image Credit: Image of the New York Stock Exchange, taken as part of a visit by Melania Trump, 23 September 2019. Photograph by Andrea Hanks (The White House Public Domain)

The book, comprising thirteen chapters, is organised into two sections. The first half is dedicated to the use of knowledge on the trading floor, focusing on models, traders and the connection between them. This section introduces the original fieldwork and explains how modelling was organised at International Securities. After the Introduction, Chapters Two to Five analyse traders, whilst Chapter Six analyses the managers who supervised them. The participants of the study were the manager of the floor, Bob, a statistical arbitrage trader; sale traders including Scott, Joe and Jim; and Max, a senior trader at the merger arbitrage desk (all pseudonyms). Chapter Seven then considers the performative effect of economic models on the financial properties of securities.

The second half of the book focuses on the moral consequences of economic models. Chapter Eight analyses how norms were enforced in the trading room, whilst Chapter Nine introduces the concept of resonance. Chapters Ten and Eleven develop the idea that the global financial crisis was a consequence of the moral side effects of the organisational changes that had been taking place in Wall Street since the 1980s, and Chapter Twelve considers the impact of the global financial crisis for Wall Street employees. Chapter Thirteen concludes by setting a framework for how future crisis could be avoided, proposing the concept of ‘proximate control’: that is, the supervision of quantitative traders not by models but by a combination of social and technological devices, such as the use of personal evaluation of quantitative results or the qualitative judgement of financial calculations. This concept is opposed to that of ‘government at a distance’, as proposed by governmentality scholars such as Peter Miller and Nikolas Rose.

Following the concepts developed in the book, performative spirals, borrowing ideas from the social studies of science tradition, permits to understand the recent evolution of the financial industry, and supersedes economist Robert C. Merton’s concept of the ‘financial innovation spiral’. Beunza’s concept represents the relationship between economic models and the properties of financial securities as a spiral. At a certain point in time, new financial devices, tools or economic models lead to changes in investment practices. In turn, these new practices often create changes in the properties of the securities. Later on, these new properties are profitably exploited by new tools, financial devices or practices. In sum, there is a reciprocal influence between economic models and financial properties, and since this can be performative, it is called a performative spiral.

The concept of resonance is another key contribution of the book. According to Beunza and David Stark, resonance can be defined as ‘the amplification of error arising from a combination of cognitive similarity and confrontation with market rivals via economic models’ (183). Borrowing the idea from physics, and giving the historical example of the collapse of a suspension bridge, the concept of resonance helps us understand how a collection of individually minute errors can add up and eventually collapse large infrastructures, such as the architecture of the global financial system. In the aftermath of the global financial crisis, it was inevitable that both finance experts and laypersons would ponder the question how could this happen? According to common perceptions, the subprime crisis went as follows: worldwide, millions of banks gave mortgages to millions of borrowers, whose probability of default, for every individual loan, was small enough as to grant the loan. However, errors were made that were important enough as to cause a global collapse of the financial system.

The concept of resonance helps us to understand how all this happened. Under the assumptions of traditional approaches to finance, minute errors in the modelling of economic reality – for example, whether a borrower will pay back a loan or not – should cancel each other: some banks would overestimate some risks, others would underestimate them. But since at every bank those who built up the models had cognitive similarity and compared themselves to market rivals via economic instruments, they did not notice that they were all making the same mistake until it was too late. Beunza’s idea of resonance therefore gives a better explanation of the financial crisis than many previous theories. It was not only that models were based upon the assumption that past events permit us to forecast the future, as per Nassim Nicholas Taleb’s ideas. It was not only the organisational silos in the credit ranking agencies, as in Donald MacKenzie and Taylor Spear’s explanation; nor solely the unethical activity on Wall Street, as in Neil Fliegstein and Alexander F. Roerhkasse. It was resonance that better explains the causes of the crisis.

Taking the Floor is a significant contribution to social studies of finance and economic sociology more broadly. It will certainly be worthwhile reading not only for specialists, but also a much broader audience, since the way abstract models shape reality is becoming one of the more salient issues in contemporary societies within and beyond the realm of finance.

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Note: This review was first published on the LSE Review of Books. 

