Context, context, context....

The Chancellor is developing an unenviable track record of Budget faux pas.  Yet again he has stumbled in the search for acceptable ways to pay for tax cuts.

Time was, when a Chancellor facing the scale of deterioration in the public finances that was unveiled on Wednesday, that he would have turned to the nation and intoned “our long-term ambition remains to raise tax thresholds and increase the point at which people start paying tax at the higher rate.  But the worsening economic outlook since the Autumn Statement means I cannot yet afford to do that.”

At a stroke he would have not needed to rely on cuts to personal independence payments to pay for his tax reductions.

Or he could have taken another tack.  “Over the past two years motorists have benefited from a dramatic fall in the price they pay at the pump for petrol.  While prices were rising, freezing fuel duty was the right thing to do.  But with prices at their lowest levels since XX now it is reasonable to add XX to the price of a litre of petrol.  This enables me to start meeting our manifesto commitments to reduce tax paid on incomes .... ”.  For good measure he could have even added in a bonus Paris climate change mention.

But he chose to do neither of these measures, neither politically easy, but looking better in comparison by the minute as the row over PIPs escalates with the policy being downgraded from firm announcement on Friday, to scored Budget measure on Wednesday to something being consulted on by 10.55 on Thursday evening.

The Chancellor has been there before.  In 2012 he dipped into the Treasury’s big box of tax anomalies to find ways to pay for the tax threshold hike the Liberal Democrats demanded as their price for allowing a top rate tax cut.  The result as an “omnishambles” budget.

In July 2015, he used a £ 4bn cut in tax credits to make his numbers add up.  His autumn reversal forced him to miss his own “welfare cap”.

We have long argued that lack of internal challenge leads to bad policy making.  The Treasury is particularly vulnerable. Budget “secrecy” means only the Chancellor and (sometimes) No.10 have an overview of the whole Budget context – the ups and the downs.  And in Budgets, context matters – because context determines whether measures appear fair or unfair.

When the PIP cuts were unveiled in a Friday written statement by a DWP junior Minister, there were a few squawks from disability lobbyists.  They became politically toxic when set alongside the Chancellor’s other Budget choices.   And if course, this is not a unique Osborne phenomenon – the same applied when Gordon Brown decided to abolish the 10p tax rate to pay for a general income tax cut.

The big decision in the Treasury used to be “the Chancellor’s budget judgement.” That used to mean whether there was to be a net hike or net giveaway.   Increasingly though the Chancellor’s Budget judgements – of what mix of measures will be politically sustainable – look questionable.  As I have argued before, that points to the need to open up  the process so the Chancellor can get some help to see the bigger picture.

Why the Wimbledon draw is a warning to policy makers

 Seeding matters in tennis.  Get the seedings – the assessment of who is most likely to win the tournament - wrong, and the public are denied the best final they might see – as happened at the French Open two weeks ago.  The tournament organisers at Wimbledon have just committed that error and produced an unbalanced draw – though less a bad one than there might have been.

Most of the world’s top tennis tournaments apply a simple rule.  They seed players according to their current place in the world rankings – which are calculated on a player’s performance over the past year.

Wimbledon doesn’t do that.  It has always said that, since the grass court season is so short, and thus plays so little part in determining the rankings, they reserve their right to adjust to recognise grass court performance.  For the men’s tournament they have an algorithm to do that.  For the women’s they exercise judgement – and that has led them in the past to bump the formidable Williams sisters up the seeding chart.

But even with these get-out clauses, the sports pages are full of condemnation of the decision to seed former champion, Rafael Nadal at No.5.

Data driven

The reason for Nadal’s seeding is quite simple.  Despite winning the French Open, Nadal is currently at No.5 in the world.  That is what the data says and data does not lie.

Context matters

But there is a reason for Nadal’s lowly ranking – he spent 7 months of the last season at home in Mallorca unable to play.  So the people ahead of him in the rankings have six months more points than him.  The fact that he is fifth in the rankings despite being absent for half the year is pretty amazing.

Formulaic adjustment

So why is Nadal not benefiting from the adjustment formula?  Because that too is very rules bound.  It takes account of performance on grass.  At first sight Nadal – twice a winner at Wimbledon (remember 2008 and his gloomy vanquishing of the seemingly undefeatable Federer), and four times a beaten finalist looks to have a pretty good claim to be bumped up.  If he were a woman he would be.  But the men’s formula looks at “recent” performance on grass – and last year Nadal’s knees were beginning to go – and he made shock early exits in the two grass tournaments he played and gave the Olympics a miss.  His earlier performances count for nothing.

