Let's pay the people to vote

Another election; another poor turnout. 

In this week's county council elections the turnout was barely above 30%, not that we should be surprised. Four years earlier when the same seats were contested the turnout was again only 39.2%. In the local elections of 2011 the turnout was 42.6%. In fact the only recent local election with a turnout of over 50% was in 2010 when it coincided with the general election, and yet even for that general election the turnout was a fairly pitiful 65.1%. While this was an improvement on the 59.4% in 2001 and the 61.4% in 2005, it is still a long way short of the 77.7% in 1992. 

These figures should be worrying for Labour because it is the Labour Party that suffers disproportionately from differential turnout. At the last general election the average turnout in consistencies that returned Labour MPs was about 61%. For those electing Tories it was over 68%, and in one Conservative-held seat (Kenilworth and Southam) the turnout was a staggering 81%. Overall this means that approximately 10% more people vote in Tory-held seats than in Labour-held ones. This goes some way to explain why the Tories need a greater number of national votes to gain a parliamentary majority, and why with 24.6% more votes than Labour in 2010 they only won 19% more seats. 

It is partly this issue of differential turnout that allows the Tories to (falsely) portray the electoral system as being biased in favour of Labour, and thus to provide cover for their attempts to gerrymander the electoral system with policies like the recent one to equalize constituency sizes in terms of voter numbers. Of course their approach conveniently overlooks the other issue that damages Labour: the problem of voter non-registration in many urban areas. As a result there could be as many as an extra 10% of potential voters missing from the electoral roll in these predominantly Labour constituencies.

Taken in combination with the differential turnout problem, these figures suggest that the Labour vote may be over 20% below what it should be, which means that even at the 2010 election Labour's total vote should have matched that of the Tories at around 10.5 million votes, ceteris paribus. The question is, how many extra seats would this have yielded for Labour? I suspect not many as most of these missing votes are in safe Labour seats. Of course that suggests that the 19% extra seats that the Tories won in 2010 is entirely down to an electoral system that actually favours them, not one that penalizes them. So the big question is: how can this problem be rectified? 

So far most of the media analysis has concentrated on issues centred around political apathy. There are many causes for this malaise. The electoral system is clearly one. The combination of a first-past-the-post (FPTP) system and a large number of safe seats clearly makes many voters feel that their vote is worthless. 

Another problem is of course the lack of voter/consumer choice. With elections dominated by swing voters in marginal seats there is a tendency for all three parties to converge on the "centre ground" and to steal each other's policies. As a result most of the potential remedies have focused on changes to the electoral system, of which the AV referendum was a prime example. 

Other solutions have focused on improving the ease of voting. Thus strategies for increasing the number of postal votes have been proposed, as well as making polling day a bank holiday or putting it on a weekend. So far, however, no-one really appears to have considered financial incentives, with the possible exception of implementing some form of lottery. Why? 

Perhaps because it seems to resemble a form or bribery reminiscent of the rotten boroughs of the late 18th and early 19th centuries. Yet politicians bribing the electorate is nothing new, old, or unusually. The tax cuts, privatizations and council house sell-offs under Thatcher in the 1980s were little more than bribes to a certain section of the electorate. In that sense they were truly insidious because they were selective and divisive rather than universal. They only benefited those with large incomes, spare cash or current tenure of council properties. Those who fell outside these groups were left out of the feeding frenzy. Doubtless some would argue that such a measure would run counter to the provisions of the Ballot Act of 1872, but if the "bribe" is merely conditional on voting and not on voting for a particular candidate or party, would that still be so? 

Of course the principal reason why paying people to vote has probably not been considered is the cost. To make it attractive enough to the potential voter each would need to be offered over £100. Yet with around 45 million potential voters the total cost could then be over £4.5bn. If this was only applied to general elections, though, it would still only equate to £900m per annum. That is peanuts for the UK government. Yet there is another solution that would cost nothing in nominal term. Use the shares the government already owns in the privatized banks. The total government stake in RBS and Lloyds TSB is currently valued (according to their FTSE-listed share price) at over £30bn. That is enough to fund a voter giveaway at the next six general elections. 

Earlier this year Lloyds TSB claimed it was close to being ready for privatization. Now RBS is saying the same. However it is highly likely that any share sale would need to be staggered over a number of years in order to get the best price. 

