Unbiased pros and cons of EU membership : Part 3 – Corrupt and Undemocratic? The EU and UK governments

In this post I’ll explain how decisions are made in the EU,  how democratic or undemocratic it is, and how corrupt (or not) it is ; and then a discussion of the same for the UK government.

How the EU works – How democratic (or undemocratic) is it?

The EU has four main decision making bodies – the European Commission, the European parliament, the European Council and the Council of Ministers.

The European Council is made up of all the elected heads of government (Prime ministers or Presidents) of EU member countries, plus the President of the European Commission.

Candidates to be President of the Commission are selected by the European Council by Qualified Majority Voting (meaning larger countries get more votes based on their population).

Then the European parliament, (made up of MEPs elected in every EU member country, by the Proportional Representation voting system), votes to approve or reject the candidate for President of the Commission.

Then each country’s government gets to put forward candidates to be commissioners. The Commission President assigns potential offices to them (e.g Commissioner for agriculture) and the European parliament votes to approve or reject them, until enough have been approved that all offices are filled.

The Councils of Ministers are made up of ministers from member governments of the EU. E.g The Council of Ministers when dealing with EU agricultural policy or laws would be made up of the Agriculture Ministers of all national governments in the EU. Votes by any Council of Ministers are also usually by Qualified Majority Voting.

The European Commission can put forward proposals for EU laws (regulations).

Usually any EU law (‘Regulation’) the Commission propose has to be voted on by the European Council (if a very controversial or major issue), or else the relevant Council of Ministers, and also by the European parliament.

The European parliament can also vote to amend (propose changes to) the proposed law. If a majority of the parliament and a majority of the Council vote in favour of the law, it becomes EU law. If not, it does not.

This is called the “Ordinary Legislative Procedure” – shown in more detail in the picture at the start of this post - you can click on the picture to enlarge it.

There are some ‘Special Legislative Procedures’ in which the Commission and the Council are the only ones involved in making a decision on an EU Regulation, with the European parliament only consulted on its views. These are only used rarely and can only be used in certain policy areas.

Then there are EU Directives, which are made by the Commission, and in theory require no one else’s approval to enter into force. In practice though national governments can decide how to implement them.

Also in practice a country’s parliament can choose not to implement a Directive by voting to “derogate” from it, as Ireland’s parliament did over the First Railway Directive, although the EU sometimes takes legal action against and tries to sue member governments for not implementing Directives (though the European Court of Justice does not always rule in the commission’s favour).

International Treaties (such as the extremely controversial Trans-Atlantic Trade and Investment Partnership  or TTIP which the EU and US governments are negotiating on) are negotiated on by commissioners, but on a mandate given to them by the Council and parliament, and must also be ratified by majority votes for them in the European Council and Parliament, and by national parliaments also before they can come into force at EU or national government level.

This is all very complicated, confusing, blurs who is responsible for what ;  and far too much of it happens in secret (with the media banned from most meetings of the Councils and Commission, but allowed in the European parliament).

Even MEPs can’t make any photocopies of documents on the details of TTIP negotiations to show to anyone else for instance (1).

(This resulted in details of the negotiations being leaked – including that they did include the provisions for companies to sue governments for any regulation that limited their profits. (which EU officials had previously denied. (2)

This leak however makes it far less likely any agreement on these terms will be ratified – with the French government already saying it may not ratify TTIP after the leak (3))

However the EU, despite not being nearly as democratic as it should be, is far from being “completely undemocratic” as many of the its critics allege.

Three of the four main decision bodies are elected, and in practice no EU Regulation or Directive can pass without the approval of elected bodies. Nor can “unelected bureaucrats” (i.e European Commissioners) make any decision without elected representatives voting to approve them (or to reject them so they aren’t implemented).

How corrupt or influenced by big banks and firms is the EU?

For instance European Commissioners and their advisers are often former employees of big companies such as Exxon-Mobil – and some of them draw up EU energy and environment policy (4).

The head of the European Central Bank, Mario Draghi, is a former executive at Goldman Sachs bank.

Many other politicians and central bankers in Eurozone countries, have gone back and forth between senior positions in government, and being paid advisers to or executives of Goldman Sachs and other large banks (5).

It seems unlikely to be coincidence that the EU has issued 1 trillion Euros of ‘Quantitative Easing’ money to private banks, but won’t issue any to pay off debts of countries like Greece (6).

And around a third of European Commissioners, on finishing their time in office, go into jobs working for big banks or firms (7).

These are just examples, not an exhaustive list.

Now how democratic is the UK government? And how influenced by big business?

How democratic (or not) and how corrupt,
or influenced by big business, (or not) is the UK government?

MPs – The House of Commons

The House of Commons – the MPs of the UK parliament - are elected by the First Past the Post voting system, which bins millions of peoples’ votes unrepresented in every election, and lets parties get a majority of seats on a minority of votes (currently the Conservatives have 51% of MPs on 37% of votes) (8).

In theory elected MPs appointed government ministers direct civil servants on what laws to make and parliament votes on whether to amend them, pass them or reject them.

The House of Lords

The House of Lords, though unelected, has little power in practice. It can only send a bill (draft law) back to the elected House of Commons (made up of MPs) twice, with suggested amendments (changes). If the Commons send the bill back a third time the Lords cannot vote against it, even if their amendments have been rejected.

In practice the Lords have helped to prevent Prime Ministers with big majorities for their party in parliament rushing through laws before the public, MPs, or the media have had time to look at what those laws would do in detail – because many MPs just vote whatever way the party leader tells them to most of the time.

The Prime Minister can appoint unelected members of the House of Lords to be government ministers, which is more dubious.

Big banks and Companies’ Influence in government departments

A much more undemocratic – and arguably corrupt – factor - is that big banks and big companies that donate to party funds often second their employees to UK government departments. They then get to influence, write, or scrap, regulations for their industries.

The Ministry of Defence has dozens of staff seconded to it from arms companies it’s giving contracts to . Energy companies second dozens of staff at a time to the Department of Energy and Climate Change – including some from gas companies writing energy policy (9) – (12)

The four largest accountancy firms in the UK also routinely second staff to the Treasury, where they help draft tax laws. They then use the knowledge of tax laws and influence over them which they gain to help paid clients they advise (including big banks and companies) to avoid taxes (13) – (14).

