tax

English Devolution

Real local power to change things comes from strong devolved polities with fiscal powers, not from Cameron's vague paternalistic notions of "social responsibility".
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On the face of it, articles today in the Guardian on Cameron's "vision of social responsibility" and Scottish Devolution and Independence might not have too much in common. But scratch the surface, and the same questions arise - and in each case the same answer is suggested.

Jonathan Friedland is a little embarassed at the attention "Dave" is lavishing on the "Guardianista troika" of Polly, Simon Jenkins and himself. But Cameron has a big idea to sell in order to get himself the keys to No 10, and he needs to sell this "big idea" to a wider audience:

He explains it as the simple belief that society's problems are up to all of us to solve. In other words, social questions currently left exclusively to the state would, in Cameron's Britain, be resolved not by central government alone, but by other key players as well, from charities to big business [my italics].

Unfortunately this statement highlights the problems with his idea, already picked up on by Tim Congdon and that I will expand on below.

Cameron is onto something, however, and Liberals should take note:

The left too has a heritage it may have forgotten, a libertarian, anti-statist tradition dating back to the 19th century and earlier, with its friendly societies, mutual associations and trade unions... If Cameron could stir that earlier, sleeping sentiment on the left, and combine it with the traditional Tory, Women's Institute brand of voluntarism, he could forge himself quite a coalition.

There is a problem with this because, as Friedland notes:

Much of that spirit was smothered by the Fabians' technocratic worship of the state and by the Labour experience of 1945, which combined to make many progressives believe the only vehicle capable of carrying their ideal was central government.

And that is a big challenge for Liberals - the ingrained notion that (i) the state must provide everything (and by that, we mean the centralised bureaucratic Westminster-based state) and (ii) that if things don't work at the local level, Westminster must intervene to sort things out.

Friedland uses this latter point as the basis of his challenge to Cameron's idea - that,as he puts it, "our civil society is too weak to carry the load he wants it to, and that would spell disaster for the very people he claims to care about."

I disagree with Friedland here. Cameron's "big idea" won't work, but not for the reasons he states. The problem with Cameron's idea is that it is, in the end, a paternalistic approach to problem solving. As Tim Congdon put it in his Telegraph article last week:

I never imagined that the modern Conservative Party would again embrace old-fashioned Tory paternalism, with a frank advocacy of expanding the state's responsibilities. The election of David Cameron to the leadership therefore came as a shock to me.

Ultimately Cameron is advocating that Central Government dispense largesse to charities and other NGOs for them to deliver services. The priorities will still be controlled centrally, and the taxes raised and collected centrally. The link between those responsible for delivering those services and those paying for them will be long, distant, and mediated via Whitehall and Westminster. In other words, this talk of "social responsibility" is a smokescreen - because Westminster will still be calling the shots and all the attendent problems will remain.

So, what is the answer? For me, Simon Jenkins touches on it in his article on Scottish Independence:

Partial devolution to Scotland and Wales remains a feather in Tony Blair's cap. It recognises the ambition of two component parts of the kingdom for an autonomy that reflects their sense of identity. No visitor to Edinburgh or Cardiff can be in any doubt that they are nowadays more different "places" from England. Their experience led Blair, or at least John Prescott, to answer the West Lothian question by offering similar powers to English regions. But those regions enjoy no collective identity or loyalty, being artificial Whitehall constructs. The idea failed.

Prescott's best answer to the West Lothian question would have been to have conferred partial autonomy on England's counties and cities. They would be viable: the county of Hampshire is the same size as the autonomous state of New Hampshire, and three times the size of sovereign Luxembourg. Westminster MPs would not then be deciding how to run English schools or roads or clinics or police any more than they used to, or any more than they do Scottish ones. Westminster MPs would have as little control over one part of Britain as over any other. They would be ruling a federation, as does the German parliament or the US Congress.

Jenkin's answer gets round the problems with Cameron's proposal. Strong local polities, with a pre-existing sense of identity (or "demos") exist in the form of Counties (traditional borders please!) and Cities. Given the power to raise their own local taxation, they would be able to run local schools, hospitals, transport and the like, either on the state-owned model or by tendering to private concerns, as their local electors saw fit. And, more importantly, the link between locally funded services, and local responsibility, would be clear and democratically accountable. It should also increase the volume and quality of participation in local government both from the passive (elctoral) and active(councillor) sense too, when people realise who controls the purse strings.

I hope our policy makers take note.


Change is a process, not a decision

At Comment is Free, the Green Party MEP Caroline Lucas questions the Lib Dem commitment to the environment. Is she right?
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Caroline Lucas begins her article at CiF by welcoming the increasing political consensus on the need to tackle climate change. She then goes on to attack the two parties who have been most vocal in supporting this recent consensus - the Lib Dems and the Conservatives.

To be fair to her, the vast majority of her criticism is directed at the Tories and, until such time as they put forward serious proposals (you may remember that the proposed Lib Dem-Conservative cooperation on the environment broke down over this issue) then her criticism rings entirely true. But what of her wider point? Her dismissal of Lib Dem environment proposals is based on the fact that Lib Dem councillors and MSPs have backed road-building and airport expansions:

But the Liberal Democrats' enthusiasm for "green" taxation at their conference in Brighton bore almost no relation to the reality of their elected councillors and MSPs backing more road-building and more airport expansion at every opportunity, making politically-expedient decisions at the local level at the expense of the very fight against climate change their party's leaders claim to be championing.

