Why the Lib Dems need to block the RBS sell-off

I don’t feel that sorry for outgoing RBS boss Stephen Hester. Nobody with a licence to extract money from the economy – in this case for severance package worth £5.8m – really deserves much sympathy.

But he has had an impossible job. Does he follow the regulators' demands (reserves) or the Treasury’s demands (profits leading to early privatisation)? Or does he follow the political imperative (lending to small business)?

In fact, of course, the infrastructure making small business lending possible has been dismantled long ago, so that is impossible, but he can’t admit that in public – any more than his fellow bank CEOs, all with their own licences to extract money from the economy.

In practice, Hester has tried to do all three and so has displeased his masters at the Treasury. But what is really unacceptable is that the Treasury’s instructions have not been about facilitating recovery at all – how otherwise can we explain that small business lending has been lower for the banks in public ownership than the rest? It has been about early privatisation.

Nobody would have welcomed the 2008 banking collapse. But given that we ended up taking RBS into public ownership, it would be a tragedy if it was returned to the market in the same dysfunctional structure that it was in before.

Britain is crying out for a small banking infrastructure like our competitors. The unbalanced state of the economy demands it.  The coalition agreement promises to "foster diversity, promote mutuals and create a more competitive banking industry". How can the coalition justify returning the RBS monolith to the market without making it a useful and effective supporter of business recovery again?

The Commission for Banking Standards report is published today and will recommend breaking it up - though it isn't clear as I write what this means, and how far the report leans towards the Archbishop of Canterbury's view that the break-up must be into more useful regional banks.

The Treasury can go ahead with a sell-off and ignore the Commission if it wants to, but it can't ignore the Lib Dem half of the coalition.  It seems to me a clear cut case for the Lib Dems here: vetoing early privatisation until RBS can be returned to the market as a useful and effective lending infrastructure, which it manifestly isn't at the moment.

That alone would justify the party's involvement in the coalition.  The prize could not be more important: providing the UK with an effective lender to expanding business which is so urgently needs.

Choice works, so why not in legal aid?

This blog post is cross-posted from Lib Dem Voice: http://www.libdemvoice.org/choice-works-so-why-not-in-legal-aid-34893.html

Choice is a funny thing. I spent seven months studying how it worked in practice when I was running the Barriers to Choice Review for the Cabinet Office.

Despite the rhetoric from parts of the left, I believe that people can improve public services by being able to choose between different providers.

I’m also only too aware how many people are excluded from that – by a lack of information or advice, by a lack of transport and any number of other factors.

I am also aware of the political confusion around the term, when words like choice, competition and co-production, are often used interchangeably. As service users know very well, there are times when choice and competition are aligned, but there are also times when they cancel each other out.

This is so, for example, when the actual choice is made, not by patients, but by service commissioners choosing between two alternative candidates for block contracts. Or when the weight of demand is such – as it is for some popular schools or GP surgeries – that the choice is made by the institution, not by the user. In both cases, there is competition, but no user choice

But the basic concept is right. Nobody should have to put up with poor or patronising service - and people’s ability to choose does give the poor or marginalised the right to say no, and go elsewhere.

I also believe in the underlying purpose of choice in public services. It puts pressure on managers to be aware of what people want. It reminds staff that services are not designed for the convenience of professionals.

The systems set up over the past decade or so miss out a great deal, but holding the basic price steady, and letting service users choose, can improve services.

The evidence can be ambiguous on this point, but the basic argument is widely accepted inside and outside government – giving people some choice between providers is a safeguard for service quality and it often improves it.

But there is a peculiarity at the heart of this. It may even be a stark contradiction.

For some reason, successive governments which believe these things suddenly stop believing them when it comes to services for poor or desperate people.

Some services directed at the at the most disadvantaged people are notable by their almost complete absence of choice. If choice encourages responsibility, flexibility and better success rates in other areas of public services, then it is probably time some element of choice of providers was introduced also in drug and alcohol rehabilitation services, and in employment services.

None of these services are intended to be punishments – they are there to support people back to work or out of addictions – and they would benefit from the same kind of choices that users enjoy in other services.

Which brings us to the proposed changes to legal aid. If choice improves services in the health and education sector, and underpins the rights of individuals not to put up with careless or uncaring professionals, why does the same not apply to legal aid?

The proposed changes take choice away from individuals, and hand it over to the commissioners - the precise reverse of policy in social care, health and education.

Unfortunately, the Justice Department seems to have fallen for one of the other great mistakes of successive governments – that economies of scale will make services more efficient.

There is no evidence for this at all. What evidence there is suggests that where there are big providers, which owe nothing to the individuals they are supposed to be helping, then the diseconomies of scale – the small inefficiencies and miscarriages – very rapidly overtake the economies.

