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A Question of Character

Wed, 6 Aug 2008 -1:00:00 GMT

Prospect August 2008

The first headmaster of Stowe school, JF Roxburgh, declared his goal to be turning out young men who would be "acceptable at a dance and invaluable in a shipwreck." A mixture of courtesy and courage used to be essential to the idea of a British citizen's character. Brits were the sort of people who knew both how to survive a Blitz and queue politely. Similarly, Robert Baden-Powell, the founder of the scout movement, aimed to induce in his young charges "some of the spirit of self-negation, self-discipline, sense of humour, responsibility, helpfulness to others, loyalty and patriotism which go to make 'character.'" He described his movement as nothing less than a "character factory."

But in the postwar shift towards a less constrained and judgemental society—"character-talk" in Stefan Collini's phrase—dropped out of public discourse, except when considering someone's suitability for high office. The idea of good character came to sound old-fashioned and patronising.

"The reason we find the concept of character difficult is because of class conflict in British society," says Matthew Taylor, former head of strategy for Tony Blair, in an interview for my recent Radio 4 Analysis programme "Character Factories." "There was a sense that good character was handed down from a patrician class to the great unwashed."

But thinkers and politicians across the political spectrum are now trying to revive "character-talk." Taylor is pushing the idea of "pro-social behaviour"—recognising, he says, that changes in personal behaviour are essential to successful policy in everything from climate change to obesity. David Cameron called in July for politicians to tackle issues of "public morality." Against the backdrop of the impoverished east end of Glasgow, he insisted that politicians had to drop "moral neutrality." He criticised the political classes for "a refusal to make judgments about what is good and bad behaviour, right and wrong." Some people on the left are also starting to argue that character might matter as much as resources in improving life chances.

Bestselling books like Lynne Truss's Talk to the Hand: The Utter Bloody Rudeness of Everyday Life speak to a generalised anxiety about the breakdown of positive social norms of behaviour. But it is important to keep this in perspective. There is some evidence of a weakening of certain norms—more littering, public profanity, drunkenness and selfishness on the roads and public transport. But most of the time, most people are perfectly pleasant. British society as a whole is not "broken" in any meaningful sense.

Of course, it is notoriously hard for politicians to get traction in the area of behaviour. They often fall into the trap described by philosopher Jon Elster of "willing what cannot be willed." And Cameron is certainly taking some risks with his incursions into morality. By insisting that individuals should take a share of responsibility for their obesity or poverty, he ensured headlines such as "Cameron tells fat people it's their fault" and revived fears of a war against the undeserving poor. Behind the headlines, though, Cameron is thinking his way towards an integration of his ideas on responsibility, morality and "broken Britain," which may lead him towards a consideration of character formation.

Conservativism and character seem like natural political bedfellows given traditional right-wing concerns with social order and reducing state dependency. What is more surprising is the number of people on the centre-left who can also see the point of a new focus on character. For them, the concern is less with general social interaction—although they worry about that too—than with the character of a small, influential and expensive group who Tony Blair once labelled the "deeply excluded."

Why a nudge from the state beats a slap

Wed, 6 Aug 2008 -1:00:00 GMT

The Observer - 20th July 2008

Nudge: Improving Decisions About Health, Wealth, and Happiness

Richard Thaler and Cass Sunstein

Yale £18, pp293

One of the many competitive advantages American public intellectuals have over their British counterparts is the ability to capture their thesis in a single word: Chaos, Sway, Faster, Blink. The most successful of these endeavours colonise the word for the author's purposes. Richard Thaler and Cass Sunstein, both professors at the University of Chicago, have done it again with Nudge: Improving Decisions About Health, Wealth, and Happiness

Nudge has become the 'it' book for politicos. Thaler is in the middle of a fortnight in the UK and is being courted and feted by the chattering, thinking, wonking classes. Everyone who is anyone has been nudged by the amiable prof (I bought him dinner). The Conservatives moved quickly to stake their claim to his brand of 'libertarian paternalism', seeing in it a way for the state to act non-coercively for the greater good.

The Tory embrace of Nudge shows how far the party has moved in its approach to free markets: Thaler and Sunstein are a long way from the old Chicago School inspired and led by their most famous predecessor, Milton Friedman. Nudge portrays the Rational Economic Man who shops and trades in Friedman's free markets as a myth. 'If you look at economics textbooks,' its authors write, 'you will learn that homo economicus can think like Albert Einstein, store as much memory as IBM's Big Blue and exercise the willpower of Mahatma Gandhi.'

Real men and women are inconsistent, ill-informed, weak-willed and lazy. We can't be bothered to fill out the form that would get us in the company pension plan, we forget to cancel subscriptions and we slump on the sofa eating doughnuts when we should be doing yoga. We are virtually incapable of balancing the temptations of today with the rewards of tomorrow; for some of us, even instant gratification isn't quite quick enough.

Thaler and Sunstein want to help real, fallible people make better choices without removing their right to choose. In many cases, the nudge required is to remove the need for people to do anything at all, on the grounds that inertia and bone idleness are fixed components of human psychology. Occupational pension schemes, for example, can be established either on an opt-in basis - meaning employees have to make a positive decision to join - or as an opt-out, with workers automatically enrolled in the fund unless they choose to get out.

For Rational Economic Man, there's no difference. He carefully weighs up the pros and cons of the scheme and makes his decision. But a real person, afflicted by both a 'status quo bias' and what Thaler and Sunstein dub the 'yeah, whatever' heuristic, the differences are pronounced. Opt-in schemes have participation rates of around 60 per cent, while otherwise identical opt-out funds retain between 90 and 95 per cent of employees. It is no wonder that Adair Turner, in his report on pensions, urged legislation to push pension schemes to an opt-in default position and that policy is moving in this direction.

Irrational humans also tend to follow the crowd, which means that peer comparisons form an important part of the 'choice architecture'. Showing people how much energy they are consuming compared with their neighbours can reduce energy use. It also helps to put a smiley face on the bills of those consuming less than the average and a sad face on those consuming more. There's something slightly absurd and infantalising about such strategies, but Thaler and Sunstein have good data to support their claim that 'everything matters' when it comes to choice environments.

Some of Thaler and Sunstein's examples of choice architecture are trivial and can be used to trivialise their argument. One policy problem used to exemplify the approach is the failure of men to pee into urinals with precision. The bosses at Amsterdam's Schiphol airport, fed up with urine all over their floors, painted black flies in the centre of the urinals. By giving men something to aim at, accuracy was dramatically improved.

Nudge remains true to its promise to preserve freedom of choice, hence the apparently oxymoronic description of its authors' approach as libertarian paternalism, but it is unashamedly interventionist in framing those choices. This is not libertarian by any sensible use of that term and actually not even very liberal. The most honest description offered by the authors of their approach is 'a relatively weak, soft and non-intrusive type of paternalism'.

A strictly liberal approach to pensions would require people actively to choose to opt in. Liberals know that people are very often their own worst enemy, but, unlike nudgers, they do not feel compelled to intervene and act as peacemaker. Yet thoughtful liberals, unlike libertarians, will always be open to persuasion away from a purist application of their principles and Nudge offers a persuasive argument in policy areas like pensions and credit card regulation.

It is harder to go along with the nudgers' enthusiasm to act in other areas where people foul up. Thaler and Sunstein float the idea of a mandatory waiting period before allowing people to marry, an indication, I think, that their paternalism runs a little deeper than they protest. Some people will indeed have too many mojitos and get married in a drunken haze in Vegas and then regret it. It is hard to see why this is any business of the state. Our frailties may often be irrational, but they remain ours.

These are fairly minor quibbles. Nudge distils a scholarly and timely argument into a highly accessible book. There's definitely a publishing opportunity with these single-word theses. I am going to write a book called Wink: How Small Signals Transmit Big Messages. It's a winner; I can feel it. Except I can't be bothered. I need a nudge. Or maybe a smack.

When talent is a luxury

Wed, 6 Aug 2008 -1:00:00 GMT

Management today - 1st August 2008

Having developed a nurturing culture in the way they treat personnel, are HR departments finding it hard to frame the best strategy for their firm?

This October, the luminaries of the HR world will make their annual pilgrimage to Harrogate for the main conference of the Chartered Institute of Personnel and Development (CIPD). The northern spa town has been the mecca for human resources bods for six decades, and for three days the town will be filled with the usual earnest crowd discussing talent, recruitment and leadership.

But this is the last year attendees will be able to curse the appalling train connections and decaying hotels of Harrogate. In 2009, the CIPD is moving its festival of empowerment to Manchester. The elite divisions of HR are dropping the doilies and cream teas for the hip cafes and bars of Canal Street. It's a sign that the CIPD, and HR generally, might be entering the 21st century.

The CIPD's brand has been that of an organisation that is - how to put this politely? - spine- crackingly dull. It is like John Lewis or the WI: full of fantastically well-meaning, nice people attending to the needs of the HR community and being ignored by pretty much everyone else.

But the CIPD has a new chief executive in the shape of Jackie Orme, formerly HR director for PepsiCo UK. The organisation has avoided the temptation to go for one of the 'great and good', appointing instead someone who has led the HR function in a fast-moving consumer goods firm known for its tough, no-waste culture. She is bright, businesslike and articulate, and will soon be a powerful new voice and face for the organisation. (I worked as a consultant to Ms Orme a few years ago: nobody has made me work harder for my fees, nor earned my respect more quickly.)

The CIPD has also launched a new series of publications - with the excellent general label of 'Futures' - intended to be a forward look at the 'people' dimension of the challenges facing the business community. Unfortunately, the first issue, Leading Through Uncertain Times (available free from www.cipd.co.uk/futures), is a failure. With a few exceptions, the contributions from both CIPD insiders and external practitioners are a mish-mash of old platitudes about the importance of investing in people, the need for strong leadership and the benefits of engaging with staff. Linda Holbeche, director of research and policy at the institute, catches the reader's attention with 'Let me state my position clearly'. OK, prepare for some fireworks. 'I believe that leader- ship is going to be crucial if organisations are going to survive the downturn and even thrive.' I suppose it is clear, but it is a numbing cliche.

