31 October 2015

Kezia Dugdale: Doctoring with a cudgel...

Can Scottish Labour "reverse" Tory tax credits cuts, like-for-like? That's a money question, and an administrative question, but it is also a legal question. Scottish devolution is subject to an increasingly complicated set of founding documents and diktats. I sympathise with the bamboozled public. I sympathise with the bamboozled commentariat too -- at least to some extent. Much of the detail of the Scotland Bill has escaped without analysis - except in the most general terms - because the detail of the thing seems simply too complicated and too dreary. 

This aversion to detail has serious drawbacks. We are left with a population, unable to discern where power - and responsibility - sits. But we are also left with a public discourse in thrall to lazy misconceptions and downright ignorance. Microeconomists like to point out that information asymmetries inevitably empower some people and disempower others. What you don't know not only can hurt you: it can screw you over mercilessly. That's one of the reasons I try to shed a little light on tricky-seeming areas of law here. Ignorance, and maintaining public ignorance, is fundamentally a conservative impulse. Trust me, it says. I'm in the know, and I know best. I reject this outlook entirely. 

Understanding the politics of devolution increasingly demands that we understand the law of devolution. Regrettably, most of our key commentators and opinion formers still haven't the nearest, foggiest clue about how the powers and reservations of devolution are delimited. And more frustratingly still, they tend not to stir themselves to find out. Instead, they spend their time discussing political tactics, impressions, aspirations, court politics -- and as a result, allow politicians to peddle guff unchallenged. 

You can understand why. It is quicker, zestier - and simply more fun - to ask whether policy X knocks Kezia Dugdale off course, or if policy Y puts Nicola Sturgeon in a tough spot - than doing the dogged, drearier work of asking: is there any legal basis for this policy, and how the hell do we fund it? This isn't a partisan point. Nationalists have used press and public ignorance of the limits of the Scotland Act to pull a trick or two in their time. But we're poorly served - misled, really - if we allow it to continue.

This lamentable tendency is much in evidence in the reporting of today's speech from Kezia Dugdale, pledging to "restore", "cancel" or "reverse" Tory tax credit cuts. The first question you might ask is a simple one: are tax credits devolved now? No, they're not. And is the new Scotland Bill proposing to devolve decision-making on either the child or the working tax credit to MSPs? No, it isn't. So how the deuce is this flagship Scottish Labour policy to be delivered? 

Here we have to go back one step further, and consider a couple of even more basic questions -- "what are tax credits anyway? And how is George Osborne proposing to change them?" Administered by HMRC, introduced by the Labour government in 2003, working tax credit is paid to the low-paid to alleviate in-work poverty. Child tax credit is also available, on top of child benefit. But isn't Osborne proposing to abolish tax credits? Not quite. As he set out in his summer budget, the Chancellor's plan hinges on reducing the overall spend on tax credits by increasing tapers and restricting entitlements. The key passage:

"From April 2016, the government will reduce the level of earnings at which a household’s tax credits and Universal Credit award starts to be withdrawn for every extra pound earned. In tax credits, this point (known as the income threshold) will be reduced from £6,420 to £3,850 ... The government will also increase the rate at which a person’s or household’s tax credit award is reduced as they progress in work, by increasing the taper rate in tax credits from 41% to 48%."

Decode that a bit. Say you earn £6,420 per annum this year. You are entitled to your full award of tax credits. But what happens if you earn £7,000? For every £1 you earn beyond £6,420, your maximum entitlement to tax credits will be reduced by 41 pence. If Osborne's summer budget plans ever materlise in the spring of 2016, this means a sharper taper of 48 pence in the pound applying to income above the income threshold, which will bite a far more modest levels of earnings. It is this new calculation which will strip out appalling sums of money from the industrious poor. 

What should immediately strike you is: this isn't a straightforward clawback of benefits by the Treasury. Gavin Kelly is good on this. "Restoring" tax credits from Holyrood isn't a question of popping an extra £200 into the balance for each qualified applicant. Each individual case will have to be calculated on its merits. This is gruesomely complicated. Someone would have to do the calculations. And under the general principles of the Smith agreement, the bean-counting money would have to come out of the Scottish budget. 

And worse, Holyrood will have only the crudest tools to begin to mitigate this impact -- even if the money could be found to begin to do so. Whatever Labour hope to be able to do -- it can't be to "cancel" or "reverse" the effect of tax credit cuts. The Scottish Parliament just doesn't have the power. So what will the Scotland Bill let Holyrood do? Well, for starters, it gives MSPs power to make provision about some disability, carers and industrial injuries benefits, maternity, funeral costs and cold-weather payments - subject, albeit, to unjustifiable restrictions. The Bill will also give MSPs some power over income tax. They will be able to establish and vary a Scottish basic rate of tax, and the higher bands. What they will not be able to do, however, is to set the personal allowance or other more nuanced forms of tax relief.

This is all well and good -- but there is nothing here which would let First Minister Dugdale pursue the scheme she has outlined today. Instead, she would have to rely on section 21, which proposes to give the Scottish Parliament power to "top-up" reserved benefits with discretionary payments. However, this power only allows Holyrood to funnel funds to those who are already "entitled to a reserved benefit". It doesn't allow MSPs to create new entitlement schemes. And critically, those whom Osborne pushes beyond the scope of the social safety net cannot be caught by a Scottish policy intervention under the Scotland Bill. Nor is David Mundell proposing to give the Scottish Parliament power to devise and administer its own welfare schemes, following its own lights. Ebeneezer Scrooge lives.

