The Strange Death of the Party System (A Siren Call)

In 1935, George Dangerfield published “The Strange Death of Liberal England”. This book has been much discussed recently as it analysed the combination of women’s votes, Ireland and rights for workers and showed how the traditional and paternalistic politics of the world in 1914 and before was radically changed by those events.

One hundred years’ later, and this country (and much of the Western world) has a different problem. Except where a sudden (and usually short-term) issue arises, political parties are progressively being shunned by voters.

As a report in The Spectator showed in September, 2013 (mainly using data from the House of Commons Library report from December, 2012), membership of the traditional political parties has collapsed in the last 50 years – true of all the three, main parties. Only about 1.5% of the electorate are now members of the three, main parties – less than ¼ of the rate that existed in 1964.

This trend seems inexorable and, while it does not portend the end of democracy, it shows that (in the absence of possibly short-lived parties like UKIP in the UK Beppe Grillo’s Five Star Party in Italy) the gap between the political parties and real people grows daily.

Single Issue Politics

Dangerfield’s three shifts in politics that were in place when the First World War struck – Ireland, emancipation for women and workers’ rights – have, progressively and with much work, been largely dealt with. After that, the Second World War saw the forces of fascism and nazi-ism smashed. The end of the Cold War saw the attempt at Communism dismantled (China not representing anything like communism after the death of Mao – or probably before).

The world has new problems but economic prosperity and the global economy have shifted focus. Sure, immigration is a hot topic in the UK and the Scots are understandably excited by the prospect of independence, but, with a seemingly stable revival in economic fortunes, the public is not engaging with politicians – outside of single issues.

The older parties in England especially seem to have no vision of the country they aspire to lead or at least no ability to convey one. This lack of vision has disenchanted those who should be engaged. For others, who are far more focused on short-term economic necessities, politicians long ago lost their interest.

The Sirens (Seirenes) of Civil Society

All this was brought into focus at the ACEVO (Association of Chief Executives in Voluntary Organisations) Leadership Conference on 7th May. With exactly one year to go to the next UK General Election, the conference began with a tour around the electorate from Ben Page, CEO of Ipsos MORI and there were also talks from Nick Hurd, Minister for Civil Society, Lisa Nandy MP, Shadow Minister and John Cruddas MP, Shadow Minister for the Cabinet Office and Head of Labour’s Policy Review.

Understandably, there was indignation from the audience of charity leaders about the Lobbying (Gagging) Bill and Liz Hutchins of Friends of the Earth especially. She claimed that the political parties wanted the restrictions on charity lobbying because they were concerned at the effect that such campaigning has prior to elections. It appears that the pressure groups within Civil Society now have Siren-like qualities and the Gagging Bill was introduced as a sort of earplug with which to render their song silent.

This insight was, for me, a central theme of the day. Politicians tried to assuage such concerns but Sir Stephen Bubb, ACEVO’s CEO, was not so comforted. He was foremost in wanting charities and the sector as a whole to raise its voice.

Now, charities and NGO’s may not be single-issue bodies but they are singular in context to political parties. In a digital age, they also, in some ways, replicate the more focused requirements of the internet – for short stay issues. From discussions that I had with several of the attendees, they have no intention of being silenced as they give voice to people who are otherwise disenfranchised by a system of politics that is too remote and where the “political class” (as John Cruddas himself called it) has fostered that remoteness.

From this conference, a clear message is that political parties are too focused on short-termism and on presenting a wide range of policies that may have engaged fifty years ago but do not now. John Cruddas, who is working to re-energise the Labour programme, pointed to his party’s desire to rid itself of a top-down, centrist mindset that was no longer suited to the 21st Century. In itself, this is fine, but the positive ability to reach out to people with real needs is, perhaps, too great a reach.

Are Charities a sign of a new Politics?

The Lobbying Bill gained most of its publicity as a result of the attempt to gag charities – a ridiculous aspect of the Bill that the Labour Party has promised to revoke. It showed a worry amongst politicians that charities (especially vocal NGO’s like 38 Degrees) offer a voice to people that is being taken very seriously. Amongst the 166,000 registered charities, there are many established to challenge society. Many others see the need to campaign in order to enhance its aims for beneficiaries. The charity sector, despite its quantifiable size relative to the rest of the economy, has a clear voice on many issues but has to fight its way in a society dominated by corporate and public sectors.

It is an understandable situation where politics is dominated by the sectors that seem to dominate our lives economically. We mainly work for the two dominant sectors and receive most of our quantitative benefits from them. Between them, they dominate. The battle between them, as J K Galbraith showed in “The Affluent Society” is between the quantity of life and the quality of life – both required to some limit but where a social balance is needed.

Unfortunately, we all appear to see the debate between public and private sectors as a battle – not as a need for social balance. Libertarians believe that the market economy will meet all requirements – there are others that believe in the ownership of all economic producers by Government. In between, the battle lines persist: private vs public.

However, there is another battle line where charities and NGO’s exist. It is not all about economics – although it is linked. This battle line is about serving those who are not covered by the armies of private or public sector or where the issue is more quality vs quantity. The debate about the future of our habitat – where the eco-warriors exist – is mainly an NGO battle (in the UK at least as Greens have, to date, low votes cast on their behalf despite them being perceived as single issue). Elsewhere, charities run the whole gamut of causes – medical, social, humanitarian, ecological.

It is into this wide range of causes that people may be engaging. In a world where politics is remote and bland, where politicians are not trusted, charities and NGO’s are seen as trustworthy recipients of funding but also as voices. Unlike the sirens, political earplugs will not cause the charities to give up. The word at the ACEVO Conference was the opposite – a louder voice was needed.

It may be that organized groups such as charities and NGO’s (aided by the digital facilities now available – which suit individual issues) will lead to a different type of political environment. Allied to the extraordinary power of economic (quantitative) sectors such as public and private sectors, the sector that represents the quality of life will likely be seen more and more as a real player in the life of politicians. Maybe the so-called Third Sector will get a Minister in the Cabinet; maybe there will be an annual budget for this area – linking the quantity of our lives (measured through GDP – life by numbers) to the quality of all our lives.




“Farewell, fair cruelty” – The Age of anti-welfare

The “Safety Net”

Ian Duncan-Smith has introduced a new system of welfare payments in the UK that seeks to better link payments to the sick, disabled and those out of work to their ability to find work and get paid for work. His (and his government’s stance) is that since the introduction of welfare payments (brought in by the post-WWII Labour government following the Beveridge Report in 1942), the world has changed and welfare has become a “right”  that needs to be changed.

Churchill had previously voiced his view that a safety net be provided to all those in society who fell on hard times. In 2006, Greg Clark  (now Financial Secretary to the Treasury) urged the Tories not to be caught up in Churchillian rhetoric as: “The traditional Conservative vision of welfare as a safety net encompasses another outdated Tory nostrum – that poverty is absolute, not relative. Churchill’s safety net is at the bottom: holding people at subsistence level, just above the abyss of hunger and homelessness.”

Mr Duncan-Smith, according to Peter Oborn, writing in the Daily Telegraph “is animated by a profoundly Christian vision of free will, redemption, and what it means to be human in a fallen and imperfect world.” It is this vision that hearkens back to Churchill and pushes this coalition government in the direction of the 19th Century.

Individual vs. State

The balance in any modern, developed State is to balance the interests of individuals and State (and also at least think through the requirements and abilities of the third sector / civil society). While, as Oborn writes, Margaret Thatcher ignored the welfare system and the NHS by refusing to substantively alter them, and while Blair and most obviously Brown made them more a political football, Duncan-Smith has taken a view that individuals must be given the incentive to work and stand on their feet.

This fits well in a society still in a state of shock following the banking crisis of 2007/8 and where our sovereign debt position is a massive risk for our future.

