WalesWatch — the IWA blog
Vulcan salute
Peter Finch reflects on the possible demise of the Vulcan pub in Cardiff:
The much-faded and painted advert for Guinness on the side of the Vulcan has been there since at least the 1960s. Back then this typically Cardiffian tavern was on the edge of a neck of tight working-class tenements, just the other side of the rail track from the recently slum-cleared district of Newtown. Cardiff was a dirty place, full of smog and dust. The sprawling steelworks of East Moors and the docks to their south provided a stream of men seeking sustenance and oblivion. In the Vulcan you sat on wooden benches in working boots and working clothes. There was sawdust on the floor. Today, fifty years on, Newtown is a memory – replaced by industrial units and a corporate hotel. The docks have been anodised, reduced to safety-conscious ghost of their former selves. East Moors is the Ocean Way Industrial Park, full of warehouses and articulated lorries. Even the terraces that once surrounded the Vulcan like ivy have been flattened and turned into a clean black-topped car park. When I first discovered this 1853 pub it still had the legendary sawdust and was still a home for working men. Railway workers, engineers from BT opposite, prison guards, locals from Duffryn Street, Taff Street and Pellet Street. I sat there with John Williams, the author whose anthology of short fiction Wales Half-Welsh (Bloomsbury) almost got titled Vulcanised. We were joined by a bunch of other writers who felt more at home here than in the aluminium and glass vertical drinkeries of Cardiff’s town centre. (If you’d like to follow this up then you can read more about the writers and the Vulcan in my Real Wales, published December 2008 by Seren).
The beer was good, there was a dart board, the juke wasn’t intrusive. Liz, the landlady, offered regulars bowls of chips and complimentary sausages.
But then came the University of Glamorgan putting a tank on Cardiff University’s lawn, by converting the old BT building into its splendid new Atrium over the road. The School of Cultural Studies. Library, students, light. The Pellet Street tower block of student flats (Ty Pont Haearn) went up at incredible speed. After that came St David’s 2 and the need for car parking. The surrounding streets were systematically flattened yet the Vulcan survived. A pub in splendid isolation. A Victorian gem for fans or a planning difficulty for developers. How you viewed it depended on where you stood.
Currently rumours abound. The pub will be pulled down next spring. Brains have sold out. In its place will be a multi storey car park, social housing, another student tower block, bars, restaurants, even Atrium 2, symbol of Glamorgan’s unstoppable sweep to domination. There’s also a half-credible tale that St Fagans will purchase the bricks and rebuilt the pub, restoring it to its Victorian splendour in the heart of the museum. Iorwerth Peate would spin.
It is a function of developers to sweep all before them. Cardiff has seen generations come and go, each cleaning the slate of everything. The city today has almost nothing with a past. If you exclude the Castle and St John’s Church almost everything standing is recent. We should preserve the pub by building round it and incorporating it into the overall plan. It has happened before. Check the retained Victorian frontage of the Altolusso block a few hundred yards on up the road. We should retain the Vulcan’s charm, its tourist attractability (it’s in the top fifty best UK pubs, according to Camra, the Campaign for Real Ale) and its delight. Removing it even to the secure and beerless pastures of St Fagans would be a crime.
Possibly the only good thing to come out of the present economic breaking halt is that new construction is almost universally on hold. Which should mean a reprieve for the Vulcan. For a time. Let’s hope.
Peter Finch is Chief Executive of Academi, the Welsh national literature promotion agency and society of writers.
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Fiscal federalism
John Osmond says momentum is behind plans to change the Barnett formula used to fund Scotland, Wales and Northern Ireland:Hints from the Prime Minister on future funding options for the Scottish Parliament are rare and usually Delphic in their meaning. So close attention was paid to Gordon Brown’s relatively unambiguous remarks on the theme in a speech delivered to a CBI Scotland dinner in Glasgow in early September. Although observing that on the whole devolution had worked pretty well, he said he did see one problem: fiscal accountability. As he put it: “The Scottish Parliament is wholly accountable for the budget it spends but not for the size of its budget. And that budget is not linked to the success of the Scottish economy. “That is why we asked the Calman Commission to look carefully at the financial accountability of the Scottish Parliament. And this is a critical part of Calman’s remit.”
The commission, chaired by Glasgow University Chancellor Sir Kenneth Calman, a former Chief Medical Officer for Scotland, began work in April. Established by the Opposition parties in the Scottish Parliament, it was their response to the minority SNP government’s call, in July 2007, for a “national conversation” on Scottish independence. Given its provenance, it is unsurprising that the Calman Commission’s remit specifically rules out independence. However, it is reviewing whether more powers might be devolved and, in particular, matters that “would improve the financial accountability of the Scottish Parliament”. It is due to produce an initial report by the end of the year and a final report some time during 2009.
This week a commissioned report submitted to the Calman Commission by an expert group of economists, advocates extending the Scottish Parliament’s fiscal autonomy by giving it greater responsibility for raising taxation. However, it stops short of “full fiscal autonomy”. As one member of the group, Jeremy Peat, a former chief economist at the Royal Bank of Scotland and former economic adviser at HM Treasury, put it: “We are clearly drifting towards more fiscal devolution, if that can be fitted in with managing the macro-economy effectively.”
