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Bank bonuses

bonusRisks

I last wrote about bonuses and bankers’ pay more than six years ago. In the second half of the article I remarked in passing that:

It makes no difference whether high remuneration is paid as a bonus or as regular pay. It would be relatively straightforward to remove all bonuses without affecting the amount anyone was paid. That would certainly not help. Indeed the whole point of “bonuses” – effectively pay whose precise quantum is only set when it becomes clear how much the bank can afford – was to enhance the financial stability of the bank.

At the time I commented on the problems that particular words can cause in public debate, but unfortunately it is not quite that simple. The problem is that the level of public debate is depressingly low.

If something sufficiently dramatic happens, then most people will notice it and get to first base. In this case the collapse of Lehman Brothers was sufficiently dramatic, and most voters grasped that bankers were overpaid. But a little more analysis is needed before sensible action can be taken.

Bank managements are not entirely stupid and had noticed that talented employees demanded big rewards, but that profits tended to be erratic. They soared and plunged erratically, so it made sense to pay most of the big rewards as bonuses. In a bad year bonuses could be drastically reduced, because there was no legal obligation to pay them.

Of course, bank bonuses were totally unlike bonuses in other sectors of the economy. Most employees do not get bonuses at all. Most of those who do get them get relatively small amounts, maybe a few hundred or at most a few thousand. But they read about individual bankers getting millions in the “bonus season”. So the conclusion was obvious: we must stop, or failing that curb, bankers’ bonuses.

I tentatively debated that with maybe half-a-dozen people, none of them stupid. None of them were interested in the idea that curbing bonuses would just increase bankers’ basic pay, which was a bad idea. Of course, that is what happened. HSBC led the way and increased basic salaries for its top few hundred bankers shortly after the cap came in.

In other words, there are two problems. One is that many people are both stupid and ill-informed, with little interest in becoming better informed. But the other, and more serious, problem is that most people are simply not interested in politics. The fact is that thinking is hard work. Most people prefer to stick to their existing opinions – however ill-supported by the facts, and however self-contradictory – rather than do the hard work of thinking about an issue.

People like me tend to find it bizarre that people do not enjoy thinking. I tend to spend most of my time analysing and re-analysing. I cast my net fairly wide. My core activity is probably thinking hard about maths and fundamental physics, but because I have always worked outside those areas, particularly in government and in finance, I also spend a fair amount of time thinking about politics and finance.

Well maybe not huge amounts. Physics, and indeed science generally, is particularly challenging, and hence exciting, because relatively small changes (in experimental data, for example) can ripple through to require huge changes in apparently well-established theories. Nothing is ever final in science. The best you can hope for is that a theory becomes firmly established in a limited domain. But the excitement of seeing the implications of apparently small changes rippling through makes it much more alluring that politics. It is also fascinating how resistant to the evidence the large majority of those whose lives are supposedly dedicated to the search for truth can be.

For example, Newtonian dynamics is well established for velocities much less than the velocity of light and distances much large than a nanometre, but arguably the most important development of the last thirty years is that it has become clear that there is an additional limitation on its validity. The Newtonian/Einstein equations for the gravitational force are probably totally wrong in the weak field domain, which applies once you move away from the solar system to galactic scales. Getting any significant number of the thousands of astrophysicists and string theorists to face up to that is another matter entirely. My general experience in science is that the more speculative the area, the more dogmatic the participants.

Given that people are extremely reluctant to think about political issues, words become extremely important. Often debates are won by capturing an idea in a single word or phrase. So Tony Blair’s genius on Iraq was to popularise the phrase “weapons of mass destruction”. That phrase conveyed that if we didn’t go to war against Saddam Hussein then Hiroshima would come to us. No further thought was needed. But where it happened, it was all about a preliminary issue (is Saddam really a threat to us) and not about the main issues: (1) granted there is a threat, is invasion the best way of dealing with it, and (2) granted an invasion, what happens afterwards.

That tale also illustrates how expertise and talent can always be used for good or ill. Unfortunately, in that case the outcome was tragic.

