Scotland Redefines Corruption?

whytefinalDavid Ellis and David Whyte (editor of ‘How Corrupt is Britain?’) asks why was the alternative to British crony capitalism not at the heart of the Indyref debates? [see also A Very British Disease].

Recent revelations about the Tory party election investigations and the huge numbers of British-owned shell companies in British Overseas Territories and British Crown Dependencies revealed in the Panama papers makes it difficult to understand how Cameron could stick his brass neck out and expect the world to take his anti-corruption crusade seriously.

Clearly we are in a surreal moment in British politics. But the remarkable hypocrisy that dominated the headlines last week should not detract from the fundamental underlying conditions of the corruption of public life in Britain. Equally pertinent to understanding Cameron’s complacency is an increasingly collusive relationship between government and businesses at the heart of Westminster politics. Those relationships are undermining public trust in democratic institutions and calling into question the integrity of public officials charged with serving the public good. In particular, ‘revolving door’ appointments between the public and private sector, and the role of private companies in public functions have the distinct whiff of something rotten in the state of politics.

To explore what people really think about these issues, we commissioned a YouGov survey to ask a representative sample of people in Britain what they thought about a range of routine UK government practices. The practices that we asked about have at times been controversial, but crucially, they are not necessarily regarded by any standard definition as “corrupt”.

The results of the survey overwhelmingly point to a public intolerance for these ‘normalised’ practices:

  • 73% said that the practice of ministers accepting corporate boardroom appointments on leaving office should be banned.
  • 75% said that the practice of senior civil servants accepting corporate consultancies should be banned.
  • 62% said that inviting private corporations into government to help shape the regulation of business should be banned.
  • 68% say that current PFI [private finance initiatives] arrangements for public projects should be banned.

Nowhere was this opposition more strongly held than in Scotland. Those results also revealed:

  • 82% of the Scottish public want the practice of ministers accepting corporate boardroom appointments on leaving office to be banned.
  • 83% of the Scottish public want that the practice of senior civil servants accepting corporate consultancies to be banned.
  • 69% of the Scottish public want the practice inviting private corporations into government to help shape the regulation of business to be banned.
  • 76% of the Scottish public want current PFI arrangements to be banned.

Given that the electorate in Scotland is much more decisive on those issues, we should ask why the collusive relationship between government and business has not been rehearsed in any detail as an election, or as a referendum issue. Why was the alternative to British crony capitalism not at the heart of the Indyref debates?

There may have been progress in Scotland to deliver a new politics, one that is distinct from the grotesque cronyism of Westminster. Yet far from diminishing, the the influence of private sector has showed signs of intensifying. Of particular concern is the growth of the lobbying industry and the opportunities for revolving door appointments it brings forth. Likewise, while the unpalatable legacy of PFI is appreciated in Scotland more so than anywhere else and has appropriately been abolished, the alternative off-balance sheet funding scheme that replaced it, the Scottish Futures Trust (launched in 2008), remains a funding mechanism that makes government overly reliant on private capital. Moreover, the SNP may be rather complacent about the strength of feeling in the Scottish electorate as it continues to take its cues on taxing business not from the people, but from key figures in the business world.

As our survey indicates, banning revolving door appointments and abolishing PFI-type arrangements would be both a populist and realistic way of wrestling back some of the power from private capital in the public interest. The new politics must recognise that the overwhelming majority of the Scottish people want rid of the normalised collusion between business and government and the ways that it undermines any prospects of achieving a more equal society.

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Redefining corruption: Public attitudes to the relationship between government and business (Scotland results)


Q 1.  A government minister who served in the Department of Health is part of a committee that awards a major contract to a private healthcare provider M.H.B. Ltd. Less than a year after leaving office, the same minister joins M.H.B. Ltd. as a Director.  He is paid £100,000 a year and given a one-off gift of shares in the company worth £250,000.This appointment is within the current rules.

Do you think profiting from political experience in this way should be prohibited?

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Q 2.   M.H.B. Ltd has a tax bill for £250 million.  The head of the government tax authority, Her Majesty’s Revenue and Customs (HMRC), negotiates a tax settlement with M.H.B. Ltd. and reduces its tax bill to £50 million. After leaving HMRC, the former head is appointed as a special advisor to the accountancy firm that helped M.H.B. Ltd. during negotiations with the government. This appointment is within the current rules. Do you think appointments like this should be prohibited?