Chancellor George Osborne has even given a job to the former head of the British Bankers’ Association writing tax law at the Treasury. (15)

There are no laws preventing advisers or ministers taking jobs with firms they did favours for in government. And advisers to ministers and Prime ministers are not elected, but appointed. 

In itself advisers being unelected would not be a problem, if so many of them did not have close involvement with private companies who profit from advice they give ministers – and if they did not often then take jobs with those companies.

For instance Sir Stuart Rose, an adviser to Health Secretary Jeremy Hunt, is also a paid member of the Board of Bridgepoint Capital – an investment firm which owns the majority of shares in the private healthcare firm Care UK (16).

Mark Britnell, an adviser to Prime Minister David Cameron on health policy, told a meeting of private healthcare firm executives that the NHS would be shown “no mercy” and that this was a “big opportunity” for them (17).

A year later he went into a job as a lobbyist for a company that lobbies on behalf of private healthcare companies (18).

The former head of HMRC – the Treasury’s tax collecting body – Dave Hartnett, now has a job working for the HSBC bank (19).

Under him HMRC let big banks and firms off with not paying large amounts of tax, without prosecution, in “sweetheart deals”, while aggressively prosecuting people on ordinary incomes for tax evasion (20).

The Campaign Against the Arms’ Trade’s Revolving Door blog shows the many former Ministry of Defence Ministers, advisers and chiefs of staff who have gone on to jobs working in arms companies (21).

Former Conservative Health Secretaries Stephen Dorrell and Andrew Lansley both went into jobs working for private healthcare firms after overseeing the contracting out of NHS services to private companies that donated to Conservative party funds (22) –(23).

Before that New Labour Health Secretaries Patricia Hewitt and Alan Milburn similarly went into jobs with private healthcare firms after also overseeing ‘Public Private Partnership’ contracts going to private firms, and the contracting out of NHS services to private firms.(24).

Again these are just examples, not every instance.

Big Business Influence through donations to party funds

There are no serious restrictions on political donations from big banks, big firms or the very wealthy to political parties.

Banks and hedge funds provided over half of the donations to Conservative party funds in the run up to the 2010 election (25).

The Coalition government including the Conservatives continued New Labour’s policy of massive Quantitative Easing of hundreds of billions of pounds, with every penny going only to private banks  (26).

In 2013 Mark Carney, a former executive at Goldman Sachs bank, was appointed Governor of the Bank of England (27).

Between 2010 and the 2015 election super-rich hedge fund managers donated £10 million to the Conservative party (28).

At the same time Chancellor George Osborne cut the top rate of tax from 28% to 20%, and abolished stamp duty reserve tax on asset management funds – which would include hedge funds (29).

Although he did later exclude hedge funds from a cut in Capital Gains tax for other businesses (30)

Leaving the EU without addressing these problems will not fix them.

It’s private political donations and the revolving door between government and business that are undermining democracy at every level of government.

The Leave Campaign’s leaders – Would they protect the NHS and stop TTIP?

Leave campaigners Michael Gove MP, Daniel Hannan MEP and Nigel Farage MEP  say they would increase NHS funding if we left the EU. Yet Gove and Hannan co-authored a book in 2009 which called the NHS “irrelevant to the modern world”. And Hannan told Fox News that the NHS was “a 60 year old mistake”. Farage has been caught twice saying the NHS should be replaced with private healthcare (31) – (33).

Gove , Ian Duncan Smith and Boris Johnson are also members of a Conservative government slashing public health spending so it can say the NHS has “failed” and needs “reforms”, while promising “big opportunities” to private healthcare firms that donate to Conservative party funds (34) – (35).

So are Cameron and Osborne, who are for staying in the EU, but Hannan and Gove’s previous statements suggests they would erode the NHS even more.

Boris Johnson’s supposed opposition to the Transatlantic Trade and Investment Partnership is not credible when he wrote an article praising its “brilliance” in 2014. (36).

So if Boris has his way he will probably just negotiate a TTIP style deal, but between the UK and the US rather than the EU and the US.

Sovereignty here just means Boris and pals handing more power to big business. And these are the people likely to become Prime Minister and government ministers once David Cameron stands down (As he’s said he will before the next General Election) if we leave the EU.

Of course many of the politicians campaigning for remaining in the EU are no more trustworthy – certainly not Cameron or Osborne.

Conclusion – Leave or Remain in the EU?

So the EU and the UK government both leave a lot to be desired. Both should be a lot more democratic than they are. Both are heavily influenced by big banks and big companies through donations to political parties and the revolving door of people going back and forth between government and big business.

Which you choose is up to you. You may decide that getting rid of one level of bad government is an improvement. Or that there is no point in leaving one corrupt and not fully democratic layer of government just to give another that is just as bad more influence – and that remaining to push for reform of both is the best way.

 

 (1) = www.guardian.com 18 Feb 2016 ‘MPs can view TTIP files – but take only pencil and paper with them’, https://www.theguardian.com/business/2016/feb/18/mps-can-view-ttip-files-but-take-only-pencil-and-paper-with-them

(2) = www.independent.co.uk 02 May 2016 ‘After the leaks showed what it stands for, could this be the end for TTIP?’, http://www.independent.co.uk/voices/ttip-leaks-shocking-what-are-they-eu-us-deal-a7010121.html

(3) = www.guardian.com 03 May 2016 ‘Doubts rise over TTIP as France threatens to block EU-US deal’, https://www.theguardian.com/business/2016/may/03/doubts-rise-over-ttip-as-france-threatens-to-block-eu-us-deal

(4) = Corporate Europe Observatory ‘Brussels, Big Energy, & revolving doors: a hothouse for climate change’, http://corporateeurope.org/pressreleases/2015/11/brussels-big-energy-revolving-doors-hothouse-climate-change

(5) = www.independent.co.uk 18 Nov 2011 ‘What price the new democracy? Goldman Sachs conquers Europe’, http://www.independent.co.uk/news/business/analysis-and-features/what-price-the-new-democracy-goldman-sachs-conquers-europe-6264091.html

(6) = BBC News 22 Jan 2015 ‘ECB unveils massive QE boost for eurozone’, http://www.bbc.co.uk/news/business-30933515

