It's not burdening our children with debt that should worry us

Leaving our children without assets is a far greater problem than "saddling" them with debt.

It is irresponsible to saddle our children with debt.

One of the most compelling, at least superficially, arguments for austerity. It is used globally; it resonates powerfully. After all, it appeals to the very best facets of human nature – the instinct to nurture; the wish to leave things better for future generations – and is, therefore, almost irresistible. But there are few things more dangerous than rhetoric designed to entangle the heart, while bypassing the brain.

Let us suppose that I knew, tomorrow I would be no more. The appointment has been made; the plane tickets to Geneva have been booked. If I were leaving behind my house to my child, encumbered as it is with a mortgage, would I worry? It is a huge amount of debt, but the house is worth almost double its mortgage. The interest is low. To look at that scenario and arrive at the conclusion I am “saddling my child with debt” would be highly irrational. I would have left them with positive equity.

It is illogical to assess the legacy we bequeath to the next generation, solely in terms of debt. Assets should form part of the equation.

This was precisely what our parents’ generation decided to do. And their parents’ before them. National debt, as a percentage of GDP, was much higher from the 20s to the 70s than it is now. But they made the positive choice of bequeathing it to us, as well as a world-class National Health Service, free education, thriving industry, bright prospects and a system of welfare which provided a safety net for the less fortunate.

Had they looked at debt in isolation, they would never have achieved any of these things. Luckily, they did not. They left us with positive equity.

The proposition put forward by the coalition government in support of their programme of cuts, is the bequest of a clean slate. In the current economic climate, however, a clean slate means clean of assets, not clear of debt.

With the economy stagnant or shrinking, the reality is that this government will fail to make a dent in the deficit and actually increase debt. According to the OBR our annual deficit is falling at exactly the same rate it was projected to do before any of these cuts. The national debt is projected to rise by a staggering half a trillion pounds, even by the most lenient of estimates. The OBR now admits that austerity is hurting the economy. The IMF now admits that austerity is hurting the economy.

On the other hand, there is another, even gloomier forecast. By squeezing ordinary people, by forcing them to remortgage, to use credit cards, to run to the nearest payday lender, private household debt is predicted to balloon by an additional half a trillion pounds.

So, forget this insidious idea that we might leave our children with a clean slate. It is fantasy. In fact, under this government, we will leave our children with at least one trillion more debt than we had in 2010. The only intelligent conversation to be had, is whether we leave our children with the assets, skills, environment and tools to manage that debt or not.

Not all asset stripping is fiscally responsible in the long term. Not every expense incurred results in debt. Off-the-cuff, misconceived policies to try and regulate a rampant energy industry are ample demonstration of that truth; a conservative government flailing in a futile attempt to control the profiteering which resulted from another conservative government’s privatisation programme.

We are paying through the nose, both in terms of tickets, subsidies and maintenance, for a rail network franchise system which is manifestly failing. Meanwhile, the part of the network which has been state-run for the last few years (as a result of the last botched franchise), is better and cheaper than it was in private hands and turning a profit.

We pay to bail out private banks, then complain that they are not lending to SMEs, when we actually part-own two of the biggest. Nationalisation is both a rational solution and a dirty word.

Meanwhile, we are allowing these failed experiments to go on, to expand even; the self-interested privatisation of the NHS, the cut-price sale of local council assets and social housing, the dismantling of the welfare state, the farming out of police and prison services, the poisonous influence of profit on our schools. Within five years, the UK will be spending less on public services than any developed nation.

Make no mistake. What is actually being proposed, is leaving our children with negative equity. The debt will still be there, but the assets will be gone. Important assets at that, the absence of which will translate into higher living costs, in perpetuity. The sale of state housing inflates rents. Lack of a welfare system deflates wages. Tuition fees enslave the next generation to financial institutions which we know to be corrupt. Healthcare bills are the single biggest cause of bankruptcy in the US.

Maybe this is the future that we genuinely want. But let us consider all the arguments, instead of wielding an axe at any expense with no thought of whether it is necessary or cost-effective. Let us look at debt in conjunction with the assets and values that would also form part of our bequest.

Our current predicament is precarious. Even more critical, then, to make rational, informed and brave choices - rather than terrified, ill-thought ones. For our sake and that of our children.

Demonstrators call for an end to the national debt outside Parliament last year. Photograph: Getty Images.

Greek-born, Alex Andreou has a background in law and economics. He runs the Sturdy Beggars Theatre Company and blogs here You can find him on twitter @sturdyalex

Photo: Getty
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Are the Conservatives trying to change the rules of politics so they never lose again?

Hidden in the Conservative manifesto are a series of measures that would tilt the field in their favour. 