Applying judgement

No tennis pundit thinks Nadal is the fifth most likely person to win the tournament.  Pre-draw betting markets had him ranked second alongside homegrown favourite Andy Murray, and ahead of both Federer and his compatriot, who has never won a Grand Slam (Rafa has 12) David Ferrer.   The smart move would be to seed him third or fourth which would have made sure there was no risk of him playing the top two in the quarter finals – and also avoiding what has happened – a quarter final versus Federer.

Off the courts

There has been much discussion on the benefits of more data driven decision making – in sport and in policy.   And in general, basing policy on data is much better than relying on prejudice alone.

But the case of the Nadal seeding adds a caution.  Data alone only tell you so much.  You also need to look behind the data and apply judgement to get the most sensible result.  This is the point US forecaster Nate Silver makes in his book “The Signal and the Noise” – you need to start with a hypothesis you refine as more data becomes available.   

This view also lines up with the points Jeremy Hardie and Nancy Cartwright made at Institute for Government on Monday about the way to use evidence in practice.  If you don’t understand the key elements that drive a result, successful replication will be impossible.  What looks like the “same” policy will turn out to have very different results if you misunderstood what bits of sameness mattered.  They called for the new What Works centres to develop guidance on how to make what works somewhere work somewhere else. And you need to find different ways of looking at the same problem to sense check your results.

If Wimbledon had looked at an alternative measure of performance – the rankings of performance in 2013 - they would have found that Nadal isn’t the fifth ranked player in the world.  By a considerable margin, he is the best.

Politics is POINTLESS

In the aftermath of the Eastleigh by-election, PASC chair Bernard Jenkin reflected on the disconnect between the Westminster village on the Today programme on Saturday morning.   If politicians watched the teatime quiz show Pointless, they would realise just how little the public knows (or cares?) about them.

I love the quiz show Pointless (I am not alone – when he did his back in, BBC Business Editor, Robert Peston, tweeted that the one good part was that he would be able to watch the show).  For those who have not watched, it the format is quite simple.  Pairs of people (an interesting demographic – a mix of small business people, students, public sector workers and the retired) have to find answers that the fewest people got when “100 people were given a 100 seconds” to answer a question.  The choice of subjects is quite eclectic – from mountain ranges, to famous blondes, to Scottish football,  to Latin phrases translated into English.   Whichever pair wins through the first 3 rounds gets to play for a jackpot when they are given five categories to choose from – and then are given 3 chances to find “the all important pointless answer”.

It’s a good format  and makes for a fun forty-five minutes – but it’s also a fascinating window into what a sample of people know and don’t know.  And over a concerted period of Pointless watching (it’s been on for years but I only discovered it in the autumn), some very distinct patterns appear. 

First, and perhaps as expected, a lot of people know about celebrities, films and other forms of popular culture and a bit of sport.   Geography and history are quite a lot weaker.   People had amazingly little recall of Olympic medallists (only 23 named Jessica Ennis as the winner of Heptathlon gold – what were they watching last summer?)

Second, those categories are the ones that the finalists almost invariably pick reflect the same themes – but because knowledge of categories such as “Steve Carrell” films is so widespread it’s really difficult to find a pointless answer. 

But third, from time to time, there is a politics category on offer.  It might be UK politics, or US or world politics.  In the final section, where contestants get a choice, they almost invariably immediately rule it out – on the basis that “they know nothing about politics” – no more shame in that than yet another woman admitting she knows “nothing about football”.  And they end up having to identify female Brit award winners since 1970.

It always seems a bad tactic.  Because to anyone who was listening to Bernard Jenkin on Saturday, its unbelievably easy to find a pointless answer in politics.  A few episodes ago the final pair did choose politics.  They had to identify current MPs whose surnames began with a vowel.  Their first answer was George Osborne – who scored a mighty 8.  Their other answers were Leo Abse (retired in 1987) and Gerry Adams (in the Irish Parliament now).   The jackpot went unwon. There were too many pointless answers to list at the end.  Douglas Alexander was pointless (Danny didn’t appear to be – the fruits of power).  In a much earlier programme when people were asked to name women MPs, Harriet Harman and Yvette Cooper were both pointless answers.

But perhaps the best illustration of the disconnect between the Westminster village and the people came in a question in an episode last week.  The category was Radio 4 programmes.  The question was “name the programme John Humphries has presented since XX”.   6/100 people (and none of the contestants) got the answer right.  Bernard: they are not listening.

Vote Abe -- or Birgitte

SPOILER ALERT – THIS ASSUMES YOU HAVE WATCHED THE END OF BORGEN SERIES 2 AND LINCOLN (OR AT LEAST KNOW YOUR HISTORY)

It’s been a great month for those of us who like our dramas political and have been wondering why we never saw Matt Santos’s first term in full technicolour.    But now Borgen has ended – until next year -  and there will be no Lincoln Part 2, it seems like a good time to reflect on what these two entertainments tell us about politics.

