Johnson suspends parliament to force a crash out Brexit

On Brexit at least (and who knows what may be next) UK democracy has been suspended. Yesterday the Prime Minister drastically reduced the number of days parliament will sit until we automatically crash out of the EU. On the critical issue of Brexit, the Prime Minister has become an unelected dictator. He intends to use his dictatorial power to restrict the supply of medicines and food to the British people.

The device he has used is a quaint part of the UK constitution where the Queen decides when parliament sits or does not sit. Nowadays the Queen has no power so she takes advice from the executive. The Prime Minister instructed his lackeys to ask the Queen to prorogue (the technical name for suspend) parliament for 5 weeks and the queen approved. It is as if the President could shut down Congress whenever he liked, and in particular whenever they were about to do something he disliked.

It was cleverly done, in that it allowed parliament to sit for effectively four days in early September and probably about a week just before we crash out of the EU, so the PM could claim parliament still had “plenty of time” to discuss Brexit. Johnson, like Trump, is a serial liar. As the former head of the civil service Lord Kerslake said, to believe this is anything other than an attempt to critically curtail the chances that parliament can stop us crashing out is an insult to the intelligence.

Johnson knows that only the most foolish will believe the 'plenty of time' lie. But Johnson's big idea that he wants wavering Tory MPs to believe is that the EU will only change the backstop if they truly believe the UK will crash out. This is one more Leave misjudgment about the EU, in a long list of them. The EU do not want the UK to crash out, but they are not going to sacrifice peace in Northern Ireland to avoid it. Any UK government not made up of anti-EU fanatics would want to avoid that to.

Like so much in the UK’s unwritten constitution, the Queens right to decide when parliament sits is a hangover from our history that has been allowed to remain because it was understood that the Queen would follow the advice of the Prime Minister (the last monarch that didn’t had his head cut off) and the Prime Minister would respect the will of the parliament. In the UK parliament is sovereign, but only because there were unwritten norms that assumed no government would be undemocratic enough to disobey.

Article 50, the process by which the UK is negotiating to leave, also makes an assumption that governments reflect the interests of its citizens. It says that after two years, unless the EU extends that deadline, the leaving country crashes out with no trade deal, and indeed no deal on anything else. It was assumed that no rational government would ever want to crash out and so this deadline was a great incentive to agree to a deal of the EU’s liking. The UK now has a government that relishes the opportunity to leave without a deal, which the government’s own advice suggests will lead to shortages of food, fuel and medicines.

Does this affront to democracy matter if it is restricted to the issue of Brexit, where a referendum voted to leave? It matters because in that referendum the Leave side only talked about leaving with a deal. That is the mandate that this advisory referendum provided - to leave with a deal. So leaving with no deal does not even respect the referendum.result.

Here are some comments by MPs about the idea of a Prime Minister proroguing (i.e. suspending) parliament to get their way on Brexit.

“I think it would be a terrible thing that having said we should have more power in this country and trust our institutions more ... and shut the door on parliament”

“[Proroguing parliament] goes against everything that those men who waded onto those beaches, fought and died for and I will not have it.”

“It is a ridiculous suggestion”

“Delivery on democracy while trashing democracy. We are not selecting a dictator.”

Not any old MPs, but now ministers in the Prime Minister’s cabinet. Yet none has expressed any regret at it actually happening, now that they have some power. How far the Conservative party has fallen.

Let’s think about what this actually means if we crash out of the EU. A measure that will have profound implications for most UK residents will come into effect without approval from the House of Commons and with hardly any scrutiny. The official document that sets out the likely impact on food and fuel supplies, medicines and much else remains secret, and no House of Commons committee has had a chance to examine claims that the government has somehow avoided the shortages this document predicts.

