Joe Sacco has been chronicling the moral issue of our age in a series of very powerful cartoons. If you have not come across these already there is a link to them here.
I thought it was about time I collected together some of my cartoons from the last 11 years in one place, so have created a page for them which you can see here. Not sure if I am getting any better as the years go by, but rest assured that I have no intention of stopping any time soon!
One of the most idiotic things that Margaret Thatcher ever said is that “there is no alternative” or TINA, as it became known. More aimed at the “wets” in her own party than anyone else, it has become for some a statement of policy.
As David Wengrow pointed out at last year’s Hay Festival, talking about the excellent Dawn of Everything co-written with the late great David Graeber, of the 200,000 years of human history, the furthest back we can currently get back to and have some idea of how we might have lived is only around 30,000 years. Most of the other 170,000 years is a mystery to us. Have we always lived the way we do now? No, obviously not, even in the bit we do know about.
However the point the TINA people are making is that, once your society gets to a certain level of development and complexity, there is no alternative to the system of nation states operating within economies driven by globalised capital and all of the constraints that puts on any particular government’s policy options. So is that true?
Again apparently not. The Nebelivka Hypothesis exhibition at the Venice Biennale, which Forensic Architecture produced in partnership with David Wengrow, shows one example of a complex society which seemed to be constructed very differently:
Between the southern Bug and Dnieper rivers of central Ukraine, less than a metre below agricultural fields, geophysical surveys reveal the unsuspected legacy of 6,000-year-old settlements, similar in scale to the early cities of Mesopotamia. But these early Ukrainian cities are centre-less. Or rather, they are organised as concentric rings of domestic buildings, around a mysterious open space. No trace is found of temples, palaces, administration, rich burials, nor any other signs of centralised control or social stratification.
Even within the 30,000 years for which we have evidence, Graeber and Wengrow have shown how the archaeological evidence indicates that bureaucracy and hierarchy are not necessary in complex societies. Another prominent example of this, in addition to Nebelivka, is Poverty Point, in modern Louisiana. Constructed between 1700 and 1100 BCE by hunter gatherers, it had huge amphitheatres on a scale to match Athens but no temples or palaces.
There were other societies who flipped their social structure according to the seasons – for example, in the Great Plains in the main hunting seasons, when strict discipline was needed, a police force and hierarchy emerged, which then dissolved again when the need for it had passed.
Then there was Teotihuacan, a massive Aztec city of around 100,000 people where, until about 300, the colossal feats of engineering created pyramids and temples which had characterised the city up to that point stopped. Temples were desecrated and there was no new pyramid construction. Instead they started to build very high quality stone apartments for family units, with internal drainage, finely plastered floors and walls, providing comfortable accommodation for most of the city’s residents. Were they likely to be operating the same TINA system of the pyramid builders? It seems highly unlikely.
I had been struggling to imagine a society which flipped from one form of social organisation to another until I read The Gallows Pole by Benjamin Myers, about a Yorkshire valley in the 1760s. What both the TV adaptation (really a prequel of the book) by Shane Meadows and the book do in different but complementary ways is show how a society which had been working in one way might, under considerable pressure to survive, suddenly start operating in a completely different way with a totally different social hierarchy, switching from a rather ambivalent allegiance to King George III to a real devotion to the King David Hartley who had, at least temporarily, saved them from the starvation caused by the collapse of the wool market following the end of the Seven Years War in 1763.
The Cragg Vale Coiners’ attempts to evade detection led to a couple of murders before they were eventually hunted down by the authorities and that particular flipping of social organisation was snuffed out. How important it was that it was snuffed out is underlined by Christine Desan in the 18th century architecture of modern money, which describes this experimental time for money operating in the economy:
At the end of 17th century, the English resolved the debate over money they had conducted since the Restoration. For the first time, bank currency written against public debt circulated. It could be redeemed for silver or gold coin. That traditional medium—coin—would be reformed according to the notably non-traditional theory that it was a static amount of metal. An auxiliary kind of currency expressly based on the government’s own issue and promise of revenues, Exchequer bills, also began to circulate. The new order was a work in progress. In ways its authors only vaguely anticipated, the design was powerfully productive of modern capitalism.
So it seems that there are always alternatives.
