There is a positive case for the Union - but Darling might lose if he makes it

During last night's independence debate between Alastair Darling and Alex Salmond, an oft repeated criticism was levelled at the Unionist campaign - that while they were good at picking holes in the SNP's plans, they had no positive reasons for staying together. This is true. Better Together's positive messaging hasn't really advanced beyond "we're better off together", which doesn't really progress anything.

I firmly believe that there is a positive case to be made for the Union. However, in the current political climate in Scotland, it may do more harm than good to the Unionist cause.

I have a Scottish name, Scottish heritage and Scottish grandparents. My interest in Scotland's future is not purely as an English observer. Nevertheless, the Englishman inside me will be sad if Scotland leaves. The Union has been a tremendous success. A great many British successes belong to Scots and to turn away from that shared history (or, worse, to bicker over who deserves credit) would be a great shame. Yet our history is not the source of the Union's value. Rather, it is the process of partnership that we should value. We are richer because we are together. Not only materially but also culturally. We share in each other's successes and support each other when things get difficult. Bad times are more bearable and good times enhanced because we experience them together. We are generous together but mean and parochial when driven apart. Separated, we bicker over trivial things, retreat to our national stereotypes and generally become a worse version of ourselves. Together, we are more open, more varied, more tolerant and enjoy a more colourful national life. Independence for Scotland would end this partnership and turn us into adversaries, obsessed with scoring petty victories at the expense of both our peoples.

Darling could make this argument, yet to do so would include an assumption with little popularity in Scotland - that the English have brought anything to the party at all. Understandably, the Better Together campaign have positioned themselves firmly on the side of Scotland and (implicitly) in at least moderate opposition to England. To suggest that Scotland has anything to thank England for is to suggest Scottish weakness and vulnerability, to lack faith in the abilities of Scots and to pour water on the flames of Scottish pride.

As a result, the question being debated is not how the two groups can be the best versions of themselves, but how Scotland can extract the best deal for itself. The offer of further devolution exacerbates this. Vote for independence and you get to keep everything Scotland has but risk losing it all if things don't go to plan. Vote for the Union and you might be able to get more from the English than you get now. England seems a cow to be milked - an adversary rather than a partner.

Who cares about the debate as long as the vote goes the right way? Two things: if Salmond wins, Scotland will not float off into the North Atlantic. We will still need to negotiate a settlement and find a way to live together. Given the tenor of the debate, attitudes may harden on all sides. British politicians, now beholden to an English electorate, will be no friends of the Scottish people. They may find no votes in reasonableness, but a great many in hard line venality. Similarly, Salmond's "mandate" will give him the confidence to hector, bully and make demands (if he wasn't given to that already). Secondly, even if the Union prevails, the partnership may already be ruined. Watching last night's debate (particularly the comments from the audience), I was struck by the thought that if Scots hate the English so much, maybe they are better off out. A No vote will still leave a bitter taste if it seems Scotland has concluded that English pockets are more easily picked from within the Union. The partnership that has proved so successful will be severely damaged and we will all be worse off. 

Today's most depressing piece of journalism?

Now I know this is probably an insanely futile exercise but I read something today that I could scarcely believe and feel must be responded to. I feel this way not because I have particularly strong feelings about trains (despite what follows). Rather, it’s incredibly depressing that journalists are willing and able to publish coruscating opinion-forming pieces with almost no interrogation of the facts presented. I’m sure similar pieces get published every day in every paper, informing people’s views and, ultimately, changing the way they vote. And that’s sad.

Anyway, for those wanting to know what brought this on, here goes:

A quite extraordinary article was published today in the Guardian [EDIT, here's a link http://www.theguardian.com/commentisfree/2013/nov/04/rail-privatisation-train-operators-profit?CMP=twt_fd]. In it, this esteemed journal’s Economics Leader Writer, Aditya Chakrabortty, described rail privatisation is “legalised larceny”. Fair enough, that’s an opinion of sorts and not, on its own, worthy of comment. However, the basis for this claim was something bizarre. According to Chakrabortty, the proof of this theft lies in the lamentable record train companies have of investing in services. He came to this conclusion on the basis of some analysis by the Centre for Research on Socio-Cultural Change (Cresc). This analysis looked at the average the return on capital employed (ROCE) for train companies last year (2012). The idea was to show how much profit the companies earned for every pound invested in the business. If the number was low, they’d be investing lots and not earning a huge profit. A high number would be proof that the industry was busy bleeding the country dry while lining shareholders’ and executives’ pockets. Cresc’s answer was that last year, the average return was 147%.