About the Reviewer

Manuel A. Santana-Turégano is Lecturer in Sociology at La Laguna’s University (Tenerife, Canary Islands) Department of Sociology and Anthropology.  Manuel’s research and teaching covers the areas of Economic Sociology and Tourism, and is currently focused on how financialisation is changing tourism. Most of his published research can be found online, open access.

 

Flybe rescue: why the government may be putting the green revolution at risk

Boris Johnson may be putting the green revolution at risk by aiding regional airline Flybe, writes Tony Hockley. He argues that while Britain led the way in the liberalisation of air travel, current evidence on climate change as well as the rise of the world wide web have transformed choices for regional development.  

The rescue of Flybe from extinction was one of the first proper decisions that faced the new British government. The decision was a triumph of politics over policy. Whilst communities around Britain celebrated concessions on a £106m tax bill that would have finished off the ailing airline, some of us just saw trouble ahead.

In the early 1990s I opted for a new role employed by the Civil Aviation Authority (CAA) to press the consumer case for air transport liberalisation. At the time, European aviation was trapped in the past. Over-protective governments across Europe were trying to save their airlines from market forces. National airlines and their national airport bases enjoyed this protection. Regional airports and airline users payed the price. Smaller airports would receive the occasional charter flight to the sunshine, or serve as a national airline’s feeder to its hub. For years, for example, Southampton was little more than a feeder for KLM passengers through Amsterdam’s Schiphol.

Along with my CAA colleagues we would to-and-fro to Brussels, pressing the liberalisation case. It took three regulatory reform “packages” over five years to get to a situation in which most standard competition law would apply to airlines and airports. The hardest nut to crack was state aid. Governments came up with ever more imaginative ways to pretend that their bail-outs could be deemed normal “market economy investor” actions. For a while, these games were tolerated as part of a smooth transition to “open skies”. The low-cost airlines would never have survived if we had not remained vigilant in making the case against state aid and routine abuse of dominance.

The biggest winners from liberalisation were, of course, travellers; fares tumbled as competition brought real innovation. The other big winners were the regional airports. New airlines shunned busy, expensive, slot-constrained airports in favour of little-used alternatives. Indeed, a core part of the strategy for step-wise liberalisation was first to open the potential for links between regional airports, in which legacy airlines had no interest. Flybe grew out of this process, developing from a niche carrier serving the Channel Islands into Europe’s largest regional airline with more almost 200 routes.

For those of us who put such time and energy into pressing the (unpopular) case for market liberalisation, it is upsetting to see the UK government using ploys only previously seen from France, Greece and Italy. Allowing Flybe to defer handing over to HMRC the Air Passenger Duty paid to them by their passengers, is a gamble with other people’s money.

What is even more upsetting are the other gambles that the government appears willing to take. Since the market liberalisation work of the 1990s, dramatically improving access to air travel, evidence on climate change and the impact of aviation has mounted. The second shift since then has been the transformation of communications, by the world wide web. Both shift the public policy balance away from the exceptional protection of air transport from normal tax treatment. When Air Passenger Duty was first announced in 1993 many of us in the sector saw it as undermining what was being achieved in reducing the costs of air travel. Today it would be hard to make a rational case against the tax, given that aviation fuel is untaxed. This may be part of the reason why the cheapest Monday morning fare from Southampton to Manchester by Flybe is £99; by train it is £236 (prices correct at the time of publishing). The externalities of short-haul air travel, the socio-demographic profile of those flying, and the lack of hard evidence of the routes’ development value comparative to good rail, road, and broadband links all suggest that short-haul aviation is heavily undertaxed.

In 2018 the Department for Transport commissioned an analysis of the economic impact of regional air services. The conclusion was not compelling evidence for state support. The authors said that these services: ‘May have a role to play in policies associated with re- balancing the economy. The evidence on which this assessment is based is limited.‘ Nevertheless, governments worldwide do support routes where the potential alternatives are limited or inadequate for essential needs.

In the discussions on European liberalisation, we took steps to make this state support transparent and contestable. Instead of supporting individual airlines, governments could support routes and spur innovation in service quality and costs. These Essential Air Services would be put to tender. We thought that the days were over when support for routes was a covert mechanism for supporting a particular carrier. The policy decisions taken this January appear determined to support one airline.