In the case of bonuses, it seems to have been accidental that policy got decided on the basis of a the wrong word (the real issue was bankers’ pay, not the proportion that was paid as a bonus). I remember at the time that the regulators seemed to have fairly mixed feelings about attacking bonuses. Of course, the attack was not wholly harmful. One reform was to delay payment of bonuses, so that there was more time to check that the rewarded actions and the institutions health were as rosy as they appeared at the end of the year. But it was hopeless for regulators to resist capping bonuses, not just because of UK opinion, but also because of the even stronger EU opinion. Eurocrats were not remotely deterred by the possible damage to the stability of London banks, indeed some of them no doubt saw anything which might reduce London’s dominance in EU financial services as a plus.

markGarnier

Anyway, it will be interesting to see if passions have yet cooled enough for this area to be revisited. Mark Garnier (the Tory MP for Wyre Forest, a rural constituency in Worcestershire, and member of the Treasury Select Committee) apparently told City AM recently that the bonus cap was imbecilic.

AndrewBailey

Andrew Bailey and Mark Carney (Bank of England) have both spoken out against it. Of course, the snag is that trying to limit bankers’ pay is likely to be even more controversial. My own recommendation would be sunlight: we should introduce a rule that the names and pay of all bank employees paid £1 million or more should be disclosed in the annual report. Even if the concept was accepted, there would be attempts to water it down and delay it with arguments about the detail, but the idea seems sound to me, and indeed should be applied to all employees. To stop avoidance you would probably also have to require a brief summary to be published of the tax return of anyone filing income of more than £1 million.

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Syria (2)

In my earlier post I focussed on the outrage caused by Ken Livingstone’s remarks that 7/7 was caused by Blair invading Iraq – in other words, far from reducing the terrorist risk, it had increased it. But we have now had the promised debate which resulted in a large majority for bombing Syria.

It took place last Wednesday (2 Dec 15). The evening before there was a private meeting of the (Tory) 1922 Committee. It holds weekly meetings whilst parliament is in session to allow backbenchers to discuss and coordinate their views. It is also used as a forum for the prime minister to consult and seek to persuade his backbenchers. On 1 Dec 15, David Cameron appealed to those present to vote for the government motion the following day which authorised the bombing of Syria.

One of those present leaked to the press that Cameron had told them:

You should not be walking through the lobbies with Jeremy Corbyn and a bunch of terrorist sympathisers.

Unsurprisingly, this remark caused a good deal of offence when widely reported in the media not long afterwards. The following day Cameron rose at 11:40am to move the government motion. He was repeatedly invited to apologise for his remarks about terrorist sympathisers, but did not do so. ITV News put together a video of a dozen MPs standing up and inviting him to apologise throughout his speech, and indeed in the early stages of Corbyn’s speech immediately afterwards:

He did say on several occasions that MPs could with honour vote for or against the motion, but that was evidently as far as he was prepared to go. Quite why, I am not sure. Given that several Tory backbenchers are passionately opposed to bombing Syria, it was clearly unwise to think that private remarks to the 1922 Committee would remain private, and labelling as terrorist sympathisers those who disagree with you on the tactics of dealing with terrorists is clearly both unreasonable and insulting.

His 40 minute speech opening the debate clearly put reducing the terrorism risk to UK citizens as the main justification for the bombing. After reading the motion, his first words were:

The question before the House today is how we keep the British people safe from the threat posed by ISIL. Let me be clear from the outset that this is not about whether we want to fight terrorism but about how best we do that.

Shortly afterwards, he continued:

… there is a simple question at the heart of the debate today. We face a fundamental threat to our security. ISIL has brutally murdered British hostages. They have inspired the worst terrorist attack against British people since 7/7 on the beaches of Tunisia, and they have plotted atrocities on the streets here at home. Since November last year our security services have foiled no fewer than seven different plots against our people, so this threat is very real. The question is this: do we work with our allies to degrade and destroy this threat, and do we go after these terrorists in their heartlands, from where they are plotting to kill British people, or do we sit back and wait for them to attack us?

A little later he listed six questions to which he believed he had good answers:

(1) … could acting in this way actually increase the risk to our security by making an attack on Britain more likely?
(2) … does Britain really have the capability to make a significant difference?
(3) … why do we not just increase our level of airstrikes in Iraq to free up capacity among other members of the coalition so that they can carry out more airstrikes in Syria?
(4) … will there really be the ground forces needed to make this operation a success?
(5) … what is the strategy for defeating ISIL and securing a lasting political settlement in Syria?
(6) … is there a proper reconstruction and post-conflict stabilisation plan for Syria?

His answer to (1) was that

the judgment of the Chair of the Joint Intelligence Committee and of the director general of the Security Service is that the risk of a similar attack in the UK is real, and that the UK is already in the top tier of countries on ISIL’s target list.