(7) = Corporate Europe Observatory 17 Mar 2016 ‘Revolving doors round-up’, http://corporateeurope.org/revolving-doors/2016/03/revolving-doors-round

(8)  BBC News Election 2015 Results,
http://www.bbc.co.uk/news/election/2015/results

(9) = www.guardian.co.uk 17 Feb 2015 ‘Dozens of arms firm employees on MoD secondments’, https://www.theguardian.com/uk-news/2015/feb/16/dozens-of-arms-firm-employees-on-mod-secondments

(10) = www.guardian.co.ujk 05 Dec 2011 ‘Energy companies have lent more than 50 staff to government departments’, https://www.theguardian.com/business/2011/dec/05/energy-companies-lend-staff-government

(11) = www.guardian.co.uk 10 Nov 2013 ‘Gas industry employee seconded to draft UK's energy policy’, https://www.theguardian.com/environment/2013/nov/10/gas-industry-employee-energy-policy

(12) = Independent 22 Apr 2015 ‘Big Six firms use influence to dictate energy policy, claims leading environmentalist’, http://www.independent.co.uk/environment/big-six-firms-use-influence-to-dictate-energy-policy-claims-leading-environmentalist-10196672.html

(13) = www.guardian.co.uk 26 Apr 2013  'Big four' accountants 'use knowledge of Treasury to help rich avoid tax', https://www.theguardian.com/business/2013/apr/26/accountancy-firms-knowledge-treasury-avoid-tax ( four main accountancy firms in the UK second staff to Treasury to write tax laws, then use knowledge of them to help clients avoid tax)

(14) = House of Commons, Committee of Public Accounts, 15 Apr 2013 ‘Tax avoidance: the role of large accountancy firms ‘, http://www.publications.parliament.uk/pa/cm201213/cmselect/cmpubacc/870/870.pdf

(15) = www.guardian.com 09 Dec 2015 ‘Osborne criticised over Treasury job for former bank lobbyist’, http://www.theguardian.com/politics/2015/dec/09/former-bank-lobbyist-to-head-treasury-office-tax-simplification (former Chief Executive of British Bankers’ Association given job writing tax law for the Treasury)

(16) = Independent 14 Feb 2014 ‘NHS adviser Sir Stuart Rose has private health link’,
http://www.independent.co.uk/life-style/health-and-families/health-news/nhs-adviser-sir-stuart-rose-has-private-health-link-9129592.html

(17) = www.guardian.co.uk 14 May 2011 ‘David Cameron's adviser says health reform is a chance to make big profits’, http://www.theguardian.com/politics/2011/may/14/david-cameron-adviser-health-reform (for private healthcare firms – also told them NHS would be “shown no mercy”)

(18) = Guardian 23 Nov 2012 ‘David Cameron's former NHS privatisation adviser becomes lobbyist’, http://www.theguardian.com/politics/2012/nov/23/david-cameron-privatisation-adviser-health-lobbyist

(19) = www.independent.co.uk 24 Mar 2015 ‘Former HMRC boss Dave Hartnett forced to defend new job – with HSBC’, http://www.independent.co.uk/news/business/news/former-hmrc-boss-dave-hartnett-forced-to-defend-new-job-with-hsbc-10129195.html

(20) = www.guardian.com 29 Apr 2013 ‘Revealed: 'Sweetheart' tax deals each worth over £1bn’, http://www.theguardian.com/politics/2013/apr/29/sweetheart-tax-deals

(21) = Campaign Against The Arms Trade – Revolving Door Log,
https://www.caat.org.uk/issues/influence/revolving-door

(22) = www.guardian.co.uk 20 Oct 2015 ‘Ex-health secretary Andrew Lansley to advise firms on healthcare reforms’, http://www.theguardian.com/politics/2015/oct/20/andrew-lansley-advise-firms-healthcare-reforms

(23) = PULSE 01 Dec 2014 ‘Former health secretary takes up private management consultancy role’,  http://www.pulsetoday.co.uk/political/political-news/former-health-secretary-takes-up-private-management-consultancy-role/20008623.fullarticle (this time Stephen Dorrell MP)

(24) = Guardian 17 May 2011 ‘Former Labour ministers rushing to take private sector jobs, report finds’, http://www.theguardian.com/politics/2011/may/17/labour-ministers-consultancy-private-sector

(25) = Bureau of Investigative Journalism 08 Feb 2011 ‘Tory Party funding from City doubles under Cameron’, https://www.thebureauinvestigates.com/2011/02/08/city-financing-of-the-conservative-party-doubles-under-cameron/

(26) = BBC News 03 Dec 2015 ‘What is quantitative easing?’, http://www.bbc.co.uk/news/business-15198789

(27) = BBC News 30 Jun 2015 ‘Mark Carney takes over as head of Bank of England’, http://www.bbc.co.uk/news/business-23118515

(28) = www.independent.co.uk  04 Feb 2015 ‘General Election 2015: How hedge fund super-rich 'donated £19m to Tory party'’, http://www.independent.co.uk/news/uk/politics/how-hedge-fund-super-rich-donated-19m-to-tory-party-10024548.html

(29) = www.mirror.co.uk 24 Mar 2013 ‘George Osborne in Budget giveaway to Tory donors in the City’, http://www.mirror.co.uk/news/uk-news/george-osborne-budget-giveaway-tory-1781551

(30) = Telegraph 17 Mar 2016 ‘Budget 2016: private equity angered at exclusion from capital gains tax cuts’, http://www.telegraph.co.uk/business/2016/03/17/budget-2016-private-equity-angered-at-exclusion-from-capital-gai/

 (31) = www.guardian.co.uk 16 Aug 2009 ‘Key Tory MPs backed call to dismantle NHS’,
http://www.theguardian.com/politics/2009/aug/16/tory-mps-back-nhs-dismantling (Michael Gove MP and Daniel Hannan MEP co-authored book ‘Direct Democracy’ in 2009 which said the NHS is “no longer relevant in the 21^st century”. Hannan also told Fox News that the NHS was a “60 year old mistake”)

(32) = www.guardian.co.uk 12 Nov 2014 ‘Film shows Nigel Farage calling for move away from state-funded NHS’, http://www.theguardian.com/politics/2014/nov/12/film-nigel-farage-insurance-based-nhs-private-companies

