Opportunist? Moi?

David Cameron, 12 May 2010, asked if he thought coalitions were a good thing:

"We did both have a choice. We could have gone for a minority government backed up by the Lib Dems. But we sat down and looked at it and both thought this is so uninspiring, it's not actually going to do what we came into government to achieve. We want to give the country good government."

David Cameron, 18 April 2011, arguing that AV will lead to more coalition governments:

"That undermines accountability and that's not right. That's what I believe AV could give us - power with less responsibility and pledges with less accountability."

Yes, yes, I know he tries to make a distinction between coalitions in 'exceptional circumstances', which can apparently be a 'good thing', and the idea of coalition governments becoming routine. But he doesn't give any reasons to back that up, as far as I can see, so really it's little more than the age-old tactic of acknowledging the glaring flaw in your own argument in order to fool people into thinking you've addressed it. Really, Mr Shiny-Face, are you seriously trying to exploit people's dissatisfaction with your own government to try and scupper AV? That's a pretty breathtaking move.

Incidentally, I also think this is another example of the Tories playing a much cleverer and nastier game than the Lib Dems when it comes to coalition politics. Notice the detail of Cameron's 'AV-means-more-coalitions' argument:

"I can absolutely put my hand on my heart and say in preparing our manifesto we really did go through every pledge and thought, 'We could be accountable for this. We aim to have, and believe we can have, a single party government so don't put anything in your manifesto you don't believe you can deliver,'" he said.

"If you move to a system where coalitions become the norm rather than the exception I think you might find politicians start being very casual about what they put in their manifesto because you can put in policies that you know you can get rid of as you form a coalition."

Indeed, politicians "may start to put things into their manifestos that might sound good but they can't deliver because they know that in a coalition they're not going to have to answer for them."

Things like, ooh, I don't know, let's pluck a hypothetical example out of the air... pledges to scrap tuition fees? Is it just me, or is the subtext here, 'Well, personally I take my manifesto pledges very seriously - but some people, like Nick here, are sadly not quite so conscientious, and I think you should all bear that in mind when casting your vote.'

Nasty, cynical stuff.

Why I'm getting excited about the Red Tape Challenge

When I first saw the launch of the Red Tape Challenge, it made me want to throw things at other things. Now, however, I'm quite excited about it. Not because I've had some kind of Damascene conversion to the joys of libertarianism, but because it seems, finally, to have woken civil society up to just how dangerous the deregulatory agenda is.

I've blogged before about the farce that is one-in, one-out, so feel free to go and read that if you need some background. Done that? Good. So, the Red Tape Challenge is that latest manifestation of this policy: the idea is that every regulation ever will go up on this website, and the public (ie. businesses) can submit comments on which ones they find tiresome or inconvenient. The regulations will then be reviewed - and will be, ahem, "presumed guilty unless proven innocent". In other words, every regulation that's ever been made will be abolished unless somebody can make a good case for it to stay. As David Cameron put it in his letter to all government ministers:

"In the past... the assumption was that regulations should stay, unless there was a good case for getting rid of them. Our starting point is that a regulation should go or its aim achieved in a different, non-government way, unless there is a clear and good justification for government being involved."

The most obvious problem with this approach arises from the question: who in practice will be making the case for and against? The idea is that, because they're on the 'front line', businesses' "understanding of how things really work will mean you know there is a better way of doing it." I sort of get that. I get that there are things that make life hard for small businesses - the kind of local shops and services I try to support - and that they should have a chance to highlight those problems. But in practice, that's not what this exercise means - or at least, certainly not the only thing it means.

Big business has millions of pounds of lobbying muscle only too happy to explain why all that pesky regulation it has to comply with should be swept away. Now they're basically being asked for their wish list, and told that, unless someone can make a pretty seriously good case for the defence, the assumption is that they'll get it. But there's a reason we don't let businesses make regulatory policy. The whole point of regulation is that it makes companies do stuff they would rather not have to do. If I were the government, and any big company or trade body came and told me a regulation was worthy but unnecessary because there was a 'better way of doing it', I'd be immediately suspicious: if you're so committed to doing this anyway, why are you so desperate to get rid of the regulation?

