Monday, 25 March 2013

Stephen the Terrible-The Liberal Commission 1970-71

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Arriving in December 1970 (on foolscap paper) the call for evidence from the Terrell Commission on relations between the Party and the Young Liberal Movement. It takes you back. A colleague of mine was moving office and found the letter behind a bookcase.

I'm not sure who wrote the wikipedia entry on NLYL ( I shall refrain from guessing who wrote it, but I would note that in parts it gives undue prominence to a few obscure people) but the bit about the Terrell Commission if fairly accurate:

The party leadership were very unhappy about the antics of their youth wing, and party leader Jeremy Thorpe set up a three-man commission which produced the Terrell Report. The report accused some of the Young Liberals of being communists. Many Young Liberals described themselves as "libertarian socialists". Peter Hain explained:
"Underlying libertarian socialism is a different and distinct notion of politics which rests on the belief that it is only through interaction with others in political activity and civic action that individuals will fully realise their humanity. Democracy should therefore extend not simply to government but throughout society: in industry, in the neighbourhood or in any arrangement by which people organise their lives."
Thorpe went on to try to stop the election of Peter Hain as chair of the Young Liberals.
At the same time as being active on foreign policy, a group of Young Liberals led by Bernard GreavesTony Greaves (later to become a Liberal Democrat peer), Gordon Lishman and David Penhaligon (later to become a Liberal MP) developed the combination of a radical YL approach and involvement in their communities. The Young Liberals put forward an amendment to the party's strategy at the Liberal Party Conference in Eastbourne in 1970 which was passed with little enthusiasm from the Party leadership. The amendment defined the new strategy as:
"a dual approach to politics, acting both inside and outside the institutions of the political establishment to help organise people in their communities to take and use power to build a Liberal power-base in the major cities of this country to identify with the under-privileged in this country and the world to capture people's imagination as a credible political movement, with local roots and local successes."

I well remember being invited to meet Terrell -who was the PPC for Eastborne-in the Spring of 1971 in the basement of the Regent Hotel. I understand that the Regent is now a Travel Lodge but in those days it still had pretensions to being 'grand' . The young Queen Victoria stayed there and by mid C19th standards with 100 bedrooms it was a big hotel. It was the place to stay when fashionable  'society people' came to Leamington to take the waters. In 1971 it showed signs of wear and was in need of new investment. Terrell struck me as that sort of Liberal. 

The 1971 Assembly at Scarborough Terrell presented his report complete with derogatory comments and unsubstantiated smears. It was a thoroughly unpleasant few days. Interestingly none of the modern histories of the Party that I have even mention it as a footnote. Much more fun was the NLYL conference held at Easter 1971 in Plymouth. As wiki mention Thorpe tried to stop Hain becoming Chair. The farcical process unravelled at the conference when Thorpe tried to rig the elections enrolling vast numbers of fictitious members from Devon. I might get this wrong but my memory was that there was a YL Commission of Inquiry led by Stuart Mole. I distinctly remember him revealing the identity of the North Devon members who turned out to be farm animals and the like.

Hain stood again at the Morecombe NLYL conference in 1971 when he was returned with a big majority despite the antic of a small fringe group -including one Richard Kemp lately of Liverpool but then a railway worker from Leyland. Again the conference was at Easter time. Morecombe and Heysham Corporation had a bye law that forbade dancing on Good Friday -which coincided with the |Civic Reception. Few people took much notice especially as Bernard Greaves had successfully moved motion that same sex dancing should be encouraged so that gay delegates felt welcome. Hain looked most uncomfortable especially when Bernard suggested in his speech that he would be asking him to dance!  It is difficult to recall just how hostile society at large was to gay people. The Young Liberal Movement was well in advance of public opinion in promoting gay rights and under Steel's Leadership the party followed 

Thursday, 21 March 2013

Why were there not more revolting Lib Dem Peers on Beecroft style employee ownership

If there is one economic/industrial policy that defines our party surely it is employee ownership. From JS Mill to the Yellow Book, Ownership for All, Jo Grimond and on to Paddy Ashdown the central belief that those who work in an enterprise should share in its ownership and control is a constant. Nothing undermines that idea more that the barking idea promoted by Osborne that employees should swap their rights for shares and  thus introduce Beecroft style management via the backdoor. It tarnishes the image of employee ownership. The good news the daft idea was defeated in the Lords last night.