(33) = www.independent.co.uk 20 Jan 2015 ‘Nigel Farage: NHS might have to be replaced by private health insurance’, http://www.independent.co.uk/news/uk/politics/nigel-farage-nhs-might-have-to-be-replaced-by-private-health-insurance-9988904.html

(34) = www.independent.co.uk 27 Nov 2015 ‘George Osborne actually cut public health budget by 20 per cent despite NHS promises, analysis finds’, http://www.independent.co.uk/news/uk/politics/george-osborne-actually-cut-health-budget-by-20-per-cent-despite-nhs-promises-analysis-finds-a6751311.html

(35) = see the blog post on this link and sources in it

 (36) = Telegraph 19 Oct 2014 ‘This trade deal with America would have Churchill beaming’, by Boris Johnson,
http://www.telegraph.co.uk/news/politics/11173369/This-trade-deal-with-America-would-have-Churchill-beaming.html

The Smith Commission Report – a deal among parties, ignoring the greater powers that polls show most people want

The dispute over the Smith Commission report turns on whether additional powers should be decided by negotiations between political parties on what powers they are willing to concede, or the views of the majority of the people of Scotland (1).

The “vow” didn’t refer to Home Rule, Devo Max or federalism, but Gordon Brown did, in widely reported comments in the last few weeks of the referendum. Opinion polls show majorities for devolving far more powers than Smith recommends.

A recent ICM poll found 63% want all welfare powers and  taxes devolved to the Scottish parliament. This would have to exclude Scotland’s share of Defence and Foreign Policy funding, but goes far beyond Smith’s recommendations of only devolving disability and carers’ benefits and the bedroom tax (2) – (3) .

A poll just after the referendum reported by STV found that ‘80% …supported Scotland having control over welfare, with 62% saying it should be in charge of pensions. Almost three quarters (71%) of people back the devolution of income tax while 62% want to see Scotland get control of corporation tax and 61% say Holyrood should be in charge of VAT.’ (4).

Smith only recommends devolving income tax, air passenger duty, the Aggregates levy and the first 10% of VAT. The UK government retains all corporation tax, capital gains tax , national insurance, oil and gas revenues, vehicle excise duty and other revenues raised in Scotland (5).

The UK parties’ argument that the power to set corporation and VAT tax rates couldn’t be devolved as it could lead to different parts of the UK competing to have lower rates was understandable. However their willingness to devolve income tax, which could similarly lead to competitive tax cutting, suggests their motives there are party political.

No UK government has raised the basic rate of income tax in decades because it’s political suicide to do so. It seems likely that, with the SNP having a majority in the Scottish parliament, the UK parties want to force the Scottish government into either income tax rises or spending cuts to try to lose it votes.

And there’s no reason why most of the revenues from income and corporation taxes raised in Scotland couldn’t be assigned to the Scottish government and parliament to decide on how to spend them, while leaving the power to set the rates  of these taxes set by the UK government, and so uniform across the UK.

It would be wrong not to acknowledge that there are a few other positives in the Smith commission. The report recommends the devolution of the power to issue or refuse onshore oil and gas (paragraph 69), which would give the Scottish government the power to block fracking (assuming the Scottish public put enough pressure on it – so far Scottish ministers’ responses on fracking have been very evasive). The power to scrap the bedroom tax and provide benefits for carers and the disabled are important, but they are not close to control over all welfare powers and the budget for them.

The power to allow the public sector to bid for rail franchises (paragraphs 25 to 26, page 21) is positive too, but a long way from allowing renationalisation.

However it’s equally wrong to pretend that the Smith recommendations are anything approaching the “home rule” , “devo max” or federalism which Brown talked of. The usual definition of these is that most domestic policy and most of the budget for it is devolved. Nor do the powers Smith offers come close to the ones polls show most Scots want.

And equally some of the recommended devolved powers are so limited as to be almost non-existent – see those over Crown Estates in Scotland for instance, which allow sweeping exceptions by the UK government on extremely vague and general terms (paragraphs 32 – 34, page 16). Similarly for those over Energy Efficiency and Fuel Poverty measures (paragraph 68).

One telling line is Paragraph 24,  page 13 ; ‘the Scottish Parliament will have no powers over the regulation of political parties (including donations)’.

This indicates a deal in the interest of parties, not voters. The major UK political parties rely heavily on donations from banks, hedge funds, big firms and the super-rich – particularly the Conservative party.

It also ensures no requirement for more internal democracy within all political parties in Scotland. So Miliband can keep imposing his policies on the Scottish branch of his party.

One month was long enough for horse-trading between the main UK parties on what level of devolution they’d tolerate. It wasn’t long enough to receive or read submissions from thousands of members of the public. Nor should we be presented with a take-it-or-leave-it package decided only by parties. Opinion polls and consultations, and/or a second elected constitutional convention, could be used to draw up a list of possible additional powers, with a multi-question referendum allowing voters to vote for or against each.

Brown might want Scottish politics “reset” with constitutional issues labelled “dealt with”, but opinion polls suggest many voters disagree (6).

Opinion polls suggesting a massive rise in the SNP vote in the next General election, combined with those on additional powers, may force the next UK government into offering considerably more devolved powers than the Smith negotiations resulted in (7).

 

Sources

 

(1) = https://www.smith-commission.scot/ and https://www.smith-commission.scot/wp-content/uploads/2014/11/The_Smith_Commission_Report-1.pdf

(2) = STV 30 Nov 2014 ‘Poll finds majority want Holyrood to control all taxes and benefits’,
http://news.stv.tv/scotland-decides/301542-icm-poll-finds-majority-want-holyrood-to-control-all-taxes-and-benefits/

(3) = https://www.smith-commission.scot/ and https://www.smith-commission.scot/wp-content/uploads/2014/11/The_Smith_Commission_Report-1.pdf , paragraphs 42 – 54, pages 18 - 19

(4) = STV 21 Sep 2014 ‘SNP on course to win third Holyrood term, according to new poll’,  http://news.stv.tv/scotland/292917-snp-on-course-to-win-third-consecutive-holyrood-term-says-new-poll/

(5) = https://www.smith-commission.scot/ and https://www.smith-commission.scot/wp-content/uploads/2014/11/The_Smith_Commission_Report-1.pdf , paragraphs 75 - 92, pages 23 - 25

(6) = BBC News 29 Nov ‘Gordon Brown calls for Scottish politics 'reset'’, http://www.bbc.co.uk/news/uk-scotland-scotland-politics-30256101

(7) = Guardian 30 Oct 2014 ‘Labour faces massive losses to SNP at UK general election, poll shows’, http://www.theguardian.com/politics/2014/oct/30/scottish-labour-snp-general-election-poll

The Scottish people must have their say on what additional devolved powers we choose from - not just to take or leave a package deal cut by big parties - Smith Commission on Additional Devolved Powers Submission

Thank You

First I’d like to thank you for giving the people of Scotland this opportunity to have a say on what additional devolved powers Scotland needs.

