The Sinister Soft Corporatism of the Lobbyists

For one definition of chaos, take a look at the state of relations between business and government in the United Kingdom. The last Government left behind a very strange state of affairs and the Coalition Government seems constantly on the hop as it tries to catch up.

What The Coalition Inherited

In essence, New Labour adopted a soft corporatist strategy where it encouraged 'creative' solutions to policy problems from business but under conditions where lobbyists could often run rings around civil servants and politicians with minimal experience of business and finance.

Some of what happened during those years was downright outrageous - interventions in society took place that were palpably linked to the special interests of technocrats floating between favoured parts of the business world and the State.

Philip Snape of PSA Communications, in PR Week, neatly let the cat out of the bag. Moaning that the Government 'has no money to fund new and interesting policy ideas', he then added:

This was not a problem before 2010 when Labour seemingly put money into every idea it was presented with ... Lobbyists now have to be far more creative - proposing policy solutions that do not have price tags attached to them.

Ahem! The role of the lobbyist is self-evidently to divert cash or regulation in their favour. But who, at any time, is able to assess the effects on ordinary people or the costs to the interests of those who are not represented? We hope Government does this for us but it seems to have been merely collusive.

The State of the Nation

One of the most sinister cases under New Labour involved the quadrupling of innocent children on an official DNA database as a result of a change in the law which resulted ultimately from collusion between the State and special interests.

The mess inside the Ministery of Defence could be replicated across Government with big IT projects inside the NHS only the tip of an iceberg but this particular case encapsulated the dangers of opaque 'sofa' dealings between lobbyists, the State and rather dim politicians.

Nor were these issues just a cost to the taxpayer (an obsession of the petit-bourgeois Right), they were systematic distortions of the market and they allowed special interests to promote the worst sort of social engineering on the population at the expense of the most innocent and vulnerable.

The case of Liam Fox expresses neatly the tragedy of modern politics in this area. The man was undoubtedly clearing up the mess left behind by the previous Government but he simply forgot that the latter had put in 'rules' (the Ministerial Code) designed to restrain their own instincts.

Now the lobbying industry is in near panic. They present its very highly priced services as in the public interest (and sometimes they are) but they are also a distortion of the market in many cases, ones where a player with cash and contacts can drive a policy at the expense of competitors and public.

It should, in terms of common justice, be outrageous that people have to pay to bring any idea that is in the public interest to the attention of decision-makers and it is remarkable but very predictable that neither State nor political class have not reformed public access in that direction.

The Geoffrey Norris Problem

Back in September, the Government announced that it would be setting up a 'partnerships unit' to co-ordinate relations between Whitehall and some of the nation's 'big brands' in order to promote 'new marketing and PR tie-ups' (PR week).

The head of that unit is close to Steve Hilton who, of course, has his links to the new economy stable via Google. This interest in the new economy is a serious commitment within Cameron's modernising Tory circle.

At the time of the Government's announcement of the 'partnership unit', Google confirmed that a close Cameron aide, Tim Chatwin, who worked closely with Hilton whose wife is VP of Google's Global Communications would be taking a top strategic communications role in the US.

The claimed long term objective (though perhaps rather that of the top end of the lobby industry) was to find a 'fixer' for State-business relations equivalent to the remarkable Geoffrey Norris. It is not conspiratorial to think that the 'old economy' might be getting a tad nervous about its own access.

Peter Bingle of Bell Pottinger revealed a great deal of the nexus between State and Big Business when he complained: "If you are the Chief Executive of a FTSE 100 company, there is nobody at Number 10 you can pick up the phone and talk to."

The Lobbyists Get Nervous

The gut left-wing reaction to this is horror but this is half-baked. The FTSE-100 and the 'big brands' are absolutely essential to the well-being of our late-capitalist economy in troubled times. Their contribution to the tax base and employment requires that they be understood by the State.

Understood, yes. Listened to in order to be understood, yes. Kow-towed too and given special treatment under cloak of privilege, almost certainly not. We will have more to say on direct relations between State and Big Business below.