147%!!!

Chakrabortty accurately identifies this as an astronomical number – comparing it to Barclays’ ambitions of a ROCE of 10%. To give you an idea of what that means, a pound invested in a train company would generate almost 15 times the profit of a pound invested in one of the UK’s largest banks. Chakrabortty makes the comparison of buying a house and selling it the following year at a 147% markup. Wow.

The problem is that this number seems quite crazy. How do we know? By applying something Chakrabortty clearly doesn’t bother with when having his biases confirmed – a little scepticism.

Because I clearly have remarkably little in the way of a life, I looked at the annual report for First Group for 2013 (available here). This isn’t perfect. First Group is a big business and the report doesn’t give me a detailed breakdown of the balance sheet of its UK Rail business. However, it does tell me the revenue and operating profit of the UK Rail business and the ROCE of the group as a whole. Here are a few things I found out:

• First Group’s overall ROCE is between 10% and 12% (or between 12 and 15 times smaller than Cresc’s claims its UK Rail business generates). This is possible – its other divisions could be loss making, for example [they’re not].
• In 2012, First Group’s UK Rail division made an Operating Profit of £110.5m from Revenue of £2.5bn – a 4% profit margin.
• This is pretty strange for a business with such an incredible Return on Capital.
• If Cresc’s numbers are right, then First Group has only £75m of capital employed in its business of transporting hundreds of thousands of people across the country every year.
• Wikipedia tells me First Group has about 260 trains in the UK. That works out at £289,000 per train. A whole train for less than £300k! And yet, Kent Rail tells me that First Group’s most common train (the British Rail Class 319) costs £306k a year to rent (here).

All of this makes Chakrabortty’s claims pretty hard to believe. I could be wrong. But if I am, this is a truly incredible story worthy of more than a spurt of criticism on the comment pages of Tuesday’s Guardian. It might be that First Group is totally unrepresentative of the industry but it’s the industry’s biggest player so this seems unlikely.

I don’t know where Cresc got their figures because they’re not provided in the article. My guess would be they’ve misunderstood how to calculate ROCE and have ignored the long term debt that provides most of the funding for many businesses and around 75% of First Group’s total capital employed.

If I’m right, this article should be retracted immediately.

Isn't it about time we learned to embrace immigration?

According to the Daily Mail a substantial number, “probably tens of thousands”, of the 300,000 foreign students who come to the UK every year “are economic migrants seeking a back door into the UK”. Indeed, net migration into the UK remains stubbornly above 200,000 a year, supported by sham colleges and the incompetent management of London Metropolitan University.

Good.

It’s about time we all woke up to the fact that immigration is a good thing. Some polls show that 80% of us support the government’s target to reduce net immigration to tens of thousands every year. I am not one of them. While the Daily Mail is right that immigration places some additional burden on public services like education and housing, it is wrong about everything else. 80% of the country, including the Prime Minister and his Government, are wrong about immigration.

Immigrants have, for centuries, provided tremendous impetus to our economy and our culture. This is more than just curries and Mo Farah. Immigration is a part of the fabric of our nation. While it is now a cliché to assert that most of the UK population are descended from immigrants, it is rare for the importance of this fact to be considered seriously. It is not just an accusation of hypocrisy. It tells us something important about who we are and what binds us together as occupants of this small island on the edge of Europe. Almost every family tree contains members who have come from abroad in search of a better life. They have come from Italy and Spain under the Romans; Sweden, Norway and Denmark with the Vikings; France with the Normans, the Huguenots and after their Revolution; Holland after the Glorious Revolution; from Africa as slaves; Ireland after English conquest; India, Pakistan, Hong Kong and the rest of the Empire as it was built and dismantled; Jews have fled from persecution elsewhere and too often found little better here; Poles and even Germans stayed after the War; Ugandan Asians were sent here by Idi Amin and immigrants from the Caribbean crossed the Atlantic for a better life; South Africans fled Apartheid and most recently people from Eastern Europe, having thrown off the yoke of the Soviet Union have come here to find jobs as members of the European Union. Throughout there has been a steady stream of arrivals and departures fuelled by the UK’s position as a centre of world trade.