His answer to (2) and maybe also (3) was that

There is a lot of strike capacity in the coalition, but when it comes to precision-strike capability whether covering Iraq or Syria, let me say this: last week, the whole international coalition had some 26 aircraft available, eight of which were British tornadoes. Typically, the UK actually represents between a quarter and a third of the international coalition’s precision bombing capability. We also have about a quarter of the unmanned strike capability flying in the region. Therefore, we have a significant proportion of high-precision strike capability, which is why this decision is so important.

He did not really have an answer to (4). He agreed that the famed 70,000 moderate opposition troops in Syria were a mixed bag and mainly in the wrong place, preoccupied with fighting Assad rather than ISIL. But he did point out that:

We do not need ground troops to target the supply of oil which Daesh uses to fund terrorism. We do not need ground troops to hit Daesh’s headquarters, its infrastructure, its supply routes, its training facilities and its weapons supplies.

George Kerevan (SNP) pointed out that

since Daesh’s offensive against Baghdad was blunted by air power, it has changed its tactics and dispersed its forces, and particularly in Raqqa, a town of 600,000 people at present, has dispersed its operations all through that city into small units which make it impervious to attacks from our Tornados, given the small number of Tornados we have?

Cameron agreed with that and shifted his ground somewhat:

What the hon. Gentleman says is right. Of course Daesh has changed its tactics from the early days when airstrikes were even more effective, but that is not an argument for doing nothing. It is an argument for using airstrikes where we can, but having a longer-term strategy to deliver the necessary ground troops through the transition. The argument before the House is simple: do we wait for perfection, which is a transitional Government in Syria, or do we start the work now of degrading and destroying that organisation at the request of our allies, at the request of the Gulf states, in the knowledge from our security experts that it will make a difference?

His answers to (5) and (6) seem thin to anyone who has followed at all critically developments over the last decade in Iraq and Afghanistan. He painted a rosy scenario:

Let me say a word about how this process can lead to the ceasefires between the regime and the opposition that are so essential for the next stages of this political transition. It begins with identifying the right people to put around the table. Next week, we expect the Syrian regime to nominate a team of people to negotiate under the auspices of the United Nations. Over the last 18 months, political and armed opposition positions have converged. We know the main groups and their ideas. In the coming days, Saudi Arabia will host an inclusive meeting for opposition representatives in Riyadh. The United Nations will take forward discussions on steps towards a ceasefire, including at the next meeting of the International Syria Support Group, which we expect to take place before Christmas.

The aim is clear, as I have said — a transitional Government in six months, a new constitution, and free and fair elections within 18 months. I would argue that the key elements of a deal are emerging: ceasefires, opposition groups coming together, the regime looking at negotiation, and the key players—America and Russia, Saudi Arabia and Iran—and key regional players such as Turkey all in the room together. My argument is this: hitting Daesh does not hurt this process; it helps this process, which is the eventual goal.

My heart sank somewhat when towards the end he switched to a different justification entirely.

The question for us is, do we answer the call of our allies, some of our closest friends in the world — the French and the Americans — who want us to join them and Arab partners in this work, or do we ignore that call? If we ignore that call, think for a moment what that says about Britain as an ally. Think for a moment what it says to the countries in the region who will be asking themselves, “If Britain won’t come to the aid of France, its neighbour, in these circumstances, just how reliable a neighbour, a friend and an ally is this country?”

So is that the real reason for bombing Syria? That Cameron feels embarrassed telling Francois Hollande that we are not going to? After many months of pondering the mystery of why Blair joined Bush in invading Iraq, I eventually concluded it was embarrassment. Is Cameron a slave to the same vice?

Added later

Several MPs who spoke later in the debate added context. First there is the serious shortage of targets to bomb in Syria. The Free Syrian Army seem to be hopeless as spotters. They are simply not providing many plausible targets for the Americans and French to bomb: one set of figures is that in the last 17 months there have been 57,000 bombing sorties, of which only 8,000 have resulted in bombs being dropped. By contrast, Assad’s forces are apparently giving 800 targets/day to the Russian bombers, more than 50x more. So it is hard to see that UK bombing will have any military effect, although it may be politically helpful to the French or Americans.

Second, we seem to be making maybe 8 additional planes available, of which 2 are likely to be in the air over Syria on any given day. In other words, we don’t actually have many planes to offer. So we will probably mainly be rerouting planes bombing Isil in Iraq to bombing them in Syria.

Finally, Isil is apparently starting to base some of its planning of European terrorist attacks on the Libyan coast rather than in Raqqa.