As devolution expert Alan Trench observed on Twitter earlier today, this means that Holyrood could devise some kind of "income supplement" and foot the bill, but this couldn't be administered through the tax system as credits are at present. This Scottish income supplement would inevitably be subject to different rules, criteria and thresholds. Jehovah only knows what it would cost to introduce. Jehovah only knows where the money is supposed to materialise from. We can make a shrewd calculation, however, that any wheeze to mitigate the impact of Tory tax credit cuts, penny for penny, in every individual case, would be impractical and ruinously expensive.

The chancellor's tax credit changes are brutal, but surgical. At best, the Scotland Bill will give Holyrood a club to doctor to the injury Osborne's reforms will create. "What do I care?" says the hard-pressed worker, glad of any mitigation for their situation, and their lost tax credits. Quite so. But whatever this is, it isn't ""restoring", "cancelling" or "reversing" the Chancellor's unjust, disproportionate and unfair tax credit policy. Holyrood doesn't have the power. And it's pure fiction - political spin - to claim otherwise.

24 October 2015

EVEL: A Postscript

Photo Credit: @JamesDoleman
EVEL, thundered Iain MacWhirter in the Independent, isn't about Scotland: it's about locking Labour out of power in the UK. After an admirably precise and succinct run down of what the Commons standing order changes will and will not do, Iain argues that:

"... the next Labour Prime Minister could find that he or she is in office but not in power. This is because Tory MPs sitting in the English Grand Committee will have an effective veto on all legislation on domestic affairs. Say Labour tries to repeal the Health and Social Care Bill 2011 that increased the freedom of private firms to bid for NHS contracts. 
MPs on the English Grand Committee could veto it on the grounds that this is an English only bill. It would leave UK Labour ministers for health, education and justice unable to implement the policies on which the government was elected. How could any prime minister pretend to govern when he or she can’t implement their manifesto pledges over 85 per cent of the UK population?"

Now, I realise the idea of a future Labour Prime Minister looks distinctly hypothetical at the moment, as Jeremy Corbyn allows his fractured opposition to drift, drift, drift. But just for the sake of argument, say that the 2020 UK general election throws up a majority of MPs from across the UK who are prepared to back a new Labour government over the Tory minority. What happens?

Reading MacWhirter, you could be forgiven for thinking that we are now stuck with EVEL, and that any future Labour government reliant on Scottish votes would be doomed.  And so it would be, if the current EVEL scheme remained in force. But a critical point I neglected in yesterday's blog, and which Iain neglects in his Independent piece, is that if an anti-EVEL majority is elected to the Commons -- the new restrictions on the voting rights of Scottish MPs will evaporate tout suite. They will melt more swiftly than a sleet shower in summer.

"As every school student knows", our sovereign UK parliament can't bind its successors. And this is as true of parliamentary procedure as it is of primary legislation. A number of critics of the UK government have suggested that it is inappropriate to make fundamental constitutional changes like EVEL using parliamentary rules instead of primary legislation. I'm not so sure. As anyone who has attempted to follow the Scotland Bill well understands, primary legislation is generally a slow and - at least in principle - considered process. It takes time.

Changing parliament's standing orders, by contrast, requires only a majority in the Commons. You may well think the Tories' recent partisan procedural games are unseemly. STV's Stephen Daisley described them as "vulgar". But, it is actually much easier for a Commons majority to alter its standings orders than it is for a Commons majority to repeal or amend an Act of Parliament. There is no ping-pong with the House of Lords, no royal assent. A single, decisive Commons motion does the trick. Because of the bungling, ineptitude and blund-minded malice of Chris Grayling, the EVEL process has been long and drawn out, but it needn't have been so.

It needn't be so, if a new Labour government with pan-UK support and confidence reclaims Downing Street. Ah, but wouldn't they be crucified by the right-wing English tabloids if they even considered dumping EVEL? Maybe. Probably, even. But you never win the fights you don't pick. The political career of Gordon Brown remains a grisly reminder that you have to win the argument. It isn't enough to win office, and sleekitly to do good and right on the quiet.

Caught between the frying pan of EVEL and the fire of governing in England without power, any Labour leader worth their salt would - and could - use their UK majority to consign the "English vetoes for some English laws" experiment to the scrap heap.  If you look at the text of the Standing Orders changes passed on Thursday, you'll see that EVEL is not an "England only" matter. It is for the whole House of Commons to decide how to structure its work. That will be as true in 2020 as it was this week.

Labour, Liberal and Nationalist members took to their pins in the chamber this week to argue the scheme was just plain wrong. The equality of MPs may not cause my viscera spontaneously to implode. EVEL may not do what many folk think it does. But folk like Pete Wishart and Tommy Shepperd at least have a defensible argument to make. So too would any future Labour government, entering office. They might well say something like this. "We are a unionist party. We are against anything and everything which imperils that Union. Anything which rubs salt into the divisions of this disunited Kingdom, we oppose. Our union remains a fragile thing. We are clumsy with it, at our peril." This isn't my politics, but it is not a bad argument.

Nothing lasts for ever. Not even EVEL.

23 October 2015

What does EVEL actually do?