It fits with Tory doctrine of the 19th Century (although not with the post-WWII consensus that MacMillan and succeeding Tories espoused).

It fits partially with the Liberals (although not necessarily the Social Democrat wing in the Liberal Democrats) in that the balance between individuals and the State should always veer toward the former – although Liberals will usually point to freedoms and open society issues rather than the “incentives” that Duncan-Smith talks about.

Welfare Stands Alone

The problem is that while it is possible that Duncan-Smith has a mission and feels genuinely that welfare needs to be changed, the world is not just about welfare. It is also about economics and opportunity. Attempting to change welfare benefits (which will naturally come down hardest on the weakest sections of society) without successfully managing up the fortunes of the wider economy and critical areas such as education (a crucial force for change and a massive “enabler” in ensuring people have the skills and capabilities that allow them to stand on their feet) cannot work.

Even Samuel Smiles (the 19th Century author of Self-Help) said: “I would not have any one here think that, because I have mentioned individuals who have raised themselves by self-education from poverty to social eminence, and even wealth, these are the chief marks to be aimed at. That would be a great fallacy. Knowledge is of itself one of the highest enjoyments. The ignorant man passes through the world dead to all pleasures, save those of the senses… Every human being has a great mission to perform, noble faculties to cultivate, a vast destiny to accomplish. He should have the means of education, and of exerting freely all the powers of his godlike nature.” (my underlining).

Government is split into different areas of control and it is a real dilemma. If David Cameron really wishes to go back to the 19th Century and bring in welfare reforms that attempt to force people to work or lose benefits, then the same Government has, at least, to generate the capabilities that will allow them to do so.

This means that George Osborne and his Ministers have to attack our substantial problems of growth (or the lack of it) while we seem to be entering a Japanese-style lost decade.

This means that Michael Gove (himself on a mission) has to ensure that those areas of greatest need in education (which are the areas most adversely impacted by Duncan-Smith’s welfare reforms) receive the resources (investment and brainpower) that they need. This could, for example, mean forcing top quality schools (from private and public sectors) to link up with worst performing schools in the country much as Lord Adonis tried to do voluntarily as he describes in his recent book “Education, Education, Education: Reforming England’s Schools”.

Of course, this means jointly pursuing policies as a Government rather than addressing individual issues one at a time because individual Ministers want to make a name for themselves.

Of course, this is the job of a Prime Minister (and in a Coalition, the Deputy Prime Minister) to see that the key decisions of each Ministry complement each other. They have failed to see how disjointed it all is and failed to understand the changes that have been put in place since the 19th Century that repels the drive to go back in time.

Back to the Poor Laws

There is a real danger that the failure to articulate a vision by our politicians, allied to an economic position that is perilous is leading the UK (or at least England) back to the Poor laws as articulated in 1834. This was the age of the workhouse as described so well by Charles Dickens. The 19th Century zeal, which Duncan-Smith is bringing to bear, is allied to monetarism and austerity together with an education philosophy which focuses on individual schools (Academies) without much understanding of how to best ensure the worst ones thrive.

This means that a “perfect storm” is likely to erupt: an economy of austerity, a goodbye to welfare and a lack of educational opportunity where it is needed. This may be seen in the future as a Government that forgot the riots of 2011 much like the riots against the Poor Laws in the 1830’s.

Modern times deserve modern remedies and better leadership

The challenge for any Government in a post-2007 world is to sufficiently understand the role it places in providing the underpinning for a thriving society. This is not the old Tory rule from the top – where the top 3% get the resources and everyone hopes for a trickle down effect. The class system in the UK – no longer just three – may have been dispersed but the political class may not have yet picked up on their duties.

Whether or not many welfare recipients have pro-actively taken themselves out of the work markets and work ethics, Government’s job is to enable them to come back into the market. This means motivating and educating at the same time as gradually changing the rewards structure.

Tell a workforce that they are pathetic and they will become so. Tell people that they are work-shy scroungers and they will not co-operate. Cameron and Osborne (and Gove) understand little about leadership. They want to show leadership by forcing issues not by motivation (or nudging – I understand they read that book – shame they never read any on good leadership) in the same way that the Upper Classes ruled in the 19th Century.

Modern times need a government that motivates and has a vision that is constant throughout – not a bunch of managers with no sense of leadership.

This should mean that rhetoric changes to encouragement not estrangement in a way that Miliband’s desire for “One Nation” (Disraeli) is meant to work. Within that rhetoric (maybe the start of some vision), the economic policies of sustainable growth have to be applied not just hope that austerity will somehow work and shift us to private economy growth; within that rhetoric, an education system that drives the worst schools to function along with the connectivity with local people (including parents); within that rhetoric, a welfare system that rewards such involvement in the community – not just salaried work.

The latter means that people should be able in a modern society to be able to work in a variety of areas – within civil society – rather than for a pittance in a salaried job. This also means spending time with kids where the worst performing schools are victims of poverty and estrangement of parents and local leadership.

This is joined up Government where each part of government takes fully into account what is happening in other sectors of society. It is not what we have now.

Farewell, fair cruelty was said by Viola in Twelfth Night – Viola was trying it on – a woman pretending to be a man.

Duncan-Smith is worried about welfare beneficiaries who shouldn’t be getting welfare – people who are not what they say they are.

This government is pretending to be showing leadership – it isn’t. It is merely repeating the mistakes of their forebears from 200 years ago.

Farewell welfare, indeed. We run the risk of becoming an anti-welfare society that alienates huge sections of it while the rest of government stands aside. Time for some vision and leadership and for this government to understand the impact one part has on another – Duncan-Smith needs Osborne and Gove to help him succeed.  Malvolio’s experiences in Twelfth Night may also be educational for Ian Duncan-Smith – he was also a man more sinned against than sinning.

Easter and Eostre, Germanic goddess

In the Christian tradition, it is Easter – named after Eostre, the Germanic Goddess of Fertility and Spring. It is that time of year, when we look for growth all around us. Yet, more prosaically, mention growth to most and we talk about recession and how ironically the current German goddess (Chancellor Merkel) is not so keen on helping those in need around the periphery of Europe.  She wants them to help themselves.

Growing Pains

Michael Heseltine, Cabinet Minister under Margaret Thatcher, who recently provided a report to the UK Government on the regeneration of English cities that David Cameron and George Osborne have welcomed , told The Independent newspaper on Saturday, March 30, 2013 that: “the richer you get the less imperative there is” for people “to drive themselves”.”

BBC Radio 4 followed this up with a debate on Saturday’s Today programme between Mariana Mazzucato (an economist) and Terry Greenham (from New Economics Forum – NEF). Terry ended by calling for more quality rather than quantity in how we measure “growth” – that GDP as a measure was flawed.

Our Affluent Society

Back in May, 2012, I posted “The Affluent Society and Social Balance” which looked back at the writings of John Kenneth Galbraith (author of The Affluent Society) and wrote about how mindsets had not changed since he wrote the first edition in 1958. Quantity was still valued over quality – economics was still all about more things, not more quality of life despite our (developed world) ability to acquire so much stuff.

I spelt out four areas for concern as developed nations seek to address further “growth” requirements. They were characterized as follows:

Forty years ago, five, major elements were missing from or only sidelines in Galbraith’s analysis – issues which have become more central over time and which complicate the prescription that Galbraith proposed: They are repeated below:

1. Globalisation

2. The errors in GDP accounting – quantity vs quality

3. The Environment – valuing quality

4. Civil Society – ending the private vs public sector spat

5. Social Balance

1. Global Trading

The world is a different one from 1958 or even 1973. We trade globally and the developed nations increasingly use labour from the undeveloped nations to do low-cost, manual work (often in conditions we would not tolerate in our own countries). It is a 19th Century state of work but internationalised– where now, international companies tend to operate as the mill owners of old.