That list is long but by no means exhaustive. Almost none have been invited. They have come as conquerors, entrepreneurs and refugees. Many have been subjected to racism, suspicion, abuse and oppression on their arrival. Yet they have all made their mark on our economy, our culture and most particularly our language. That the UK is a microcosm of the world feeds our belief that the UK is at the centre of the world. Immigration is fundamental to our national psyche.

And yet all this would be irrelevant if today’s immigration brought none of those benefits. This, however, is plainly false. Immigration’s opponents live with the curious contradiction that immigrants both take our jobs and sponge off benefits. Both cannot be universally true.

It is true that many immigrants are willing to work harder for less money than their British born competition. They fill tedious positions performing manual labour picking fruit and waiting tables for the minimum wage – jobs many Britons flat out refuse to do. Without them, businesses across the country would be unable to compete and thousands of management and administrative jobs would be lost. When they have finished their degrees (paying handsomely for the opportunity) they stop waiting tables and take graduate jobs where their extra languages and knowledge of different cultures in part offsets the UK’s dreadful failure to teach these to our own kids. Many immigrants bring with them energy and entrepreneurial zeal, injecting the British economy with new products and ways of doing things. This innovation drives our economy forward and keeps us competitive internationally. It is true that many ‘native’ Brits do this too but the added spice from those who have undergone tremendous hardship to make a better life for themselves brings a welcome boost. They become sportsmen and women, actors, playwrights and authors, reinvigorating our cultural scene and supporting the UK as an international tourist destination.

In addition to their domestic benefits, they support Britain’s interests abroad as well. That the UK is known as the country that sheltered Mo Farah and enabled him to achieve buys us goodwill amongst the people of Somalia. A marginal benefit, perhaps, but potentially important in the battle against al-Shabaab’s al-Qaeda infused attempts at radicalisation in that part of the world. Similarly, when David Cameron is defending Britain’s interests in Europe, is it not easier for him to find allies when the Polish Premier knows that scores of his citizens are as dependent on the UK economy as we are?

There are costs to immigration, undoubtedly. Some control of immigration is necessary but the levels advocated by the current government are crazy. We should take as many immigrants as we can accommodate. None of their costs would be higher if we embraced them and many would be lower. There would be less temptation, for example, to hide from the state and live in the black economy. We should change our minds and welcome immigrants as the tonic this country has benefited from for centuries.

The idiocy of a wealth tax

In a fairly blatant attempt to placate the Lib Dem faithful before conference season, Nick Clegg floated (again) the idea of a wealth tax. Some Tories seem to think the idea has merit. It doesn't, it raises almost no money and would be a nightmare to administer.

Before I get on to my own objections, let's just look at two justifications put forward by its advocates:

1. Clegg's: to prevent social unrest. Really? Are the British people so violent that they would riot in the streets in protest at John Terry's wealth? And if they are, would they be placated by a 1% tax on large houses?

2. Some Tories': to shift the tax burden away from income and towards wealth, encouraging the aspirational. Ok, well, in order for this to enable a decrease in the income tax burden, the wealth tax would have to be substantial. The equivalent taxes in France raise a few billion Euros a year. You'd need at least a tenfold increase to make any impact on the £250billion in Income Tax and National Insurance* the government collects each year. Moreover, the aspirational middle classes are unlikely to distinguish between an income tax this year and a wealth tax next year, particularly given the latter continues after you've retired.