Meanwhile one of the most pernicious examples of TINA is in response to the challenge of climate change. Chris Shaw’s appearance at the Dark Times Academy launch yesterday reminded me of this. Chris was talking about his book, Liberalism and the Challenge of Climate Change. In a wide ranging talk, he discussed the problem with the cult of the individual that liberalism has created getting in the way of collectivist approaches to shared problems like climate change. The book looks at how the philosophical and ideological challenge climate change poses to the legitimacy of free-market liberalism has been marginalised, closing off the possibility of imagining a different kind of future for humanity. Text book TINA.
And this is a particularly ridiculous use of TINA, when it is so obvious that there are alternatives to the relentless increase in habitat (including our own) and biodiversity destruction in lock-step with the ever-increasing and intoxicating levels of carbon we are filling the global atmosphere with. I discussed some of the arguments raging amongst those grappling with these challenges in my previous blog. But, rather than joining the discussion about the huge societal changes needed, we are instead told that fiscal rules are the priority for the current government and that any green new deal spending will need to wait until “later in the parliament”.
As Chancellor, Rachel Reeves has gone further, with a phrase which I really hope does not come to define this government:
If we cannot afford it, we cannot do it.
This appears to be a deliberate, almost Animal-Farm-level, reversal of the famous quote from Keynes (from a 1942 talk for the BBC – transcript sourced from here):
Let us not submit to the vile doctrine of the nineteenth century that every enterprise must justify itself in pounds, shillings and pence of cash income … Why should we not add in every substantial city the dignity of an ancient university or a European capital … an ample theater, a concert hall, a dance hall, a gallery, cafes, and so forth. Assuredly we can afford this and so much more. Anything we can actually do, we can afford. … We are immeasurably richer than our predecessors. Is it not evident that some sophistry, some fallacy, governs our collective action if we are forced to be so much meaner than they in the embellishments of life? …
Yet these must be only the trimmings on the more solid, urgent and necessary outgoings on housing the people, on reconstructing industry and transport and on replanning the environment of our daily life. Not only shall we come to possess these excellent things. With a big programme carried out at a regulated pace we can hope to keep employment good for many years to come. We shall, in fact, have built our New Jerusalem out of the labour which in our former vain folly we were keeping unused and unhappy in enforced idleness.
If we really are the complex sophisticated developed society that we think we are, then it’s time to put a tiara on Tina and start seriously discussing alternative approaches to all our problems.
The biggest battle in the climate sphere used to be between climate deniers and climate scientists, perhaps the battle we are most used to. Some, like Michael Mann for instance, are still earnestly fighting this one, but at the recent UK election, only 14% of voters opted for the one climate denial party (Reform). In fact the climate deniers are now more frequently climate denier deniers, ie denying they are or ever have been denying.
Then last year the biggest battle seemed to have become between climate campaigners and climate doomers. Rebecca Solnit wrote an exasperated piece in The Guardian in July last year called We can’t afford to be climate doomers, which drew an equally exasperated response from Jem Bendell called Let’s tell the moodsplainers they’re wrong and then get back to work.
I think Solnit clarifies most starkly what her argument is all about when she talks about hope:
Hope is not happiness or confidence or inner peace; it’s a commitment to search for possibilities.
However Bendell is also focused on searching for possible solutions. He quotes the Kenyan climate activist, Dr Nyambura Mbau, who argues that “The millions of people being uprooted by climate change do not benefit from the ‘stubborn optimism’ of environmental elites. Instead, they will be better served by the stubborn realism of the experts and activists now brave enough to call for urgent degrowth in rich countries and fair adaptation everywhere.”
Then there is that increasingly less marginal idea of degrowth. Only this week, James Meadway, Aashis Joshi and Jason Hickel had a fairly heated exchange on X about the recent paper by Hickel and Sullivan called How much growth is required to achieve good lives for all? Insights from needs-based analysis. Joshi felt that the degradation already caused by climate change made the outcomes possible via better distribution of wealth suggested by Hickel and Sullivan unachievable. One of Hickel’s tweeted responses went like this:
To say you’re happy to live in a world where you get to use a phone and laptop, but these should be actively denied to people who don’t have them because… ecological collapse might happen? Not acceptable.
I saw another take on this by Chris Shaw earlier today at the Dark Times Academy launch event. He seemed to share many of the views set out by Bendell above, and his book, Liberalism and the Challenge of Climate Change, goes further in suggesting that liberalism cannot provide us with acceptable climate solutions as long as it continues to present net zero as solving all our problems rather than as the least worst option that will still leave us with a much depleted global environment. His dismissal of degrowth revolved around the lack of narrative of how we get from here to there, specifically the dramatic movement of political power that would be required. However amongst the academics presenting their new courses for the Academy, Piers Locke’s Future Thriving looked like it would present some challenges to Shaw’s critique.
