Senior management pay: dimensions of pay policy in business and the higher education sectors

Coincidentally, at about the same time that the higher education sector announced that it would publish draft guidance on executive pay (Times Higher Education, 14 December 2017), the Financial Reporting Council (FRC) was also issuing its proposals for a comprehensive review of the Corporate Governance Framework, which sets the basic expectations for FTSE listed entities on governance matters, including remuneration.

The FRC notes that there is a high degree of compliance with the existing Code, and the purpose of the revision is therefore largely to simplify the Code to ensure it is fit for purpose in the years to come.  Yet one of the striking features of recent corporate governance has been the issue of executive pay, suggesting that thus far the Code has not come up with an approach to prevent this attracting bad headlines.  Indeed, the proposed revisions sort of make this point: the consultation highlights the importance of corporate governance in ensuring that remuneration policy works well for the company; and also highlights that AGM resolutions on remuneration (either policy or practice) attract more opposition than any other.  In other words, corporate governance is important in setting remuneration policy and levels for executives, but so far it has yet to make the issue go away amongst investors (let alone the public at large).

In many ways, however, the Corporate Governance Code is way ahead of the higher education sector.  In the latter, it is only now being proposed that vice-chancellors should not sit on the remuneration committees that decide their pay, something that is already strongly discouraged in the Code.  For those who have studied the Corporate Governance Code over a number of years, the fact that this approach still exists in higher education is revealing of how far university governance lags behind that of leading UK businesses.

But the existing evidence on the Code suggests that, even if universities bring themselves more in line with what is regarded as good practice in governance, it won't make the problem of executive pay go away.  So what might?  One way might be to rethink how choices are made and explained about executive pay.

Usually, the public explanation for a particular salary or bonus is that the sum announced is the 'market rate' for the kind of person the university wishes to employ.  This probably means that few people move for less money, so the university in question has taken that person's existing salary, added a bit on, and come up with the new figure.  In other words, there is a permanent inflationary spiral in executive pay.  The consequence of this is that the issue is bound to recur in the media and amongst stakeholders, because increases are inevitable.

The headlines about pay might be (and are, frequently) dismissed by senior business and university figures as a lot of froth and not much substance; but they create a particular image, nonetheless.  So, one question for both businesses and universities might be: does that image matter to you.  Or, put another way, how far is the reputation of the institution factored into decisions about executive pay?  Because, where people have a choice, reputation matters.  This is particularly the case in England, where students might be tempted to make a link between the level of fees they pay, and the remuneration received by the de facto chief executive of the university to which they have applied.  And whilst individual shareholders might not have much influence over corporate executive pay, the institutional shareholders (like pension funds) certainly can do, and their choices would be felt by corporations.

It would not harm either universities or businesses to set out the criteria by which they will set remuneration for executives.  We can only hope that there are criteria there beyond 'the market rate'.  But I would be willing to bet that 'reputation' is not currently there for the majority.  This is unfortunate, because it then personalises the issue when it arises.  It moves from being an issue of policy (which is the problem) to the personal greed of the executive who takes the money (which is problematic, because let's be honest, how many of us would turn down a salary and ask for less money?).

So, this might be the challenge under the new Corporate Governance Code, and the guidance on executive pay in the higher education sector: explain how these choices are being made, and discuss them with your stakeholders before the decisions are actually made.  Take the personalities out of the issue, and put the attention where it belongs: the actual practice of corporate governance in both business, and the higher education, sectors.

Sources used
Times Higher Education
https://www.timeshighereducation.com/news/new-guidelines-set-steer-uk-v-cs-away-pay-panels

Financial Reporting Council, Code of Corporate Governance (2016)
https://www.frc.org.uk/getattachment/ca7e94c4-b9a9-49e2-a824-ad76a322873c/UK-Corporate-Governance-Code-April-2016.pdf

Financial Reporting Council, consultation on revisions to the UK Code (2017)
http://www.frc.org.uk/getattachment/31897789-cef6-48bb-aea9-f46b8cf80d02/Proposed-Revisions-to-the-UK-Corporate-Governance-Code-Dec-2017-1.pdf

High Speed 2 Ltd, the Department for Transport, and public accountability

The most recent set of accounts published by High Speed 2 Ltd (HS2 Ltd) make for compelling reading.  This is mainly due to the fact that, thanks to a published NAO report, a published internal audit report, and a Public Accounts Committee (PAC) hearing, we know that the accounts were qualified by the auditor due to an unauthorised redundancy scheme instituted by HS2.