 

Need for additional devolved powers decisions not to be just a deal between party leaders
that the Scottish people can only take or leave

While I was a Yes campaigner, I recognise that the Scottish Social Attitudes Survey 2014 showed the majority of people in Scotland wanted additional devolution or “devo max” as an option in the vote, and always thought this should have been an option people could have voted for (1).

As Lord Ashcroft’s post referendum poll found 25% of No voters said they had voted No primarily because Scotland would get additional devolved powers, and assuming the vast majority of Yes voters will back additional powers too, a majority of Scottish voters of somewhere around 58% want more devolved powers (25% of the 55% who voted No would be 13.75% of all voters. The 45% of voters who voted Yes plus 13.75% would be 58.75%) (2).

While the various Scottish and British political parties, pro and anti-independence,  each have their own positions on what the additional powers should be, and clearly have to have input into the final decision, the Scottish people must also get a major part in making this decision.

It should not be reduced to just being given a Yes or No vote on  a package the parties agree among themselves to offer us. It should include the wider public getting to decide which options the whole country will choose from. Additional devolved powers are a more complicated issue than independence and cannot be reduced to a Yes or No without taking much of the say from the public.

Another Scottish Constitutional Convention? Elected this time?

One month is a very short period for such a consultation. I’d argue that the next stage should be a longer consultation period to a new Scottish Constitutional Convention elected by Single Transferrable Vote (STV) , allowing for candidates from smaller parties, and representatives of Scottish society who don’t represent any party, to be involved in drawing up the options (3) – (4).

STV allows voters rather than party officials to rank candidates in order of preference, and ensures that no one’s vote is “wasted” by going to a candidate who is not elected. It allows voters to vote positively for the candidate or party they support most, rather than just negatively to try to keep the large party they dislike most out of power (5).

While an elected constitutional convention would take longer to put proposals for additional devolved powers together, due to the time required to elect it, those options would be more likely to reflect the views of the whole population rather than just a deal cut between the leaders of the largest political parties.

While the Electoral Reform Society and the British Labour Party propose a UK Constitutional Convention this would risk become bogged down in disputes that can’t be resolved like English Votes for English Laws; as well as whether further devolution in England should happen at all, and, for those who want it, whether it should be to an English parliament or regional ones (6) – (8).

There is no reason why additional devolved or federated powers for Scotland should not be decided separately to ensure they are not delayed indefinitely.

 

How the Scottish people , rather than just political parties, can be given a real say on further devolved powers even if there isn’t another Scottish constitutional convention

Even if another Scottish Constitutional Convention is not formed though, the Scottish people’s views can still be taken into account. First through public consultations like this one. Second by looking at opinion poll results on what powers people in Scotland think should be devolved (though bodies accepted as neutral by all parties would have to be given a remit to conduct polls, as what results polls come up with depend on what questions are asked and how they’re phrased).

Finally by making the final referendum on the proposed additional powers a multi-question one with voters able to approve or reject each major additional power or group of them, rather than just a single Yes or No question to approve or reject all of them.

Opinion polls since the referendum already show majority support for devolution of welfare policy and budget to the Scottish parliament and government, as well as pensions, corporation tax and VAT (9).

These polls show that the public want far more powers devolved than the main two UK parties plan. Other polls during the referendum campaign showed that two-thirds of voters did not know what additional powers these parties were offering in the event of a No vote (10).

If the actual powers delivered are a disappointment to the majority of people in Scotland another independence referendum is likely within 5 to 6 years (or sooner if the UK leaves the EU).

Labour politicians have raised reasonable concerns about this leading to competitive reductions in corporation tax across the UK, reducing tax revenues. While such competition does already take place between countries, it is arguably unhelpful (11).

There is no reason, though, why the UK government could not continue to set the rates for these taxes, while the  majority of revenues from them went directly to the Scottish government, assuming the majority of domestic governmental powers were devolved to the Scottish government.

 

Each devolved power must include full control of the budget for that policy area – and devolving the politically sensitive income tax alone would be merely party political manoeuvring and unacceptable

All devolved powers must include power over the budget for that power, or else the power has been devolved in name but not in reality.

It also has to be emphasised that the plans for limited additional devolution amounting to little more than powers over income tax plus a “proportionate” cut in the devolved Scottish budget by the Labour and Conservative party leaderships are dubious and may well be motivated by an attempt to gain party political advantage over the SNP (12) - (14).

Income tax is the tax most reported on by the media, most noticed by the electorate and so most politically sensitive. As a result UK governments have for decades avoided any rise in the basic rate of income tax. A devolved budget cut plus income tax powers would seem to be a trap set for the Scottish government, forcing it either to raise the most unpopular of taxes or cut services.

(I’d add that I’m not an SNP member and have stood (and lost my deposit repeatedly) as an independent candidate in more than one election).

 

Why many No voters will have expected full federalism based on Brown’s statements.
Why full federalism is practical for Scotland in the UK.

Gordon Brown MP, the former UK Chancellor and Prime Minister, greatly influenced the result of the referendum and the establishment of your own commission. However his opinions should not over-ride the views of the majority of the people of Scotland any more than any other politician’s. The terms he used are also likely to have given most people the impression that he and the UK party leaders were offering considerably more devolution than he or those party leaders actually plan to.

During the referendum campaign Mr Brown claimed that a No vote would result in “as close to a federal state as you can be in a country where one nation is 85 per cent of the population” and “nothing less than a modern form of Scottish Home Rule” (15) – (16).