It seems to me that there is room for different takes on the optimism/realism axis here. For instance Simon Sharpe’s excellent Five Times Faster, while not shying away from the size of the task ahead on decarbonising, definitely has a feel-good quality to it. It is designed to wake us up to the possibilities offered to us by exponential technological change and social tipping points. By contrast, the Institute and Faculty of Actuaries’ Sustainability Group’s publication earlier this year, Climate Scorpion – the sting is in the tail, is all about waking people up to a higher level of climate risk than they may previously have been aware of. Meanwhile Sir David King, former UK Government Chief Scientific Adviser, is currently Chair of the Climate Crisis Advisory Group and founded the Centre for Climate Repair at the University of Cambridge. He set out his thoughts about where we are here.
So there are many shades of hope and despair on show here (I could obviously have mentioned many more that the few picked out here). What really matters is how fast and how radically we can act as a global species to the climate emergency. And the UK would make a good start if it stopped pretending that £22 billion is a lot of money for a developed country to find.
Election day is approaching. It has been a bruising 5 years and the Labour Party’s landslide-super-majority seems like a distant memory. The Conservative Party was not quite wiped out in the end: less than 100 seats but still His Majesty’s Opposition. The Labour Government had well over 400 seats. Once all the levels of government jobs had been allocated: 95 ministers and whips, 41 parliamentary private secretaries, various party roles such as chairman, deputies, etc and perhaps a few trade envoys, and other roles had been occupied like select committee positions, there were considerably in excess of 200 MPs over who the Government had rather less leverage. In the case of the 60 or so MPs seen as left wing, the leverage was close to non-existent after 5 years of vilification of the Corbyn era and all who sailed with her. There had therefore been a great deal of scope for mischief to be made, and mischief duly followed.
This did not concern the new Government too much. It made it clear to all that they were very different to the Corbyn-led party, a point that they had been almost obsessive about (even likening the Conservatives to Corbyn in terms of uncosted commitments) in the 2024 election campaign. The left wingers were not particularly well coordinated in any case, and still felt considerably more loyalty to the Labour Government, however much they disagreed on policy, than the Government felt towards them. In the absence of an issue which unified MPs more widely, the potential damage was limited.
But then a party which had always been a party of protest suddenly found itself with a seat. In fact the Reform Party had 6 seats and very loud seats they turned out to be. However most of their manifesto or “contract” with the electorate was not shared with any of the other parties. The one exception to this – a manifesto position shared to some extent by the Liberal Democrats, the SNP, the Green Party and Plaid Cymru – was a more proportional voting system to replace first past the post (FPTP). This only amounted to 100 votes in total of course, but it was a start.
The Taking Back Our Seats campaign launched in September 2024. Its main argument was that a large number of the seats in parliament had not been granted by the votes cast. Labour had won 40% of the votes, which should entitle them to 252 seats but had instead landed them 435. The SNP had also done well out of FPTP. However the Conservatives, with half the Labour vote, should have expected 126 seats but got less than 100. The Liberal Democrats could also claim they were due 12 more seats. And the Green Party and Reform were the most hard done by: the Greens should have won 57 seats but gained only 4 and Reform’s 6 noisy seats should have been a cacophonous 101.
But even with all of the opposition parties on board, and a steadily increasing majority in the country in favour of changing the voting system as the campaign developed, they still had less than half of the Labour vote in parliament. Before the 2024 election, around half of Labour MPs were in support of Proportional Representation (PR), but their now dominant parliamentary position had caused many of those to reconsider, as well as bringing in a lot of new faces who owed their seats to the unfairness of the current system. About two thirds of Labour supporters were thought to be in favour of PR, which might become more relevant should the super-majority itself suddenly come under threat.
Which it duly did. The early signs were there: talks with the junior doctors, which many had expected Labour to be able to settle quickly and for less than 35%, collapsed and a new wave of strikes were announced. Any lingering thoughts of a honeymoon period ended abruptly in 2025. The summer was a shocker, a late heatwave in August led to hundreds of excess deaths and widespread riots in the most overcrowded prisons in the system in Durham, Leeds, Preston, Wandsworth, Bedford and Lincoln. And then, towards the end of September, just as the nation’s children were setting off to campus, the first universities declared themselves bankrupt.