Nor is the idea of giving these shares away a new idea. This is an idea that was originally proposed by some LibDems a couple of years ago. Then in February there were reports that George Osborne may consider giving bank shares away to all taxpayers (does that include poor pensioners and the unemployed?) It is therefore only an additional small step to suggest that such a gift should be conditional in some way. So why not make it conditional on a citizen exercising their democratic right, nay duty, at the ballot box? Let us call it the citizen's dividend. 

It should be clear that while all may benefit from this idea, the Labour Party and Labour voters will benefit the most. A typical Labour voter is more likely to be incentivized to register on the electoral roll and to subsequently vote by a cash windfall of £100-£200 than is a merchant banker living in Surrey. And when they vote they are more likely to vote Labour in order to ensure that the policy would not be discontinued. If the Tories and LibDems copied Labour's policy then they would still lose out because of the greater benefit to Labour in terms of differential turnout. If they fail to support the idea then they risk the loss of even more votes to Labour. And then there are the economic benefits. Most of the shares will be sold on receipt, and the proceeds spend. The result will be an urgently needed fiscal stimulus for the economy, while the universality of the share allocation will help reduce inequality. So where is the political downside?

20 questions for the next Labour leader - part 2

Having just watched the Newsnight debate between the five contenders for the Labour leadership, I have to confess that I am still not much the wiser. With Jeremy Paxman seemingly more interested in trying to get the candidates to talk about the past (e.g. Iraq, Gordon Brown's leadership) than the future, there was precious little time for the candidates to outline future policy changes. Paxman's attempt to try and get Ed Balls to knife Alistair Darling over his last budget was particularly emblematic of much that is wrong with the way politics is conducted inside the Westminster/media bubble. Then Michael Crick had the audacity to claim that Ed Miliband had underperformed because he had "..failed to put forward the kind of visionary ideas..." that he had outlined at previous hustings. Well of course he failed, Michael, because he wasn't given the opportunity. In fact none of the candidates were.

In a previous blog I outlined five of the top twenty questions that I think need to be addressed in this leadership debate. Only the first of these (why you?) and the last (civil liberties) were really addressed in the Newsnight debate. The issues of housing, inequality and the candidates' own policy priorities were largely ignored. Yet the previous debate hosted by the Fabian Society seemed to be much more policy oriented. As a result it is slowly becoming apparent that there are some distinct differences between the various candidates, but we will only be able to fully appreciate what these are when we find out where each candidate stands on a range of different issues. Many of these critical issues will be in policy areas where the last government was found wanting, both by its supporters and by the electorate as a whole.

6) Clearly electoral reform is one such issue. The media think this is only of relevance to political anoraks, but it is becoming clear that it is central to issues of social justice and inclusion. It also impacts on the way political parties position and differentiate themselves and hence on amount of choice voters are given at elections. This was one of the key policies that was addressed at the Fabian meeting. It now appears that most of the candidates are signed up to electoral reform. Ed Balls is even in favour of a written constitution, which brings me on the the next point.

7) Constitutional reform.
One area where the last government lost trust was over its refusal to grant the people a referendum on the Lisbon Treaty. So would a future Labour government grant a referendum on all future EU treaties? This question is even more important given the role that such treaties appear to be playing in forcing the UK government to contract out public services and possibly privatise the Royal Mail.

8) Then there is the euro. Given the current problems in the eurozone it is imperative that we know under what circumstances (if any) each candidate would countenance the UK joining the euro. It is also important that we find out to what extent they each understand the potential economic consequences of doing so. One of the biggest economic consequences of joining the euro would be in the effect it had on the UK financial sector.

9) So would any of the candidates be prepared to reform the banking system to make it more competitive and reduce the risk of another financial collapse? Are they prepared to break up big banks? What other financial measures would they introduce? And how would they prevent the most disadvantaged in society being excluded from access to bank services as banks seek to increasingly make customer pay annual fees for bank accounts?

Of course it is not only our banking system that is prone to excessive executive pay and a disproportionate bonus culture. The same is true of much of British industry.

10) So how would each candidate improve shareholder democracy and Company Law in order to reduce corporate fraud, tax evasion and avoidance, and excessive executive pay and bonuses?