One of the external contributors, Neil Roden, head of HR at the Royal Bank of Scotland, urges readers to 'excel in leadership and management capability', 'drive engagement in people', 'actively manage talent', 'work collaboratively' and - no, please, don't say it - 'align HR and business strategy'. The HR community has been banging on about aligning HR and business strategy for at least two decades. But if people are the vital accelerator of business success, then the business strategy itself should contain the investments in people required for success. If HR strategy is seen as separate from the main business strategy, no amount of aligning will save it. If the series keeps up like this, they should rename it 'Histories'.

Perhaps I'm being harsh. So I should declare another interest: I used to be director of a Futures division at what is now the Work Foundation, a quasi-competitor of the institute. I believe the CIPD has a chance to lead a vital debate about the future of work and business. It has yet to seize it.

The strongest theme running through Leading Through Uncertain Times is a call on business leaders not to react to the economic slowdown by shedding staff. Holbeche argues that firms that chopped headcount in the recession of the early 1990s lost valuable intellectual capital, as well as the loyalty and commitment of remaining staff. Jeffrey Pfeffer of Stanford University warns that dismissed staff are often snapped up by longer-sighted competitors. John Philpott, the CIPD's chief economist, points out the cost of replacing staff and urges 'avoiding the self-inflicted wound of letting people go', then broadens his appeal to the conscience of bosses: 'Add to all this the fact that rising unemployment can itself reinforce a weak macro-economic situation by dampening consumer confidence and further depressing the housing market, and the merit of holding on to workers for as long as possible becomes crystal clear.'

It's striking that whereas all the CIPD contributors issue 'Don't lay off your staff!' warnings, the external writers or interviewees are silent on this issue. Perhaps they know it's not as easy as all that. It's true that many firms, in a panic-stricken state, lay people off too quickly. But the thing about people being your most important asset is that they are often also the most expensive asset - which means that if costs have to be cut in response to falling demand, people are likely to have to go.

Most successful business leaders know their people are vitally important. But they fear that HR professionals too often confuse the general message that human capital should be guarded and maximised with a specific belief that it is wrong to sack people or make redundancies.

The HR community will secure the ear of business leaders only if it stops sounding like a lobby group for the workforce. That is what trade unions are for. As for the CIPD, it now has a new conference home, a new publications stream and a new boss. All it needs is some new ideas.

The value of a self-governed life

Mon, 14 Jul 2008 -1:00:00 GMT

The Guardian - 20th Novemeber 2007

John Stuart Mill's On Liberty demonstrates that freedom is not a right – it is a choice

"The only freedom which deserves the name," according to John Stuart Mill, "is that of pursuing our own good in our own way". The sentence appears in surely the most famous book on the subject of liberty, On Liberty, published in 1859. For Mill, liberty (or freedom – he used the terms interchangeably) was the supreme political and ethical value because each of us is the expert on what makes for a good life for ourselves.

For Mill, there was no "natural right" to liberty; he agreed with the description by his secular godfather Jeremy Bentham of natural rights as "nonsense on stilts". Liberals could not avoid political argument by recourse to some essential, unchanging element in human nature. Mill would have supported human rights as devices for protecting certain key ingredients for a fully autonomous life; but for him these "rights" could only ever be means to an end, rather than an end in themselves.

The big idea of On Liberty is the supreme value of a self-governed life. He wanted us to lead our lives from within, asking: "What do I prefer? or, what would suit my character and disposition? or, what would allows the best and highest in me to have fair play, and enable it to grow and thrive?"

Mill's idea of liberty requires freedom of opinion, expression and lifestyle in order to produce the broadest possible palette of ways of life for us to choose from. The state should not impose a single view of the best way to live – for Mill, the idea of a centrally imposed national curriculum was horrifying. Equality before the law, and rights to fair trial were important precisely because they allowed people to live the way they chose, even if eccentric or even disgusting to the majority, so long as they did not actively harm others in so doing.

For Mill, liberty could therefore be threatened as easily by peer pressure, majority opinion and social intolerance, together creating "a social tyranny more formidable than many kinds of political oppression". The state could coerce and oppress: but so could the citizenry. Society could "issue its own mandates" and when it did it left "fewer means of escape, penetrating much more deeply into the details of life, and enslaving the soul itself. Protection, therefore, against the tyranny of the magistrate is not enough: there needs also protection against the tyranny of the prevailing opinion and feeling."

Mill's version of liberty is not a piece of historical abstraction or arcane legalism. Liberty is the vital foundation stone for free, flourishing lives, ones that are free from the mercy of others. Liberty is not a right: it is a way of life

Cameronism

Mon, 14 Jul 2008 -1:00:00 GMT

New Statesman - 20th June 2008

The Tory leader has done a brilliant job rebranding the "nasty party", but he has yet to come up with a coherent political philosophy - or anything especially new. Richard Reeves on the continuing Conservative makeover

David Cameron, plus a sizeable entourage, swept past, drawing the attention of the senior Labour politician (now a cabinet minister) from our conversation. It was November 2005, and the self-styled "modern compassionate conservative" was on course to lead the Conservative Party. "Does he worry you?" I asked my lunch companion. "A bit, to be honest," was the reply. "But he's fantastically right-wing, you know. You should read some of his old speeches."

I did. And they were, indeed, a deep shade of blue. The trouble is that the electorate was apparently unwilling to make the same effort. Lab our's attempts to portray Cameron as a right-wing wolf in woolly compassionate clothing failed in the face of his determined rebranding of his party. A Tory leader who praised gay couples to his own party conference - as Cameron did in 2006 - was hard to paint as a reactionary.

The other principal line of attack against Cameron - that he is a toff, out of touch with real people - has also foundered. The prospect of a prime minister and mayor of London who are old chums from Eton and the Bullingdon Club at Oxford may stick in Labour throats, but it doesn't seem to bother the electorate.

If Labour politicians were a bit worried in 2005, they are terrified now. Unless there is a significant change in the political weather, Cameron is set to be prime minister within two years. For a long time, Labour refused to believe that Cameron was executing a brilliant strategy to return the Tories to office by reshaping Con servatism. Cameronism is real - as real as new Labour, or the Third Way - and is likely to be the guiding light of the next government.

As a political strategy, Cameronism represents a largely successful attempt to detoxify the Tory brand. Andrew Cooper, the Tory modernisers' favourite polling guru, spent years presenting evidence to party elders showing that people supported various Conservative policies - until they were told they were Conservative policies. Cameron was the first leader to understand this. The first two years of his leadership was like a sorbet between courses, intended to cleanse the electorate's palate of late Thatcherism. It consisted of a relentless marketing exercise to dem onstrate that Cameron was, variously, a "compassionate", "modern", "liberal", "centre-right", "practical" Conservative: and that he was leading his party in the same direction. At his boldest, Cameron has claimed himself as the true "heir to Blair". He and colleagues such as Oliver Letwin now audaciously claim to be pursuing "progressive ends by conservative means".

Now the bitter taste is gone, tougher policies on welfare, immigration and public services can be pursued without being dismissed as typical products of the "nasty party". Cameron was perhaps a little more explicit than he intended when he said last year: "We've prepared the ground by moving to the centre."

The success of Cameron's rebranding campaign, and his heavy reliance on Steve Hilton, a brilliant marketeer, has led a few Tories to dismiss him as nothing more than a pre-packaged, ideologically vacant product. A former minister, George Walden, has written that, in calibrating his position, Cameron asks himself: "What would Diana have done?"

Cameronism is certainly not an ide o logy, nor even - yet - a coherent political philosophy. Cameron himself, in his 2005 Keith Joseph Memorial Lecture, explicitly rejected "ideological" politics in favour of "practical Conservatism". But the broad contours of his thinking, and that of the bright politicians and advisers around him, are now visible. Cameron ism displays certain features: it emphasises the pragma tic over the theoretical; takes an essentially optimistic view of human nature; favours the devolution, rather than centralisation, of power; stresses social, rather than economic progress; and places more faith in society than in the state.

When he was studying philosophy, politics and economics at Oxford, Cameron was enamoured of the Scottish Enlightenment philosopher David Hume. "After David Hume, he loved the free market and Thatcher," recalled his old friend James Fergusson. "He thinks exactly like Hume - he's a complete sceptic . . . it's all about throwing out dogma and starting from scratch." Cameron's view of human nature also appears to draw on Hume's conviction that, in affluent nations, progress would come from the growth of both knowledge and "humanity", by which he meant the "fellow feeling" necessary for "civilisation". While Thomas Hobbes believed the state was a necessary buffer between self- interested individuals engaged in a "war of all against all", Hume thought that, in the right conditions, people would willingly act in concert, for the greater good. Cameron said in 2007: "What builds society, what encourages civility, is people taking responsibility. Putting each other before themselves." Cameron is Humean, rather than Hobbesian.

Social recession

It is this essential optimism, that individuals and communities can usually organise their lives more successfully than any government, which underpins Cameron's rhetorical commitment to move power from central to local government and give users more power over the manner in which public services are provided. It remains to be seen whether he will be as much of a localiser in power, but the Tories now support directly elected mayors, a shift towards more locally based taxation, and much more choice over schools and hospitals. Cameron is honest about the fact that Thatcher's governments started the centralising trend long before Blair and Brown arrived on the scene, but defends her on the decidedly weak grounds that many councils had fallen into the hands of the "loony left".

But Cameronism diverges most sharply from Thatcherism with its focus on social, rather than economic, matters. Cam eron and his lieutenants argue that the nation is in a "social recession" and that "it's the society, stupid". One of Cam eron's mantras, a deliberate wedge between himself and Thatcher, is that "there is such a thing as society. It's just not the same thing as the state."

In a speech in May this year, widely reported for its revival of the Thatcherite drive for "good housekeeping", Cameron remained clear about his overall objective. "All this supports the overriding mission we have set for ourselves: to revive our society, just as Margaret Thatcher revived our economy; to reverse Britain's social breakdown, just as she reversed our economic breakdown," he said. "We want to respond to what should be a new post-bureaucratic age, by decentralising power, by giving people more opportunity and control over their lives, by making families stronger and society more responsible."