Coventry and Sheffield Hallam had been in very public difficulties for some time, but it soon became clear how much they had been relying on a very different funding deal from the incoming Labour Government. Different from the Conservatives of course but also from the statements made by the shadow cabinet in the 2024 election campaign. It had taken 12 months for the reality that the Labour Government meant what they had said in the election campaign to come into contact with the universities’ financial plans, but now there was nowhere else to go. Courses were closed and put on teach out mode, almost entirely online. Students expecting to take up places were suddenly back on a hastily organised late emergency clearing programme, with all those who could defer by a year advised to do so.
Bristol, Bournemouth, Southampton, Somerset, Dover, Havering, North Northamptonshire, Cheshire East and Bradford councils all issued section 114 notices in quick succession. There was talk of a large number of other councils not far behind them.
The election polling towards the end of 2025 indicated the fastest and biggest swing in polling history. 40% was now a distant memory as the level of support sank below 30%. The very real danger that the super-majority might be a one term phenomenon was being actively discussed in all the bars and tea rooms of Westminster. The question on everyone’s lips in government was whether something big and popular could be done quickly which might also put some kind of safety net under the Labour seat count. And Taking Back Our Seats suddenly started to make sense to more and more Labour MPs. It might not save all their seats, but the threat that the leverage which had worked on their increasing popular vote so powerfully in 2024 could be turned just as effectively against them in 2029 was being taken increasingly seriously.
A referendum was proposed for the following year. Taking Back Our Seats avoided the trap the 2011 referendum had fallen into when they advocated the Alternative Vote (AV) system as the alternative to FPTP. This had kept the single MP per constituency of FPTP which sitting MPs always claimed was so important to voters, but had been susceptible to charges that it was not really PR at all. AV, or instant-run off voting as it is sometimes called, involves voters ranking the candidates rather than just voting for one. The candidate with the fewest “1” rankings is eliminated and all its “1” rankings are then reallocated to the “2” rankings of those who ranked the eliminated candidate 1st. And so on until one candidate is left.
Taking Back Our Seats instead backed the single transferable vote (STP), which also lets voters rank candidates. However instead of organising constituencies around single candidates, they are clustered (into clusters of 3 to 6 seats). First choices are reallocated if those choices are eliminated as for the AV system, but also if candidates have more votes than they need to get elected. This means that each vote has broadly the same value and results in much more proportionality in outcomes. This compares with the current system at the 2019 election where, according to the Electoral Reform Society, 865,697 votes were required to elect each Green MP, while only 38,264 were needed for each Conservative MP. STV is the preferred voting system of the Electoral Reform Society and is used in the Australian Senate, Ireland and Malta.
The result was an almost exact reversal of the 2011 vote – 70% voted in favour of STV for the next general election and the enabling legislation was passed the following year.
The impact on the party system in Westminster even before the new voting system was used was interesting. Many of the disaffected Labour left group announced that they would not be standing as Labour candidates at the next election, and subsequently a new Socialist Labour Party emerged which attracted many of them, as well as Jeremy Corbyn, who had stood successfully in 2024 as an Independent. Others gravitated towards the Greens. The Conservatives, whose vote was still struggling to overtake Labour despite the many reverses of the last 5 years, were less prone to splits amongst their 100 remaining MPs, but a handful joined Reform and there was a smaller number of transfers between the Labour, Conservative and Liberal Democrat Parties as their positions had moved further apart at the prospect of a STV election.
And now here we are. On the brink of what feels like a big change. Everyone is a little nervous about where we are going with this, but there is also a certain amount of exhilaration in the air. We are all half expecting the politicians to find a way to turn this experiment against us, but also the thought that we will finally have a Parliament which properly represents us is a little bit intoxicating. Still lots of work to do on all the problems we have of course, but perhaps we now have the right tool to start that work.
We shall see…
For more information on the different voting systems mentioned in this little fable, I recommend Lessons Not Learnt, published by the Electoral Reform Society in January 2024.
Posted on LinkedIn on 4 June 2024
This is just a quick personal note to explain the imminent end of my LinkedIn account.
LinkedIn became an important tool for me in 2014 when I became a Lecturer at the University of Leicester and Programme Director for the BSc Mathematics and Actuarial Science there: to connect with potential students and guests to the university, to link up with former students, to publicise the activities of the Leicester Actuarial Science Society and to facilitate a professional network which would be useful to our current and former students. I also posted a few articles here along the way. However I will be leaving the University of Leicester on 30 June and moving to retired status with the Institute and Faculty of Actuaries soon afterwards. Therefore the description I have given myself here (Actuary, Lecturer and Writer at the University of Leicester) will at that point become almost entirely untrue! It therefore seems like an appropriate time to wind up my account here.
