Universalising French pensions

It’s not the first time that a French government has tried to inject a greater element of universality into its arcane system of welfare provision.  The Juppé plan, in 1995, tried to curb rising costs partly by imposing spending limits, and by trying to bring the pension rights of miners and railway workers into line with other groups.  It also proposed universal rights to health care and guaranteed access. One prominent trade unionist called that idea “the biggest rip-off in the history of the French Republic. … the end of the Sécurité Sociale.”

The current system of pensions is costly – it’s long been the case that pensioners in France are on average better off than workers.  Clearly, part of the government’s agenda over time has been to cut the cost, and that is the source of many of the protests.   If cost was all it was about, there are other things that the government could have done – raise the pension age, increase contributions, increase the number of contribution periods required, and so on.  But there are lots of other problems in the system.  The shift to precarious labour and the problems of switching between different pensions rules can shut people out. With 42 distinct pensions regimes, the system is horrendously complicated.  It takes years (literally) to work  out what someone’s pension is going to be; often the calculations begin long before a person reaches 60 and are not finished until after the person retires.   As the government plan says,

personne ne sait exactement ce à quoi il a droit. Le système est illisible, complexe, et crée de la défiance.

[Nobody knows exactly what they’re entitled to.  The system is incomprehensible, complex and it creates distrust. ]

The proposed alternative is outlined in the government plan (the link is in French). The main elements are:

  • a universal scheme for everyone – one of the principal aims is to remove inequities between people currently under different regimes
  • a points system, in place of contribution periods, to determine entitlement
  • an increased minimum pension
  • retention of retirement at 62 (that is early by European standards, but  worse than some French regimes currently offer)
  • credit for every hour for which contributions are paid  (seriously!)
  • improved protection for people whose contributions have been interrupted through care, unemployment or sickness
  • full transparency, through a personalised record of contributions and linked entitlements
  • a commitment to balance the books – the current system runs perennially in deficit
  • transitional arrangements for current workers
  • a new system of governance.  There is a commitment to consult about the value of points, but overall the new system will reduce the role of the ‘social partners’ including trades unions.

Something that isn’t explicit in the plan is the distributive element.  It’s been reported that the proposals are regressive:  the contributions required of very high paid people will be 2.8% above 120,000 Euros a year, whereas under that level the contribution will be 28%.  However, the 2.8% is purely redistributive; it will yield no benefits for the contributions.

Both sides of the argument are right.  On one hand, the government is proposing a scheme that should be less complex, fairer and  more inclusive.  On the other, the objectors will be trying to defend a scheme which, for all its irrationality and complexity, has delivered far better benefits than  a more orderly set of schemes could ever have offered.  There will, of course, be vehement protests  – it’s the French national sport, and they do it so well. But the protestors, mainly from the left and the trades unions, are  protesting against the idea of universality and state welfare, and from a British perspective, that’s a difficult position to hold.

Scotland is not ready for an independence referendum

The First Minister of Scotland has been pressing for a further independence referendum, and the UK government seems determined to refuse the request.  I am not sure that either party means what it says.   If the polls are to be believed, there is a narrow majority against independence; and in a time of great insecurity, with the difficulties of leaving another union all too apparent, many voters will be apprehensive about what a vote for independence might mean in practice.  The longer the process, the more likely the movement for independence is to gain in credibility and support.  If the UK government genuinely wishes to maintain the Union – which is uncertain – a proposal for independence is far more likely to be defeated if it takes place very soon.

On the other side, one has to ask whether the Scottish Government really is prepared for a referendum campaign that will avoid the traps that the last one fell into.  During the long campaign before the 2014 referendum, the Scottish Government presented a ‘White Paper‘ with specific plans for action.  Alex Salmond told the electorate that this is what they would be voting for.  That was a miscalculation: it meant that every detail that people disagreed with became a reason to vote against the deal.  The debate about currency was an illustration: units of exchange are not decided exclusively by governments, there was no need to commit to any specific plan, Scotland could use multiple currencies (it already trades oil in dollars)  and in practice no-one can stop people accepting trades in foreign currency.  Committing the country to a specific single policy outcome was unnecessary and destructive.

Similarly, the draft Independence Bill went off-track when it started to legislate for future policies, such as sustainability or the possession of nuclear weapons, which serve no useful purpose in a constitutional document.  None of the constitutional issues that have to be nailed down was clearly settled.  The draft Bill left gaps in terms of rules of recognition (such as delegation of authority to ministers or to local government), change (such as how to amend the constitution) and  adjudication (such as the power of the courts).  It assumed that there would be only one legislative chamber, which could not possibly have the capacity to deal with national legislation; it proposed no constitutional limitations on the power of government.  I argued at the time that Scotland’s great strength was in participative public engagement, and that what Scotland needed to have was an extended period of discussion about constitutional arrangements.   That discussion has not happened yet.