This paragraph is the best summary of Cameronism that Cameron himself has yet articulated. All the work on family breakdown, poverty, education and antisocial behaviour fits into the basic Cameron analysis: society is broken, and the state cannot put it back together again. "The big question," Cam eron suggests, borrowing heavily from JFK, "is not what will government do - but what will society do? Not so much what will I do - but what will you do? And what will we do together?"

This is all coherent and plausible, but it is neither especially new nor particularly Conservative. The Social Justice Commission, established by John Smith, and reporting in 1994, argued that "what central government can do for people is limited, but there is no limit to what people and communities can be enabled to do for themselves". Of course, the differences between political parties are often overstated, but nonetheless it is difficult to cope with the level of political disorientation caused by Cameronism. Consider this statement by Oliver Letwin: "We have put on the agenda issues of well-being, quality of life and social breakdown that Labour has ignored. These are central contemporary challenges - but Labour's focus on markets and economic value at the expense of all other concerns, their obsession with . . . notions of private sector 'efficiency', have rendered Labour incapable of addressing them." There is no way a shadow Labour minister would have dared write such socialist heresies in 1995.

Cameronism is, however, starchly critical of state initiatives to solve underlying social problems, lambasting Labour for nationalising social problems. Cameron has been much mocked for encouraging us to "hug a hoodie" (although it was an Observer subeditor who coined the phrase). "There are two ways you can try to make those kids behave better," the Conservative leader told a conference at the RSA last year. "You can put a policeman on every bus, an Asbo on every teenager and a parenting order on every parent . . . Alter natively, you can build a society where those kids know how to behave in public, because that's how they've been brought up and that's what society expects."

OK, Dave, that sounds great. Nobody can sensibly argue against a more socially responsible, civilised society. Labour would love to be able to cut the law-and-order budget following an outbreak of Humean humanity. But how - given that you, mostly correctly, suggest that the state can't do it - are you going to lead us to this Brave Responsible World? Cameron says: "We can actively build the responsible society we need by creating a framework of incentives that encourages civility and pro-social behaviour."

But - and this is the big question for Cameron - can we really? There is more than a hint here, in the philosopher Jon Elster's phrase, of "willing that which cannot be willed". Cameron wants to "roll forward society", but it is not yet clear how this is to be achieved.

Unthinking anti-statism

Indeed, Cameron verges on hypocrisy on the issue of state action. He has set up the Young Adult Trust, a charity that he says is "working in partnership with many of Britain's leading youth organisations, to develop plans for a national programme for all 16-year-olds that helps teach them the responsibilities of adulthood". A national programme to teach adulthood? If Ed Balls had announced it, the Tories would be turning it into a piece of "nanny state gone mad" propaganda. Cameron is quite right that Labour is very often guilty of a knee-jerk statism, but he is equally at risk of following an unthinking anti-statism.

Cameronism will only be a new political movement if it can get past the defunct "pro-state" versus "anti-state" divide. More thoughtful Conservative modernisers have already got to the properly liberal attitude towards the state, which is an agnostic one. "The purpose of reform and reducing demand for government services is not tax reduction - that is a (welcome and necessary) by-product," writes Danny Finkelstein, a Times columnist and influential Tory thinker. "The purpose is to change the relationship between citizens and the state, to build a stronger society and to improve the quality of things like health and education."

The Cameron critique of the state is very often that it simply isn't working properly. Take the issue of family breakdown, which the Cam eronites say is a major cause of a range of other social ills: this is true. What, then, is to be done? A tax break for marriage is mostly a symbolic measure, as Cameron himself has come close to admitting. The Conservatives have looked hard at the stress points for families and proposed policies to offer some relief. The birth of a child is one pressure point, so the Tories are advocating the provision of a dedicated maternity nurse for every new family, for up to six hours a day, similar to a Dutch scheme. The difficulty of combining work with childcare is another strain, so the Conservatives want a new law giving all parents the right to request part-time work. These are welcome measures: but it does seem as if it is the state, rather than society, that is rolling forward here.

It is clear that some of Cameron's anti-state rhetoric is designed to help the Conservatives paint Gordon Brown and his allies as statist, centralising meddlers - a task made easier by the fact that they often are. But the truth is that, in many areas, the Conservatives want to improve the state, rather than shrink it. And it might be as well to start saying so.

Yet there are many areas, such as antisocial behaviour, individual health and local governance, where Cameronism represents a genuine stepping back of the state, in the optimistic hope that "society" will fill the gap. This is the genuine radicalism of Cameronism, and also the greatest paradox about the man himself. Even before becoming PM, he is making a compelling argument for his own powerlessness at the head of the next government: real power lies in society. If elected, Cameron will be the first prime minister from Britain's ruling class for half a century - but one who proudly claims not to be able to rule.

Lapses into laddishness

Tue, 3 Jun 2008 -1:00:00 GMT

Management Today - 1st June 2008

A sales executive takes a picture of a female colleague to show to a new client. A worker in an open-plan office selects a screensaver from Nuts magazine. A senior manager requests a new PA who is 'blonde and busty' This is all done in the right spirit, you understand. It's not serious. It's harmless banter. A bit of a laugh. In these post-feminist times, most women are surely cool about it? Similarly, entertaining a client in a lap-dancing club is fine, so long as everyone sees the post-modern, pole-dancing irony. Come on, loosen up, why don't you?

This is the modern battleground for gender equality. Women no longer face high legal or structural barriers to career success, but instead face a culture of sexism fuelled by a climate of sexualisation. The net result of the behaviour described above is a climate in which women often face the choice between being demeaned as a sex object or dismissed as a prude. It represents - to borrow a phrase from the economist Thomas Schelling - a tyranny of small decisions.

The Fawcett Society, which campaigns for women's rights, collected the examples cited above for its recent 'Sexism and the City' campaign. It is leading the fight against what it sees as an insidious trend. 'Post-feminism is an oxymoron,' says campaigns officer Kat Banyard. 'We still need feminism. Women are still paid less than men at every level of society. But what's really new is the level of sexual objectification taking place - lapdancing clubs are the most blatant expression of a deep problem.'

Research by Lynda Gratton at the London Business School suggests that women's career chances improve once about 40% of senior managers are female. There are various possible explanations for this finding: women may be more likely to hire and promote women than men; successful women may act as role models and/or mentors to up-and-coming women; policies on flexible working and parental leave may improve. But it may also be that having enough women near the top changes the day-to-day interactions between employees, the thick of everyday life.

Without enough senior women, the sexist variants of what some sociologists have dubbed 'micro-behaviours' - a little joke here, a wolf-whistle there - might accumulate into a female-hostile environment. This cultural sexism also reinforces stereotypes about what women 'should' be like - usually sexy and submissive.

It has long been recognised that one of the reasons women don't get pay rises and promotions in line with their male peers is that they don't ask for them as often. But there may be a good reason for this reluctance. Research by Hannah Riley Bowles, associate professor of public policy at Harvard's Kennedy School of Government, shows that women who ask for more are viewed as grasping and selfish, contrary to the selfless persona expected, while men displaying precisely the same behaviour are seen as confident and successful.

'This isn't about fixing the women,' Bowles says. 'It isn't about telling women: "You need self-confidence or training." They are responding to incentives within the social environment.' Women are caught between meeting the expectations created by a culture of sexism and being marginalised, or rebelling against it and risking ridicule. No wonder so many opt out altogether.

There are two main difficulties with tackling sexist corporate climates. The first is to distinguish harmless social interaction between the sexes from harmful micro-behaviours that contribute to an inhospitable culture. Context is often vital; an elderly welder gently asking 'would you like a cup of tea, love?' is perhaps not to be found guilty of crimes against feminism; but a laddish trader doing the same with dripping sarcasm may be. How to act against the latter without crazily pursuing the former? This is difficult territory for any line manager, but who said being a manager was easy? Perhaps the most important task is to regularly seek honest intelligence from women about the culture of the firm, making it clear that no incident is too trivial to raise.

The second challenge is that many of the incidents, taken on their own, seem too minor to warrant disciplinary action. But if firms are serious about equality, there is no choice but to come down hard on offenders, not least as an example. Pour encourager les autres, as Voltaire's Candide innocently remarked. Above all, if a company has a clear policy on specific behaviours, it must enforce it. It's no good having a rule against downloading porn or using sexist swearwords if an offender is then let off lightly because they're a brilliant salesperson.

Above all, this new front in the sex wars requires that the hearts and minds of both sexes be won. The single most shocking finding in the Ipsos Mori survey accompanying the Fawcett Society's manifesto was that 48% of men and 41% of women think it is 'acceptable for businesses to use lapdance clubs as venues for entertaining clients'. This is incredible. Who are these people? It is one thing to accept people's freedom to visit lap-dancing clubs in a private capacity and another to endorse company-funded trips that either exclude women or put them in a horrible position.

The most powerful argument for affirmative action on behalf of women in the workplace is to save a culture from regressing into laddishness, with all its 'harmless' innuendo and banter. Until women are pulling the corporate strings, they are in danger of being condemned to their G-strings.

Liberalise or die

Mon, 2 Jun 2008 -1:00:00 GMT

In the drama of British politics, a Labour tragedy is unfolding. A combination of strategic errors, political mishaps and bad luck has left the party in a vulnerable position. The economy is turning soft and the electorate sour. The focus, at the moment, is on the lead characters—Gordon Brown and David Cameron—rather than the stories they are telling. Of course they matter. Leadership is about character. But Labour's woes do not flow simply from weak leadership and poor politics.

Labour is failing to win—or even to grasp—the big political argument: how to ensure people are in control of their own lives. The government has tested, often to destruction, the idea that a bigger, higher-spending state can deliver a better society. It has enjoyed some success in rehabilitating the idea of the state as an enabler. But Labour has reached the limits of what can be achieved through central-state diktat, and is running out of money.

For New Labour to survive, it must become new liberal. The key dividing line in politics is no longer between left and right, but, increasingly, between liberal and authoritarian. The Labour government too often finds itself on the wrong side of this divide. One of the lessons Labour ought to have learned from 11 years in charge of the state is to be humble about the limits of that power. Another lesson is that the demands of individuals for more say in how public services are provided and delivered are growing stronger.

