Jonathan Todd

MPs have abused their expenses, seeming to treat them as perks or part of their remuneration. In doing so, they have shattered a social contract with actions that sometimes appear criminal.

It is ironic, then, that in this week Gordon Brown has given us his first key note speech on crime as PM and John McFall has alleged that remuneration packages in the financial sector have lead to a social contract being broken.

So, MPs and bankers both stand accused of breaking a social contract. What does this mean? And what are its consequences?

Wikipedia defines a contract in these terms:

“A contract is an exchange of promises between two or more parties to do, or refrain from doing, an act, which resulting contract is enforceable in a court of law. It is a binding legal agreement”.

But what is a social contract? An exchange of promises between two or more parties to do, or refrain from doing, an act, which resulting contract is enforceable in a court of public opinion? Harriet Harman once threatened to throw a banker to the lions in this court but MPs are now as likely to suffer a mauling as even Fred the Shed.

That said, the long history of the term social contract, appealed to by thinkers from Thomas Hobbes to John Rawls, makes it harder to properly define in terms as concise as Wikipedia’s definition of a contract. The vagaries of legal courts are legion but are nothing as compared to the vagaries of the court of public opinion, for one thing. In contract disputes, it is also usually clear between whom the original promise was reached. In contrast, it may be a surprise to some bankers that they have a contractual obligation - a social contract – to anyone beyond their employer. Presumably, MPs have, at least, a dim memory that the Fees Office are not the people with whom they have entered into a contract. Electors, I believe, they are called. The ultimate sanction in the case of MPs who break their social contract is also clearer than it for bankers. It is to be found at the ballot box. Fred the Shed will be grateful that this doesn’t determine his fate, as he would only receive two votes: one from a Hearts player and another from Jackie Stewart. Though, there are MPs, elected with fat majorities, who must now wonder whether they are any more capable of attracting popular support.

When once respected MPs and bankers can dredge such depths of unpopularity, the ballot box may not seem for all an entirely adequate sanction for the breaches of the social contracts that have occurred – not least when this sanction doesn’t even apply directly to bankers. Some may sigh and shrug, feel even more powerless than they do already and not vote. Some may vote for a party like UKIP, up 12 points in the polls in the past 7 days, in the belief that minor parties will be more respectful of the social contract than major ones. Some may react even more extremely: voting for the BNP and/or engaging in violent protest. Am I getting too excited?

I’m not sure. Trust has been lost on a massive scale, as it is when any contract is broken. This is very difficult to recover. Tony Blair, for example, never regained the trust that he lost over the invasion of Iraq. Broken trust begets broken trust, as violence begets violence. Broken trust often begets violence and vice versa. Certainly, neither broken trust nor violence begets anything positive. Only negativity suggests itself.

Britain has, rightly, moved away from the absurd, unjustified hierarchies that defined us as a deferential, class-based society. But it is hard to imagine a society that doesn’t need leaders of some kind in politics, business and elsewhere. Social contracts are formed between these leaders and those that they lead but such contracts are only viable when the leaders can command respect on some basis. This respect has long since ceased to derive from class, while most of our present leaders in politics and business struggle to command respect by virtue of their abilities and virtues. The breaking of social contracts would, therefore, seem to have produced a crisis of leadership. Whether it produces anything graver than that will depend what, if anything, emerges to fill the vacuum of trust and respect that this crisis has opened up.

Interesting set of book reviews from Julian Le Grand in the latest Prospect. He comments intelligently on The Spirit Level by Richard Wilkinson and Kate Pickett – a book which David Aaronovitch has also recently commented upon. Le Grand also reviews Unjust Rewards by Polly Toynbee and David Walker.

It’s worth a look. He advocates a policy on inheritance tax – also, wrongly, known as the death tax – that I previously been sympathetic to myself. This is to “hypothecate the revenues from inheritance tax to the new Child Trust Fund. In true Baconian fashion, the wealth of one generation would thus be used to fertilise the growth of the next. It might also make inheritance tax more popular, or at least less disliked”.

This hypothecation is fundamentally just: redistribution, via the Child Trust Fund, from those who are born into wealth to those who are not. It also challenges the misconception that the death tax tag encourages: that the person being taxed is the person who has died, rather than those who stand to inherit unearned wealth.

The death tax language perfectly framed the inheritance tax issue from the perspective of George W Bush’s Republicans, while the linking of inheritance tax and the Child Trust Fund nicely frames these policies from a Labour perspective. Framing policies in ways that speak to your values allow beachheads to be created – Policies that are easily understood by the public but which cut to the core of your governing philosophy. Selling council houses performed this function for Margaret Thatcher. The minimum wage did the trick for the early Blair years. Labour desperately needs to quickly establish other beachheads. Le Grand’s idea might be a good way to start.

