A very disturbing picture of the next few turbulent years in the first piece here by d’Ancona.
The second piece started with a good idea but forgot to come to any practical conclusion. If there’s one thing that bureaucrats are past masters of it is ‘covering their own backs’. The policy needs a few heads to roll - preferably without them ever getting to court. They should have severe financial penalties attached. This just might ‘encourager les autres”.
The public is completely blinkered on the subject of banks. They made little complaint as they spent their way through a whole decade on the backs of the apparent profits that these self-same bankers were believed to be creating. Let's not be hypocritical!
Christina
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SUNDAY TELEGRAPH 19.7.09
1. Whatever David Cameron does as PM, he will cause pain and anger
The row over military spending is a taste of what lies ahead for the Tory leader, says Matthew d'Ancona.
For a taste of what the Cameron era will be like, behold the row over defence spending of the past week. The demands made by General Sir Richard Dannatt, the head of the Army, for "more boots on the ground" in Afghanistan; the consequent Labour whispering campaign against Dannatt; the attacks upon Bob Ainsworth, the tragic-looking new Defence Secretary, over the £1.4 billion cut in the military helicopter budget; a surly confrontation between Gordon Brown and the Commons Liaison Committee on Thursday over defence resources: all these are familiar spin 'n' spending rows of the sort that have characterised the New Labour years. But there is another, more productive way to survey this fractious debate: as a parable of what lies ahead, a case study of what might be called the great Cameron Conundrum.
Me? I'm a hawk, in case you haven't noticed from previous writings on these pages. I believe – sorry – that the free world is indeed engaged in a struggle with a militant Islamism that thinks globally and acts locally. The Taliban, against whom our soldiers fight so valiantly in Helmand province, could not be more different from Andrew Ibrahim, the Muslim convert found guilty last week of planning a suicide attack on a shopping centre in Bristol; or more similar. They are linked by an ideological artery that connects them to Hamas and Hizbollah, to the LeT cadres responsible for the Mumbai atrocities in November and Jemaah Islamiah, the al-Qaeda affiliate responsible for the Bali bombings. These groups are decentralised, but not wholly disaggregated: they represent a global franchise. At present, and for the foreseeable future, Afghanistan is the front line in that global conflict.
So when Lord Guthrie, the former Chief of the Defence Staff, says "of course they need more helicopters. If there had been more, it is very likely that fewer soldiers would have been killed by roadside bombs", I am inclined to agree. As CDS, Guthrie was permanently and rightly outraged by Chancellor Brown's scepticism about defence spending.
[sent the next paragraph out earlier in another posting -cs] "You don't think I understand defence, do you?' Brown asked Guthrie. "No, I bloody well don't," replied the general. When General Dannatt tells the Today programme that we need "a short term uplift" of troop numbers – decorously avoiding the Iraq-contaminated word "surge" – I applaud him. I lament Mr Brown's lack of foresight and hope that David Cameron will increase the defence budget substantially. But that's me. That's my priority, my placard waved in front of the prime minister-in-waiting. And the problem is that every single strand of public spending has a vociferous lobby demanding not only its retention at existing levels but its significant increase. The placard-waving takes different forms in different sectors. The champions of each line in the ledger have their own emotional, traditional or polemical ploys. [But all these lobby groups will have a rude awakening unless our finances are sorted out first - See “ Britain on the way to being a third world country” and “ An object lesson for us in Britain” sent earlier -cs]
In education, it is the claim that scant resources are jeopardising "our children's futures". In welfare, it is the prospect that any cuts or new conditions for the receipt of benefits, will plunge Britain back into a Dickensian horror in which poor wee tots are sent up chimneys to scrape a living. The NHS is so sacred and inviolable that Cameron has not even dared to broach the subject of cuts, pledging instead to ring-fence the £100 billion budget and even to increase it in real terms after 2011. But he appears to have removed the ring-fence from Sure Start, the network of 3,000 centres which provide care for children in their early years. Just consider the headlines and the images: tearful mums and kids outside a derelict building with a "Closed" sign on the door, celebrities queuing up to "Save our Centre", placards of Dave wielding scissors under the slogan "Stop Cutter Cameron!"
The Tory leader's greatest talent is probably a capacity to learn and, boy, has he needed that talent in the past three and a half years. When he took the helm, he assumed that he would, as PM, inherit a reasonable level of growth and that the point of differentiation between the parties would be the distinctive ways in which Labour and the Conservatives spent the "proceeds of growth". As part of his "decontamination" strategy, to prove that public services were safe in Tory hands and that the new breed of Conservatives were indeed "compassionate", Cameron ring-fenced the NHS and international development budgets.
Now, that age of growth seems a distant and delusional memory, and the Tories know that they will inherit public debt on a quite prodigious scale. Their task will not be the pleasant one of deciding how to spend the Treasury bounty, but the nastier question of how to raise taxes and to cut expenditure, while maintaining social stability in a nation already disgusted with the financial sector and the political system.