We will see. But I suspect the plans will not just decrease choice, they will also increase costs.

How to tell useful IT projects from useless ones

I’ve spent the last two days in a couple of seminars at the European Commission in Brussels about the future of work, and it was fascinating. I was there to talk about time banks across Europe and how they are developing, but I also heard about the developments in crowdfunding, crowdsourcing, micro-finance and online volunteering.

All this is developing extremely fast, and it was good to chat to Wingham Rowan, the founder of Slivers of Time – the website that allows people to work very flexibly for a few hours a week, when they can.

In this case, incidentally, they have been frustrated by benefit rules that want people either to be in jobs or not, but hopefully this conundrum can be broken by the new universal credit, which positively encourages people to work where and when they can.

It took a little while to strip away the heroic West Coast rhetoric about the internet being a brave new world, and to realise that – in nearly all these cases – they are making possible local interactions which had become too difficult before.

People wanting to work flexibly. People who want to raise local finance from friends and family for a business idea (and in practice crowdfunding usually is from friends and family). People who want to use their life skills to help out in a local health centre. All these are made possible by these innovations.

What they are not is internet-driven disappearances into virtual reality, where nobody meets. They enhance geography, they don’t try to make it irrelevant.

This is the truth about the internet, when it is used effectively. It can’t in the end subsume human needs for real face-to-face connection – that is a California fantasy. But it can make possible local institutions which had become impossible before.

In lots of ways, the internet brings back a world where a man in a van delivers groceries to your door (as they used to deliver to my grandparents’ door - Mr Botting, he was called).

It brings back a world where local people could pool local savings to create a friendly society to provide themselves with revolving loans.

Or it does potentially. We are not there yet on any scale.

And what gets in the way, apart from the wrong kind of regulation – or officials who want to describe and circumscribe precisely what these innovations are, so that they stop innovating – is the rhetoric of virtualisation.

It all goes wrong where the internet mega-corps think you can somehow measure digitally and replace vital human components like trust or love.  When they believe they can digitise human skills, and pretend that the complexity and care with which we deal with each other as human beings is somehow irrelevant.  

When public services fall for this stuff, the result is services which don't work very well - or which don't work for any non-standard cases which, as the systems thinker John Seddon points out, simply locks in costs.

So I feel a little justified in my continuing scepticism by my visit to Brussels, and finding that - where these internet innovations really work - it is by making local institutions possible, where people are more able to meet or work together.

So, for me, it is social innovation plus technology that matters. Not thinking machines that are supposed to keep an eye out for lonely old people – would you want to replace human interaction with a thinking machine? 

Instead, we have technology making it possible to gather money and people to that they can do something effective again.

You will get bizarre side-effects of this stuff. Online programmers in Bangalore mending your computer in Brighton, but that si just back-office work.  Or, more worryingly, Chinese factories paying semi-slave rates to do online gaming – creating online ‘gold’ that can be sold to rich American gamers (there are supposed to be 400,000 of these, and that was years ago, doing what is known as 'gold-farming').

But don't let's pretend this is a whole new work paradigm/  And don’t ever forget, the internet works most effectively when it makes real life, real geographical life, better – and begins, by the way, to replace our lost local financial institutions.

Toward the Setting Sun available briefly for free

It is no great secret that what I most want to do in life is write history books.  I've written about Richard the Lionheart's journey in disguise, about the strange hidden history of money, and I'm finishing a short ebook about the submarine passage of the Dardanelles in 1915.

Where someone like me can find a new angle on old stories, it seems to me, is by putting familiar stories in context.  When I published a book about the 'discovery' of America in the USA five years ago, that's what I did.

Who remembers, after all, that Columbus, Cabot and Vespucci were making their amazing voyages during the hegemony of the Borgias, while Leonardo and Michelangelo were at their height (Leonardo knew both Vespucci and Cabot), and during the brief reign of Savonarola - not to mention the rebellion of Perkin Warbeck, which nearly prevented Cabot's voyage in the first place.

When you do that, you find that the three great explorers all knew each other and were deeply involved in each other's lives.  It may be that Cabot began by working with the Columbus brothers.  We don't know.

But I'm glad to say that my book Toward the Setting Sun: Columbus, Cabot, Vespucci and the Race for America is now available in the UK as an ebook published by Endeavour Press.

In fact, for the next three days, the ebook is downloadable for free from this link:

http://www.amazon.co.uk/Toward-Setting-Sun-Columbus-ebook/dp/B00CP6VL2S/ref=sr_1_2?s=books&ie=UTF8&qid=1370942809&sr=1-2&keywords=boyle+toward+setting+sun

Globalisation isn't happening

I spent last weekend in the Derbyshire Dales where my mother was brought up, and it had a dreamlike quality which I had forgotten.