So what's the real problem with a wealth tax? Put simply, it would be incredibly expensive to administer. Astronomically so. Although, the Guardian naively believes it would be really simple:

The mechanism for collecting the tax could be straightforward though – higher rate taxpayers already file an annual tax return relating to their income, and pages could simply be added for a wealth statement. However, income tax is collected a year in arrears – if you were to try and do the same for wealth, you would be asking in January 2013 about assets held in 2011/12. People would need notice that they needed to keep the paperwork.**

This is nonsense. Most people have no idea what their net worth is. Why? Because unless it's cash held in a bank account, wealth doesn't really exist as a number. It's an estimate of the cash you would have if you sold everything. Why is that a problem? Because estimates are judgement calls and judgement calls can be argued about. Armies of tax accountants would make huge amounts of money arguing that assets were worth less than they at first appear. There would be huge incentives to invest in assets with opaque values. A new market in complex financial products would develop that returned income but appeared to have no taxable value would spring up (and that's definitely a route we want to go down). Worse still, many people would seek to hide assets altogether. The divorce courts already struggle to pin down the true net worth of rich individuals. Imagine doing that for everyone.

Here are just a few of the questions any substantial wealth tax would have to grapple with:

• How do you value complex financial products? Particularly, how do you value hedging instruments, derivatives and other assets whose value is based on future events?
• How do you distinguish between houses that require repair and houses that don’t? Bear in mind that many buyers of high end houses intend to make substantial changes anyway, so it isn’t clear value is added by making repairs.
• How do you deal with deliberate actions that decrease asset values (e.g. bricking up windows, burning down unwanted outbuildings etc)? Where people have valuable property they use but don’t intend to sell, they may well take action to decrease the value of elements they don’t care about.
• How do you deal with unnoticed issues? I’ve just discovered my house has subsidence. This massively decreases its value but it also means all previous values were wildly optimistic. Can I have my tax back please?
• How do you value debt, and which types of debt do you include?
• How do you value shareholdings in unlisted companies? Do you add a premium for having control of those companies? Which valuation method do you use? If you use earnings, what multiple do you use?
• How do you value intangible assets?
• How do you account for depreciation?
• How do you value (or even identify) offshore assets?
• Do you include the costs of realising the value of an asset in calculating someone’s wealth? If so, how do you estimate these?
• How do you value assets held in bank vaults? Come to think of it, how do you make sure people aren’t stashing cash under the bed or in their basement?

 I’m sure there are many, many more issues thrown up by the vast complexities of everyone's finances. The answers to the questions above are not trivial or easy to apply universally. It would require an enormous government bureaucracy to manage that would consistently be challenged in the courts. As a result, the system would be a nightmare to deal with and phenomenally expensive, rendering it a hugely inefficient way for the government to raise revenue.

There is one more issue I'd like to point out. When taxing wealth, you will very rarely be taxing a number in a bank account. The vast majority of this tax will be raised on non financial assets. As a result, you need a way to assess the values of said non financial assets. This will almost always be done with reference to market prices. The value of my house will be based on the selling prices of other, similar houses in the same area. The problem with this is, I don’t control those prices. The price of those houses is decided by an agreement between two people I have no influence over or contact with. And yet, that price will decide the value the government puts on my house and therefore the tax I owe. As a result, my tax burden is decided by an agreement between two people that is totally disassociated from me. If the seller negotiates a particularly high price, good on them but I’m screwed. Similarly, if the seller is desperate to offload said house, I end up a winner.

I don’t know about you, but I have a massive problem with that setup. It does not seem right, that someone's tax burden should be decided by something completely out of their control. In all other areas of tax, I have some level of control over it. I can choose not to accept a pay rise, or to spend all my money on Jaffa Cakes and children’s clothing. 

At the point where I am taxed based on the actions of others in this way, the tax system ceases to be anything other than the state taking money from me because it feels like it. I don’t like that.

I'm sure proposing a wealth tax seems like really good politics to Nick Clegg. To the rest of us, though, it should just be a really, really bad idea.

Sources:
* HMRC: http://www.hmrc.gov.uk/stats/tax_receipts/tax-receipts-and-taxpayers.pdf
** The Guardian, 29 August: http://www.guardian.co.uk/money/2012/aug/29/clegg-emergency-wealth-tax?newsfeed=true

The Qatada decision protects us all, we should celebrate it

This week's furore over the failed deportation of Abu Qatada has been an unedifying spectacle indeed. Those determined to deport him have not only lambasted an institution that provides important protection to British citizens, they have also suggested that the government ignore the courts and accept whatever punishment is handed down.