Gordon Brown’s remarks have led seasoned devolution watchers to conclude that the Westminster Government is now resigned to giving up decades of opposition to changing the Barnett Formula. Since 1979 this has determined changes in the level of the block grant funding given by Whitehall to the devolved administrations in Scotland, Wales and Northern Ireland. Now, it seems, Westminster is contemplating an element of fiscal federalism, in which the devolved administrations will become responsible for raising through taxation a significant proportion of their expenditure.
Hitherto, despite pressure from Wales and some northern English regions, which have believed they have been short-changed, successive Westminster administrations have refused to open up a debate on changing the Barnett formula, largely because of pressure from Scotland which is generally acknowledged to have been a beneficiary.
However, tensions have risen since the SNP took power in Edinburgh last year, with the Nationalists introducing a series of ‘giveaways’, including the phasing out of prescription charges and freezing council tax. This has prompted accusations that the Barnett formula means English taxpayers are ‘subsidising’ Scotland for services that are not available south of the border.
So it is significant that even some leading Scottish figures are now calling for change. These extend to some in the Scottish Conservative party who are calling for the Scottish Parliament to be made fiscally responsible in raising the money it spends. Sir Kenneth Calman himself has given the broadest of steers that his Commission is considering altering or even scrapping the Barnett formula. Asked if the formula was fair to British taxpayers, he said, “It’s pretty good for Scotland – it depends if you think that’s fair or not. But I don’t think it reflects the needs.
“It depends where you live in England. Its quite important you don’t think about England as a single place – you can break down the regions quite nicely. If you look at London, for example, you would see London does pretty well.”
That doesn’t apply in Wales, which is why the Welsh Assembly Government, a coalition between Labour and Plaid Cymru, has established its own Commission to investigate the Barnett formula and come up with recommendations for change. It is a small expert group, chaired by Welshman Gerald Holtham, a hedge fund manager and former Director of the Institute for Public Policy Research think tank. It also includes Professor David Miles, a managing director and chief UK economist at Morgan Stanley, and Paul Bernd Spahn, an Emeritus Professor at the Goethe University, Frankfurt am Main, who has advised the Treasury of Bosnia and Herzegovina.
Announcing the Commission in October Welsh First Minister Rhodri Morgan said:
“You would be astonished at the way the debate has already been framed strictly in terms of the relationship between the UK and Scotland. You can imagine what a dangerous scenario that is for Wales. We do not believe we are over-funded. We believe we are probably – in some sort of gut feeling – under-funded, but we need an evidence base to demonstrate that.”
Although Northern Ireland is generally reckoned to have done well out of the Barnett formula (see Table 1), even here there have been calls for a review. Last year the Northern Ireland Assembly’s Committee for Finance and Personnel called on the Executive to examine the implications of the Barnett formula and scenarios for reform.
 The Barnett formula, named after Joel Barnett who was Chief Secretary to the Treasury the year it was established in 1978, determines the increase (or decrease) to a baseline block grant for each of the devolved administrations at each comprehensive spending review. The change is calculated by considering three elements:
- The changes in spending for England by UK departments.
- The ‘comparability percentage’, which essentially refers to the extent to which a programme or service is devolved.
- Size of population compared with England.
The result is known as the Barnett consequential, with the calculation being made for each UK government department. Put another way, the formula means that for every pound of extra spending in England each year on a service which is devolved, Scotland, Wales and Northern Ireland will get an increase in their block grant proportionate to their populations. Originally the proportions were set arbitrarily at 85:10:5 for England, Scotland and Wales. So, for every 85p of extra spending in England, Scotland would get 10p added to its block grant, and Wales 5p. These population proportions were too generous to Scotland (and too mean to Wales) until altered by Michael Portillo, as Chief Secretary to the Treasury, in 1992, to the correct population proportions.
In practice, the changes have been complex. So, for example, pre-1992 for Scotland, for programmes other than law and order the proportion was calculated at 10/85ths which corresponded to a 11.76 per cent increase. Following 1992 this was reduced to 10.66 per cent. For Wales, pre 1992 5/85ths amounted to a 5.88 per cent increase in expenditure. Following Portillo's review this was upped to 6.02 per cent to reflect Wales's relative increase in population. These small changes in percentages have significant consequences in terms of reductions and additions to the block grant, though it is fair to say that the Scottish Parliament's share has been persistently high in relation to the other devolved institutions.
Now they are rebased for the following two or three years after every spending review. Table 1 provides the break-down for spending per head for 2007-08 across the UK, together with the percentage deviation from the UK average.
The Barnett formula is not based on any assessment of relative need, or of costs of services, which is pointed to by its critics as one of its main drawbacks. Table 1 gives a snapshot of the relative inequities. Wales, for example, is especially aggrieved that Scotland and Northern Ireland received 21 pr cent above the UK mean in 2007-08 compared with its own 8 per cent. It argues that the distribution would be markedly different if a greater emphasis were given to fairness in terms of need, taking into account levels of economic performance (GVA per head) and levels of poverty (households below 60 per cent median income levels).