While ‘devo max’ has never been clearly defined and ‘Home Rule’ similarly has no universally accepted definition, it’s likely that most people would see these phrases as meaning the same as federalism - the devolution of almost all domestic policy – full control of the budget and policy making for domestic policy – i.e everything except foreign and defence policy. While the degree of devolution of powers in existing federal systems like the US, Germany and Switzerland varies, it is high in every case.

“As close to a federal state as you can be in a country where one nation has 85% of the population” would imply the maximum level of devolution as in Germany and Switzerland. While there are some grey areas on what is foreign policy and what is domestic policy (international trade policy etc) which would be matters for negotiation, the majority is easy to define.

Mr Brown has implied that as Scotland has less than 10% of the population of the UK this precludes full federalism as “majority rule” must be maintained.

Earlier this month he stated that “You see, in the United Kingdom, England is about 84% of the United Kingdom. Scotland’s 8%, Wales is 5%, Northern Ireland’s 3%. And you’ve got to find a fair distribution of power that recognises the majority rule but also recognises the minorities and that they have special needs that have to be met.” (17).

This concern with maintaining “majority rule” is doubtful for two reasons. First existing federal systems include states with massively different populations, of far greater orders of magnitude than the differences between Scotland and England.

In 2010 Perlis, the smallest state in Indonesia, has a population of under 250,000 people, while Selangor, the largest, has a population of over 5 million – a ratio of about 20 to 1 between the largest and smallest states, double the roughly 10 to 1 between England and Scotland (This does not include the smaller federal territories which are not states) (18).

Bremen, the smallest state in Germany has a population of around 660,000 compared to over 17 million for North-Rhine Westphalia, a ratio of 25 to 1  (19).

Eight states of the U.S had an estimated population of under 1 million in 2013 and another two populations of only just over 1 million, while California has a population of 38 million, a ratio of over 38 to 1 between smallest and largest (20).

In any case it is likely that if the UK became a federal state England would be split into several regions with populations of a similar size to Scotland’s, as Gordon Brown himself has suggested, making the relative populations of the different nations in the UK irrelevant, as the devolution would probably not be only on the basis of nations, but regions of England (21).

 

Why “majority rule” does not exist in the UK,
Would not be particularly democratic if it did,
And is not a barrier to full federalism

Second “majority rule” is a doubtful definition of democracy in the UK . First, due to the unrepresentative First-Past-The-Post voting system for UK General Elections, most UK governments have not had a majority of the votes cast. Most have had large majorities of seats in the UK parliament, sometimes even over 60% of the seats, while getting only 39 to 48 per cent of the vote (22) – (26).

The current Coalition government is the only one in the last 66 years which was elected by a majority of voters, but it has also failed to represent the majority of voters in many ways (e.g by Nick Clegg MP breaking his main election pledge on tuition fees and in letting private companies run more NHS services despite public opposition – and by e.g the fact that many Lib Dem voters would have preferred them to form a coalition with Labour, or leave the Conservatives to run a minority government by not forming any coalition).

So majority rule is the exception rather than the rule in UK politics. It is usually largest minority rule, but with that minority behaving as if it had a huge majority of the votes cast for every policy it implements, when in fact it has the support only of the largest minority, and on some policies, which were not brought up in the party’s election campaign or its manifesto, not even that.

Second defining democracy as “majority rule” would lead to many undemocratic implications. In Northern Ireland “majority rule” under “Home Rule” led at one point to the Protestant, Unionist majority being given free reign implement policies that disadvantaged the Catholic minority.

Third “majority rule” is a dubious definition of democracy. Is it democratic if a small majority completely over-rule the wishes of a large minority, or even if, as more often happens in UK politics, the largest minority completely over-ride the wishes of the majority?

Surely real democracy involves everyone having an equal say, not winners and losers?

Finally defining “majority rule” as the defining democratic principle of the UK would mean that on every important matter the opinions, wishes and interests of the Scottish, Welsh and Northern Irish minorities would remain irrelevant. On every issue the majority in England would over-rule them. Scotland has just 59 MPs out of 650 in the UK parliament. Frequently a majority of Scottish MPs will vote the opposite way to the majority of English MPs on an issue. As the Reverend Stuart Campbell has shown on his ‘Wings Over Scotland’ blog, MPs elected in Scotland have only changed the results of UK elections four times since 1945, and in each case only marginally (27).

The House of Commons Library blog has largely confirmed Campbell’s analysis, finding that the overall result of all but four of the 18 UK General elections since 1945 would have been the same with or without MPs elected in Scotland (28).

 

Need for the power to regulate banks and other financial firms in Scotland

Scotland desperately needs the powers to regulate banks, hedge firms and other financial sector firms operating here in order to avoid another financial crisis and recession. We also need to stop banks foreclosing mortgages on the homes of taxpayers who bailed them out, and letting viable businesses collapse through refusal to even provide bridging loans.

If the British government was willing to effectively regulate the financial sector this would not be a problem, but UK governments of all parties have failed to even institute any law banning high street savings banks from also being involved in dubious “investment” banking (often effectively high risk bets like the trading in futures). Even the US had such a law, the Glass Steagall Act, gradually repealed in the 1980s and 1990s, with disastrous results more recently (29).

The Conservative party gets more than half its funding from banks and hedge funds. Predictably Chancellor George Osborne has not instituted a full legal separation on the types of banking, instead referring to ‘Chinese walls’,  ‘firewalls’ and ‘ring fences’ between the two arms of the same bank, which amount to the lack of a legal ban that would prevent another crisis (30) – (32).

 

Need for power to establish a nationalised national bank for Scotland
and local ones for local authorities

For similar reasons Scotland needs the power to set up a nationalised bank to provide secure savings for savers and low interest loans and grants to small and medium sized businesses, as well as the power for local councils to set up local government banks similar to the regional and local ones in Germany. The UK Labour party has said that it intends to establish something similar, but is not guaranteed to get a majority in the UK parliament for this after the next election.

 

Going beyond devolution to the Scottish parliament – the principle of subsidiarity

Some have pointed to the sizeable minority vote for the Conservatives in the 2010 General election (16% of the vote) and the election of a UKIP MEP in Scotland in the last European Parliament elections as signs that unionism and conservatism are stronger in Scotland than has been assumed.

