Time to break the habit?

Apologies for prolonged failure to blog; it's summer and I've been busy carrying a cello around Edinburgh. Anyway, work have once again kindly agreed to let me cross-post this blog I just wrote for them over at Any Other Business to tide you over. Usual disclaimer - No Wealth But Life represents my personal views only and has no formal affiliation with my employer, etc.

Kent County Council has become the latest local authority to come under fire for its investments in tobacco. Why it has been singled out is something of a mystery - as last year's Evening Standard investigation into London boroughs' investments showed, councils who don't invest in tobacco are the exception rather than the rule. But Kent's response is a perfect illustration of a seductive habit - one that may be comforting to investors under pressure, but is less than helpful to those around them.

Faced with media criticism of the pension fund's tobacco holdings, Kent's spokesperson did what investors in their position seem to have done since time immemorial: they fell back on the well-worn mantra, "We have a responsibility to obtain the best possible return on investments."

It’s standard practice for funds, when questioned about the ethics of a particular investment, to respond that their hands are tied by their duty to maximise return. But where does this duty come from? As part of the research for our recent report, I was lucky enough to trawl through pretty much every major court case on investors’ legal duties. I looked long and hard for the oft-invoked ‘duty to maximise return’, and I can confirm that the phrase doesn’t appear anywhere.

This isn’t to say that there’s no basis at all for this view: there is, as they say, no smoke without fire. What the law does say is that pension funds have a duty to act in the best interests of their beneficiaries, and that this will usually mean their best financial interests. But does that rule out disinvestment from particular companies on ethical grounds? Not necessarily.

There is nothing in law that bars pension funds from considering their members’ ethical views. Of course, it would be unfair for them to accommodate the views of a minority if this would result in a serious loss of income for the majority who don’t care. If excluding an investment was really going to damage returns, you’d have to be able to show a pretty watertight consensus among your beneficiaries that the investment was wrong. In the case of tobacco, this might be unlikely.

But what if an investment could be excluded without damaging returns? Lots of funds exclude investments on this basis: if you can show reasonable grounds for thinking an exclusion won’t make any significant impact – for example, because you can substitute another stock which behaves in a similar way – it should be permissible by law. In the case of tobacco, some campaigners have even argued that it makes positive financial sense to exclude it, because litigation and increasing regulation mean the tobacco industry does not have a long-term future. That’s also the view taken by Newham Borough Council, whose pension fund excludes direct investments in tobacco firms.

Of course, not every given exclusion will pass this test. But the important thing is that the test should be applied: if lots of members are unhappy with a particular investment, the fund should examine whether that concern could be addressed without harming the other members’ interest in a decent pension. Instead, too many funds fall back on the easy response of claiming there’s nothing they can do.

So if your pension fund invokes the ‘duty to maximise returns’ to justify an investment you think is unethical, ask them what analysis they’ve done of the impact of excluding that stock. If the answer is ‘none’, challenge them to explain why. They might not thank you for it, but it’s in everyone’s interest to help them break the habit.

I am extremely very busy doing spying

So, two heads roll at the highest levels of the Met over phone hacking. I can't say I'm crying for them, but it does beg the question why nobody resigned over Ian Tomlinson's death - and why Bob Broadhurst, in charge of Operation Beat-up-Climate-Campers on the same day, actually appears to have been promoted since.

When Paul Stephenson gave evidence to the Home Affairs Select Committee yesterday, he apparently repeated the line that investigating phone hacking was 'not a priority' in 2009 set against the terrorist threats the Met was expected to deal with. Frankly, I think he's got some nerve saying that on the same day the Court of Appeal overturned the convictions of 20 environmental activists on the basis of unlawful police infiltration.

The judgement criticised the police for effectively planting an agent provocateur (undercover cop Mark Kennedy) in the environmental movement, and then prosecuting dozens of peaceful protesters for the acts he encouraged. Kennedy was deployed by the shadowy National Public Order Intelligence Unit, which used to sit within the Association of Chief Police Officers, but in the wake of the scandal was transferred to - you guessed it - the Met.

Just for the record, the action for which those protesters were prosecuted took place in, um, 2009. Presumably the same 2009 in which the police were too busy to investigate phone hacking. The previous year, £5.9 million - including a substantial Met contingent - was spent on policing the Kingsnorth Climate Camp, another completely peaceful protest. So thanks, Paul Stephenson, for helpfully highlighting the hypocrisy of the police's insane vendetta against peaceful civil disobedience in general and the environmental movement in particular.

In other protest news, the CPS has finally dropped over 100 cases against protesters for sitting in Fortnum and Mason which should never have been brought in the first place. And, although this is not new news, senior officers have apparently admitted deceiving those protesters into mass arrests. Sadly a few others have received hefty sentences for lashing out against heavyhanded police, even though there's no evidence they hurt anyone (unlike the cop who left a teenager in a coma after last year's student demos - but then, that's obviously different).