A petition has now been launched to try and persuade Osborne to drop the idea. Please sign up here

The bad news was that far too few Lib Dem Peers joined the rebellion. One exception was Sal Brinton who made an excellent contribution. Her speech can be found here half way down Col 605

I remain bemused with the basic philosophy behind the clause. We are told that the scheme is aimed at small businesses that want to grow fast and motivate their workforces. We have heard that employees will take a significant reduction in their employment rights and face tax and NI demands on the free shares that they have been given over £2,000 as they receive them.

I assume that the minimum of £2,000 is for ordinary shares, but given the interchange on the previous amendment I am not convinced that they would necessarily be ordinary shares. In a number of years, possibly with a following wind, they might increase in value, although the House should note that the majority of micro- and small companies do not make large returns for their shareholders in the early years. That rarely takes less than eight years or a decade. Worse than that, while the employee currently in a firm can choose not to take part, the applicant on jobseeker's allowance would have no such luxury-a point clarified in the letter from the Minister on 13 March. Either a scheme is voluntary or it is not. It is clearly not for those on jobseeker's allowance. This provision is supposed to encourage growth. We need to go back a step to the coalition agreement's commitment to growth. With such a key strategy in mind to help SMEs, we should do all that is within our power to assist them. Clause 27 would do the opposite. If an employee has the choice between a company that offers the usual employee benefits and another that exchanges these rights for shares in the company, the evidence suggests that employees would rather maintain their benefits, especially in the current recessionary climate. That was corroborated by my own experience speaking with employees working for high-tech SMEs who are bemused that they would want to demotivate their staff during the very difficult early days of a company when it is developing products and just beginning to enter the marketplace and unlikely to be making a profit, let alone anything that they could distribute to shareholders.

Directors have told me that this does not set the relationship off on the right footing. Morale is important because while the shares in an SME are unlikely to yield high returns in the first few years, if any at all-most do not become the superstars implied by the capital gains tax mentioned in the Bill-after a company is founded, especially during this period of low consumption and investment, it has to find ways of motivating employees to help get the business off the ground. It might offer flexible working hours and shares without links to a cut in employment rights. The founders of such firms have been offering shares without any removal of rights for years, and it works. Why would they take up a proposal that destabilises the employee and the company?

Additionally, should the question of unfair dismissal arise, the cost to a company could overwhelm it. Both the Law Society and the Solicitors' Journal have expressed concerns about this. Clause 27 eliminates the use of unfair dismissal tribunals which help SMEs by placing a cap on the costs of discrimination claims. Without the benefit of these tribunals, the courts could become clogged with costly discrimination suits that may drain the funds of the very businesses we are trying to support. The clause is then doubly debilitating. It removes employment rights that protect the employee from discrimination and at the same time it leaves SMEs vulnerable to very expensive discrimination claims, should an employee feel the sting of the loss of basic rights like statutory redundancy pay and rights to training and flexible working. The example given by the noble Lord, Lord Forsyth, in the previous amendment of an employee being sent up the blind alley of having to accept terms that mean that they would be forced into redundancy, but the contract saying that the shares would be lost if the employee was made redundant, absolutely exemplifies the point. I believe that a court would want to hear this argument and I do not believe that it is what the Bill intends.

Tuesday, 19 March 2013

Pugh on local government boundaries

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You don't have to be a Sandgrounder to decode this question:

John Pugh (Southport, Liberal Democrat)
To ask the Secretary of State for Communities and Local Government what his policy is on the alteration of local authority boundaries in order better to deliver the localism agenda.

Brandon Lewis (Great Yarmouth, Conservative)
The Government believes that it is preferable for local authorities not to be distracted by boundary changes, but to focus on combining and sharing operations across boundaries on both front line service delivery and back office. Where all councils concerned believe a boundary change would be of genuine benefit, the Government will not stand in the way of their pursuing this, providing there is clear evidence of public support and the changes unambiguously would lead to greater value for money.