This may be true, but they remain a minority. The Eurosceptics and pro-Europeans share one principle though – the idea of subsidiarity, that decisions should be taken at the lowest level possible for that kind of decision (33).

This would imply that if they wish to have more decisions taken by the UK government rather than the EU, they would have to approve the maximum devolution of powers from the UK government to the Scottish government, from it to local councils, and from local councils to community councils, too, based on the same principle (34).

If they want to do the first but none of the rest then they are clearly basing their decision not on democracy or subsidiarity, but blind nationalism, merely blind British nationalism rather than blind Scottish nationalism – and that is not a principle worth upholding, it’s not a principle at all.

The SNP’s tendency to want to centralise all the powers devolved to Scotland in the Scottish parliament equally needs to be challenged by the principle of subsidiarity, with both more powers transferred from the UK parliament to the Scottish parliament, from it to local councils and from them to community councils. This should include budgets and revenue raising powers.

 

Power to decide electoral system for the Scottish parliament – need to avoid changes made purely to maintain position of dominant parties

While the principle of devolving the power to decide the electoral system for the Scottish parliament to the Scottish parliament is a good one, care has to be taken that it does not give the two largest parties in Scotland – Labour and the SNP – the power to change it to a purely First-Past-The-Post system that would benefit them but be as poor in terms of democracy as the Westminster voting system. Several Labour MSPs have suggested in the past that the Holyrood voting system be changed to the supposedly “fairer” FPTP and referred to SNP list MSPs as having been “defeated” and as “sneaking into the Scottish parliament through the back door”. There has to be some suspicion that the Labour party proposals to devolve this power might be about party political advantage.

While the SNP has not made similar suggestions on changing the voting system to FPTP for Scottish parliament elections so far, it’s possible that, if they win most seats in Scotland in the 2015 General Election under FPTP, as polls suggest they could, they might be tempted to do so.

The current voting system , designed by Labour to prevent the SNP ever getting a majority, failed to do so. So it will not prevent Labour or the SNP from pushing through changes to the voting system made purely for party political advantage either.

One way to reduce this risk would to require a 66% majority in the Scottish parliament, followed by a referendum, to make any change in the voting system. The referendum could be held on the same day as the subsequent Scottish parliament elections to avoid voter fatigue or low turnout, and to reduce costs. Any resulting change in the voting system would not be made until the Scottish parliament elections after those.

On the other hand some senior Scottish Labour and Lib Dem figures have in the past suggested changing the voting system to Single Transferrable Vote, which could be a step forward from the current Additional Member System, so a balance has to be struck between making electoral reform possible, and blocking backwards steps taken for party political advantage (35) – (36).

However when the Single Transferable Vote was used for council elections in Scotland in 2012 and Labour lost seats to the SNP, some Labour MSPs, and the largely pro-Labour Daily Record, began to criticise the voting system as “too complicated” and claiming that the “over complicated” voting system had resulted in a reduced voter turnout, despite the turnout actually having been higher than in the previous council elections, and higher than in the 2012 council elections in England (37) – (38).

 This underlines the risk of big parties given the power to change the electoral system using it to change it to their advantage even if this reduces choice for voters.

 

Need for written constitution and constitutional court to define the division of powers between the Scottish and British governments – but section relating to Scotland does not need to wait on other nations and/or regions

Almost every federal system in the world has a written constitution defining what powers are held by the different levels of government, and a constitutional court to adjudicate disputed and grey areas.

This would be beneficial for a Scotland with devolved federal powers, but the complications and earlier stages of devolution to the rest of the UK do not need to delay Scotland getting additional powers.

The section of a written constitution relating to Scotland could be written separately and before those relating to other nations and/or regions of the UK.

Federalism rather than Devolution?

Devolution in the UK has involved asymmetric division of powers in which some policy areas are Reserved, with only the UK government able to legislate or make decisions on them, while others are Devolved to the Scottish, Welsh, Northern Irish and London parliaments or Assemblies. The UK government however retains the power to legislate or make decisions even on devolved matters, with the limit that it only do so with the consent of the devolved parliaments being a “convention” rather than an absolute restriction. So far the UK government has not broken this convention, but most people in the devolved areas do not realise that it retains the power to do so (39).

In a Federal system the central government would not retain this power, with the division between regional/national and central government powers being absolute and symmetrical (i.e neither could encroach into the other’s specified policy area), other than for a few grey areas of joint responsibility.

I would argue that Scotland’s devolved powers should become policy areas in which the UK government cannot act or legislate without a majority vote in the Scottish parliament permitting them to do so on a specific issue, and similarly for devolved or federally divided powers in other regional/national parliaments and assemblies.

 

Sources

(1) = Scotsman 18 Feb 2014 ‘Scottish independence: Most Scots back ‘devo max’’, http://www.scotsman.com/news/politics/top-stories/scottish-independence-most-scots-back-devo-max-1-3310342

(2) = theguardian.com 20 Sep 2014 ‘Scottish independence: poll reveals who voted, how and why’, http://www.theguardian.com/politics/2014/sep/20/scottish-independence-lord-ashcroft-poll?CMP=fb_gu

(3) = Wikipedia - Constitutional convention (political meeting) , http://en.wikipedia.org/wiki/Constitutional_convention_%28political_meeting%29

(4) = Wikipedia – Single Transferable Vote, http://en.wikipedia.org/wiki/Single_transferable_vote

(5) = Electoral Reform Society – Single Transferable Vote,
http://www.electoral-reform.org.uk/single-transferable-vote/

(6) = Electoral Reform Society Briefing 19 Sep 2014 ‘Time for a Constitutional Convention’, http://www.electoral-reform.org.uk/images/dynamicImages/file/Briefing%20on%20a%20Constitutional%20Convention,%2019th%20Sep.pdf

(7) = Guardian 19/20 Sep (website/print edition)  ‘Labour proposes devolution settlement to 'shape own futures'’, http://www.theguardian.com/politics/2014/sep/19/labour-ed-miliband-constitutional-convention

(8) = BBC 14 Oct 2014 ‘Hague and Brown clash over 'English votes for English laws'’, http://www.bbc.co.uk/news/uk-politics-29606220

(9) = STV 21 Sep 2014 ‘SNP on course to win third Holyrood term, according to new poll’, http://news.stv.tv/scotland/292917-snp-on-course-to-win-third-consecutive-holyrood-term-says-new-poll/ , (see 2nd last paragraph ‘A total of 80% of people questioned supported Scotland having control over welfare, with 62% saying it should be in charge of pensions. Almost three quarters (71%) of people back the devolution of income tax while 62% want to see Scotland get control of corporation tax and 61% say Holyrood should be in charge of VAT.’)