What does the UK government's "English votes for English laws" scheme actually do? It makes Scottish MPs second-class citizens in the UK parliament. You might well think so, but how precisely do the new rules achieve this? EVEL violates the Act of Union. I'm really not convinced that it does, but I'll ask you again - even in outline - what difference will Chris Grayling's changes to the House of Commons' standing orders really make? They lock Scottish MPs out of decision-making. It is an outrage. Maybe, but what precisely is the outrage? What aspects of the new voting rules do you particularly object to? What key changes do you have a problem with?

A strikingly large number of folk talking - at higher and lower pitches of feeling - about yesterday's vote on English votes for English laws couldn't answer you any of these questions. In an earlier blog, I outlined the main practical effects of the changes Grayling proposed. And they are considerably more modest in scope than crowing Tories and outraged Nationalists are today claiming. I can't really improve on my earlier summary:
"There are a number of aspects to the EVEL proposals, but the most important is the idea of an English veto. On Bills and statutory orders which affect only England, the government wants to introduce an additional stage to parliamentary procedure. It all risks sounding a bit arcane and impenetrable. But consider this concrete example. Say a hypothetical Labour government enjoyed a majority in the Commons but only by dint of winning 56 of Scotland's 59 MPs. The majority of MPs returned for English constituencies were Tories. Say this Labour government proposed to abolish free schools in England, over the Conservative Party's profound objections. 
Under Grayling's new rules, if the Speaker certified this as an England only issue, MPs representing English constituencies would take an additional vote on the government's plan to abolish free schools. If the English majority supported the idea, MPs from all parts of Britain would then participate in the final vote on whether to accept or reject the plans. But if the majority of English MPs did not support the proposals, they fail. Notice: the attitude of English MPs is decisive only in a negative sense. They can veto England-only laws they don't like, but they cannot insist that England-only laws they approve of are passed. This is how the plans are intended to operate. All MPs, from every corner of the United Kingdom, will retain the last word on whether England-only laws reach the statute book."
So let's get one thing perfectly straight: Scottish MPs are not being excluded wholesale from voting on English only Bills and orders. You could be forgiven for thinking that this is what EVEL will do, given today's coverage, but you credit the UK government with more steel, more spine, than it possesses. This is essentially a feeble, milquetoast innovation. The whole-UK majority will still have the last word on English legislation, not English MPs. 

Take one very concrete, very controversial example: the SNP will still be able to block fox-hunting changes under the new rules. The point bears repeating. The power given to English MPs under this iteration of EVEL is asymmetric. The English majority can only block an England-only Bill it doesn't like. It can't insist that an England-only Bill it approves of is passed in the teeth of whole-UK dissent. Reason the implications of this through. Use the example cited by SNP MP Tommy Sheppard in his trenchant critique of yesterday's Commons vote. "The problem", he wrote:
"... is how you define what is a piece of England only legislation. The proposals say that it is where only England is affected geographically and is a matter where the Scottish (or Welsh) parliament can legislate separately. Sounds fair? But hold on a moment, sometimes things that happen in England affect people in Edinburgh. Let’s take the example of tuition fees. If there’s a proposal to increase tuition fees in England it would make it harder for students in Edinburgh to go to Newcastle or Manchester universities. It would also mean Edinburgh’s universities would have to put up fees for English students. Anyone telling me that the people who elected me wouldn’t want me to try to influence that decision?"
And as far as it goes, this is perfectly fair. It is argument I've made myself on previous occasions. You can't always just look at the "extent" section of an Act of Parliament to establish its impact. Some reforms have major financial consequences. Although money matters are voted on separately, an earlier Act can lay out the legal groundwork on which important spending decisions are built. You are unlikely to be able to persuade Tory MPs to vote down a chancellor's budget. You stand a much better chance of coaxing them into the rebel lobby on a narrower issue of educational policy. That's the animal politics of the thing.

But let's stick with Tommy's scenario. Say Nicky Morgan proposes to hike tuition fees to £20,000 per annum south of the border. She brings forward subordinate legislation to give effect to this policy. John Bercow gives it the nod: this is an England only matter. The House divides, twice. First, the English MPs vote on the policy. They are in favour. Scottish MPs are excluded at this stage. The proposal passes by a majority of 44.

Next, EVEL envisages that every MP, wherever they come from, whichever constituency returned them, will take the final decision. At this stage, say the government is defeated by one vote. What happens? The will of the whole-UK majority prevails. Fizzing, perhaps disgruntled, perhaps increasingly resentful, the English Commons majority will have to lump it. Tommy will have his say. All he is prevented from doing is participating in the English veto vote. If he can strong-arm, cajole and persuade enough Tories to rebel - he can still prevail. No fees hike.

Artistotle understood that virtue often sits between two extremes.  The courageous man is neither rash, nor cowardly. The generous person is neither a spendthrift, nor a miser. Sometimes, the same is true of the truth. The UK government hope to persuade us that this change will soothe ragged and increasingly resentful English spirits. A radical change, they say, curbing Scots assertiveness and restoring equity to our post-devolution kingdom. EVEL can only better secure the Union. This is cobblers. But so too is the alternative extreme, determined to depict this oh-so-mild EVEL scheme as the beast rising up out of the surf of the sea, fanged, horned and crowned, with the words "better together" branded on its seven monstrous heads. 

EVEL is a constitutional innovation which looks backwards, which is aimed at the now flyblown and forgotten Blair and Brown governments, propped up by their Scottish MPs -- not the politics of today. But -- whisper it -- EVEL is essentially a toom tabard. It is empty symbolism. Ah, you say, but symbolism is important. I agree. Disrupting the equality of parliamentarians in the Commons seems difficult to reconcile with sturdy unionist arguments about the sharing of common institutions on the basis of equality. But that's their problem. 