The big lobbyists were getting antsy because Cameron's new boys looked like amateurs at fixing things for the 'boyos'. They were looking back at Blair's approach to private-public partnership with undoubted nostalgia. Mr. Fox's amateurism might be rather useful in the case for an Ancien Regime Restoration.

Feeling against lobbyists only hit the headlines because of Fox (just as the expenses scandal focused a more general distrust of politicians and the hacking scandal on an underlying suspicion of journalists). What insiders always knew was now entering the thick skulls of the middle classes.

The consequent mood for 'reform' is inchoate. It is not that someone is blocking it deliberately but that all those who could reform have too much to lose from it. They have no easy alternative plan to mollify the cynical public. It is tough enough trying to be credible about reforming bankers.

Whether big business lobbyists, Parliamentarians, print journalists or bankers, the entire system has been set up on the assumption of the value of intermediaries. Any reform almost inevitably threatens to break apart the very system on which a whole political and economic culture depends.

This is not just a British problem. Many Americans remain aghast at the fact that Wall Street has scarcely been touched by reform as they would understand it. In the European Parliament, the vote against reducing very high expenses at a time of serious crisis was derisory.

It is as if an entire system of beneficiaries of the three decades before the 2008 Crash are simply burying their heads in the sand and hoping that all the protest and anger will just simply evaporate if they can only hang on for the next two or three years. They may be right. They may not.

On Revolt

The Occupy Movement is probably not as significant as it likes to think it is but draconian and often unjust magisterial sentencing and PR campaigns in the Evening Standard about rioters and students may not deter Greek-style revolt in the coming years.

At least two investigative operations that were highly marginal or did not exist before the current crisis have played a major role in getting the lobbyist issue up there alongside the other scandals. Spinwatch and the Bureau of Investigative Journalism have diligently provided what data there is to be had.

It has to be said that a) what they expose is often rather small-scale stuff compared to the massive machinery to be found in Washington and increasingly in Brussels and b) they are still not exposing the precise methodologies of influence and their actual effects on policies that affect the population.

These rather conventional activists and journalists still tend to prefer to be outraged and then assume that we will be outraged in turn by the 'facts' but what we really lack, in the long term, is a cogent explanation of how our lives are changed by the actions of this curious industry.

Revolts against the elite are usually crushed on the State's reasonable assumption that the middle classes would rather have a bad Government than the mob but there is reason to believe that the closed 'meritocratic' elite that has emerged in the last three decades is seriously trying public patience.

The danger here is that the transition from an old economy to a new economy might mean that the old ruling elite (those being marked out by degrees in successive scandals) will be regarded as eminently sacrificeable by those in the middle class with a stake in the future.

The Problem of New Labour

The lobbyists' attempt to restore pre-2008 Blairite corporatism has to be seen in this context - as part of a more general attempt by those who made their pile before 2008 and who are still doing rather well to hold on to the commanding heights of the State.

New Labour, still rather lack-lustre under its decent but uncharismatic makeweight Leader, made great political capital out of the Fox case but it still does not have a viable 'reform' agenda that would take it out of this establishment nexus that increasingly troubles the voter. Cameron has everything to play for.

While the lobbyists moaned about the lack of a Geoffrey Norris and as the latest stage in the soft-shoe shuffle between Google and Number 10 was taking place, Milliband (E.) was 'encouraging' Parliamentary candidates to divulge details of their meetings with lobbyists.

At that time (September 2011), New Labour candidates were being 'asked' to provide details of meetings with lobbyists, expenses and voting records on their web sites. This was faintly ridiculous - asking and encouraging looked weak. Demanding would have looked stronger.

But, as PR Week pointed out in its report of September 9th, many New Labour MPs come from a lobbying background. The worst kept secret in British politics is just how few MPs under a certain age have had any life outside the political class and the political caste in business, the NGOs and the trades unions.

And Now ...