The new UK Government finds itself in an early political bind. The priority of levelling up the regions seems to call for the preservation of all current regional air routes. The priority of moving to net zero carbon calls for the opposite. The conundrum will demand some innovative thinking. Can Flybe reasonably be kept in the air long enough to boost the alternatives, such as cheaper, easier, and better rail connections; the introduction of electric planes; a green revolution on the roads; better availability of fast fibre and the arrival of 5G? The Conservative manifesto did point to these and the Budget in March may reveal how the Government intends to answer some of this, not least in whatever reforms it makes to Air Passenger Duty.

By attempting to preserve Flybe permanently the government would be hindering, not helping this technological shift. The primary effect of airline state aid before liberalisation was to deter innovation. There is no reason to believe that the effect would be any different today.

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About the Author

Tony Hockley ia Director of the Policy Analysis Centre and Visiting Senior Fellow, Department of Social Policy, LSE. Dr Hockley was Economic Adviser to the Air Transport Users Council at the Civil Aviation Authority, and Secretary of the Federation of Air Transport User Representatives in the EU during the completion of the Single Market in Air Transport. He was Special Adviser in the government led by John Major.

 

All articles posted on this blog give the views of the author(s), and not the position of LSE British Politics and Policy, nor of the London School of Economics and Political Science. Featured image credit: Pixabay (Public Domain).

Punctuation and rhetoric: the difference between the “the people’s parliament” and “the peoples’ parliament”

How Boris Johnson’s government refers to parliament may come to reveal how deep a commitment it has to constructing a pluralistic claim of a collective UK state interest, rather than a singular populist claim, writes David Judge.

Immediately after the general election, Boris Johnson greeted the newly convened parliament with the triumphalist words, ‘[this] is one of the best Parliaments that this country has ever produced’, and pledged that ‘this new democratic parliament – this people’s parliament [will] get on with delivering the priorities of the British people’. Repeatedly the PM enthused that this was to be ‘a Parliament that works for the people’ and a parliament that had ‘delivered a people’s government dedicated to serving you’.

The PM’s repetitions seemingly pointed to a singular vision of ‘the people’ sharing common priorities, and with their elected representatives capable of sustaining a ‘people’s government’ dedicated to serving ‘one nation’. Yet, on closer inspection, they also pointed implicitly to the existence of ‘peoples’ – in the plural – who were to be represented, and of institutions – in the plural – made manifest in the differentiatedness of ‘parliament’ and ‘government’ within Westminster.

According to the PM two features of the new parliament made it a ‘vast improvement on its predecessor’. First, it was more representationally descriptive of the UK population; and second, and more importantly for the PM, it was ‘going to get Brexit done’.

Peoples in the plural

If ‘bestness’ is measured by the extent of descriptive representation, then the new parliament was indeed ‘better’ than its predecessor. The idea of descriptive representation denotes ‘shared experiences’ between represented and representatives – which allow the latter to be ‘in some sense typical of the larger class of persons whom they represent’. And, if within-group intersectional differences are inserted into this relationship, further complexity and contingency come to characterise the practice of parliamentary representation. Intersectionality recognises that there are no uniform identities within descriptively defined groups.

The new parliament returned record numbers of: women MPs (220); Black and Minority Ethnic MPs (65), Muslim MPs (18); and openly gay, lesbian or bisexual MPs (45). Yet while descriptively ‘better’ than its predecessors, this parliament is far from being the best it could be. Women and BAME groups remained proportionately under-presented when compared to their population size, while other visible and invisible minorities remained notable by their absence. While 22% of the UK population are recognised as having a disability, only a handful of self-declared disabled MPs are present in the new parliament. A cursory examination of the CVs of MPs also reveals that few had direct prior experience of unemployment or of grinding poverty. The significance of this descriptive representational deficit is that comparative empirical studies of policy preferences in legislatures reveal that ‘differential representation [of income groups] is always in disfavour of the poor’.

A simple listing of the group characteristics deemed to be of descriptive importance, immediately reveals, therefore, the innate plurality of ‘peoples’ in a representative parliament. Indeed, even Boris Johnson’s baseline definition of representational ‘bestness’ – in terms of ‘more female Members than ever before and more black and minority ethnic Members than ever before’ – still managed to undercut the very idea of a singular people represented in a ‘people’s parliament’ – no matter the powerful, propagandist, populist appeal of this rhetorical device.

