Designing Democracy for 21st Century

An Assemblies for Democracy meeting 10th May 2016 at the House of Commons, Westminster

Report by Julie Timbrell/Peter Arkell; Photos Peter Arkell

Designing Democracy for the 21st Century was called by Assemblies for Democracy, to talk about why we need a constitutional convention, and to consider how we design one that will have the best outcome for citizens.  Energy has been building for a citizens-led convention that looks critically at the present broken UK constitution and comes forward with proposals for democratic change amongst democracy groups, social justice campaigners, citizens and progressive parties. The Green party has called for one, and Jon Trickett, the shadow minister for the constitutional convention, supports the idea. King’s College, University of London, is drafting a proposal to create and run a convention. This event was called to bring experts on designing conventions, democracy groups and citizens together to learn more about the process such a citizen-led convention could look like. Continue reading

General discussion on Alan Renwick’s six questions

Democracy for 21st Century, Assemblies for Democracy , 10th May 2016,  6-9pm Committee Room 5, House of Commons, Westminster

First general discussion on the first three of Alan Renwick’s six questions:

  1. What is the purpose of this process?
  2. Who is represented in this process?
  3. What is the basic structure of the body or set of bodies that debates the options and makes recommendations?

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Osborne’s fiscal nightmare – by Damien Quigg, London Planning Group

George Osborne’s new plan to legislate fiscal surpluses is an attempt to return Britain to Victorian values. He has even revived the Victorian Commissioners for the Reduction of the National Debt (a body that last met in 1860).

His rational is that the financial crisis was due to Labour’s irresponsible borrowing when it was in office. The Opposition cannot be trusted unless it admits its guilt and promises to follow Osborne’s guidelines.

But the fundamental problem here that Labour has never been able to refute Osborne’s accusation, even though it is a lie. It’s astonishing that some of the candidates for the party’s leadership are buying into the surplus argument.

The reason we have £1.5 trillion of debt is not because Labour were irresponsible with the nation’s credit card in order to reduce child poverty, enhance public services, or give young people leaving school with few/no qualifications a better chance in life.

Instead, the vast majority of our national debt has, in fact, come from bailing out the banks, following the 2008 global financial meltdown. That, of course, was the product of the banks themselves through irresponsible lending and speculation in debt.

The global economic recession followed hard on the heels of the crash – and so did austerity. As a consequence of the banking crisis, Osborne introduced the bedroom tax, cuts to welfare benefits, attacks on legal aid, cuts to local authority funding for vital services, the freezing of public sector workers’ pay and the privatisation of key areas of NHS provision.

And while our MPs are set to enjoy a 9.2% pay rise, the Tory government is planning a further £30billion in cuts to public sector spending, including a £12billion reduction to the welfare budget. All this based on a “mandate” of fewer than 25% of the registered electorate. Where’s the democracy here?

If the government is to achieve an overall fiscal surplus and taxes are not to be raised (the Tories have ruled this out, allegedly) then spending must first be cut, and then kept at a level, relative to gross domestic product, achieved only twice in the past 70 years.

The Osborne argument that the crisis has proven the need for a surplus in normal times is simply not the case. His claim that, in other words, we would be better prepared in the event of another financial crisis if the state was running a surplus doesn’t add up.

It would have made little difference to the effects of the financial crisis in 2008 if Labour had run a balanced budget before it. Both Ireland and Spain, for example, had been running a balanced budget before the financial crisis. Yet the meltdown in economic activity that followed the crash devastated both these economies.

Another argument from Osborne is that a fiscal surplus is a hallmark of prudence. Yet the focus on public debt alone is mistaken. Crucially, it ignores the asset side of the balance sheet altogether. Moreover, all things being equal, the bigger the fiscal surplus, the lower interest rates would be. If that encouraged a run-up of private debt, the economy could end up even more unstable. Alas, the Office for Budget Responsibility already forecasts a big jump in household debt.

As Osborne well knows, there are alternative measures that can be taken to reduce our national debt in the long term. It does not all have to be done right away. In fact the ratio of our public debt to GDP is well below its average over the past three centuries. Naturally, such considerations including the case for fiscal stimulus apply only if a country has fiscal space.

But markets and the IMF agree that the UK has such space. It is clear that the obsession with public debt is unhealthy. Public borrowing is not always an evil. Nor is private borrowing always a good. It is quite appropriate to borrow to invest. Not least, the time to reduce public debt comes when economies boom and interest rates are far from the floor. Despite what the chancellor claims, our economy is certainly not booming.

What is also important is how fiscal consolidation is achieved and at whose expense. It should never be at the expense of the poorest and those least able to defend themselves. For that to happen, we would have to live in a truly democratic society.