Mark Kennedy - the saga continues

Well, this is currently making me feel pretty vindicated about this (and, to a lesser extent, this).

For those without the time or energy to follow links: it turns out the CPS knew about the infiltration of the climate movement by police spy Mark Kennedy at the time they were prosecuting 26 activists for thinking about taking direct action - and, more crucially, knew about the evidence he'd obtained that basically exonerated six activists of the charges they faced. The trial of these six activists collapsed when that evidence became public, after the activists themselves uncovered the spy. It's now being suggested that the convictions of the remaining 20 may be unsafe.

The CPS's position on Ian Tomlinson now looks even more absurd than it did before. It was bad enough that they refused to charge the officer involved because there was 'no realistic prospect of a conviction', based on nothing more than the testimony of a dodgy pathologist. It became worse when that pathologist's evidence was soundly rejected by the jury at Tomlinson's inquest, thus demonstrating that it might indeed have been possible to bring a successful prosecution.

But it seems like an obscene irony that, we now discover, the CPS was quite happy to proceed with charges against well-meaning activists who, let's not forget, hadn't actually done anything, despite having much more serious and credible evidence to cast doubt on their culpability. Of course, in this case there was a realistic prospect of a conviction - because, um, the police and CPS suppressed said evidence.

As ever, there are now calls for an inquiry - but, as this person points out, we've had half-baked inquiries every time a tiny corner of the huge festering mess that is the policing of protest in this country has been exposed. I wouldn't say they've made no difference at all, but there has to come a point where we stop chin-stroking about the symptoms and address the cause: police contempt for the right to peaceful civil disobedience, and the insidious rise of the category 'domestic extremist' which puts those who believe in it neatly in the same box as Abu Hamza and the BNP. There does need to be a proper inquiry, but it needs to be serious, independent and far-reaching - and most importantly, it needs to come at the issue with a respect for the traditions of civil disobedience and a willingness to ask the right questions.

Dear Lib-Dem hating leftie friends...

Come on, Left. I know it's fashionable to hate the Lib Dems right now, but after a couple of exchanges on Facebook about the NHS reforms I've decided enough is enough. By all means, challenge and question the moderating effect that coalition government is having on Tory hideousness. That's a legitimate debate to have. But the self-justifying disdain some people now seem to be harbouring, to the extent that when Lib Dems clearly are moderating a policy we all oppose, you have to find ways to explain it away and carry on hating them regardless, is frankly just silly.

Two arguments I've seen to play down the Lib Dems' role in forcing a rethink of the NHS reforms, and why I think they're both wrong:

1. “This has happened because the policy is a political liability – the Lib Dems had little or nothing to do with it”

Um, Iraq war anyone? I worked in parliament for nearly two years, which admittedly does not make me a world expert - but my experience with majority governments was that they pretty much do not give a shit what you think. If they want something badly enough, they will push it through regardless of public opposition. We are talking about a government that didn't feel the need to consult the medical profession before launching this thing at Parliament in the first place. Why should things be any different six months down the line? And why is everyone so conveniently keen to forget that the original 'pause' in the Bill's passage through Parliament was announced not following some cataclysmic protest, but shortly after the Lib Dem Spring Conference overwhelmingly rejected the proposals?

2. “Yeah, well, pity they didn't start opposing it before they got slaughtered at the elections”

Um, except they did. See above. (As an aside, the Lib Dems' policymaking process is one of the really brilliant things about them. It's kind of like how I imagined parliament ought to work before I started working there and all my illusions were shattered. Ordinary members bring motions to conference. Hundreds of delegates sit and listen to a reasoned debate. Then they vote on the motion and any amendments, and if they pass it, it becomes party policy. Might sound trivial, but to my knowledge no other major party still does it.)

Fair enough, Nick Clegg signed off on the White Paper: the proposals needed his support to get off the blocks in the first place, and that at least puts him legitimately on the hook. And fair enough, he does seem to have grasped the urgency of the issue rather more immediately since May 5^th. But there is a distinction between party leadership and party itself, and that's exactly what's so great about the Lib Dems' policymaking process. At the first opportunity it got, the party rank and file told him in no uncertain terms that the reforms were unacceptable. And, from pretty much that point onwards, things started to change. This is democracy in action, and you can be damn sure nothing like it would have happened without a coalition government. How much things will change remains to be seen – but, at the very least, reserve judgement until the outcome is clear.

I don't think the Lib Dems have got everything right in the last twelve months, far from it. All I'm saying is, I wish people would reserve their contempt for the people who are actually contemptible and their anger for the things worth getting angry about. Give credit where credit's due and, more importantly, recognise an ally when you see one.