An early referendum would require the Scottish Government to go into the campaign either with another White Paper – a settled prospectus – or with a promise to have a discussion in time to come, something that would depend largely on on trust.  Neither or those is a winning proposition.

The benefit system fails people who lose their jobs

Former employees of Thomas Cook are reported as complaining that the benefit system has failed them.  This should come as no surprise.  Universal Credit is based a fundamental misunderstanding of what benefits are for, and what they are supposed to do.  Part of that misunderstanding was the assumption that benefits are all about work: most of the intended recipients are people who are not in the labour market.  But for those people who are looking for work, the next part is the assumption that those people have to be guided or pushed towards work.  The vast majority of unemployed people move back to work within a year, regardless.   What people needed, and what they didn’t get, was income smoothing to tide them over while they found new employment.  What they got instead was delay, obfuscation, confused advice and periods with no money.

I’ve argued in the past for a different approach to unemployment benefits, including provision for short-term income smoothing and a distinction in the pattern and level of benefits for shorter-term and longer-term unemployment.  The French system, based on a convention of employers and trades unions rather than state-based provision,  has both.   The British approach has long been to assume that one size fits all.

Further evidence that responsive benefits don’t work

A solid paper by Jane Millar and Peter Whiteford emphasises the problems of trying to refine means-tests by recording and responding to changes in circumstances.  The problems of managing simple changes of circumstance, unpredictable incomes and overpayments have overwhelmed a series of benefits designed to be ‘responsive’.  They cite a recommendation from the OECD:

In order to ease access barriers to social protection, policy makers should consider: … making means tests more responsive to people’s needs by shortening the reference periods for needs assessments and by putting appropriate weight on recent or current incomes of all family members.

I’ve been  banging on about this for years – you’ll find about 25 relevant entries about changes in circumstance or fluctuating incomes on this blog,  and a longer argument in my book, What’s wrong with social security benefits?  The benefits that work best, like pensions and Child Benefit, are long-term.  There is no practical way to obtain the sort of information required for responsive income-testing and deliver a system that is efficient, fair and workable.  These systems are designed by those who are convinced that the problems can always be resolved by the technology, when we all know they can’t.  We need to smooth things down, to ask only for information that makes sense to claimants, and to stabilise income.  In other words, we need to be less responsive, not more.

The realignment of UK politics

What happened last night is more than the eclipse of Labour.  The Conservatives won on a populist platform: representing the will of the people in opposition to a venal political class.  The core problem with that formulation is that the Conservatives are simultaneously seeking to appeal to both of those factions at once.

This could lead  in the long term to a new  political alignment, as a class of people with no obvious political home look for different ways to have a voice.  Our political system militates against that.  It is more likely that the vote will change the Conservatives.  In the course of the next two or three years, they will be trying to appeal to their new electorate, and recruiting new members, very different from the rural and suburban heartlands they have made their own.

In the course of the next five years, then, I think we can expect to see the redefinition of coalitions of interest into two rather different main  parties, looking rather more like the parties in the US.   On the right, there will be something more like the US Republican party: mixed, angry, uncertain whether it’s  more in favour of free markets or the pork barrel.  On the left, there will be something like the US Democrats: an uneasy combination of liberals and conservatives, with a marginalised left wing.  Neither of these combinations leaves much room for social democrats, trades unions, traditional Tories or the old political centre.

Boris Johnson: in his own words

Most of the criticisms of Boris Johnson focus on the things he says that he obviously doesn’t believe.  Here are some of the things it seems he does believe.

Greed is a valid motivator of economic progress.(Source)

The real divide is between the entire class of people now reposing their fat behinds on the green and red benches in the Palace of Westminster, and the bottom 20 per cent of society – the group that supplies us with the chavs, the losers, the burglars, the drug addicts and the 70,000 people who are lost in our prisons and learning nothing except how to become more effective criminals. (Source)

A combination of economic misfortune …  and an excessive predilection for welfarism have created a peculiar, and deeply unattractive, psyche among many Liverpudlians.(Source)

Single parents are responsible for “a generation of ill-raised, ignorant, aggressive and illegitimate children”. (Source)

It must be generally plausible that if having a baby out of wedlock meant sure-fire destitution on a Victorian scale, young girls might indeed think twice about having a baby. And yet no government – and certainly no Labour government – will have the courage to make the cuts in the safety net of the viciousness required to provide anything like such a deterrent. (Source)

Whatever you may think of the value of IQ tests, it is surely relevant to a conversation about equality that as many as 16% of our species have an IQ below 85 … while 2% have an IQ above 130 … And the harder you shake the pack, the easier it will be for some cornflakes to get to the top.(Source)

I don’t believe that economic equality is possible; indeed some measure of inequality is essential …  (Source)

Ipse dixit.