Meanwhile, the civil society organisations who would make the case for regulations to stay - organisations like the one I work for - have mostly tiny budgets and are fighting on many fronts as it is. To extend the courtroom metaphor, it's like giving your 'guilty-until-proven-innocent' defendant access to the cheapest legal advice going while the prosecution is represented by some silly-money hotshot barrister. Of course, as with all such government initiatives, it's hard to know how much of it is cosmetic and how much is genuine. But I don't think we can afford to be complacent.

My biggest fear about the Red Tape Challenge has been that individual NGOs and trade unions would be too busy fighting their individual battles to get involved in the deregulatory war. But in the last couple of days I've seen trans friends getting outraged at the notion that the Equality Act is 'red tape', and Greenpeace and 38 Degrees condemning the fact that environmental regulation has been put up for grabs. I am finding this genuinely encouraging. We're still no match for the corporate lobbyists. But it's starting to look like the Red Tape Challenge could achieve what I've been wishing I could for months: mobilise the public in defence of regulations that protect us all.

Bob Broadhurst and the 'mindless yobs' - takes one to know one

It's now a week since the anti-cuts protests; I'd hoped to have blogged about them sooner, but work has been a bit chaotic. Anyway, now the dust has settled and many of the things I was going to whine about - like the media's inability to distinguish between 'violent thugs' and people sitting on a shop floor, thus implying the police had arrested 149 people for violence rather than, um, 11 - have been very ably exposed by other people. Perhaps the distinction between the 'minority' of a few hundred who broke away from the main march and the far smaller minority of a few dozen who smashed stuff up is too subtle for the mainstream media.

It's also been pointed out, although nobody much seems to care, that the police lied to a group of entirely peaceful protesters inside Fortnum and Mason, telling them that if they left the building they would be allowed to go, whereupon they were promptly arrested and charged with aggravated trespass.

Underlying all this is the police's continued insistence on conflating 'peaceful' with 'lawful'. There doesn't seem to be a category in their brains labelled 'peaceful civil disobedience'. This was pointed out after the G20 protests, in the inquiries that followed Ian Tomlinson's death, but nothing much seems to have changed. As a result, the narrative, as always, pits the nice law-abiding marcher against the 'minority of troublemakers intent on causing violence', with no room for those in the middle, those who believe in peaceful civil disobedience but abhor violence as much as anyone else. Even more concerning, the police definition of 'lawful' protest is so narrow that it seems only to cover protests explicitly authorised by the police. That is truly worrying. A right to peaceful protest that stops when the state says so is no right at all.

Commander Bob Broadhurst encouraged this narrative, even trying to co-opt the term 'protester' and brand anyone not engaging in the kind of protest the police find acceptable as 'not a real protester'. "I wouldn't call them protesters. They are engaging in criminal activities for their own ends," he told the press on Saturday. It's worth noting that trespass is not actually a criminal offence, although 'aggravated trespass', the charge being levelled at the Fortnum and Mason occupiers, is. It's a pretty dubious charge, particularly as video footage shows people were able to carry on shopping while they were there. I know some of these people. They are definitely protesters, and they are definitely not criminals.

It was this same failure to distinguish between 'peaceful' and 'lawful' that led to hundreds of people being beaten up and violently dispersed after the Climate Camp protests at G20. The Climate Campers were just blocking a road, the same way any march or rally does. They'd made clear they were going to leave after 24 hours. It was night-time, so they weren't really in anyone's way. But they hadn't asked police permission, and the police decided it was time for them to go. So, as any reasonable law enforcer would do in that situation, they pushed them into an ever-more confined space and thwacked them over the head with sticks. I heard horrific stories afterwards, including one from a woman who may have suffered a miscarriage because of her treatment at the hands of the police.