Both Scotland and Wales also complain that the process by which the Treasury determines whether spending is subject to the Barnett formula or not is at best unclear, and at worst arbitrary. They are certainly not underpinned by any published criteria. So, for example, there are currently disputes between the devolved administrations and the UK treasury regarding the Olympics being classified as being of the benefit to the UK as a whole and therefore not subject to a Barnett consequential. Plaid Cymru’s economics spokesman, Carmarthen East MP Adam Price, claimed that as a result Wales was being robbed of £437 million, saying it is “a disgrace that the poorest part of the UK is effectively funding a massive regeneration project in London, officially the richest city in Europe.”
For its part the SNP Scottish Government claims it is being financially penalised by the failure to attach a Barnett consequence to the £1.2 billion increase in spending on prisons in England and Wales, in response to the Carter Review and pressure on prison places.
A further drawback to the Barnett formula is that it institutionalises what the political scientist Anthony King has dubbed an “infinite blame potential”. The devolved administrations have virtually no control over the size of the block grant that is available to them. When things go wrong, or there is a cutback in spending, they simply blame Westminster and Whitehall. It is not a recipe for accountability and responsibility in spending.
However, it is one thing to criticise the formula, quite another to come up with an alternative designed to achieve acceptance across the competing nations and regions of the UK. There are broadly three options for change:
1. Implementing a needs-based system for calculating the block grants of the devolved administrations. To ensure credibility this task should be carried out by an independent body, such as the Australian Commonwealth Grants Commission, established in 1933 to assess claims made by the Australian states for financial support from central government.
2. Devolving fiscal autonomy to the devolved administrations to raise their own revenue to meet their own expenditure, and at the same time making a contribution to the central Whitehall government for functions such as defence, the welfare state and international aid. This is broadly the case in the Basque Region’s relationship with the Spanish government in Madrid, probably the most extreme example of fiscal federalism.
3. A hybrid approach combining greater fiscal autonomy with the equity of a needs-based grant.
The likelihood is that the Calman Commission, together with the Holtham Commission in Wales, will opt for the third, hybrid solution. Certainly, this was the recommendation of the report Fair Shares? Barnett and the politics of public expenditure produced by the Institute of Public Policy Research in July 2007. However, this still leaves the hard question of what category of tax to allow the devolved institutions to deploy. The choice is assigning taxes, where the proceeds of certain taxes are attributed to the area where they are raised, or allowing the devolved administrations to vary certain taxes, whether income tax, corporation tax or VAT.
Possibilities explored by the expert group of economists that this week reported to the Calman Commission include letting Scottish Ministers set income tax. Currently they are only able to vary the standard rate of income tax by up to three pence in the pound, an option that has never been utilised in a decade of devolution. Other possibilities include devolving VAT, introducing an US-style sales tax, and devolving National Insurance contributions.
None of these options is straightforward. Yet the balance now seems to have tipped in favour of moving away from the Barnett formula in favour of a reform that would combine an element of devolved taxation with a needs-based equalising block grant. Despite the political problems in opening this ‘can of worms’, the arguments for change are gathering momentum. It is noteworthy, for instance, that even the author of the formula himself, Lord Barnett, now a Labour peer, has pronounced that he is amazed it has lasted as long as it has. He says it should be scrapped and replaced with one that reflects needs rather than population.
John Osmond is Director of the Institute of Welsh Affairs. This article appears in the current issue of the journal Public Finance.
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Rhodri reveals his ankle
John Osmond reports on the debate that launched the IWA’s Politics in 21st Century Wales :The debate in the Senedd on Monday evening that launched the IWA’s latest book on the future of Welsh politics proved a fascinating curtain raiser on the coalition negotiations between the parties that we can anticipate in the wake of the 2011 Assembly elections.All the participants were key players in the two months of negotiations that took place following the May 2007 elections and three of them may well be in pole position in a little over three years time. So, it was instructive to watch them circling around one another warily and watching their words. Of course, First Minister Rhodri Morgan won’t be among them after 2011, since he has announced his impending retirement from politics – “he has indicated a wish to stand down as First Minister well before the elections” (according to his biographical note in Politics in 21st Century Wales). However, he prompted the speculation by suggesting in his contribution to the book that Labour should countenance proportional representation in local elections in order to allow a coalition deal to be negotiated with the Liberal Democrats.
It was Plaid Cymru’s Adam Price who suggested somewhat mischievously that this was tantamount to Rhodri revealing ‘a bit of ankle’ to the Lib Dems. Read the small print, he inferred. Rhodri was not showing the whole of his leg. In fact the First Minister was suggesting what is called permissive PR. That is to say, on the presentation of a petition by a set number of electors, local authorities should be obliged to hold a referendum on whether to introduce proportion representation, following the similar system that obliges them to hold referendums on establishing a mayor. On Monday evening the First Minister stated that he had borrowed the notion from New Zealand where it had worked extremely well and, as he said, completely taken the heat out of the argument over proportional representation.
However, Adam Price wanted to know whether this would be enough to entice his fellow contributor to the book, the Liberal Democrats’ Kirsty Williams, into a coalition with Labour. She carefully skirted round giving a straight answer to the question, though she did concede that, although she vetoed a coalition with Labour last year she would be prepared to consider one after 2011.