Institutions in the plural

The PM’s main criterion for assessing the ‘bestness’ of the new parliament, however, was simply that it wasn’t its predecessor. The 2017-2019 parliament stood accused of using ‘every trick in the book’ to thwart ‘the will of the electorate’. In contrast, the new parliament would ‘not waste the nation’s time in deadlock, division and delay’; instead ‘this people’s parliament … [is] going to get Brexit done’.

If the meaning of Brexit had long been a conundrum – encapsulated in Theresa May’s mantra of ‘Brexit means Brexit’ – the new ‘people’s government’ now claims, on the back of its electoral victory, the licence to determine what Brexit means. Indeed, the Johnson government has every right to define Brexit in whatever way it sees fit, and equally it has a right to claim, as the PM did in his contribution to the debate on the Queen’s Speech, that it will legislate in the name of all the people. In fact, the PM’s invocation of ‘all the people’ is but the latest iteration of a constructed claim made by all UK governments to represent the collectivity of the state and its peoples (whether couched in terms of the common interest, national interest or the people’s interest).

Central to the notion of representative democracy, however, is that these claims of a collective interest are subject to what Manin calls ‘argumentative scrutiny’ and ‘the trial of discussion’ where ‘everything has to be justified in debate’ in the legislature. This notion of justification is epitomised in the institutionalised processes of deliberation, scrutiny, and accountability – with their associated elaborate procedures, rituals, and symbols – embedded in the contributions made by parliaments to state decision-making processes. Governments thus have the right to make claims to act, and legislate, in the collective interest; but, equally, parliaments have the right to subject those claims to ‘argumentative scrutiny’ and to ask executives to account for their actions.

Significantly in this respect, the Leader of the House, Jacob Rees-Mogg proclaimed that 2020 would be a year ‘in which this House, this great institution of our democracy, will work for the people, delivering the Prime Minister’s ambitious legislative agenda while conducting its work of scrutiny and accountability in the proper way’. Earlier, upon his appointment as Leader of the House, he had expressed ‘perhaps a somewhat romantic view of the House of Commons’, in his belief that it was the job of MPs ‘to hold the Government to account and not simply facilitate whatever the Government will want to do’.

Whether this romantic view prevails in the face of a government majority of 80 is an open question. The portents are unfavourable, however: generally, all governments tend to be gripped by ‘an executive mentality’ which predisposes them to undervalue the requirements of parliamentary scrutiny and accountability when formulating and implementing their policies. Specifically, since the Brexit referendum, successive Conservative governments have sought to evade parliamentary judgment of their Brexit strategy through procedural deceits and corrosive anti-parliament narratives. In the intervening period, the Supreme Court has been called upon twice to remind the executive of its foundational constitutional responsibilities to subject itself to the authority of parliament. In the same period, government ministers, leading Conservative MPs, and even Prime Ministers  themselves, have peddled populist narratives of being on the side of the people against parliament, of parliament setting itself against the people, and of ‘parliament versus the people’.

More specifically still, and possibly symptomatic of Johnson’s mindset towards parliamentary scrutiny and accountability, has been the appointment of Dominic Cummings as the PM’s chief special adviser. Cummings had earlier been admonished by the House of Commons Privileges Committee for contempt of parliament, with the Committee deeming that Cummings’ attitude ‘did not to serve the interests of civilised debate’.

When punctuation matters

If civilised debate is the hallmark of parliamentary government, then Boris Johnson and his closest ministerial confidants and political advisers have ‘previous’ in their disregard for scrutiny and accountability. There is every prospect, therefore, that the institutional divide between the ‘people’s government’ and the ‘people’s parliament’ will be brought into stark relief as the realities of representing the diverse experiences of multiple peoples throughout the UK become apparent in a ‘post-Brexit’ UK after 31 January 2020.

In these circumstances, punctuation may yet come to matter. Where the apostrophe is placed – “the people’s parliament” or “the peoples’ parliament” – may come to reveal just how deep a commitment the Johnsonian ‘people’s government’ has, first, to constructing a plausible pluralistic claim of a collective UK state interest, rather than a singular populist claim; and, second, how prepared it is to justify its claim before a parliament representing the interests, opinions, and expectations of multiple peoples.

