How To Break A Democracy

“Elections remind us not only of the rights but the responsibilities of citizenship in a democracy.” – Robert Kennedy

There’s a tweet being shared around Scottish political Twitter advertising an event on October 23rd. Australian company Clearpoll going to be holding an opinion poll on Scottish independence but are doing so in an intriguing way. They are offering a blockchain-based mobile phone app that, they claim, could be the first step in a revolution in how we approach voting. Instead of having to go to a ballot booth, one could simply press a button on your smartphone, secure in the knowledge that your vote will be transfered and counted without the vulnerabilities to hacking and spoofing that occur in other forms of electronic voting.

An advert by Clearpoll for a "blockchain powered mobile vote on Scottish independence" on October 23rd.

First of all. I’m not going to tell people to not take part in this poll. If that’s your thing, go for it. If you want to help test an upcoming piece of technology, by all means.

But I do want to voice my concern about this kind of technology making its way into our democracies. They are vulnerable enough without adding something that, if done badly, could break our voting system entirely.

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Demanding Supplies – Supplying Demand

“There will be no downside to Brexit, only a considerable upside” – David Davis, October 2016

“Qu’ils mangent de la brioche” – Apocrypha, commonly attributed to Marie Antoinette

I hesitated to write this article. Why, shall become clear in the reading but the short version of it is that this is not just a sensitive topic but the mere act of talking or writing about it may provoke the negative effects discussed.

The artifact warehouse from Raiders of the Lost Ark.

I am talking about the recent stories that as we enter the “kinetic phase” of Brexit, beyond which any meaningful control of the course can be made, it is looking increasingly likely that the negotiations will conclude without a deal. The UK’s own red lines are insurmountable and are themselves incompatible with the EU’s red lines.

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Today in Parliament

I’m on holiday, so no deep analysis of today’s excitement. Have a poem instead.

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(Image: Lorna Miller)

Theresa May, Strong and Stable,
Put a plan upon the table.
Davis ran, he wasn’t able,
To sell the EU that hand-picked fable.

In went Raab to fix the plan.
Not much road left to kick the can.
In Barnier will he find a fan,
or will he sink like an uncooked flan?

Boris Johnson, hair a flutter,
slid out the door as if made of butter.
Rumour now is just a mutter,
he may be back from the gutter.

Hunt pushed in to fill that chair,
from wrecking health without a care.
Courting trade deals, he now must dare.
The NHS, will he “share”?

And here comes Farage, that baleful vole,
sniffing around an open goal.
If you think he speaks with soul,
to the Geordies, I’ll sell some coal.

The government now does swing and sway,
In the wind, no clue which way.
Who’s to blame? We all can say.
Strong and Stable. Theresa May.

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We (Still) Need To Talk About: Budget Underspends

“Journalism is what we need to make democracy work.” – Walter Cronkite

It’s that time of year again. Amazingly, despite the looming catastrophe that is Brexit, this week has been one of those “slow news” weeks. Of the kind that manage to get pages out of very minor things like essentially reprinting old stories with the numbers slightly updated.

I am, of course, talking about the perennial “Scottish Government Underspend” story.

A screengrab of the Herald article on the budget underspend. Headline "SNP government budget underspend almost £500 million"

I covered this before back in the early days of this blog (it remains the most read article on here so far – even excluding the annual reposts). Others, like Wings Over Scotland, have covered it pretty much every year since.

Here’s the short version though.

  1. Opponents are complaining that the Scottish Government aren’t spending everything they’ve been given in the Block Grant or raised through taxes and are claiming that the Government are starving services of resources.
  2. This year the “underspend” is “almost £500 million” (actually, the article later says that it’s £453 million).
  3. But the Scottish Budget is pretty much fixed annually.
  4. And the Scottish Government has extremely limited borrowing powers for revenue – £600 million per year, £1.75 million maximum.
  5. If it DID try to use them, you can bet that the same opponents would be raging at the thought of the Scottish Government going into debt.
  6. The solution to avoid debt is to budget conservatively – if you had to set an ice-cream cone budget at the start of the year but your ice-cream purchases varied between 800 and 1,200 cones depending on weather – you’d need to budget for 1,200. If you only bought 800, then you’d have a 400 ice-cream cone underspend.

Without borrowing powers or an independent currency, budget underspends are an inevitable feature of the annual budget.

Though complicating the above point is that until 2006-07, Scottish Executive underspends were, in great part, retained by the UK Government. This was corrected after a negotiation between the UK Government and the then new SNP Scottish Government and the accumulated £1.5 billion was gradually fed into the budgets of the next several years.

An excerpt from an Audit Scotland report detailing the

Since then, underspend money gets carried over to next year’s budget (though, as that budget will have an underspend too it’s a bit of a moot point).

One thing often missed in the “Budget Underspend” headlines is the actual nature of the sum involved. It’s not all cash sitting in the bank. Some of it will be due to underspending due to less-than-projected spending items (like the ice-cream cone budget issue). Some of it will be due to projects coming in underbudget possibly due to good management, possibly due to currency or price fluctuations (if your ice-cream cones cost £1 in January but drop to £0.80 by June, you might underspend even if you still buy 1,200 cones).