Labour is being left behind. The governing elites of the Conservative and Liberal Democrat parties have got the point—and may be planning to prove it together in government. Nick Clegg is more liberal than social democrat. David Cameron is right when he talks about the "post-bureaucratic age." (Although neither has yet developed a full programme, and both are hampered, to an unknown extent, by the parties they have to carry with them.)

There are shards of new liberalism in Labour's programme, some of which were in evidence in the recent Queen's speech preview. The government may extend the idea of individual budgets from social care to health care. And there are some steps, albeit small ones, to give more power to social tenants.

But, in general, Brown and his allies retain a benign view of the power of the central, expert state to build a fairer, better society. The government genuinely seems to believe that "Britishness" can be legislated for. It has a tin ear on civil liberties. The plans for regulating new casinos include a ban on paying by credit card. Ed Balls, the secretary of state for children and families, wants a national play strategy.

Such gestures remind us that Labour's faith in central government draws from the deep, poisoned well of its Fabian tradition. Leonard Hobhouse, the foremost new liberal theorist at the beginning of the last century, recognised early the dangers of the Fabian brand of "mechanical socialism," which was inclined to "applaud the running of the machine merely because it is a machine and is being run."

Labour has too often fallen into this trap: a list of the institutions created and abolished since 1997 represents a significant amount of "machine" money spent to little effect. Labour politicians too often see a social problem—obesity, children at risk on the internet or declining interest in high culture—and make two assumptions: first, that the problem is amenable to a policy solution; and second, that this solution ought to involve the establishment of a council, commission or task force. But many of the issues facing modern society are too complex and too cultural for such a wooden approach.

It needn't be like this. Labour is heir to another tradition too. Radical liberals, seeking to provide the conditions for people to live flourishing lives of their own choosing, drove many of the social advances of the 20th century. "New" liberals such as Hobhouse, John Hobson and Lloyd George recognised that the state had a role to play in creating these conditions, and that Gladstone's laissez-faire liberalism was defunct.

The break between Gladstonianism and new liberalism was the recognition that freedom was made, not born: that barriers to liberty, such as sickness and poverty, could be huge. A late-19th century editorial in the Progressive Review declared that liberals "must… assign a new meaning to liberty: it must no longer signify the absence of restraint, but the presence of opportunity."

But new liberals have also been wary of the dangers of the central state drawing power to itself. There are often good reasons why power should be collectively exercised through the state. The point is that this should be the exception rather than the rule. Unless there are strong arguments to the contrary, power should reside with individuals. The historian GDH Cole called this strand of thinking in Labour's theory "federalism"—which he contrasted to the dominant strain of "centralism." The Clause IV of 1918 was a centraliser's charter. The Clause IV of 1994 was a federalist work.

David Miliband has recently suggested that the future for the British left lies in a marriage of these two traditions. A nice thought, but the two traditions lead to quite different places: for example, on public service reform, the environment and taxation.

A new liberal starting point for the way public services such as health and education are organised is that the individual should be in charge. Politicians often say this; but they rarely mean it. The NHS is a great social democratic monument. But the truth is that it can only survive through the use of liberal principles. The range of medical treatments is too large, the population too old and their expectations too great for the NHS simply to carry on as it is. As healthcare becomes increasingly about chronic care, control over funding and treatment has to pass from the profession to the individual. This will make the care people receive more appropriate and more cost-efficient, while institutions will join up, finally, around the patient. Passing control to individuals means they can spend their NHS entitlement on double glazing if they think it a better treatment for their asthma. Such a service is designed to produce good outcomes, because individuals are granted as much control as possible.

New liberals also part company from New Labour on the environment. They back strong state intervention, in the form of more aggressive "cap and trade" systems, as John McCain wants, but also tighter regulation of and higher taxation on emissions. This level of intervention is not only permissible on liberal principles, but is required by them. Liberals have always insisted that actions become subject to legal sanctions if they harm others. It is now irrefutable that the emission of greenhouse gases, mostly by rich nations, is causing climatic changes which will harm those in the low-lying, equatorial nations, which are mostly poor: a clear form of "passive killing."

Labour has just abandoned plans to give each person a tradable carbon allowance on the grounds that the idea is "ahead of its time" and would cost too much to implement. Of course the politics of the environment are hugely difficult. And the call for more action is not a liberal monopoly: many social democrats, especially on the continent, back a greener position than Labour. The point is simply that new liberals, bound by the harm principle, can clearly see the case for radical change.

There is no advantage in fiddling with the tax system for short-term political gain. But the government urgently needs a clear direction of travel and a real argument about the moral and philosophical basis for taxation. A new liberal fiscal policy would be based on two clear principles. First, tax "bads" (like carbon) not "goods" (like work). Second, tax "unearned" rather than "earned" income. The distinction between earned and unearned was developed by new liberal theorists such as Hobhouse and Hobson and brilliantly politicised by Lloyd George in his "people's budget" of 1909.

The application of the principle raises a whole host of questions, of which the most difficult concerns the degree to which wage inequalities represent real differences in "earnings." Has the hedge fund manager "earned" his £100m?
Nonetheless, the broad implications are clear. The riches flowing from inheritance or soaring house values should be taxed more heavily than at present. While people should be able to take some increase in the value of their house free of tax—up to, for example, what they could have received from a risk-free investment like a gilt—anything above that should be subject to substantial taxation. On the other hand, income in the form of wages, especially at the bottom of the pile, should be taxed as lightly as possible, if at all. But new liberals worry about the 40p tax band too, which now kicks in far too low. Liberals instinctively dislike income tax; Fabians will always see income—especially high income—as ripe for state confiscation.

Labour has been in thrall to the Fabian branch of its history for decades, even as its purchase on the world has loosened. It is telling that there has been no big work of social democratic theory since Crosland's The Future of Socialism in 1956. Labour's future, after three terms, looks bleak. The only hope for the party is to excavate its liberal treasure. The choice is stark: liberalise or die.

Splitting the vote

Thu, 1 May 2008 -1:00:00 GMT

The Guardian - 28th April 2008

London elections 08: We need a progressive metropolitan alliance of greens, liberals and social democrats.

It has become a staple of political commentary that Gordon Brown's fate is now entwined with that of his old enemy, Ken Livingstone. But this presumed "political spillover" effect is based on an outdated view about the allegiance of voters to particular party labels. Livingstone is now the official Labour candidate, but Londoners remember that the first time round he won as an independent, defeating the Labour candidate, Frank Dobson.

For most voters, Ken is seen as Ken, rather than as a representative of the Labour Party. Similarly, Brian Paddick has been a Liberal Democrat for less than two years and in many areas, especially the environment, significantly deviates from the party line. Party labels sit uncomfortably on the lapels of both men. Meanwhile the Green Party, represented by Sian Berry, can do little more than take first-preference votes from Livingstone and hope for a lucky third place. Only Boris Johnson - a shadow minister for and intimate of David Cameron - is a clear flagbearer for a national party.

If he wins, it ought to prompt some soul-searching among the progressive-minded about the dissipation of their energies. Even under a transferable vote system, the splitting of votes between greens, liberals and social democrats is insane. Before future London elections, let's hope the politicians learn some history. In the early years of the London County Council, between 1889 and 1907, the dominant political grouping was the Progressive Party, a loose bunch of liberals, Fabians and trade unionists.

The first leader of the council was the Earl of Rosebery, who would later become Liberal prime minister, but the ruling progressives also counted the technocratic Fabians, Sidney Webb and Graham Wallas, as well as the firebrand leader of the dockers' union, Ben Tillett, among their number. Another Progressive Party councillor, representing East Finsbury from 1889 to 1822, was John Benn, great-grandfather of Hilary Benn, the current Labour secretary of state for the environment.

Those who stood under the Progressive Party banner in London were perfectly free to stand as liberals or Independent Labour Party members, for parliamentary seats. (It would perhaps have been better if the idea of a Progressive Party had gained purchase in Westminster, but that's another story.)

The "progressives" didn't agree about everything - not all of them supported the dock strike in 1889, for instance - but they shared a broad view that municipal government needed to exercise more power over transport, sanitation and education in order to make London healthier and safer. They were all, in this sense, "municipal socialists". The London-based Progressive Party had close links to the Liberal Party nationally, but was the broader church required to achieve electoral success in the capital. It was a metropolitan political response to the metropolitan political scene.

Livingstone has done a deal with the Green candidate, Sian Berry, to urge their supporters to give their second preference votes to the other; he has also made a bid for Paddick's supporters by suggesting he would give the former policeman a job in his administration. All this deal-making may be too little, too late.

If BoJo becomes mayor, one silver lining might be a belated recognition of the fatal error of trying to squeeze London politics into outdated, national party structures. A progressive metropolitan alliance of greens, liberals and social democrats would have swept its leader to power. It is too late this time around, but London needs to break free of the Westminster tribal system. The London School of Economics has a fine collection of Progressive Party banners. They are a century old, but ready for unfurling.

A lifetime of questing and questioning

Thu, 1 May 2008 -1:00:00 GMT

Nesta 28th April 2008

"I love to learn", said Oscar Wilde, "I just can't bear to be taught". Wilde, then, is a model student for the 21st century. With the shelf-life of professional knowledge falling, it is clear that the most important skill will be the capacity to abandon old skills and embrace new ones. Learning, rather than being taught, is the future. Click here to read the full article.

Click here for the associated blog

Make the Lords history

Thu, 24 Apr 2008 -1:00:00 GMT

The Guardian - 24th April 2008

Make the Lords history

The upper house should be reformed - into an ornamental thing, with Commons power boosted

The 10p tax-band rebellion has made a drama out of a crisis. Parliamentarians are simply doing what they should (but so often fail to do): hold the government to account. It demonstrates that the Commons can still bite. But it also shows that it needs more teeth. If the Commons was taken more seriously, Labour wouldn't be in this mess. The Treasury select committee's report on the 2007 budget included a clear warning about the 10p band abolition. Robert Chote, director of the Institute for Fiscal Studies, gave evidence indicating trouble ahead. Who was listening?

Rather than trying to modernise the Lords, Gordon Brown should be boosting the power of the Commons. Sadly, our major parties remain wedded to bicameralism. Norway is preparing to ditch its upper house next year, but no British political party queried our need for one. Even the excellent Power inquiry did not address the issue. The government is now planning a reform package likely to include election by proportional representation, payment and long parliamentary terms for the new Lords-Senators.