And this wasn't a 'minority' of 'criminals' or 'mindless yobs' among the police. It wasn't a few bad apples. It happened because the Silver Commander ordered it. I know because my boss at the time was on the phone to him at one in the morning, asking what the fuck he thought he was doing. Was he the least bit repentant to hear that his officers on the ground were beating people up and that we were getting calls from terrified protesters pleading for our help? Nope. Was he bothered by suggestions from my boss, who happens to be a lawyer, that what he was doing was totally unlawful? Nope. His response: 'See you in court'. And that commander's name? Bob Broadhurst.

And who was in charge of policing the student protests where a crack on the head from a police officer left a boy bleeding into his brain? Yep, Bob Broadhurst again. This guy is responsible for more violence and more unlawful activity than anything managed by evil balaclava-clad anarchists last Saturday. After what happened at Climate Camp, I'm convinced he should have been in court, never mind at liberty to oversee protests again. But if anything, he actually seems to have been promoted since then - he's now head of the Met's public order branch. That is, frankly, a fucking outrage.

So next time Bob Broadhurst feels like branding a bunch of protesters as 'criminals' and 'mindless yobs' just for sitting in a shop, I'd suggest you take his words with a good pinch of salt.

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UPDATE: It's occurred to me that I failed to make an important distinction myself in this post - ie. that between people engaged in vandalism or criminal damage (ie. smashing stuff up) and the yet smaller minority of people who were allegedly engaged in actual violence (ie. throwing lightbulbs full of nasty at police). I wasn't there, and often reports of the latter turn out to be untrue or greatly exaggerated, but whether or not it actually happened the fact remains that vandalism isn't in and of itself 'violence', and I regret colluding with the implication that it is. In my defence, the post was written in something of a rush.

Did we own the banks before the crisis?

I wrote this post for work over at Any Other Business, and they've kindly said I can re-post it here. In celebration of the fact that I have just all but finished the report referred to in the post, and can therefore stop working thirteen hour days whilst eating baby food out of a jar, I thought I'd do so. Enjoy.

A lot is made of the fact that 'we' – the taxpayers – now own some of the banks that failed during the financial crisis. The government, through UK Financial Investments, owns an 84% majority stake in the Royal Bank of Scotland and around 40% of Lloyds, and has often been criticised for its timidity when it comes to using that stake to control bank behaviour – whether it be restraining bonus levels or promoting sustainable investment.

But it's rarely pointed out that 'we' had a stake in the banks already: through our pension funds, life insurance policies and other savings. In 2008, pension funds accounted for 12.8% of UK share ownership, insurance companies for 13.4%. Although that's less than it was thirty years ago, it's still a lot: just a hair over £300bn.

Of course, there are two obvious differences between the government's holding in RBS and the holdings you or I have in, say, HSBC through our pension funds. Firstly, the government is a single shareholder with a large stake: it could, if it so chose, unilaterally influence the policies of the institutions it owns. By contrast, the 26% of UK shares owned by pension funds and insurance companies are dispersed between hundreds of different institutions. When you drill down even further, to the level of the ultimate owners – us – it's dispersed between millions.

Secondly, we as owners are far more distanced from the companies we own than the government is. UK Financial Investments is independent of government, the reason often given by the Treasury for its refusal to intervene to change bank practices. But that was a choice made by the government at the time of the bail-out. Most of our investments are legally owned by a set of agents (our pension fund or insurance company) who then outsource the job of managing those investments to another set of agents (the asset management firms). Unlike the government, we have no choice in this situation. In fact, we're so far removed from the rights we have as owners of major companies that it's hardly any surprise most of us aren't even aware of them.

This makes the duties owed to us by the people who manage our money absolutely crucial. The way they behave has an enormous influence on our future wellbeing – not only because it determines the level of our pension or savings, but also because of its indirect influence on the things that determine our quality of life – from financial stability to climate change. In the wake of the crisis, many accepted that institutional investors hadn't done enough to curb excessive risk-taking in the banks – they had taken their eye off the ball, behaving as 'absentee landlords'. And it's us, the ultimate owners, who pay the price for those mistakes.