Fast forward to this month and the wake of the Fox scandal. The lobby industry goes into over drive to distance itself from Mr. Werritty, probably correctly. Its criticism, however, increasingly looks like a trades union sending a scab to Coventry.

A promised Statutory Register of Lobbyists might rather suit the industry because only a community with the resources to comply will be able to get access to its protections yet, until now, they have been fighting it because the costs will have outweighed the closed shop benefits.

That position has changed with the recent scandal. The Register had looked, before then, as if, it might not so much be kicked into the long grass as be quietly manipulated into an exclusive closed shop arrangement by the professionals.

This is why the Fox scandal is particularly unwelcome. The Register is now not only back on the agenda but it has woken up liberal activists, small businesses and NGOs (and smaller and perfectly respectable lobby shops) that a Register fixed between the State and the Industry might weaken their position.

Instead of the Register creating formal protocols and transparency, it is, without a challenge, in danger of privileging the well capitalised, distancing the political class even further from political struggle and ensuring statutory backing for rules of confidentiality that undermine freedom of information.

What The Lobbyists Say

Here is Iain Anderson of the Cicero Group on October 20th:

... why was Adam Werritty allowed anywhere near the Secretary of State? Werritty was not part of the APCC or CIPR Public Affairs or any other group ... a recognised lobbyist he was not.

And here's Gavin Devine, COO of MHP Communications in the same spread:

A new structure will set us even further apart from the 'amateurs' who are almost always the cause of lobbying scandals ... Allowing some organisations, individuals and even professions to lobby unfettered while subjecting others to regulation would not simply be unjust. It would also be ineffective.

Anderson makes some reasonable points and he does call for the inclusion of unions and charities but the implication here is obvious - that regulation requires a soft corporatist compact where the lobbyists are recognised by a closed shop of institutions that coincidentally (?) can keep prices high.

Devine is more explicit that access to our political class should be entirely in the hands of professionals. The dangers of this to the functioning of liberal democracy where the professionals and the politicians are effectively the same people appears not to cross his mind.

The closed nature of this policy-making is not entirely down to the 'discretion' of the lobbyist. Government loathes communicating with its electorate as we shall see.

The Small Business Position

An editorial in the November Edition of South East Business (a magazine for small regional business) lambasts the conduct of Francis Maude in telling Mark Taylor, a Surrey businessman, advising in his own valuable time, that he cannot talk about meetings organised by the Cabinet Office.

Taylor is angry because he is being gagged about something of great importance to him and others - the exclusion of SMEs from government contracts (the sort of contracts where well paid lobbyists can have an influence). All he can say is:

I have heard enough stories to convince me that far from government procurement becoming more open to SMEs, it is going the other way.

Whether he is right or wrong (he has his own angle), his narrative tells us that the cosy world of the elite will still try to silence critics by bringing them into its consultative fold. It is an old trick and it often works but Mr. Taylor is clearly not 'sophisticated' enough to comply. He is not 'clubbable'.

I like small businessmen. They are feisty and operate outside the cosy world of the 'professionals' who thrive on secrecy. They are not 'politically correct'. Taylor says this conduct is undemocratic and South East Business goes into rhetorical editorial overdrive suggesting Maude reads Solzhenitsyn.

This may seem over the top to the sophisticated elite but it is telling us something about the weakening tolerance of Middle English businessmen under pressure from late paying big customers, regulations skewing the market against them (and adding costs) and a State that does nothing useful for them.

Coalition Responses

Nevertheless, the Coalition appears to be keeping its nerve. We are awaiting a consultation paper with a view to legislation next year. New Labour is mouthing platitudes and playing politics, rather pleased to have anything (in the Fox business) that will get it back on the front pages and appear 'outraged'.

There has also been recent talk about allowing the CEOs of the top 50 companies direct access to Government (perhaps to dish the lobbyists). Six Ministers from three Departments will be key points of contact for a select group of exporters and inward investors.

The TBIJ (which analysed this) was negative but I am not so sure. All the TBIJ criticisms are valid but we may be looking at the 'lesser evil' while the State considers how to unravel the dodgy half-baked corporatism of the last Government.