11) How would they regulate takeovers in order to maintain market competition, improve consumer choice and protect British businesses and jobs from unfair competition and commercial predators? There is no doubt that the takeover of Cadbury by Kraft cost Labour many thousands of votes, both around Birmingham and elsewhere.

12) Wealth and Mansion Taxes.
Which candidates would support a Mansion Tax of the type outlined by Vince Cable? Such a tax is far more redistributive than income tax and could generate up to £20bn, as I pointed out a few months ago. That is nearly ten times the amount that inheritance tax currently generates. It is also far more than is currently generated by stamp duty and CGT.

So, twelve down and eight more to go.

Nick Clegg and the Tories - deal or no deal?

So who should Nick Clegg and the Lib Dems do a deal with? And what should they seek to get in return?

Clearly their first priority must be electoral reform. This is clearly their best opportunity yet to secure a set of reforms that could completely change the dynamic of British politics. Unfortunately, there are a number of major obstacles standing in the way that could prevent them from achieving this.

The first problem is this. On issues of policy (tax, electoral reform, Europe, the economy) the Lib Dems are much closer to Labour than the Tories, and so are most Lib Dem activists. Unfortunately, the same cannot be said for most Lib Dem voters, particularly those in many of the seats in the South of England where the Lib Dems are the main opposition to the Tories. So while most Lib Dem party members and MPs would be much happier forming a coalition with the outgoing Labour government, they could face a backlash from some of their voters and the Tory press if they did. David Cameron may not have won the election last Thursday, but there is no doubt that Gordon Brown lost it. Therefore Nick Clegg would be committing electoral suicide if he was seen to be supporting a Prime Minister who had been rejected by the voters.

The alternative Lib Dem-Labour scenario is that a coalition between the two parties could be agreed, but with Gordon Brown stepping down as PM. But would Gordon Brown ever agree to that? I suspect not, but even if I'm wrong, who would replace him? No-one from within the Labour Party has the mandate, and a new leadership election would take too long. So how about if Nick Clegg were to be the new PM? That might be more popular with the electorate, but then the problem switches to the question of who would be his Chancellor of the Exchequer. The public would also want Vince Cable, but it is inconceivable that any coalition between the Lib Dems and Labour could be agreed with the Lib Dems holding both of the two top posts in Cabinet when they are by far the smaller party. And the alternative is that Gordon Brown might demand his old job back.

Finally there is the problem of stability. A Lib Dem-Labour coalition would still fail to command a majority in the House of Commons. It would need the additional support of the SDLP, the Greens, and either Plaid Cymru or the SNP or both in order to govern. Yet the greater the number of partners, the greater the risk of collapse. The question the Lib Dems should therefore be asking themselves is this. How long would such a coalition need to exist in order for it to deliver electoral reform in time for the next election? And how likely is it that it would happen? The doomsday scenario is that this coalition would collapse before any real reform could be enacted, and that at the ensuing general election the Tories went on to win decisively, with the Lib Dems routed. Electoral reform could then be off the political agenda for another generation.

So if a Lib Dem Labour coalition is fraught with difficulty and danger, how about a pact with the Tories? At first sight it is hard to see, though, how a pact between the Tories and the Lib Dems (whether in the form of a formal coalition or an informal one) could work given the massive differences in policy between the two parties and the mutual hostility of many of their respective MPs. Moreover, the Tories would never agree to electoral reform of the House of Commons. However there is one thing that the Tories could deliver that would be a total game changer - reform of the House of Lords.

David Cameron and the Tory Party claim to support a fully elected upper chamber, so now Nick Clegg needs to call their bluff. The outgoing Labour government has claimed that it was opposition from the existing Tory life peers and hereditary peers that blocked and delayed reform of the House of Lords in the final years of Gordon Brown's premiership. David Cameron on the other hand can deliver the necessary votes in the House of Lords needed to get reform through quickly. That should therefore be the price that Nick Clegg should demand for limited support of a minority Conservative government in the House of Commons. The critical factor here is speed. If reform of the House of Lords is not in place before the next general election, not just in legislation but in operation as well, it can always be repealed by a new (Tory) government in the House of Commons that may seek to break any promises and cancel any deals agreed previously. There is little honour in politics, particularly if it gets in the way of the exercising of unbridled power. However, once an elected House of Lords is up and running though, no House of Commons will be able to abolish it unilaterally. It would need a broad consent in The new House of Lords as well, and turkeys don't usually vote for Christmas. In short, once it is up and running, a directly elected House of Lords is here to stay. It is irreversible.