In her chapter she criticises the June 2007 Rainbow deal the Liberal Democrats negotiated with Plaid and the Conservatives in the following terms, ones she reiterated on Monday evening:
“The All Wales Accord had a tick box and a sprinkling of pork barrel for every interest group, but where and what was the vision? The most attractive part of it was to get rid of Labour. The vision was to change the government – not to change the nation. Is that enough? It wasn’t for me at the time, and I remained unconvinced today.”
Adam Price retorted that this was a bit rich since in the negotiations it was the Liberal Democrats who kept on inserting detail after detail of commitments. He said he well remembered delivering a final version of the accord to the Liberal Democrat Chief Executive just before the fateful meting of the Liberal democrat Executive in Llandrindod, which rejected the deal. “It still had the ink of Liberal Democrat bullet points drying on it as I handed it over,” he said.
The Conservative leader Nick Bourne opined that it was a perfectly honourable ambition to have as a priority the replacement of the governing party if it had been so long in charge as Labour in Wales. He believed that the results of the 2011 election would more than likely mean that Plaid, Liberal Democrats and the Conservatives would be facing that option once more.
Adam Price said that Red/Green stripes ran right through him and that it should be acknowledged that while the Plaid-Labour coalition Government might not be popular with party activists on either side, it struck a deep well of approbation amongst the electorate. “It chimes with what Wales wants,” he said. At the same time he said, and as puts it in the book, “The question for Plaid is not whether to challenge Labour for dominance, but when”.
He acknowledged there were dangers for any junior partner in a coalition in being sidelined by the electorate. But optimistically he referred to West Germany’s SPD, a party that Willy Brandt led into a Grand Coalition with the Christian Democrats in 1968. This gave them their first taste of power since before the Nazis had taken over in the 1930s and legitimised them as a governing party. Two years later they went on to gain a majority.
Rhodri Morgan said he had been in politics a long time and lived through many periods when Labour had been written off, only to bounce back in often unforeseen circumstances, as was currently happening with Gordon Brown’s renaissance amid the credit crunch. But he warned that his party needed to embrace PR for local government if it wanted to have any choice of coalition partners in future.
John Osmond is Director of the IWA.
Politics in 21st Century Wales is available from the IWA. Price £10, or for IWA members £7.50, plus £1.50p P&P.
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Politics in 21st century Wales
John Osmond reports on some remarkable insights into the future of Welsh politics:Proportional representation in local government elections is needed to revive Labour’s fortunes in rural west Wales, says First Minister Rhodri Morgan in his contribution to a new book Politics in 21st Century Wales, published today by the IWA and the Wales Governance Centre at Cardiff University.Rhodri Morgan argues that, for Labour, the most urgent lesson from the May 2007 elections was its need “to renew itself in west Wales” from which it has retreated in recent elections, losing seats to both the Conservatives and Plaid Cymru. As he writes: “The reason why I think it absolutely essential that we turn our minds again, as a party, to winning in the west is the simple recognition that, as far as the Assembly is concerned at least, without winning in the west, Labour cannot win Wales.”
The First Minister argues that the impression Labour has sometimes given as being reluctant advocates for the Welsh language, reluctant on more powers for the Assembly, and reluctant exponents of Welsh identity have allowed party to be portrayed as ‘London-dominated’, with the Conservatives, in particular, repositioning themselves as more pro-Welsh than Labour. To rebuild he says Labour should start with creating a platform in local government in west Wales. He argues that:
”The only way in which that this going to happen is through proportional representation – a form of election which would, undoubtedly, improve our representation in counties such as Pembrokeshire, Ceredigion, Ynys Môn and Gwynedd.”
In his contribution to the book Conservative Assembly leader Nick Bourne argues that the present Assembly structure is a “political fix” and says the Richard Commission proposals, advocating a Scottish-style Parliament for Wales, were “a missed opportunity to seek to build a consensus”. He argues that the present system in which legislative powers are drawn down to the Assembly via Legislative Competence Orders granted by the Westminster Parliament is “devolution by the back door”. He says, “It would have been much better to go straight to the people and hold a referendum on proper powers.”
Plaid Cymru’s Carmarthen East MP Adam Price speculates that a coalition government between his party and the Conservatives is a real prospect following the 2011 Assembly election. He argues:
“A nationalist-Tory coalition would still seem counter-intuitive, though the shock factor will be greatly diminished by the near-precedent in 2007.”
He says for Plaid Cymru to support Labour as a junior partner might take a commitment to a job rotation as First Minister, with the Plaid leader taking over for the second half of the term.
Kirsty Williams, the Liberal Democrat AM for Brecon and Radnor, says her party should be much more ambitious in its target for winning Assembly seats. She says Liberal Democrats must project a message that provokes a “gut-level, emotional response” from the electorate:
“However, as a Group in the Assembly we have failed to do that. We haven’t given people a gut feeling. In our attempts to make our appeal as broad as we can we have failed to stamp our mark.”
The four authors were asked to consider the future of their parties in the context of coalition politics that seem here to stay following the May 2007 Assembly election. They were asked to address:
1. The experience of the May 2007 election and the two months of coalition negotiations that followed.
2. Future prospects for coalition government in Wales.
3. The forthcoming Convention and how they see events unfolding towards a referendum on further powers.
4. The changing political culture of Wales and how the parties can help promote the engagement of the electorate in politics and political debate more widely.