So, the whole thing seems to be a storm in a teacup. It is unlikely to make an iota of difference of Isil’s ability to mount terrorist attacks in the UK.

On the other hand, bombing is quite expensive. Exactly how expensive I am unclear, because no doubt many of the costs would be incurred anyway – if the RAF was training rather than bombing for real. But as one MP pointed out, one could fund an awful lot of internet propaganda for the cost of the bombing missions. Might we not do far more to reduce the threat of terrorism in the UK by using our limited resources to combat Isil grooming of UK citizens as terrorists?

Oh, Isil v Daesh. I have not got to grips with the complexities of this piece of political correctness. Cameron’s motion was apparently drafted before he decided to switch to Daish. But after announcing the switch early in his speech, he kept forgetting and reverting to Isil.

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The Turtles

Anyone faced with a new and challenging senior role wants to be sure that his key people will perform well. In practice, most people feel that the best hope of achieving this is to hire people he already knows, who have worked with him before.

For example, when Steve Jobs was brought back to Apple in 1997 to turn around its fortunes he brought with him not just the company NeXT and its software, but also a collection of people who moved into key roles in Apple. Most people who are appointed as CEO of a different company tend to bring with them at least some of the key people who worked with them in their previous job.

Something similar happened when John Browne was appointed by the Tories on 30 June 2010 to make the civil service more efficient. Exactly how he came to be appointed is unclear to me.

There is a rather endearing potted history of BP during the period 1999-2007 in Tony Hayward’s talk at Stanford Business School on 12 May 2009 [11m39s to 14m0s]:

During the period 1999-2003 John Browne transformed BP from a regional oil company with major fields in the North Sea and Alaska and not much else into one of the world’s top three oil companies. Then disaster struck:

BP PLANT EXPLOSION

(1) the Texas refinery explosion 23 Mar 2005;

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(2) the Thunderhorse tilt. Due to careless construction the world’s largest semi-submersible platform (cost $1 billion) tilted and almost sank in the Gulf of Mexico in July 2005. Fixing it cost another $250M;

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(3) the Prudhoe Bay oil spill in Mar 2006, when 6,400 barrels spilt from a small leak due to poor procedures. BP subsequently paid a $25M penalty.

(4) in June 2006 the US Commodity Futures Trading Commission filed suit against BP claiming that a trading team in Houston had cornered the market in TET propane and overcharged for it. The next year BP paid $303M to halt the prosecution.

At the same time, it was becoming clear that BP’s financial performance was substantially worse than that of Shell (the closest company to it in terms of size and operations). I am not completely clear what Hayward meant by this. He mentioned underperformance of $6 billion. The 2006 accounts show net income of $22 billion, Shell had $25 billion. The following year was BP $21 billion, Shell $31 billion. Maybe his 8 is somewhere in that 3-10 range.

In any case Browne was born 20 Feb 1948, and the standard BP retirement age was 60, so it was announced in mid-2006 that he would step down as CEO in December 2008. Succession planning began and Tony Hayward was chosen as his successor. Meanwhile Browne was splitting up with his partner Jeff Chevalier. They had apparently met through a gay-escort website and lived together for four years from about the end of 2002 until early 2006. The Appeal Court judgment (see below) explains:

While the relationship lasted JC adopted the claimant’s lifestyle and was provided with food, travel, clothes and accommodation at a fairly luxurious level. The claimant also gave JC substantial sums of money either in cash or by cheque. The judge said that the relationship seemed to have become fairly widely known (although no mention was made of it in the media) …

When the relationship ended, JC found himself in financial difficulties and having to adjust to a drastically reduced lifestyle. JC said that the claimant provided him with funds towards a twelve month lease on a flat in Toronto and the cost of furnishings. According to JC, at a meeting in June 2006, the claimant also agreed: “that if needed, [he] would assist in the first year of me transitioning from living in multi-million pound homes around the world, flying in private jets, five star hotels, £2,000 suits, and so on to a less than modest life in Canada”.

As the judge put it in paragraph 8 of his judgment, JC’s plight was compounded by the fact that he had been out of the employment market for several years. He had some experience in IT work but had left that career path during the period when he was effectively being “kept” by the claimant.

There were various communications from JC towards the end of 2006 seeking further financial assistance from the claimant. On 24 December 2006 JC sent the claimant an email which included the following: “I have nothing left to lose … I am facing hunger and homelessness after 4 years of sharing your lifestyle … the least I am asking for is some assistance … please respond … I do not want to embarrass you in any way but I am being cornered by your lack of response to my myriad attempts at communication”.

