Scotland needs a revising chamber

The UK government has decided to nullify the law recently passed by the Scottish Parliament, which aims to simplify the process of self-identifying oneself as being in a different gender from one’s sex at birth.  I don’t propose at this stage to discuss the principle of self-identification – I may return to that later.  I do think, however, that the legislative process is important for clarifying the constitutional place  of Scotland within the UK.

To begin at the beginning, the UK parliament is a sovereign body.  That does not mean that it is in control; it means that the UK parliament is the source of authority for all laws passed within the UK.  This is very different from a federal government, in which powers and authority are delegated from the member states – David Cameron’s claim, after the 2014 referendum, that Scotland would be the most powerful devolved parliament in the world, is simply asinine.  The idea of ‘devolution’ depends on the principle that devolved governments have to be authorised to do things by the central government.  That summarises the current status of Scotland.

Second, the UK parliament retains the right to legislate, not just for the UK as a whole, but specifically for Scotland.  That is the basis of the ‘Sewell motions’, which have been passed at the behest of a Scotish Government that otherwise cannot fit the legislation into its busy timetable.

Third, there is no legislative area which is reserved to Scotland.  The authority of the Scottish Parliament is wholly dependent, in law, on the continued authority of the UK parliament.  The UK government has taken advantage of this to intervene in the affairs of Scottish local authorities, which are part of the services devolved to the Scottish Parliament.

And then, finally, there is s.35 of the 1998 Scotland Act, which states:

If a Bill contains provisions … which make modifications of the law as it applies to reserved matters and which the Secretary of State has reasonable grounds to believe would have an adverse effect on the operation of the law as it applies to reserved matters, he may make an order prohibiting the Presiding Officer from submitting the Bill for Royal Assent.

That is what is happening now.  There has been talk of legal action to object to the use of s. 35, but I think it highly unlikely that such an action will succeed; the Supreme Court has already taken a dim view of attempts to expand the powers of the Scottish Parliament.

Professor Aileen McHarg has been cited as saying that there are alternatives to the use of s.35.  These alternatives include

  • amending the Equality Act 2010 to take account of the Scottish legislation,
  • introducing a bill to overrule the Scottish law
  • and taking the Scottish Parliament to court for exceeding its powers.

The first two would take far more parliamentary time, and in the meantime any potential conflict with equality law would not be resolved.  The problem with the third option is that, simply put, the Scottish Parliament hasn’t exceeded its powers.

This is not just about legality, however; it’s also about politics.  This legislation is controversial, but it offers nothing like the challenge to the devolution settlement implicitly represented by the (untested) Scotland (Referendums) Act 2020.  The UK government has been looking for ways to curb the enthusiasm of the Scottish government, and gender recognition looks like a plausible target.

The position of the Scottish government has however been undermined, in my view, by the process it has followed.  Amendments to the legislation were rejected outright: those included several attempts to assert the relevance of the 2010 Equality Act, protection of single-sex spaces and to include impact assessments. These were all met with the questionable, often repeated assertion that there was no impact on the application of UK equality law that required consideration.  Of course the legislation aimed to alter the categorisation of protected equalities: that, surely, was the point.

The government of Scotland, as currently constituted, is principally based on the unitary authority of the Scottish Parliament.  There is no other mechanism by which laws can be scrutinised and revised, except for reference to the UK parliament.  If the Scottish government wants to be able to argue that it should be left alone to make decisions relating to Scottish law and government, and that any intervention by UK authorities is unreasonable, it has to be able to demonstrate that appropriate safeguards are in place.  It cannot do so within the current institutional framework.   Scotland needs a revising chamber.

Nigeria needs to spend more on social support

I was alarmed to read a report in the Nigerian Observer, which told me that the World Bank was pressing Nigeria to ‘reduce the poverty net’.

If structural reforms are not implemented, Nigeria’s future looks bleak, per capita income will plateau, Nigerians will not have a full-time job by 2030 and if the employment rate does not improve, 23 million more Nigerians will live in extreme poverty by 2030,” according to the [World Bank’s] chief economist.