In his introduction to the book Anthony Barnett, Editor of the global website openDemocracy.net remarks, “I doubt if the Westminster leaders are capable of producing a cross-party book of essays as reasoned, careful and thoughtful as this.”
Politics in 21st Century Wales (available to order online from the IWA at £10 plus £1.50 P&P) is the second in a new Cardiff Bay Papers series being published jointly by the Institute of Welsh Affairs and the Wales Governance Centre at Cardiff University. The first in the series Unpacking the Progressive Consensus, an analysis of the philosophy underpinning the One Wales coalition between Labour and Plaid Cymru Welsh Assembly Government, was published earlier in November.
John Osmond is Director of the IWA.
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Tools for the recession
Professor James Foreman-Peck, Cardiff Business School:Deputy First Minister, Ieuan Wyn Jones, maintains that the Assembly Government’s approach to alleviating the impact on Wales of the present crisis demonstrates the importance of devolution. His claim – reported on WalesOnline on November 4 – raises two distinct questions. First, what can any government really do about this global economic downturn? Second, are effective policy instruments currently within the devolved government’s powers?Prime Minister Jim Callaghan’s announcement in 1976 that we can ‘no longer spend our way out of recession’ appeared to mark the end of confidence in Keynesian economic prescriptions. Yet, this may not be relevant because the principal cause of the crisis of the mid 1970s was a supply shock – oil price jumps - not a financial collapse, as now. Some economists contend that a downturn triggered by monetary factors should either be addressed by monetary policies (over which the Assembly Government has no power) or left to take its course without state intervention (Daily Telegraph's letter from 16 economists). What these economists neglect is that in a democratic society our political leaders must be seen to be doing something appropriate if they are to remain popular and therefore in power.
Look at the Gordon Brown’s recent bounce back in the polls. Leaders cannot say to the electorate now, as did the Telegraph economists: “Occasional slowdowns are natural and necessary features of a market economy”. Particularly this is so for a recession that promises to be the severest and longest since the Great Depression that began in 1929, despite the radical policies recently adopted by central governments particularly in the US and the UK.
If the Telegraph economists’ response is that elected leaders should have the political courage to resist interventionist measures, we could look back to the time when they did. Laissez-faire approaches to the economic crises in German and Japan brought to power in 1931-2 aggressive governments committed to addressing the immediate problem - and other real and perceived problems - with extreme measures. This had appalling longer term consequences for their countries as well as for the world as a whole. Without anticipating such radical reactions nowadays, we can still infer that economic crises impact on politics.
Granted that something must be done, what can the Assembly Government do? Anti-recession measures must be easy to implement immediately and fast acting. The Assembly Government cannot boost spending by cutting taxes, nor can they influence interest rates and the money supply. True, they can spend, but their budget is tightly controlled by the block grant from central government and the apparent lack of borrowing powers. Not surprisingly then, Ieuan Wyn Jones’s statement focuses on longer term development, such as new facilities opening to offset job losses elsewhere. Similarly the Wales Economic Summit proposes doing things that should be done regardless of the recession, such as paying Assembly bills on time and allowing SMEs into the procurement process. Even greater spending by Finance Wales is not in fact counter-cyclical, but avowedly developmental.
Probably the most genuinely anti-recession policy is the provision of more money for the Mortgage Rescue Scheme. Rising unemployment and tighter credit are rapidly pushing up mortgage repossession in Wales. Though still well below their 1991 peak they can be counted on to go on rising for some time. Second quarter annualised increase in repossession orders in county courts was 39 percent in Wales, compared with 31 percent England and Wales as a whole, and only 12 percent in London. Repossession and forced house sales when the market is depressed are generally painful and wasteful judged by most criteria. Bad luck or bad judgement in this area bear more heavily on poorer households. Households with younger heads are at greater risk of mortgage arrears because they have had less time to accumulate savings as a cushion against financial shocks. In the second quarter of 2008 there were almost 2,000 mortgage repossession orders in Wales.
Against this background WAG’s allocation of more funds to their Mortgage Rescue Scheme seems very timely. Under the scheme house owners with mortgage problems can sell their home or a share of it to a Housing Association, while remaining in it as a secure tenant. One difficulty is that the Scheme is expensive; the £5m allocated by WAG might help only perhaps 100 households. So while the scheme shows WAG’s heart is in the right place, it will hardly shield Wales from the recession’s impact.
In conclusion, we must put a rather different interpretation on Assembly anti-recession policies from Ieuan Wyn Jones. If the Assembly’s measures demonstrate the importance of devolution they do so by showing that insufficient powers have yet been devolved to cope with a strong global downturn. Alternatively we should decide that appropriate instruments for alleviating the crisis, such as taxation and monetary policy, could never be sensibly devolved to Wales and therefore the recession can only be effectively addressed at the UK level. Devolution is irrelevant.