Chevalier then turned to the Mail on Sunday which prepared an article with numerous revelations unlikely to please Browne. The newspaper contacted BP on Friday 5 Jan 2006 and asked for comment on a number of points it proposed to include in an article two days later. Browne obtained an injunction the next day. In early March the case reached the Appeal Court ([2007] EWCA Civ 295) which ruled mainly against Browne and published a judgment going into some detail about allegations of abuse of BP’s resources by Browne to benefit Chevalier and, perhaps more important, about “the Lie”.

This was at first sight a rather minor matter. Browne claimed he had met Chevalier while exercising in Battersea Park. Chevalier claimed they had met through a gay-escort website. Browne had persisted in his version, but Chevalier was able to corroborate his version and Browne had eventually admitted that he had lied. The judge at first instance (Eady, [2007] EW HC 202 (QB)) was not amused:

It is ironic that the claimant should choose to tell this lie at a time when he was maintaining (particularly at the hearing before me on 12 January) that I should heavily discount the factual account of JC and also any evidence from him (at that time yet to be served). A wholesale attack was being made on his credibility. It was said that he is a liar, unstable and adversely affected by dependence on alcohol and illegal drugs … It is thus clear that it is not only the claimant’s willingness to tell a deliberate lie to the court, persisted in for about two weeks, that is relevant in assessing his own credibility and the overall merits. So too is his willingness casually to “trash” the reputation of JC and to discredit him in the eyes of the court.

deepwater

Browne tried to get the Appeal Court judgment overturned by the House of Lords, but failed. On 1 May 2007 he resigned. On 20 April 2010, the Deepwater Horizon oil spill began. On 14 Nov 2012 BP agreed a $4.5 billion settlement with the US Dept of Justice, although other litigation continues.

The key question, of course, is to what extent Browne was responsible for this series of mishaps.

Tom Bower, the biographer well-known for demolishing inflated business reputations is in little doubt, judging from an article in the Mail on 3 July 2010:

lordOilSlick

After his appointment as BP boss in 1998, Lord Browne swiftly transformed the firm from a dying oil corporation with just two fields – in Alaska and the North sea – into the world’s second largest behemoth.

By re-focusing on so-called ‘elephants’ (the big oil reservoirs) and ruthlessly cutting costs, his mastery of financial engineering used BP’s rising share price to launch audacious take-overs of failing oil companies, especially in America …

After re-branding BP as ‘Beyond Petroleum’ – the world’s most environmentally friendly oil company – he boasted during visits to Washington that BP was not only the largest producer of oil in America, but also the most successful explorer in the Gulf of Mexico, one of the most difficult places to extract oil …

However, it was Lord Browne’s ambition to overtake ExxonMobil and transform BP into the world’s biggest oil corporation that sowed the seeds of disaster. Success depended on BP earning high profits, which could be used to set up a merger with shell. Lord Browne went for broke by cutting costs.

His philosophy was ‘more for less': operations would be completed at a cost that was 10 per cent cheaper than the previous time, and so on. Taking his cue from New Labour, targets became the Holy Grail. In July 2000, he announced that production would annually grow over three years by 5.5 to 7 per cent, mostly in the Gulf of Mexico and Angola.

This optimism was hailed and BP’s share price soared. But, in fact, BP’s growth turned out to be only 2.9 per cent and BP could hit its targets only by more ruthless cost-cutting. Hundreds of engineers were sacked. Budgets for safety and maintenance were slashed. Skilled oil men resigned in disgust.

Unwilling to tolerate criticism, Lord Browne favoured only ‘the turtles’ – the sycophants trusted to deliver his targets. Tony Hayward was one of the chosen ones. Meanwhile, [the US engineer responsible for refineries] was replaced by John Manzoni, an accountant and Lord Browne ‘turtle’ with little understanding of the complicated engineering skills required to run refineries properly.

And to satisfy Lord Browne’s ‘more for less’ mantra, Mr Manzoni zealously pruned safety and maintenance costs. There followed an explosion at a refinery in Texas City in March 2005 when 15 sub-contractors were killed and 170 injured.