According to the latest analytics, I have around 1,400 connections on LinkedIn. Thank you to everyone who has connected with me over the years, particularly if we worked together in some capacity. I have managed to work with some wonderful people over the last 10 years. A particularly big thank you to all of the students who have made the job so enjoyable during that time.
Of those 1,400 connections, over 400 of you list the University of Leicester in your profiles. If you are a current or former student, or indeed anyone who needs to be in contact with a member of the Leicester actuarial team and are currently only connected to me, you should ensure that you are connected to at least one of the following excellent colleagues of mine: Leena Sodha, Paul King or Nigel Sell. You should, in addition, as a current Leicester student, join the LinkedIn group Leicester Actuarial Science Society. If you are a former Leicester student, the group you want is Leicester Actuarial Science Society – Alumni.
I will continue to be in various actuarial WhatsApp groups for the time being and on X (@weknow0). And, if you like any part of what I write, you can always subscribe (for free!) at weknow0.co.uk. For those of you who still want to keep in touch with me by email once I have left here and my Leicester email address has been discontinued, and we have not already shared alternative contact details, please send me a message on LinkedIn (or weknow0.co.uk) and I will be in touch.
With my best wishes for the future to you all.
The Telegraph thinks the shareholders are to blame. The Guardian has the Australian investment bank Macquarie in its sights. Martin Bradley’s (the European Head of Infrastructure at Macquarie Asset Management) attempts in Infrastructure Investor at justifying their actions only seem to be making things worse. The FT is using it as an excuse to have a go at the Capital Asset Pricing Model. Count Binface has included in his manifesto for the London Mayoral election a requirement for the company’s management to “take a dip in the Thames, to see how they like it”.
I am talking of course about Thames Water, which really does appear to be everywhere at the moment. But how did we get here?
The management of water works by private companies was originally a legacy of the Victorians – most of the water supply and all waste water services moved into local government control from the late 19th and early 20th centuries. Control then passed from 165 different water supply bodies to 10 regional water authorities in 1974 before these were sold back to private companies in 1989.
Water is obviously a resource vital to all of us, as well as being what economists call a natural monopoly. There have been debates for quite some time now about renationalising the water industry – some arguing that it is too expensive and that a Welsh Water not-for-profit model is the answer, others saying that water, electricity and Royal Mail together would cost less than £50 billion to nationalise and would pay for themselves within 7 years if investors were just repaid what they had invested in the businesses, others saying that water is a failed business and could be acquired without compensation for shareholders as happened with Northern Rock.
What none of these appear to be arguing is that private monopolies should not exist as a reason for renationalising water. We have become so used to monopoly or oligopoly profits in everything from utilities to transport to mobile phones to supermarkets, that we sometimes forget that it has not always been like this.
This point was made to me powerfully in Cory Doctorow’s excellent The Internet Con – How to Seize the Means of Computation. The 19th century debate in the US Senate about monopolies was impassioned. Senator John Sherman of the 1890 Sherman Act effectively put the war against monopolies on an equivalent footing with the War of Independence from the British Crown:
If we will not endure a King as a political power we should not endure a King over the production, transportation, and sale of the necessaries of life. If we would not submit to an emperor we should not submit to an autocrat of trade with power to prevent competition and to fix the price of any commodity.
It’s stirring stuff. The “harmful dominance” theory of antitrust (ie the idea that companies which dominate an industry are potentially harmful just because they are dominant, before they even start to abuse their dominant positions) led to the dismantling of several “empires”, including that of Rockefeller’s Standard Oil Company in the early 20th century.
But then enter Robert Bork. Famous amongst other things for having an extremely dull taste in video rentals, Bork was Solicitor General of the US between 1973 and 1977, under Presidents Nixon and Ford, and Acting US Attorney General from 1982 to 1988 under President Reagan. Bork developed what he called a “consumer welfare” theory of antitrust. This allowed mergers and monopolies to proceed provided prices were lowered and/or quality improved, or even if they weren’t as long as some “exogenous factors” could be blamed for the price hikes or reduction in quality.