Opponents of the ECHR have complained that the case shows the stupidity of human rights legislation. The courts have lost their mind, we are told, and should go back to defending the rights of people we like. Politicians of every stripe have queued up to attack the decision with tremendous gusto (who ever lost an election for attacking a terrorist? The West Wing says it, so it must be true). They point out quite how evil Qatada is, a convicted terrorist in Jordan and bilious preacher of hate. They are right that he seems to be a truly unpleasant piece of work.

And yet, even if Qatada is guilty of every accusation levelled at him, I cannot help but feel that the debate has demonstrated the vital role institutions like the ECHR play. It has been a clear demonstration of how easily our own justice system may ignore Human Rights. Worse, it has shown how willing those in power are to ignore those rights when it doesn’t suit them.

Human rights took root in our most enlightened moments during the 20th Century, usually after witnessing some dreadful atrocity. We recognised the common dignity of humanity and the necessity to protect every person, regardless of where they came from and so set down a few principles that we felt trumped others. It was a victory for our better angels over the demons that so often corrupt our morals. Moreover, it was made knowing that we would forget the horror of human rights abuses. We would forget how easily rights are eroded and how tempting it can be to ignore them. And so, at a moment when their importance was clear in our minds, we codified them and gave them incredible status within the law. We knew the day would come when we would think them unnecessary or unwieldy, so we made it phenomenally difficult to back out of them. The Qatada decision is not an expression of contemporary modern human rights madness; rather, it is a reminder from our better angels of the importance of  fair trials and how awful it becomes when we erode that right

That may be the lefty defence of the ECHR. There is also, however, an argument that appeals to the right-winger within me. If there is one lesson from the 20^th Century, it is how extraordinarily vulnerable we are to the overbearing power of the state. Both groups and individuals have suffered great harms and injustice at the hands of state institutions, often with the open consent of the majority. It is not just the victims of Nazi Germany and Communism who fall into this category. The treatment of prisoners (and protesters) in Northern Ireland, the introduction of control orders and repeated assaults on trial by jury in the UK alone show how willing governments can be to trample on human rights. Human rights legislation exists not to protect us from each other so much as to protect us from the state. With that in mind, it is logical that when this legislation is truly effective, it acts as a check against state actions, infuriating governments in the process. If everything ticks along smoothly with no controversy, I would be suspicious that the courts were not providing an effective check. That Abu Qatada's deportation should be stopped, to howls of anguish from the government, tells me that our current system is robust and effective. It proves that I can feel secure that the state cannot go beyond itself and abuse the freedoms I hold dear. Indeed, I now know that if the state one day comes for me (as, apparently, is its wont), the courts will protect me. 

Qatada is scum, but he is human. The courts have proved that even the worst and most hated in society will be protected. For a while at least, we can feel safe and protected against the vicissitudes of the state. For that, we should all celebrate.

P.S.

Ignoring whether we should welcome the decision of the courts, let us take a moment to consider the pathetic idiocy of those who encouraged Theresa May to deport Qatada and accept the consequences. In the UK, deliberately ignoring instructions from a court is an incredibly serious offence. Contempt of court frequently carries a jail sentence. In that context, to suggest it is ok for the Home Secretary so flagrantly to ignore a court decision is grossly irresponsible. Furthermore, every encouragement to ignore the court and deport Qatada tacitly includes the justification “because we can afford it”. Whatever fine the courts might hand down for such a transgression, goes the argument, the resources of the British state could cope. This attitude exists elsewhere in our legal system, where companies sometimes generate profits from transgressions that vastly outweigh the fines regulators can hand down. Similarly, the rich sometimes feel able to buy the right to break the law. It is disgusting and to validate this attitude by encouraging the government to take it is beneath contempt (Peter Bone – I’m looking at you).