Thursday, 14 March 2013

Schools being bullied into Acadamy status Pugh debate

Southport's MP has been taking up the cudgels on behalf of schools who are being 'bullied' to become Academies. The full debate is here scroll down to 2.30pm at Col 31WH after the debate on where to bury the remains of Richard III (me I favour Liecester Cathedral)

I was trying to determine the basis for the psychic gifts that enabled the Secretary of State to anticipate how many schools will become academies by a certain date. I concluded that he probably does not have psychic gifts; he has a gift for irony, as the matter will probably not be left to choice anyway. Throughout the land, brokers are appearing in schools when the opportunity arises to hasten things on and ensure that the targets are met. They show up when a school suffers even a temporary decline in standards. A recent article in The Guardian by George Monbiot—not a man I ordinarily agree or see eye to eye with—compared them to mediaeval tax collectors. I happen to think that mediaeval tax collectors performed an important social function; I do not necessarily feel the same way about brokers.

Brokers appear to come to governing bodies with threats and an academy contract in hand. The threats are, “Sign the contract, or you, the governors, and possibly the head teacher, will be replaced”, or “Choose a sponsor, or if you don’t we’ll choose one for you, which we may do anyway.”

There is a hurry to get on with things. Schools are basically told, “Get on with academisation now, or we will do it for you anyway.” They are also told—this surprises me—“Don’t tell the parents or the staff until it actually happens. Consult with them afterwards.” To sweeten the pill, cash is sometimes promised, in the form of a changeover fund to accommodate change. Relief from inspection or the school’s current status is also promised: whatever pressure Ofsted or the LEA apply will disappear when academy status is established. More worryingly, I have evidence that sponsors have been recommended, particularly school chains, with whom individual brokers have prior connections.

Tuesday, 12 March 2013

David Boyle and the importance of Beveridge's final Report

My thanks to Lord Bonkers for drawing my attention to David Boyle's posting written after he had appeared on Radio 4's Start the Week with Ken Loach. I guess David Boyle was there to plug his new book but the programme was centred around Loach's film on 1945.

I have regularly referred to Beveridge's final report on Voluntary Action and it's critique of the 'socialist ' solutions in 1945 and it is good to see Boyle take up the point.We should add that Beveridge was educated in Birkdale and supported the Southport Liberal candidate in the '45 election  

David says on his blog:

Since watching the film last week, I have been struggling to articulate what I felt was wrong with the Attlee government and the post-war settlement that is given such heroic and emotional support in Ken Loach's film.  The best I can come up with is this: those huge institutions created by Labour to slay Beveridge's Five Giants were not up to the job.

Oh yes, they slayed the giants, but the giants came back to life again - and still come back to life again every generation, and have to be slayed over and over again, and it costs that much more each time.  That was not how they were designed and not what was expected - Beveridge expected the NHS and welfare state to get cheaper to run over time, not more expensive.

The trouble was that these institutions also disempowered people.  They had their own agendas, their own elites and - more recently - their own dysfunctional targets hollowing them out.  Beveridge warned that this would be the case as well, in his report Voluntary Action, and he was ignored.

Full posting here

Thursday, 7 March 2013

Liberal Hero of the week

Stephen Tall nominates some unexpected folk to be his 'Liberal hero of the week'. Robert Oakeshott is surely well qualified.

A central theme of  the Liberal Party was the need to reform capitalism and in particular to change Company Law to give employees a place by right on the Board and a proper share of the surplus an enterprise created. This policy of co-ownership -a lite version of which was adopted by the Lib Dems at Brighton the last time we met there-was the flagship policy of the Grimond era.

One of the most prominent advocate of that policy was Robert Oakeshott. Along with Jo Grimond he established what is today the Employee Ownership Association (EOA). Oakeshott died last year and the EOA and launching the inaugural Oakeshott lecture and as their CEO says in his blog this week:

 Robert Oakeshott. Nobody made a bigger contribution to the popularity of employee ownership in the UK and overseas than Robert did when he was alive. I am very proud to say that, in tribute to his legacy, the EOA with a range of partners including Robert’s family has established an annual Oakeshott Lecture. The inaugural Lecture will be held later this month, delivered to an invited audience by the Deputy prime Minister.

David Erdal -whose book Beyond the Corporation is in the 'must read' category for Liberal and who contributed to the recent Lib Dem policy commission on Mutuals/co-ownership etc- wrote this appreciation of Oakeshott:

“Robert Oakeshott was a pioneering observer and interpreter of employee ownership. His first major work, The Case for Workers’ Co-ops, introduced Spain’s giant Mondragon co-operative to the wider world; his last was the magisterial Jobs and Fairness. As well as being an original and deeply intelligent thinker, Robert was a pioneering leader in practice. His response to the 1956 uprising in Hungary was to lead a delegation of student-friends to Budapest to support it.

