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Dementia friendly communities: corporates not behaving badly, or clever marketing?
There is of course an element of both. “Dementia friendly communities” could be an example of corporates not behaving badly, to create a competitive advantage for themselves; or it could be quite nifty marketing.
Corporates not behaving badly, officially known as “corporate social responsibility” is a form of corporate self-regulation integrated into a business model. CSR policy functions as a built-in, self-regulating mechanism whereby a business monitors and ensures its active compliance with the spirit of the law, ethical standards, and international norms. It’s in keeping with the idea of corporates like citizens just like the rest of us, like trade unions, for example, all co-existing “in the public good“. CSR is a process with the aim to embrace responsibility for the company’s actions and encourage a positive impact through its activities on the environment, consumers, employees, communities, stakeholders and all other members of the public sphere who may also be considered as stakeholders. Given the talk of “pandemic” and “time bomb”, it’s not a huge surprise corporates will wish to be in on the action. Some were out in force last week at the #G8summit. So that’s the answer to the question posed by Vivienne Parry in the session with NIKE and BT: “What are they doing here”?
Companies the world over, whether they are involved in consumer sales, B2B, intermediaries, charities or NGOs, all recognise the importance of marketing. Marketing tends to be something which many people feel they can have a dabble at, but of course charities have highly skilled people doing it just like any other corporate. ‘Strategic marketing‘ has been defined by David Aaker as a process that can allow an organisation to concentrate its resources on the optimal opportunities with the goals of increasing sales and achieving a sustainable competitive advantage. Or surplus, if you’re in the third sector. Talk to any smaller charity going out of action, like Dementia Advocacy Network, and you’ll see cut-throat it can be.
The highly visible “dementia friendly communities” programme of the Alzheimer’s Society focuses on improving the inclusion and quality of life of people with dementia, as described here. The Alzheimer’s Society’s five year strategy includes a key ambition to work with people affected by dementia and key partners to define and develop dementia friendly communities. In these communities: people will be aware of and understand more about dementia; people with dementia and their carers will be encouraged to seek help and support; and people with dementia will feel included in their community, be more independent and have more choice and control over their lives. And it’s also great publicity for corporates which sign up. The Prime Minister’s challenge on dementia also includes an ambition to create communities that are working to help people live well with dementia, and which politician doesn’t seek to be re-elected?
However, the concept is actually not at all new.
The “York Dementia Without Walls project” from the Joseph Rowntree Foundation looked into what’s needed to make York a good place to live for people with dementia and their carers. It’s argued fundamentally that dementia-friendly communities can better support people in the early stages of their illness, maintaining confidence and boosting their ability to manage everyday life. Working with people with dementia, the research team investigated how local resources can be harnessed to this end, provided there is enough awareness. It was great work.
They were not alone. The RSA also developed their “connected communities” project. Connected Communities is a research programme that explores ‘social network’ approaches to social and economic challenges and opportunities. They concentrated on understanding, mapping and mobilising ‘real world’ face to face networks of support and exchange between citizens, small informal groups, public sector and third sector agencies, and private sector businesses.
This RSA group perceived the answer was to be found in “networks” because networks have dynamic qualities through which behaviour, emotional states, conditions, and influence spread and cluster, often in quite specific ways.
The UK indeed is not alone. There’s been a growing number of cities and communities worldwide are striving to better meet the needs of their older residents.
The WHO Global Network of Age-friendly Cities and Communities was established to foster the exchange of experience and mutual learning between cities and communities worldwide. Any city or community that is committed to creating inclusive and accessible urban environments to benefit their ageing populations is welcome to join.
And these initiatives have had great success, which is to be applauded. In October 2013, it was announced that a landmark guide for banks and insurers to help improve the everyday lives of people affected by dementia was being launched by Lloyds Banking Group and Alzheimer’s Society. The ‘Dementia-friendly financial services charter‘ was designed to help financial services organisations recognise, understand and respond to the needs of customers living with dementia and their carers. Financial abuse can be a massive source of worry for carers of people living with dementia, so it was wonderful Lloyds Bank participated in this innovation.
So why should corporates prefer to go with the Alzheimer’s Society? It is quite possible that this is due to the strength of the brand of that society.
A parallel can be seen in property law.
A landlord would obviously prefer to know that his tenant is solvent and reputable and consequently more likely to perform all leasehold covenants.
Property professionals often refer to covenant strength and try to determine whether a proposed tenant is a “good covenant”. For investors the covenant strength of the tenant is an extremely important factor. If a landlord has tenants with good covenant strength, the property will be more attractive to potential buyers and its value will be likely to go up.
The parallel is the power of the brand of a charity – its “pulling power”.
Businesses and charities put a lot of time into their outward reputation, in the hope of attracting more inward business. Whilst Google hits are not per se a sign of popularity and goodwill, because for example a Google ranking might depend on the number and quality of pages which link to that webpage, the ranking of a phrase can be a good indication of the power of a brand.
Here it is quite interesting that the Alzheimer’s Society puts up a good showing for a search of ‘dementia friendly communities’. A possible reason for the society’s success here is to find in the last entry of this extract: the powerful strategic alliance it has with the Department of Health, who will clearly want this project to succeed.