It is a sign of how timid our politics has become over the past century; during the constitutional struggle between the Commons and the Lords leading up to the Parliament Act of 1911, Liberal politicians such as John Robertson MP, a member of the Rainbow Circle - a sort of Lib-Lab dining club - were urging a single chamber solution. In a pungent 1911 essay, Robertson quoted the (then) well-known challenge to bicameralism from Emmanuel Sieyès, the French revolutionary priest: "If a second chamber dissents from the first, it is mischievous; if it agrees with it, it is superfluous."

The result of the 1911 conflict was an unsatisfactory victory. Thenceforth, the Lords could delay legislation for two years, so long as it did not concern finance; in 1949, the Labour government reduced the delaying period to one year. The distinction between finance and non-finance bills was advocated by the Liberal government to ensure that its welfare reform measures could no longer be strangled by the Lords. But a situation in which the Lords can block legislation so long as it does not concern money is ludicrous. Taxation and spending go to the very heart of the political and democratic process. If the Lords can't stop money bills, what's the point of them?

Making the Lords democratic seems, on the face of it, to be a wholly progressive position. But, in fact, it betrays a lack of faith in democracy. The only sensible argument for an upper chamber is that it can provide a check against "democratic excess". This was the explicit argument made by the framers of the US constitution. When Thomas Jefferson asked George Washington why America needed a Senate, he asked in return: "Why did you pour your tea into that saucer?" To Jefferson's answer - "to cool it" - Washington responded: "Just so. We pour House legislation into the senatorial saucer to cool it."

The question is which particular legislation passed by an effective, democratic, representative assembly would need "cooling". The answer seems to be that which a particular group opposes at a particular moment in time. Right now, liberals are grateful to the Lords for resisting some of the more illiberal elements of the government's anti-terror legislation, just as the hunting lobby were grateful for the Lords' attempted veto of the hunting ban in 2003. In the 50s and 60s, American racists were similarly grateful to the Senate for stymieing civil rights laws. Upper houses can always find allies among the opponents of the measures currently being pursued by the lower house; but this is an unworthy argument for their continuance.

The Commons, as currently organised, is a poor proxy for a democratic assembly. It should be elected by proportional representation; its committees ought to be given much more bite, including confirmatory powers over ministerial and other significant public appointments; and parliament must have more power to initiate legislation. But if democracy needs "checks and balances", these should be built into the principal democratic body, not bolted on to it.

We probably don't need to abolish the Lords, any more than the monarchy. It can just be permitted to wither away as a constitutional force, with its delaying powers withdrawn bit by bit. This process would result in the Lords, like the crown, becoming an ornamental rather than instrumental part of our constitution. The Commons simply needs to muster its courage, for - as Robertson pointed out - "the self-styled Mother of Parliaments is afraid of the single life".

The upper house should be reformed - into an ornamental thing, with Commons power boosted

A week to remember?

Thu, 17 Apr 2008 -1:00:00 GMT

New Statesman - 17th April 2008

Faced with an almost unprecedented drop in popularity, some in the Labour Party are starting to think the unthinkable: what would follow election defeat?

So, how bad is it for Gordon Brown? The polls are obviously terrible, with one showing the biggest drop in a prime minister's approval rating since 1940, when Neville Chamberlain lost the nation's confidence after the German invasion of Norway. Since the March Budget the Conservatives have consistently polled above the 40 per cent mark needed to win power. In YouGov's latest respected snapshot, Labour was trailing 16 points behind the Tories, who scored 43 per cent - their most popular rating since before Black Wednesday. The voters, who gave Gordon Brown the benefit of considerable doubt when he took over, seem to have turned away.

The commentariat, even some of the friendlier columnists, are coming to a similar conclusion. The Commons rebellion over 42-day detention without trial for terror suspects is growing. Anger about the abolition of the 10p tax band is rising. Most worrying of all is the effect on the nerve and discipline of the Parliamentary Labour Party. Graham Stringer MP explained that "it's sorrow, more than anger, with Gordon". Ian Gibson MP described his Prime Minister as being "a bit like a scared rabbit in the headlights". An unnamed former cabinet minister chose to sum up the position thus: "We're f***ed." Some MPs have switched from plotting against Blair to plotting against Brown with barely a pause for breath. The Prime Minister may be the architect of his own misfortune, but the spinelessness of his MPs is still shocking.

The loyal Hazel Blears took to the airwaves to defend the PM as "a pretty serious person who thinks very deeply about decisions and is also a man of conviction". Few would challenge the first claim: but if anything Brown has been hobbled by lack of confidence. The paradox is that he almost certainly does have a vision of a more communitarian, more equal nation. But if this is Brown's real agenda, he seems to have been persuaded that it would alienate voters. Having tucked away his own moral compass, he appears directionless. It is difficult for him to appear as the friend of business, following the capital gains tax reforms which - on the upside - seem poised to push Digby Jones out of government. Yet it has also become harder for Brown to be seen as a staunch ally of the poor after the 10p tax band blunder. He has tacked on public service reform, trimmed on tax and triangulated on China.

It is nonsense, however, to suggest that he will be replaced before the next general election. Things might yet get better. The snazzy new communications team might get a grip. The PLP might find their cojones. Anxious voters might begin to worry about handing power to the sixth-form prefect duo of George Osborne and David Cameron. The downturn might be shallower than feared, and Brown credited as the one who kept his head. There is always a fight to be had.

But the only hope for Brown is to be Brown. He should launch a passionate, outright campaign for a fairer and more democratic Britain; rein in the Blairite marketisation of public services; raise taxes on inheritance and high incomes to fund more aggressive redistribution; and introduce much tougher regulation for the financial markets. He needs to persuade the voters that an unashamedly social-democratic government is the only one that can really be On Your Side. Even if he loses, at least he will do so on his own terms.

Bad news, good news

The hard truth, however, is that everything now has to go right for Brown - and Brown has to get everything right - to save Labour's chances. "We have to be thinking about opposition now," admitted one level-headed senior adviser, indicating that the smart money is not on a fourth term. In this case, the party would also be electing a new leader.

The bad news is that there is no superstar candidate, no Blair or Clinton, waiting in Labour's next generation. The good news is that this means the next leader will have to set out a compelling direction for Labour and its path to reconnection with the British people. The most likely contest would be between David Miliband and Ed Balls. This would present the party with a real choice, not only between two very different personalities, but between two distinct philosophies.

Balls has declared himself, on these pages, to be uncomfortable with the label "social democrat", because it reminds him of the treacherous SDP. He prefers the term "socialist", he said: "Socialism, as represented by the Labour Party, the Fabian Society, the Co-operative movement, is a tradition I can be proud of." Balls is Fabian to his fingertips. He is the guardian of the government's pledge to abolish child poverty. He may not have said "So what?" in response to Conservative claims that Labour had ratcheted up the tax burden, but it is the sort of thing he might say. Balls is a passionate advocate of Sure Start and a national strategy for play. Confronted with evidence that poor children are more likely to suffer death or injury in the home, his Fabian instinct was to put £18m into a fund for domestic safety equipment for low-income families.

Miliband's nascent philosophy has a different starting point. As a backbencher, he told an audience in Berlin that Labour "needed to reach back into the history of progressive thought in Britain to develop a 'liberal socialism'" and he argued for not only "regeneration of local government", but a wider agenda that would "include issues of ownership and control of local public services". By 2005 he was suggesting "liberal social democracy" as an alternative label, but the import was the same: power should go to patients, parents, local citizens.

He has been a consistent, if cautious, advocate of greater devolution to local government and an enthusiast for citizen-focused public service reforms. In an article in the Times a fortnight ago, Miliband insisted that a "successful ideology for the 21st century" would be built on "two rich intellectual traditions": state-focused social democracy and the "radical liberal" tradition, whose "goal was the freedom and flourishing of the individual".

Balls the Fabian socialist wants to use central power for progressive ends; Miliband the radical liberal thinks those ends require the devolution of power. This critical battle, not yet joined, would be for the very soul of the Labour Party.

Martin Bright is away

Wonky women

Fri, 4 Apr 2008 -1:00:00 GMT

New Statesman - 03rd April 2008

The political agenda is increasingly being set by women from leading research organisations. Poorly represented in government, are they having a greater impact from outside?

"A brilliant woman is a plague," lamented Jean-Jacques Rousseau. "A plague to her husband, her children, her friends, her valet, everyone." Rous seau would not be happy if he cast his eye over the think tanks of the centre left today, as they are experiencing an epidemic of femininity.

So complete is the feminisation of progressive think-tank leadership that when Jennifer Moses, former head of the Liberal Democrat-leaning think tank CentreForum, was scooped into the new Downing Street talent pool last month, interest was sparked in her nationality (American), her party allegiance (non-Labour) and her Goldman Sachs-generated wealth (gigantic) - but not her gender. Meanwhile, Demos is run by Catherine Fieschi; the Institute for Public Policy Research (IPPR) is co-directed by Lisa Harker and Carey Oppenheim on a job-share basis; and the Social Market Foundation is run by Ann Rossiter. At least on the non-Tory side, all the top wonks are women.

This feminisation is, in part, a simple reflection of the general rise of women in public life. "Part of it is purely statistical," says Fieschi. "There are simply more women in public positions." But Fieschi, and others, think there may be more to it than that. These organisations are important ideas factories for progressive politics, but are also independent organisations at some distance from the dysfunctional, tribal, macho culture of Westminster and Downing Street. As such, they provide perfect platforms for women who want to make an impact on politics without having to play the boys' games.

"The kinds of demands that being a special adviser makes on your life are ones that women in particular might reject," suggests Oppenheim. "A think-tank role gives you more control over your time." Journalism and research organi sations also provide perches for high-profile women such as Polly Toynbee at the Guardian and Julia Unwin, director of the Joseph Rowntree Foundation.

"It is a cause for celebration to see women in these jobs," says Katherine Rake, director of the Fawcett Society, which campaigns for women's rights. "But if you look at Downing Street or even the cabinet, where the number of women has actually fallen, you see that governmental power remains mostly male."