From a micro-economic sense that is understandable – each company is different and many act responsibly. However, from a macro-economic viewpoint and from an international political viewpoint, there are limited mechanics for equalizing health and safety laws let alone education and pay scales.

Galbraith’s concern was that we produced too much and that we should be able to make less in a country like the USA. When the work goes international, the responses to the problem have to as well.

2. Production by numbers: quantity versus quality

In an affluent society, production is made the cornerstone of all we do (the economy is central to all our decisions) because work is needed to secure income. Even in an affluent society, income at a certain level is deemed to be critical. Products of progressively less use (or utility) are sold (often solely on the back of advertising) and we buy them and this is meant to keep us in work and more buying goes on.

Of course, in an international labour market, that won’t always work (as Gandhi found out in the early 20th Century when England produced most of the cotton garments sold in India) and it has become harder to focus just on one country.

However, the global economy does not mean that products become more useful – much of what we make is simply wasting energy and resources. However, it is keeping people in work in many developing nations.

But, growth is measured by GDP and GDP is a poor measure of quality of life or even production. Quality of education, for example, is measured in GDP by its cost (an input) not an output. A £500 handbag is deemed worth the same as £500 worth of essential foods – no difference in utility is assessed.

The felling of a rare tree is “valued” at the cost of felling or its price in the market as a table. The value of a river is missed completely – unless over-polluted when its clear-up costs may enter as a cost in a nation’s GDP.

It is production by numbers, quantity versus quality.

3. Environmental Balance

While mentioning the issue of environment, the main topic of “The Affluent Society” is the social balance between public goods and market production. All these are made by people – so, the environment in which we live is ignored. The trade-off is not, of course, that simple (even though the Galbraith trade-off has never been seen to function). The environmental trade-off (our need to maintain our natural capital) is now being understood but remains relatively hidden in economic debates. Natural capital needs to be brought into any debate on affluence in society – our quality of life as opposed to the quantity of life.

4. Civil Society

To Galbraith, the game is between the market and the public sector and to most, this battle still exists as the only one. There was not much mention of civil society – where most of us spend most of our time – except through discussion of leisure time. Here, the trade-off was between productive working and spare time. I expect that this assumes that all non-productive time is spent on hobbies or watching TV.

The creativity and value of civil society – a huge array of organisations from sports to international development, from charities to women’s institutes – is normally missed completely by economists and thinkers on society. The problem is that it does not fit easily into econometricians’ computer simulations: more of the “if you can’t count it, it doesn’t exist” syndrome.

Of course, for centuries, people have been undertaking “good deeds” – the history of the 19th Century is full of examples of charitable activities. However, society is changing fast and as politics loses its appeal for so many (with parties genuinely fearing for their future), the role of civil society is growing and, in affluent societies, taking back more from the state that it lost to the state in the 20th Century.

This escape from the centre is to be applauded, but needs to be better understood.

5. Social Balance

Complete reliance on the market or on the centre (libertarianism or communism) may still appeal to some. The reality is that complexity is the norm. Society is a mixture of competing ideas and competing structures – out of which we muddle through and where individuals take centre stage and form organisations to make their voice louder.

Nevertheless, we should learn from history and our mistakes. Centrism is a doctrine of the defeated; totalitarianism a doctrine of the damned. There is no one answer but a constant mix of opportunities that society provides and where changes are constant in the way we answer our problems.

The mix of competing answers does no longer rest between public and private sector in an affluent society – that is a 20th Century doctrine or response. The response now has to take into account the social balance we want from our lives between products, social value, natural capital and civil society relationships in a global context not a rigidly national one.

This means being adult about the causes of change and grown-up about the challenges – it means being international in approach and understanding the complexity of the problem – not something that can be understood wholly by quantities or computer simulations.

As we grow materially (i.e. through the quantity of products we are able to manufacture) and bump up against the troubles of environmental degradation and massive disparities of wealth and conditions (on a global scale), the question to be addressed is how does a complex society best form itself to take the decisions it needs to maximize the value we all give and receive from this “affluent society”.

So, should we Give up on Growth?

Terry Greenham of NEF would propose (as does NEF) that this is what we have to do. As the developing world strives towards economic well-being as described by growth of GDP (gross domestic product), the developed world should (in NEF terms) re-balance the lives of their people so that quality is maximized and quantity is stabilized.

Of course, all our measures and motivation focus on quantity. Homo sapiens have developed over 100,000 years to seek food and shelter and the more the better. However, following Maslow (Hierarchy of Need), humans aspire to more than just “stuff” and as we gain wealth, the majority want more that is not measured.

A salutary valediction from The Independent’s Michael McCarthy (Environment Editor) today after 15 years with the newspaper, showed a pessimism that the human race could wake up to the qualitative disaster that it was causing in its rush to quantitative growth. Governments have responded with nothing in this debate – transfixed as they are by the glamour of GDP statistics. Heseltine is the first senior Conservative in the UK to state the obvious – that being the fastest growing economy is not necessarily what we all want. GDP is, in reality, meaningless as it fails to measure value as outlined above. A tree is not worth the amount it costs to fell and transport; a river is not worth just the cost of keeping clean – they have value beyond this that is not within the bounds of GDP.

Businesses, operating in the micro-economy cannot be expected to make the change – they are set up to benefit their shareholders and adjust to cultural and legal pressures (usually with some degree of resistance).

It ends up with Government having to lead. In very few nations is there an understanding of the problems that faces us – the race to grow GDP. Most completely misunderstand what GDP measures (and that includes most economists – centred as they are on econometrics the simulation of economies that reflect the 19th Century reality not the 21st Century’s).

We need to establish measurement (if that is how we work best) of the Gross Domestic Value  –  GDV  –  where Value takes over from product (things).

In this way, CO2 in the atmosphere can be valued; that tree being felled can be valued; humans can better value their time given back to society.

We should not give up on growth, but growth of value not product or income (based on the wrongful simulation of salaries, costs and sale prices).

National Value or Gross Domestic Value should become the target – not how many products we have. The question is whether there is a drive and energy to establish an understanding of what really is important or whether (as economist Georgescu-Roegen said in the 1970’s)

“Perhaps the destiny of man is to have a short but fiery, exciting, and extravagant life rather than a long, uneventful, and vegetative existence. Let other species — the amoebas, for example — which have no spiritual ambitions inherit an earth still bathed in plenty of sunshine.”

Michael Heseltine is only partially right. There is a limit to the drive and push people have to continuously get more stuff – but, there is probably no limit to our drive for more value. Michael McCarthy is, maybe, too pessimistic – we can drive human growth through value not products – GDV not GDP.


Locked out of Power and Making a Noise

How do we contribute to society and how do we influence the future?


There is a dangerous gap opening up between people and institutions that current forms of democratic parties and other organisations set up to channel views to those instruments of power are not able to bridge. The problem is manifold:

Political parties which dominate most democratic societies are filled with professional politicians who have little (or at best moderate) understanding of the real world outside of politics;

Civil service bodies and public sector institutions are (as they have always been) full of careerists who are no longer “tempered” by the social reality that broadly based political parties would provide;

Campaign organisations are also full of careerists who work their way up the system internally and may have little real association with society outside their own silo of interest.

Corporations (especially large, multinationals) have a tremendous power in a world dominated by numbers – growth objectives – and can fund large campaigning groups of their own.

Ever-Changing society

There is no equilibrium in society although it feels like stasis has been reached. Different bodies are continually evolving as the environment changes politically and socially and economically. The problem is that entrenched interest groups (drawn from those sectors above) continuously work to make their positions more secure.

In the past, four, main sources of change were developed to open up society to change:

Political parties

Campaign groups

The media


But, mainstream sectors have succeeded, in the main, in wrapping the first three groups into that mainstream. There is a dependency on each other and a difficulty in breaking through with new ideas and attempting to force through decisions on even the most important issues.