Now at first sight this might all seem like a small and insufficient concession for the Lib Dems to extract from the Tories given that most people see the House of Lords purely as a revising chamber. I believe, though, that reform of the House of Lords is the real key to total electoral reform in this country. It represents the small crack in the dam that will eventually bring down the whole structure. As the new House of Lords would be elected by PR, it would be more proportional, more democratic, and therefore more legitimate than the House of Commons. It could act as a block on extreme policies promoted by governments with Commons majorities but minority support from the electorate. In effect it would lead to coalition governments without the need to reform the voting procedure for the House of Commons, though that would surely follow. In short, it would totally change the rules of the game. That is why Clegg must seize the opportunity now. He may never get another chance.

AV or not AV? That is the question. Or is it?

When Gordon Brown announced in his speech to the Labour Party Conference last week that a referendum on the alternative vote (AV) electoral system would be held after the next election (if Labour won), did he really mean AV? Or was the term simply a lazy shorthand for all possible flavours of AV+ (AV plus top-up seats to increase the proportionality) with the exact composition to be decided on later? Or more worryingly, was it another exercise in triangulation designed to kill off any real prospect of reform?

If it was the last of these then I can understand the anger of people like Neal Lawson of Compass who wanted the referendum to coincide with the next General Election. However, the problem with that strategy is that the issue of proportional representation (PR) could become subordinate to the other main issues at the election. Then there is the other problem of double jeopardy. Either scenario for a referendum will mean that two separate electoral hurdles must be overcome before electoral reform can become a reality. With four possible permutations available (YY, YN, NY, and NN) but only one (YY i.e. Yes to a Labour government and Yes to voting reform) that will actually deliver change, the odds are not good. So was that part of Gordon's cunning plan?

The issue of PR in our electoral system has long been a controversial one, particularly for those on the political Left. Maybe it is because some on the far left were never really true democrats in the first place, and only ever saw democracy as a means to an end, not an end in itself. For them it was about the acquisition, appropriation and maintenance of the reins of power, albeit for what they perceived to be the common good or the liberation of the working class. That position, however, is no longer tenable, if it ever was.

21st century Britain is crying out for a modern democratic system. You only have to look at the disaffection of many voters, and the lack of any real policy differences between the main parties to see that the current electoral system reduces the amount of pluralism within politics, rather than increasing it. It places 90% of electoral power in the hands of 10% of voters in the 100 most marginal constituencies and effectively disenfrachises most of the rest. It is therefore not fit for purpose, and is most certainly not democratic.

It is against that background that many of us in the Labour Party have long been waiting for Gordon Brown to take the initiative in this area. So when he finally broke cover, the relative modesty of his proposed reforms has left many of us underwhelmed. However, much of the criticism regarding Gordon's announcement and of AV in general has been about its perceived lack of proportionality. So while Simon Heffer writing in The Daily Telegraph thinks (wrongly) that AV is a form of proportional representation (PR), many others such as Neal Lawson and Mark Thompson at Left Foot Forward dislike it because it is more disproportionate than the current First Past The Post (FPTP) system. Meanwhile, back at The Daily Telegraph, Janet Daley seems to hate AV because she thinks the Tories would never be able to win under it (as incidently does Heffer given his apparent paranoia over the "threat to put a centre-Left coalition in power for perhaps decades to come"). Of course the point both Daley and Heffer fail to acknowledge is that if the Tories can't win under AV or PR (even in coalition) it is probably because more than 50% of the electorate hate them. In which case they don't deserve to be in power in the future just as they probably didn't for much of the recent past either.

The reality is that the proportionality or fairness of AV+ depends fundamentally on the number of top-up seats that are included. The greater the number, the greater will be the proportionality, at least for the three main parties. The argument that is then presented to counter this is that top-ups give too much power to the party leaders in their appointment, but this is another red herring. If the top-up candidates are selected from the highest placed runners-up in each constituency and ranked in priority based on their proportion of the first preference vote, only the voters can ultimately decide which candidates get chosen for the top-up seats, not the party leaders.