Despite various third sector and corporate entities competing with each other, there has been remarkably little scientific peer-reviewed published evidence on “dementia friendly communities”. Here for example is the output from the ‘Medline’ database encompassing a huge collection of medical journals. This search only returned two pieces, where the abstract was not even available. Many, therefore, will have agreed with Sir Mark Walport, the Chief Scientific Officer, to query publicly at #G8dementia what the precise evidence base for the “dementia friendly community” is currently.
Notably, the prestigious Stirling group (DSDC) aired their concerns here:
““Dementia-friendly” has become part of the language of strategic planning in the public and third sectors, since the launch of the Prime Minister’s Challenge on Dementia in England in 2012 included the creation of dementia-friendly communities as one of its three main objectives. However, its exact meaning is inconsistent.
Being “dementia-friendly” has also become an aspiration for specific organisations, for facilities and buildings and for services – sometimes as part of a wider commitment, sometimes stand-alone.
DSDC does not believe there is a single model of “dementia-friendly”, or any need for one. But it does advocate for objective measures of what is being promoted as “dementia-friendly” to ensure it is not just a popular phrase used to cover shallow or cosmetic change. In terms of what we do ourselves, DSDC aims to help any group or community work out what can be achieved on a sustainable basis given available local resources.”
Piercy and Lane (2009) from the Warwick Business School really elegantly reviewed the relationship between corporate social responsibility and strategic marketing in their article, “Corporate social responsibility: impacts on strategic marketing and customer value” [The Marketing Review, 2009, Vol. 9, No. 4, pp. 335-360].
The initiative of Lloyds embracing “dementia friendly communities” can be at once understood through Piercy and Lane’s discussion of the notion of “ethical consumerism“”
“Commentators on branding suggest that ethical consumption is one of the most significant issues in modern markets. The conclusion is that ethical and environmental questions are being posed by growing numbers of consumers, but they are not always overly impressed by companies’ responses. It is also unclear how robust ethical consumerism will be in the face of other pressures – sales of organic foods fell nearly 20% in the UK in 2008, as consumers reverted to cheaper alternatives when economic conditions worsened. Nonetheless, the impact of “ethical consumerism” is large and of escalating significance.”
A particular banks, despite being in a relatively crowded market (and hence oligopolistic), particularly need to demonstrate why it’s better than the rest, and ethical consumerism has been particularly important for this in recent times, possibly in a way accelerated by the global financial crashes.
Also such initiatives are particularly attractive to investors, viz:
“There are growing signs that many corporate boards of directors are under shareholder pressure to adopt more acceptable environmental policies and keep a closer watch on environmental issues, reflecting investor concerns about global warming and shortages of natural resources. The attitude of investors toward CSR initiatives may be positive or negative. For example, it may be from an investor perspective the case for sustainability is essentially a business case – initiatives are not about “saving the planet”, but about cutting waste, reducing costs and becoming more efficient. In 2006, Google launched a strategy to switch to renewable energy – while this reflects the personal beliefs of the founders of the business, it is also true that Google is a massive user of electricity and renewable energy provides a way to cut costs. Nonetheless, when Google announced its renewable energy strategy, one leading New York stock analyst downgraded the company, despite clear indications that the initiative would cut costs – his view was that the company was no longer focusing on its real priorities.”
This criticism clearly would not apply to dementia charities, where inclusion of disabled members of society would be invariably an aim of any reasonable dementia charity. But the point holds: that the ‘market’ is sensitive to a company’s ethical credentials these days. For example, a dementia charity which solely concentrated on genomic ‘big data’ might not have as much competitive advantage with the general public. And the ‘dementia friendly community’ is an effective way of returning value to members of the general public, in the absence currently of disease-modifying drugs or cures for Alzheimer’s disease and the other two hundred causes (at least) of a dementia.
It is not of course accidental that Andrea Ponti from JP Morgan was there at #G8dementia. Corporates behaving well is big business. It would be easy to dismiss what they can bring to the table, that is somehow raise the profile of dementia. The tragedy of course would be if diversion of resources acted to the detriment of actual patient-centred care so desperately needed at the moment.
Is a banking crisis or an A&E crisis more important to English voters?
(c) Steve Bell 2008
link here
Comparing a banking crisis and an A&E crisis is comparing chalk and cheese. Likewise, potential English voters will have personal reasons for why they might think one crisis is more significant than the other.
It is said that James Carville, campaign strategist for Bill Clinton’s successful 1992 presidential run, posted a sign at campaign headquarters that succinctly set out the key messages: “Change versus more of the same; the economy, stupid; and don’t forget health care.” English voters in all probability do not do a direct comparison of economic performance and performance in the NHS, but it is easy for a right-wing dominated press to forget the impact of the NHS. Whilst the raison d’être of the current Coalition has always been to ‘sort out the mess’ from 2010, the facts are that a series of catastrophic mistakes by George Osborne has left the economy in a dire state when it had been recovering when David Cameron was bequeathed the keys to Downing Street even having not won the General Election. Not voting Labour, furthermore, has been seen as a punishment for “fiscal incontinence”, or “reckless spending” of the Labour Party whilst in Government 1997-2010. The issue there is that the Conservatives promised to match, at least, the spending commitments of the Labour administration last time around, and there is no conceivable argument for blaming public sector nurses or teachers on a global economic crisis.