The global economy has exacerbated this problem – as international needs lead to massive international organisations that succeed always in taking decision-making away from the individual.

Improved communications have through history succeeded in transforming the ability of individuals to learn more and have a greater say. The printing press was followed by the telephone, which was followed by the fax machine and the mobile telephone and the internet. Mass communication is now available that provides the ability for all of us to understand more of what is being done in our name. Social systems such as Twitter enable communication in an instant; mobile telephony and digital technology allows information in microseconds. This has had repercussions in events like the Arab Spring but the rigidity of social norms fights back most often.

Society’s complex underpinning will see some new emergence develop from this – but, what is it likely to be and how can the individual become involved rather than be part of a sector that more clearly matches that of Orwell or Huxley’s nightmares?

The drift to Centralised control

Maybe it’s a natural occurrence – that as organisations develop, they coalesce and form groups and associations that begin to meld into international committees that appear completely remote from most of us.

This is certainly true of political parties, true of sports associations (like FIFA or the International Olympic Committee), true of international organisations (like the UN, WTO), major NGO’s and charities, political groupings such as the EU, international corporates (such as the banks). Most people don’t know most of these organisations and many (like FATF – the Financial Action Task Force) have for years seemingly gloried in their anonymity.

With the rise of the internet, we were meant to discover more but that same rise has meant that less spending goes into traditional media organisations like campaigning newspapers. This has meant a reduction in in-depth investigations and analysis and much-reduced investment by newspapers and other media outlets in providing the type of information we need as individuals in society to keep the massive organisations on their toes.

In a major sense, the rise of the internet has had consequences that were not envisaged and has led to a major centralization of power structures – more immune from investigation than before.

We must not be misled by the closure of the News of the World in the UK after the hacking enquiry – the NotW was a scandal rag that was part of the new world of celebrity. Its loss is not great.

The loss of whole departments where the main task was to investigate and analyse how society works (and where it does not) and the rise of the internet as a news medium (and comment in 140 characters) shows that, so far, what has emerged is leading to centralization not the reverse.

Does Centralised control matter?

Democratic society is supposed to provide individuals with the ability to influence the way our society is run. So, centralized control does affect us all. While the drive to consumerism may suggest that we would not mind if we were ruled like in China (more goods supplied to keep the population quite), I suspect that this tendency does not appeal to all of us. Centralised control does not stop at Tiananmen Square – it has no controls. “”Unlimited power is apt to corrupt the minds of those who possess it” (William Pitt the Elder) is borne out through history and the idea that we can allow others complete freedom to guide us through life is obnoxious to most of us I suspect.

What are the options for decentralising?

The centralization of sectors of society needs to be continuously prodded. That can be done both internally (i.e. within those instruments of power) but mainly externally (from other organisations and / or individuals).

Working within is tough – the structures bind staff to their culture and it is very difficult to break out. A feature of British politics has been how the Liberal Party (a party for the individual within a coherent society and always opposed to centralization and totalitarianism) has become (especially since it became the Liberal Democrats) so bound up with the EU project – a centralizing force that is now seen to be breaking up.

External pressure may now be the only way to elicit change and to change the environment so that something less centralized can emerge.

The Centre for Civil Society in Australia is a good example of an organization that has been set up to prod society.

The Centre for Investigative Journalism in London is another.

NGO’s like Global Witness are important contributors.

All such organisations are set up to prod (some quite heavily) the existing structures – they are all dependent on external funding.

We need some creative destructionism – in the same way that Apple created new products that tore at our desire for more than pure functionality (although Apple is now part of that central structure); in the same way that Google tore into the online world and is now a core of that central structure – within the non-economic sphere, the way we live outside of numbers and products.

There are some options that remain that can assist in developing society so that we learn the lessons of the 20th Century – where communism and fascism drove the world to and then away from totalitarianism. Those lessons are now in danger of being unlearned – where the danger of unbridled centralism of society is occurring without (thankfully) war, but just the same potential results. We could wake up and find the world run from the centre. Maybe it is already and the drift to unequal wealth distribution a symptom.

That suggests more of an effort is needed to point a finger at our structures and the best way to do this is through our participation – and through some independent organisations, especially in investigative journalism, which can expose, fight for freedom of speech, help to analyse the impact of centralised decisions on society and expose fraud and corruption: many groups, many individuals wanting to open up the closed doors.

Does a tree that falls in a forest make a noise?

Governance – From Osborne to Diamond – where is it?

If we wanted to see bad governance issues at their most raw – in all sectors of society – then maybe this was the week.

First – Corporate governance was shown to be completely awry at Barclays, where Bob Diamond’s testimony showed so clearly that non-execs that should have been applying governance strictures were so out of the picture.

Second – the public sector and education, where Michael Gove in a strange speech at FASNA (Freedom and Autonomy for Schools) said he knew what “good governance” looked like (fascinating to hear a politician talk about good governance!) and criticized many existing school boards as:

A sprawling committee and proliferating sub-committees. Local worthies who see being a governor as a badge of status not a job of work. Discussions that ramble on about peripheral issues, influenced by fads and anecdote, not facts and analysis. A failure to be rigorous about performance. A failure to challenge heads forensically and also, when heads are doing a good job, support them authoritatively.

Third – charities, where governance was held up at an ACEVO (Association of Chief Executives in Voluntary Organisations) conference to be a critical problem and the split between Chief Execs and Trustees very problematical (nearly 30 are seeking urgent advice from ACEVO on this issue).

Fourth – Government via the astonishing spat between Messrs. Osborne (our Chancellor of the Exchequer) and Ed Balls (his shadow) over banking and LIBOR – or worse, their obvious hatred for each other.

Across the nation – Governance in doubt

We clearly have a crisis of governance across the nation and in all sectors. Government, public sector, corporates and Third Sector all exhibit problems where real strains are showing and proper governance is often missing.

Gove’s comments (which show political mannerisms at their worst) can be spread across all areas if we want to.

The role of non-executive directors, trustees, governors or similar is crucial in organisations. Their importance is completely under-estimated in the same way that the importance of backbenchers in Parliament is. This showed so clearly in the Osborne / Balls playground fight this week and showed how dangerous it is when the Executive is a major part of the Legislature (as we have it in the UK) and back-benchers are unable to confront the over-weaning egos of the front-benchers.

The example shown here – of a senior government minister and his shadow in opposition – was appalling but, unfortunately, does shine a light on society. When recession strikes, the worst examples of society come to light.

What’s going wrong?

Much is actually right in sectors of society that organize themselves into such oganisations such as companies, public sector bodies and Third Sector organisations. But, there is a crucial link that is not sufficiently understood and where traditional rules don’t really work anymore – and, where they do work, are rubbished by politicians pursuing a political agenda.

The link is the one between senior operational staff and Boards. It is the crucial link in any organization.


The danger here is the risk that Chief Executive Officers who have got where they are because they are good at what they do but also because they act like steamrollers, often force Boards to concede issues with too little scrutiny. Time is of the essence and information hard to take in when you are a Non-Executive Director (NED) maybe at many corporations and spend a few days a year on each.

The law now lays a heavy burden on NED’s but there remain many who want to bring their skills and knowledge and experience to companies. Most are acceptable to the CEO if they have good connections /networks. Beyond this, they are begrudgingly provided with data and fill remuneration and audit committees and the like, fulfilling a role but often not really involved with the central and driving forces behind the business. Government tinkering with the laws has prescribed the areas of involvement that the law requires and where NED’s have to focus. Areas that are fundamental, like strategy, culture, and ethics, are more likely to be left outside.

The danger becomes real in companies like Enron – which imploded under a Ponzi scheme that should have been obvious to all on the Board. It is endangering one of our best-known banks as it did with RBS and Lloyds-TSB.