If you are scandalised by EVEL, you are almost certainly scandalised by this symbolism, or are labouring under a serious misapprehension about what the new rules will and will not do. You almost certainly don't give a damn about the procedural changes and their striking limitations. Forgive me, but the indivisible equality of members of the House of Commons is not a cause I'm prepared to pop a kidney over, however politically expedient or entertaining it might be to do so.

21 October 2015

You have the right to remain silent

How does a profoundly deaf man, with no speech and only basic sign language skills, give evidence in court? This was the difficult question undergirding the Court of Criminal Appeal's decision in McDougall v. HM Advocate, published today. Louise McDougall, 24, was indicted in the Sheriff Court, accused of threatening or abusive behaviour towards the 86 year old complainer, and an assault to his severe injury and permanent disfigurement with a fireside implement in his Dundee home. 

In response, McDougall told the police that it was the complainer who first sexually assaulted her and threatened her with a knife. The injuries inflicted on the old man, she said, were the result of legitimate self-defence. It was this allegation which gave rise to the third charge McDougall faced: that she had attempted to pervert the course of justice. The Crown argued this whole story was a tissue of lies and there had been no sexual assault. 

The complainer's evidence was clearly critical to the Crown's case. But how could he testify? It was proposed that the complainer's long-term companion interpreter, Jennifer Ramsay, should facilitate the presentation of his evidence to the court. Ramsay practised as a specialist interpreter in "minimal sign language", and knew the complainer very well.

Indeed, she'd had dealings with him for the last seventeen years, dealings which had only increased after a stroke in the spring of 2013, some months before the incident with the young woman occurred. This proposal was challenged by the defence, who argued that there was a "real risk of prejudice" if someone so personally close to the complainer was permitted to act in court as his sign interpreter and translator. 

Evidence was taken, during which it was revealed that there were a number of alternative interpreters available, but "there had been no attempt by the Crown to seek or to instruct any interpreter other than" Ramsay. Nevertheless, the sheriff concluded that she was "not satisfied that there was a real risk of prejudice" to the accused and a "real risk to the interests of justice" if the complainer's "evidence was not properly interpreted." Ramsay, concluded the sheriff, "was clearly the best person to achieve that." 

You may sympathise with this assessment. Taking the complainer's impairments into account, someone with an intimate knowledge and experience of interacting with him may well be best placed to comprehend, decode and relay the significance of his gestures. But there remained a nagging doubt. Was Ramsay too close to the fray? Too personally involved with the complainer? Even if she did her very best to be cool, impartial, and to interpret the complainer's testimony in an unbiased way, could she avoid human sympathy for the complainer? Even unconsciously?

And as Ramsay herself recognised in evidence, it would not "be impossible for another interpreter to interpret for the complainer so long as that interpreter was able to spend a couple of hours with him beforehand, to become familiar with what was, in his case, required." The Appeal Court thought not. Quashing McDougall's conviction on grounds that a miscarriage of justice had occured, Lady Smith concluded that:

[13] The issue for the sheriff was whether, if Mrs Ramsay acted, there was a significant risk of prejudice to the appellant. In the circumstances, the question whether there would be apparent bias if Mrs Ramsay’s services were used was of central importance. The point was not whether or not Mrs Ramsay would in fact be deliberately biased; no one suggested that she would be deliberately biased. Partiality may, however, be conscious or unconscious and a trial can be rendered unfair by the presence of partiality, whatever its source and whether actual or apparent. If the circumstances are such as would lead a fair minded and informed observer to conclude that there is a significant risk of partiality then it will be difficult to resist the conclusion that a trial conducted in the presence of such circumstances cannot be a fair one.  
[14] All the circumstances relied on by counsel for the appellant did, we agree, point to the presence of such a risk. The length and nature of the association between Mrs Ramsay and the complainer and her knowledge of the line adopted by him at the earlier police interview made it impossible to rule out there being a significant risk of her interpretation being affected by sympathy for him particularly once he was being subjected to cross examination. It was a risk which did not, in the circumstances, need to be run.

Appeal judges also revised a Crown motion to grant authority to bring a new prosecution against Louise McDougall - a request which was delined, partly because of the length of time she has already spent in custody, partly because "the Crown were not without fault in this matter", presumably in failing to canvass alternative interpreters.

You can understand the human sympathy for the complainer which may have animated this decision by the prosecution. In submissions, the Advocate Depute argued that "it was important to equip a frail and vulnerable witness so as to enable him to give his evidence" and in view of the complainer's "particular circumstances", the use of a well-known interpreter was justified.

He might also have argued that employing Ramsay was the best way of securing the best evidence from a complainer, for whom communication could clearly be challenging. But this seems ultimately unpersuasive. The Appeal Court must be right about that. In its efforts to accommodate the complainer's needs, the accused's rights and entitlements slipped too far from view.

McDougall is also an important reminder that victim-centric decision-making can risks losing sight of other important aims and values in criminal justice processes, not least that the accused should be tried fairly. There is a presumption of innocence, not a presumption that the complainer is telling the truth - even, or perhaps especially, a complainer whose personal characteristics render them, in the Advocate Depute's phrase, "frail and vulnerable".