What happened was that a £0.8 trillion cash injection was pumped into the “banking crisis”, for which Labour has never been given any widespread credit (and only blame for increasing the deficit.) As such, it did not receive much credit either for the highest level of public satisfaction recorded by the King’s Fund. And yet, even daily, Conservative supporters remind potential voters about ‘the lack of regulation’ in the financial sector, even though it was the Conservatives who felt the City of London was over-regulated compared to its competitors abroad. The Conservatives have tried through innuendo to pin the Mid Staffs blame tail on the Labour donkey, and latterly tried to the pin the A&E tail on the Labour donkey. What happened in Mid Staffs, certainly in terms of substandard clinical care (whether or not you agree on the precise mortality statistics), has never resulted in an electoral backlash against the Labour Party. In fact, the “NHS brand” of Labour has been very resilient, as demonstrated in the recent poll findings from Lord Ashcroft:
And yet there is barely a ‘cigarette paper’ between Labour and the Conservatives on an ability “to steer the country through tough times”. It could be, simply, that there is a ‘time lag’ – for example, Tony Blair supporters have often argued that Labour won a General Election, in spite of the dubious (allegedly) reasons for the UK to go to war against Iraq. Likewise, people may not instantaneously (or ever at all) blame the Labour Party for failings at NHS Trusts, or the current Coalition for the A&E crisis. Yet, the reasons for these failings matter immensely, and all parties are aware of the massive importance of finding reasons for these failings with a view to ensuring that these disasters do not happen again. There is concern about whether ‘the Mid Staffs experience’ was replicated elsewhere, hence the genuine organic support for ‘Cure the NHS’ led by the inspiring Julie Bailey. The Labour Party argue that the ‘banking crisis’ could have become a real crisis felt by members of the public, with people being seconds away from being unable to take money out of cash machines.
It is possible that the best days of the ‘National Health Action Party’ are yet to come, but it is likely that the Labour Party has more of a chance to getting into government than the National Health Action Party. That of course does not stop either Party from standing up for what is right. People generally have more affection for their hospitals than banks, and this could be one of a number of reasons why there was never felt to be a need for the ‘National Banking Action Party’. Without banking, as per without hospitals, England would collapse, except the fundamental problem for the Conservatives is that hospitals as yet do not “create wealth”. It is easy to measure the success of a director in generating profit for his shareholder, as he is legally obliged to do under the Companies Act, with regard to his environment, but it is very hard to quantify degrees of bad care. ‘Success’ in the financial sense, creating a profit, in the voters’ eyes may not be paralled by ‘success’ in quality-of-care, and certainly there have been reports of people having been reported to have been given very generous pay-offs despite poor clinical care in institutions with which they were connected.
The media’s obsession with Labour’s blame for the global financial crisis is indeed staggering, and its inability to cover accurately issues such as the Health and Social Care Act (2012) has been a scandal in its own right. Parts of the media have been trying to ‘rubbish’ the NHS brand, but have latterly discovered that private healthcare providers using the NHS brand, which has a lot of goodwill, can be very profitable. An argument which the media could have argued, which they did not, either due to stupidity or incompetence, is that the NHS overall was under-regulated, in the same way the financial industry allegedly was. There has been a notion that private companies are restrained from making profit by ‘legal red tape’, but it is worth noting that much of this legal regulation is there to ensure safe standards for workers. One only has to look at reports of corporates making profit out of collapsing factories in Bangladesh to understand the importance of corporate social responsibility, and it has been an on-running theme in healthcare that employee relations when bad in hospitals or in social enterprises can be very much to the detriment of the organisation.
It would be therefore be very convenient had the Health and Social Care Act (2012) addressed any of the issues which led Mid Staffs to be unsafe clinically. It did not. That is why even in their wildest dreams parts of the news media cannot argue that the £3 bn reorganisation which nobody voted for will do anything to prevent another Mid Staffs. If anything, even with a more fragmented market, regulation of healthcare providers will be harder. Much focus has been put into ‘breaking up the monopoly’ of the NHS, rather than defending the need for a comprehensive, universal service free-at-the-point-of-use (as far as is feasibly possible, of course). Labour does have a ‘head start’ in that it has a loyal following regarding the NHS, despite ‘controversies’ in policy, such as PFI or the introduction of NHS Foundation Trusts. Labour seems desperate to restore its ‘economic credibility’, even though it still has never won the argument, and is likely to do so in the near future. Labour politicians are lining up to establish their ‘pragmatism’ in managing the UK’s finances properly, but even the response to last week’s announcements of means-testing benefits has either been welcomed by those who would never vote Labour or derided by Labour ‘core voters’ for bringing Labour ever closer to the Conservatives.
England in my view will never learn to love Labour over its running of the economy, although it is probably fair to say that if Labour is considered economically incompetent it is unlikely to win a General Election. However, it does have an opportunity to lead on its running of the NHS. This takes real leadership from all involved in the NHS, and needs a very clear vision of what sort of society we wish to live in. This might include, for example, making Doctors, nurses, healthcare professionals, and other NHS staff feel valued, rather legally ensuring primacy of the shareholder. The A&E crisis is unlikely to get as many column inches as the banking crisis, and as such the A&E crisis hasn’t brought the country to its knees, but the thing is: in a non-financial sense, it has every potential to.