Name the major scandals in corporates and then describe the efforts of NED’s to make things right – whether in newspapers and phone hacking, oil industry and health and safety, mining and corruption.

Public Sector

I use the example of schools / academies to show the reverse. Michael Gove, in seeking to set up an array of different schools so that the good ones can “emerge”, is in danger of wrecking education and the potential for good that exists in those schools / academies.

Of course, he was speaking at the FASNA – so, was amongst friends. But, his injudicious language threatens to throw out the good with the bad. I am a Chair of Directors / Governors at an excellent Academy and Gove runs the risk (as all “leaders” do) of demoralizing just the people he should be motivating.

In pursuing his political agenda, he shows he is full of ideas but not allied to the skills of a leader. Schools boards / or governing bodies are full of people who (unlike in corporates) are unpaid and fill positions out of a desire to help kids and the staff that run the schools. Gove is at least ten years out of date with his picture of local worthies – it is not just an insult but shows Gove to be stuck in the 1970’s at best.

At schools, the link between Head and Governors / directors can be bad (as it can in any situation) but is often very good. The role of the board as “critical friend” is enshrined in all that is done and the Head (and some of his / her staff) are on the Board as well. This creates a team that motivates each other to work together and develop a school for its students. Where it works (and it usually does to some extent), it provides enthusiasm as well as governance, skills as well as motivation – on both sides, operational and governance.

Of course, Gove has some insights as schools in difficult areas will have trouble finding the skills needed to fill a board. But, this is down to the location and the need to ensure that they are supported within a structure that works. This is a key area and where successful schools can certainly help.

But, Gove should not ridicule the governance structure in schools – it may be the one area that does work!

Third Sector

Now, I work in this sector as a CEO. I have a good Board but having been in the sector for five years or so (my previous 30 were in the corporate one), it is clear that there is a crisis and it is between CEO’s and the Board.

There is a divide that is unnecessary and needs to be fixed. My concern is that it won’t be because the mind-set of third sector participants is that the charity sector is precious and that there needs to be a separation between boards and operations.

The separation is, I am repeatedly told, because of conflicts of interest. These conflicts, if a CEO becomes a Trustee, means, for example, that the roles are somehow confused and that the Chief Exec can no longer properly comment on staff salary issues because of conflicts of interest (see NCVO website).

The Charities Commission is completely confused. Two requests for information on this yielded completely different responses in the last couple of weeks – both suggested a board would need to ensure no conflicts of interest but while one said they would need to approve the appointment and one did not, neither could attest to the specific conflicts that would be in evidence.

What this means is that the separation (which does not happen in Education – and a school is no less precious) is maintained for little reason and the huge benefits – teamwork, joint motivation, openness for example – are lost in the preciousness.

It needs to change and fast.

Governance and Government

Our government shows itself adrift in its response to good governance by the way it shows itself in parliament. Having the Executive commanding the legislature is bad enough but requires a more magisterial quality. Osborne and Balls would not know that if it hit them between the eyes.

It is important that organisations are properly run. They have an enormous impact on society and are a key part of it. It can be argued that civil society has lost its control over organisations as government (our supposed defenders) has clearly shown no tendency to take itself seriously. Osborne and Gove are poor exemplars.

There may be no excuse for the rioters of last summer in England, but the tendency of organisations to show lack of leadership is troublesome and leadership is needed.

The future of Governance

Sectors of society like the three (or maybe four) mentioned above work in silos and come up against each other from time to time. There is much in common and governance issues affect each and all of them.

Governance is the method of governing – it applies to us nationally, internally and within organisations to which most of us belong. Good governance is crucial to the way society works but it is under threat.

The future of society depends on good governance and we now need to unravel the workings of a hundred years of legal doctrine to develop improvements throughout all the sectors of our society.

We need structures that combine strategy and operations, directors / trustees / governors and business / organizational leaders, but where the non-executives are provided with the skills and time to address the concerns that society has.

At the same time, Chief Execs need to be able to explain the key drivers that make (in their view) the organization work and non-execs should be able to investigate for themselves.

Gove wants Ofsted to rigorously assess governors in the way they monitor Heads. Fine (if they had any understanding of what that means and the ability to do it) but who is doing this in corporates – maybe the auditors or some other independent body for any publicly listed company?

Finally, different sectors should not be isolated from each other. NEDs, trustees, governors have a lot in common but all operate to completely separate rules and guidelines. It is time for some common dialogue as civil society (which includes everyone) is getting pretty sick and tired of the mess that organisations are in.

Education and Examinations – back to Plato

In the UK, a leaked document from the Department for Education proposes that we go back to the 1950’s and separate kids at 15 or 16 into two sections of society: those who can and those who can’t. I guess this may be better than the separation at 11 that took place then (the UK’s “11 plus” exams) but not much. Hearkening back to a “bygone age” of seeming perfection is often the norm for conservatives – there to preserve rather than illuminate – but, the mistake is that we have lost the meaning of education.

Education as a Feeder system for the Economy

To educate is to develop the faculties and powers (of a person) by teaching, instruction, or schooling.

Going back to definitions may be important. If the crucial objectives of education are to develop “faculties” and “powers” – which parents are doing from the time a baby is born – why has the education system decided not to do this? Why is it that the education system devised in the mid-20th Century has, through national curricula, worked to establish something different?

In all the discussions and discourse on education that reaches most of us through TV and newspapers, the focus of education is not about maximising the powers and faculties, but about developing certain skills in order to make pupils employable. How this has come about is debatable but is likely to be as a result of economics and the view of governments that it has to feed the economic system.

Now, this is not completely unreasonable and it is not as though citizens want everyone to be a Plato, a Socrates or even an A C Grayling. Economics applied to most citizens means that we want to develop ourselves sufficiently to have a decent job. University degrees in subjects that are not job-focused are decried because they dare to deviate from the GDP-focus that dominates all our lives.

We are continuously subjected to the competition between the newly developing nations and their own devotion to exams and economic prosperity as the new mantra. “Communist” China is now held up as the beacon – we are, in effect, at war with the soldiers now the pupils in our schools and universities who are in competition with their counterparts in China. It is not just league tables to compare your local schools; we are now homogenized into comparisons on a world basis against the maths and science students of China and Singapore and Thailand.

Across the world, education has made Huxley’s dystopian Brave New World a closer reality.  We now have schools / academies split into alpha, beta and epsilon (through the division of private sector, and maintained sector split by geography / location). We have exacerbated the problem (if we agree it is one) by the almost complete drive to make our children the feeder for gross domestic product (GDP) growth. This is leading (in the UK) to Michael Gove’s attempt to split our kids into two sectors – those who can and those who can’t – by type of exam taken at 15 or 16. But, citizens are not being given the exam question that he is attempting to answer in this way.

What is the question?????

Gove wants a division of society into those who can pass exams at 16 and those who cannot. Why? Because there is a view that young people need to be divided at some age into those who can be management and leaders within the private and public sector and those who will be providers of services to them and the organisations that they manage and lead.

The 19th and 20th Century devised organisations, which have led to societies, which are now run by government and private sector priorities. Government is supposed to be (in a democracy) at the will of the people but is now a mix of career civil servants and career politicians (especially the case in Europe but true in most developed societies).

The private sector (which has been the source of so much wealth creation and so much that is good) has through competition developed an amazing monopoly over our lives. Economics never envisaged a duopoly of forces that would dominate in this way. The accommodation of the private sector by government and vice versa is how our societies are now run and education is seen more and more as the provider into these monolithic power centres.

So, the question we should be asking of our education system is whether we wish to have our kids taught in order to supply the system in this way and in addition to suffer the effects of the Brave New World of demarcation into alpha, beta and epsilon schools AND even more between top tier pupils and service providers  OR whether we wish real education to take place? Huxley’s dystopian vision (or Plato’s world view that we should divide children at an early age to educate those who will rule early and divide the rest) was based on a top-down philosophy that is outdated and pretty totalitarian. In any emergent society (and human occupy the same emergent plateau as any other living creature), we should ensure that the best opportunities are provided wherever possible and at any age. This is possible in a developed society and where our gross domestic product should be directed.

