It has been a long time coming but it seems that at last leaseholds on new houses are to be banned. And ground rent on leasehold flats will apparently be able to be set only at peppercorn levels.
But there are still not any definite plans to help those already affected by the blatant rent extraction of selling what would and should be newly built freehold homes as leasehold.
As many of the freehold land owners seem to reside in tax havens, perhaps a start could be made by mandating that any rent payable to a company incorporated anywhere except the UK or the EU would not have the force of English law. And their agents – because they always have agents – should be required to disclose the details and addresses of landowners. So the shady companies of which, anecdotally, it seems there are quite a few, might just fade away. The others would have to declare themselves.
Indeed Property ownership in tax havens seems so widespread that even articles in the ‘Sunday Times’ earlier this month were highlighting how tenants resented exporting their rents and calling for realistic taxation of commercial property companies.
Once company names are revealed then it is surely up to the builders who sold on these streams of rents to the professional rent extractors, to themselves unwind the deal.
If the builders do not find they have the moral fibre to do so then, although retrospective laws are not usually to be encouraged, arbitrary doubling of ground rents and spurious fees for alterations are so completely contrary to natural justice, that I think a retrospective law would be justified. Such leasehold trickery certainly brings the law into disrepute and has no right to expect the legal system to be available for its enforcement.
Indeed it is at least arguable whether the agreements were freely and knowingly entered into in the first place and some conveyancing solicitors will surely end up being sued.
This deviousness only goes to further demonstrate the perversity in UK jurisdictions of treating the tenant and landlord relationship as equal.
On the Continent, whilst it is true that the codified Napoleonic legal system was based on Roman church law, at least it was modified by the French Revolution. They didn’t want the Bourbons back and ensured that the rent extractors did not get it all their own way. Consequently Continental laws have clear tenants rights and obligations for landlords and recognise that the landowners cannot be allowed the untrammelled power that is their natural advantage.
That revolution is long overdue for English law.
On Wednesday I read George Monbiot’s most recent column in The Guardian* in which he briefly discusses James McGill Buchanan, a man who features prominently in US historian Nancy MacLean’s new book, Democracy in Chains: The Deep History of the Radical Right’s Stealth Plan for America. As Monbiot notes, McLean’s book makes what has previously been largely invisible to the vast majority of people (including it has to be said many politicians) visible, and the title of his piece pulls no punches as to why: ‘A despot in disguise: one man’s mission to rip up democracy’. Monbiot continues with a sub-heading in which he notes that ‘…Buchanan’s vision of totalitarian capitalism has infected public policy in the US. Now it’s being exported.’
Now I’ll admit that I don’t often take issue with much that Monbiot writes, including his work on “rewilding” which gets him branded an extremist in many circles. But I do take issue with his claim that it’s only now that Buchanan’s vision of ‘totalitarian capitalism’ and the way this has infected public policy (and US politics in general it should be noted) is being exported elsewhere.
Why? Well, the answer to that is simple. As a mature student studying for a degree in public administration in the early 1990s one of the subjects covered was public choice theory, the development of a body of work in which, as Monbiot notes in his article, Buchanan played a central role. A leading book on the subject at the time was Peter Self’s Government by the Market? The Politics of Public Choice (Macmillan Press, 1993) in which the author details and critiques how the creation of the new public choice ideology came about, why, its goals and ambitions, and known and likely outcomes for the post-war model of social democracy.
As Self notes, public choice theory was indeed primarily a US development, although by the early 1990s its influence had spread, especially to English-speaking countries, and a prolific volume of work had been produced. In the US public choice theory had two strongholds: ‘…the Virginia School led by James Buchanan and Gordon Tullock, who founded the Public Choice Society in 1963, and the Chicago School, represented by such writers as Mancur Olson and George Stigler.’ (Self, 1993: 1). This body of work developed out from Anthony Downs’ ground breaking book of 1957, An Economic Theory of Democracy.
It’s not my intention to undertake a detailed review of public choice theory here, except to note that the underlying behavioural view – as for neo-classical economics – is that humans are primarily egoistic, rational, utility maximisers. Thus, Buchanan and Tullock (1962) rejected the traditionally accepted view of the difference between ‘political man’, supposedly concerned with public interest, and ‘economic man’ and private interests. Instead they argued ‘that it was reasonable to assume that his basic motives and interests will remain the same. What will change are the constraints and rules under which he operates, which will be critical for the rational calculation and pursuit of private interest.’ (Self, 1993: 2).
This ‘rational’ view does have profound consequences for how we view politics and indeed the construction and operation of political systems and economic and social relations in general, of course. Leaving that aside, for the purpose of this blog I want to focus on one succinct passage in which Self explains the emergence of public choice theory and the fundamental role it played in the new ideology of what in the 1990s was increasingly viewed as ‘government by the market’:
‘Mainstream public choice theories have been fused with market theories and converted into a powerful new ideology which has become politically dominant over the last two decades. This new ideology has overthrown or undercut the previous dominant ideology often described as the Keynesian-welfare state.