One of the neglected threads in Theresa May’s manifesto is a series of measures that, added together, look like an attempt to advantage the Conservative Party not just at this election but at every election.

They are: a new requirement to have a form of identification in order to vote, pressing forward in boundary changes and the shrinking of the number of seats in the House of Commons from 650 to 600, votes for life for British expatriates, and the abolition of the supplementary vote system for police commissioner and mayoral elections.

Are the Conservatives trying to change the rules of politics so they never lose again?

Well, let’s take them in order. The requirement to have ID to vote is open and shut. Of the 481 allegations of electoral fraud at the last election, the vast majority related to election offences – everything from filling in nomination forms incorrectly, to declaring spending incorrectly, to not putting details of where leaflets were printed. Only a quarter related to election offences, and the majority of that minority related to treating and postal votes – neither of which would be resolved by the requirement to have a Voter ID. And these are allegations, not court proceedings let alone convictions.

The most recent high profile convictions involved false claims about a candidate (Labour’s Phil Woolas against his Liberal Democrat opponent in 2010), postal vote fraud (Birmingham, 2004) and bribery and spiritual influence (Lutfur Rahman, 2014). Again, none of these are problems that would be solved with the requirement to have ID. The biggest consequence of ID is it makes it less likely that people on low incomes or who move around a lot would vote – two groups which are more likely to vote against, rather than for, the Conservatives.

Boundary changes have dominated a lot of the coverage as far as Westminster is concerned since the Conservatives first came to power as part of the coalition.  Under the Conservatives’ proposals, the number of seats would be shrunk to 600 and the size of the constituencies would be equalised.

Under British law, constituencies are drawn up by the number of people on the electoral roll, not the number of people who live in a given seat. The average constituency tends to have around 70,000 registered voters but just over 90,000 people in it, though there are variations. (Obviously, a constituency with a higher number of retired people will have a closer match between the two.)

The change in boundaries increases the scale of the swing Labour needs to win an election, but only slightly. After the 2015 election, Labour needs a 8.75 per cent swing from Conservative to Labour to secure a majority of one. If the election was taking place under the planned boundaries – which will come into force from 2018 – they would need a swing of 9.5 per cent.

The bigger problem with boundary changes is of the representation of individual citizens. Obviously, just because people are not on the electoral roll, doesn’t mean they don’t contribute to the workload of the consitutency’s MP.

But as Christopher Cook shows, the actual boundary changes don't artificially shape constituencies to change election results. (You could, for example, create a safe Conservative to change the result of the election. What is true, however, is that many Conservatives believe that boundary changes will hand them an unassailable advantage in election results.

The same is true of extending and increasing the rights of British voters who live overseas. As far as political fairness, this is open and shut. There’s no reason why British citizens shouldn’t retain the right to vote when they move abroad and the United Kingdom is among the worst of the world advanced democracies as far as this goes.

But the reasons why the Conservatives want to do this are unapologetically partisan. One of the reasons why Grant Shapps, an underrated operator as Conservative party chair, worked so hard to secure an increase in the voting rights of those living abroad was his belief that they would buttress the Conservative majority.

And it is clear that expatriates could be decisive in a number of constituencies. In the marginal constituencies of Gower, Derby North, Croydon Central, Brighton Kemptown, Hove Ealing Central & Acton and Cambridge, the number of diaspora voters exceeds the size of the winning party’s majority.  They are also an outsized chunk of the electorate in a number of superficially safe seats such as Kensington and Vauxhall, and are a significant force in many marginal seats in Britain’s great cities.

If Britain chose to adopt the French model – French citizens living abroad elect MPs to 11 special constituencies – the role of British citizens overseas could be more decisive still in close majorities. In the case of the 2015 election, if all 11 constituencies had voted Labour, they would have eliminated the Conservative majority.

There is not a great deal of hard data as to how British citizens living abroad would vote in a general election, or, indeed, much information about who they are.

Sue Collard at the University of Sussex is surveying expatriates, and although she stresses that without more funding it is hard to get a true picture, “from all the surveys that I’ve done, it’s clear that they’re not all Tory voters.” (I’m indebted to Collard for sharing some of her research with me to write this article.)

The widespread belief that Britons abroad are Conservatives seems to arise from the 1980s, the first election when diaspora voters were allowed to vote in the United Kingdom. There are a lot of problems with this assumption, though. It is 30 years since the 1987 election and both the 1983 and 1987 election were wave years for the Conservative Party. Concluding that expatriates trend Tory is a bit like deciding that elderly voters are Labour supporters because they opted for that party by a five-point margin in 1997.