Access to key government jobs still appears to require a Y chromosome. Moses will be one of the very few women in Gordon Brown's No 10, alongside Oona King, the former MP with the tough task of making the government more female-friendly.

The rise of the wonky women can also be seen as part of the evolution of the think tanks themselves. The principal progressive think tanks have been through three stages, suggests Fieschi. The first stage was a "blue-sky" period, when idealistic directors were encouraged to think boldly about a progressive future. James Cornford, the first director of IPPR, was an academic by background and a marvellous iconoclast. He cared little for what ministers, or shadow ministers, thought. But this was at a point when Labour had been out of power for three terms, and was keen to demonstrate that it was fizzing with ideas about how to make the nation better.

The second stage came in parallel with Lab our's terms in office. With the party securely in power, the priority for centre-left think tanks was to provide realistic, grounded, sensible policy advice. This technocratic era was unsurprisingly marked by a revolving-door relationship between the think tanks and the government. Geoff Mulgan, the founding head of Demos, went on to run the prime minister's Strategy Unit and then the No 10 Policy Unit; Phil Collins, a former director of the Social Market Foundation, became chief speechwriter to Tony Blair.

IPPR acted as a training college for Labour politicians and advisers. Patricia Hewitt, a former deputy director, became an MP and then cabinet minister. So did David Mili band. And James Purnell. Miliband was formerly Blair's head of policy, and that job was subsequently filled by Matthew Taylor, who had previously run IPPR. It is now held by Dan Corry, IPPR's former head of economics. Indeed, to list the number of IPPR staff who have worked for a Labour government, or vice versa, would take the rest of this article. (And yes, to declare an interest, me too.) Chris Powell, when chairman of trustees of the IPPR, boasted that IPPR actually had two departments: the research and development section in Southampton Street (the think tank's HQ) and the "applied department" in government itself.

Now, however, the progressive think tanks are entering a third stage, one resembling the first in its emphasis on free thinking. Now that Labour's hold on power is tenuous the rules have changed again. The value of ideas has risen, both for a government in desperate need of intellectual reju venation and for an opposition anxious to prove itself fresh, modern and ready to govern.

This requires a different style of leadership, and especially a greater openness to work across party lines. It is likely that this would be happening under male leadership, although perhaps to a lesser extent. "Let's be honest - it is partly a reflection of the political situation," admits Fieschi. "Having said that, I do think that women may be slightly better at handling ambiguity, acting as critical friends, and perhaps working with different partners in a different way."

Oppenheim agrees, though she is wary of being too deterministic about the gender element. "I think there is a likelihood that women are more consensual in their approach, and less bound to a particular political party." The job-share arrangement at IPPR (unprecedented in UK think tanks) is itself a powerful symbol. "Lisa and I are often asked how we can possibly share leadership," she says. "It is a different way of leading, and for us it is a very powerful one."

One of the other factors reducing the level of tribalism in the think tanks is the career stages and ambitions of the new breed of women leaders. According to Fieschi: "The women who run these think tanks have no ambition to end up in the government's Strategy Unit. They have either already been in government, or have no interest in being in government."

It is certainly true that Rossiter, Oppenheim and Harker have all been government advisers, but they can now be considered as in the post-hack, rather than pre-hack, stages of their careers. Consequently, these female leaders have more latitude. They tremble less when a Labour minister rings to complain about a critical report.

As a result, the Conservatives, energetically triangulating to prove their changed condition, are mustard-keen to work with the centre-left think tanks. IPPR submitted substantial evidence to the Conservative "quality of life" task force, is working with the Liberal Democrats on immigration and is trying to build a cross-party consensus on climate change. Demos, while anchored in progressive politics, is also less prescriptive about where it is to be found: "I am quite happy to work with Steve Hilton [David Cameron's key strategist]," says Fieschi.

IPPR had a major presence at the Conservative party conference for the first time last year. Demos is taking a more dramatic step away from party politics and eschewing the drunken party conference scene altogether. Instead, there will be Demos events at the Hay and other literary and cultural festivals around the country. For Fieschi, shaping radical ideas and building a consensus for progressive change is now a more subtle and complex game that reaches far beyond political party.

In 1997, the era of the Blair Babes, it seemed as if politics itself might be on the cusp of a new, more feminine era. It hasn't quite worked out like that; women are in short supply in senior government roles. But they have scaled the commanding heights of the progressive intellectual powerhouses. Rather than being a "plague", these brilliant women may be the medicine that progressive politics urgently needs.

A lifetime of questing and questioning

Thu, 3 Apr 2008 -1:00:00 GMT

Nesta - February 2008

Some individuals proudly declare themselves self-taught - parading their lack of an academic background and highlighting the knowledge they have acquired through their own solo efforts. Of course, this distinction should not be pushed too hard. There is a set of basic skills, such as reading, which are necessary ingredients for these individuals and which certainly can be taught. There will always be a need for institutions which provide a framework, culture and opportunity for the acquisition of knowledge.

Debates about education tend to focus on either structures - for example, in arguments over selective versus comprehensive education and the role of quasi-independent academies - or upon the nature of the examination system. The ongoing argument about the relative merits of narrow, deep A-levels and a broader, more flexible baccalaureate approach to post-16 education is the most obvious example of the latter. Very often, this particular argument is couched in terms of a battle between 'academic' qualifications and 'vocational' exams. But this misses the point.

A baccalaureate system is preferable to A-levels, not because it allows for more vocational learning, but simply because it would permit young people greater flexibility in their choice of subjects.

Indeed, precisely because the specific skills that will be required in the labour market of the future are impossible to predict or plan for, the very notion of 'vocational education' is an oxymoron. It is not possible to impart to young people the knowledge they will need for their careers. Javier Bayer, a learning consultant and the former head of the Talent Foundation, a charity that works to improve learning skills, says our preoccupation with courses and technical skills is misplaced. "What matters most of all is having the emotional capacity and desire to learn", he says. "Technical skills are disposable - we have to be ready to drop them and pick up new ones."

In the end, the debates about structures and tests are a sideshow. The challenge is to enable young people to develop the characteristics, motivation and attitudes necessary to support lifelong learning. Those who succeed in the labour market of the future will be those with a self-development mindset and character. Three attributes are critical: autonomy, open-mindedness and application.

It is clear that individuals with a strongly developed 'locus of control' - the sense that they are in charge of their own destiny - enjoy better economic and social outcomes. With the crumbling of traditional career ladders and life plans, the capacity for autonomy has become even more important. But future learners must also retain an open mind. It is harder to let go of existing skills than it is to acquire new ones (in a slightly different context, economists refer to this as 'loss aversion'). But a willingness to question and, if necessary, abandon our opinions will be increasingly important as the halflife of knowledge continues to atrophy.

John Stuart Mill, the great 19th century liberal, declared that any person worth listening to "has kept his mind open to criticism of his opinions... No wise man ever acquired his wisdom in any mode but this. The steady habit of correcting and completing his opinion by collating it with those of others, so far from causing doubt and hesitation in carrying it into practice, is the only stable foundation for a just reliance on it".

It is, of course, much easier to declare the need for a 'steady habit' than to acquire it. Along with autonomy and open-mindedness, application is a key predictor of life outcomes. The acquisition of knowledge will not become easier, except in the trivial sense that Information Communications Technology (ICT) speeds up the retrieval of information. Learning will remain the hard graft of reading, thinking, reflecting and absorbing. An ability to do this hard work - to crack the books, rather than hit the town - has always been essential, but is likely to become more so. What the Oxford Professor Avner Offer describes as 'commitment strategies', character traits that allow us to make short-term sacrifices for longterm gain, will grow in importance. In this sense, the ability to develop certain aspects of individual character is a vital part of any future-oriented education system. There is a tendency to see the social and environmental aspects of learning as a separate part of the curriculum. In fact, developing the necessary personal characteristics to support a lifetime of learning is not separate from education, but integral to it. The capacity for 'prudence', as Offer labels this trait, may seem opposed to the entrepreneurialism upon which our economy and society relies. In fact, it is those with the greatest confidence in their abilities, and a capacity to bounce back should things go wrong, who are most likely to take risks.

Joel Mokyr, in his book The Gifts of Athena - Historical Origins of the Knowledge Economy, shows how specific institutions played a vital part in the development of what he describes as 'useful knowledge' during the industrial era: "The existence of organisations in which such knowledge is preserved, defused and augmented (such as academies, universities and research institutes) were of central importance in explaining progress over past centuries". Institutions will continue to play an important part in preparation for life's uncertainties. But, over the coming decades, the future of learning will rely as much on the instincts of individuals as the wisdom of institutions.

A lifetime of questing and questioning will, of course, in many ways be more demanding than one in which the skills necessary for a particular trade or profession were learnt before the age of 21, and only slowly, if ever, became obsolete. We should be honest about the downsides of this new world - uncertainty, instability and risk - especially if we are among those who are currently benefiting from it. But the future in which specific skills will quickly go out of date is also one in which talent should be able to rise, application should be rewarded and each of us will have the opportunity - and perhaps the responsibility - to keep developing ourselves as individuals. It does mean questioning ourselves and our knowledge base regularly. But as the Chinese proverb reminds us, the person who asks the question is a fool for today, while the person who never asks it is a fool forever.

Work isn't working

Wed, 19 Mar 2008 -1:00:00 GMT

New Statesman - 19th March 2008

Families and firms are at war. It will only be won when parents - fathers as well as mothers - can care for their children without harming their careers. It's the economy that must change

The Sex War is over. Girls outperform boys at school and are streaming through higher edu cation. Young women are now taking home the same size wage packets as young men. But the celebrations have to wait. A new, tougher battle has to be fought. It is not a duel between men and women, but between families and firms. This family war will be won only when parents - fathers as well as mothers - can care for their children without dumbing down their careers.

Women now compete with men on a virtually equal footing in both business and politics - but only until the precise moment they become mothers. It is not a question of old-fashioned notions about their capabilities. "Women don't lose out because of outdated views about them as women," says Mary Gregory, an economics lecturer at Oxford University and expert on gender and work. "They lose out because they make different choices about work when they have children." It is not possession of a womb that now holds women back, but its use.

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Is a degree just the job?