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Q 3.   A government minister invites a senior representative of a major UK accountancy firm to help in the design of tax reform policies.  This company provides technical advice that helps major corporate clients in tax avoidance. Do you think this type of appointment should be prohibited?

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Q 4.  A local government Department agrees a contract with a private building firm to build a hospital. Rather than being paid immediately for the work, the building firm will be allowed to rent the building back to the local authority on a 30 year lease. By the end of the contract, the building firm will earn a sum valued at around 5 times the original cost of the hospital. This cost will be at the expense of taxpayers. Do you think this type of contract should be prohibited?

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David Ellis is a Post-Doctoral Researcher and David Whyte is Professor of Socio-legal Studies, both at the University of Liverpool. The Scottish results of their British survey Redefining corruption: Public attitudes to the relationship between government and business are published here exclusively for Bella Caledonia.

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Comments (24)

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  1. Mike says:

    How corrupt is Britain you ask?

    When the Pro Independence Scottish Greens abstain on voting for the Pro Independence Nicola Sturgeon as First Minister while in competition with Pro Union Willie Rennie you kind of get a real feeling that something absolutely stinks to high heaven in the UK political circles.

    This is the party who complained when Labour abstained on Conservative legislation in Westminster.

    Did the Greens actually tell us they couldn’t decide who would make a better FM between Nicola Sturgeon and Willie Rennie? Really?

    So much for our so called “Pro Independence majority”.

    1. What? A party abstaining in a vote that was never in question is the same as corruption? Er … not sure what to say really … um … thanks for your contribution.

  2. Mike says:

    The Greens ran their campaign for regional selection based on attracting votes from the Pro Independence SNP support in order to create what they and others within Bella coined “A pro Indy majority” They specifically appealed to the SNP regional vote on the creation of a Pro Indy majority support.

    Didn’t see that “Pro Indy Majority” hold up on the simplest of votes and decisions. Did you?

    Ive got no problem with the Greens holding to their manifesto on policy be disappointed if they didn’t but here was a chance to use the so called Pro Indy majority in an appropriate way without compromising themselves and their own pledges and promises.

    What they basically told the people of Scotland was they view both Nicola Sturgeon and Willie Rennie with equal contempt.

    I always thought of the Greens as a single UK party. They are starting to prove me right.

    1. I didn’t coin anything.

      ‘Ive got no problem with the Greens holding to their manifesto on policy’. That’s big of you.

      It’s called democracy. We’re attempting to create one.

    2. Jim Bennett says:

      Mike, I voted SNP/Green at the Scottish election. I am sick and tired of my vote being described as an SNP vote loaned to the Greens for the list. I, along with many others, voted SNP in the UK GE; that doesn’t mean I’m SNP property.

      I’m not aware that the Greens campaigned for SNP votes at the recent election. RISE and Solidarity did, not the Greens. I am however, well aware that the SNP campaigned for Green votes at the UK GE and I gladly gave them mine.

      I can easily see the SNP drop in votes between the constituency and list as being the Greens “lending” votes to the SNP rather than the opposite. That, however, just reduces indie politics to a sectarian bicker.

      If I were a Green MSP, then I would have voted for Nicola but I have absolutely no problem with the Greens abstaining. They are a different party with different values. The Greens
      – oppose the monarchy
      – want out of NATO
      – don’t want air travel subsidised
      – are anti-capitalist.
      etc etc etc

      Given those differences with the SNP, they are absolutely right to differentiate themselves. That isn’t corruption, as the BC eDitor says, that’s democracy!

      Grow up.

      1. Me Bungo Pony says:

        While the action of the Greens in failing to vote for Nicola Sturgeon has nothing to do with “corruption in the UK”, it is disappointing.