But a good chunk of the underspend could be from things like depreciation of assets which can’t be spent on other things at all – even if the asset is sold (The metaphor gets a little strained here, but if your ice-cream cone is worth less as a half-eaten, melted pile than it was when you bought it fresh, it’s not as if you can sell the cone and pocket the difference in price).

Another thing often missing from these headlines is the inevitable revision afterwards – calculating National budgets down to the penny turns out to be quite tricky. If you remember last year’s headline that the government had underspent by £191 million, you probably missed the reporting that that figure was later revised down to only £85 million after final accounting adjustments were made.

Indeed, this year’s figures have ALREADY been revised downwards. Stripping out the non-cash items and money already budgeted for but not yet spent then it only leaves around £66 million to be spent on something else.

But £66 million is still a fair bit of money though isn’t it? Surely, the government could just, you know, budget better?

To answer that question we’d be best to do another thing that doesn’t really come across in reporting if one looks at the situation one headline at a time. Examine the trend.

To that end, I’ve spend a fair bit of time trawling through annual Consolidated Accounts to pull together the underspends from this and previous years. I managed to get back to the accounts for the year 2005-2006 before the trail gets fragmented. Before this point, the Scottish Executive accounts operated in a substantially different way (see the segment on Resource Accounting and Budgeting here). Underspends still happened, but comparing them like-for-like with years after 2004 may not be strictly fair. I also haven’t been able to locate the 2002-03 underspend at all.

As far as I can tell though and if the revision mentioned stands, this year’s underspend may well be the lowest since the start of devolution.

A bar chart of Scottish budget underspends since devolution. There is a clear trend downwards from the 2000-2001 high of £718 million down to the 2017-18 low of £66 million.

And if we compare the underspends to the budget as a whole we begin to see just how small a story this all becomes. The Scottish Government’s devolved budget is on the order of £32 billion. A £66 million underspend is about 0.21% of that budget – or about 18 hours worth of spending across the year.

The underspend bar chart converted to percentages of the total budget. From 4% in 2000-2001 to 0.21% in 2017-18

Even the initial estimate of £453 million was about 1.4% of  the total budget – if it really was all spendable cash, it’d be the equivalent of about five days worth of spending.

This is not to say that the budget underspend won’t become an issue. It was simplier back in the days when the bulk of the Scottish budget came from the block grant and tax powers were both limited and largely unused. Now, with divergent income tax rates and bands and an impossibly complex Fiscal Framework, there is a risk that the devolution settlement gets strained to breaking point. The David Hume institute has described it as an “interesting cocktail” of arrangements.

I don’t know what the future holds for this story. I could see a time, possibly as soon as next year, where the Scottish Government revenue budget slips from “underspend” to “overspend”. I already know what the reaction of the opponents will be if that happens.

I could hope that the media will up its game here and try to explain these issue in more detail than an attention grabbing headline.

Sadly, I can see my 2015 article just being reposted again in 2019.

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Battening Down the Borders

The UK Government phoned me last night. They are getting that desperate. The Brexit negotiations are well past being called a “shambles”. It’s a constitutional crisis of a kind that the UK hasn’t seen in decades – perhaps ever. The government is simply not equipped to deal with this kind of thing. Iain M Banks coined a term for this. An “Outside Context” problem. An event where nothing in the subject’s frame of reference or prior experience can possibly lead them to a solution. Banks described this kind of problem as one that civilizations encounter only once and in the same way that a sentence encounters a full stop.

london_in_ruin_by_dark_spawn-d4vi6kv

But there is a solution to the Outside Context problem and that’s to expand one’s context. To find someone from outside one’s one cognitive bubble who can see the problem in a different light.

And so the UK Government phoned me. I don’t know if I was first on the list, or last, or anywhere in between. I don’t suppose it really matters.

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A Silver Chain

“Whilst the purpose of this report is to specifically critique the report produced by the Growth Commission it is done so in the spirit of the principle laid out by the First Minister on the latter’s publication. If the Growth Commission report was produced to be discussed, then this report seeks to add to that discussion”

My latest report for Common Weal was been published this week. A Silver Chain takes an in-depth look at the monetary policy proposals suggested by the Sustainable Growth Commission.

Those proposals were for an independent Scotland to unofficially keep using the pound sterling – outside of currency union like the one proposed in 2014 – for a period of time until Scotland’s economy is deemed ready for the launch of its own independent currency by the means of meeting “six tests” covering areas such as deficit, foreign reserves and economic need. Our report suggests that the plan proposed, especially alongside the “six tests” will make it difficult, if not impossible, to launch an independent currency and that the proposals risk locking Scotland into a future of permanent Austerity not dissimilar to that experienced by some areas of the Eurozone.

The report can be read here or by clicking the image below.

Silver Chain Cover

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We Need To Talk About: The Growth Commission Report

If this is a discussion document – It’s time to start discussing it.

The Growth Commission’s long-awaited report is finally out and will surely take some time to fully digest. It has been described as a discussion document and a starting point for the revitalised case for independence; not the final word on SNP policy or national trajectory.

In many ways, the report covers ground now very familiar to campaigners in the independence debate. We’re all now quite familiar with the deep and systemic flaws of the UK’s economic system especially its regional inequality which, quite frankly, is embarrassing when compared to neighbouring countries in Europe.

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(Source: Eurostat)

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