This is an all too-human case. You sympathise with the choices made, and why they are made. This was, I think, an all-too human mistake by the procurator fiscal. One that Lady Smith and her colleagues - more coldly seeming, perhaps, at a bit more emotional distance - put right today.

14 October 2015

Our "One Party State"...

"One party state" Definition: relating to or denoting a system of government where only one political party is permitted.

"One party state" (Scot only) Definition: relating or denoting a system of government in which many different parties are permitted to stand and enjoy representation at every level of democratic government. 

Composition of the Scottish Parliament at time of writing:

Total number of SNP MSPs: 64
Total number of opposition MSPs: 63.
Percentage of governing party MSPs in parliament of "Nicola Sturgeon's one party state": 50%.
Percentage of opposition MSPs in parliament of "Nicola Sturgeon's one party state": 49%

Local government (2012)
Total number of SNP councillors elected in 2012? 425
Number of councillors not in the SNP elected? 798.
Total number of local authorities subject to SNP majority control? 2 of 32 (6%)

European Election (2014)
Total number of SNP MEPs elected?
Number of non-SNP Members of the European Parliament, despatched to Brussels and Strasbourg? 4

Westminster parliament (2015)
Number of SNP MPs elected? 56 
Number of non-SNP MPs elected? 3
Number of Scottish MPs contributing to the UK government's absolute majority? 1. 

Unchecked single-party tyranny index (2015)
Total number of elected representatives in "Nicola Sturgeon's one party state": 1,416.
Total number of SNP politicians elected in "Nicola Sturgeon's one party state": 547.
Total number of non-SNP politicians elected in "Nicola Sturgeon's one party state": 869.

Totting up these figures, it looks like the First Minister's incipient tyranny needs serious work. SNP candidates control a mere 38.6% of seats in Holyrood, in Scotland's Westminster delegation, and in town halls and local authority offices across the country. If this is authoritarianism, it is singularly inept authoritarianism. Yet another area in which the Scottish Government has over-promised and under-delivered, no doubt. It is almost as if this is a deranged fantasy, or tabloid hyperbole, and Scotland isn't a one party state at all...

12 October 2015

Carmichael questions, Carmichael answers...

In Parliament House in Edinburgh today, Lady Paton and Lord Matthews reconvened the election court, investigating the return of Alistair Morrison Carmichael as MP for Orkney and Shetland. Earlier, the two Court of Session judges held that the case against Mr Carmichael under s.106 of the Representation of the People Act 1983 couldn't be kicked on legal grounds alone. "We wish the hear evidence", the two judges said. Today, the judges set down a timetable for the hearing of that evidence. And equally importantly, deciding (a) where it would be heard and (b) whether STV would be entitled to film the oral evidence of the former Secretary of State, and other witnesses. 

So what are the important details? Firstly, the case has been set down for four days from Monday the 9th of November. The final list of witnesses will have to be produced later this month. This is a formidable length of time to hear evidence. Reports of today's by order hearing are limited and incomplete -- but the time scheduled suggests that the election court may hear from a significant number of witnesses. The petitioners are seeking to establish that Carmichael's lies related not only to his political conduct and character -- but extended to his personal conduct and character also. It remains unclear how precisely this will be demonstrated -- but we might hear from a surprising range of people in pursuit of this aim.

Secondly, there is to be no change of venue. Generally speaking, election petitions should be heard in the constituency concerned. This, to allow locals - electors - to attend the court proceedings and to hear the case both for and against the Member of Parliament they have returned. Today, Lord Matthews and Lady Paton have decided that the Carmichael case should continue in Edinburgh. There will be no decamping to the sheriff court in Lerwick to hear testimony. 

But the judges have also kiboshed the idea that the evidence - and cross-examination - of witnesses should be televised. This, argued Lady Paton, would "create a risk to the proper administration of justice". The final submission of lawyers for the two sides can be broadcast -- but unless you hie yourself along to the Court of Session -- you won't be able to see the former Secretary of State's account of himself and his behaviour. On one level, this decision is unsurprising. Cameras are a new phenomenon in Scottish court rooms. It was, perhaps, naive to image that the election court would cross the rubicon so hastily, and allow the evidence in this case to be broadcast live. Instead, we'll have to rely on scribbled transcripts in the media. 

A few other questions suggest themselves. Firstly, could Carmichael avoid all this by simply standing down and contesting the subsequent by-election in the northern isles? Under the Representation of the People Act -- he couldn't. Under s.139 of the 1983 Act:
The election court will sit until it reaches a conclusion. The court's judgment - one way or the other - is now inescapable. But could the former Liberal Democrat Secretary of State simply decline to give evidence before Lady Paton and Lord Matthews? Again, the answer is no. Carmichael must appear if summoned. Under section 140 of the Act, the election court has power to require witnesses to appear before it. And if they fail to do so? They commit a contempt of court. There's no escaping this assize.

But even if Carmichael appears in the witness box, does he really have to answer all of the questions put to him? Can't he stonewall, or evade, or otherwise decline to assist the court in its deliberations? No dice here either. Under section 141, witnesses don't even enjoy a privilege against self-incrimination before an election court. And a prevaricating witness commits a contempt of court. There is no escape -- no legal bolt hole -- for Mr Carmichael in the four corners of the 1983 Act. He has no option but to stand in the witness box, and to answer the questions which will be put to him directly and truthfully. For a politician, more used to fencing with journalists, and providing apt but evasive answers -- this is likely to be an unfulfilling, embarassing, and potentially disastrous personal experience.