In both these cases the dominant ideology is a joint product of economic and political thought. The Keynesian-welfare state combination stressed the limitations and failures of market economics and beneficial capacities of the state for promoting both social welfare and economic prosperity. The new ideology reverses this approach and argues the general beneficence of markets and the many failures of politics. Public choice thought plays a vital part in this new synthesis because it claims to expose the grave intrinsic defects of the political process, especially compared to the merits of market choice. Without this demolition job on the role of government, market ideology could not have flourished in the 1980s.’
(Self, 1993: 56)
This then is where I take issue with Monbiot’s article, because the work of Buchanan and other advocates of public choice ideology is not a recent US export. Far from it. It has been infecting and thus impacting politics, government and public policy in the UK and elsewhere for decades. Nevertheless, Monbiot (following McLean’s argument) is correct in highlighting the more recent role billionaires such as the Charles Koch have played in funding entities that promote – usually by stealth – Buchanan’s/public choice forms of government and constitutionalism that effectively leave ‘democracy in chains’, as McLean so aptly puts it.
But again, it’s important to recognise how long this process has been going on. Thus, Self notes the role that so called “think tanks” played in the early transmission of public choice ideology and how they were usually funded either directly or indirectly by big business. Breaking with the independent tradition of organisations such as the Rand Corporation and Urban Institute, think tanks such as the Heritage Foundation and Hoover Institute (to name just two US example from many), and in the UK the Institute for Economic Affairs and Adam Smith Institute (ditto Canada’s Fraser Institute), all aggressively promote policy ideas and proposals based on public choice principles. (In his 2014 book, The Establishment, Owen Jones discusses the activity and impact on UK politics of several of the UK’s leading right wing/public choice think tanks).
In terms of influence and impact, Self notes a number of examples from the 1980s of which I simply highlight one:
‘The Heritage Foundation specialised in detailed, closely argued policy proposals. When President Reagan took office, twenty Foundation ‘staffers’ joined his administration and he was greeted with a twenty volume, 3000 page report entitled ‘Mandate for Leadership’ filled with detailed recommendations for cutting down government and boosting defence. Four years later the Foundation could boost that 61% of its proposals had been implemented…and a new mandate was issued for Reagan’s second term with 1300 specific proposals.’ (Self, 1993: 66, citing The Nation, December 1984).
Although seen by many as at best incestuous and at worst verging on corrupt, over the decades since Peter Self’s book none of the influence/lobbying activity he reported has slowed or been curbed. Indeed, quite the reverse. The purveyors of public choice ideology have continued to evolve ever more ingenious ways to control and shape public policy that furthers their ideology and the interests of their benefactors. This is usually by stealth because it has been consistently shown that such ideas generally lack public support. Currently there’s no more egregious an example of this than the continuing attempts by US Republicans to pass legislation to repeal and replace (or just repeal) Obamacare, thus negatively impacting millions of US citizens, while simultaneously committing to tax cuts that will overwhelmingly benefit the already wealthy.
It’s somewhat ironic then, as retired US senator Barney Frank noted on MSNBC on Wednesday evening, that at the same time the behaviour and actions of President Trump demonstrate to everyone who dislikes government that there is, in fact, something worse than government: No government. Furthermore, through their actions many Republican politicians (ditto their Tory compatriots in the UK) also expose the fact that public choice ideology has never been about devising public policy that responds to public need.
Nor is there anything public – in the sense that most of us understand that term – about public choice theory and ideology. It’s actually a misnomer of the grandest order. For what public choice is really about is bowing down to that base and simplistic measure of humans as egoistical, rational, utility maximisers, and rewarding those that act accordingly.
Amid the bewildering discovery that Surrey seemingly has higher skyscrapers than London – at least based on the heights of their respective fire services’ hydraulic platforms we now discover that the EU also played a role in the disaster and one which does not show it in a good light.
In order to comply with EU carbon reduction plans housing energy efficiency has been pursued with vigour. This is the reason why most high rise blocks in the UK have been swathed in cladding – it was the only way of improving their thermal efficiency without tearing them down and starting again.
For the purposes of insulation, polyisocyanurate (PIR) used on Grenfell tower was 30% more efficient than its fireproof competitor, which if it were used, at over six inches would probably be physically too thick to attach to the outside of the tower.
So to do the right thing for energy efficiency, PIR insulation was fitted.
Meanwhile, even before Croatia joined the EU in 2013 they were party to technical talks on fire standards. And they had already flagged up that these (PIR) insulating materials were vulnerable in fire and should be required to comply with a stricter fire safety standard. The research team recommended the British Standard, BS8414 for high-rise buildings. They went on to say there was an indissoluble link between energy performance and fire performance of buildings, and that the EU-mandated fire test standards were wholly inadequate.