The tendency to forget who the ultimate owners are has also contributed to the rise of what's been called 'agency capitalism' – whereby, essentially, intermediaries do incredibly well for themselves while the incomes of the people whose money they're managing continue to stagnate. Between 2002 and 2007, the fees paid to investment agents by our pension funds rose by over 50%. Meanwhile, real annual returns on our pension savings averaged just 1.1% - lower than in previous decades. FairPensions' upcoming report, 'Protecting our Best Interests', will argue that the government needs to take a fresh look at the duties our agents owe us to make sure they really are putting our interests first.

Some agents, such as pension fund trustees, owe incredibly stringent duties to their members, known as 'fiduciary duties'. At the heart of fiduciary duty is the idea that you have been entrusted to act on someone else's behalf, and you must bear that in mind in everything you do, never becoming complacent or using your position to further your own ends. It's a noble ideal. Crucially, it puts the people whose money is at stake back in the driving seat. Arguably, rediscovering the essence of fiduciary duty would go a long way towards encouraging a more responsible financial sector. Perhaps it's time to go beyond bashing the banks and look at the people who, on our behalf, have the right to tell the banks what to do. As Pensions Minister Steve Webb observed in a parliamentary debate just before Christmas, “There is occasionally a need to remind those who manage our money that it is our money.”

Oh God, won't somebody please think of the rich?

A major downside of having bought a single share in BP for work purposes last year is that my brokers, Hargreaves Lansdown (it feels so wrong even typing that phrase) now keep on sending me crap. I am pretty sure they have now sent me crap to more than the value of the share (which was about a fiver, if anyone's interested). Moreover, said crap has a tendency to add to my levels of outrage more than I think is really healthy at this troubled time.

This month's edition of 'Investment Times' arrived on Sunday, and I didn't even have to remove it from its plastic wrapping to find something objectionable. On the front cover is an article by Mr Hargreaves with the headline "Who will bear the burden?" As you might imagine, the "burden" in question is that of reducing the deficit. And the answer to the rhetorical question appears to be "Not the rich, anyone but the rich!"

The article starts off by expressing concern that "neither the government, nor the public, exhibit the stomach for cuts in public expenditure". You can pretty much guess what's coming from the fact that this guy's biggest concern about the Tories is that they're just not keen enough on cutting things.

Next, he moves on to Labour and "the unions" - accusing them of "misinformation" designed to disguise the scale of the national debt. Surely, Mr Hargreaves concludes, "the general consensus is that we should be reducing our public debt as soon as possible."

Then, in a leap of logic I'm still struggling to fathom, he starts opining about how hard done by the rich are in today's society: apparently, "Britain has a perverse attitude towards wealth and success", reflected in the fact that "even right-wing politicians are suggesting that people with money and savings are the easy option to effect the bailout." I'm not quite sure what he means by "the bailout" in this context - I assume he's talking about the deficit again. He seems a little confused, poor man.

Anyway. Onwards and upwards: "There is no account taken of their prudence, their work ethic and the tax they paid accumulating those savings." Hmm. That would be the kind of "prudence" displayed by the millionaires who brought the financial system crashing down on all our heads? I see. Well, it sure is a mystery why nobody's taking that into account.

"Sadly" - oh so sad! I am practically weeping as I type this - "the only thing that people with savings can do is place as much of them as possible out of the taxman's clutches, for it is through taxes that wealth will be used to balance the books."