Mr Carmichael may have escaped the horrors of a televised cross-examination, but he must be anticipating the next stage of this case with little relish. His way is littered with thorns. Every step - every misstep - risks slurping this tarnished, unbruising bruiser, into another political sinkhole. Wise man say: help me Rona.

6 October 2015

Mortgage fraud

As readers may have noticed, there has been a deafening silence at the heart of this blog on the Michelle Thomson affair. There are several reasons for my reticence about breenging into the fray. The first is consciousness of my own limitations. There are a number of areas of law which I understand pretty well: conveyancing and property transactions are not among them.

The second reason for circumspection is the active investigation into the case currently being undertaken by Police Scotland. Scottish political comment already has far too many folk reaching bold and decisive conclusions based on limited information and limited understandings of the processes which saw Christopher Hales, Michelle Thomson's solicitor, disbarred by the Scottish Solicitors' Discipline Tribunal in the summer of 2014. I'm disenclined to add to it. 

But the sheer weight of guff circulating in the public domain on this warrants a small, measured intervention. So here it is. Firstly, if you want to understand what the case is all about -- go straight to the source material. The Discipline Tribunal's decision is long and often technical, but read with a little care, it is clear. Some of you may be disinclined to credit it, but from everything I have been able to gather in the days since this story first broke, Ian Smart's summary of the issues lying behind the Hales decision was more or less bang on. It's worth remembering that although Ian has a partisan political perspective, and sometimes comports himself in a way which does him less credit than he warrants, he is no fool. He is also a solicitor of many years' experience, whose bread and butter work is selling houses. The rules Hales broke apply to his work, day in, day out. 

In Scots law, fraud is defined as a false pretense which secures some practical result. If you turn up at a restaurant, sit down, and set about the menu, you are cultivating the impression that you intend to pay for the food you eat and the wine you drink. If you beetle off without having settled up your final reckoning - you are a fraudster. If you convince me to lend you a sum of money with no intention of paying it back, you are a fraudster. But this week's topic is the esoteric question of mortgage fraud.

Why? Because in June 2014, the Scottish Solicitors' Discipline Tribunal stuck off Christopher William Hales, an Edinburgh lawyer, who had facilitated a range of transactions by a Mrs A and her husband. Why was Hales struck off? The tribunal's judgment sets out its reasoning at some length -- so much length, in fact, that some folk are stuggling to see the wood through the trees.  But first, some context. We have to understand something about the CML handbook. The handbook is produced by the Council of Mortgage Lenders, and imposes particular duties on solicitors who handle property transactions. In particular, the handbook sets out the following rules which lawyers are expected to follow in completing the sales of houses subject to standard securities (mortgages):

5.1.1 Please report to us [the mortgage provider] if the proprietor has owned the property for less than six months, or the person selling to the borrower is not the proprietor. 
5.1.2 If any matter comes to the attention of the fee earner dealing with the transaction which you should reasonably expect us to consider important in deciding whether or not to lend to the borrower (such as whether the borrower has given misleading information to us or the information which you might reasonably expect to have been given to us is no longer true) and you are unable to disclose the information to us because of a conflict of interest, you must cease to act and return our instructions stating that you consider a conflict of interest has arisen.

But why apply these rules? Why should solicitors be expected to advise mortgage providers of this information? The short answer is this: back-to-back property transactions and tricky mortgage arrangements are classic features of modern mortgage fraud. The nub of it is this: failing to disclose all the critical information to lenders in order to convince them to lend you more than the property you are purchasing is worth -- that is the potential fraud.

The Law Society of Scotland offers this advice to solicitors on identifying when their clients may be trying to dupe them - and their mortgage providers. Its guidance is pretty clear and simple. There are a number of warning signs which lawyers need to keep an eye out for. These include:

  1. Has the property been owned by the current owner for less than six months? 
  2. Has the value of the property significantly increased in a short period of time? 
  3. Is the mortgage for the full value of the property? 
  4. Is the deposit being paid by someone other than the purchaser? 
  5. If there is money left over from the mortgage after the purchase price has been paid, are you being asked to pay this money to the account of someone you don't know, or to the introducer, or to someone else on the client's instructions? 
  6. Have you been asked to enter a price on the title that is greater than you know was paid for the property?

If you dig into the tribunal's Hales decision, you will find that a large number of the thirteen transactions faciliated by Mr Hales bear features characteristic of this kind of mortgage fraud. These features aren't decisive. They can have perfectly innocent explanations. But they trip warning lights. Here's a useful summary of what is known as "flipping fraud" and back-to-back selling:

The scheme known as 'flipping fraud' involves purchasing property and re-selling at an inflated price within a short space of time to a buyer with a high LTV mortgage greater than the value of the property. The true nature of the transaction is concealed from the lender and may also involve dishonest or negligent professionals. A typical example is: 
A sells property to B for £75,000. B quickly sells the same property to C for £125,000. The true value is £75,000. C obtains a 95% mortgage with ABank who is unaware of the sale from A to B. If B and C are fraudsters in league, C will obtain a mortgage of £118,750 against a purchase price of £125,000. B and C use the £75,000 mortgage advance to pay A, then disappear with the remaining £43,750. Such cases will almost always involve a valuer who overstates the market value of the property and a solicitor who fails to notify the lender of the transaction between A and B.