Perhaps direct access, in our current state of economic war, with the serious national commercial players without the intermediation of lobbyists is precisely what is needed. There is no criticism by TBIJ that could not be covered by subsequent legislation.

Tougher rules on transfers of political and state administrative personnel into the private sector, rules on engaging with competitive (especially small business) interests, clearer confidentiality and conflict of interest guidelines, and rules on party donations in a conflict of interest context are all feasible.

Prospects For Real Reform

The point is that direct access between various institutions and the representatives of the electorate, one that cuts out the intermediaries except in clearly defined circumstances, could be beneficial. It could certainly start to unravel the soft corporatism and embedded group think of the last Administration.

Do we trust the Coalition to manage this well? Well, that is another matter. But there is no reason to believe that Cameron is not aware of the issues. Back in February 2010, this is what he said:

We don't know who is meeting whom. We don't know whether any favours are being exchanged. We don't know which outside interests are wielding unhealthy influence ... I believe that secret corporate lobbying, like the expenses scandals, goes to the heart of why people are so fed up with politics ... I believe it's time we shone the light of transparency on lobbying in our country.

Was this just a bit of electioneering at a vulnerable opponent? Was he lying? I don't think so. I think it does concern him but he is not finding it easy to turn round what amounts to a system of self interest and special interest. The speech is worth reading in full.

The Balance of Interests

There is a fine balance here. All interests in society, without exception, including private individuals, should be able to put their case on the effects of legislation and regulation and offer ideas for the betterment of the commonweal to their elected representatives.

All commercial approaches to the State and the State's responses, subject to national economic security, should be conducted openly without spurious appeals to confidentiality that generally provide the edge that one special interest thinks they are paying for by hiring a 'professional'.

There is also a space for informed specialists between State and public who can act as barristers in presenting the case of special interests to the State. And there are people who genuinely (rightly or wrongly) feel that that what they have to say is in the national interest.

But what there should not be is a professional closed shop that is designed to create a mystique around political access, raise prices and stop elected representatives from talking to anyone who is not like themselves.

A wider closed shop of collusive sub-elites is treading on thin ice if it thinks that it can busk its way through the current crisis towards a cosy European-style regulatory state where costs are shunted down the line or on to future generations. These people are under scrutiny from both Left and Right.

The COI - Making Taxes Work For You?

Although the talk since the Reagan-Thatcher years has tended to be of the reduction in the power of the State and the importance of markets, the rhetoric does not quite fit the actuality.

All that has happened over thirty years is that the threat of a public sector monopoly over productive capacity has been replaced by a duopoly of power in which innovation and infrastructure have shifted into private hands but provision of services remains state-led.

Decentralising The State

Radical conservatives (including many who purport to be on the centre-left) were moving to change this balance in the boom years before the 'credit crunch'.

This position has gone underground while the public is forced to place more trust in the State as a guarantor of last resort against financial system failures - but it has not gone away. The British public sector is now readying itself not just for spending cuts but for a possible administrative revolution.

Currently, our national administration is operating on a 'care and maintenance' basis because of the uncertainties of the coming General Election.

It may take months after the result is announced to get things started again (if only because new ministers will not rubber-stamp predecessors' decisions). By the time that they do, in the Autumn, the mantra will be cost-savings and cuts, regardless of who is in office.

The current theme, partly dictated by the full employment and votes requirements of the incumbent Government but also by economic strategy, is that capital investment is to be cut but head-count ('front-line' services in the speeches) will be sustained.

This is, of course, absurd in the very long term. It is capital investment that creates sustainable wealth and greater efficiencies (as well as jobs). Having lots of people working within a crumbling infrastructure is tantamount to embedding long term economic decline for fear of short term unemployment figures.

Beyond Cynicism

What can be done about this? The first and most cynical thing to say is that this delay in cuts affecting head-count is only partly to do with keeping the economy going. It is also a determination by an incumbent not to disturb a public sector whose votes will go to it all things being equal.

