Accounting for the democratic deficit in Britain: The Bank of England knows no shame

As Europe protests, the UK sleeps. MPs and civil servants lack accountability and it’s our fault. Witness the duck and dive tactics of the Bank of England itself

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Mervyn King: Shameless?
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Simon Miller
On 4 May 2012 14:54

This week in Europe we saw millions of trade unionists, socialists and ordinary members of the public take to the streets to protest against austerity measures.

In France, the first round of the presidential election saw a voter turnout reach 80 percent.

In a time of economic hardship, uncertainty over the coalition‘s governance and a false media message of cuts in government spending, the turnout for UK local elections barely touched a third of the electorate.

Doesn’t that make you proud? That, in the birthplace of liberal democracy, only a third could be bothered to go and vote.

Only a third had a view on whether their councillors, mayors or assembly members were good enough.

We blame politicians for everything under the sun, that they don’t represent us, that there is no difference between them.

We shout at them to do something but if only a third can be bothered to vote, are you surprised that there’s a cigarette paper of difference between the parties? That they can spend our money, buy themselves iPads, run up obscene amounts of debt, and give money guarantees to the IMF with impunity.

It is because we don’t hold them to account.

We hear plenty of noise in the media about bankers’ bonuses, about companies’ actions, about football teams but there is one thing that links them – in the end they are accountable for their actions.

Despite the legal weaknesses of shareholder voting in this country at the moment, shareholder activism can prove catalytic to get changes at a company as demonstrated by actions at Barclays, Aviva and Hovis in the last couple of weeks.

The system isn’t perfect but there are mechanisms to hold executives to account.

Indeed, there are even financial and criminal penalties for directors and executives that fail to show fiscal probity when in stewardship of a company or, as Rangers has found out, a football team.

And yet we fail to see this in the Palace of Westminster, nor indeed its linked environs such as the Bank of England.

The Bank’s governor Mervyn King has ludicrously claimed that it did warn about the risks of a financial crisis. Really? Where was it shouting from? Dartmoor?

Even more ludicrously, King claimed there was no boom. To cover the fact that the monetary policy committee failed to raise interest rates to cool us down and, hopefully give us a soft landing, King now defends the Bank by rewriting its role. To cover for the fact that like everyone else, it was fooled by the years of cheap credit and seemingly never-ending rise in asset prices.

And yet, the Bank still refuses to have an inquiry about its role before, during and after the crisis. King refuses to be held accountable and yet the Bank insists that it be given greater power to take over troubled banks on its say-so.

Now, King has said that the Bank of England would be willing to submit to scrutiny as part of a review of the tripartite system as a whole but considering how practiced the Bank is at the dark arts following years of civil war between it and the Financial Services Authority, don’t be surprised to find accountability for its actions somewhat lacking.

A former footballer friend of mine has always argued that instead of yellow and red cards, leading to convenient holidays and suspensions in the depths of winter, why don’t professional footballers get hit where it hurts: in the wallet? To which I would add, why not make MPs fiscally accountable for their actions?

Think about it. Instead of blindly following party lines into the lobby, why not give them the same liability as directors and doctors? If they have to think about the consequences of their actions, wouldn’t they actually think about what they are voting for? After all, they should be fine, I mean they all read the Lisbon Treaty before blindly following orders... didn’t they?

Indeed, fiscal probity could be extended to the civil service. Why should permanent secretaries get nice retirement packages and gongs when their departments are paragons of waste, over-manning and unproductivity? Reward those that bring fiscal discipline to their departments, fine personally those that don’t. Reward departments that come in under budget, punish those that needlessly waste money of “projects”.

Stop this culture where, every March, roads get dug up over fears that if a department/council doesn’t spend up to their allocation, they would lose that money the following financial year. Allow them to build up decent safeguards against downturns such as the one we are in now. Bring private accountability and discipline to the public sphere.

Yesterday saw the depth of the public’s antipathy with politics where we are in a bizarre dichotomy where politicians react to the latest fast-food media outrage which apparently reflects public outrage and yet only a third of the public vote.

How do we want our politicians to react? On the basis of headlines or on the basis of the ballot box?

I am not being entirely serious about fiscal probity rules for politicians (if anything purely on practicality issues) but we need to get people back to the ballot box. We need politicians to have true democratic legitimacy and true accountability to their voters.

We need politicians that can legitimately argue that they have acted in the interests of the voters and not their grubby career ambitions or party or business interests.

Above all we need to vote. Make them answer to the population as a whole, not a third of it.

For all who complain about the government, ask yourself a question – did you register your vote yesterday, even if only to spoil your ballot paper? If the answer is no, then you are part of the problem. You are not holding our employees to account.

Simon Miller is the Editor of Financial Risks Today. He tweets at @simontm71

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