Wandering through Bakewell in the sunshine also reminded me of one of the fundamental truths of globalisation – we are living in what is paradoxically a decreasingly globalised world.

I don’t think this just because I spend more time in Paris, Brussels or New York than I do north of Watford. Or just that I go to Edinburgh, Leeds or Manchester but not the swathes of the nation in between.

I isn’t just because a rare visit to Middlesborough, or even Harrogate, feels like a different country to south London. Its voices, faces, language and culture seem different, perhaps because they are different.

No, I’m confirmed in the sense that globalisation is a fantasy by the results of the 2001 census which found that half of us in the UK, and rising, live within 30 minutes of where we were born.

That is also about needing to be near free childcare because both partners of most couples need to work now to pay the mortgage or rent. They need to be near their parents. But it isn’t globalisation.

What I did see in the well-dressing at Ashford-in-the-Water, where we stayed, was a ‘children’s well’ dressed to celebrate 30 years of the Disney Channel. Now, that is globalisation, and here is the difference: because globalisation is not the same as Liberal internationalism.

Globalisation is about brands monoculture and monopoly. Internationalism is about diversity.

Globalisation is about widening gaps between rich and poor, centre and periphery, urban and rural. Internationalism is about closing the gap.

Globalisation is about money. Internationalisation is about culture.

When Jean Monnet said that, if he had founded the European Union again, he would have based it on culture not trade – he was saying something very important about the differences between globalisation (or mondalisation as the French coined the phrase) and Liberal internationalism.

Where Liberals have been too forgiving to the EU, it is because they have muddled the two. Just because an institution claims to be international does not make it Liberal.

It seems to me that Liberals bring an insight to the debate about the difference between nationalism and self-determination.

The saving grace of the EU is that it draws the claws of the nationalists – who represent the opposite to Liberals in any ideology. It blurs national boundaries. It means that Scots or Catalans can determine their own affairs if they want to, within the overarching structures of the EU.

It means we can be diverse and look after our own affairs, if we want to, without being either absolutely in or absolutely out of the nation. That is the basis of the Anglo-Irish agreement too.

My great-aunt used to say that the only nationalism which English Liberals were prepared to smile upon was Irish nationalism, and there is some truth in this. But it means that, when I am in favour of Scottish independence, or even Yorkshire independence, within an international framework – as I am – it is because I am a Liberal not a nationalist.

And because I believe that small nations are a fundamentally peaceful and humane architecture for the world.

The great Liberal John Maynard Keynes set out the difference pretty clearly, it seems to me:

“I sympathise with those who would minimise, rather than those who would maximize economic entanglements among nations. Ideas, knowledge, science, hospitality, travel — these are things that of their nature should be international. But let goods be homespun wherever it is reasonable and conveniently possible, and above all, let finance be primarily national.”

Except for what he says about money, this is absolutely right. Money has to be all three.

That is the Liberal answer to globalisation, it seems to me. Ideas, knowledge, culture has to be the basis for internationalism. This isn’t a basis for outlawing international trade – quite the reverse – but it is a basis for relying on it a bit less.

All regimes try to develop poor people's parks

The stand-off in Ankara about the future of a public park that is about to be handed over to developers has been treated by the media for what it says about the Turkish government and its relations with ordinary people. What the story really demonstrates is the vital importance of green spaces in people's lives.

We are extraordinarily lucky in British cities with open green space, though the environments the poor have to live in are often unremittingly brutal - especially in the big cities and thanks to the architectural fantasies of the 1960s and 70s, a blot on the reputation of municipal housing.

What we forget is that, as in Ankara, it all has to be fought for.  I have commons all around where I live in South London, and every one of them has required campaigning defence and sometimes direct action - from tearing down the fences enclosing Sydenham Common in the 17th century to tearing down the fences enclosing Plumstead Common in the 19th century.

My own nearest park is Norwood Grove, which twice had to be defended from developers - in 1913 and 1924 - until it was bought by public subscription.  It is a major civilising influence on the area (though I expect some economists would complain that building on it would create economic growth).

So the defence of a park in Ankara may not actually mean that the regime is particularly brutal (though the police clearly are).  All regimes try to develop the parks used by poor people.  What it does show is that Turkey is politically mature enough for people to hang on to their park  for dear life.

What worries me is that we haven't learned the latest lessons of green space in UK policy either.  We already know from there that mental health problems are enormously higher in high-density concrete estates without grass or trees. But it is now also clear from research that:

• 71 per cent in one Mind survey reported lower levels of depression after walking in a country park (22 per cent found an equivalent walk through a shopping centre made them more depressed).
• 24 per cent fewer sick visits among prisoners in Michigan in cells that overlooked farmland and trees.
• Shorter hospital stays, fewer painkillers, less medication for Pennsylvania patients when they had views of trees.