The auditor's qualification comes as something as a surprise, given the emphasis within the front half of HS2's accounts on corporate governance, internal controls, and - startlingly - a link to the framework agreement with the Department for Transport (DfT) that is at the heart of the whole problem.  So it is a bit like a slow-motion car crash as you wait for the impending disaster to fall with the audit report.

The internal audit report provides the fullest explanation of what happened, which in summary is: HS2 asked permission to pay redundancy monies to staff that were higher than that stipulated in the framework agreement with the DfT; the Department refused to give its permission; and four days later, HS2 went ahead with the scheme anyway.

The crux of the problem appears to have been that the email from the DfT refusing permission for the scheme was neither copied in to anyone, or subsequently forwarded by the recipient (the then Chief Executive).  So when the CEO at the time resigned to take up a new post, effectively that knowledge disappeared.

The episode is a good example of the problems of corporate memory in an organisation going through frequent structural change.  A look through recent HS2 annual reports shows a different organisation chart almost every year.  With the best will in the world, ensuring that everyone has the information they need under such circumstances is going to be tough.  It is also a lesson for government departments sponsoring such companies: always copy others into emails.

But in many ways, the story is about accountability, and in particular the value of democratic accountability for the way in which public money is spent.  Through audit, then internal audit, and then finally the PAC, ever more details of the story have emerged.  And whilst the NAO report spelt out some of the internal control issues, and the internal audit report found much more (and much worse), they show limitations: even these reports only refer to 'a senior official' at the DfT emailing a 'very senior official' at HS2. 

The reticence is a bit odd, because for accountability to be properly effective, surely we need to know at least the roles (and also the names?) of the individuals in question.  Questioning at the PAC at least supplied one of them: the 'very senior official' was ex-CEO Simon Kirby, who was quoted in the Financial Times as denying doing anything wrong, largely because he had left by the time the scheme was launched.

By strange coincidence, my public sector accounting course was looking at audit and accountability this week, and it was recognised that the very public accountability provided by the PAC is the ultimate, democratic accountability of tax-spenders to tax-payers.  And whilst its main job is to hold everyone else to account, it is also noticeable how PAC hearings introduce a new context in which to view issues, one that perhaps officials do not always share.  This is perhaps why the official reports do not 'name names', but the PAC wanted to know them.  But it goes further than this: when Bernadette Kelly, Permanent Secretary at the DfT, says that no action is planned against Simon Kirby because he is no longer a contracted employee of HS2, the Committee is clearly not impressed, and wants DfT to explore all legal avenues to hold the former CEO to account.

For all the weaknesses in public sector audit - and auditing more generally - HS2 has been held to account.  The 'after the event' nature of being held to account means that the unauthorised spending will probably never be recovered.  But it is a salutary lesson for other government-owned companies, particularly those like HS2 going through internal change.  Official auditors might deliver bad news, but the glare of the PAC is another matter altogether, and if a company can avoid it by getting things right first time, they will be doing themselves a big favour.  

HS2 Ltd annual report and accounts:
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/637655/hs2_annual_report_and_accounts_2016-17_print.pdf

NAO report on the redundancy scheme:
https://www.nao.org.uk/wp-content/uploads/2017/07/Report-of-the-Comptroller-and-Auditor-General-on-the-2016-17-Accounts-of-High-Speed-Two-Limited.pdf

Internal audit report: 
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/654854/hs2-ltd-redundancy-schemes-audit-report.pdf

PAC oral evidence:
http://data.parliament.uk/writtenevidence/committeeevidence.svc/evidencedocument/public-accounts-committee/high-speed-2-annual-report-and-accounts/oral/72377.html

I also referred to two articles in the Financial Times, from 26 October 2017 and 30 October 2017.

The UK constitution - some thoughts

I didn’t write this to say which way I will vote this Thursday; more because my interest in the debate is around the constitutional settlement for the UK.  But in that context, it’s possible to feel so uncomfortable with the UK as it stands to vote for its effective abolition.

Perhaps the nub of it is best described as follows: the UK was born as part of an exercise in empire building, but it has lost its way now that the empire has gone and our challenges are more obviously at home – inequality, poverty etc.  In other words, it works better looking outward than inward.  Maybe the other factor it hasn’t coped well with is the EU – a social, political and economic union that many English revile as much as they support the same type of union in the UK.  What is the point of the union as an integrated trading bloc when we are all part of an even bigger one just over the Channel?