What about scrapping the supplementary vote (SV) system for electing Mayors and Police and Crime Commissioners, and replacing the additional member system (AMS) for the London Assembly?

Under SV, voters get given two votes, a first and a second preference. If in the first round no candidate has more than half the vote, the top two go through to a run-off and everyone else’s second preferences are re-allocated.

There are a lot of problems with this system. The first is that voters effectively have to guess who they think the final two candidates will be and if they guess wrong, their vote doesn’t count. 42 per cent of second preferences in the West Midlands mayoral race went to candidates other than the top two. The result was worse still in the Bath and Bristol mayoralty, where more than two-thirds of second preferences went to candidates other than the top two. In the most recent London mayoral election, half of all second preferences went to candidates other than the top two.  London and the West Midlands in particular are very troubling results, as the coverage of both in local and national papers highlighted that it was a two-horse race. (In the Bath and Bristol contest, that any of four candidates could have made the top two probably contributed to the very high level of wasted second preferences.)

The case for scrapping it is fairly open and shut. The best like-for-like replacement is the alternative vote – which allows you to rank every candidate according to your preference – but that’s already been rejected by British voters in a referendum, making it tricky. (It is worth noting, however, that George Osborne imposed mayors on areas that had rejected them in referendums.)

The evidence is that as far as who wins the contest goes, it would change very little. Across the seven combined authority mayoral races – London, Greater Manchester, Merseyside, Bath and Bristol, West Midlands, Cambridgeshire and Peterborough and Liverpool City Region – none of the contests would have a different winner under first-past-the-post than they did under the supplementary vote.

In fact, across the 82 contests held under the system, just 13 would have a different result. The net consequence would be for Labour to have three more police and crime commissioners and at least two more mayoral wins under their belt, assuming everyone votes in the same way. (I say “at least” because the independent Mayor of Mansfield, Tony Egginton, won the 2002 election only on the second round but has won on the first ever since. It seems unlikely he would have been able to do so had he lost in 2002.) The Conservatives would have three more crime commissioners and no extra mayors. The big losers would be independent candidates, who would have lost six crime commissioner elections and two mayoral races had they been conducted under first-past-the-post.

But again, what the data shows and what many Conservative politicians believe are very different things. There is a widespread belief in the Tory party that they were “completely fucked” as one politician put it to me, by the supplementary vote in the commissioner elections. It is true they led in five contests only to lose in the second round. But they also trailed in two and won on the second, so the picture is more nuanced, and the main victims are not their main opponents, but local independents.

Less defensible is the plan to scrap the additional member system at City Hall, reported by Martin Hoscik over at MayorWatch. Under the rules of the additional member system, voters get two votes, one for the party list, and one for their local candidate in the constituency section.

What then happens is that the votes on the list are then weighted to take account of the results in the constituency contest. If a party gets 45 per cent of the vote, but just 10 per cent of the constituency vote, they will make it up in the list, and vice versa. (This is why Labour Assembly member Murad Qureshi lost his seat in 2016 – Labour’s vote went up, but they gained two seats in the constituencies, meaning that his seat on the party lists was lost.)

The biggest losers are the smaller parties – Liberal Democrats, Greens, and Ukip – who would all have no seats on the assembly if the 2016 contest had been fought exclusively on first-past-the-post lines. Other than the Conservatives and Labour, only the Liberal Democrats could plausibly hope to win representation to the Assembly under first-past-the-post, as their vote is well-concentrated in South-West London.

It would also change the winner of the 2000 London Assembly elections; the Conservatives, not Labour, would be the largest party, with a majority of two. To put the changes into perspective, of the 47 seats the Conservative have won on the London Assembly, 80 per cent came through first past the post, while just 68 per cent of the 57 seats Labour have ever won on the London Assembly come through first-past-the-post.

It is striking that the Conservatives are not planning to scrap the additional member system for the devolved legislatures in Scotland and Wales. In Scotland, of the 99 seats they have ever won to the Scottish Parliament, just 14 have come via first-past-the-post. (Even last year, a banner year for the Scottish Conservatives, they gained just seven of their 31 seats via first-past-the-post.)  Two-thirds of the seats ever held by a Conservative in the Welsh Assembly – 37 have been won on the party list system.

It is hard to make the case that first-past-the-post is acceptable for London but unacceptable for Holyrood and the Senedd. (The argument that these are national parliaments doesn’t work, unless the Conservatives are planning to introduce AMS at Westminster.)

Taken with the changes to expatriate voting, boundary changes, the requirement that voters have ID, and the abolition of the supplementary vote, it’s hard to escape the conclusion that the golden thread of the Conservatives’ changes to Britain’s electoral systems is in order to make it easier for them to win.

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.

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