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The Obama effect
Charlotte Williams reflects on the impact of Senator Barack Obama’s victory in the American election:The outcome of the US presidential election is nothing short of joyous. We can pause for a moment and try to grasp the magnitude of the moment in all its dimensions, whether the focus is the historic inauguration of a black president, the end of an era of damaging American foreign policy under Bush, or the marker of the revival of active, engaged and refreshed democracy. Any which way adds up to the Obama effect.I was in the States the night of Obama’s democratic nomination acceptance speech, celebrating the marvel with a small group of black academics. Back in September, I was surprised at their reluctance to dare believe that 4th November would become Obama day. It seemed to me an absolute certainty. An intelligent, self-assured, charismatic, calmly reassuring fellow with 21st Century communication skills and techniques, sound policy ideas – shall I go on? – with no small amount of a celebrity aura, youthful in outlook, representing a seismic shift away from what had been a disastrous set of politics in the last two presidential terms, evidently popular, for me he could not fail to win. Oh, and he’s black, with a model African-American family. The level of mistrust of this group of academics even with the white liberal public to vote as they ostensibly suggested they would, seemed to me to be misplaced. Yet so deeply riven is the racial politics of the US, so acutely do black people feel and live out their distressing racial history in their everyday lives, that perhaps their caution was realistic.
We know it isn’t the same this side of the Atlantic. Our ‘race’ debate is more muted, our experiences as black Britons are more diverse, our racial histories are more chequered, and our landmarks are less certain. The result is that the ‘race’ issue is just that bit more slippery and concealed, the target more diffuse, the politics less sharp, more ambivalent and certainly less black and white than over there.
You may struggle to put your finger on any equivalent collective marker of change in black British political history as the Obama day. Our key turning points regrettably rest on more negative footings – reactions to riots, to murders, to deaths in custody, and to child abuse tragedies, than they do the celebration of such strategic attainments. We have our heroes but we don’t have any similar collective symbolic signal of change. And there are missed opportunities.
In Wales we certainly missed the Obama trick. The new constitutional arrangements for Wales and the historic return of self governance might easily have mobilised a disenfranchised and disinterested minority population and accomplished a more engaged politics if they had been bold enough to recruit from the ranks of one of Britain’s oldest black communities and one that commands the geographical territory on which that seat of our emergent democracy, the National Assembly building, is placed.
So in the wake of Obama day, when the obvious debates and questions have been drawn up for dinner party rumination – could we have a black prime minister? Would such a thing happen here? Is this the ascendancy of the ‘browns’, those of mixed race who stereotypically don’t do war? Can he deliver on all the expectations? And when all the ‘hail the king of peace has arrived’ and the ‘new world leader’ sentiments have been expressed, I find myself pondering the Obama effect.
For me it is this. It’s about black history not being black history any more, but just History. It’s about the confidence to put aside the preoccupation with the first black this and the first black that and just be a normal part of things. It’s about putting to rest the awful lines of the pigmentocracy where the browns will be pitched against the blacks and the blacks against browns, while ‘white’ remains the aspirational ideal. It’s about every one of us seeing the possibility to transcend that awful legacy that corrupts the everyday relationships between us, and about the belief and confidence in our own potential in a truly ‘yes we can’ society. The transnational appeal of Obama is to a post-race politics. So hey – yes Obama is black – now maybe one day we can say so what?
Heartwarming and compelling as these arguments are, they are the prerogative of a mature democracy, a democracy where black people have felt sufficient collective power to exercise some clout, where a black middle class has emerged as a marker of success and where issues of black representation and disadvantage are at least the target of specific government policies. Such deliberations are the product of a society uneasy with its history.
In Wales we have not reached anywhere near that level of confidence or consternation in political debate. We barely acknowledge the historical record. The political ranks of our society are as closed as ever to difference and an appalling level of disadvantage persists for Wales’s ethnic minorities. Were the Obama effect to contribute to complacency rather than commitment, we will miss yet another opportunity.
Charlotte Williams is Professor of Social Justice at Keele University. She
lives in Llandudno and her autobiographical memoir, Sugar and Slate, won
Welsh Book of the Year in 2003.
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Regional Press Under Threat
Carolyn McCall says ownership rules must change and the BBC must hold back if the regional press is to surviveTimes are incredibly tough for most businesses and almost all media companies. But it’s also very clear to me that there remain opportunities for those bold enough to take them and many reasons to be positive about journalism in the UK.One of those reasons is the nature of the owners of much of our national press. Take the Scott Trust, for example, the owner of the Guardian Media Group. The Trust is a totally unique form of ownership in the UK, and quite possibly the world. It has one, core purpose: to sustain the financial and editorial independence of the Guardian in perpetuity.
Our ownership model is unique, but look around and you’ll see other examples of owners whose world view might be very different to ours, but whose commitment to journalism is equally clear: the Rothermeres and, dare I say it, Rupert Murdoch, do so because they value journalism and believe it should sit squarely at the heart of political, social and business life.
Also, many publishers made early moves to evolve and adapt to the changing media landscape, to transform themselves into multimedia – not just press – publishers. So, although the national press is under huge pressure in terms of advertising revenues and readers, and although I think there will be some casualties in the not-too-distant future, I believe that the UK’s quality London press, as a multimedia industry, is in relatively good shape and a long way from being on its knees.
Sadly, I’m not convinced that the same can be said for parts of the regional press.
For years the big listed companies have insisted that the changes occurring in local and regional media markets were predominantly cyclical, not structural. In other words, declines in advertising revenues were driven by short-term economic factors and were reversible. This has been wrong for at least 10 years and is now universally accepted as such.
The changes are structural – they are permanent and result from fundamental changes in consumer behaviour, communications and technology. The situation is exacerbated by the current cyclical downturn, but neither the readers nor the revenues are ever coming back, at least not to anything like previous levels.