The 'One nation' of Ed Miliband is essentially about rebuilding the economy, rebuilding society and rebuilding politics
There are a number of overly-complicated accounts of what ‘One nation’, in its latest reincarnation, is about. One interpretation of ‘One nation’ is that it is literally that; scottish citizens can feel proud that ‘Team GB’ has won another Olympic medal, an example which Ed Miliband actually gave in his conference speech. The general consensus is that the speech was very well delivered, but lacking in firm policy. This is clearly unfair as a number of examples were given in that speech given last Tuesday, and Labour is currently undergoing a detailed, complicated, policy review, being led by Jon Cruddas. Describing the next steps in Labour’s policy review, Ed Miliband has said it would focus on three themes: rebuilding the economy, rebuilding society and rebuilding politics. Jon Cruddas has indeed previously provided that, “For me, politics is more about emotion than programme; more groups, community and association- imagined as well as real- rather than theoretical or scientific.” The significance of this is not to be underestimated, as the three planks of policy review, namely economics, society and political process, if executed correctly, would be more than sufficient to rebuild ‘One Nation Labour’. What is clear is that ‘One Nation Labour’ is not a slick re-branding exercise; it could provide a natural break from the neoclassical or neoliberal approach taken by New Labour, and it is clear that Ed Miliband wishes to make it a sustainable political ideology for the party which he leads.
The economy
Peter Kellner argues that Labour needs a new doctrine of equality.
Kellner argues that,
“If Britain is to remain a part of the global economy, in which trade and investment ignore national boundaries, it will struggle to fight the forces that are driving low incomes further down, and high incomes further up. Symbolically, we can and should clamp down on the worst excesses, such as bankers’ undeserved bonuses; and more could be done to banish poverty by, for example, raising the minimum wage and enforcing it properly. But these policies will make only a slight difference to the normal measure of income inequality, the Gini coefficient.”
There have been countless descriptions of why the deficit exploded in the global financial crisis of 2008/9. For example Nick Thornsby describes that,
“Whatever Ed Miliband’s claims, the Labour party clearly have to take a significant share of the responsibility. Firstly because the government was spending more that it was taking in before the recession, clearly putting the UK in an unusually bad position (by international standards) when the recession began. And secondly – and more significantly – because they assumed they had done away with the business cycle – they believed they had “abolished boom and bust” – when actually the truth was that Britain was living through an enormous boom, and consequently underwent an enormous bust in 2007.”
Peter Kellner has further argued that,
“Labour has less to worry about on that front (though other YouGov data suggest that the party is vulnerable to the charge that it is too soft on illegal immigrants and welfare claimants). On the other hand, it can’t shake off the charge that it messed up the economy when in office; but there’s not much it can do about that now. What Ed Miliband does need to do is persuade voters that he heads a competent team that is in touch with their own supporters, that Labour has learned from its failures in office, and that he, personally, has the backbone as well as strength of purpose to take the tough decisions that will enable it to govern Britain effectively.”
Ed Miliband has some economic priorities for this.
The Guardian noticeably gave its support for Ed Miliband in his approach to banking regulation. Ed Miliband does not feel that the Coalition has gone far enough in implementing the recommendations by Sir John Vickers, and interestingly the Guardian editorial uses an experience from across the Atlantic to support its argument:
“… , Congress has failed to put in place a coherent set of rules to offset the eye-watering amount of money the Obama administration pumped into the banks, leaving the US with much the same arrangements as before the Lehman Brothers crash. Banks, awash with cheap funds, lend to the same people under the same rules and pay the same bonuses to their executives. Senators Dodd and Frank, who put their name to the new banking regulations, have sadly found their legislation lobbied to death, increasing the danger of another crash in a few years. Miliband is right to say the same is happening in the UK.”
Sustainability is critically another key factor. In law, there is a duty of directors to promote short-term profitability, as judged by the shareholder dividend, and sometimes corporates can prioritise this above business ethics. For example, it is said that it was many years before RH Tawney defined socialism in terms of its objective of resistance to the market and its constraints to private profit. He had identified two approaches: ethical and economic. The ‘responsible capitalism’ narrative, firmly footed in the ‘strategy and society’ work of Prof Michael Porter from Harvard concerning how corporates can be good citizens like everyone else, was of course famously introduced by Miliband in his 2011 conference speech in Liverpool. There has always been disquiet about why corporate citizens should voluntarily wish to embrace good citizenship, but the recent LIBOR scandal has demonstrated how potentially the City could lose its competitive advantage by not being a safe place to do business.
I spoke to an expert in wealth management at a Fabian Society event last week and he echoed what a fellow panel member from Which? suggested – that corporates, including banks, could publish transparently hard data on its business activities, such that customers could make an informed choice as to whether to transact with them (this is otherwise known as the “differentiation” strategy). Miliband interestingly highlights that it could be possible to legislate for this: “You see businesses tell me that the pressure for the fast buck from City investors means they just can’t take the long view. They want to plan one year, two years, ten years ahead but they have to publish their accounts in Britain every 3 months. In line with the wishes of the best of British business, we will end that rule so companies in Britain can take the long term productive view for our country.” Also notably, Ed Miliband has also started a debate about immigration within Europe, and the effect particularly that the behaviour of some some multinational companies and recruitment firms in employing workers with poor standards, for example: “So the next Labour government will crack down on employers who don’t pay the minimum wage. We will stop recruitment agencies just saying they are only going to hire people from overseas. And we will end the shady practices, in the construction industry and elsewhere, of gang-masters. So we need a system of immigration that works for the whole country and not just for some.”