The report goes on to list the kinds of reforms that are being looked for: support for the private sector, ‘unlocking’ private investment, introducing ‘critical’ macroeconomic and structural reforms.  That, on the face of the matter, looks like a call for ‘structural adjustment’ and a return to the ‘Washington Consensus’, which emphasised liberalisation, privatisation and fiscal discipline.  Structural adjustment was not an unmitigated disaster – its effects were mixed – but it did lead to substantial hardship  and in some cases created positive obstacles to development.  One might have hoped it had been left behind in the 1990s.

As it turns out, however, this is not what the World Bank has been saying at all.  The Bank’s Nigeria Public Finance Review bemoans the chaotic arrangements that characterise many of Nigeria’s current policies, but the central theme is very different: Nigeria needs to devote far more of its resources to  public expenditure, and it needs particularly to expand its systems of social support.  Yes, it calls for ‘fiscal adjustment for better and sustainable results’, but it also argues that ‘Nigeria’s social spending is too low, both in levels and as a share of budget resources’; that education and health provision is not enough to raise human capital; and that government and the states need to raise revenue substantially to pay for it.  Nigeria has been shaping up to become one of the world’s largest poor countries – ‘the world’s second-largest poor population after India’. The World Bank’s policies have been misjudged at times, but this is not one of those times.

How much should income be cut by?

The government claims to be concerned about ‘inflation-busting’ settlements.  Public sector wages have generally ‘risen’ by 2.7%; private sector wages by 6.9%.  Many benefits (not all) have ‘risen’ in line with inflation.

I have put ‘risen’ in inverted commas because incomes have not risen at all.  As a simple matter of maths, a rise ‘in line with’ inflation is not an increase in income; it is a reduction.

Initial income 100
Inflation 10.7%
Value of income after inflation 89.30
Increase of:
2.7% (recent public sector awards) 91.71
6.9% (recent private sector awards) 95.46
7% (NHS in Scotland) 95.55
10.7% (‘in line with’ inflation)
98.56
12.32% (break even) 100
19% (the claim made by the RCN) 106.27

Increasing benefits ‘in line with inflation’ implies a cut in real income. It would take an increase of 12.32% before that did not happen.  And the supposedly unaffordable claim by the RCN for 19% is actually a request for an increase in real terms of 6.27%.  Since 2010, the real wages of nurses have fallen by 8%.  The RCN claim would not restore that level of income.

A trial for rape

If I’ve been inactive during the last week, it’s not least because I’ve been otherwise engaged.  I’ve been on the jury for a trial in the High Court, where a man was accused of rape.  I am not at liberty to reveal any part of the jury’s discussions, but I can comment on the law.

The law relating to rape was restated in Scotland in the Sexual Offences (Scotland) Act 2009.  Section 1 begins in these terms:

If a person (“A”), with A’s penis—

(a) without another person (“B”) consenting, and

(b) without any reasonable belief that B consents,

penetrates to any extent, either intending to do so or reckless as to whether there is penetration, the vagina, anus or mouth of B then A commits an offence, to be known as the offence of rape.

There are several elements in this. The most important are

  • the identity of the person,
  • the act of penetration,
  • consent,
  • intention, and
  • the ‘reasonable belief’ of the perpetrator.

The case was found to be ‘not proven’: a  verdict available in Scottish law that is treated in practice as equivalent to acquittal, but which is distinctly not the same as ‘not guilty’.   There is a presumption of innocence, and it is for the prosecution to establish the case. That must extend to every aspect of the crime, and in this case it did not.

I’ve commented previously on some of the problems with the law relating to rape, particularly the focus on consent.  This case has made me aware of another.  The statute adds the rider of a ‘reasonable belief’ in consent to a whole slew of sexual offences, including rape, exposure, voyeurism and drugging people.  “Even the devil”, the legal proverb runs, “knows not the mind of man.” Rape and most other sexual offences should be a matter of strict liability: what matters is how people behave.