The advantages of AV+ are that it means that each candidate needs to garner the support of over 50% of the electorate relative to his/her nearest rival in order to win. So fewer constituencies will be safe seats and almost everyone's vote will count towards the final decision. This should help to increase voter turnout and improve the democratic credentials, support and legitimacy of whichever candidate is selected. However, there are three other important factors that most people tend to overlook when considering the merits of any type of electoral reform.

Firstly, you cannot judge the merits of a proposed electoral change for the House of Commons (HoC) without considering how such a change interacts with the electoral process for the upper chamber (assuming we ever get one). The two bodies should be designed to work in unison, with each complementing the other and each compensating for the deficiencies of the other, not merely reproducing the political balance or composition of each other. A bicameral system only serves any real purpose if it introduces a separation of power or powers, and creates constitutional checks and balances. If each of the two arms of the legislature is a carbon copy of the other then all you are doing is adding extra cost for no additional benefit.

Secondly, people wrongly assume that if electoral reform is implemented everything else will stay the same, that the constituency boundaries will be the same and the amount of tactical voting will be unchanged. Neither of these are true. If the voting system changes then the Boundary Commission will inevitably change the size, shape and demographic of the constituencies in order to make the outcome of any election fairer. People's voting strategies will then be influenced by both of these changes as they seek to maximise the impact of their vote.

Finally there is the elephant in the room that no politician will talk about. That elephant is the Parliament Act of 1911 and its 1949 amendments that give the House of Commons ultimate supremacy over the upper chamber. It's justification is the greater democratic legitimacy of the elected House of Commons (HoC) over the unelected House of Lords (HoL). But if the HoL is reformed into a democratic chamber elected by PR using the list system, and the HoC remains with FPTP or merely changes to AV or AV+, how can the Parliament Act continue to be justified? The reformed HoL will have at the very least equal democratic legitimacy, and so should have equal power and status. Unfortunately, many MPs will never countenance such a transfer of power, and presumably neither will many of them countenance any real electoral reform either. In that respect these MPs demonstrate their true anti-democratic credentials.

Perhaps the most worrying aspect of Brown's speech, though, was the one reform that was glaring by its omission. What exactly is the Government's policy on House of Lords reform? Until we know that everything else must be put on hold?

It is clear that real electoral reform requires a reform of both Houses of Parliament and of the constitutional settlement under which they operate. AV+ has many attractive attributes in this respect.

• It maintains the constituency link for most MPs as in FPTP. This will also help maintain the independence of local parties and their candidate selection.

• It means every vote will count in many more constituencies, so voter turnout should increase, and there will be more marginals.

• Marginal constituencies will be as attractive as safe seats to the winning candidate(s) because these constituencies will return two candidates, not one.

• It is more likely than PR to generate a House of Commons with a parliamentary majority for one of the major parties, and therefore avoid the constitutional messiness of ever changing coalitions.

But AV+ also has a number of drawbacks:

• It is still not truly proportional. A party will probably still end up governing with less than 50% of the popular vote.

• It still disadvantages the small parties.

• It fails to address the West Lothian question.

However all these drawbacks could all be compensated for with a reformed HoL elected on the list system. In such a chamber it is unlikely that any one party would ever achieve a majority of votes or seats. Therefore a coalition between the dominant party in the Lower House (i.e. HoC) and other smaller parties in the Upper House (i.e. HoL) would be necessary, provided of course that the Lower House could not steam-roller its legislation through using the Parliament Act. That is why the Parliament Act must eventually be repealed.

The constitutional settlement that I have arrived at could also be enhanced with a number of other refinements.

• Disenfranchising voters in Scotland, Wales and Northern Ireland from one of the two Houses (personally I favour the Upper House) effectively nullifies the West Lothian question.

• PR for the Upper House is more amenable for fixed term parliaments.

• Mid-term elections to the Upper House would increase democratic accountability. I would elect a third of members every two years.

• Term limits of six years for the Upper House would increase the independence of MPs and decrease the power of the party whips and the executive.

So, Gordon, if you really are committed to electoral reform I expect to see much of the above in the next Labour manifesto. After all, what have you got left to lose?