A U.S. government report into the accident blamed ‘systemic lapses’ by BP’s management and budget cuts which had left ‘unsafe and antiquated designs. . . in place, and unacceptable deficiencies in preventive maintenance were tolerated

I am not sure Bower is right to brand Manzoni as an accountant. BP generally had a habit of appointing non-accountants to the top finance jobs, and Manzoni had engineering degrees from Imperial College. But his central point may be correct.

Having watched Hayward’s talk to Stanford Business School twice, I am still not sure what to make of it or him. He explains how he was (in May 2009) clearly on notice that BP needed to pay more attention to safety. He had three years at the helm before the Deepwater disaster. Why did he fail to prevent it?

Then there is his unappealing record since, to which I will turn in a future article.

The first person in government to reach out to Browne after his resignation was Peter Mandelson. After his period as EU trade commissioner he returned to government in Oct 2008 as business secretary with a seat in the Lords. In June 2009 a reshuffle added universities to his responsibilities. On 9 Nov 2009 he announced the Browne Review, an independent review of the funding of higher education chaired by Browne. It reported in October 2010 (after the election and subsequent formation of the Tory-LibDem coalition government).

Meanwhile on 30 June 2010 Browne was appointed as Whitehall’s Efficiency Czar, charged with finding £6 billion of “efficiency savings”. Did he simply run into Osborne or Francis Maude whilst working on his education report? In any case, how he carried out his mandate as Czar will have to wait until the next article.

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Syria

I have to admit that I find the level of debate about bombing Islamic State depressing.

kenLivingstone

Ken Livingstone is one of my favourite political figures. His opinions on most things differ from mine, but I respect the fact that he does his homework, and positions which at first may appear cranky or far-out often turn out to be better supported by the evidence than one might think.

The Labour Party made some serious errors of judgment over the new position of London mayor. Livingstone was the obvious Labour candidate as long-time GLC leader, but his candidacy was unwelcome to the Blairites. After much in-fighting they got Frank Dobson as the Labour candidate. Livingstone ran against him for the position of mayor as an independent and won the first mayoral election in May 2000.

This caused a good deal of upset in the Labour party and Livingstone stood down as an MP at the June 2001 general election. Eventually, the Labour Party came around and supported him at the 2004 mayoral election which he again won. He was defeated by Boris Johnson in the 2008 election (Johnson 53.2%, Livingstone 46.8% in 2nd round) and again in the 2012 election, albeit by a smaller margin (Johnson 51.5%, Livingston 48.5% in 2nd round).

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Since then Livingstone has adopted a fairly low profile. He decided not to stand for London mayor in 2016. He supported Jeremy Corbyn for the Labour leadership and earlier this month was appointed by Corbyn to review Labour’s defence policy alongside Maria Eagle (the shadow defence secretary). She was elected in 1997 following selection from an all-women shortlist and had a short-lived job as a junior minister under Blair. Since the 2010 election she has had a variety of shadow front-bench jobs, becoming shadow defence secretary in September 2015. She is supported by Kevan Jones, who has a longer standing involvement with defence. He was a junior minister for defence under Gordon Brown and continued as shadow minister for defence after the 2010 election.

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On 14 June 2012 in a debate about mental health (Hansard col 516) he said:

Now I am going to throw my notes away—I thought long and hard last night about whether to do this—and talk about my own mental health problems. 1n 1996, I suffered quite a deep depression related to work and other things going on in my life. This is the first time I have spoken about this. Indeed, some people in my family do not know about what I am going to talk about today. Like a lot of men, I tried to deal with it myself—you do not talk to people. I hope you realise, Mr Speaker, that what I am saying is very difficult for me.

I have thought very long and hard about this and did not actually decide to do this until I just put my notes down. It is hard, because you do not always recognise the symptoms. It creeps up very slowly. Also, we in politics tend to think that if we admit to fault or failure we will be looked on disparagingly by the electorate and our peers. Whether my having made this admission will mean that the possibility of any future ministerial career is blighted for ever for me, I do not know. I was a Minister in the previous Government and I think that most people on both sides of the House thought I did a reasonable job.

We have to talk about mental health issues in this place, including people in the House who have personal experience of it. As I have said, I thought long and hard last night about doing this and I did not come to a decision until I put my notes down just now. Whether it affects how people view me, I do not know; and frankly I do not care because if it helps other people who have depression or who have suffered from it in the past, then, good.

Politics is a rough old game, and I have no problem with that. Indeed, I am, perhaps, one of the roughest at times, but having to admit that you need help sometimes is not a sign of weakness. I also want to say to you, Mr Speaker, that we need to do more here to support Members with mental health issues.

and went on to mention the possibility of support from Dr Madan and her team.