In the early 70s he left the Financial Times, turning down a plum posting in Paris, to devote himself for years to co-operative education in Botswana. Back home, he founded a building co-operative, Sunderlandia, to put his ideas into practice. In the early 1990s he travelled widely in the Soviet bloc, advising on employee buyouts. Legislation in the UK and elsewhere bears his stamp.

His unmatched range of friends included senior academics, civil servants, bankers and politicians, such as the late Jo Grimond, Liberal Party leader and the first chairman of the EOA’s predecessor, Job Ownership, which Robert founded in 1979. It also included ordinary working people, no less his friends, all over the world.

Not mention above was he was the Liberal candidate in the Darlington by election. He and Grimond visited the Mondragon co-ops in the 70's and both wrote books about the lessons they had learnt. Grimond's was The Common Welfare.

At a time when the highest priority should be given to reforming our capitalist system the lessons that Oakeshott and Grimond gleaned are very relevant and deserve to be better known. John Crudus and others -realising the the Labour Party's long and fruitless flirtation with state-ownership is over -are looking at this Radical tradition. That is welcome, but just as they discover it , it would be perverse if we who have championed it for so long downgraded our commitment.

When Grimond talked of the re-alignment of the left he often identified this policy area as one where co-operation should be possible. If we are to avoid another Conservative century we must again turn our attention to this policy.

Tuesday, 5 March 2013

Urgent need for a Liberal plan more radical than plan B

I am please to have signed the Emergency motion on the economy tabled for this weekends conference. Prateek Buck has drafted the motion. Prateek is author of the Social Liberal Forum's Plan C which-along with Will Hutton's foreword is available here

The motion speaks of the failure of the banks to lend to businesses and people-especially RBS and Lloyds. Yesterday Lord Oakeshott tweeted:

matthew oakeshott

Furness Building Soc was bigger net lender to homes and biz than RBS,Lloyds or Santander"State-owned banks are stabbing biz in back

That is a pretty amazing statistic. One small northern mutual Building Society is massively out performing the mega banks-and I bet nobody at Furness got as 7 figure bonus. It does raise two important issues for me; the diffusion of economic power (including what to do with the state-owned banks) and the consequence of having our financial institutions owned predominately by PLC's.

Liberals have never been comfortable with concentrations of power and wealth. Unlike the Labour Party whose activists default position is to concentrate more and more power in the state through nationalisation or the Tories who are naturally the friend of big corporate businesses-mind you that is also true of the Labour leadership, we have sought to diffuse ownership/wealth. That is why we have championed employee ownership of businesses, wealth taxes and inheritance tax. Today alternative institutions for  financial services are much diminished.

The market place is dominated by one form of ownership-the PLC. It is not original for Liberals to assert that that model is flawed. The sole obligation of the directors is to build 'shareholder value'. This leads to excessive risk taking and a concentration on short term activities. There is no obligation to build a sustainable business or to have a care for the employees or the community. Perfectly good and sustainable businesses are wrecked in the pursuit of increasing shareholder value.

Liberal have sought over the years to reform the ownership model. For nigh on a hundred years the party has argued for employees to be involved in the ownership and control of their enterprises. It is an idea that goes back to J S Mill. It was part of the Yellow Book proposals in 1928, developed further in Ownership For All ten year later and received a major boost under Jo Grimond's leadership who adopted the idea as his flagship policy. Even after his retirement as Leader Jo carried on his campaign and after visiting the Mondragon Co-ops along with Robert Oakeshott  (Liberal by election candidate in Darlington) set up what is today the Employee Ownership Association (EOA). In announcing the launch of  EOA's new annual Oakeshott lecture their CEO Ian Hasdell writing on his blog echoes that analysis:

Economic ownership remains one of the fundamental macroeconomic issues yet to be addressed since the economic crash. Business ownership and wealth in the UK has become, as the recent report of the Ownership Commission testifies, incredibly concentrated amongst a small number of individuals and institutions with the plc model for businesses being over-dominant. 50% of the people in the UK own just 1% of the wealth, with the wealthiest 20% owning a huge 84% of the wealth. This unequal nature of economic ownership in the UK will, if unaltered, continue to have major negative social consequences and costs. There is, therefore, a burning need in the UK to help nurture and achieve greater diversification of ownership of wealth and business.