But Britain is part of the EU, and has no competence to authorise this standard, the EU alone has this competence (single market and all that). So Britain already had a sufficient standard but it appears, the British government seems to have ignored or at the very least failed to vigorously support the Croatian research with the EU.
So I can only agree with Richard North, on whose very comprehensive article this one is based “ when it [comes] to framing regulations, the Community law-making machine [is] not very good at it.”
And the British government is also seen to be asleep at the wheel – whether as a result of fire service cuts or a hollowed out civil service, or just incompetence, will presumably be something for the inquiry to discover.
Even China, for goodness sake, bases its approval for its high rise insulation on the British Standard BS8414.
Brexiteers may gain satisfaction that the EU had a part in the biggest UK fire disaster of our times but could they also see their way to suggest that Her Britannic Majesty’s UK government take a course in humility and learn from the system of governance in Croatia?
An action dubbed ‘East 4 West – Grenfell Solidarity‘, took place on 27 June. It involved 22 lots of residents in tower blocks mainly across East London hanging out a banner to express their solidarity with the residents of Grenfell Tower. (Twenty two because one for each residential floor in Grenfell Tower).
It was not generally reported as far as I can tell but it does indicate how quickly a movement can be formed. The interesting part is not so much that these tower blocks were hanging out banners – although that in itself requires organisation – but that there was an organisation formed very quickly to do it.
As is now more and more evident to everyone, efforts to put the budget in equilibrium have precisely the opposite effect on society in general. Am I alone in feeling that this could be the start of a greater engagement in the democratic process?
I was also struck by a short piece on radio 4 , where an ex firefighter who lives in a Manchester tower block went to see his tenant management company to ask about the fire systems. Without demur they proudly gave him an envelope with all the details. He was astonished when he read it and and is now apparently working on a structured reply to tell them the alterations they need to make to bring the fire prevention up to standard. So it rather looks as though Grenfel Tower was not the only accident waiting to happen.
As an aside I remember when I ran a company, I was appalled that I was all of a sudden supposed to be an expert in fire protection as well. Of course the idea is that you go to the ‘market’ to hire in that skill, but how do you know the people you hire in possess the correct knowledge?- or are not just on commission? Or do you just say ‘looks good to me’? (I’ve been in a fire so I can say I didn’t follow this last option, but others might have been less diligent). The stupidity is that no authority seems regularly to check anything until after you’ve had a fire.
There is now controversy about who will run the inquiry into the Grenfell fire and whether its remit will be wide enough. The Fraud Squad are investigating the fire alarm firm, which is certainly worrying. But I cannot agree with George Monbiot’s otherwise excellent exposé of red tape – and the clique that likes to run the country – where he says that “A public inquiry where the government chooses charges, judge and jury puts the bonfire of regulations outside the frame. An independent commission is needed.” But I think that is long grass territory. The inquiry can establish the causes of the fire and the reasons for its rapid spread. Apart from the inadequate response from Kensington & Chelsea Council, the principle reason for a wide remit is to show that deregulation is life threatening. A conclusion I think most have already reached, and indeed, this is suggested by the reversal, by the Government, of the abolition of the requirement to have sprinklers in new schools.
It would certainly make us feel good to have an inquiry that, in due course, concluded that because the Conservatives do not wish to leave any financial debt for ‘future generations’, those generations are to be left instead with pot-holed roads, homes that are fire hazards, hospitals that are obsolete, schools that are falling apart and a shortage of trained doctors.
And that’s a real debt.
But surely that is already obvious.
With the Grenfell Tower disaster still fresh in our minds, and daily reports of the steadily increasing number of tall buildings clad in material that fails to meet fire safety standards, it’s understandable that the more general issue of fire safety and regulation has rightly become something of a talking point.
I well remember being wonderfully amused by a commentator on Tax Research UK suggesting that the BBC political correspondent Laura Kuenssberg, should be a correspondent for Hello Magazine.
Mind you they might not be able to afford her wages of almost £250,000 a year.
Continue reading “The consequences of Politics as Hello Magazine”
The devastating fire in North Kensington must have had us all thinking of 9/11. And yet this was a preventable, (in all likelihood) accidental fire in what is supposed to be the fifth richest nation on earth.
Personally I feel deeply ashamed that such an appalling inferno, in which at least 17 people perished, can happen in 2017 and in municipally owned housing in one of the richest boroughs in the country.
Theresa May has promised “the greatest expansion in workers’ rights by any Conservative government in history” if she wins on 8th June. She claims: “There is only one leader at this election who will put rights and opportunities for ordinary working families first.”
However, a recent report by the Ministry of Justice shows a stark contradiction between those words and the actions of her government.