The society
Welfare for many in Labour will be of concern; disabled citizens are irritated that their living allowances have been mixed up with the “lazy benefit scrounger” rhetoric, particularly as disability living allowance is not an employment allowance. Many have felt indeed that welfare might be the next “big” issue, closely after the NHS and the economy, particularly after the handling of work capability assessments by ATOS.
The NHS is often cited as a “national treasure”, but certainly an institution which is well cherished amongst the vast majority of members of the British Public. In relation to this, it is indeed interesting that Jon Cruddas, when talking about institutions in general, says, “… socialism is about the creation of institutions that allow us to self realise, to flourish. Vaclav Havel once said that we ‘ are capable of love, friendship, solidarity, sympathy and tolerance…:we must set these fundamental dimensions of our humanity free from their ‘private’ exile and accept them as the only genuine point of meaningful human community’.” It is indeed particularly noteworthy that Ed Miliband wishes to repeal the Health and Social Care Act (2012), and to eliminate competition from the NHS. While it appears that Ed Miliband will keep NHS Foundation Trusts and commissioning in some form (possibly through retention of the clinical commissioning groups and the NHS Commissioning Board), Miliband appears to signalling that activities in the NHS will not be caught by the competitive legal definition of the word “undertaking” in domestic and European law, and Labour will return to a NHS built on traditional values as provided in the speech: “Not values of markets, money and exchange but values of compassion, care and co-operation.” This is fundamental, as it appears that Miliband and Burnham would be prepared to legislate for the NHS, asking existing structures to do different things, to avoid another costly reorganisation of the NHS which could potentially cost billions, at a time when England is struggling to meet the efficiency demands of the Nicholson challenge anyway.
Ed Miliband admits that the focus on universities was incorrect, in that 50% of individuals were failed by an academic drive which put little value in vocational qualifications. Andrew Adonis in “Education, Education, Education” has certainly started the ball rolling, and the growth of a skills-based economy (and indeed the Technical E-Bacc which Adonis himself is an architect of), and the idea that the private sector would have a psychological and social contract with the state is indeed a concrete policy proposal. Labour latterly has tried not to use the term “industrial policy” of late, but the issue that Ed Miliband does not see a distinction between private and public sector is a useful one in framing the future policy. No vested interest will be overly powerful in Miliband’s one nation; whilst Ed Miliband explicitly refers to bankers (and he has said that he will work closely with anyone wishing to introduce a ‘mansion tax’), Miliband is mindful that members of the Unions only constitute 40% of Labour’s funding, and that Conference last year agreed to implement a different means of electing its Leader. Miliband will be fully aware, however, that many members of the public do not feel that the pay of the “super-rich” is fair, and indeed this is a concern shared by the Chartered Institute of Management Consultants for both private and public sector. A criticism of the ‘One Nation’ speech is that it is something which potentially could be attractive to workers, if there were an emphasis on building affiliations of working class individuals in communities consistent with Maurice Glasman’s goal for Blue Labour, but New Labour and Progress (amongst others) will be keen to ensure that ‘One Nation Labour’ is also attractive to floating voters who might otherwise not vote for Labour. A number of Union leaders broadly welcomed the speech, ranging from full-on acceptance to caution saying that it was lacking in policy. While Vernon Bogdanor in the New Statesman in an article entitled “Half echoes of the past” this week has warned that Labour should perhaps be keen to keep a safe distance from Blue Labour, it is likely that Jon Cruddas will not wish to see any watering down of socialism and working class values in the policy review, whatever the recent history of the Labour Party.
The political process.
There is of course a concern that ‘for one nation’ to succeed, it has to do so on a number of levels. Harriet Harman in Progress Online described it as, ” With the Tories’ collapse in Scotland, Wales and much of the north, and Labour making progress again in the south, we are now the only ‘one-nation party’.” This is reflected in Ed Miliband’s observation that, “So we must be a One Nation party to become a One Nation government, to build a One Nation Britain. “Currently, in the three southern regions, where Labour have 24 target seats, Labour have only 10 Labour MPs and far fewer councillors. Here, the Fabian policy document, “Southern discomfort again” might provide some useful clues in particular about how Labour might form new connections with potential voters:
“Any party seeking to recover from electoral defeat has to develop a coherent analysis of why it lost, and what ought to be done to put it right. For a decade after New Labour’s 1997 election triumph, the Conservative Party refused to listen to voters and, as a consequence, suffered its worst sequence of election defeats since 1832. In the 1950s and the 1980s Labour made a similar mistake which condemned it to long periods out of power. If the party is to escape the impotence of opposition, it will need to shape a political strategy that will enable it to win next time.”