Why everyone should ditch the outrage and listen to Diane Abbott

A leader in the Black community makes a comment on Twitter in which she generalises about white people. Cue gleeful outrage from an assortment of right wing commentators gleeful that one of the left's most articulate advocates has opened herself to the accusation of racism. 

Wow. Isn't it time we all grew up?

Abbott's comments were rather clumsy and unhelpful additions to any debate about race. Nevertheless, I cannot be outraged by them. Indeed, the only response I really have can be summed up with the phrase: "Am I bovvered?"

Here's why:

1) I don't have a right not to be offended and would prefer to err on the side of Abbott being able to say whatever the hell she likes.

2) Even if you take her words at their most pernicious meaning, I'm pretty sure they're not true and similarly sure Abbott doesn't believe them herself.

3) 142 characters isn't exactly a recipe for subtle and nuanced debate.

4) If that is a concern some people hold in private, it's probably useful for it to be aired in order to be refuted.

5) Many Black people still get a raw deal in this country and certainly have in the past. Some hyperbole producing anger is probably reasonable/ understandable/ forgivable. Take yer pick.

6) Sometimes people fuck up. Deal with it.

7) I have all the time in the world for Diane Abbott.

Racism is a serious thing. Daft generalisations should be challenged as unwise and unhelpful but to jump on them with quite so much alacrity is pathetic. To describe Abbott's comments as racist associates her with the purveyors of hatred, vitriol and violence. It validates racist views by creating the appearance that everyone is at least a little bit racist and therefore it is ok. It isn't ok and most people aren't racist (thanks, in part to leaders like Diane Abott).

Perhaps it's time we spent a little less time condemning people to score political points and a little more time confronting the issues.

How to get a Tory to agree with Laurie Penny

Nadine Dorries' amendments stem from her own anti-abortion prejudice and don't even deliver what they claim. They are an insidious attempt to restrict access to a service that helps thousands of women every year.

Over the last couple of days Nadine Dories has achieved a remarkable feat. As a result of her activities in the House of Commons and lobbying on the Health and Social Care Bill I find myself appalled by Government policy and in complete agreement Laurie Penny of the New Statesman - something I never really thought would happen.

Now I've never been a tremendous fan of the MP for Mid-Bedfordshire. She has campaigned to reduce the time limit on abortion and is a member of the socially conservative Cornerstone Group (motto: Faith, Flag, Family - creepy or what?). I don't think we're going to see eye to eye on a huge range of issues. Nevertheless, this week she has surpassed even her own chequered history.

Dorries worries that women seeking abortions don't have access to proper counselling before going through with the procedure. Some of the principal sources of this counselling are the abortion providers themselves. Since these providers receive money from the NHS every time they perform an abortion, they are financially incentivised to counsel vulnerable women to have abortions.

This is where the nonsense starts.

It paints abortion providers as institutions not that exist not to furnish women with the ability to choose, but to perform as many abortions as they can. This is mental! How would Dorries react to the suggestion that midwives should be prevented from advising pregnant women? After all, they depend on women giving birth for their livelihoods!

But, I hear you cry, surely you can't really object to ensuring the counselling we provide is independent? It should help women make the decision that's right for them not just provide a justification. Fine. But there are two responses to this:

1. There's no evidence that the current system doesn't provide independent advice already.
2. THAT'S NOT WHAT THE AMENDMENT DOES.

When you read Dorries' amendments, available here, they don't create a framework for ensuring abortion counselling is independent. Oh, they use the word "independent", sure, but their definition is intriguing:

Information, advice and counselling on abortion is independent where it is provided by:

"either a private organisation that does not itself provide for the termination of pregnancies or a statutory body".

In other words, counselling provided by the Catholic Church is independent. An evangelical Christian telling a teenage girl that she will burn in Hell if she terminates her pregnancy is independent. A professional counsellor employed by Marie Stopes explaining the pros, cons and risks of abortion cannot be independent.

I'll leave it to the experts to tell you the ways in which this will harm vulnerable women. However, I am happy to denounce it as a cynical attempt to manipulate thousands of women into making the decision Dorries wants them to make. It shouldn't be Tory policy and it certainly shouldn't be government policy.

If you agree, you can contact your MP through the Abortion Rights organisation.