Fri, 29 Feb 2008 -1:00:00 GMT

Management Today - 29th February 2008

The official line is that universities should equip students with work skills. But in a fast-changing world, people need a broader grounding for life.

What do you say to a sociology graduate with a job? 'Can I have fries with that, please?' An old joke. An unfair one, too. It is simply not true that all sociology graduates end up flipping burgers. According to the most recent survey, only one in seven were working as 'retail, catering, waiting and bar staff'. (This compares, however, to just under one in 10 for graduates as a whole.)

But as the numbers entering higher education rise - 43% now enrol on an HE course before they turn 30 - the question 'What is a degree for?' is being asked with greater urgency. A university education used to signal membership of the intellectual elite of the nation. But as we enter an era of mass higher education, this can, by definition, no longer be the case.

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The naughty nation

Thu, 14 Feb 2008 -1:00:00 GMT

New Statesman - 14th February 2008

Should the state force us to eat well, drink wisely and behave nicely on public transport, or should we leave people alone unless they are directly damaging others?

Smoking, smacking, snacking and boozing: ours is a naughty nation. Billboard advertisements for St Trinian's, the UK Film Council-funded hymn to anarchy, were covered in the punitive lines: "I must not misbehave. I must not misbehave. I must not misbehave." It is not too difficult to imagine the Prime Minister setting the same lines for the country as a whole. From diets leading to obesity to alcohol-fuelled violence, reducing misbehaviour is now a political priority.

Politicians have historically been wary of appearing to pass judgement on our behaviour, but are becoming more outspoken as the impact of Brits Behaving Badly is more keenly felt. David Cameron has pledged to fix our "broken society", though the chances of a tax break for marriage curbing the behaviour of tanked-up teen agers have to be ranked as thin at best. Early this month, the Home Secretary, Jacqui Smith, unveiled plans to give the police powers to seize alcohol from underage drinkers in response to research showing that young people are drinking more heavily - and that alcohol explains a rising proportion of violence among school-age young sters. Most 13-year-olds surveyed said they have had a drink. "This is a very interesting political space at the moment," says David Halpern, a former government adviser, now at the Institute for Government. "There is still a fear of being seen to be manipulating people. But Gordon Brown has long talked about the need for culture change."

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Unfashionable character

Fri, 1 Feb 2008 -1:00:00 GMT

Management Today - 1st February 2008

The official line is that universities should equip students with work skills. But in a fast-changing world, people need a broader grounding for life.

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The Trouble with targets

Tue, 8 Jan 2008 -1:00:00 GMT

Management Today - 1st January 2008

There's a new word lurking in the lexicographical undergrowth. It's not in the Oxford English Dictionary yet, but I fear it will be. So far, it has appeared in a few academic articles and research papers, but it seems likely that it will enter the mainstream at some point. The word is 'targetology'. It's well-known that the Government is target-mad. But in fact, as usual, the politicians are merely following in the footsteps of business, especially the human resources profession.

The HR community has embraced targetology with embarrassing fervour. Discussions in HR are dominated by benchmarks, metrics, scorecards and key performance indicators (KPIs). The US-based Conference Board, a research alliance business, has established the 'Defining New Performance Targets for HR Research Working Group'. As the board alluringly explains: 'Evidence-Based Human Re- sources is the next generation in Human Capital Analytics'. The days must just fly by.

But one of the principal frustrations of dealing with people, rather than with things and money, is the difficulty of finding adequate measuring tools. It's straightforward to set a sales target, to count the money in the bank or ask the supplier to halve their delivery time. But ever since managers started thinking in terms of human capital, rather than human resources, the fetish for metrication has taken hold.

Targets are not intrinsically bad: clear objectives for any organisation, expressed as specific goals, should improve performance against them, whether that is to reduce hospital waiting times or sell more chocolate bars. Since the Government set a target to cut the number of people waiting for more than four hours in A&E, it has fallen from 23% of patients to just 5%. Targets are a powerful mechanism for communicating to an organisation: 'this is what matters most'.

But there are a number of caveats. First, it's vital not to confuse measurement with target-setting. In their famous article for the Harvard Business Review in 1992, Robert Kaplan and David Norton described a 'balanced scorecard', consisting of a range of measurements that a firm should be monitoring in order to check its health and performance. 'Think of the balanced scorecard as the dials and indicators in an aeroplane cockpit,' they said. 'For the complex task of navigating and flying an aeroplane, pilots need detailed information about many aspects of the flight.'

But the use of 'scorecard' to describe these measures has proved unhelpful: managers are inclined to start keeping score. But Kaplan and Norton were very clear about the limitations of individual targets, arguing that a good leader 'establishes goals but assumes that people will adopt whatever behaviours and take whatever actions are necessary to arrive at those goals. Senior managers may know what the end result should be, but they cannot tell the employees exactly how to achieve that result.'

Once an organisation becomes infected with targetology, things can get quickly out of hand. One or two clear targets can be powerful. A hundred targets is a recipe for confusion, stress and disaster. Employees can quickly come to feel as if they are being asked to throw darts in all directions at once. Just because targets are good, it does not mean more targets are better.

Targets also become less useful when they're a means to driving people to heroic levels of performance. Once an organisation sets 'stretch' or 'aspirational' targets, you know targetology has taken a dangerous hold. Targets should represent what senior management thinks ought to happen, not the contents of their wildest dreams.

Other problems occur when targets are closely attached to individual performance. If indi- viduals are rewarded for reaching certain sales targets, for example, a vicious internal market can be created, with colleagues scrambling over each other to get to the client and win their bonus. Healthy competition is a good thing: but it should be for promotion and advancement. As a rule, team targets are better than individual targets: and if a member of the team is letting the side down, you can be sure the others will soon be on their case.

Ironically, given the HR profession's enthusiasm for them, there's a particular problem using targets in this area. Human capital is an unhelpful term, because it implies a degree of objectivity and precision in an area that is, in fact, complex and deeply personal. Individual workers are not depositories full of human capital; creativity, friendliness, ambition, loyalty and energy can't go under the slide rule.

But there's a deeper problem. It's clear from a vast body of research that the more freedom an individual has over the way their job is done, the higher their productivity and the bigger the rewards reaped by the firm for which they work. People need to know the objectives of their organisation and they need to know how their performance contributes to them. Employee engagement is much more likely to follow from autonomy than from a battery of management-dictated targets.

There's lots of rhetoric in the HR world about nourishing the 'whole person' and letting employees 'bring the whole person to work'. These are worthy aspirations that fly in the face of targetology. Target-hitters or free spirits? You can't have both.

A deeper shade of green

Sat, 1 Dec 2007 -1:00:00 GMT

Management Today - 1st December 2007

Many firms assume the garb of sustainability in order to attract and keep staff, but they have to look much more urgently at wasteful practices.

By 16 September this year, the area covered by Arctic ice had shrunk to 1.6 million square miles. The ice always contracts over the summer - but not this much: the previous low was 2.05 million square miles, recorded in 2005. Earlier in the year, the Intergovernmental Panel on Climate Change reported that sea levels are rising at 20 times the average rate over the past 3,000 years. In the history books of the future, 2007 will be recorded as the year that the threat posed by climate change became irrefutable, imminent and catastrophic. The question is whether 2008 will be written up as the year we did something about it.

At the moment, fewer than one in 20 of us have made significant changes in our lives to reduce our environmental impact. The fossil- fuelled juggernaut of the hyper-mobile consumerist economy has barely touched its brakes. At an individual level, many of us salve our consciences by recycling our newspapers and buying Ecover washing-up liquid, while continuing to drive to the airport for our flights to continental Europe and beyond.

At a political level, the prime minister (when he was chancellor) could declare 'a new ambition for Britain... to lead the world in creating a stable and sustainable economy founded on low carbon - a Britain that is both pro-growth and pro-green'. But then the Government can build new runways and widen motorways without even the appearance of any cognitive dissonance. Since Labour came to power in 1997, the cost of motoring has fallen by 6%, while train fares have jumped by 7% and bus fares by 16%.

If individuals and governments are failing, can businesses do any better? British firms exhale 66 million tonnes of carbon a year - but of this, almost a third is wasted through poor building design and energy inefficiencies. It has become important to many firms to demonstrate their green credentials - not only to customers but also to employees. (They have to tread carefully, though: a dozen companies were recently rapped by the Advertising Standards Agency for misleading environmental claims.)

But companies are becoming alert to the rise of 'ethical employees' who want their employers to be greener. A recent survey by Badenoch & Clark, the professional services recruiter, found that 41% of employees say that they would be more likely to accept a job offer from a firm with strong green credentials, and that half felt that their current employer did not take environmental issues seriously. It seems likely that in the near future, some firms might become toxic employer brands, in the same way that tobacco companies are today: examples might include fossil-fuel-reliant energy utility firms, oil and gas companies, and airlines.

It's difficult, though, for even the most diligent workers to know what being environmentally responsible amounts to. Declaring carbon neutrality has become a badge of pride: but many of the offsetting schemes used to achieve neutrality are of dubious quality and efficacy. One of the most common forms of offsetting is planting trees, but only fully grown trees absorb much carbon, and trees take a lot longer to grow than a 747 takes to fly to New York. Similarly, a company might invest in brightly coloured recycling bins but fail to switch to a green electricity supplier.

There's a great deal companies can do to make their buildings more energy-efficient, much of which would save them money, from wholesale switching to natural cooling systems and solar panels to fitting a £15 timer on a soft drinks machine to turn it off at night and weekends - which saves about £160 on the annual electricity bill.

But the biggest impact an employer can make is through changes in the culture of working. Even firms that claim to be carbon-neutral start the carbon clock only when an employee walks through the door: their journey to work does not feature. But in the UK, the average employee commutes 46 minutes a day - and seven out of 10 do so in a car. Many of the most impressive green offices are in out-of-town locations, easily accessible only by private car. If companies are serious, they should include employee commuting in their overall carbon foot- print, and work to dramatically reduce it. There are generous tax breaks for companies that encourage greener commuting, but take-up is dismally low, and the 'company car' has failed to become the anachronism it needs to be. Being able to work from home must become the norm.