This is a bitter pill to swallow for businesses and shareholders that have enjoyed margins of over 30 per cent. But those days are gone. We have already seen local titles close and this will continue. Certain owners will struggle to continue in their current forms.
Many will criticise the owners or managers and blame them for cutting too hard, demanding unsustainable margins, downgrading the product, under-investing in journalism. This may or may not be true. The more important point is that the provision of local and regional news is becoming increasingly uneconomic.
The growth of the internet has not only decimated the staple diet of local and regional papers across the country – classified advertising revenues – it is detaching advertising from content altogether. Online search advertising doesn’t need to peg itself to any form of content, let alone journalism. Bluntly, the money that traditionally paid for highly skilled and qualified journalists, for printing presses, for offices, for newsprint, is for many simply no longer there – at least in quantities sufficient to support the business of journalism.
I am painting a somewhat apocalyptic vision, so let me quickly say that the death of the regional press is not inevitable. Or rather, there are ways to ensure it continues for a good while yet.
The principal barrier to the future viability of the regional press is the application of competition law around local ownership, which is stuck in a time-warp. In a world where Google accounts for 90 per cent of all searches in the UK, where regional papers are fighting tooth and nail for their very life against all-comers – online-only players, the BBC, search engines, commercial TV and radio, direct mail and other media – the idea that one publisher owning two very small local papers in the same area is monopolistic, or poses a threat to consumers and advertisers, is ludicrous.
The current approach doesn’t protect anyone, and by preventing consolidation within the regional press it threatens to undermine plurality and the provision of valuable public service content. Because if local papers disappear and ITV continues to retreat from its public service commitments, that just leaves the BBC.
A strong local and regional press is vital in a democracy – it’s a really important part of a properly functioning society. Just think of Wales without the Western Mail, of Yorkshire without the Evening Post, of Liverpool without the Echo. Who will hold politicians, councils and other authorities to account? Who will invest the time and effort in impartial newsgathering within communities? Who gives citizens their voice on all community issues – the very local included? It won’t be Google Local, that’s for sure.
The future for regional press must be about consolidation. Fewer owners, who are able to make savings through scale and compete on a more level playing field with other media, will result in a more sustainable model.
Regional newspapers will have to be reengineered completely – they will need to have significantly reduced overheads – costs will need to come out, staff numbers will have to fall, some titles will inevitably need to merge and close. Owners will have to accept much lower margins. This is unpalatable for journalists and shareholders alike, but it is the only realistic way forward.
The interpretation of competition law is actively preventing companies from pursuing perfectly sensible deals because they know previous efforts have been blocked. Local ownership regulation is a millstone around the neck of the regional press and it’s dragging the sector to the bottom. It is anachronistic, misguided and hopelessly out of date, and the issue must be addressed – legislation needs to change.
Another roadblock in the path of the regional press is the BBC, specifically its local online activities. At GMG we are great supporters of the Corporation as a champion of public service broadcasting and a hugely important fixed point in a shifting media landscape.
However, we have become increasingly concerned about certain of the BBC’s recent expansionary activities, which we feel are both inappropriate and damaging, especially at such a critical moment for the commercial media industry. So we find ourselves in the position of an aggrieved fan.
To focus on one example – the BBC plans to invest some £68 million, on top of existing investment in bbc.co.uk, in local online video. This is a huge figure in the context of the local media industry, and dwarfs the investment levels that commercial players are able to deploy. To give you a sense of the scale of the investment – it’s more than the total annual local and regional online revenues of Trinity Mirror, the UK’s largest regional publisher.
The BBC’s plans threaten not only to divert ever more traffic and therefore advertising revenue away from local commercial websites, but also to strangle at birth any kind of commercial market for local online video. The BBC does not do what it does out of spite. Much of the damage it inflicts on commercial markets is entirely unwitting. As the Guardian’s digital head Emily Bell says, the BBC is like a largely benevolent dragon, albeit one that can destroy entire villages with a careless swish of its tail.
We understand that the BBC is motivated by a need to demonstrate it is delivering public value. Making life even more difficult for the regional press, with the implications this has for plurality, is not delivering public value.
To conclude, the media is not simply facing a period of crisis, but continuous change. Those that have adapted to new consumer behaviour by understanding their audiences, and those that are now reducing costs while continuing to invest in the right things, are the companies that will emerge ahead of their competitors when the economy picks up (whenever that is).
• Carolyn McCall is Chief Executive of the Guardian Media Group. This post is an extract from her address to the Cardiff Business Club on 3 November 2008.
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Call for Welsh Oyster Card
John Osmond reports on a new IWA publication which challenges the Assembly Government’s ‘Progressive Consensus’Wales should follow the lead of Transport for London and produce its own equivalent of the Oyster card, allowing people greater flexibility in the use of buses and trains. This idea, which would involve the injection of greater private finance into Welsh public transport, is put forward by the economist Will Hutton in a new IWA publication launched today Unpacking the Progressive Consensus. The aim of a ‘progressive consensus’ which rejects the use of private finance in funding public services, was claimed by the First Minister Rhodri Morgan and the Deputy First Minister Ieuan Wyn Jones in their ‘One Wales’ coalition agreement in July 2007.