Sound familiar? It should, as we all still live in Bork’s world. For example, the microeconomics part of the Institute and Faculty of Actuaries’ Business Economics syllabus relating to imperfect markets reads as follows:
Note the focus on the different ways firms supposedly maximise profits (this approach is fairly thoroughly debunked by Steve Keen here) rather than on the market power they wield. The part which should include the regulation of monopolies reads as follows:
Note the lowering of expectations in 3.1.6: “Why government intervention might not improve market outcomes in practice even if the existence of ‘market failures’ suggest they can in theory”. However the real limitations are laid bare in 3.2. The main targets of “competition policy” in the text book (Economics by Sloman et al) you are pointed to by the core reading turn out to be what are referred to as “exclusionary abuses”, ie where businesses actively prevent effective competition from actual or potential competitors. As the preamble on competition policy in Sloman says:
Competition policy could ban various structures. For example, there could be restrictions on mergers leading to market share of more than a certain amount. (This is the harmful dominant approach, about which no more is said) Most countries, however, focus on whether the practices of particular monopolists or oligopolists are anti-competitive. Some practices may be made illegal, such as price fixing by oligopolists; others may be assessed on a case-by-case basis. Such an approach does not presume that the existence of power is against the public interest, but rather that certain uses of that power may be.
So, in other words, we will leave monopolistic businesses with the power and attempt to detect abuses of that power on a case-by case basis via overworked and under-resourced regulators. Sherman could have never cut Standard Oil down to size with this approach.
Yanis Varoufakis’ contention, in Technofeudalism, is that capitalism now only operates within the framework provided by the most extreme monopolists of Big Tech, with most of us either “cloud proles” (ie wage slaves working for Big Tech under feudal conditions) or “cloud serfs” (ie the rest of us working for Big Tech for free by creating content and sharing our data on their platforms). Big Tech’s size massively increased as a result of the bank bail out of 2008 and additional money pumped through them and the corporations working for them coupled with austerity for everyone else, which was therefore almost totally financialised – leading to the “everything rally” for asset owners.
As Varoufakis says:
When an activist state makes fabulously wealthier the same bankers whose quasi-criminal activities brought misery to the majority, while they are punished with self-defeating austerity, two new calamities beckon: poisoned politics and permanent stagnation.
Again, sound familiar?
It is not too late to push back against the monopolies which control our lives. Doctorow’s big idea in The Internet Con is interoperability, the ability of new technologies to plug into Big Tech’s services, systems and platforms, which Big Tech tends to resist with all of the power at its disposal. He makes a convincing case for how this simple change could reduce the size of Big Tech companies quickly and bring them within the scope of democratic control once more.
And for those businesses which need to be at monopoly scale to work at all? Water, for instance. That sounds like an unanswerable case for nationalisation to me. Perhaps assuming that dominant private companies are bound to be harmful needs to come back into fashion.
My evidence to the House of Lords Economic Affairs committee on the sustainability of the UK’s national debt is now available on the parliamentary website.
I was rather surprised to see that only 37 people submitted written evidence. My evidence was as follows (with the hyperlinks which got removed restored and the addition of the graph of the history of public sector net debt):
The “incredible” £2.6 trillion mentioned by Lord Bridges of Headley in the call for evidence suggests that you are using the public sector net debt excluding public sector banks figure, which is £2.671 trillion or 97.5% of GDP as at November 2023 according to the Public Sector Finances bulletin on the ONS website. You could more reasonably use the public sector net debt excluding public sector banks and the Bank of England figure, which recognises that otherwise you are notionally including a debt attributed to an organisation which has no debt, which therefore reduces this debt to £2.419 trillion or 88.3% of GDP. Or even better, you could also deduct the Bank of England Asset Purchase facility, which was used for QE and is held by a subsidiary company of the Bank of England controlled by the Treasury and therefore also not a debt in the commonly accepted sense of the word. This stands at £0.597 trillion in Q2 2023 according to the latest quarterly report from the DMO and would further reduce the debt to hopefully a slightly less incredible £1.822 trillion or 66.5% of GDP.
Even if you want to stick with your original number, despite a large part of it not being owed to anyone with any interest in being paid back, the public sector net debt according to the ONS following a global pandemic and Brexit as a percentage of GDP is lower in the UK than at any time between 1916-17 and 1960-61.
Our latest general government debt available on the IMF Datamapper, which is from 2022, of 101.4% of GDP also compares favourably with the United States (121.4%), Japan (261.3%) and France (111.7%), with only Germany (66.5%), China (77.1%) and India (83.1%) of our major partners or rivals with lower debt.