Does she have a point? In my view, no. There are two ways of looking at green politics, indeed of any political choice that has to be made. One, which I regard as being generally more compatible with a liberal view, is that we get to where we want to go by setting up processes to get there. The other says that we achieve change through taking decisions which enforce an outcome immediately. Lucas is looking at decisions, and ignoring the fact that the Lib Dem proposals are about creating a process.

The process of emissions reduction relies on incentives to do so. These incentives, applied principally through the tax system, will make polluters bear the cost of their pollution. It's not about banning cars, or reducing the number of roads to drive them on, or closing airports; it's about saying to people that they have a choice, but that the rewards for choosing a green option will outweigh the costs of pollution most of the time. Building new roads does not undermine this position; in fact, smart road building can cut journey times and distances, thus reducing emissions. Expansion of regional airports can reduce the need for connecting flights or long journeys to distant airports. Quite simply, the Lib Dems are consistently in favour of people choosing for themselves, and having the best range of choices at their disposal.

It's true that this lacks the simplistic appeal of 'less cars, fewer roads, less pollution', but it's also true that only such a process has a chance of succeeding. Lucas is favouring gesture politics over fully-rounded, thought-out ideas. Moreover, processes are about considering the effects over time, not just what will happen when we wake up tomorrow. By creating incentives rather than mandating short-term change, we can encourage positive behaviour as well as discourage negative behaviour. Taxes on pollution encourage the development of new technologies that can save households money by reducing their carbon emissions. These technologies do exist, and real cuts in emissions are achievable (see this post for some excellent examples).

But it seems that Lucas has heard this argument before, because she goes on to dismiss it. But she does so by throwing up a series of unconnected objections. Firstly:

The limitations of this approach are thrown into sharp relief in the light of increasing evidence that the era of cheap, abundant fossil fuel energy is about to end. A growing number of petroleum geologists believe that peak oil - the moment when global oil extraction peaks, and demand starts to outstrip supply - will be upon us very soon.

Secondly:

The argument is often made that we must have global growth in order to achieve poverty eradication. But, in truth, it's a very inefficient strategy. In 1990, 23% of the world's population was below the "$1-a-day" poverty line. But between 1990 and 2001, just 60 cents of every $100 of extra income generated by global growth reached the poorest. In other words, it took an extra $166 of production and consumption, with all the associated environmental damage, to generate each $1 of poverty reduction. If we are to get really serious about global poverty reduction, redistribution of income and wealth would be a far more effective method.

Finally:

Instead of attempting to support ever-increasing industrialised systems based on exponential growth, and then desperately trying to find the energy and materials to sustain them, we need to reverse the present paradigm, and make sufficiency, equity and sustainability our objectives, rather than ever-increasing economic growth.

On the point about peak oil, I am unsure what point she is trying to make. Should the oil begin to run out (as it eventually must), its price will increase dramatically and its use will decline until it runs out entirely. This will (and, following recent oil price rises, already does) cause individuals, companies and governments to look at alternative sources of energy. There's nothing here that anyone could disagree with.

On poverty eradication, surely nobody could argue with those figures? Well, I'm not going to argue with the fact that so many people live in such dire poverty is a terrible indictment of the state of global affairs. But the fact is that it is those countries which have made the greatest strides in economic growth which have succeeded in lifting their citizens out of poverty - India and China are often quoted as examples, but the economic story of the whole of Asia has been one of economic growth overcoming poverty.

Blaming economic growth for pollution is another failure to distinguish a process to tackle root causes from quick fix solutions. Yes, we could cut pollution if we cut economic growth. The Black Death, by decimating the population of Europe and devastating the Medieval economy, was responsible for such a fall in global CO2 that it is believed to have played a role in causing the Little Ice Age. I apologise if this seems like an unfair historical example to use, but it's worth remembering that real cuts in economic growth will have real consequences in falling living standards, unemployment and the slowing of the very technological progress we need to find new energy sources and rebuild our economy around low-emissions technology. What good is a Toyota Prius if nobody can afford to buy one? We need to protect and promote a vibrant, free economy; we also need to ensure that the economic incentives in place ensure that it is an economy built on clean energy.

Finally, Lucas calls for a completely new economic order. It seems strange that, having spent most of her article making easy arguments, she only tacks her solution to the problem on as an afterthought, with little explanation of what it would mean. Sufficiency, equity and sustainability are all fine words. But who decides what is sufficient? Who decides what is equitable? Who decides what is sustainable? Clearly Caroline Lucas doesn't trust ordinary people to make those decisions. The only mention of people's economic liberty is the suggestion that it should be curtailed by a global programme of redistribution. It is here that the contradiction is worst; it would be hard to afford any kind of redistribution whilst simultaneously restricting economic growth.

So, whilst I share her concern for the environment, I don't share her beliefs about how to solve the problem. I take heart from the fact that the environmental agenda is increasingly taken up by the Lib Dems; it cannot be left in the hands of the Greens.