The critical aspect about all of this, thankfully, is that Labour has got time on its side. There is no point in Labour publishing its policies way in advance of 2015, particularly since the economic performance of the UK is declining by the second (as illustrated in the latest Labour initiative, “the borrowing counter”). Labour has said it regrettably that it would not be able to reverse many of the cuts, such as the closure of the law centres, or certain NHS institutions being abolished (e.g. PCTs or SHAs), but the approach taken by Ed Miliband indeed is a practical one for the time-being. Ed Miliband’s leadership is now a curious mixture of ‘charismatic leadership’ and ‘crisis leadership'; ‘charismatic’ in that Ed Miliband pulled off a performance which meant that people have not written him off, and seem prepared to give him and Labour a chance, despite Labour’s potential mistakes, because the Coalition’s performance has been so poor. If a week is a long time in politics, two to three years constitute an ever longer period.
The 'One nation' of Ed Miliband is essentially about rebuilding the economy, rebuilding society and rebuilding politics
There are a number of overly-complicated accounts of what ‘One nation’, in its latest reincarnation, is about. One interpretation of ‘One nation’ is that it is literally that; scottish citizens can feel proud that ‘Team GB’ has won another Olympic medal, an example which Ed Miliband actually gave in his conference speech. The general consensus is that the speech was very well delivered, but lacking in firm policy. This is clearly unfair as a number of examples were given in that speech given last Tuesday, and Labour is currently undergoing a detailed, complicated, policy review, being led by Jon Cruddas. Describing the next steps in Labour’s policy review, Ed Miliband has said it would focus on three themes: rebuilding the economy, rebuilding society and rebuilding politics. Jon Cruddas has indeed previously provided that, “For me, politics is more about emotion than programme; more groups, community and association- imagined as well as real- rather than theoretical or scientific.” The significance of this is not to be underestimated, as the three planks of policy review, namely economics, society and political process, if executed correctly, would be more than sufficient to rebuild ‘One Nation Labour’. What is clear is that ‘One Nation Labour’ is not a slick re-branding exercise; it could provide a natural break from the neoclassical or neoliberal approach taken by New Labour, and it is clear that Ed Miliband wishes to make it a sustainable political ideology for the party which he leads.
The economy
Peter Kellner argues that Labour needs a new doctrine of equality.
Kellner argues that,
“If Britain is to remain a part of the global economy, in which trade and investment ignore national boundaries, it will struggle to fight the forces that are driving low incomes further down, and high incomes further up. Symbolically, we can and should clamp down on the worst excesses, such as bankers’ undeserved bonuses; and more could be done to banish poverty by, for example, raising the minimum wage and enforcing it properly. But these policies will make only a slight difference to the normal measure of income inequality, the Gini coefficient.”
There have been countless descriptions of why the deficit exploded in the global financial crisis of 2008/9. For example Nick Thornsby describes that,
“Whatever Ed Miliband’s claims, the Labour party clearly have to take a significant share of the responsibility. Firstly because the government was spending more that it was taking in before the recession, clearly putting the UK in an unusually bad position (by international standards) when the recession began. And secondly – and more significantly – because they assumed they had done away with the business cycle – they believed they had “abolished boom and bust” – when actually the truth was that Britain was living through an enormous boom, and consequently underwent an enormous bust in 2007.”
Peter Kellner has further argued that,
“Labour has less to worry about on that front (though other YouGov data suggest that the party is vulnerable to the charge that it is too soft on illegal immigrants and welfare claimants). On the other hand, it can’t shake off the charge that it messed up the economy when in office; but there’s not much it can do about that now. What Ed Miliband does need to do is persuade voters that he heads a competent team that is in touch with their own supporters, that Labour has learned from its failures in office, and that he, personally, has the backbone as well as strength of purpose to take the tough decisions that will enable it to govern Britain effectively.”
Ed Miliband has some economic priorities for this.
The Guardian noticeably gave its support for Ed Miliband in his approach to banking regulation. Ed Miliband does not feel that the Coalition has gone far enough in implementing the recommendations by Sir John Vickers, and interestingly the Guardian editorial uses an experience from across the Atlantic to support its argument:
“… , Congress has failed to put in place a coherent set of rules to offset the eye-watering amount of money the Obama administration pumped into the banks, leaving the US with much the same arrangements as before the Lehman Brothers crash. Banks, awash with cheap funds, lend to the same people under the same rules and pay the same bonuses to their executives. Senators Dodd and Frank, who put their name to the new banking regulations, have sadly found their legislation lobbied to death, increasing the danger of another crash in a few years. Miliband is right to say the same is happening in the UK.”
Sustainability is critically another key factor. In law, there is a duty of directors to promote short-term profitability, as judged by the shareholder dividend, and sometimes corporates can prioritise this above business ethics. For example, it is said that it was many years before RH Tawney defined socialism in terms of its objective of resistance to the market and its constraints to private profit. He had identified two approaches: ethical and economic. The ‘responsible capitalism’ narrative, firmly footed in the ‘strategy and society’ work of Prof Michael Porter from Harvard concerning how corporates can be good citizens like everyone else, was of course famously introduced by Miliband in his 2011 conference speech in Liverpool. There has always been disquiet about why corporate citizens should voluntarily wish to embrace good citizenship, but the recent LIBOR scandal has demonstrated how potentially the City could lose its competitive advantage by not being a safe place to do business.