Another cynical observation would be that one cost, neither truly capital investment nor head-count, that might be cut to buy time is the elimination of consultants (before the election) and the quangocracy (after the election) - just work the existing staff harder. We'll come on to that.

If the economists are wrong and if the IMF manages to hold the line in the outer rim of Europe and we are not faced by a sterling crisis, then, perhaps, just perhaps, the infrastructure of the State and 'frontline services' will hold together and we can go back to business as usual in due course.

Through natural wastage and slow growth, with such a strategy, the State can retain its role in society as something more than law enforcement against the surly unemployed. The remnants of social democracy, which is always civil servants' natural preference, might be preserved.

However, we hold to the view (based on experience) that all institutions have an acute sense of their own survival. The machinery of the State cannot be identified entirely with the people who pay for it and whom it serves. It has a politics all of its own.

State Survivalism

As the months go by, you are likely to see at least three 'survival tactics' emerge that are quite new and are designed to preserve the core of the State against radical decentralisers who have emerged on the Right of New Labour and, above all, in the Tory Party.

The new Tory Parliamentary intake will include many experienced local government 'cutters'. Influential Tory 'intellectual' politicians like Douglas Carswell are pushing hard (with some Liberal Democrat sympathy to be expected) for a significant decentralisation of power.

We have already noted the first 'survival tactic' - the slashing of the use of consultants, in effect a decision to throw the private sector hangers-on who have benefited so much from New Labour approaches to private/public partnership overboard to sink or swim.

The second is to start bringing in academics to 'nudge' the population into acceptance of the value of the State and the third, perhaps most interesting of all, are tentative moves to try to quantify the value of what Government does in preparation for aggressive media and PAC questioning.

Away With Agents & Consultants

Since we are associated with the public relations industry, this might be the place to start looking at signs of what is to come. Government communications are an easy target for a new Parliament of Tory provincials - they represent 'spin' and they cost a lot.

On December 11th, PR Week 'revealed' that the COI was going to undertake a highest-level review of government communications with planned efficiency savings of £650m from marketing and management consultancy spend.

Some of the savings will come from an eventual assault on the quangocracy (123 bodies seem to have been targeted for merger or abolition across Government). The claim is that overall consultancy spending in Whitehall will be cut by 50% and marketing by 25%.

What is perhaps most interesting (especially to those exercised by what the centralisation of gritting roads says about New Labour) is the hint that the COI will become more powerful as the central point for all Government communications efforts, which is certainly logical in terms of economies of scale.

This, of course, centralises the State's effort even further into 'one message' communications. This is a challenge to the Tory instinct for the decentralisation of power, although it might suit the Right to have a smaller State communicating more clearly.

However, before we get too excited, New Labour is not cutting a steady-state marketing capability. The COI spend on PR and news management (according to PR week) in 2008/2009 was actually 50% up on the previous year at £41m so a big slash could merely return it to 2007/2008 levels.

The suspicion of Tories has always been that the relatively recent surge in expenditures on education and health communications was 'political' - designed to increase awareness of New Labour's zone of electoral advantage.

A true cynic (not us!) might wonder whether this was legerdemain. A surge of expenditure in the run-up to a known election year and then newspaper-friendly responsible cuts  - back to normal once the vote was in. Surely not!

Nudging Approval

We have already raised concerns in As It Happens and elsewhere about the politicians' new fascination with anthropology and the cognitive sciences. This is a general phenomenon, to be found in Cameron's circle as much as anywhere else.

We have cruelly likened it to the fashion for race politics in the first half of the twentieth century that led to the death camps. It is imperfect science within an undeveloped paradigm seized upon by politicians desperate for a solution to their problems of social order and legitimacy.

In the same edition of PR Week, having announced cuts in consultancy and agency, the COI also announced a new raft of advisers - a planned panel of 'behaviour change experts' (i.e. psychologists, behavioural economists, anthropologists and sociologists) to assist in PR planning.