Not quite Universal Basic Income: the new selectivity

UBI is universal when it provides for everyone in a category, without further conditions; basic, when it is only the starting point, and people are free to add income from other sources; income, when it is paid periodically.   The Basic Income Earth Network identifies five main points:

1. Periodic—It is paid at regular intervals (for example every month), not as a one-off grant.
2. Cash payment—It is paid in an appropriate medium of exchange, allowing those who receive it to decide what they spend it on. It is not, therefore, paid either in kind (such as food or services) or in vouchers dedicated to a specific use.
3. Individual—It is paid on an individual basis—and not, for instance, to households.
4. Universal—It is paid to all, without means test.
5. Unconditional—It is paid without a requirement to work or to demonstrate willingness-to-work.

There is more to being ‘unconditional’ than not having a work test – benefits that are restricted to people with disabilities or care needs have to impose a test, and to that extent they are selective.  UBI tries to avoid the pitfalls of selective benefits, which have three great problems: complexity, the difficulty for claimants of knowing whether  or not they will be entitled, and potential stigma.  Selective benefits commonly fail to reach many of the people who ought to be receiving them.

Arguments for Basic Income have captured the imagination of many people.  I have my reservations about them, and those reservations are serious, but I’m sympathetic to the core objectives: providing people with a foundational income that is consistent, reliable,  and as simple as possible.

It seems, however, that some recent programmes have departed somewhat from the script. In Wales, a ‘basic income’ experiment is being conducted for 500 young people leaving care.  The programme is linked to advice and support relating to financial management, education, employment and welfare.  That’s the right way to go about supporting vulnerable people, but it’s three steps removed from ‘Basic Income’: it’s selective, time-limited and not just a cash payment.  In San Francisco, there are three such programmes.  The first is the “Abundant Birth Project“, which offers a ‘Basic Income Supplement’ to pregnant women who are African American or Pacific Islanders, mainly for the duration of their pregnancy and shortly afterwards.  Next is the Guaranteed Income Pilot for Artists, supporting two cohorts of 60 artists, nominated by partner organisations.  The third, and most recent, is the Guaranteed Income for Transgender People, offering both cash support for 55 transgender people and ‘wrap-around’ support (including medical care, case management and financial advice).  Again, these initatives are time-limited.

These programmes don’t have much in common with the idea of Basic Income.  They’re selective, short-term, and eligibility is highly restrictive; they are linked, beyond cash, to other forms of support; and their target groups are highly visible.  I don’t think we can draw any lessons from them about how Basic Income might work, or how people might adapt to a UBI.  It’s interesting, however, to see that arguments for UBI have influenced the development of highly targeted, selective benefits – for example, this paper on supporting transgender people.  We’re seeing, not a commitment to universality, but a new selectivity.

A case for higher taxes

Professor Richard Murphy argued yesterday in a tweet that the government should be aiming to cut taxes in a recession.  He duplicated that tweet in his  blog, but the core point he makes is this:

When facing a recession a government should
– cut interest rates
– cut taxes
– increase its spending.

In a recession, a government needs to stimulate the economy, and that can be done by injecting resources.  I’d question, however, whether either of the first two would actually stimulate the economy as things stand.  Interest rates have been close to zero for some time, and while lowering them further (perhaps into negative rates) would have some effect on economic activity – primarily, dis-saving, converting holdings from money to goods (such as houses) and diverting money to activities or locations which offer higher interest rates  elsewhere – most of those effects have already been realised. Cutting taxes – the policy of the catastrophically inept Truss government – would primarily release money to those who pay more in taxes, and the resources released will go in large part to rentiers.

The simple case for higher spending is made by Keynes:

Pyramid building, earthquakes, even wars may serve to increase wealth …. It would, indeed, be more sensible to build houses and the like; but if there are political and practical difficulties in the way of this, the above would be better than nothing.

Higher spending doesn’t have to be financed point for point, and it doesn’t have to be financed by tax – there are lots of other options.  However, it can be inflationary if it means that ‘too much money is chasing too few goods’.