And this is the critical section of the judgment which ended Hales' legal career:

The Tribunal had no hesitation in making a finding of professional misconduct. There were numerous breaches of the CML Handbook in respect of 13 different transactions involving an ongoing course of conduct which continued for a period of over one year. The Tribunal has made it clear on numerous occasions that institutional lenders are clients of Respondents in the same way as any other clients and are owed the same duties of care. The CML Handbook has been instituted to help prevent mortgage fraud and emphasise the reporting duties on the part of solicitors. 
In this case the Respondent had a clear duty to report the back to back transactions, cash backs, increases in prices and deposits being provided by a third party to the lender. These matters would have been very likely to have had a material effect on the lender’s decision to lend. The Tribunal consider that the features of these transactions were such that the Respondent must have been aware that there was a possibility that he was facilitating mortgage fraud, whether or not this actually occurred. He generated fees on the basis of allowing this to occur. It must have been glaringly obvious to the Respondent that something was amiss when cash backs of £27,000 or £28,000 from the seller to the purchaser were involved.

Even if you read this paragraph - and only this paragraph - from the decision - it scotches the idea that this is an empty and partisan scandal whipped up by a hostile media. There may be a good explanation for these transactions. There may be no wrongdoing here whatever. But Hales was kicked out of the legal profession because his failure to observe the rules may well have covered up behaviour characteristic of mortgage fraud. Of course there had to be a police investigation. Lawyers are facilitators and professional functionaries. We don't know why Mr Hales failed to keep the mortgage providers properly informed. Only by being investigated thoroughly will the answers to these questions become clear.

But as ever, politics and calculations of political advantage intervene and distort the reporting. Labour are going great guns on this story, demanding that the Lord Advocate should appear to answer questions in the chamber. Frank Mulholland QC appeared in Holyrood this afternoon. His answers - unsurprisingly - focused on when prosecutors received all of the information on the Hales decision from the Law Society of Scotland. There are real public interest questions for the Society to answer about how this case was handled, and how other cases of this kind are handled.

The Society has a vital regulatory and public function. You might expect the phrase "mortgage fraud" in a decision to ring alarm bells. So why did it take them so many months to communicate the outcome of the Hales case to the criminal authorities? Law's delays? "Pressures of work", as Law Society chief executive Lorna Jack said at a recent conference? We do not know. Or at least, not in detail. Hales was prosecuted before the tribunal and struck off to protect the public. But public protection surely cannot cease when a disciplinary tribunal has reached its conclusion. The Law Society has a wider duty - not just to lawyers - but to society at large. We can expect today's appearance by the Lord Advocate to turn up the heat.

But after the Lord Advocate had spoken, blundering Jackie Baillie decided to go too far. Not content with the facts as we understand them - not content with the allegations currently being investigated - today she uttered this gem in the Holyrood chamber. She said:
"The Lord Advocate is right not to rule out action under the Proceeds of Crime Act. Vulnerable families have lost out because of the alleged actions of people trying to make a quick buck. In the interests of justice it's only right that those who allegedly profiteered from vulnerable families don't get to enjoy the benefits of their immoral actions."

Reading this quotation, you might get the impression that the investigation prompted by the Hales decision turned on the fraduluent manipulation of people who sold their houses to Michelle Thomson or her business partners. You might get the impression that the "mortgage fraud" in the headlines concerned the initial purchases and the amount paid. But there is nothing like this in the Hales judgment whatever. This scenario has marched straight out of Jackie Baillie's head.

On the facts set out in the Hales decision, it is the mortgage providers who are the potential victims of  any alleged fraud -- not the sellers who completed their transactions with Mrs A and her associates. A number of the loans now being investigated were taken out with Birmingham Midshires - a trading name for the Bank of Scotland. I don't know about you, but I struggle to see the bank as a "vulnerable family", however cosy its declared corporate ethos.

You can understand folk wishing they'd been paid more for their houses. But with certain exceptions, the law doesn't prevent you from striking a hard bargain or getting a lower price than you hoped for your property. That isn't what this criminal investigation is about, and Jackie Baillie must know that this isn't what the investigation is about. Her innuendo cannot be defended as a political point about the ethics of landlordism either. Her invocation of the Proceeds of Crime Act was presumably premediated. But given the opportunity to stick to the facts, she declined.

Full of political mischief, blinded by partisanship, she decided to lob yet another ripe red herring into the heart of this difficult affair. You might well think that a wise person, a prudent person, condemning alleged falsehoods, would do well to ensure that their own comments are not misplaced and misleading. Not Jackie Baillie, it seems. Blockheaded, forked-tongued, her contribution actually serves to obscure the real, serious, challenging legal issues raised by this matter by over-egging them. All for the sake of a partisan barb without legal foundation. This kind of thing is the worst of politics.

Let the criminal investigation proceed. As the Lord Advocate says, let's "follow the evidence". Let's ignore the baseless, breathless political sidelines. The rights and wrongs of this matter will, surely, become clear in time.

5 October 2015

"Labour is coming home. Come home to Labour..."