So, here are my three areas where the UK makes me uncomfortable; 3 areas in which I would genuinely welcome a commitment to change.

1.  The UK and the World

The UK prides itself on its influence in the world.  This seems to be comprised of three elements: first, an empire formerly spanning the globe, and the residual goodwill that exists within the ex-empire Commonwealth nations; second, the ownership of nuclear weapons which, in the post Second World War environment has been enough to gain an influential position in the world (e.g. the security council of the UN has permanent members all of whom are nuclear powers), and third the ‘special relationship’ with the USA.

There are, of course, arguments against these positions.  It is not clear to me how possession of weapons guaranteed to end the lives of millions is suitable qualification for conflict prevention.  Even if it was, it would perhaps be fairer if Europe had only the one seat, and another was given to a country from a different part of the globe (either the Middle East or Africa spring to mind).  Equally, whilst there is considerable goodwill within the Commonwealth, other UK impacts on the rest of the world are less benign – we have now had 25 years of more or less continual conflict in the Middle East, with no great solution in sight.  Finally, the USA would like nothing better than for the UK to be a strong voice in Europe; the UK, it seems, still sees its close relationship with the USA as a reason not get closely involved in Europe.  These two countries really need to have a plain conversation!

It is possible for the UK to be a non-nuclear nation, one that provides influence in the world by the value of its friendship, by the advice and guidance it can offer nations who seek it.  The UK has a substantial diplomatic history behind it, which could be of benefit to others.  But it doesn’t have to be delivered at the point of a gun, and it is this aspect of our influence that seemingly remains the strongest.  Similarly, although the UK did have an empire, so too did France, Belgium, the Netherlands, Austro-Hungary, and Spain.  All of them have got over this and created something out of the European Union.  The UK has no reason to stay on the sidelines.

2.   UK Government and the electorate.

It is true that nations across Europe are struggling with fairly low turn-outs for election campaigns.  Therefore, whatever is affecting the UK is not unique to it, although the explanations for lower turnouts are not necessarily the same everywhere, therefore there could be some issues that are unique to the UK.  I would suggest two issues: first, the extent to which government is something that is done to the electorate (rather than on its behalf); and second, the lack of enthusiasm to change any of this.

Aside from the bloodshed and anarchy that revolutions often bring, there is something to be said for a clean break from the past every so often.  England had one before most other European countries, then took fright and reverted to its original approach.  As a result, further change has been gradual, piecemeal, and issue driven.  The result of this is that the UK has moved to welcome elements into the franchise over time – to join the club, so to speak – rather than reflect the fact that power has been denied them unfairly.  Or put another way, power in the UK seems to be an extension of the divine right of kings, modernised into the divine right of government.  Government derives its power from God, not from the people.  Therefore extending the franchise is more of a benign act of graciousness, not the correction of a mistake.  The distinction is important because it reflects how government acts – UK government is not by the people, for the people; it is by a political elite for its own benefit, tempered by the need to secure a mandate every few years from the electorate.

And what sort of mandate is given?  Not a very convincing one, in my view.  Entire governments are formed, often with large majorities, based on less than half the available votes.  Some local elections, including for police commissioners, can attract even fewer votes.  Most of us would be reluctant, I think, to believe we spoke on behalf of an electorate where we could not convince one half of them to vote for us.  But politicians do; for them a vote not cast is an irrelevance.  It is not surprising that strike ballots are rarely referred to by politicians in terms of the ‘yes’ votes as a percentage of all votes (including non-voters); the charge could equally be made in the opposite direction.  I would consider it a major flaw in our current arrangements that people cannot be persuaded to vote – it is an indicator of the lack of engagement with our constitution as it stands, and a strong reason for reform.

But herein lies a paradox.  Again, to take England as the case study (it will become clear below), there have been three recent attempts to modernise the constitution – directly elected mayors, replacement of the ‘first past the post’ system, and elected regional government.  Voters at the polls have rejected all three.  Therefore, proposals to change the system have met with the same negative reaction from which the current system of elected government also suffers.