However, Will Hutton, chief executive of the Work Foundation, argues that it takes a too restrictive view of the potential for private finance to improve public services. “Why shouldn’t a Transport for Wales produce its own equivalent of the Oyster card?”
“Why shouldn’t a Transport for Wales collect the fares and, like Transport for London, have borrowing capacity against that publicly owned, but independently gathered, revenue base? We would have a non-state institution that would drive a coach and horses through Rhodri Morgan’s progressive consensus. However, within ten years we would have a much more interesting transport infrastructure in Wales, than if we had continued with the current policies.”
In fact, the Assembly Government has already taken a step towards an Oyster-style solution with the development of the Smartcard. This is intended to replace all concessionary travel passes. It contains a small electronic chip which will be used to check concessionary entitlement. Of course, this is a long way from the London Oyster card which is available to all. Although it was perhaps revealing that in response to the Oyster card suggestion, an Assembly Government spokesperson said:
“We are rolling out our Smartcard scheme across Wales and are actively looking at ways in which this can be developed further. The technology exists for this to be turned into a version of the Oyster card if we want to go down that route in due course.”
Hutton argues that spending on health and education will inevitably grow beyond their present 8.5 and 6.5 per cent of GPD over the next 20 years. ”The only question is, is it going to be purely tax financed or co-financed through some form of private payments? And if you believe, with most economists, that there is a cap of around 40 per cent of GDP on taxation, then we have to start thinking of private co-financing of health and education.
“In turn this means that Wales will have no alternative but to start a debate on the Private Finance Initiative. To think otherwise will be to behave like King Canute in face of the rising tide.”
Will Hutton argues that the ‘progressive consensus’ advocated by the Assembly Government is mistaken in giving primacy to civil society institutions over the needs of the individual. He says it should be arguing for a public service model in which hospitals engage first with individual citizens as patients, and education colleges with individual citizens as students. Instead the government is guided more by the collective voice of civil society institutions than individual choice. This, he argues is leading the government in the wrong direction.
The philosophy underlying the ‘progressive consensus’ has been articulated by Mark Drakeford, Rhodri Morgan’s Cabinet health and social policy adviser. In an article in the Winter 2006-07 edition of the IWA’s journal Agenda, reprinted as an Appendix to this publication, he described six principles which embraced an idea of ‘progressive universalism’. These, he said, underpinned the Assembly Government’s approach to policy:
1. Government is the best vehicle for achieving social improvement.
2. Universal rather than means tested services.
3. Co-operation is better than competition in the design, delivery and improvement of public services.
4. Policy should be guided more by the collective voice of civil society institutions than individual choice.
5. Delivery and receipt of public services should be regarded as a collaborative rather than quasi-commercial transaction.
6. Equality of outcome rather than equality of opportunity in public service provision.
Each of these principles can be contested in terms of the effectiveness and efficiency of their application. Nevertheless, they seem likely to be reinforced rather than weakened by the third-term One Wales government. Indeed, First Minister Rhodri Morgan re-iterated the philosophy in a wide-ranging address on his Government’s approach to universal entitlement in a speech to a Welfare Reform conference in Cardiff in April 2008:
“Amongst some of the weaker-minded members of the commentariat we are sometimes accused of government-by-gimmick or even of give-away-government. The real give away is in the attack itself. It gives away the failure to recognise that the clearest linking purpose between a wide range of our most imaginative policies – free prescriptions, free breakfasts in primary schools, reduced bus travel for 16 – 18 year olds to name just three – is the way in which they all contribute directly to making work pay. As many in this audience will know, one of the major stumbling blocks for anyone who has had to settle for a life on welfare benefits is the anxiety that, on taking up work, new expenses will erode the differential between what can be earned in employment and what can be obtained through the social security system.”
The IWA’s Unpacking the Progressive Consensus explores what the Assembly Government’s ‘progressive consensus’ means in terms of the philosophy it represents and its impact on key policy areas such as the economy, health, housing, education, social justice, the environment, and culture. A joint publication with the Wales Governance Centre at Cardiff University it has four contributors:
• Will Hutton is chief executive of the Work Foundation. Formerly economics editor with BBC Newsnight, he has written a weekly column formerly for the Guardian and now the Observer. Publications include The State We're In (1996), and China and the West: the Writing on the Wall (2007).
• A columnist with the Financial Times, John Kay’s interests focus on the relationships between economics and business. His work spans universities, think tanks, business schools, company directorships, consultancies and investment companies. His The Truth About Markets was published in 2003.
• A former Labour MP and chief adviser to the European commission David Marquand was a founder member of the SDP. His latest book, just published, is Britain Since 1918: The Strange Career of British Democracy.
• Peter Stead taught history at Swansea University for many years. A Fulbright scholar, he was Labour candidate for Barry in 1979. He has written critical studies of Denis Potter and Richard Burton and has jointly edited four volumes of essays on aspects of popular culture in Wales.
• Unpacking the Progressive Consensus, price £10 (£7.50 to IWA members), is the first in a new series, the Cardiff Bay Papers, being launched by the IWA in association with the Wales Governance Centre at Cardiff University. It can be ordered online from this website: click on ‘Latest publication’ on the homepage.
John Osmond is Director of the IWA.
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