Since the Labour conference in Brighton, I've been trying precisely to pin down why I found John McDonnell's "come home to Labour" riff so irritating. Alex Massie captures some of the reasons in his stinging Spectator blog. My article in the latest edition of the Drouth harps on a similar string. But the sense of Labour entitlement implicit in the phrase "come home" has always been vexing. It was, after all, common enough currency among Scottish Labour's old guard. Celebrating the party's stonking 2010 general election win, Douglas Alexander gushed: 
"Right across Scotland, people have come home to Labour. We've never taken Scotland for granted, we've worked for every vote this evening and we've enjoyed success as a consequence of a great deal of hard work."
And in pursuit of victory in that election, Gordon Brown repeated, again and again:
"At this moment of risk to our economy, at this moment of decision for our country, I ask you to come home to Labour."
A quick search on LexisNexis turns up a mighty 196 news articles which use some variation of the phrase. Entertainingly, one of the earliest instances emanated from one Anthony Charles Lynton Blair.  In his keynote address to 1996's October conference in Blackpool, the Labour leader told party delegates:
"I don’t care where you are coming from; it is where your country is going that matters. If you believe in what I believe, then join our team. Labour has come home to you, so come home to us. Labour’s coming home! Seventeen years of hurt never stopped us dreaming. Labour’s coming home! (Applause) As we did in 1945 and 1964, I know that was then, but it could be again – Labour’s coming home. (Applause) Labour’s coming home. The people are coming home."
And a mere nineteen years later, one of Blairism's most inveterate foes in the parliamentary Labour Party is giving it precisely the same "come home" patter? How's that for eternal recurrence? As seems increasingly to be the case with his efforts, the speech did the job for Blair in 1996, but today is nigh unreadable. This political message has been brought to you by the Simpsons' Nelson Muntz and the phenomenon of AWOL daddies who've just nipped out for a pint of milk and a packet of fags. Come home, papa. Come home. *sniffle* 

I'm conscious that gags about flipping political real estate may be regarded as being in poor taste at the moment - but we can only assume that the Labour party has moved neighbourhood in the intervening period. That said, it seems apt - or at least divertingly ironic - that both the inception and the death of the Blairite project in the Labour Party are being announced and celebrated in precisely the same terms. Labour is coming home. Come home to Labour.  Any number of wise clichés suggest themselves here: in my end is my beginning; and "history repeats first as tragedy then as farce."

But it isn't even this which really irked about McDonnell's presumptious, previous declaration that "Labour is now the only anti-austerity party" and that the Plain People of Scotland should biddably "come home". I couldn't quite put my finger on the real source of my disgruntlement, until I read Iain MacWhiter's bit in the Sunday Herald, and the thought suddenly crystallised. 

Labour's new left leadership are running two distinct and incompatible strategies which together conspire to make McDonnell's "come home" schtick simply unendurable. Across the UK, the new party leadership are currently all honey and amelioration and consultation. Shadow cabinet members have been unshackled by anything approaching collective responsibilty. To describe Labour Party policy as incoherent at present would be charitable: it is motley. I appreciate honest policy disgreement as much as the next fellow - more than most, in fact - but there is simply no coherent political expression to be plucked from this mangled policy haystack. You name it. Trident renewal, tuition fees, budget discipline, railways, energy, "people's quantitative easing": it is a boorach.

And worse, the leadership seems isolated and listless rather than fighting its corner within the fractuous and divided ranks of the parliamentary party. Whatever calculations the Corbyn-McDonnell axis are making behind the scenery, on policy, the spirit of left capitulation seems general, sacrificed on the altar of party unity. Consultation is the watchword of the day. And Jeremy seems more preoccupied with facilitating party democracy than he does with securing the victory for his own viewpoint. 

The impression may be unfair and mistaken -- but Mr Corbyn seems prepared biddably to assent to whatever policy compromise his party is prepared to yield up to him. As a saintly democrat - this all may be perfectly commendable - but if you wanted an invertebrate to lead the UK Labour Party, Andy Burham was already on the ballot paper. 

But in Scotland? In Scotland we are invited to conclude that only the views of the party's new leadership are in any sense consequential, however few followers Mr Corbyn and his vicar on earth actually command on their own Commons benches. We are invited to forget awkward memories of recent votes on the Welfare Reform Bill, which propelled Corbyn to the front line in the leadership contest. "Labour is now the only anti-austerity party".

In every other context, we are encouraged to believe that the new leader has a frail and self-depracating democratic voice - one among many, many of whom disagree with him. But in Scotland? In Scotland, only the sentiments of this isolated and embattled leadership matters. Come home to Labour. I'm reminded of King Richard the II's melancholy reflections on a Welsh beach, in Shakespeare's play of the same name. "For God's sake," said King Richard:

"... let us sit upon the ground And tell sad stories of the death of kings. How some have been deposed; some slain in war, Some haunted by the ghosts they have deposed; Some poison'd by their wives: some sleeping kill'd; All murder'd: for within the hollow crown That rounds the mortal temples of a king Keeps Death his court and there the antic sits, Scoffing his state and grinning at his pomp, Allowing him a breath, a little scene, To monarchize, be fear'd and kill with looks, Infusing him with self and vain conceit, As if this flesh which walls about our life, Were brass impregnable, and humour'd thus Comes at the last and with a little pin Bores through his castle wall, and farewell king!"

There will be no monarchizing from Jeremy. No fear. No killing looks. As Iain MacWhirter lays out, it is difficult to find the policy issue where Corbyn hasn't tacked and trimmed, compromising and accommodating himself to his many deprecators in his own party. But in Scotland? In Scotland, we must think on the increasingly hollow crown Jeremy wears, enjoy its glitter, and "come home" to Labour like good bairns. And so farewell, king.