It is hard to explain this – if the system is so rotten, why don’t we change it?  The rejection of the regional assembly proposal for the north-east seems largely to have been a rejection of the political class (i.e. it would create another layer of unpopular politicians).  So maybe it is just that these proposals have not been radical enough.  Perhaps also as a nation, we are more content to criticise and complain than participate – the closer that government gets to us, the less excuse we have for it.  Perhaps, even, our ability to turn this complaint into humour – in particular satire – blunts any energy to do anything with it.  As Will Self recently observed, when we start laughing about something, every other emotion is blocked out.  So as soon as we find humour in this, all the anger that we should rightfully feel about our political system is dissipated, and nothing changes.  If our politicians have learnt to laugh along with us, then nothing will ever change.

3.   UK economic geography

In recent decades, there has been a persistent trend in UK economic geography: a burgeoning services sector (primarily financial services) located in London.  The result has been that the longer term drift of the population to the south-east corner of the UK has persisted.  This has, to some extent, been amplified by the loss of manufacturing jobs elsewhere that has ‘unbalanced’ the UK economy.  One consequence of that is that a majority of the country now live in a relatively small part of it, engaged in activities that (broadly) are not typical of the rest of the country.

The problem is that the activity in London is generating a lot of tax revenue.  Therefore, to maximise tax revenue, the financial services sector in the south-east is encouraged.  The difficulty this generates is that we cannot all live in the south-east, still less all work in financial services.  Growth of this sector in one part of the country puts immense strain on its infrastructure, including transport, power, sewage/water, and housing.  This creates a double-whammy: first, improvements to any of these systems tend to be very expensive (think Crossrail, the Thames Tunnel, Thameslink); second, there is no clear policy in place for what should happen in the rest of the country.  Transport improvements tend not to change this situation radically, because they all have a start or finish in London (think HS2); and the reason this happens is because the status quo is already so loaded that business cases that do not involve London are hard to make work.

Unfortunately, we know we cannot carry on over-loading the south-east; so we must use more imagination in how we prioritise our spending. Important though financial services are, we are in danger of splitting the country into two, and creating a small state around London and the south-east.  As it is, economic policy is too often geared to the needs of the south-east (think interest rate policy and the influence of London house prices rather than north-east manufacturing).  The problem is that where economic policy goes, politics will follow.  Already it is the south-east that holds the whip hand in terms of national elections (resulting in the situation Scots know well, of rarely voting in the party in power); and if the south-east does not want, say, electoral reform, then it will not happen.  But why would the south-east want any different, when government economic policy is already geared towards it?  When all of our leading cultural institutions are based there?  When it is the centre of government?

It will take a brave politician to admit that we have got ourselves into a mess; yet this is the truth of it, and one reason why, whatever the result of the referendum in Scotland, the problem will not go away.  The only way to save the UK in the long term is to rebalance the population; and the only way to do this is to rebalance our economic priorities.  Government talks of this; yet at the same time the last Labour government was encouraging the north of England to close the productivity gap with the south-east through some improvements to Manchester’s rail network, it was sanctioning Crossrail and Thameslink in London.  The current government talks about developing Liverpool as an international port; yet it has already spent money improving connectivity to Felixstowe, and has placed Southampton at the base of its ‘electric spine’ rail freight network.  The next government will almost certainly approve airport expansion in the south-east.  And the government after that will be cutting the ribbon at Euston for High Speed 2.  London and the south-east will benefit from all of this.  It will take decades for the rest of the country to neutralise the advantage that the south-east will gain from this, still longer to reverse it and hold an advantage itself.  At present, the south-west of England is simply pleading for a railway line that is open all year; in Scotland, having a dual track link between Perth and Inverness would be a major step forward.  Whilst London is introducing trains now that will be replaced within a matter of years, rolling stock over 30 years old is regularly in use in northern England.

If there is a yes vote, I hope Scotland will learn from this.  I hope Scotland will begin to think differently about its constitution, its relationship with its voters, and its place in the world.  And when it has done this, I hope it recognises the flaws in how the UK has been governed, and sees that centralization of resources in one part of the country (say, Edinburgh), is a ticking time-bomb.  In other words, that it values the entire country, not just the bit it finds on its doorstep, and easiest to deal with.

Artifice

I have been thinking about this for a while now, and it's one of those topics that seems to have greater significance than one might first imagine.