Which brings me back to the Cameron Conundrum and his capacity to learn. He has had to learn to be a completely different sort of leader, shifting from the call in his first party conference speech to "let sunshine win the day" to warning in April at the Tory spring forum of an "age of austerity".
He is stuck, for now, with the ring-fencing of NHS spending and the international development budget. There will always be ferocious opponents of overseas aid and the party's commitment to spend 0.7 per cent of GDP on international development by 2013 – although I would urge them to read Jeffrey Sachs's The End of Poverty and see how much can be done in sub-Saharan Africa with shamingly small sums (Sachs is an adviser to George Osborne). The greater question is whether the ring-fencing of the NHS budget will be long sustainable in this austere age: whether, indeed, anything much can be ring-fenced in such times.
Mr Cameron's favourite soundbite is his promise of a "post-bureaucratic age". If this means anything, it must mean a decentralisation of government and public services in which value for taxpayer's money is achieved by choice, competitive tendering, out-sourcing and the reduction of bureaucratic fiat in spending decisions. It also means an absolutely fundamental shift in political practice: away from the assumption that more money is always the answer, or even usually so. But that assumption is hard-wired into the British psyche, in spite of the 11-year Thatcher Revolution and plentiful evidence that ever-greater public expenditure compounds as many problems as it solves. It will take years and many tears to shift.
I, of course, believe that well-targeted expenditure on defence is an exception, and that we urgently need more money to be spent on our troops in Afghanistan. But I would say that, wouldn't I? Prime minister Cameron will have no such luxury. Whatever he does, he will cause pain, anger and recrimination. That was the true portent of last week's row over helicopters and troops. It was, as the laureate of Afghan campaigns would say, no end of a lesson.
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Matthew d'Ancona is Editor of 'The Spectator
2. Make bankers and bureaucrats pay for their mistakes
When people are encouraged to behave irresponsibly with money in any sector, disaster ensues, observes Alasdair Palmer.
Bankers and government bureaucrats seem to have little in common. The sedate atmosphere pervading public sector offices is about as far away as it is possible to get from the trading floors of investment banks, and their wild, and wildly over-rewarded, denizens. But appearances are deceptive, for the two share something very basic that accounts for the poor performance characteristic of both sectors: a lack of liability for the mistakes they make.
As last week's Walker Report into the finance industry noted, bankers get rewarded for the risks they take, and the bigger the risks, the bigger their rewards. They do not get penalised when those risks turn sour, unless the resulting disaster is so huge that it kills off the whole firm – and even then, they can still walk away with vast rewards. Sir Fred Goodwin, the former chief executive of RBS, is the most notorious example of a trend widespread across the whole industry. When their gambles pay off, the bankers make huge fortunes. When they don't – the bankers also make huge fortunes. No wonder they take stupid risks.
Bureaucrats in the public sector behave irresponsibly in a different way. They don't fritter away public money by gambling with it. They waste it by not properly considering, or even accounting for, how it is spent. There were two splendid examples of that pervasive trend last week. The National Audit Office [NAO] noted that pensions had been over-paid to at least 85,000 former public servants, at a cost of more than £90 million to the public purse – essentially because no one was identified as personally responsible for ensuring that the right amounts were paid.
Then there was the revelation that the Learning and Skills Council [LSC], a quango responsible for allocating taxpayers' money dedicated to refurbishing further education colleges, had promised those colleges twice as much money as it actually had, with the result that many colleges had initiated expensive building projects, demolishing some of their existing buildings, only to discover that the money they had been promised did not exist. This incompetence has already cost taxpayers £400 million, with a lot more to follow. A select committee that looked into what went wrong found that there was "a total failure (by the LSC) to apply common sense about the scale of the commitments being made". Mark Hayson, the chief executive of the LSC, was on nearly £200,000 a year. He had 13 senior managers working under him who were paid between £120,000 and £145,000 a year. Mr Hayson resigned in March. Just like Sir Fred Goodwin, he was rewarded for his mistakes, albeit on a less gargantuan scale: he left with his pension intact and was given £100,000 as a pay-off.
Limited liability was a great invention of the 19th century, because it made it possible for people to invest in companies without risking personal ruin. But limited liability has been replaced, in banking as in the management of public funds, by no liability – and that has encouraged both bankers and bureaucrats to behave in a chronically irresponsible fashion with the money they are trusted to manage. If we want to avoid future meltdowns in the finance sector, and also to ensure that most of our taxes are not simply wasted, we need to hold bankers and bureaucrats responsible for what they do, and they need to know it. And that means that we have to introduce a means of ensuring that their mistakes don't just cost other people: there is also a cost to those directly responsible for them.
The Government has commissioned a lot of reports from bankers on ways to stop other bankers from destroying the economy, just as there have been many reports from bureaucrats on how to prevent bureaucratic incompetence from bankrupting the public sector. But so far, not one has recognised that the only reform that will have any lasting impact is one that ensures bureaucrats and bankers have some degree of personal liability for their mistakes. Now why, I wonder, is that?
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