A large tranche of what we call ‘public spending’, however, is something different.  Benefits and pensions are transfer payments, a point I’ve made in previous blogs.   Government doesn’t spend the money it allocates to pensioners; it passes them the money so that they can spend it.  Taxation to fund cash transfers doesn’t withdraw money from the economy.  When transfer payments are directly financed – that is, being transferred from someone else – they are presumptively neutral in economic terms. This is not inflationary, because the amount of money in the economy remains the same after the transfer.  Any differences will depend on whether the recipients spend money differently from those who pay. That will be true to some degree, but it’s marginal: people on lower incomes spend proportionately more on food and energy, and save less.

Taxation is not the only way to finance public spending, but there are particular advantages in funding cash benefits this way.  If transfer payments are funded by ‘helicopter money’ – like the extra £20 pw for Universal Credit during the pandemic – they’re politically vulnerable and implicitly temporary.  Transfer payments financed by taxation, or by an equivalent mechanism such as national insurance, imply a more equal distribution of income than the same payments financed indirectly through creating credit.  They will fund markets that function better for people on lower incomes. They do it without risking inflation. And they offer a better prospect of growth. The IMF have argued that a 1% increase in the income share of the lowest paid 20% produces growth of 0.38%, four and a half times the growth that comes from increasing the income share of the top 20%.

 

The uses of theory in social policy

States and welfare states is my twenty-third book. Its main arguments are that:

  • All states provide some welfare; all leave gaps.
  • The main methods used in comparative social policy don’t tell us what’s happening.
  • The ‘welfare state’ refers to guiding principles, not specific actions.

This leads to some distinctive insights about the subject matter:

  •  An examination of the sources of legitimacy in modern government, founded in a distinctive understanding of sovereignty and governance;
  •  An explanation for the burgeoning of social policy initiatives in many states which in the past would not have engaged with it; and
  • A new model of the development of greater universality, moving from particularism to solidarity and solidarity to welfare states.

Forty years ago, while being interviewed for a post in a relatively prestigious university, I said that I wanted to work on the theory of social policy. I was told that that didn’t exist as a subject.  This is my ninth book set in that non-existent field, and I’m not convinced that people out there are any more persuaded of  the relevance of theory now then they were then. One reviewer complained of the ‘high level of abstraction’; two others said it was ‘connected to policy’ and ‘clearly (and always) topical’.  Two reviewers thought it was original; one that ‘it will not say anything new to academics in the field’; and one more commented that, rather than being distinctively original, ‘it does draw together a variety of ideas … ‘ Yes, that’s what original theory does. Theory is used to clarify, to structure and to identify the relationships between ideas and evidence. The originality comes from the distinctive synthesis and critical evaluation of material, not from new facts.

 

Towards a Scottish independence referendum: widening a crack in the law

The Supreme Court is currently hearing a question of whether or not the Scottish government can hold a referendum on independence.  On the face of the matter, the constitution of the UK is a reserved matter, and that ought to imply that the Scottish Government doesn’t have the power to do it.  From the submissions being made on both sides, the position is not so certain.

The wording of the Act defines competence solely in terms of legislative activity.  Sections 29 and 30 deal with ‘legislative competence’; Schedule 5 makes it clear that constitutional matters are reserved, and so not within the competence of the Scottish Parliament.  And there, one might think, the matter ends. Only it’s not so simple.  The submission being made by the Advocate General for Scotland emphasises that any referendum would be advisory. It may still be the case, though this has still to be decided, that the Scottish Government doesn’t actually need a law to conduct a referendum; it could be seen as a matter of administrative competence, no different in principle from a mass survey of the population.  Accordingly, the counsel for the UK government is trying to get the Supreme Court to agree that the Scottish Parliament must first pass a law on which a decision can be made.  Passing a law would bring the measure directly and unequivocally into the provisions of the Scotland Act, and a UK decision made on that basis would certainly be negative.

The Scotland Act defines the legislative competence of the Scottish Parliament. It largely fails, however, to consider the actions of the Scottish Government (still referred to, in the Act, as the Scottish Executive).  Normally this would rest on a definition of powers – the actions of government can be within its powers (intra vires) or beyond them (ultra vires).  The ultra vires rule is well established in UK law: the classic case is AG v Fulham Corporation (1921), in which a local authority was blocked from operating laundry facilities because they had no explicit authority to do so.  A public authority can only act in accordance with the power that it has legitimately been given.