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About the Author

David Judge is Professor Emeritus of Politics at the University of Strathclyde.

 

 

 

All articles posted on this blog give the views of the author(s), and not the position of LSE British Politics and Policy, nor of the London School of Economics and Political Science. Featured image credit: Pixabay (Public Domain).

Why did the Conservatives’ large lead in vote shares produce only an 80-seat majority?

Plurality rule voting systems have a well-known tendency to exaggerate the seats of the largest party. A full analysis of the 2019 results remains to be completed, but Tim Smith finds evidence that this time around the Conservatives had a modest 23 seat advantage over Labour in terms of two-party bias. The ‘leader’s bias’ advantage was also much smaller than that which Labour enjoyed in 1997-2005. This may mean that the future boundary reforms to equalize constituency sizes may not be as beneficial as the Conservatives hope.

Conservative politicians have long complained that they have been fighting the Labour party on an uneven pitch. Their case has been that Labour MPs have been elected in constituencies with smaller electorates than those in Conservative seats. The 2019 manifesto is the fourth Tory manifesto in a row to promise legislation to equalize the sizes of constituencies by implementing boundary reforms on a strict population basis. Once implemented, the pledge means that in future constituency sizes will not vary more than 5% from the UK quota (national average), with every set of boundaries reviewed every five years. The boundaries used in the 2019 election are now almost twenty years out of date. The electoral statistics used to draw them up derive from December 2000.

Some Conservative commentators have also noted that despite being just under 12 percentage points ahead of Labour in national vote share, Boris Johnson none the less gained a smaller majority of 80 seats in the Commons than when Labour won a majority of 165 in 2001 with just over a 9% lead. Table 1 below shows that Labour’s two-party lead in 2005 was under 3%, but it yet produced a two-party seats lead of 158 and an overall majority of 66. In 2019, the Tory lead was four times larger, but the two-party seats lead was almost the same as in 2005, and Johnson’s overall Commons majority is 80 seats.

The classic means of measuring two-party bias in a plurality rule (‘first past the post’) system, is using Brookes’ decomposition method, as adapted by Johnston, Rossiter and Pattie, and also explained here. Everyone accepts that plurality rule benefits the larger parties, especially the winning party, at the expense of the smaller parties with widely spread support. The Brookes method has a more limited purpose, namely to check how level the playing field is between the top two parties. By adjusting the vote shares on a uniform basis to an equal level, one finds the Conservatives 23 seats ahead of Labour, which constitutes the total bias. The various components that go make up the overall bias can be derived algebraically using the Brookes method from this point.

Table 2 below shows that total bias in the system has been in the Conservatives’ favour since the 2015 election, when it peaked at a 49 seat lead advantage. Since then it dropped to 12 seats in 2017 (when Labour almost matched Tory support). In the 2019 election the Conservatives were well ahead in terms of votes, but the overall seats advantage they enjoyed rose only slightly to reach 23 at this election.

Sources: Data for 1987 to 2010 are drawn from Johnston and Pattie [link to be added shortly]. Data for 2015-19 are the author’s calculations.

Notes: The cell entries show the consequences of bias in terms of two-party seat leads, i.e. multiplying each seat by 2. Positive numbers show a pro-Tory bias, and negative numbers a pro-Labour bias. Notice that the 2019 overall bias is much smaller than the leader’s bias Labour enjoyed in the three elections it won from 1997 to 2005. Indeed, Labour had a larger two-party bias in its favour in 2019, an election that it lost, than the Conservative gained in 2019 despite being streets ahead in voter terms.

Looking at the different components shown in Table 2 helps to explains why the very large lead the Conservatives received in terms of vote share did not translate into the kind of majority that Labour managed in 1997 and 2001. The size differentials between constituencies remains an issue, giving a Labour advantage over the Conservatives of 18 seats. Eight seats of this come from the differential between the three nations, England, Scotland, and Wales. Whilst Scotland’s representation was reduced closer to English levels in 2005 after devolution, there is a considerable malapportionment in the system favouring Wales. If constituency sizes were equalized in Wales, then the country would overwhelmingly elect Labour MPs on the basis of equal vote shares. This effect is currently constrained because Wales has much smaller constituency sizes than England, 58,000 to 74,900.