Ah, so now we get to the point. It turns out this whole article has been a rambling, incoherent intellectual justification for tax avoidance. And sure enough, when you look inside (as I have just done after finally bringing myself to tear off the plastic wrap) it turns out that the lead features in 'Investment Times' are all about how Hargreaves Lansdown is the discerning choice for all your tax-dodging needs. There's even another little vignette inside, where Mr Hargreaves complains that "[the government's] first port of call is those with the broadest shoulders" (really? I want to live in Mr Hargreaves' world please), and reiterates that "placing as much capital as you can into tax shelters is therefore vital." Well, Mr Hargreaves, why didn't you just say so in the first place? Really you could have just printed a picture of yourself sitting on a sack of money sticking two fingers up at the nation and saved us all some time.

Frankly, I am struggling to get inside the mind of someone who genuinely believes that the government is somehow more enthusiastic about taxing the rich than it is about cutting poor people's benefits. But leaving that aside for the moment, it seems to me that the rest of this article can be briefly summed up as follows:

1. It is very, very important that we reduce the national debt. Stupid lefties do not understand this.
2. It is therefore very, very important that rich people pay as little tax as possible on our enormous quantities of wealth.
3. Why? Um, because we're awesome.

Sorry Mr Hargreaves, but with shoddy arguments like that, you're not doing any favours to your claim that you deserve your millions for being so thoroughly brilliant.

One in, one out, shake it all about

There's a maxim at the heart of government policy that shapes every single thing this coalition does - a maxim based on an ideological belief in a small state, which cripples the ability of government to actually do anything.

No, I'm not talking about public spending cuts. I'm talking about something called 'one-in, one-out regulation', and I'm continually surprised that so few people seem to have noticed it, because to me it adds huge force to the argument that the cuts agenda is ideological, not driven by necessity.

The premise is simple. Every time the government introduces a regulation, it has to get rid of one. Never mind that truly proportionate regulation should mean introducing regulations when they're needed, and repealing them when they're not. Never mind that there is absolutely no logical reason why the two decisions should be related. And never mind that this is ludicrously difficult to put into practice: is it one line of regulation in, one line out? One statutory instrument in, one out? And can you get around it by scrapping some archaic rule about who can graze their goats on Westminster Bridge that nobody even knew existed? When the policy was first introduced I even heard officials joking about whether it would be 'one letter in, one letter out', leaving them scrabbling around for more concise ways of saying the same things.

As far as I can tell, Whitehall seems to have spent the first six months or so of the new parliament desperately trying to find ways to make this self-evidently nonsensical policy slightly less nonsensical. Essentially, what they have come up with is this. Every time a department wants to introduce a regulation, it has to be accompanied by an impact assessment, estimating the additional burden it imposes on businesses. This then goes to the 'Regulatory Policy Committee', and from there onwards and upwards to the 'Reducing Regulation Committee', as explained in this helpful flowchart (you really couldn't make this shit up). If approved, the regulation has to be accompanied by an equivalent 'out': in other words, the removal of requirements that add up to an equivalent cost 'burden'.

And this bureaucratic process is entirely based on the numbers in the impact assessment, with no room for common sense. So if a regulation adds short-term costs but produces intangible, difficult to measure long-term economic benefits (say, by helping tackle climate change) - nope, it's still an 'in', and if you want to do it you're just going to have to find an 'out'. Sadly, this is far from hypothetical. I've seen it in my day job - this is dominating every decision departments take, hampering effective measures on climate change and many other things. The press release that first announced the system did at least say there would be an exception for regulation to tackle systemic financial risk. But even this grain of sanity seems to have sunk without trace; there's certainly no mention of it anywhere in the government's guide to one-in, one-out. This is not proportionate regulation - this is government by hokey cokey.

Astonishingly, this seems to have been the compromise position in coalition negotiations: the Conservative manifesto said:

"A Conservative government will introduce regulatory budgets: forcing any government body wanting to introduce a new regulation to reduce regulation elsewhere by a greater amount"

while the Lib Dem manifesto said it would:

"reduce the burden of unnecessary red tape... using ‘sunset clauses’ to ensure the need for a regulation is regularly reviewed, and working towards the principle of ‘one in, one out’ for new rules".