Harry Burns on mortality figures

I’ve recently joined the board of Barony Housing Association, which is part of the Wheatley Group, and consequently was invited to a institutional lecture by Prof Sir Harry Burns, who was considering mortality statistics in Scotland and the UK.  He made the case that, despite the emphasis on nutrition in much of what’s written about public health, nutrition is not at the core of the problems.  Scotland’s nutrition-related mortality follows a pattern, astonishingly, which is not much different from Finland’s.  Finland has an exemplary nutritional policy and lots of virtuous practices, and Scotland (notoriously) doesn’t.

The real difference in mortality, he argued, occurs in younger age groups; and the primary issues for the mortality of younger adults are drugs, alcohol, violence and suicide.  All of which are social.

British democracy faces an existential crisis.

The government of the  United Kingdom has always had an unwritten constitution, and that position has been defended on the basis that it allows governments a degree of flexibility in dealing with complex situations.  That position has been tested to breaking point in recent months.  Here are a few concerns.

1.  The Conservative Party is standing on a manifesto which commits them to change the basis on which laws are made and reviewed.  The Manifesto states:

After Brexit we also need to look at the broader aspects of our constitution: the relationship between the Government, Parliament and the courts; the functioning of the Royal Prerogative; the role of the House of Lords  …

2.  At the same time as Britain withdraws from the governance safeguards imposed by the European Union, it is proposing to weaken  other safeguards (such as human rights and judicial review) which derive from other sources.   The Manifesto again:

We will update the Human Rights Act and administrative law to ensure that there is a proper balance between the rights of individuals, our vital national security and effective government. We will ensure that judicial review … is not abused to conduct politics by another means or to create needless delays.

3.  The present government is firmly committed to legislation on Europe that will give Ministers extensive ‘Henry VIII powers’ – the power to change laws without scrutiny or the prior approval of parliament.  The election was called, not because Parliament had failed to agree the EU Withdrawal agreement, but because it had demanded the rights to scrutinise the bill that enacted those powers.

4. The government has responded to criticisms in the media, the courts and in Parliament by threatening to close them down – most recently threatening Channel 4’s licence to operate.

5.  Members of the government have no scruples about lying about its aims, objectives, situation, process or outcomes.  There is a depressing catalogue of falsehoods listed by Peter Oborne.  It is probably no less dangerous, however, that so many government ministers don’t do detail, and say things that are false simply because they don’t know any better.  Recent examples are the confusion between the EU and the European Court of Human Rights, the mistaken statements about state aid and the EU, or the ill-informed statements made by Johnson and Patel, in the wake of the recent terrorist attack, about the release of prisoners on licence.

These things threaten three key elements of any democracy.  They are the rule of law, public accountability, and open discourse and deliberation.  The threat to democracy is chilling.

The election campaign has been marked by a flurry of lies

Lies are a rarity in British public service.  Most public servants know to avoid them, for a simple reason: they will be found out.  The nature of modern government means that everything is somewhere recorded (usually in writing), subject to exposure or liable to be the subject of legal action.   Public servants, in the best tradition of Sir Humphrey, can prevaricate, obfuscate, divert or distract, but if they’ve got any sense, they don’t say things they know to be untrue.

The Brexit campaign was bizarre, and alien to our political culture.  There were not only deliberate lies (for example, about Turkey’s entry to the EU), but deliberate and flagrant breaches of electoral law.  It’s not going too far to describe those breaches as ‘corrupt’ – the first legislation on electoral spending was, if I have it right, contained in the Corrupt and Illegal Practices Act of 1883.  Now, two elections on, we’ve seen a repetition of many of the same practices. 40 new hospitals and 50,000 nurses belong with the lie on the Brexit bus.

The cavalcade of lies is spearheaded by Boris Johnson.  The Conservative journalist Peter Oborne, horrified by what’s going on, is maintaining a tally at https://boris-johnson-lies.com/ .  I suspect he’s finding it hard to keep up.  Only this morning, the Guardian reports preposterous things being circulated about prostitution, immigration and spending,  and less preposterous (but false) statements about state aid, trade unions, tax and defence.

The main offenders are the Conservative party, but the Labour opposition is not exempt.  Accused of a ‘mendacious fiction’ in saying that the Labour Party had deal with all cases of antisemitism, Jeremy Corbyn did not try to say (in his interview with Andrew Neil) that the statement he’d made was true; he said only that the accuser would have to prove that it was ‘mendacious’, or deliberately untrue.  So the statement was false, but not intended to deceive?  Politicians really ought to be aware that people will on occasion listen to the words they use and judge them accordingly.