If education is really to develop the faculties and powers of an individual through teaching, we should continuously ask what these faculties and powers should be and then whether we are providing them (and, if not, how we should be).

Faculties and Powers in the 21st Century

We have reached the stage in our economic development (we probably did many years ago – as Galbraith’s “The Affluent Society” so well testified) when rapid and continuous economic growth as measured by current measurement systems is no longer rational. We are wasteful of resources and wasteful of our freedoms in the pursuit of more goods. The challenge to society is how it remodels itself in the light of diminishing economic utilities and diminishing returns for this wealth as well as the potential calamities that divisive wealth distributions (between the top 1% and the rest) are creating.

Jobs are central to economic well being and naturally feature in our minds as one of the most important priorities in our lives. They aren’t the only ones, though.

Equipping our children for the difficulties that the 21st Century society has on offer as well as for the opportunities that it provides is the most important requirement for education.

I have been involved with Education and the system for over 20 years as a pro-bono School / academy Governor and as a Chair of Governors for the last eight of those years. I have seen successive governments in the UK pass the buck on education as different theories are tried and children used for experiments. What Michael Gove is now stating is that all the changes made over the last fifty years have not allowed us to progress and that we should go back to where we were.

The trouble is that the assessment is mistaken. There is little in the proposal about exams and divisions at 16 that would provide any confidence that our children will be better educated as a result. The imperative is to equip them with the faculties and powers to make decisions, be real and pro-active members of society and to make real contributions. Some of that is about the ability to work. We are leading much longer lives, though, and young people will go through a variety of careers and need to use many of their skills (inherited and learnt) as a result. There is little chance of having one job for life any more – change is too fast and we need to change to keep up.

Where is this faculty being learned if we are determined to divide up our kids at such an early age and send them off into the world without the faculties and powers that will best equip them for that world?

Employers bemoan the low level of maths and English taught in many schools and this needs to be improved; we have too few scientists and that needs to be changed. However, employers look to the short term and to their current needs. Economics is very poor at forecasting (as the banking disasters of 2008 to now show so clearly). Therefore, friends in Government must not only listen to employers groups and change our education philosophy as a result to their advantage only.

Education must be centred on providing the faculties and powers to enable young people to make the most of themselves in society – not just to gain immediate employment when 18 (the age when young people will soon be obliged to stay at school in the UK).

Civil Society as the Bridge Between Private and Public Sector Monoliths

Most of us work in the private or public sector. I don’t these days – I have worked in the so-called Third Sector for the last five years – for NGO’s and charities. But, the Third Sector is not just about charities and NGO’s. As a School / Academy Governor, I play a civil society role in a public sector school / academy. I don’t see myself as being in the public sector.

We all live in society – some of that in work and much outside. A good education is the crucial foundation for anyone to enable them to take best advantage of what life has to offer. Getting a good first job is important but not everything. Each individual’s contribution to society (whether local, regional, national or international) is important and a good education which stretches an individual’s faculties and powers at an age when our brains are most able to grow, develop and take on new ideas is essential. This is the fundamental notion that the best societies don’t work on a top-down basis (the essence of totalitarianism – a Brave New World) but provide the opportunities to those who can best use those them – and at whatever age.

Education is core to our well-being. We should have learned much since Plato opened the first Academy in 387BC in Athens. The essence of education has to be that it is a central provision of society and that it has to be there for all to take full advantage. Arbitrary divisions at any age from the top-down perpetuate societal divisions and hinder society’s ability to grow – its emergent properties are stymied by the imposition of extra rigidities.

Further, the division of our schools by location would drive us backwards not forwards as many schools in economically poorer areas will continue to be second-tier (compared to the better maintained sector schools and remote, third tier compared to the private sector) and will never have a chance to recover that position. Plato’s division of society (or Huxley’s) will be set.

Those of us who can stand aside from public or private sector top-down views of society don’t need to accept this position. Our children should retain access to the best throughout their lives. A two-tier exam system on top of a three-tier education system is out of date and condemns too many, too early.

Under-valuing Civil Society – Wherever the Market and Government don’t work

What, in the 21st Century, is it the role of charity?  Where does civil society (the real society) fit in a world dominated by the market and the state?

Recently I became Chief Executive of Willow Foundation ( – a Charity in the UK that works to help 16-40 year-olds who are suffering from life threatening illnesses. We do this by providing psychological and emotional benefits through the provision of “Special Days” – something exceptional that we organize and make work  for them and their close ones. Our research shows that this is important for all – whether in curative or palliative phases of their illness.

So, my question above is heartfelt as well as intellectual.

Well, the simple and well-known answer is that where the marketplace has no response to society’s need and today’s government (focused on financing an NHS as the biggest employer and where they are just getting round to looking after elderly patients with care) is not entrusted (or does not feel entrusted) with this task, then charities and civil society intervene. That response encompasses both interventions such as Willow employs all the way to campaigners for new rights (here and overseas).


In 2010, Sir Stephen Bubb, CEO of ACEVO in his paper titled: “Rediscovering Charity: Defining our role within the State” focused on the role of charities from their origins to the present day through their varying links to Government.  Whether funded by government (the state) or philanthropists, the link with the state was crucial from early times when the state was there just to extract taxes and fight wars to now (when it seems to be much of the same!) where the state sets the minimum standards of involvement.

The state also sets the laws under which charities operate (partly to defend its citizens from rogue elements) and pays a considerable amount of its taxation to charities. My recent blog on this: Do we value the Charity Sector? (

was a statement of concern that the state completely fails to lay out the economic benefits and costs of the sector.

But, it is not only in regard to the state (or government) that charities must be seen. Charities exist in the 21st Century in the USA, UK and other, wealthier countries because neither government nor the “market” meets all our needs – even if they are better met than five hundred years ago. The “Third Sector” exists where the main economic system actors fail and where the need is financeable and / or manageable by volunteers and / or better managed by this sector.

Charities (or civil society organisations) range very widely. With newer forms of company (like social enterprises, community interest companies), the blurring is intensified, but the relationship of many forms of non-government, non-traditional market organisations are continuously reforming and developing.

Also changing is the gap that is to be filled as a result of government and / or the marketplace “failure”.

Maslow described in 1934 our “hierarchy of needs” which changes as we become wealthier. From charities operating to provide food and shelter (critical in much of Africa now and the UK in the 19th Century and before), as economies grow, the gaps become different. As income grows, the market may wake up to provide the need; government raises taxation and develops new ways to disburse that income where voters shout for that need to be filled.

Charities and the economy

In 2010, Charities had an income of £36.7 billion – about the same size as Aviva’s revenue – the UK’s biggest insurance company. The UK economy’s GDP in 2011 was around £1.5 trillion – so, the Charity sector is about 2.5% of the UK’s GDP as measured in simple economic terms (comparing income to GDP).

Financially, the raw economic facts do not speak for themselves. Economic statistics are based on what is measured and it is assumed that £1 is £1 is £1. Measurement in our economy is flawed – real value is mistaken, of course, when our decisions are made almost entirely on the basis of cost data.

The impact of the charity sector, then, is much greater than the raw data. This is reflected in the media and elsewhere but because the third sector is not so easily measureable – charities don’t have financial bottom lines – it is too easy to ignore it or treat it like a small child to be patted on the head when it does well and scolded if it doesn’t.

How important is the Third sector / civil society?

If it is not practical to value civil society or that piece of society that is not government or the market (although it interfaces with both), then how can the real value of this sector be valued? If we are now working to value our natural resources, the value of the charity sector (or whatever we call it) has to be made so that decisions are not taken purely on the basis of costs.