You may say that parliament overwhelmingly gave the approval for the government to start the Article 50 process, but on this occasion - and time and again subsequently - MPs have not anticipated how fanatical those advocating No Deal are. They will certainly not have anticipated a No Dealer becoming Prime Minister and suspending parliament to crash out via Article 50. If you had said that more than two years ago you would have been laughed at. UK democracy has fallen a long way in two years.

For those tempted to say this is just one issue and just five weeks (the total length of parliament’s suspension), I would say two things. First, this is hardly a minor issue, but one of the biggest issues that the UK has had to deal with in decades. On this vital issue, Johnson is trying to force an outcome that most people do not want. Second, pluralist democracy normally does not end with a bang but in stages of plurality. No doubt when the Hungarian government in 2011 abolished its fiscal council plenty of Hungarians thought little of it. That has been followed by the end of judicial independence and and independent media. It is clear this government also has little respect for parliamentary democracy.

Will the majority of MPs in the little time they have left do enough to stop us crashing out of the EU? I honestly do not know, but I am pessimistic because only Johnson can extend Article 50 and I now think it is quite likely he will try to frustrate parliament in other ways and that he will ignore parliament if it did succeed. A vote of no confidence may be the only option MPs have. Will Johnson’s suspension of parliamentary democracy unite enough MPs to do this? Again I have no idea, but I can say this.

If Jeremy Corbyn in government did anything similar to this in order to get one of his policies through, I would argue he was no longer fit for office. But perhaps putting power above principle, as the MPs whose quotes I show above clearly do, is today a characteristic of almost the entire right of UK politics? The principle at stake right now is parliamentary democracy itself.

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The Kerslake Review of the Treasury

This review, published today, was commissioned by John McDonnell but is entirely independent. Although it is ultimately Lord Kerslake’s review, it is the product of a small panel of which I was a member, and also reflects submitted evidence and meetings of invited experts. I can say that in my area, macroeconomic policy, this external evidence was very influential and let me thank again all those involved. This post just focuses on these macroeconomic aspects of this review of the Treasury. [1]

The obvious place to start is to think how the role of the Treasury has changed in the last two decades. In 1997 setting monetary policy was delegated to the Bank of England. In 2010 the forecasting aspects of fiscal policy were delegated to the OBR. To a government obsessed by cutting the size of the state that might suggest that the Treasury did not need to have a large macroeconomic capacity, But if you think about the major macroeconomic disasters if the last decade, that view is completely misguided.

One way of thinking about these disasters is that they reflect a failure to consider potential risks to the economy, and what might be done to both mitigate those risks and respond to them if they occurred. No one was ever going to predict the exact time and date of the financial crisis, but someone in government should have been thinking about what risks a rapidly expanding banking sector might pose. There were not many who warned about the risks, but enough to warrant a risk analysis. As I have said before, I doubt that this could have avoided a crisis - the banking lobby is too strong - but at least the government would have given some thought about what to do if it happened before it happened.

When it came to austerity, everything would have been relatively unproblematic if the economy had grown at the pace at first expected in 2010, because monetary policy would still have had control. (Interest rates would have been above their lower bound.) But someone should have been focusing on what happens if things turned out to be less rosy, and making sure ministers had to address these risks. At the very least that analysis would have pinpointed the need to change fiscal policy the moment that more pessimistic outcome came to pass, but perhaps also thinking about this risk might have injected a note of caution into policy before this happened. In a secret Treasury that might not have stopped a determined politician, but if this risk analysis had been made public?

Who in government should have been doing this risk analysis? The obvious institution is not the central bank, which can be far too tentative in the area of fiscal policy and too biased on financial policy, but the Treasury. The Treasury, to use a phrase suggested at one of our evidence gathering meetings, should be “the country’s risk manager of last resort”. The Treasury is uniquely capable of getting information from all the parts of government, including the Bank, and putting it together within a consistent macroeconomic framework.