(10) = Sky News 17 Sep 2014 ‘Sky Poll: Scots Unclear Over No Vote Powers’,
http://news.sky.com/story/1337107/sky-poll-scots-unclear-over-no-vote-powers

(11) = Scottish Labour Devolution Commission March 2014 ,  all of it, but especially page 6, http://b.3cdn.net/scotlab/26e0eb4bdf4c775d14_ram6b81bk.pdf

(12) = See (11) above

(13) = Scottish Labour’s Devolution Commission Final Report March 2014 ‘Powers for a Purpose :

Strengthening Accountability and Empowering People’, http://b.3cdn.net/scotlab/277fe5eb9b114b9a3c_1pm6iir9r.pdf

(14) = BBC News 9 Sep 2014 ‘Scottish independence: What new powers might Scotland get?’, http://www.bbc.co.uk/news/uk-scotland-scotland-politics-25626977

(15) = Scotsman 15 Aug 2014 ‘Gordon Brown backs federalism in event of No vote’,
http://www.scotsman.com/news/politics/top-stories/gordon-brown-backs-federalism-in-event-of-no-vote-1-3511291

(16) = Telegraph 08 Sep 2014 ‘Gordon Brown unveils cross-party deal on Scottish powers’,
http://www.telegraph.co.uk/news/uknews/scottish-independence/11082930/Gordon-Brown-unveils-cross-party-deal-on-Scottish-powers.html

(17) = Guardian 12 / 13 October ‘David Cameron ‘playing fast and loose’ with constitution, says Gordon Brown’, http://www.theguardian.com/politics/2014/oct/12/david-cameron-fast-and-loose-constitution-gordon-brown

(18) = Wikipedia - States and federal territories of Malaysia, http://en.wikipedia.org/wiki/States_and_federal_territories_of_Malaysia#The_states_and_federal_territories , (Wikipedia states source as "Laporan Kiraan Permulaan 2010". Jabatan Perangkaan Malaysia. p. iv. Retrieved 24 January 2011.)

(19) = Wikipedia - States of Germany,
http://en.wikipedia.org/wiki/States_of_Germany#States

(20) = Wikipedia - List of U.S. states and territories by population
http://en.wikipedia.org/wiki/List_of_U.S._states_and_territories_by_population#States_and_territories , based on US Census Bureau reports and statistics,
http://en.wikipedia.org/wiki/List_of_U.S._states_and_territories_by_population#References

(21) = Scotsman 15 Aug 2014 ‘Gordon Brown backs federalism in event of No vote’,
http://www.scotsman.com/news/politics/top-stories/gordon-brown-backs-federalism-in-event-of-no-vote-1-3511291

(22) = Electoral Reform Society – First Past the Post, http://www.electoral-reform.org.uk/first-past-the-post/

(23) = Political Science Resources – ‘British Governments and Elections since 1945’, http://www.politicsresources.net/area/uk/uktable.htm

(24) = House of Commons Briefing Paper SN/SG/2632 (2010) ‘General Election results 1979 - 2010’, http://www. parliament.uk/briefing-papers/SN02632.pdf

(25) = David Butler (1989) ‘British General Elections since 1945’ Blackwell, Institute of Contemporary British History, London, 1989 ; Appendix I Election Results 1945 – 1987, pages 121 to 123

(26) = David Butler and Dennis Kavanagh ‘The British General Election of 1997’ MacMillan Press, London , 1997,  Appendix I The Voting Statistics, pages 254 to 255 (includes 1992 and 1997 election results)

(27) = Wings Over Scotland 10 Jan 2012 ‘Why Labour doesn’t need Scotland’ by Rev Stuart Campbell,
http://wingsoverscotland.com/why-labour-doesnt-need-scotland/

(28) = Second Reading - House Of Commons Library Blog 19 Jan 2014 ‘General Elections without Scotland, Part 1: 1945-2010’, http://commonslibraryblog.com/2014/01/30/general-elections-without-scotland-part-1-1945-2010/

(29) = Wikipedia – Glass Steagall Legislation, http://en.wikipedia.org/wiki/Glass%E2%80%93Steagall_Legislation

(30) = Bureau of Investigative Journalism 08 Feb 2011 ‘Tory Party funding from City doubles under Cameron’, http://www.thebureauinvestigates.com/2011/02/08/city-financing-of-the-conservative-party-doubles-under-cameron/

(31) = BBC 15 Jun 2011 ‘Banks must ring-fence retail operations, Osborne to say’, http://www.bbc.co.uk/news/business-13770746

(32) = Telegraph 21 Nov 2012 ‘Big banks are good for society, says George Osborne’, http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/9694634/Big-banks-are-good-for-society-says-George-Osborne.html

(33) = Wikipedia – Subsidiarity, http://en.wikipedia.org/wiki/Subsidiarity

(34) = The Scottish Government – Community Councils, http://www.scotland.gov.uk/Topics/Government/PublicServiceReform/CommunityCouncils

(35) = BBC News 27 Aug 2003 ‘Voting system change mooted’, http://news.bbc.co.uk/1/hi/scotland/3183401.stm

(36) = Electoral Reform Society – Additional Member System, http://www.electoral-reform.org.uk/additional-member-system/

(37) = Daily Record 05 May 2012 ‘Local council elections 2012: Fears over turnout as numbers system puts off voters’, http://www.dailyrecord.co.uk/news/politics/local-council-elections-2012-fears-877195

(38) = Dr Alastair Clark, LSE Blog, 2012 ‘Scottish local elections in 2012 show that voters have understood the STV system and are not put-off by it’, http://blogs.lse.ac.uk/politicsandpolicy/stv-scottish-local-elections-2012-clark/

(39) = The Scottish Parliament - Devolved and Reserved Matters, http://www.scottish.parliament.uk/visitandlearn/Education/18642.aspx