Take The West Wing.  I'm about half-way through the seven-season box set now, and it is striking the extent to which - perhaps because it is being watched mainly for entertainment value - the subtleties of artifice do not emerge in bolder colours.  Another way of putting this is that a bunch of people going 'er, not sure, I'll find out', talking over each other, dropping pens on the floor or doodling on a notepad, i.e. the things that go on in almost every meeting, never happen in The West Wing.  Showing people doing that would not make them look impressive, and since the object of the show is to demonstrate how impressive the real West Wing is (or ought to be), what you get instead are a series of talking heads - in effect a group of characters, who periodically have their turn to produce the most relevant statistics, in the right order, at the right meetings.

This is, I suppose, part of the object of The West Wing - to be a drama about policy and politics, perhaps more than about politicians and advisors.  And the compromise is the requirement to get as much factual information into the dialogue without swamping the characterisation; I suspect that on the whole - with the exception of 'republican' characters within the drama - there is a bit of sacrifice of character to make this happen.  But the effect is to create characters that seemingly know everything relevant about everything, and buried within all this attempt to crowbar fact into discussion is realism - I doubt anyone has ever worked anywhere that resembles The West Wing, and the reason is that such places, and such people with the facts always at their fingertips, simply don't exist.  If you don't believe me, I challenge you to watch 6 episodes, and note all the topics for which cast members seem to have all the relevant facts ready, and think whether such people really exist.  Nobel Laureate or not, the President knows way too much to be real (charming though Martin Sheen is).

At the other extreme, a recent comment on Twitter read something like 'Anyone who believes that the civil service is capable of conspiracy has clearly never worked in it'.  This is the West Wing antithesis - the perception of government by people who don't have the facts at their fingertips, who are simply not as capable of achievement as one might think.  I doubt, in fairness, either position is quite true, and the comment  on Twitter was almost certainly meant as a joke.  But it reminded me of the extent to which my viewing of The West Wing is noticeably unsubtle - perhaps it's because I want to believe that West Wing people exist.  A similar thought occurred to me reading Clive James latest autobiographical volume, and he described how a chat show was put together, specifically that guests were 'prepped' so they knew which stories to come out with, because they knew the questions being asked.  I had always thought, with complete naivete, that it was spontaneous.

There is, I think, something of an insidious quality to these things.  What purports to be real is, in fact, artifice.  But not simply something made to look like it is real; it is something that is made to look people better than real.  The consequence is that we view such actors as more talented than they are (or, in the case of The West Wing, the thing their acting is trying to represent), and the reality as consequently less impressive.  Watching, for example, a parliamentary committee in action next to an episode of The West Wing, does not make our politicians look particularly good; but in practice they probably are doing a good job.

Reality is often to hard to watch - both in the sense that it is less impressive, but also in that it is more awkward.  It's not so much the shining brilliance we miss, as the absence of embarrassment.  It's what makes programmes like The Office hard to watch - there's a memorable scene where Tim, Gareth, David and Ricky are trying to outdo each other with jokes about jelly, Tim having started things off by suspending Gareth's stapler in bright yellow jelly.  The awkwardness of no-one being able to think of anything funny, after a couple of gags, and the realisation that this has broken up the conversation and means everyone needs to go back to their desk, is exquisitely done.  But it's almost unbearable viewing.

Of course, you could just see this as a version of Hollywood make-believe.  Ever wonder where Jason Bourne gets all his weapons, ammunition, and money from?  Why do bad guys drop after the first gun-shot wound, when our heroes stroll around with half a magazine lodged in parts of their body without so much as a limp (see Last Action Hero for a parody of this).  But I think we know to suspend disbelief for such shows - they are, after all, not really trying to be real, just the right side, in aggregate, of believable.  TV shows like The West Wing, I think, are trying much harder to be real, and the danger is therefore greater that we will take fictions like it as how reality should be, and how people should be.  Reality, and real people, tend to be much less impressive, but no worse for that.  It is what makes them real.

The wider scandal in cash for access

Perhaps it is because cash scandals in politics are relatively common that they attract such interest; or maybe it is because a 'scandal' doesn't have to mean actual wrongdoing, just the appearance of it: either way, they tend to create a lot of comment.  In doing so, discussions of 'what can we do to prevent this?' bump into some profound questions around how civil society operates.


The BBC's Nick Robinson tweeted this earlier today:
Why no statesmanship? asks @EvanHD Politics = power. Power = elections. Elections = £s . Parties fear less £s = less power. Solution anyone?