I spoke to an expert in wealth management at a Fabian Society event last week and he echoed what a fellow panel member from Which? suggested – that corporates, including banks, could publish transparently hard data on its business activities, such that customers could make an informed choice as to whether to transact with them (this is otherwise known as the “differentiation” strategy). Miliband interestingly highlights that it could be possible to legislate for this: “You see businesses tell me that the pressure for the fast buck from City investors means they just can’t take the long view. They want to plan one year, two years, ten years ahead but they have to publish their accounts in Britain every 3 months. In line with the wishes of the best of British business, we will end that rule so companies in Britain can take the long term productive view for our country.” Also notably, Ed Miliband has also started a debate about immigration within Europe, and the effect particularly that the behaviour of some some multinational companies and recruitment firms in employing workers with poor standards, for example: “So the next Labour government will crack down on employers who don’t pay the minimum wage. We will stop recruitment agencies just saying they are only going to hire people from overseas. And we will end the shady practices, in the construction industry and elsewhere, of gang-masters. So we need a system of immigration that works for the whole country and not just for some.”
The society
Welfare for many in Labour will be of concern; disabled citizens are irritated that their living allowances have been mixed up with the “lazy benefit scrounger” rhetoric, particularly as disability living allowance is not an employment allowance. Many have felt indeed that welfare might be the next “big” issue, closely after the NHS and the economy, particularly after the handling of work capability assessments by ATOS.
The NHS is often cited as a “national treasure”, but certainly an institution which is well cherished amongst the vast majority of members of the British Public. In relation to this, it is indeed interesting that Jon Cruddas, when talking about institutions in general, says, “… socialism is about the creation of institutions that allow us to self realise, to flourish. Vaclav Havel once said that we ‘ are capable of love, friendship, solidarity, sympathy and tolerance…:we must set these fundamental dimensions of our humanity free from their ‘private’ exile and accept them as the only genuine point of meaningful human community’.” It is indeed particularly noteworthy that Ed Miliband wishes to repeal the Health and Social Care Act (2012), and to eliminate competition from the NHS. While it appears that Ed Miliband will keep NHS Foundation Trusts and commissioning in some form (possibly through retention of the clinical commissioning groups and the NHS Commissioning Board), Miliband appears to signalling that activities in the NHS will not be caught by the competitive legal definition of the word “undertaking” in domestic and European law, and Labour will return to a NHS built on traditional values as provided in the speech: “Not values of markets, money and exchange but values of compassion, care and co-operation.” This is fundamental, as it appears that Miliband and Burnham would be prepared to legislate for the NHS, asking existing structures to do different things, to avoid another costly reorganisation of the NHS which could potentially cost billions, at a time when England is struggling to meet the efficiency demands of the Nicholson challenge anyway.
Ed Miliband admits that the focus on universities was incorrect, in that 50% of individuals were failed by an academic drive which put little value in vocational qualifications. Andrew Adonis in “Education, Education, Education” has certainly started the ball rolling, and the growth of a skills-based economy (and indeed the Technical E-Bacc which Adonis himself is an architect of), and the idea that the private sector would have a psychological and social contract with the state is indeed a concrete policy proposal. Labour latterly has tried not to use the term “industrial policy” of late, but the issue that Ed Miliband does not see a distinction between private and public sector is a useful one in framing the future policy. No vested interest will be overly powerful in Miliband’s one nation; whilst Ed Miliband explicitly refers to bankers (and he has said that he will work closely with anyone wishing to introduce a ‘mansion tax’), Miliband is mindful that members of the Unions only constitute 40% of Labour’s funding, and that Conference last year agreed to implement a different means of electing its Leader. Miliband will be fully aware, however, that many members of the public do not feel that the pay of the “super-rich” is fair, and indeed this is a concern shared by the Chartered Institute of Management Consultants for both private and public sector. A criticism of the ‘One Nation’ speech is that it is something which potentially could be attractive to workers, if there were an emphasis on building affiliations of working class individuals in communities consistent with Maurice Glasman’s goal for Blue Labour, but New Labour and Progress (amongst others) will be keen to ensure that ‘One Nation Labour’ is also attractive to floating voters who might otherwise not vote for Labour. A number of Union leaders broadly welcomed the speech, ranging from full-on acceptance to caution saying that it was lacking in policy. While Vernon Bogdanor in the New Statesman in an article entitled “Half echoes of the past” this week has warned that Labour should perhaps be keen to keep a safe distance from Blue Labour, it is likely that Jon Cruddas will not wish to see any watering down of socialism and working class values in the policy review, whatever the recent history of the Labour Party.
The political process.
There is of course a concern that ‘for one nation’ to succeed, it has to do so on a number of levels. Harriet Harman in Progress Online described it as, ” With the Tories’ collapse in Scotland, Wales and much of the north, and Labour making progress again in the south, we are now the only ‘one-nation party’.” This is reflected in Ed Miliband’s observation that, “So we must be a One Nation party to become a One Nation government, to build a One Nation Britain. “Currently, in the three southern regions, where Labour have 24 target seats, Labour have only 10 Labour MPs and far fewer councillors. Here, the Fabian policy document, “Southern discomfort again” might provide some useful clues in particular about how Labour might form new connections with potential voters:
“Any party seeking to recover from electoral defeat has to develop a coherent analysis of why it lost, and what ought to be done to put it right. For a decade after New Labour’s 1997 election triumph, the Conservative Party refused to listen to voters and, as a consequence, suffered its worst sequence of election defeats since 1832. In the 1950s and the 1980s Labour made a similar mistake which condemned it to long periods out of power. If the party is to escape the impotence of opposition, it will need to shape a political strategy that will enable it to win next time.”
