[Robin McAlpine Blog] Loopholes, looting and law courts…

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Loopholes, looting and law courts...

It’s perhaps the thing about government in Scotland about which I am least certain – who is behind the continuous loophole-creation and the endless looting of public money? This happens so universally it isn’t really feasible that it’s random. Someone is doing this. But who? And how on earth do we stop them?

It seems that there is no policy created by the Scottish Government which is not riddled with ways for the financial elites to profiteer. Even when there are policies that they simply can’t turn into a cash-grab for the wealthy, somehow they manage to do it. Again, something that consistent isn’t just happening for no reason.

At the weekend the Herald covered the launch of our new paper on how to deal with the crisis in foster care in Scotland. There are two things I think we can all agree on (if we have the data and even a rudimentary moral compass). First, foster care is in crisis with more demand from children seeking placements and a reduced number of people coming forward as foster parents.

Second, since children in need of foster care are abused or neglected or there are serious family problems such as addiction and these are quite literally the most vulnerable people in society, it would be deeply immoral if we raised money through tax to help them and rich people top-sliced that money.

So the rules say only non-profit agencies and local authorities can get contracts for brokering foster care. When that means charities and local authorities, we’re good. But if it includes companies or holding companies which have for-profit beneficial owners, we have a problem. And when those agencies are paying inexplicably high ‘service charges’ to the profit-making parent company those problems are real.

And if those ‘non-profit’ foster agencies are making multi-million pound unsecured, interest-free loans to their for-profit parents (they are, loads of them), that ought to be fraud. But according to the government it’s not, it’s perfectly legal.

Yes, we know – because you made it perfectly legal. In fact, to my mind, when the journalist contacted the Scottish Government for comment there was only a single reply which should have been acceptable; ‘oh, that’s disgusting – we will remove all these foster agencies from our books immediately and close all loopholes’. As we see, that wasn’t the response…

It may be that the fact the external consultants have their fingers in every pie which is leading to so many empty pastry cases

I can’t begin here to illustrate properly the scale of this problem. It is so overwhelming, so comprehensive. Let’s call it ‘those who make and administer laws deliberately creating pathways for very rich people and corporations to cream off money the public believes is being used for good causes in their name’. Now see if you can find a government policy which is not beset with this.

Let’s start with policymaking itself. As you know, no public policy in Scotland seems to be made other than by the private sector. Millions upon millions of pounds leave the public purse every year destined for one of the corporations who will write policy for millions of pounds – and for the benefit of their clients.

Indeed this may answer my question. Think of the Big Four accountancy firms as ‘the loophole industry’, literally. They seem to exist to do two things; firstly to build almost invisible loopholes everywhere they can in public policy. Second to exploit those loopholes to make their clients money. If only they know where the loopholes are, so much the better.

It may be that that explains the problem right there – this may be ‘Theft by Target Operating Model’. (In case you don’t know, what a lot of these contracts are for is to develop what are now known as ‘Target Operating Models’, or what used to be called ‘implementation policy’.) It may be that the fact the external consultants have their fingers in every pie which is leading to so many empty pastry cases.

But I’m not sure. It is really hard to follow who is writing what policy. You need to sit on the contracts portal almost continually and mostly they don’t exactly make it easy to work out what the policy-making contracts are actually for, what policy they link to and all the rest. And in any case, these are just pieces of advice. It is the civil servants who write the actual legislation.

Is it the politicians? I’m sceptical. Let’s have a very quick look at some examples of where there is inexplicable little interest in the public good from decisions. For example PFI schemes for tree planting, land reform legislation that won’t reform land, the ScotWind auction for offshore wind that put a maximum cap on bids, virtually anything the Scottish National Investment Bank does…

…care homes for the elderly, the production of absolutely any IT system, almost anything related to large infrastructure construction (especially if it goes via the Scottish Future’s Trust), the privatisation of the electric vehicle charging network, most of what Scottish Enterprise does in giving grants to massively profitable corporations, the use of the private sector to deliver healthcare in the NHS…

…the refusal to bring busses into public ownership, the use of big NGOs as large-scale public service delivery vehicle, the way CMAL commissions ferries, the extent to which schools rely on for-profit learning materials like text books, the wall-to-wall advertising in the public realm, the ongoing determination to use market value with planning permission rather than use value without when purchasing land for public use, tax haven-owned care homes…

Look, I’ll stop there. I don’t think adding more to this will help. Just assume that if it is a public process and it involves money, somehow someone is syphoning money that shouldn’t be (morally-speaking if not legally). This is why I don’t think it is down to the politicians. For the most part they don’t have that much of a grasp on detail and they are seldom that effectively coordinated.

Plus there isn’t really very much in this for them. Scotland’s politicians don’t, on the whole, end up with the lucrative board positions available to former UK cabinet members. But the senior civil servants do. I mean, they really, really do if they’re at the very top. You can usually tell because they’ll be back in their new role doing a talk for Reform Scotland making the case for more privatisation.

Under President Robin, placing loopholes in public policy that seem to have the sole purpose of extracting money for reasons other than the public good would be a criminal offence

I genuinely believe that this is all deliberate and, if not fully coordinated, at least intentionally culturally embedded. The lifecycle of a senior civil servant appears to be get spawned into some private school, get to a Russell Group university, join the civil service, get fast tracked, fill legislation with loopholes that get private equity rich on public money, retire, join the board room, get your kids to private school, repeat.

I am bemused at the rising costs in the public sector. Barlinnie is 600 per cent over budget in six years? That’s 100 per cent inflation per year. That doesn’t happen. So how much is the decline in public services explained by what looks like a rising budget being plundered more and more?

You may be aware of my thesis on this. It really has accelerated in the last decade. Prior to the financial crisis, Scotland’s elites basically all lived off the scraps from the Scottish finance sector. You may remember the ‘Gogarburn Delirium’ when all the senior people thought Scotland would become a wholly-owned subsidiary of Fred Goodwin’s empire. Of course that went ‘full Darien’. I firmly believe that, short of easy finance bucks, Scotland’s elite needed another easy source of free money.

I believe they chose the taxpayer. I think they knew about the weakness of political governance in Scotland and how easy it would be to infiltrate policy-making for purely extractive reasons. I think they decided to replace the spillover from a rich banking sector with plunder from the public purse. I strongly suspect that is a key factor in the decline of basically everything in Scotland in ten years.

There are lots and lots of ways round this or to prevent it. I spend a lot of time outlining how I’d reform democracy to prevent conflicts of interest and I’ll repeat those here. But here is one simple, aggressive move I’d take – under President Robin, placing loopholes in public policy that seem to have the sole purpose of extracting money for reasons other than the public good would be a criminal offence.

If someone made a complaint to the police then the police would have to decide who was responsible for the loophole and whether there was reason to believe it was unmerited. I don’t care if it was a civil servant, a politicians or a consultant – let’s just let them know that in future they will have to justify the reasons for their loopholes in court. It would be sobering for them, no?

What is happening in Scotland is scandalous, but because it’s literally hundreds of little scandals it is hard to keep track of them. But if you add this up it’s hundreds of millions of pounds at stake – every year. You’d think that would be the sort of thing a government would want to put a stop to.

Right?

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