The key point (and without wishing to blow my own trumpet, one I picked up in an earlier blog) is the last one: 'parties fear less £s = less power'.  The logic, taken apart completely, is that the ones who spend the most at election time will ultimately win (or will have the best chance of winning).  In that sense, it's almost a 'hygeine' factor, a sort of 'necessary but not sufficient' influence on elections.  In other words, having money won't necessarily win you an election, but not having it will almost certainly mean losing.


Nick's tweet was in response to a question about statesmanship, and one point to make would be that a statesman/woman probably wouldn't believe in that logic.  If politicians merely think about power, it is arguable that statesmen/women think instead about concepts such as change, reform, or the 'greater good'.  So the existence of the narrative leading to the need for money is itself a symptom of a lack of statesmanship in our politicians.


It is, of course, possible that the party that spends the most wins the election.  It would be bleak if it were true, and I'm not sure how one would separate out the influence of good ideas and general spend levels to establish its truth.  It may be a coincidence; it's also possible that the parties with the best ideas generate the most political support, giving them the advantage in terms of advertising spend.


But to get back to the issue of statesmanship, it seems to me to come down to a choice.  Statesmanship, in other words, is something that you choose to be; in that sense it is not created, so it's not about the conditions in which people are born, raised, or live.  One could equally substitute 'statesmanship' for 'moral courage' or 'ethics' here.  So why aren't we seeing more of it in relation to political funding?


Ultimately, these attributes have to be a choice, I think (in part because their essence is taking control of events, and not allowing excuses to flourish).  But are there things that influences this choice?  It is often said that people know the cost of everything but the value of nothing.  Statesmanship could be argued to fall into this category, a sort of moral attribute where, because it cannot be tied to increased salary or power (quite often the reverse, I would think), it is discarded.  Society is bombarded with these kind of 'wider choices' - ethical products vs cheaper products, for example.  It is part of a process whereby 'values' come up against the limits of tolerance, and society can choose to accept the bare minimum from its members rather than the potential full quota.  It would be good, for example, if people put others first: limiting noise pollution, picking up litter, waving others through, offering to help.  But if we don't count these interventions directly, and as a society we place value on what we can count, then such actions will become more rare.  It is common in some parts of the country, for example, to let someone ahead in a queue at a supermarket if they have only one or two items; do that in other parts of the country and you will generate a strange stare.


Our society does not value the things it professes to believe in, as a rule, and one conclusion we can draw from that is that society doesn't actually believe in them anymore.  It just likes to think that it does.  On that basis, should we be surprised that political parties might want to sell access?  I can't see why we would.  It is just another example of society holding up a mirror to itself, not liking what it sees and blaming the image for looking the way it does.  If the latest political scandal teaches us anything, it is that we need to place more value on our values; fully to appreciate the things we can do either at no cost to ourselves, or even at our personal cost.  Because the converse of this would also hold true: we would place less value on actions that did not support our values.  If we started to do that, we may yet see a return of phrases like 'this was the wrong thing to do'.

Cash for access?

I'm in danger of being topical here, but there is a very big storm in a teacup happening today about who gave how much money to which party in order to go and talk to them.  It's a curious story, if only for the amount of coverage it is generating, but also because I think it is missing the point (to a very large degree), and not really providing a useful angle to explore what is a serious issue behind it.

The first point is that anyone seriously committed to a political ideology, at least one aligned to a particular party, pays for it.  How much they pay will vary - from membership of the Conservative Party to the political levy I declined to pay when I was a union member - but everyone pays.  What they are paying for is not, obviously, access, but something more important: they are supporting a cause that they hope, through their actions, will control the political agenda as a government.  The editor of Conservative Home, Tim Montgomery, suggested on The Andrew Marr Show on Sunday that there is a difference between funds given in opposition that reflect a particular viewpoint, and those given in office that are about more general influence.  But I'm not sure this is a particularly big distinction; it is all about influence ultimately, and the best way to get influence is to get access.