His comment about being himself “one of the roughest at times” was justified in this context, since two years earlier (Hansard 15 June 2010 col 767) he had commented:

Actually, I agree with programme motions, because any idiot in opposition who argues that Government legislation can somehow be got through without programme motions should be taken out to the nearest lunatic asylum.

A fairly innocent comment perhaps. But it is worth bearing these comments in mind when we read the Mirror for 18 Nov 2015:

Ken Livingstone has triggered a storm of Labour infighting after the anti-nuclear maverick was made co-chair of a review of Trident nuclear submarines.

His appointment was blasted by Shadow Defence Minister Kevan Jones, who feared it would strip Labour of its “credibility” and questioned whether he should lead a defence review.

But Mr Livingstone lashed out in response. Speaking exclusively to the Mirror, the ex-Mayor of London claimed: “I think he might need some psychiatric help. He’s obviously very depressed and disturbed. He should pop off and see his GP.”

Blasting Mr Livingstone’s “gravely offensive” slur, [Jones] said: “I and a lot of people will be very angry about such insensitive and stupid comments. Offensive statements like this just reinforce the stigma about mental illness.””

Mr Livingstone initially shrugged off calls to apologise and claimed he was unaware of Mr Jones’ illness.

After pressure from Corbyn, Livingstone apologised later in the day (on Twitter):

I unreservedly apologise to Kevan Jones for my comments. They should not have been made at all, let alone in this context. I also make this apology because Jeremy is right to insist on a more civil politics and as a party we should take this seriously.

I find the fuss about Livingstone’s ad hominem remarks overblown. Jones’ original comments to Parliament were hardly that courageous, despite the stigma of mental illness. One has to make a few distinctions. Psychosis causes serious alarm. People have visions of a naked man rushing into a church and laying about with a kukri. But depression? We have got used to celebrities revealing themselves to suffer from serious depression. Most people feel vaguely sorry for them. Their condition is hardly a threat.

Equally, Livingstone probably had missed Jones’ comments. Almost everyone else did. And unlike most public apologies, his was unconditional rather than the classic sham (“I am sorry if I have unwittingly caused offence” etc).

However, this was just the beginning. 9 days later, Livingstone appeared on Question Time in Manchester:

I remember when Tony Blair was told by the security services “if you go into Iraq, we will be a target for terrorism”, and he ignored that advice and it killed 52 Londoners. We need to be absolutely clear [interruption] I want to see on the ground the capacity to defend ourselves and in London – I don’t know what it is like up here – we see thousands of police taken off the streets and that is crucial in actually finding out who’s at risk.

Matt Forde (a comedian and former Labour political adviser) was outraged:

This idea that you can absolve the people who killed those innocent Londoners by blaming it on Tony Blair is shameful.
[L] Well you can
[F] [interrupting] blame it on the people who carried out the atrocity
[L] Yes. Go and look what they put on their website. They did those killings because of our invasion of Iraq.
[F] Accept the propaganda of the terrorist, then?
[L] No, no. They gave their lives. They said what they believed. They took Londoners’ lives in protest against our invasion of Iraq.
[F] [unclear interruption]
[L] Excuse me, we were lied to by Tony Blair. There were no weapons of mass destruction. [vigorous applause from a minority of the studio audience]
[Kate Andrews, research fellow, Adam Smith Institute] The lies of Tony Blair, whatever they may be, will never, ever absolve the terrorists of their actions.
[L] No
[A] But you have just brought those two things together.
[L] If we hadn’t invaded Iraq, those four men would not have gone out and killed 52 Londoners. We know that.
[A] I think you are accepting their excuses.
[everyone starts to talk at once]

Of course, Livingstone is correct. Invading Iraq was predicted (correctly) to increase the risk of terrorism in the UK, whereas the idea that it was reducing the UK’s risk of suffering at the hands of Iraq’s “weapons of mass destruction” (WMD) was known to be false. So whatever the merits of invading Iraq, justifying it on the basis of reducing physical harm to the UK was bogus, indeed the best view was that it would increase the risk of harm, and Blair knew that.

Moreover, it is correct to say that he lied, in the sense that he deliberately misled the public. There was widespread alarm following 9/11 at the possibility of terrorist attacks on the UK on a scale never seen before. Blair played to that alarm with the nonsense about WMD and the claims that he was protecting the UK.