Intriguingly, for Coalition Britain, a central theme has been stitching together coalitions – with the noble Mr Lincoln resorting to bringing out the US version of the payroll vote – by offering federal jobs to lame duck Democrats to vote through the 13^th amendment – and PM Nyborg having to resort to smear tactics to get the Greens on board with her grand “Common Future” – and exiting a potential rival to Brussels (in the best titled episode of the series).   In both, we are asked to admire politicians who do the wrong thing to achieve a bigger objective.  But we also see the care and attention that is needed to assemble and keep coalitions going.

And a key theme of both is the problems politicians have in reconciling political office with home life.  The scenes between Abe and Mary Todd Lincoln make the Borgen domestics look restrained – at the very least until Birgitte’s last screaming match.  In both the spouses fail the Denis Thatcher test.   But most poignant in both is the impact on the children.  Interestingly the littler ones cope better – whether Tad or Magnus, while it is the older child who suffers.  And the compromise for both politicians is that they apply different rules to their children – Abe wanting Robert not to enlist because of what his being killed would do to the mother, Birgitte going private to jump the waiting list to get Laura into psychiatric treatment (do they really have 50 week waiting lists n Denmark?!). 

The biggest shock is just how different politics looks in the two.  One hundred and fifty years (and the Atlantic) separate Lincoln and Borgen.  While the House in Lincoln is split on abolition of slavery, it is vehement that it will not concede votes to “negroes” – but even clearer that votes for women would be absolutely beyond the pale.   The set up in the Danish Parliament looks very similar – big seats, in a semi-circle with a speaker in the middle.  But the composition of the two legislatures is very different.  In 1865, it is white men with beards. In 2012 (fictional) Denmark it is a rainbow parliament with prominent women and Muslims.   The House of Commons looks a bit too dangerously near the Lincoln end of the spectrum (except for the beards). 

But there is a heartening message from both.  Politics is a trade for honourable people.  They can manage to survive the chaotic home life (even if not an unfortunate theatre trip).  They can make change happen.   But one is fiction.  One is a story over a century old.  Neither is a story about British politics.   The most recent British political film showed our only woman prime minister struggling with Alzheimers, not wowing Parliament and trouncing the opposition, and left people none the wiser about what she actually did.  We still get the hopelessness of Yes Prime Minister and the venality of the Thick of It – and then wonder why people disengage from politics.

Which raises a question.  Can we only drop our cynicism about politics and politicians if we are looking at the “ government” of another country?

 

Instant messaging

Lord Justice Leveson publishes his report at 1.30.  The Prime Minister, the leader of the opposition and the leader of the Liberal Democrats aka the Deputy Prime Minister respond this afternoon.  Is that a sensible way to make policy in the minefield of press regulation.

Speed reading was clearly the order of the day in Downing Street yesterday as ministers cleared their desks to work out what to say on Leveson.  The Coalition Committee has been finally hauled into action.    Nick Clegg is on the phone to the Speaker.

After all a 2000 page report demands an instant response.  Or does it?  Maybe from individuals  whose reputations may not emerge unscathed.  But it is not clear that any good purpose is served by reacting immediately in an inevitably unthought through way to the proposals for the future.

Rather than try to make capital (or not lose it) out of Leveson, wouldn’t it be better for the Prime Minister to stand up and simply say: “I am very grateful to Lord Justice Leveson and his team for the immense amount of work they have put in.  They have produced a long and considered report.  This is an issue which raises important issues on the balance of freedoms between individuals and the press and now deserves serious study.  That is what I and my colleagues will now do as I hope will the party opposite.  In the New Year, we will bring forward proposals – on which we will then consult widely.  Where possible, I am keen to build cross-party consensus.  And I will look to see whether there are issues which would be better resolved by free votes in this House.   I – and my Ministers – like Lord Leveson, will not discuss further today”.

And then Ed Miliband would have no option but to stand up and agree with the Prime Minister that this was too serious a topic to rush to instant conclusions.

Fantasy politics?  Possibly.

Better policy making?  Definitely.

Autumn in Europe

This is a blogpost I wrote but did not post a year ago.......  as riots take hold of Madrid and Athens, there has been depressingly little progress on sorting out Europe.  Consolidating democracy in southern Europe was one of the EU's great prizes - failure to act on the euro crisis is now threatening it.

"European autumn

The hot news earlier in the year was the Arab spring.  Now the dominant story is faltering leadership in Europe.  Do the two phenomena have more in common than it looks at first sight?

 In the first part of the year, the world was taken aback as the people of the Middle East rose up against oppressive regimes.  The tide turned against autocracy.

The other big political story of the year has been of western leadership failing to measure up to the challenges of the eurozone crisis; while the extent of gridlock in the US was exposed by the debt ceiling wrangling. 