Crudely put, what is being funded and argued over in all this are votes of electors in the UK.  To some degree, this could be seen as a commodity that is going for the highest price - the discussions around budgets at election time in the UK, as with the super-pacs in the USA, suggest that votes are there to be won largely by means that can be paid for with hard cash.  It seems it's not as important to have the best argument, one that voters can rationally make up their mind about through balancing their own direct interest with that of others, as to have the right 'message'.  And messages are advertising, and advertising is bought.  And what isn't directly bought can be influenced through actions that don't need paying for in cash - message boards, letters pages, phone-ins and so on.  To some extent therefore, this story only works if you believe this narrative - that big spending is what matters.  The fact that political commentators and politicians believe it is unfortunate and evidence of that rare thing, a self-fulfilling fallacy.  It's also symptomatic of a wider problem with politics - no-one seems to want a fair fight anymore.  We are losing track of the idea that the most rational argument should win, and weak arguments are carrying the day, held up by a deluge of coverage.  That is wrong, but it's not the argument that's being had today.

The other issue here, I think, is one around representation, taxation, and influence.  We like to think that we have a government made up of elected members, answerable to those electors.  In reality it is not so simple: wars have been fought over issues around representation and taxation, and it seems to me to be self-evident that bodies that find themselves handing over taxes will feel the need to influence the discussion around those tax policies.  So whilst we have a 'one person, one vote' democracy, we are taxing institutions such as companies that cannot directly influence that debate.  There are two ways around this under the current system: use everyone's 'one vote' to reflect the interest of the company, or (to put it more colloquially) go straight to the top with a cheque book.  Neither is ideal - why should employees of company X feel they have to reflect a specific economic interest in voting, when it might not chime with their other viewpoints - but both are symptoms of the problem of getting a business interest (which should really be in everyone's interest) into the discussion.  Oddly, the one area in the UK where this does happen - the Corporation of London - is seen as profoundly undemocratic as a result.  Well, it is democratic; it's just a different type of democracy.  In the same way that having as your MP the Leader of the House of Commons will also feel like a different type of democracy (in that no-one will stand against them from the major Westminster parties, by convention).

So, what is to be done?  Actually, a lot is done already.  A policy obviously devised to benefit a narrow group of stakeholders will in all likelihood be exposed by the Impact Assessment as such.  It's quite hard to get through a policy without having some assessment of what it will do - government is not, in that sense, arbitrary, and therefore policies that are specifically targeting an interest group will appear as such.  I suspect that the argument over the 50p tax will show that it didn't raise much money - taxing the rich is never as easy as it looks - and therefore the argument that the abolition of this rate can be linked to companies paying for access, will look correspondingly weak.

What, I think, should not be done is to make a distinction between seeing the head of the Conservative Party in someone's private home, and seeing the PM at 10 Downing Street, or even at Chequers.  You would have to be quite mad to believe that this solved the problem, and all it would do is create barriers and bureaucracy.  In other words, it's a waste of time.

The problem is one around party funding: the one thing that I find quite spooky is that some of our leaders in business - the ones who create the wealth and the jobs we all rely on - feel the need to pay to talk to the Prime Minister.  I would have thought it's in everyone's interest for that access to be free.  And, as such, it could be non-ideological and not supporting one party or another.  And we would all benefit from this, because it's not in anyone's interest for the people who create wealth to feel that they have no direct means of talking to government.

What would be sensible is, of course, greater transparency.  I would want to be assured that any government was not partisan in terms of who it met and who it refused to meet.  But the idea that companies should feel the need to pay to influence policy?  That just seems wrong.

The problem of Britishness

A couple of vignettes:  John Major said that Britain would always be a land of warm beer and cricket on the village green, and Chris Evans more recently provoked a substantial postbag on the hot topic of what constituted an English breakfast.

I remember John Major's comment, intended to reassure voters that Britain would always be Britain despite Maastricht (or whichever EU treaty it was), and thinking that it didn't resemble the Britain of my experience.  And the noticeable feature of the "what makes an English breakfast?" postbag was the extent of the variation between regions about what should, or should not, go into it.

What has always struck me, as an English/British person, is how markedly regional England (and its culture) is. Everything from the building materials - despite the prevalence of brick, it's still a good guide to where you are - to food, to dialect and accent, screams of a profoundly regional place.  Even when British English are abroad as sports fans, this seeps through - how many St George flags or Union Jacks have the names of a place or club emblazoned across the middle?

Maybe this is why the "proud to be British" or "proud to be English" statements seem to fall a bit flat for me - what, ultimately, does it mean?  I'm already demonstrating my confusion - I don't know in this context whether to refer to British or English.  Both seem a bit alien to me, but largely because I'm seeing them through the lenses of other people's experiences, and since they are not mine, they feel a bit wrong.