The stupid action of the Treasury in proposing to set an upper limit of £50,000 or 25% of income for tax deductions on charitable donations is so crass as to be almost unbelievable! It is the sign (if we needed it) that valuation is not the issue. Apart from the fact that the Treasury cannot even provide decent examples of the complex schemes that they are trying to hit (sledge hammers cracking nuts), it completely under-values the Charity giving sector and the value that is created from these donations.

This is happening throughout our austerity-driven society. In the same way that pollution effects of manufacturing in the 19th and 20th Centuries (from pesticides to greenhouse gasses) were not properly valued (and are still not properly), so charity is completely undervalued by those responsible for taking decisions that have enormous and adverse impacts.

The value created by a volunteer does not show up in statistics. The value created by pro-bono help from companies and lawyers and school governors and countless others is not shown. The reduced cost of staff in the sector compared to other sectors (notwithstanding the argument about managerialism which is another important subject) is shown as much lower and demands far lower “income” to fund it. Discounts from companies, gifts in kind – all appear to reduce the economic benefit of the sector because they show up as lower costs. But, they provide huge value, which is seriously under-reported. The Big Society is much bigger than the raw data shows.

Yet, decisions are still made based on 19th Century statistics and 19th Century economics.

If we value society as a mix between the market, government and the third sector – with individuals as the customers of all three – then we have to be much smarter and less lazy in understanding what real value comes to mean and much less lazy in using out of date models to make decisions.

The Charity (or third) sector / civil society has a huge and under-estimated impact on society – far greater than the 2.5% of GDP or its equivalent to other sectors of society – which (apart from various externalities) are better approximated by GDP statistics. It is not just the market and the state which makes up society – although we are brainwashed to believe it it.

In the past, before we became beholden to numbers as the only arbiter in society, charity was understood for the huge part it played. As we have become wealthier, rightly government and the market have taken positions, which in the past were covered by charities. Charities and civil society in its widest sense have moved into new areas as the demand became clear. Now, we need to understand the impact of the sector in macroeconomic terms (across the huge range of “charitable activities”) – not just its GDP – in order to properly make decisions.

Osborne’s recent numbskullery with the £50,000 limit has not done much to Cameron’s happiness index nor his leader’s desire to establish the Big Society, has it?

Do we Value the Charitable Sector?

As the Coalition Government slips worryingly through its third year, the value given to the Third Sector (or the Civil Society) is more uncertain. The Big Society is being challenged as it has not been for many years through financial austerity in national and local government. This has had a dramatic impact on charities in the UK that have been set up to serve the community and who rely on government (national and local) income. In Osborne’s last budget, charitable giving has been hit hard by limiting that which is tax allowable to £50,000 in any one year for individuals.

The charitable sector is strong in the UK, but threatened by this reduced government spending, reduced spending by companies and potential reductions in individual giving as we tumble back into recession.

The variety of charities is vast – from those set up to further medical research, those working to improve health and welfare, those set up to do international development, social clubs and societies, sports clubs and a host of others. Even schools are charities under UK law. This makes it hard to understand the role they have in society.

However, they stand alongside the Governing sector (government) and the products and services sector (business) and the fourth sector or fourth estate – journalism. Maybe that’s also where many NGO’s lie these days – funded to do investigations into society as newspapers once were. The fourth estate now contains many NGO’s – the likes of ONE, Enough, Global Witness, parts of Greenpeace, Oxfam, Save the Children, Amnesty and many others – where charitable work continues alongside the investigations and journalism and lobbying.

The Charitable Sector – Filling the (Massive) Gap

The role of charities is therefore complex – even if in the minds of most funders it is primarily to provide help to those sectors of society that are left out by the State and by the remainder of civil society. Charities exist to drive funds and assistance locally, regionally, nationally and internationally where it is deemed that government does not, cannot or will not.

Whether it is DEC (Disasters Emergency Committee) or similar assisting in emergency international funding, or Oxfam or Save the Children, or local hospices, each has been set up by individuals who saw a gap in care and raced to fix the problem. The whole area of social business has also sprung up in between business and charities. The roles are evolving as niches appear where need is believed to occur – it is a complex and adaptive system that is constantly evolving.

Each society is developing its own way from the bottom up – very few governments are sufficiently totalitarian to impose its blueprint on its people. In North Korea, this may be so but elsewhere government and business leave gaps that the market cannot satisfy and that civil society attempts to fill.

If the role of the charity sector (outside of the fourth estate incumbents) is to fill the gaps that business and government leaves – because they identify the need first, provide funding that is otherwise unattainable, provide better expertise, more focused concern or whatever other motivation – then how should society be developing to maximize its positive effectiveness? While this note focuses on the UK, it is as relevant to the international community.

Valuing the Charitable Sector


It is now time that government in the UK (and elsewhere) took a long, hard look at the charity sector and saw it as a real sector of the economy. The last budget was a good example of how taxation and benefits were structured towards businesses and individuals and where civil society (or the Third Sector) was seen as a peripheral activity. This was a slight on that sector.

The seemingly thoughtless and throw-away issues such as the limit of £50,000 on tax-free giving was typical of government not seeing the organized part of civil society as being defined in any special way. It is surely time that civil society – the charitable sector – is defined as separate from the business and individual taxed community and that we establish a set of income and expenditure statements from government that shows clearly how well or badly we are doing in that sector – at least in money terms. This would then clearly show how well or badly governments are also doing.

At the time when the Natural Capital Committee under the newly appointed Dieter Helm is calling for an accounting for natural resources / natural capital, it is time for the charitable sector to be similarly “valued”.

Impact Valuations – What does this mean?

On a basic level, an understanding of the tax taken from the sector (mainly through VAT, plus income tax and national insurance – both company and individual – paid to staff) should be provided annually at least by Government – maybe the office for National Statistics. That can be set against the tax benefits that may arise through gift-aid benefits for those who provide funds to charities. At the very least, an Annual Report should be made by Government (almost a CSR report) but verified and commented on by Charities Commission and maybe more independently-minded organisations). This would be completely different to the current Charities Commission Annual Report – which is a micro-analysis of how it spends its £29.4m. The report has to be a macro-economic one.

Stage two would be an analysis of the sector’s public “goods” – a value of the huge and positive impact that charities have in the UK and internationally. This will be its “Impact” at a macro-economic level.

If natural assets can be “valued” (providing an accounting value as Dieter Helm wants), then so can charitable activities. This is being demanded by many funders before (certainly trusts and foundations) before they fund charities, while individual givers often want to know more about an individual charity beyond the “gut-feel” instinct that propels them to give.

This macro-economic valuing would give the charity sector an independence. It would mean that civil society could begin to understand just what contribution the charitable sector provides in terms that begin to be understandable.  Nick Hurd, the Minister for Civil Society, would have a far more meaningful brief. Currently, he sits in the Cabinet Office (under Francis Maude) – but, the brief is very wide and less economically focused than it should be. The key, of course, is how we go beyond pure economic modeling (our GDP of quantity not quality) to measure the benefits we receive from natural capital / assets (which the NCC is set up to assist with) and from civil society itself.

Just as the value of education is not the money that the government spends on education per head (based on the Academy where I am Chair, £9.35m of income is spent on 1450 students – a “value” of £6,448 per annum – although at least this has some calculative affect. Even here, of course, the cost is reduced by the government’s take of income tax from staff, National insurance from staff and schools), so the value of charities should be assessed and the (often adverse, sometimes positive) impact of government intervention should be made known.

This is not a simple task, but a critical one. As we enter a world of real austerity (especially in Europe), we are underestimating the cost of cost savings on society – at best, we ignore them.

We are well into the 21st Century – time we thought in 21st Century terms and valued those things that materially contribute. The NCC may be making a start with natural capital: it is a good time to start making real progress on valuing the macro-economic benefits of our charitable sector – before it is too late.