There are philosophical issues here - should your or my money be spent on systems that try to change my behaviour rather than just require compliance with the law? Should a democratic state be using techniques designed to sell goods and services against its own people?

This is the famous 'nudge' approach to public policy and probably as doomed in the long run as all such theoretical and manipulative interventions into our lives, but we can rant as much as we wish - clearly Government thinks that this is the way forward.

In fact, much of this is benign. There is an obesity problem and behavioural psychology can legitimately be used to change behaviour in the interests of the public (assuming they retain the right to be obese by choice). What we have to watch for is drift into projects that suit them and not us.

The point is that the State is now shifting from simply being the client to agencies who take the cash and communicate messages into a more complex animal that learns how to manage perception of itself and so the skills institutionally to embed itself in society against threats to its legitimacy.

This is a major challenge to libertarians because the main claim against the State at the moment is, in fact, that it is not truly competent (often unfairly so but a widespread perception). Changing perception does not change competence but merely perception of competence.

The COI And Value For Money

We leave the best to last. Hidden away but public domain on the COI 'big thinkers' blog is a paper boringly entitled Payback and Return on Marketing Investment [ROMI] in the Public Sector. It is what it says on the tin and the tin was opened up to consultation within the COI family at the end of November.

We don't propose to analyse it here but it is very significant and very creative. In essence, it is taking the bull by the horns of value in marketing (an old debate that has created a mini-industry of evaluation in public relations for nervous corporations).

It is a pre-emptive strike against Parliamentary scrutiny. Under the current regime, 'spin' is good if the Cabinet office or the Prime Minister's Office thinks it is good. There was no need to evaluate. But things change.

'Spin' is not going to be good if New Labour loses the next election (any post mortem will place the collapse down to a history of public manipulation going back to the mid-1990s) and the COI is going to have to demonstrate quantifiable social benefits to ministers under increasing backbench pressure.

Although all these initiatives relate just to one key Department (the Central Office of Information), their appearance at the end of 2009 in anticipation of new conditions by mid-2010 is neither accidental nor unique to communications.

The threat to the State is not simply sheer lack of funds but also legitimacy under conditions where more funds are being raised from the private sector through taxation for services that are undoubtedly going to weaken through cuts - and this may go on for many years.

The new Parliament, regardless of Government, is going to have a phalanx of cost-cutting anti-statist libertarians in place hungry for decentralisation and placing constant pressure on the State to justify its existence against starving packs of private sector rivals and angry letters from constituents.

Legitimacy & Cuts

These three strategies: bringing business back in-house, using academics to build strategies for legitimacy and demonstrating value to Parliament more quantitatively: are three survival tools of value to public administration in very difficult new times. They are pre-emptive strikes against slash and burn.

One last note - the agencies and consultancies who are about to be pushed out may have little to say in the matter (though they will no doubt be lobbying to get back in when things pick up) but many civil servants are not going to like Mark Cross' initiative at the COI one little bit.

If you are used to making relatively unstressful decisions based on your Oxbridge judgement and keeping your head below the parapet to avoid fairly rare Parliamentary scrutiny, Cross' initative, if it spreads through Whitehall, sounds like a lot of hard work and risk.

The Luddites would be mistaken. It is not just the Tory backwoodsman that the State has to worry about (after all most will sink back into relative laziness or end up on the payroll vote after a while) but the new breed of citizen journalist and blogger.

In the coming decades, the issue is not whether Parliament backs the State but whether the public backs both State and Parliament. Parliament is in bad odor with a written warning in its HR file. The State needs direct public legitimacy if taxes are to be paid and laws obeyed.

And here's a thought that should concentrate minds - what if an enraged and angry electorate decides that not only should bankers' bonuses be clawed back but also 'fat cat' public sector pensions? Unlikely, yes, but Luddites ought not be complacent - the anger out there is palpable.

We should take the current planned cuts with a pinch of a salt and be highly suspicious of government by 'nudge' but the COI's initiative on ROMI should be welcomed and encouraged - in the public interest.