The reason they feel wrong, it seems to me, is that when people talk about characteristics of being British or English, they tend to pick on things that really can't be national (tolerance, fair play), or are in fact regional (see above).  In other words, we tend to go to either extreme.  In a recent blog for the BBC, Mark Easton pointed out that it was unfair on the rest of the world to pick issues like tolerance and decency, even democracy, as national characteristics.  And regional issues can be incredibly nuanced - as a child, I would notice that even if I was using the same words as kids only twenty miles away, it would be pronounced differently: 'larking' and 'laking' meant the same thing, but I could tell you which one was said in the West Riding and which in the Vale of York.  We even ordered our fish and chips in a way that wouldn't be understood 30-40 miles further south (anyone else ask for 'one of each', meaning fish and chips?).

The odd thing about Britain/England is that this deep regional association is in complete contrast to the wider political and constitutional arrangements.  The UK has an incredibly centralized tax-collection system, for example, which is what provokes so much debate around the Barnett formula etc - in effect how much money anyone has is decided centrally, even if all the money (and sometimes more and sometimes less) ends up flowing back again to the same place.  The constitution is similar - despite the fact that regional government has always existed (even without regional assemblies, there were always 'government offices' for the regions, they just weren't democratic) - it's all dominated by Westminster and Whitehall, apart from the more recent devolutions in Scotland, Wales and Northern Ireland.

Part of the 'British' identity is, I think, wrapped up in this centralized state.  This is the Britain of the armed forces, of the Empire and Commonwealth, of the monarchy.  But beneath this, sometimes even overlapping with it, is a regional culture of peculiar strength: our armed forces are recruited still to regional regiments (although increasingly less so), a number of our ships are named after cities.  And probably only the monarchy remains as a unifying influence (despite the republican element within Britain).

What is striking, then, is how far much apart from a shared monarchy is 'up for grabs', a sort of vast pick and mix from which people can take their identity.  Mark Easton examined this through institutions - no other country has anything like the BBC, or the NHS, for example.  But these are peculiar institutions to pick, not least because they are very recent, but also because they are a bit nebulous.  When we talk about the BBC, are we really saying we like high quality TV with no adverts?  Is that strong enough to be an identity?  Or are we talking about Reithian values, in which case how far does even the BBC represent this?  It's a similar issue with the NHS - do we mean the original intention of a service free at the point of use, and (presumably) not managed via an immense queuing system?  In which case we don't mean quite what we have now, with charges for dental and optical treatment and prescriptions - even for car parking - and sometimes long waits to see consultants and for operations?  I think the BBC and NHS both represent an idea that we like, but may not in practice experience very much.  In that sense we might include the Church of England as well - as Yes Prime Minister put it, no-one goes to it, but we all feel better knowing it's there.

Scottish nationalism in this sense is an extension of these themes.  It's noticeable that the SNP isn't proposing to break with the monarchy (and why should it? It belongs to Scotland too).  In other words, the one uncontestable unifying factor isn't going to change.  But how politics and government is organized in the countries that share that monarchy is most definitely up for grabs.  Perhaps it's relevant in this context that when Scottish devolution took place in the late 1990s, even the role of the BBC was an issue, including the idea of a separate Scottish edition of the 6 o'clock news.  Recently the SNP has argued that the Union itself imperils the NHS, and whatever the merits of that argument, it would seem to be true that the version of the NHS that most closely resembles the original idea is in the devolved areas of the UK.

One could regard constitutional arrangements simply as a matter of what the majority want, i.e. 50% + 1 vote.  But in practice in other countries, most constitutional changes require bigger mandates - 2/3rds at least.  This suggests that constitutional issues are much more about consensus than majority views.  In other words, it's not enough for 50% + 1 to vote in favour - it's much more a question of starting at what everyone agrees with and then achieving as much co-ordination and consistency as possible while retaining  as much support as possible.  And maybe the issue here is that once we move beyond the monarchy, there isn't much that everyone agrees is a good idea.  Beyond this is a mass of regional identities, some of which might be shared by 'super-regions' (broadly what the north/south debate seems to me to be about).  What's striking about the debate on Scottish independence is that the Scots are ahead of the rest of us in terms of defining themselves (as well they might be), and thus what they want the constitutional settlement to be, within the monarchy.