The term ‘ultra vires’ appears in the explanatory note to section 107 of the Act:

“This section forms part of the set of provisions which deal with the handling of ultra vires acts by the Scottish Parliament or the Scottish Executive.”

Donald Dewar explained his understanding in these terms:

“it is not in the power of the Scottish Parliament to change the constitutional arrangements … A  referendum that purported to pave the way for something that was ultra vires is itself ultra vires.”

The first of these examples, however, is referred specifically to the legislative remedies available to the UK government; and the second statement, by an individual MP during a debate, cannot taken as evidence of the intention of Parliament.

It could certainly be argued that the legislators were expecting the normal ultra vires rules to apply – but the law is not clear, and Jim Wallace failed in his attempt to fill the gap. If the Scotland Act had referred directly to administration intra vires, or simply to ‘competence’ rather than ‘legislative competence’,  the Scottish Government could be held bound not to exceed that authority.   However, the Act doesn’t say that.  There is a hole in the legislation, and the Scottish Government  hopes to be able to prise it open further so that it can let the light through.

23rd November:  The Supreme Court has made its judgement, based on the simple principle that the Scottish Parliament does not have the power to make such a law. On the specific point of ambiguity, they held that the reservation of powers could not be taken to be confined only to legislative functions, and that it must include non-legislative powers.

 

A few reasons not to cut the value of benefits

The most obvious problem with cutting the real value of benefits is that it will plunge people further into poverty.   It’s not a great surprise that people on benefits and low wages might be going without food; that’s been a recurring problem since at least the early 1980s.  It’s been estimated that there are two and a half million people in Britain who are destitute.  There will be more.  Expect growing malnutrition, and the short and long term harm to public health that goes with it.

A policy of impoverishing benefit recipients, however, will affect more people than just the recipients. There are the macroeconomic effects.  Cutting the value of people’s benefits would cut the demand for goods and services, at a time when the economy is teetering on the edge of a slump.  We know that people on lower incomes spend proportionately more of their income than richer people do – that much is self-evident, because people on lower incomes don’t have resources to save.  Research for the IMF has calculated that benefits for poorer people produce more of a multiplier – a beneficial ripple outwards – than tax cuts for richer people.  Conversely, withdrawing money from poor people will reduce demand  more than withholding it from richer people.

Next, there are sectoral effects.  Poor people spend proportionately more on food and energy than people on higher incomes do. Local shops and community businesses depend on their customer base; if that base withers away, so do the businesses that serve them.

Now to labour markets.    Most benefits, by quite a long way, are not concerned with whether or not people are part of the labour market: pensions, child benefits and disability benefits account for three quarters of the cost of benefits, and other benefits, notably Universal Credit, extend to people who are working as well as those who don’t. The mean-minded reluctance to support people on benefits is often justified in terms of the ‘incentive’ to work.  As benefits for unemployed people currently stand at something like 15% of the average wage, one might have thought that there was every incentive to work for pay. But there’s more going on here.  Many years ago, I heard a senior executive from the Danish social security system explain that they didn’t want to make too little provision, because if people got used to living on very low income that would undermine their incentives to work.  I dismissed that argument  at the time – the evidence didn’t seem to show much of an incentive or disincentive effect in either their system or in ours.  But the speaker had a point.  If we want people to engage in a high-wage economy, the last thing we should be asking those people to do is to survive on a pittance and  take any low-skilled job that comes up.  Forget the gibberish about preparing CVs: we should be training, getting people into education and funding internships.  We have to put more money into the process, not less.

Finally, microeconomics.  One of the central arguments that’s made by free-market liberals is that markets need to be able to operate.  Indeed they do, but markets have to be fed.  When people get cash benefits, those benefits are spent in the market.  When incomes are very, very low, people have less ability to participate in markets, and market providers have less reason to engage with them. Lower incomes mean more uncertainty for businesses and for poor people, more debt, and more debt defaults. This is the opposite of anything a free-marketeer should want.