The other ten seats due to differentials in constituency sizes arise within a country, mainly within England. The Conservatives have tended to favour regular boundary reviews because in the past this seat bias in favour of Labour has grown between such reviews – inner city seats have tended to shrink whilst suburbs and rural seats have seen their electorates grow. However, this effect has not been the case this cycle. The size bias is exactly the same in 2019 as it was in 2010 when the current boundaries were first used. On the basis of actual voting shares (rather than the equal ones assumed by the Brookes method), the size bias has actually dropped since 2015, as the Conservatives have gained more support in territory with declining electorate sizes such as Stoke.

Differentials in turnout, or more properly lack of turnout, have had a greater impact on the two-party bias than differentials in constituency sizes. Throughout the period shown in Table 2, there has been a lower turnout in seats that are more Labour-inclined on average than those that are more Conservative-inclined on average. This effect peaked in 2001 and 2005 at a 38-seat bias to Labour and it has been 20 to 24 in the last three elections, larger than the impact of constituency size differentials. The average turnout in seats more Labour than the national average was 65.3%, compared to 69.3% in those seats more Conservative. Boundary changes will not assist the Conservatives here.

The ‘third party’ effects in Table 2 come from the minor parties either piling up ‘wasted’ votes in seats where they cannot win, or winning seats, in areas which are differentially more Conservative or more Labour. The net effects here have tended to favour Labour, with the Liberal Democrats historically winning more seats in areas which were more Conservative than Labour. However, after the Liberal Democrats’ big losses in 2015, and the SNP’s big gains in Scotland at that election, the third-party effect has moved towards benefiting the Conservatives, albeit only slightly. As John Curtice, has pointed out or here, this larger wedge of third party seats means that there is now a bigger landing zone for the UK’s voting system to produce hung Parliament outcomes, as it did in 2010 and 2017.

The main component in the system for the last three elections that has cancelled out the Labour advantage in terms of size and turnout, has been the Conservatives having a considerably more efficiently distributed vote. This comes from Tory votes being located in the right places across the country, so minimizing ‘wasted surplus’ votes from piling up huge majorities in safe constituencies, and also minimizing ‘redundant votes’, in seats where the party does not win. There was a big bias in Labour’s favour in 2005. The Conservatives have done well to turn this around to a bias in their favour of 55 seats over Labour in 2015. However, at the last two elections they have not been able to match the kind of advantage that Labour had in 2001 (74). The pro-Tory efficiency bias stood at 27 in 2017 and 46 seats in 2019. During the ‘New Labour’ era in 2001 and 2005, Labour made the most of local incumbency advantages and the party ruthlessly targeted and held onto marginal seats.

Some consequences

The Conservatives cannot necessarily assume that changing constituency boundaries on a stricter or more regular basis will help them buttress their majority as much as many appear to hope, or indeed as feared by some of the left.  The much cited estimates that give the Tories a notional majority of 104 on ‘new’ boundaries are based on numbers for the 2018 review that was never implemented. That scheme is now unlikely to be put into action without significant change, since the electoral numbers on which it was based are now themselves dated (deriving from December 2015).  Removing a more realistic two-thirds of the size bias would increase the current Tory majority a little bit, to 92 seats. But recent voting patterns also appear to be changing towards the Conservative Party doing better in northern towns. If so, then the strategy of putting though a strict boundary review every five years may not yield the kinds of gains that Tory party elites expect.

Both parties also appear to be looking at reforming the franchise in order to tilt the electorate in their favour. Labour has been proposing lowering the voting age to 16 and giving the vote at General Elections to EU citizens, on the grounds that Commonwealth citizens already have this right. Surprisingly, the Conservatives have not moved to close off this unreciprocated anomaly, especially since it enfranchises large numbers of overseas students, who are eligible to vote immediately at general elections on arrival to the UK. These additional student votes almost certainly cost the Tories several university town constituencies, such as Canterbury and Warwick.

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About the Author

Tim Smith recently graduated with a PhD in Politics from Nottingham University. He works as a Senior Dealer for Ruffer LLP, but writes here in a personal capacity.

 

 

 

All articles posted on this blog give the views of the author(s), and not the position of LSE British Politics and Policy, nor of the London School of Economics and Political Science. Featured image credit: Pixabay (Public Domain).

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