George Osborne and the Axis of Charity Evil

You know you're doing something right when George Osborne thinks you're the scourge of society. In a marvellous speech of his today at the Institute of Directors, I learned that organisations like the one I work for are apparently now the "forces of stagnation". Having set out his stall as "unequivocally pro-business" and extolled the virtues of deregulation and low taxes (for which Miles Templeman, outgoing Director General of the IoD, has - quelle surprise! - been a "tireless advocate"), he went on to say:

"Delivering this will not be easy. The forces of stagnation will try to stand in the way of the forces of enterprise. For every line item of public spending, there will be a union defending it. For every regulation on business, a pressure group to defend it. Your voice, the voice of business, needs to go on being heard in the battle."

I'm confused, George! Yesterday we were the Big Society. Today we're the Forces of Stagnation. I don't know what to think any more. I suppose I'll just have to carry on thinking that you're a horrendous Thatcherite idiot.

Really, I just do not know where to start with this bullshit. I think the thing that annoys me most about it is the way that civil society groups are presented as the vested interests, while business leaders asking for lower taxes and less regulation are "tireless advocates" for what's best for Britain. Honestly, what exactly does he think the IoD is if it's not a pressure group? But it's the good kind of pressure group, the kind that agrees with his neoliberal politics because it's in their direct self-interest. Not the bad, nasty, stick-in-the-mud kind, the kind that defends regulations because... because... um, maybe because it's the right thing to do? Maybe because those regulations are there for a reason? Maybe because they protect vulnerable people who don't have Miles Templeman to stand up for them in the corridors of power?

I've blogged before about the 'Red Tape Challenge', which the government has likened to a trial in which regulations will be deemed "guilty until proven innocent". Soliciting a case for the prosecution and not one for the defence is one thing. Attacking the defence as the "forces of stagnation" is another - and for me it feels like the last straw.

He's got a whole field of ponies and they're all literally running away from his taxes

Today, one of my many news-digest mailing lists informed me that

"Peter Hargreaves has soared 46 places on The Sunday Times Rich List, placing him ahead of musical maestro Andrew Lloyd Webber, Lord Alan Sugar and Easyjet's Sir Stelios Haji-Ionannu."

Peter Hargreaves, I thought. Why does that name ring a bell? Oh yes, it's because back in February, I posted an immoderate rant about an article he wrote which suggested that the government wasn't nearly serious enough about cutting spending and that, if you were filthy rich, the only morally responsible thing left for you to do was furiously avoid paying your taxes.

Peter Hargreaves is now the 65th richest person in the United Kingdom. Peter Hargreaves is a billionaire. Peter Hargreaves' tax bill is probably within the same order of magnitude as the cost of some of the vital public services people are battling to save - my local library, for example. Basically, the amount of tax Peter Hargreaves pays has a not-entirely-negligible impact on the deficit.

Peter Hargreaves does not believe the deficit isn't an issue. On the contrary, he believes it's an enormous issue. Clearly, for every billionaire who pays less tax, the government has a bigger gap to plug, which means harsher spending cuts. So by endorsing tax avoidance, Peter Hargreaves is effectively saying he thinks that money is much better off stashed in his bank account than paying for services for the poor and vulnerable. Not only that, he presumes to moralise on the matter. Is it just me, or is that utterly grotesque?

(Incidentally, Stephen Lansdown, Hargreaves' partner at Hargreaves Lansdown brokers, comes in at a mere number 90 on the rich list, with a piffling £750m personal fortune. Amateur.)

The Ian Tomlinson verdict should put the CPS on the hook

Very encouraged to see that the inquest into Ian Tomlinson's death has returned a verdict of unlawful killing. The Guardian reports that the CPS is now reconsidering its decision not to prosecute the office who shoved him.

But surely the next question has to be why on earth they made that decision in the first place. The ostensible reason why charges could not be brought was that there was "sharp disagreement between the medical experts" about the causes of death, and that this was so irreconcilable that there was no realistic prospect of a conviction.

It was obvious at the time that this was outrageous: the 'disagreement' was the result of a discredited pathologist giving a dubious analysis which was contradicted by two other pathologists in two independent post-mortems. Now that a jury has considered that pathologist's evidence and dismissed it as unsound, the decision looks indefensible.

As I understand it, in order to decide not to prosecute, the CPS has to be pretty damn sure that there is simply no way a jury could come to a guilty verdict. In this case, a jury not only could: it effectively has. That is surely enough to demonstrate that the CPS acted improperly in pre-empting deliberation of those issues by the criminal courts.

I hope the CPS comes under serious pressure over the coming days and weeks to explain itself - and that questions are asked about the real motives for its original decision.

(Incidentally, it makes me very angry that this verdict has not been enough to prompt an urgent question in parliament - neither was Tomlinson's death at the time, although we tried our best to get one - yet some smashed windows on the anti-cuts protests apparently were. In my experience - with a few honourable exceptions - this is completely typical of parliamentary and government attitudes to police treatment of protesters, and it's unacceptable. In our political system, the state's use of violence is supposedly legitimated by parliamentary democracy. If parliament shrugs its shoulders when the police kill an innocent man, that notion massively loses credibility.)