        I can’t believe Jim does not remember Greens actively urging SNP inclined voters to cast their list vote for the Greens. Patrick Harvie was constantly urging it to ” maximise” the number of pro-indy MSPs at Holyrood and talking of “wasted SNP votes”. Unfortunately, the reality of the drop off in SNP list votes was fewer pro-indy MSPs 🙁

        While I support much of what the Greens stand for (I even briefly considered splitting my vote) and quite like Patrick Harvie, I have always been a little suspicious of their commitment to independence. Their failure to back Sturgeon at the first opportunity on such a no-brainer of a risk free vote only adds to that suspicion. I feel many others may be questioning that commitment to independence more now. I hope the Greens don’t let us down.

        All completely off topic though.

        1. “While the action of the Greens in failing to vote for Nicola Sturgeon has nothing to do with “corruption in the UK”. Just stop there. You are right. Stop. Re-read the article.

          1. Me Bungo Pony says:

            Cheers for that patronising response to my post. I acknowledged that it was nothing to do with the article but it was relevant to that particular sub-thread. It could have been left at that but, instead, a sarky put down from the editor was the preferred course of action. Thanks again. Now …. will I put my hand in my pocket for Bella …. ?

      2. Graeme Purves says:

        Spot on, Jim. I too voted SNP/Green on 5 May. I didn’t ‘lend’ my vote to anyone. I made a considered decision about the smart thing to do in Lothian Region. Ben MacPherson and Andy Wightman were both elected, so both my votes counted. I am equally delighted about each result.

  3. Alan says:

    David Ellis and David Whyte asks why was the alternative to British crony capitalism not at the heart of the Indyref debates?

    Good question, especially as one of the great critical books on cronyism and corruption and its impact on economic activity and equality was written by a Scot: An Inquiry into the Nature and Causes of the Wealth of Nations. For some discussion see comment here. For a lengthier discussion see Adam Smith: Theorist of Corruption.

    1. David Whyte says:

      Good point Alan. And actually he was talking about corporations that were granted a monopoly by the state which gave them a green light to overcharge and generally defraud. Ring any bells? Unfortunately, although he might have been opposed to “corruption”, actually he didn’t have a problem with governments doing all they can to enhance the profitability of business – and this is what the people in our poll are opposed to. Thanks for your comments.

      1. Alan says:

        …he didn’t have a problem with governments doing all they can to enhance the profitability of business

        I’m not quite sure what you mean. What is government supposed to do in this respect according to Smith? He set out the proper role of government in book 5 and I don’t recall that being part of the argument. Can you explain your meaning or provide references, either book/chapter/sections or page numbers for the Glasgow edition.

      2. c rober says:

        PFI and the 3x price tags , Labours toxic can kicked down the road.

        Or the supposed open markets that were meant to materialise from selloffs of taxpayer owned utilities , ie in a free market EU that prevents state ownership in the uk , yet somehow allows state owned companies coming into it , such as…

        Statoil , new offshore windfarm. Norway , I know not a full EU member.
        EDF , hinkley. France.
        Abellio and arriva. Supplier of a few rail franchises.

        Or for a longer list of State owned utils and providers , which may open some eyes.

        https://en.wikipedia.org/wiki/State-owned_enterprise

        Some of this list is not current , as the practice of small office , part localed , is not included.

        This is very important when regarding the likes of EDF and Hinkley , where the parent company would be protected from the cost of failure or clean up , through going through local adminstration , leaving that cost to the taxpayer… in a free market. Legal but immoral.

        A bit like socialised bank debts really through a bad bank , hands rinsed. And worth considering when the EU ordered the UK to tear down RBS because of part state ownership , yet there are still EU state owned banks in Germany and other Eu member states.

      3. Alan says:

        No citations for “he didn’t have a problem with governments doing all they can to enhance the profitability of business”?

        The only three roles he lists for government are justice, public works (infrastructure, education, etc.) and defense. A good part of the rest of the book is an attack on collusion between government and private parties (contrary to justice) against the public interest and and the negative impact this has on the wealth of society as a whole. The title should be a clue: It’s about the An Inquiry into the Nature and Causes of the “Wealth of Nations” not “Private Wealth”.