Of course, it would be wrong to say that Blair’s actions absolve the 7/7 terrorists from blame. But as with many other harms, people are often more interested in secondary blame than primary blame, for the excellent reason that we (as a country) may have no control over those primarily to blame, but we do carry secondary blame.

It is clear despite the slightly confused exchanges on the video of Question Time that Livingstone does not disagree that the terrorists are primarily to blame. He just points out that they would not have carried out their attack if we had not invaded Iraq.

Both Forde and Andrews seem to be guilty of muddled thinking. He wants to hold Blair blameless, she does not want to discuss anyone’s blame except the terrorists’.

But Forde is far from alone in wanting to attack (verbally) anyone who suggests that military action overseas can cause terrorist attacks over here. The problem is that the public want simplicities. They have been wound up by the media for months about terrorists trained by Islamic State killing us over here, and then we get wall-to-wall coverage of 130 people being killed in Paris by such a group. So they want protection. Cameron and others immediately say, let’s bomb Islamic State.

There is ample evidence from the last decade that that is not helpful to anyone. Clearly some careful justification and explanation is needed to demonstrate that this case would be different. But few politicians want to get into that kind of complexity. They just want the simple position: we need to protect the public; we need to wipe out the evil Islamic State and stop them harming us etc.

Calling Livingstone “disgraceful” etc is ludicrous. He has some excellent points.

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Universal Credit (2)

I last wrote about Universal Credit (UC) more than two years ago, just as it was running into heavy criticism from Commons’ Committees and within government. I had intended to write one or two further articles about that criticism within a month or two.

There is little point in going into that in any detail two years later. Those wanting to pursue the matter could start with the National Audit Office report in Sep 2013 ( pdf ).

But it is worth reproducing one Figure from that report:

UC-projBenefits

The main purpose of UC is to remove the disincentives to work by simplifying the system and removing the high marginal tax rates faced by current claimants on additional earned income. But an important secondary purpose was to reduce the costs of administering welfare benefits. The Figure shows that it is hoped this reduction will be £2.7 billion/year once the system is fully operational. The £4.4 billion figure is some kind of quantification of the hoped-for benefits of removing the disincentives to work.

Unsurprisingly, the key to this reduction was changing the process from personal visits to Job Centres where a claimant can have all the paperwork completed by an expert employed by the government to a process where the claimant applies online.

The snag of course, is that benefit claimants are probably the least plausible group for a massive switch to online.

There were additional problems arising from a long history of government incompetence both at delivering large IT projects in-house and at procuring them from commercial providers.

The upshot was that the government decided to hold back introduction of digital UC, so that it would not be fully implemented until near the end of the current parliament (May 2020). It decided to use rapid-prototyping techniques to develop the necessary software in-house. Meanwhile there would be a roll-out of UC for simple cases where there were no children involved using the traditional approach of claimants applying in person at Job Centres. For some reason, the jargon for this roll-out is “live service”.

A Nov 2014 NAO update report summarised the situation as follows:

NAO-UC-keyFacts

The government also has a website with regular monthly reports (Oct report pdf ) on the roll-out:

UC-casesOct15

One can get more elaborate detail by going straight to more detailed databases which are available online:

stat-xplore

although for some odd reason searching on Universal Credit gives nothing (and you have to search on something in order to populate the left-hand Databases column) – you have to try rather broader terms. Clearly there has been substantial progress since the NAO update, although things seem to have flattened out recently:

UC-claimsOct15

In the summer the government released details of how the roll-out of simple cases would continue. A lengthy “district list” shows when each postcode will be reached.

districtListsHead

My own SE11 is one of the laggards:

districtListsExtract

Of course, Iain Duncan Smith is far from out of the wood yet. The precise detail of “simple cases” qualifying for the “live service” roll-out is fairly complicated and set out in Schedule 5 of SI 2013/983 (“The Gateway Conditions” p53ff of the pdf). But they evidently amount to only 0.5M in total out of the 7M projected claimants. Even getting from the present 141k simple cases, to the projected 500k by next April could be challenging. To enlist another 360k in the 26 weeks before the end of April (4 already past) will require an average of 14k/week compared with the current 6k/week. If the ramp-up was constant throughout the period, that would mean ramping up to 22k/week by next April. Not impossible, but certainly challenging.

How the full-blown digital service is getting on is completely unclear. But clearly the Major Projects Authority (on which I hope to write soon) is applying a good deal of pressure. Its last published traffic-light rating of UC seems to be amber/red in Sep 2014.

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