With this perspective in mind, my responses to a selection of the questions set out for the call for evidence would be as follows:
What is meant by a “sustainable” national debt? Does the metric of debt as a percentage of GDP adequately capture sustainability?
I think this means affordable, both currently and in the future. The only reason our current level of debt (which, as I have shown, is not particularly high either by international or historical comparison) is felt by some to be unaffordable is the sharp increases in interest rates by the Bank of England over the last two years. Central government debt interest, net of the Asset Purchase Facility was £112.1 billion in 2022-23, compared to £60.9 billion in 2021-22 and £26.7 billion in 2020-21.
According to the World Economic Outlook from the IMF in April 2023:
Overall, the analysis suggests that once the current inflationary episode has passed, interest rates are likely to revert toward pre-pandemic levels in advanced economies.
This is therefore a temporary problem and does not suggest that the level of debt is unsustainable at all. Interest rates should be brought down as quickly as possible, and the rate of interest on the Asset Purchase Facility should be reduced immediately to very low levels, as is already the case in many other countries including the Eurozone and Japan (the case for this was made in June 2022 in the New Economics Foundations’ report Between A Rock And A Hard Place).
The Government’s target is for public sector net debt (excluding the Bank of England) to be falling, as a percentage of GDP, by the fifth year of the OBR’s forecast. How meaningful is this target; and how does it inform an evaluation of the sustainability of our national debt?
I think this target is essentially meaningless given the high likelihood of a change of Government within the next year. In my opinion Government spending needs to be set according to need rather than by setting an arbitrary target for the level of debt as a percentage of GDP.
What are the market risks created by high levels of public debt; and what factors will influence the market’s appetite for this debt?
As the DMO Annual review for 2022-23 states: “The average cover ratio at gilt auctions in 2022-23 was 2.39, in line with 2.41, in 2021-22”, ie there are consistently nearly two and a half times as many bids for gilts as gilts being offered for sale. This indicates a continued strong demand for gilts.
What levels of productivity and growth are required to ensure our national debt is sustainable?
Our national debt is already sustainable.
If we are to ensure our national debt is sustainable, what might this mean for fiscal policy?
Our national debt is already sustainable.
Should the definition of the national debt differentiate between debt incurred for investments (which generate revenue for the Government), and other areas of spending?
Yes. One example would be where nationalised entities such as Network Rail are included as a liability but the corresponding revenue-producing asset is not set against this when included in the national debt figures.
It is striking to me what questions you are not asking, eg:
If we are to ensure our national debt is sustainable, what might this mean for monetary policy?
This seems to me to be a much more relevant question, as it would appear that the sole reason the unsustainability of the national debt has become an issue is due to the monetary policy of the Bank of England. Japan has negative interest rates, the Eurozone’s rate is 0.75% below ours. The high level of interest rates in the UK is having a negative impact on economic growth, investment and unemployment, as well as sharply increasing the cost of the national debt. The independence of the Bank of England and the nature of the targets it is set would both be more interesting subjects for a call for evidence than the sustainability of the national debt.
So the proposals which I wrote about last month have been reconsidered by the newly elected Institute and Faculty of Actuaries (IFoA) Council on 15 October, where they agreed some tweaks to the original proposals as follows:
Council devised and ultimately voted for revised measures based on the member feedback it had received on the previously approved reforms. You told us that you wanted the new President and Council (2023-2024) to reconsider the reforms and we agreed this at our meeting on 1 September 2023. You told us that you wanted better communication and more engagement and we have embarked on one of the biggest member engagement exercises in our history which will continue next year into the role of Council. You told us that you were uncomfortable with the idea that actuaries would be in the minority on the board. We have responded by changing the makeup of the new IFoA Board so that it will continue to have a majority of actuaries. You told us that you wanted safeguards to ensure the IFoA Board could be held to account and that a “bad board” could not self-perpetuate. We have responded by ensuring that appointments of members and independents to the IFoA Board will need to be ratified by Council on first appointment and every 3 years for the remainder of their term.
So am I happy now? The answer is no in some respects and I don’t know in others. No I am not happy that a member vote still seems to be proposed for 2026, giving this proposal the inside track to becoming the final permanent governance structure by only asking for a vote after most of us will have become quite hazy about what went before it.