Huge issues are in play in Europe.  But one issue that is being exposed is the extent to which the euro, as an elite political project, has few popular roots in the countries that are now being asked to write the cheques to “save” the struggling southern economies.    There are some interesting lessons to learn.

Economists would always say that a 17 member euro would struggle to meet the tests of an optimal currency area.  The case for a Benelux + Germany with possible additions of some Scandinavians (who opted to stay out), possibly Switzerland and maybe France could be strong.  Adding in Spain, Portugal and Italy was a stretch.  Ireland was always a risk without the UK inside.  Greece a bridge too far. 

To make it work, it would have to be underpinned, as people are now pointing out, by a massive deepening of European governance arrangements – not just a central bank, but a European Finance Minister, extensive transfers and an ability to set fiscal policy at European not national level.  But the leaders who created the euro knew that, while people might be up for the benefits of a single currency, they were not up for that degree of surrender of national sovereignty.  And so that was a conversation that leader after leader refused to have with their people before the single currency was created.   

The single currency also needed stronger central institutions to enforce the rules – most notably on the German-inspired Stability Pact.  The fact that France and Germany went unpunished for breaching the rules sent an important message on the balance of power between individual states and the centre.  At the same time, the decision to go for 2^nd division players as the president and high representative respectively again reinforced the determination to maintain that this was a Europe of nations.

Which was fine – in a benign economic climate.  But now we are seeing Europe struggle to cope with the extraordinary political demands on it. There is no politically legitimate leadership from the centre – apart from in the ECB.   At the same time, the leaders of the strong northern states, are hamstrung by the knowledge of the limited political appetite to make sacrifices for the euro.  People allowed their leaders to engage in their grand projet on the basis of a bit more economic growth and a bit less hassle when travelling – on the basis of their assurances that this was a no risk enterprise.  Now we see a huge fissure opening up between what leaders think might need to be done to “save” the euro (or more accurately the banks that leant to Greece on the assumption it was Germany) and the price voters are willing to pay.

The European autumn reflects the gap between leaders and people.  Exactly what was exposed by the Arab spring".

Anyone for tennis?

  The fact that Rafa Nadal’s early exit from Wimbledon is front page news only underlines how the current male tennis elite have become a class apart, expected never to lose. Whereas the women’s game is suffering from a plethora of interchangeable players none of whom match the former greats. There are parallels with political leadership.

Wimbledon will be denied the chance of a Djokovic-Nadal classic (it may yet get a Federer-Djokovic semi followed by one of them taking on Andy Murray in the final). But these two have dominated men’s tennis over the past two years – and the triumvirate have won 28 out of the last 29 grand slams – the top prizes in tennis. The really interesting thing about this is the way that each player has inspired the other to raise their game. Roger Federer – five years older than Nadal – was gobbling up the opposition in routine victories before Nadal broke through: like Tony Blair against William Hague or Iain Duncan Smith or Margaret Thatcher against Michael Foot. Looked great but was barely tested – by the opposition at least. Since then Federer has won less – but arguably played better. Nadal then looked set to dominate, until Novak Djokovic discovered gluten free diets and the power of patriotism, leading Serbia to its first ever Davis cup win (tennis’s team competition), and lifted himself above both Nadal and Federer. But after a year in which Nadal could not beat Djokovic, a remodelled serve and more aggressive game looked to be evening up the Rafa-Novak rivalry. Poor Andy Murray sits by and wishing he was five years younger (or older).

Meanwhile the era of the great women’s champions is over for now. The Williams sisters are no longer the force they were; Steffi Graf is in Las Vegas with the kids and Martina and Chrissie who shared a riveting rivalry in the ‘70s and ‘80s are wheeled out as pundits not players. Six different women have won the last six grand slams and eight have won the last ten. So the choice is between a few really established leaders who bestride the international stage and challenge each other to do better and raise the bar for the rest: or a mix of nice but anonymous people who briefly emerge to the fore, fail to capture the public imagination and then leave the stage to the next person who has a good two weeks, with the game not developing or growing. Who comes out on top is fairly random – who has a good draw, holds their nerve at the right time. Noone is going on to really redefine the game.

It is tempting to say that political leadership in the west looks much more like the women’s game than then men’s. There are few figures who look set to make it into the history books as great leaders. Few people look set to dominate their own local politics for a prolonged period as government after government reaps the electoral consequences of austerity. And no one is imposing themselves on the game and challenging others to raise their own standards to meet them.

As we saw with Blair-Brown, political rivalries can be destabilising too (and much less fun to watch). But there is a real sense at the moment that there is a crisis of political leadership – with nobody matching up to the demands of the time. We really need some dynamic leaders to light up the world stage - more Novak and Roger and Rafa than Maria, Victoria, Sam and Petra. And the good news for Rafa fans is that at least this year there is a second chance to see him at Wimbledon – just let’s hope Lukas Rosol isn’t in the Czech Olympic team.