“A week is a long time in politics, but four years is a very short time”, as Michael Barber once told Tony Blair’s Cabinet in a misquotation of Harold Wilson. Alistair Darling will be hoping that the first part of this is true and that next week’s Budget allows the political focus to move on from the Damien McBride-affair. This affair has undermined the momentum that Gordon Brown built at the G20 conference and Darling will attempt to recapture this.

However, he might reflect upon the second part of Barber’s observation, as he draws up his Budget. Anatole Kaletsky may have him question its wisdom, while Dieter Helm would praise it. An energy crisis may only be six years away, argues Helm. The recent comments of Lord Browne may cause us to wonder about the proper role of energy markets in both keeping the lights on and meeting our climate change obligations. Helm makes a convincing case that government decisions made now will massively bear upon our ability to keep the lights on in six or so years time; with the possibility that we will be diminished in this ability far more real than we might imagine. While Kaletsky joins Samuel Brittan in encouraging Darling to focus on economic growth in 2010, not the state of public finances in 2015. The later only deteriorates without the former, even if focusing on the former involves more borrowing now, which inevitably has implications for public finances in 2015.

The McBride-affair has made the political challenge facing Darling even bigger. But, as Matthew Taylor has noted, there are some “huge choices to be made” on policy. These are such that the policy-making and economic dilemmas facing Darling are, arguably, even bigger than the political dilemmas.  They are certainly more important. This isn’t a time to play political games but to face up, as honestly and as fully as possible, to the real challenges that we face as a country. Ironically, to do so might also be the best political response. This would be to place political strategy above political tactics; the reverse of what Taylor claims is the defining trait of Gordon Brown’s administration.

Good post earlier this week from Danny Finkelstein:

“A very interesting comment from Pregethwr underneath my post on Labour and its leadership:

‘No Blairite seems to acknowledge, even those who were around at the time, that Blair won in 1994 with a coalition that reached deep (very deep – Peter Hain, Harriet Harman) into the soft left of the party. He won because he squeezed Robin Cook to such extent that he could have only run as the candidate of the far left and lost. No Blairite seems to want to build that coalition, they seem to want to run a ‘back me or lose’ campaign and blackmail the party into supporting them. Worked well for Ken Clarke that tactic didn’t it?’

“I am quite sympathetic to this argument.

“During the three or four years that preceded David Cameron’s election to the leadership of the Tory Party, we modernisers often discussed how we had been better at diagnosing the electoral failures of the Tory Party, and less good at analysing our own political failure to persuade the Tory Party.

“That having been said, the alliance that Tony Blair built was only possible because the soft left abandoned their position. They accepted that they had to win and were prepared to make whatever sacrifice was necessary to do that.

“I agree with Pregethwr that the Blairites need to build a broad coalition in order to win. It’s just that this may not be possible”. 

To which I replied:

“Susan Crosland’s biography of her husband records that he said to Roy Hattersley just before his death:

‘We have got to keep making the point that the far Left are not the only people that can claim a socialist theory while the rest of us are thought to be mere pragmatists and administrators. It’s not enough to disagree with the Marxists et al. The centre must remember and keep reminding people that we are ideologists too’.

“The centre of the Labour Party must again do so”.

“This was the week in which Labour lost the next election”, according to Matthew d’Ancona. A coalition between Labour and the Lib Dems is the best response, thinks Sunder Katwala, while Matthew Taylor suggests a, “radical departure from past practice. How about declaring a unilateral political ceasefire?” John Prescott was spitting feathers in a wholly absurd and unnecessary fashion with Taylor. Presumably, he is at least as angry with Katwala. But, at least, Prescott wants to fight this war; the next general election.

Danny Finkelstein suggests that Ed Balls is briefing against Ed Miliband as part of the next war; the race to be the next leader of the Labour Party. Balls, allegedly, wants to be the candidate of the left in this contest, though I can’t see him usurping Jon Cruddas from this position. Given that Labour could well swing leftwards in opposition, as a Blair/Brown backlash occurs against a backdrop of continued economic struggles, this is a position from which Cruddas could be victorious.

This is an outcome which is unlikely to delight either of the Eds, but the extent of Labour’s leftward swing in opposition may be directly proportionate to Cameron’s majority. Labour Party discipline will be easier to maintain if the party feels itself to be closer to a return to government. So the Ballses and the Milibands may best fight their next war (i.e. the Labour leadership election) by focusing entirely upon this war (i.e. the general election). In this much, Prescott is right. But, I think, there is more to be said for Taylor’s suggestion than he thinks. Certainly, the public appetite now is very much for sincere and strategic leadership, not political game playing. While I am not quite sure how one goes about “a unilateral political ceasefire”, Charles Clarke would seem to have suggested a good place to start.

“Surely it would be better both for Labour and for the country if the prime minister were now to announce the date of the next general election (my preference would be 6 May 2010). That would show confidence in the government’s economic approach, rebut any allegation that Labour was trying to manipulate economic decisions for party advantage and remove the rampant speculation around election timing which can erode the clarity and direction of the government’s leadership”.