I don’t know because we are still not going to be given sight of any part of the DAC Beachcroft report to which these proposals are supposed to be a response. We are therefore being asked to completely trust the description of what was in it by the very people trying to sell us their proposals. That is a big ask in my view.
However it is also difficult to raise any formal objections to the proposed amendment to Regulations 2, 3, 4, 5, 6, 10, 11, 12 and 13 in this state of enforced ignorance. I will therefore be raising the concerns I have set out here by contacting the Corporate Secretary at the IFoA. If you feel that you can go further and formally object on the basis of what you have or have not been told, then those objections should be raised by 30 January to be considered.
Perhaps I am making too much of what I don’t know, but I was struck by the references here to any future consultation being confined to the role of Council, with the rest of the governance structure seemingly regarded as done and dusted. Also if you watch to the end of the little video there, you are confronted with this message:
Is our ability to continue to self-regulate at all really under threat? I would have expected to be told rather more about why this is before being asked for my views in a member organisation such as the IFoA.
I accept that many of the IFoA’s functions may need a more streamlined system to run them effectively. There are many different alternative structures which we could consider to achieve this. But these proposals are about changing the very nature of the IFoA and that requires full disclosure to members about why we are doing this and a chance to vote before we do so in my view. More than a tweak, in other words.
We have been here many times before, even in recent memory. The 2008 banking crisis, memorably immortalised by the Steve Bell cartoon above; the MPs’ expenses scandal the following year; the successive disappointments of Brexit; and now the the Post Office Horizon scandal. All of these had in common an initial public expression of outrage, followed by loud condemnations of aspects of it from within the Establishment, followed by a series of measures which generally failed to change anything substantive. So the ring-fencing legislation brought in to isolate the risk taking within banking from retail customers has steadily been lobbied against and is now gradually being unravelled. MPs continue to have expenses scandals. I don’t know how to encapsulate in a sentence the Muppet Show of how the Establishment has been trying to deal with Brexit since 2016. And now this.
The Post Office scandal seems to be being discussed everywhere: beyond the TV, radio and social media, it is in the pub, the supermarket queue, in families and workplaces. The Establishment condemnation is already underway, as pithily summarised by Marina Hyde here. I do not really care about the implications for the honours lists, but very much hope that the sub-postmasters and sub-postmistresses get the compensation they are seeking. However this time the response cannot stop there.
As David Allen Green has written in Prospect today (with a great overview of what has happened from a legal point of view), the scandal also represents a failure of the legal system. This was partly caused by the repeal, in 1999, of the part of the Police and Criminal Evidence Act 1984 which presumed in favour of individuals rather than computer systems. This has been particularly unfair in these cases as the evidence defendants needed to show that Horizon was at fault often remained undisclosed by the Post Office. It was also caused by the Post Office’s eagerness to pursue private prosecutions.
Coincidentally, I came across the concept of private prosecutions a couple of weeks ago while reading the excellent Butler to the World: How Britain became the servant of tycoons, tax dodgers, kleptocrats and criminals by Oliver Bullough (which also suggested to me that I should revisit the issue of Scottish Limited Partnerships soon, but I digress). As Oliver points out:
Under measures introduced in the post-2010 austerity agenda, defendants…have no prospect of reclaiming their expenses from public funds if they are convicted. Even if they’re acquitted, they can only get their expenses back if a request for legal aid has previously been turned down…Meanwhile, private prosecutors – whether individual or companies – can claim back all reasonable expenses if they lose. Financially speaking, a private prosecution is a one-way bet. As long as you can afford the upfront cost of bankrolling the case, you’ll get your money back because under common law you are acting on behalf of the Crown.
David Allen Green has called for private prosecutions to be abolished, which I would agree with. But I also think the burden of proof needs to be returned to the operators of computer systems in what I predict will become increasingly frequent human-expert system disputes in the future. In fact we need to go further than that and have a full public consultation into what legal protections individual humans will need in a world increasingly driven by decisions and calculations made by non-human systems.
Over seven years ago I wrote an article in response to Cathy O’Neil’s excellent Weapons of Math Destruction, where she set out the case against devolving important decisions to mathematical models without adequate feedback loops. I said then (with an Oppenheimer reference too!) that:
If mathematical models are to be the dominant regulatory tool of a financial world, and of the consultancies and financial firms competing in that world, then the time will come when mankind will curse the names of the highly paid professionals who followed inappropriate rules rather than exercising their own expert judgement when it mattered.
It is starting to look like we may be there already unless we act fast.