This is true not just of manufacturing firms. The dominance of the PLC amongst banks is also unhealthy. This was not always the case. The mutual financial sector was destroyed in an extended crazed act of economic vandalism under Mrs Thatcher and Blair. The TSB, and Building Societies turned themselves into PLC's and joined the frenzied march toward the financial crash. Those Building Societies that stayed loyal to their origins-like the Furness-and had as the guiding objective to provide services for their members have flourished. Sadly there are too few of them.

In launching a pamphlet recently Vince Cable highlighted the role that Building Societies had in reviving the economy after the economic crash of the 1920's and 1930's:

...........for households deemed to be prudent, almost 1,000 locally based British building societies were dependable, non-profit, mortgage lenders. A virtuous circle was created: more mortgage demand leading to more house building leading to more houses; leading to lower prices and greater affordability; leading to more demand.

Houses built by the private sector rocketed from around 130,000 in 1931 to almost 300,000 in 1934 and it is estimated that house building contributed almost a third of all employment increases in this period.

By contrast we are now in a downward, opposite spiral. A key reason is the destruction of the British building society movement – or much of it – in the two decades after the late 1980s. This was one of the great acts of economic vandalism in modern times. And the commercial banks largely abandoned locally based relationship banking in the decade before the recent financial crisis. There is now no institutional structure in place to offer countercyclical lending, particularly small and medium sized businesses, in place of the banks. A major and urgent task of government today is to ensure that we have banks that meet that requirement, alongside counter cyclical regulations and liquidity measures of the kind set out at last Thursday’s Mansion House speeches. We now look enviously at Germany where the Sparkasse and KFW underpin a business and mortgage lending system which works.

A key element of reviving our economy is to create locally based financial institutions that know their regions and will lend to local people and businesses. The worker owned mutual bank established in Mondragon are an essential element in the growth of the worker co-operatives there. Grimond was much impressed by them Today the only avenue for action is via the sate-Green Banks and Business Banks. I have long thought that when the government come to disposing of the state owned banks they could do a lot worse than to break them up into new mutually owned regional institution. The purchase price could be recouped over a period. Establishing them as PLC owned banks would appear to me not to learn the lessons of the crash. This is why I am not attracted to the idea of handing out shares. A mutually owned bank would be permanently an alternative to the plc . Handing out shares would be a short term measure and would soon result in those shares being bought up by the usual shyster City institutions

Prateek's motion doesn't deal directly with this issue but it does address the issue of the lack of lending and the central role of  house building in kick starting the economy.

Emergency motion: kickstarting economic growth

Conference is concerned that the latest published figures show:

■low growth, as confirmed on February 27th 2013;

■negative net bank lending (especially by RBS and Lloyds), as confirmed on March 4th 2013;

■and weak manufacturing confidence as announced on March 4th 2013;

while real incomes are being squeezed for the fourth year in a row, with retail prices rising at 3.3% pa, more than twice as fast as average earnings at 1.4% as announced on February 12th 2013.

While noting positive trends in employment and company start-ups, conference believes our economy continues to suffer in the wake of the disastrous banking crisis from a serious shortage of confidence and domestic demand, and therefore calls on Lib Dem ministers to show unity and resolve not only to reduce the structural deficit in the budget but to take radical action to get growth going again with a bold Plan A+ with these four pillars:

1. Get the builders building.

2. Get the banks lending to business.

3. Prevent a slash and burn approach to public spending.

4. Bring in the mansion tax.

Conference calls for:

a. Loosening the straight jacket preventing public capital investment by government and councils and realising a once in a lifetime opportunity to invest using low interest rates

b. A firm commitment to increase house building by at least 100,000 houses a year by 2015 including at least 50,000 more social homes by freeing councils and housing associations to borrow and build.

c. Urgent action to step up lending to SMEs through the imposition of net lending targets on semi state owned banks as in the Coalition Agreement, considering whether it is necessary to split the major British banks in to good and bad banks, and further development of the Business Bank and Green Investment Bank.

d. Resisting pressures to agree to curbs on public spending beyond the lifetime of this parliament when this Coalition Government will be over

e. Shifting the tax burden from hard earned income to wealth with a Mansion Tax of 1% a year on a property’s excess value over £2m to help lift the income tax threshold to £10,000