Liberalism and politics – short-term thinking or the fight for ideals?

In the UK, the Liberal Democrats are holding their Spring conference this week. I declare an interest. That party represents the closest thing to the ideals that I hold – the belief that monopolies of any type are bad in principle and that the state (and other potentially totalitarian groupings) should be limited in scope and the individual in society provided with the best chances to succeed.

This overly-simplified outline of Liberalism (probably not social democracy) – at least to a British formula – where society is seen as individuals and groups that must be enhanced and where over-bearing accumulation of power is to be resisted – is nevertheless a strong reason why I pay my annual subs to the party.

Against the centralist doctrines of the Labour party (where state is still seen to be the best judge of everything) and Conservatism (difficult to assess but primarily a “market is best” doctrine allied to a notion that old institutions must be conserved no matter what), Liberalism should be the politics of the 21st Century. It shouts for the spirit of individuals and civil society making changes for the better against the rigid institutions set up in the 19th and early 20th Centuries. It should be capturing the spirit of the internet age – where freedoms to communicate should be elevating transparency and openness to a new generation (and convincing the old as well). It should be screaming about how the UK fits into the future of a world that continues to change (and not always for the better), where the rise and development of China threatens the drive to democracy and transparency that has been in place since the defeat of Nazism and totalitarianism after World War II and since.

Today’s Politics

Tragically, politics in the UK is all about shopping baskets. All our attention is drawn to GDP and austerity. These issues are important – especially to those living (or just about surviving) on low incomes. The drive to change taxation at the margin (and we always talk about changes at the margin – not true in the US where a real debate on dramatic changes in taxation are taking place – see John Mauldin’s latest on this) is a proper argument but the focus on taxation and its short-term impact blots out everything else.

Liberal Democrats believe in a wide range of issues. Moving in with the Conservatives as part of the Coalition Government has been a brave move that is hitting the party hard – based on recent polls. Shifting the tax burden to free those earning low salaries to a wealth tax (although the shift is tiny) is seen by senior Liberal Democrats as working to define the party.

Ask a voter what the Liberal Democrats stand for and they will probably answer with comments about university tuition fees or other short-term decisions made during this parliament.

Today’s politics, the politics of short-term economics and counter-terrorism (or long-standing views on how to counter the perceived threats that international terrorism poses) is our staple. Politicians (and we are not blessed with the cream of intelligence in that area – they usually became bankers in the 1980’s) are hooked on short-term ideas and the next election. It was ever thus.

GDP slaves, taxation dummies, election addiction, five year parliamentarians that act like five-year olds.  In the UK we may have been better off than our EU colleagues in Greece (we do have a society that respects to a greater extent tax collection as a cornerstone) but minor modifications to our lives emphasize the conservatism of the nation –  conservatism that is likely to propel the UK backwards and means that our influence is greatly lessened as the 21st Century progresses.

Tomorrow’s politics

Political parties are under threat. Their short attention span means they are missing the evidence that is before them. People and groups in society are pursuing single initiatives to great effect. Whether these groups are organized as NGO’s or small societies or other types of organization, civil society (propelled by new technologies) are able to have a greater influence on politics than ever before. Politicians and government has to be aware of that change and make efforts to respond to it

That response has to mean that decisions must be allowed to take place at the lowest level possible not at the highest.

It must mean that politics has to “open up”and be more inclusive – that means helping those in society to understand what parties stand for – really stand for – and the world that they see ahead.

It must mean that the political parties must continuously work to make themselves relevant.

For Liberal Democrats fighting to show themselves as sufficiently different so that voters provide them with a future beyond this parliament, it seems pretty important to use the remaining three years to do two, crucial things.

First, sure – secure the short-term changes that (even if at the margin) show benefits to that area of society that is bleeding because of the poor economic conditions.

Second, and far more important in the long term, ensure that Liberal Democrats shout about the society that the party wants to have in place and the UK’s place in the world. This is not about minor taxation shifts. This has to be a society where individuals and groups have a bigger say but also where the opportunities to develop (in terms not just of how many makes of designer trainers one can buy but in terms of real education opportunities, real quality of life from birth to death, a society where large, monopolistic groups which threaten that society from inside or outside are not tolerated) are maximized.

Liberal Democracy (or at least the Liberal part of it) has a strong tradition in all these areas. The message has been obscured in its pro-Europe and pro-euro fervour and over-reliance on short-term tax issues and the obscuring of its longer-term reason for existence and how it should want to change the world.

Nick Clegg’s speech back in December at the Open Society Institute made an attempt to voice some of these issues (see…e-21st-century/).

Politics needs to motivate and excite in the 21st Century as large movements (such as the labour movement in the late 19th Century and early 20th) are not so obvious – that does not mean it is not happening.

The movement is now about individuals and groups within civil society using whatever tools are available (and which technology is supplying) to make their case. For Liberal Democrats, the aim should be to show how it supports that key change in society and can help and nurture it and maybe lead it and make it work.

Civil Society – Its Place in the 21st Century

Vern Hughes, Director, Centre for Civil Liberty in Australia, has produced a manifesto for the Mobilisation of Civil Society. Its ten tenets are:

1. Understanding the World Outside States and Markets
2. Personal and Social Relationships
3. Self-Help and Mutual Support
4. Small is Beautiful
5. A Leaner State with Less Bureaucracy
6. A Market Economy without Concentrations of Corporate Power
7. Social Enterprise in Finance and the Exchange of Capital
8. Entrepreneurship and Innovation
9. Social Enterprise in Education Health and Social Services
10. A Renewal of Democracy

and the full proposition can be found on:

This links so well with my own philosophy that, this week, it makes sense to show the Manifesto and my own comments on it – which is also displayed on:

My own comments:

Vern, this is a courageous attempt to frame a new society and one that, in principle, has a great weight of sense behind it. The manifesto should consider some more variables – which you may already have done.
One is how Civil Society fits in a fractured world made up of democracies (however imperfect) and many states where even the simplest form of democracy does not exist. China is a major player now and the basic forms of democracy (and civil society) play no part. Economics as measured imperfectly by GDP – which ignores all “externalities” – is to the fore on a Maslow index where the basic needs are still to be met. Political change (in the way you suggest and in a way that makes much sense) is well behind in terms of priority.
Second, civil society works (or attempts to work) within the decision-making processes to effect change. Having spent five years in an NGO (until very recently at Global Witness, a pro-transparency and anti-corruption / conflict NGO), the key to any success is operating to make change. But, NGO’s and civil society organisations are unelected and the danger of a civil society in this form taking a dominant role (it already has a very key role) is not obvious.
Third, I agree that in modern society where information is available and transparency should be, the drive to more local decision-making is critical for most decisions. Large, centralised and almost totalitarian agglomerations (monopolies) should not be tolerated. However, the newly developing nations of China, Russia and Brazil (as examples) will see this as a secondary issue. Developed nations will stress the need to compete – this is a major challenge.
Fourth, reducing the state through localism is important but the state’s role needs to be better explained and will vary from country to country. The state has a role to play (such as being the guardian against monopolies across the spectrum) as well as traditional issues of defence and security. These roles are tough to assess.
Fifth, I argue in my own blog – – that the economics and politics of the 19th Century is still dominant and need massive revision. I therefore support in principle the direction of change from your own NGO with economics being in the centre of the change. Apart from the inclusion of key externalities such as climate, waste, quality vs quantity, pollution that 19th Century economics ignores (except on the periphery of substitution and pricing – with massive disconnects throughout), politics and politicians are too short-term and too focused on the next election to build successful futures. That is why the Chinese and their lack of democracy appears more economically successful today. But, that is not the direction to travel.
So, good luck with this manifesto as a starting point for an urgent process of change!