Similarly, reliance on air travel must be dramatically reduced. In many firms, the number of zeroes on a frequent-flyer programme card is a symbol of status; but allowing staff to benefit in this way from environmentally damaging forms of travel is simply immoral. How can firms that hold meetings in locations that require everyone to fly justify this, if not to themselves, then to their children? Mea culpa - I speak at a number of conferences, and have often flown. But that is often the only way to get there.

The truth is that all conference organisers know that a warmer location is often one of the key attractions: Barbados catches the attention in a way Birmingham does not. But we all have to stop. So here's a deal. There are 100,000 readers of this magazine. If one hundred of you pledge not to fly for the next year - just let me know at the e-mail address below - so will I.

Cry, freedom

Tue, 20 Nov 2007 -1:00:00 GMT

The Guardian - 20th Novemeber 2007

'I love liberty by taste," wrote Alexis de Tocqueville to his new friend, John Stuart Mill, in 1836, "equality by instinct and reason." Mill had just put the liberal French aristocrat on the English-speaking map with a review of his De la Democratie en Amerique: but it was his own 1859 masterpiece, On Liberty, which gave Victorian liberals their call to arms - the Liberal Party was formed later the same year - and became the New Testament of liberalism.

Mill has recently been voted Britain's Greatest Liberal, and his book is frequently quoted by politicians seeking a dash of gravitas and a splash of liberalism for their speeches. Rhetorically, the cause of liberty is prospering. David Cameron insists on the label liberal conservative, David Miliband proudly declares himself a liberal socialist, and Gordon Brown recently gave a speech on liberty in which he mentioned the L-word 74 times.

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Why Brits need not apply

Thu, 8 Nov 2007 -1:00:00 GMT

New Statesman - 8th November 2007

Why Brits need not apply

Richard Reeves examines the economic impact of immigration

Just weeks after Gordon Brown pledged "British jobs for British workers", figures were released showing that half of the 2.2 million jobs created since 1997 - and all of the half-million generated in the past two years - had gone to immigrants.

Although the figures on immigration are generally treated as "bad news" for the government, the data on migrant employment is in many ways cause for celebration. A standard case against immigration is that foreigners come to the UK to luxuriate on benefits, use the NHS and snag a council flat. But, on the contrary, it seems immigrants come to do an honest day's work.

Certainly, a significant inflow of people puts pressure on public services, especially when the level of immigration is much higher than expected. And some of the indigenous population may see their chances reduced of gaining cer tain goods such as social housing. These are real, political issues. Nonetheless, most economic analy ses show that immigration has a positive economic effect - the latest has estimated a £6bn boost to GDP and it seems certain that recent waves of immigration, dominated by eastern Europeans, especially Poles and Lithuanians, have been even more beneficial.

These arrivals are young: 83 per cent are aged between 18 and 34. They are mobile, demonstrating a much greater willingness to travel the UK in search of work than previous immigrants, who tended to cluster in ethnic conclaves in the large cities. Some of the most popular destinations are the north and west of England, Scotland and East Anglia. Boston in Lincolnshire now boasts 40 languages.

The vast majority of the new immigrants - 94 per cent - have no dependents. They are also white, which improves their chances of landing a job (a fact about the British labour market that should cause no pride). And they work hard. Major employers praise the "superior work ethic" of eastern Europeans.

The new immigrants believe, with good reason, that if they come to the UK and work hard, they will make good money - or, at least, money that looks good once it is converted back into zlotys or litas. Given that their countries of origin are much closer than those of earlier immigrants (from the Caribbean or Asia, for example), it seems likely that many of the eastern Europeans will work here for a few years and then make the reverse migratory journey.

A harder question is why so few of the jobs that have been created are being taken by any of the five million native Brits currently out of work. They do, after all, have a linguistic edge over the newcomers. It is not as if any of the jobs are advertised with signs saying "Brits Need Not Apply". One explanation is that much of the work, especially in agriculture and construction, is not appealing to the indigenous population. Another is that the new immigrants are making more use of effective "informal" job-search methods - personal contacts and the grapevine - than unemployed Brits, many of whom are cut off entirely from the world of work.

Out-of-work Brits are also, after a decade of economic expansion, increasingly in what policy wonks dub "hard to help" groups: the long-term unemployed; those with caring responsibilities, such as lone parents; and those on incapacity benefits. A single Lithuanian lad can easily pop up to Liverpool to take a job: it is a different matter for a single mother of four.

There are some harder truths. The British benefits system makes relatively few demands on recipients in terms of job search, certainly by comparison to the new "tough love" US welfare system - a gap that David Cameron looks set to exploit. You do not need to be on the far right to see that there is little incentive for indigenous welfare recipients to swap the stability of benefits for the uncertainty of the labour market.

But the link between immigration, welfare and employment cannot be ignored much longer, for there is certainly something tragic in the sight of a British economy creating jobs alongside a British welfare system discouraging British citizens from taking them.

Merv the Swerve skids

Thu, 1 Nov 2007 -1:00:00 GMT

Management Today - 1st November 2007

In propping up Northern Rock, the governor of the Bank of England is tacitly condoning casino capitalism - with public money as the stake.

A decade ago, I wrote a column calling for the installation of the Bank of England's chief economist as the governor. The piece was so positive - highlighting the candidate's intellectual rigour, financial experience and impregnable reputation in the City - that it embarrassed my editor. Now I'm the one blushing: his name was Mervyn King.

King has been badly - perhaps fatally - wounded by September's Northern Rock debacle. The damage resulted from a stunning, 180-degree about-turn. When the market for three-month debt seized up - a market on which Northern Rock's directors had been reliant - he at first insisted that it was not the job of the Bank of England to help. Northern Rock had taken some big risks, and risk, by definition, has a downside as well as an upside.

King was admired for his toughness. But then, as the queues of terrified depositors curled around the branches of Northern Rock, the Bank changed tack and pumped cheap money into the market and bailed out the flailing bank. At last count, Northern Rock had borrowed £8bn from Threadneedle Street.

To say King has egg on his face would be an understatement: he is entombed in omelette. Either he publicly changed his mind on an issue of strategic significance in a matter of days, or he bowed to public and/or political pressure and used public funds in a manner that he considers irresponsible. Neither explanation reflects well on a central banker, and it seems unlikely King will serve a second term.

The whole spectacle throws some light on our peculiar, hypocritical approach to risk and reward. Initially, King had invoked the danger of 'moral hazard' - a term well known to the insurance industry that means people who are insured against a particular risk are much more likely to take it. If your car is covered against theft, you might not bother locking it. Since the Northern Rock incident, banks know that they can borrow recklessly on the international money markets, or build huge debt portfolios on small asset bases, and that the Bank of England will step in to save them if things go pear-shaped. So where is the incentive to be cautious? King invoked moral hazard, then created it.

If he'd stuck to his guns, Northern Rock would have gone under. And rightly so, according to economic theory: the firm took the risks and must pay the price. The problem, of course, is that the real losers would not have been the bank's directors but its customers: the pensioner who would have seen her whole life savings wiped out because Northern Rock's board fancied themselves as latter-day Gordon Geckos. In King's world of 'rational economic men', this would have been the right outcome. But socially, politically and morally, it is hard to argue for.

In theory, Mrs Pensioner should have been exercising her power and discretion as a consumer to move out of Northern Rock. Having looked closely at the bank's accounts, studied the long-term trends in the London Interbank Offered Rate, read the analysts' reports and concluded that the bank was unacceptably vulnerable to a tightening in the short-term debt markets - which might indeed occur if American banks became concerned about the volume of sub-prime borrowers in their portfolios - she should have moved her money.

But for us punters, such exercises are a flight of fantasy. To most of us, 'securitisation' sounds like a safe thing, conjuring up images of locks and guarantees - rather than selling on debt in the unstable three-month money market. Given that neither the Bank nor the Financial Services Authority saw it coming for Northern Rock, what chance were customers supposed to have? Consumer sovereignty is simply a myth in a world of such financial complexity.

What this means, though, is that the taxpayer ends up as insurer of last resort. Already the Government is moving to increase the amount of savings that will be guaranteed by the state to £35,000. At the heart of this is a debate about the balance between the free market and the state's role.

Free-market capitalism, financial regulation and globalisation have created the conditions for phenomenal levels of innovation in the money markets: theoretical mathematicians can now make a fortune devising products that only they (and maybe two others) fully understand. Much of this innovation has been beneficial, allowing more sophisticated management of risk and giving institutions opportunities to grow quickly: how else could Northern Rock have gone from regional bank to global player?

When things are going well, we welcome these changes and the boost they often give to share prices and therefore our pension funds. But when things go wrong, we cling to the apron strings of the state. Capitalism thrives on risk - but it seems that although we all want the upside, we'd rather not have the downside. We want the gain without the pain.

The hard truth is that most of us have no idea what financial institutions are up to, and little prospect of finding out, and simply believe that banks are safe places for our money. But ambitious directors can now play the global financial field, as Northern Rock did, and reap huge commercial rewards if it goes well. At its most extreme, this is a kind of 'casino capitalism': the trouble is, it's our money they're playing with.

Richard Reeves is director of Intelligence Agency, an ideas consultancy.

Middle England. They're nicer than you think

Thu, 25 Oct 2007 -1:00:00 GMT

New Statesman - 25 October 2007

Middle Englanders are insular, selfish and intolerant. Not so, argues Richard Reeves. Plus Stephen Armstrong on the Accidental Middle Englanders

It is a place inhabited by "ordinary people with suburban dreams who worked hard to improve their homes and their lives; to get gradually better cars, washing machines and televisions; to go on holiday in Spain rather than Bournemouth", in the words of the new Labour strategist Philip Gould. It is where homes are anxiously owned, families are raised and crime is feared. The Daily Mail lies on the doorsteps. It is where contemporary British elections are won and lost. And it casts a powerful spell over marketeers, pollsters, journalists and - above all - politicians. It is, of course, "Middle England".

When Gordon Brown praises "hard-working families" or when David Cameron takes the axe to inheritance tax, they are assumed by headline-writers to have their eyes trained on this semi-mythical land. It represents, we are supposed to assume, the very heartland of the nation. As such, it acts as a kind of political bull's-eye: if parties can aim their policies directly at Middle England, the electoral match will be theirs.

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