The critical aspect about all of this, thankfully, is that Labour has got time on its side. There is no point in Labour publishing its policies way in advance of 2015, particularly since the economic performance of the UK is declining by the second (as illustrated in the latest Labour initiative, “the borrowing counter”). Labour has said it regrettably that it would not be able to reverse many of the cuts, such as the closure of the law centres, or certain NHS institutions being abolished (e.g. PCTs or SHAs), but the approach taken by Ed Miliband indeed is a practical one for the time-being. Ed Miliband’s leadership is now a curious mixture of ‘charismatic leadership’ and ‘crisis leadership'; ‘charismatic’ in that Ed Miliband pulled off a performance which meant that people have not written him off, and seem prepared to give him and Labour a chance, despite Labour’s potential mistakes, because the Coalition’s performance has been so poor. If a week is a long time in politics, two to three years constitute an ever longer period.
The reform of the banking industry. Are firewalls and ringfencing the answer?
Tomorrow the Independent Banking Commission headed by Sir John Vickers will publish its interim report. The Commission of five economists and bankers, chaired by former Bank of England chief economist John Vickers, was tasked with considering a full-scale break-up of banks – something Liberal Democrats had called for in their election manifesto. Regulation holds the key to successful functioning of the financial services or banking industry. The main argument made until now for completely breaking up the banks is that it is unfair that ordinary retail customers should be put at risk by the investment banking arms. That is likely to be true, in that when a consumer bank – Northern Rock – adopted an investment bank style of financing in the shape of aggressive securitisation it failed horribly. This report due to be published tomorrow will not support the total break-up of Britain’s biggest banks, according to the BBC. Instead it will favour ring-fencing their risky investment banking operations, so they do not jeopardise the savings of ordinary depositors.
Most of the big “Wall Street banks” have long come off the critical list, repaid the US government every cent invested or borrowed, and are happily paying dividends. Conversely, in the UK, Northern Rock, Royal Bank of Scotland and Lloyds Banking Group soldier on, largely on the back of the UK government. The new ‘firewall’ arrangement is intended to eliminate the possibility of losses at the investment banks being borne by the public purse. Customers’ deposits, business lending and the transmission of money would be ring-fenced within the universal banks as new subsidiaries, endowed with increased capital resources to protect against losses.
Markets are likely to see the ring-fenced investment banks as riskier credits, making it more expensive for them to borrow and undercutting their profits. Rating agencies will be looking carefully at the report to understand how it affects the chance of banks being rescued by the government in future financial crises. One of the most famous agencies, Moody’s, said on Thursday that it will review ratings for 19 UK banks this year in light of the tougher regulatory environment, with many likely to face large downgrades. What happens to banking regulation will have worldwide implications for our relative competitive advantage, say, for example, compared to New York or Shanghai.
The ring-fencing may mean that rating agencies give investment banks separate – and lower – credit ratings than their parent banks. The buzzword is banking circles now is “subsidiarization”— the idea that banks can address regulators’ concerns by creating legal firewalls between their different businesses that stop short of full separation. Santander already operates a subsidiary structure along these lines: all its major units are separate legal entities, independently regulated and with responsibility for their own capital and funding. HSBC also largely follows this pattern. Since these have been two of the most successful banks in the world through the crisis, this models are understandably attracting increasing attention as a possible solution.
However, subsidiarization is not the complete answer to the regulators’ dilemma. For example, a subsidiary structure would have enabled U.K. regulators to stop Lehman Brothers transferring large quantities of cash to the U.S. the night before it went into administration. Similarly, U.K. regulators would have been able to ring-fence the operations of Icelandic banks active in the U.K. before the crisis by forcing them to hold their own capital and liquidity. Instead, they collapsed with their parents, with disastrous consequences for the U.K. economy. Not surprisingly, regulators are keen on subidiarization as part of their efforts to force banks to maintain so-called living wills to help ensure an orderly wind-up. Any regulation has to be correctly thought through this time around.
For example, the Wall Street Journal has previously remarked (link to the article here),
“[It is considered not atogether clear] subsidiarization provides the kind of firewall between different parts of a bank needed to protect taxpayers in the parent country. After all, HSBC operates a subsidiary structure, but that did not stop it funneling billions of dollars into its troubled U.S. unit, Household, rather than allowing it to go bust. At the time, HSBC argued persuasively that allowing Household’s bondholders to bear the losses from the unit’s disastrous subprime lending would have calamitous consequences for its own credit rating. Santander argues that its decision to write down the value of its Argentinian unit to zero during that country’s devaluation crisis early in the decade shows it was willing to cut a troubled subsidiary adrift. But ultimately, it never took this step—no bank could easily survive such a breach of trust. But because banks would retain the ability to deploy their capital across the range of their activities according to the returns they perceive to be available at any particular moment, the increase in their costs of doing business would not be – in their view – prohibitive.”