        I agree with the importance of your question: “Why was the alternative to British crony capitalism not at the heart of the Indyref debates?” But an informed critique of crony capitalism would be strengthened by rescuing Scotland’s intellectual heritage from the likes of Margaret Thatcher, Alan Greenspan, Milton Friedman, George Stigler, Greg Mankiw, et al. All the aforementioned have mischaracterised Smith’s arguments to justify crony capitalism. If critics on the Left bothered to read Smith, rather than take what the Right claim he argues at face-value, they’d realize that it is unlikely any of the aforementioned, their colleagues, and political offspring have read Smith either and that their uses of Smith are a mixture of selective and out-of-context quotes, bullshit, ideological justification and professional mythology.

  4. c rober says:

    Corruption , from those in power , never.

    There is quite a big list of MSPs that are private landlords , and are profitting from it , but not as many as at Westminster , yet we allow the elected to legislate the very housing policies which enriches them.

    Once the Holyrood declarations of interests are up , it should be an interesting read and what work groups they end up in.

  5. David Allan says:

    Corruption in the UK , an example – The timing of the “Big SNP MP Affair” news splash , on the day Nicola becomes FM , now that will be just a coincidence!

    1. It’s sensationalist, its crap, its tawdry, its tabloid, but it’s not really what we are talking about.

      1. c rober says:

        If you cant hack an axe/be the lead singer , or be wealthy like Ecclestone , then the next best way to getting some is politics , especially if yer face is like a meltit welly. Power and wealth are intertwined.

        I have to agree though , story sold off for a hold off. Normal in politics with its sibling the “shovel item” coming second , ie buried in a bad news day.

  6. John Page says:

    This is a really important topic and it is very personal to me given my civil service experience. In the early part of my career retired Board members and senior officials of the old Inland Revenue would go on to quietly enjoy their pensions, take up further study or maybe occasionally do modestly paid work on civil service employment tribunals. Now we have the spectacle of a former permanent secretary of HMRC seeing his not inconsiderable pension dwarfed by consultancies with Deloittes, HSBC and the Russan Government. Of course this is not corruption. But it is wrong and with particular regard to Scotland, civil society should ensure that these arrangements should be fully exposed to the disinfectant of daylight be they concerned with fracking, land reform or local taxation.
    What I find also disgraceful is the fact that this important discussion has been hijacked by the same one topic troll who trashed Bella repeatedly up to 5/5/2016 promising never to come back.

    1. Graeme Purves says:

      Indeed, John. I think robust moderation is required.

    2. Broadbield says:

      And the egregious example of Vodafone’s friend, Mr Hartnett, parachuting from HMRC into HSBC, not to mention Darling or every dictator’s go-to man, Blair. No, it’s not corruption as defined in the dictionary, but it is, imho, unacceptable. MP’s and Civil Servants are servants of the public, even if some of them think it’s the other way round, and it’s quite wrong that they are allowed to enter big business to use their insider-knowledge, contacts and so on in pursuit of the aims of corporations which are often inimical to the public interest.

  7. Ian Kirkwood says:

    I guess parties resist making it an issue because if you are vociferous in condemning the questionable habits of Westminster, then you have to get stuck in with reforms immediately if you are voted into power. But it is then that you find permanent secretaries providing all the reasons why reform might not be such a good idea. Or interest groups calling into question democratic bills in the European Court of Human Rights.

    The issue of the sanctity of private property has been recent example at the hands of one well funded land owners’ interest group.

    I would argue that the central and most damaging traditional corruption was the privatisation of public value by ‘rent-seekers’. The rent of land is public value created by the efforts of society. Paying that rent to the exchequer to fund public services was once the norm. It was a social responsibility that went with owning land.

    Owners groups rush to court to protect their property from society. But does their claim trump the right of ALL to access to land? AGR resolves this fully to the benefit of all parties. Escaping our stone age tax system requires site owners to pay the rents of land to the exchequer. In return they will enjoy monopoly use of their site to generate UNTAXED profits.

    LVT/AGR is society claiming back public value. It heals the social dislocation that tears apart affected countries. It reverses the most corrupt act of Westminster: the subtle reduction of rent-as-revenue from near 100% to zero over five centuries. Governments must start collecting it again instead of the taxes we now endure that unnecessarily stifle, suppress and burden Scotland’s economy(Adam Smith).

    But can they sideline the permanent secretary?

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