These are important findings, and the Netherlands now has 600 ‘care farms’ in the countryside to tackle depression, integrated into their health service (we have 42). They imply that human beings have a basic need for green, natural space and trees.

One study in Seattle even found that turnover in shops were higher when there were trees in the shopping street, so there are direct economic links as well.

All this also implies that the green movement, in the UK at least, is partly responsible for the rise in mental illness. Green campaigners have been at the forefront of calling for high density cities, and high density flats, over the past two decades, and high densities necessarily means less greenery.

The hideous results – at least for those who have to live in them – are all too obvious, just as they were two generations ago when environmentalists and architects last ganged up to raise urban densities. Then as now, it was the poor that suffered – without any obvious reduction in traffic either.

But the third implication is more urgent. There is a political opportunity here, because there is – hidden in this research – a note of hope. We can have an impact on the epidemic of depression that is undermining our society but not if we reserve the dullest, concrete environments from the people they are most likely to damage.

Would Heathrow ever stop expanding?

It really is extraordinary that more homes, families and villages are being blighted by yet another plan for a third runway from Heathrow's stubborn bosses, to boost their shopping centre with airport attached.

No doubt it will be accompanied by another of those dubious economic studies which add up all the potential benefits of more flights to China, but don't subtract the costs of all he disbenefits of the extra flights, from noise and carbon emissions, and to health.

The future of Heathrow currently divides the Conservative Party, but there is at heart a more fundamental argument about whether we really make progress by increasing the number of economic exchanges in the economy - the meaning of 'growth' - or whether somebody has to exercise some kind of judgement about what is good 'growth' and what is simply destructive.

Sometimes, you just have to subtract - there are disbenefits.  The apotheosis of growth over everything that can't be put into a cost-benefit calculation is, in the end, a corrosion of the language.  If we pedal this kind of idea, one day we may be unable to express the reason for our unease as they chop down the forests, demolish the parks and villages, in the name of growth.  We will only be able to look at a forest and see the potential paper - just as airport operators can only look at a village and see a potential runway.

All this reminded me of the crazy story of the biggest cost-benefit analysis ever undertaken, to choose the site for a Third London Airport in 1969.

The government had rejected the preferred site at Stansted in Essex, and for the next two and a half years the commission chaired by the senior judge, Mr Justice Roskill, combed the evidence. To make sure there was a choice of sites, the think-tank the Town and Country Planning Association put in their own planning application to build an airport at Foulness, on marshland off the Essex coast much-frequented by Brent Geese - an early version of Boris Airport.

The Roskill Commission was determined to work out the answer mathematically. They would do a cost benefit analysis on all the possible sites - the biggest analysis of its kind ever carried out. They would put a value on the noise of aircraft, the disruption of building work, the delay of flights, the extra traffic and they would calculate the answer. 

For the Roskill Commission, there was going to be no value judgement at all. The figures would speak for themselves.  And there was the mistake.

To avoid any chance of judgement and to keep the process completely ‘scientific', the measurements were put together in 25 separate calculations. They were only added up right at the end of the process. And to the horror of some of the members of the commission, when the final addition was made, the answer was wrong.

The site they felt was best - Foulness - was going to be £100 million more expensive in cost benefit terms than the small village of Cublington. After 246 witnesses, 3,850 documents, seven technical annexes and 10 million spoken words, some of the planners on the commission felt cheated.

In public, they stayed loyal to Roskill. The commission was excellent, said Britain's most famous planner Colin Buchanan - a member of it – “it just got the small matter of the site wrong".

The team had managed to measure the exact cost of having too much aircraft noise by looking at the effect noise tended to have on house prices. But when it came to measuring the value of a Norman church at Stewkley, which would have to be demolished to make way for the runway, things got more confused.

How could you possibly put a money price on that? One joker on the team suggested they find out its fire insurance value. Everyone laughed, but the story got out and reached the press. Doing it like that would measure the value of the church at just £51,000.

A fierce political debate erupted. Commission members were accused of being 'philistines'.  John Adams, from the University College geography department, drew up an alternative plan. Using similar cost-benefit methods, he showed that the cheapest option would be to build the airport in Hyde Park – but that Westminster Abbey would have to be demolished.

The satire didn’t work: the Sunday Times published a letter from a retired air vice marshal congratulating him for recommending Hyde Park for an airport, and pointing out that he had proposed exactly the same thing in 1946.

And there is the point.  If you believe you can really sum everything up in terms of price, you have gone beyond satire.