I must admit I was surprised to discover this when researching this post: I'd always thought it was a Tory policy. I am hugely disappointed that the Lib Dems have gone in for this bullshit, but then, I suppose they never thought they'd have to implement it.

Anyway. To the point of this post: I think this is as much proof as any campaigner needs that the cuts are ideological and not a 'tough but necessary' response to the deficit - and here's why. The way I see it, there are two main ways governments can do stuff. They can spend their money and do stuff themselves. Or they can pass laws and make other people do stuff. This government has made it a fundamental principle to do both of these things as little as humanly possible. And that, right there, is your libertarian small state (or 'big society', or whatever the latest euphemistic bullshit term for it is).

One-in, one-out is a farce. Everyone secretly knows it's a farce, right down to the civil service and at least some government ministers. Not only that, it's a dangerous farce. In a week where the government has U-turned on forests and housing benefit, is it too forlorn for me to hope that if it's exposed publicly as a farce, we might be able to force a rethink? Probably, but I still think it's a story that needs to be told.

Are companies moral beings?

Excellent quote from Vodafone on Saturday, explaining why they shut down their Egyptian mobile phone network on Mubarak's orders: “We didn't have any option as the government was within its rights under emergency powers that it invoked after the outbreak of demonstrations.”

Great stuff, Vodafone – interesting use of the phrase 'within its rights', there, I thought. I had a brief vision of somebody standing in the dock at Nuremberg saying, “I didn't have any option as the government was within its rights under emergency powers that it invoked after the Reichstag Fire.” Now, of course I'm not equating cutting off someone's mobile phone supply with complicity in genocide. The point of that slightly dubious comparison is that when an authoritarian government gives itself arbitrary and unjust 'rights', in a move that will clearly be regarded by history as illegitimate, the mere existence of those rights doesn't begin and end the question of whether you were justified in complying.

We don't expect individuals to roll over and comply with unjust orders from despotic regimes. We don't automatically exonerate those who were complicit in atrocities or acts of oppression simply because they were acting within the law. Being told to do something by a government, however illegitimate that government may be, is not a moral defence.

But for companies, it almost seems that the opposite is true. Sure, public opinion makes the distinction between what's acceptable corporate behaviour and what is legally permitted (eg tax dodging) or legally demanded (eg Yahoo giving the Chinese government information about dissidents). But there's a strong school of thought that doesn't make this distinction – as Milton Friedman famously put it, 'the business of business is business', and anything else is irrelevant.

And that school of thought still seems to be the one that holds sway in UK and US corporate governance frameworks. Much has been made of recent changes to UK law which require directors to 'have regard' to factors like their social and environmental impacts. But these changes are based on the notion of 'enlightened shareholder value'. In a nutshell, they encourage companies to think about their wider impacts on the basis that these wider impacts may ultimately affect their bottom line. It's progress, but it doesn't change the basic principle that anything which doesn't affect their bottom line is not truly their concern.

At a seminar I attended for work recently, someone suggested that the role of the law in relation to legal persons (like companies) should be to replace the role of virtue for natural persons (ie. individuals). Yet in some ways the law seems to have the opposite effect: companies exist to make a profit, and have no obligations to anyone but their shareholders. Investors exist to make money for their underlying owners, and will often loudly proclaim that their 'fiduciary duty' to do so absolutely prevents them from considering the rights and wrongs of what they're doing. The law not only doesn't require them to be virtuous: it actively reassures them that being virtuous is none of their business.

This is especially worrying when you think about the lessons of social psychology: people feel less responsible for their actions when they're cogs in a huge machine. It makes even less sense to rely on the 'virtue' of individuals within big organisations to make them do the right thing than it does for individuals acting on their own behalf. If we refuse to attach moral responsibility to those organisations, there's a danger we're left with a moral vacuum.

So what's the answer? How can moral responsibility be transferred from individuals to massive legal entities? I have a vague feeling I might be indulging in some slightly woolly thinking here, although I can't quite pin down how, so feel free to rip this to bits in the comments...