But this isn’t the only reason why the Treasury still needs a strong macroeconomic capacity. It sets the rules by which fiscal and monetary policy operate, and the danger of not having this capacity is that the rules get determined by political whim, or don’t change through inertia. And it also needs the capability to undertake large pieces of complex analysis very quickly, as we have again seen over the last two decades.

What do I mean by capacity? Above all people: people who have the ability to do and understand state of the art macro analysis. If you compare the number of macroeconomists at the Treasury and the Bank there is a huge imbalance which is not conducive to good policy making. It is absurd to think that you need suites of models to set interest rates, but virtually nothing to set monetary and fiscal policy rules and analyse the impact of potential risks to the economy.

None of this is guaranteed to stop the Treasury become obsessed with the deficit and ignoring macro analysis, but the stronger the macro team is in the Treasury the less likely this is to happen. One other way that is often suggested of combating this danger, and which we considered, involves splitting off from the Treasury key aspects including macro policy into a new Economics ministry. My own view, which is similar to that expressed in the report, is that such a split just runs the danger of institutionalising the dominant role of balancing the budget in policy making.

There is one final benefit of enhancing the macro capacity of the Treasury, and that would be to provide the potential to increase openness. I take it as given that greater openness would be a good thing, and also being an essential way of utilising existing expertise around the country. It is far from clear why risk anaysis has to be secret. To take just two examples, the Bank makes a concerted attempt to find out what is being done in UK universities that might be useful to it, and it publishes a regular blog where their economists can flag interesting data and analysis. It would be good if the Treasury had the capacity to do something similar.

[1] There is a great deal more in the report, both about macro policy and issues around devolution, working with other departments, the overall goals of policy and much more. I also feel I need to note one area where I disagree with how Bob talked about the report yesterday (on Peston’s show and to the Guardian). While I’m sure it is true that the Treasury has lost trust as a result of its incorrect pre-referendum short term forecast, by highlighting this in the context of this report you inevitably give the impression that it did something unprofessional. But both assessments were signed off by Charlie Bean. and the Treasury were hardly alone in expecting negative short term impacts from Brexit. Worse still, it risks suggesting that their long term analysis is suspect.

When finance ministries no longer need many macroeconomists

Years ago, when I worked at H.M.Treasury, there was a large team of macroeconomists. My first three jobs involved forecasting, and my last looked at the economic effects of the budget, a pattern that was fairly typical at that time. Since central bank independence in 1997, and particularly the creation of the OBR in 2010, that requirement for a large team of macroeconomists to be working at the Treasury has gone.

If all macroeconomic decisions had been delegated to these two external bodies then this would not present any problems. But of course that has not happened. The remit for the Monetary Policy Committee is, quite rightly in my view, set by the Treasury. The Treasury still decides on the fiscal policy rule that governs all the of detailed micro measures we see in the Budget. And occasionally big decisions that have important macroeconomic aspects have to be made, and the Treasury is required to provide the evidence on those. Brexit is just the latest example.

The problem with this set up is that the need for macroeconomists within the Treasury is periodic. Fiscal and monetary rules are reconsidered at intervals involving a number of years. We have seen two crucial referenda quite recently, but I hope that will not become a regular feature. That creates a resourcing problem. While we insist that there is always the electricity generating capacity available to deal with peak loads, the idea that civil servants are spending time with little to do for large periods is an anathema for the public.

The danger is clear. Because a large team of macroeconomists are not needed all the time there is a tendency to cut back. As a result, when they are really needed to help make important decisions they are overstretched. Alternatively economists with expertise elsewhere might make badly informed macro decisions. More speculatively, with a small mass macroeconomists will have less influence over key decisions than, say, those charged with controlling public spending.

An interesting and I think important question is what you do about this. Do you separate out the macroeconomists into their own (rather small) ministry? Can you mobilise some kind of reserve army in academia or elsewhere, to be brought in when big decisions have to be made? I would be very interested in (sensible) solutions to this problem. (There is an incentive: if it is a good idea it might acquire some legs.)