In Defence of Liberty

Driven by data; ridden with liberty.

Policy Coherence

Policies should be coherent. (Edited: zeitfaenger.at)

Policies should be coherent. (Edited: zeitfaenger.at)

Politics must make sense. Another reason as to why the adoption of a popular public policy by a political party may not lead to rises in electoral support is coherence.

‘Policy coherence’ is defined [1] by the Organisation for Economic Co-Operation and Development as “the systematic promotion of mutually reinforcing policy actions across government departments and agencies creating synergies towards achieving the agreed objectives”.

Synergy

An example of policy incoherence, occurring at different levels of government, was to be found during the last election.

Labour, in the European Parliament, had supported the introduction of bonus caps for bank employees across the European Union. This rules would restrict payouts to 100% of the base salary, or up to 200% with the approval of shareholders. Aneeliese Dodds MEP (Labour, South East England) said [2]:

Financial experts agree that a high-risk, short-term bonus culture, combined with a lack of capital, were at the heart of the global financial crisis in 2008. This is a culture George Osborne, with his repeated legal challenges to a bonus cap, seeks to defend.

Labour, however, in the British parliament were suggesting their 2015 government would use a tax on bank bonuses to fund a ‘jobs guarantee’. The 2015 Labour manifesto said [3]:

Introduce a Compulsory Jobs Guarantee, paid for by a bank bonus tax, to provide a paid starter job for every young person unemployed for over a year.

The limitation provided by the bonus cap will restrict the revenue from the bonus levy, undermining and contradicting the purpose of the tax, since it must raise revenue to pay for a specified piece of public spending. This is incoherent.

The promise of a 'jobs guarantee' was a key promise in the 2015 Labour manifesto. (Source: Labour)

The promise of a ‘jobs guarantee’ was a key promise in the 2015 Labour manifesto. (Source: Labour)

Considered individually, these two policies are popular. Back in 2010, The Observer reported [4]:

A YouGov poll reveals the extent of public anger at City excess. It finds that 76% of people would support a cap on bonuses, that 59% support windfall taxes on bankers’ bonuses, and that 60% want the tax to be extended to those working in hedge funds and private equity houses.

By the pigeonhole principle, at least 35% of respondents believed in simultaneously capping and taxing bank bonuses.

(Video: High Tory Blog)

This statutory limitation remains very popular in more recent polls [5], with 73% of YouGov’s weighted sample supporting the banker bonus cap.

After its implementation, the banker bonus cap remains popular. (Source: YouGov)

After its implementation, the banker bonus cap remains popular. (Source: YouGov)

“Undermine”

Analysts from Credit Suisse [6] also claimed that two other Labour policies were contradictory:

Labour’s election manifesto pledged to use the money made from the sale of the public’s stake in Lloyds and the Royal Bank of Scotland to deal with Britain’s debt. But the party also plans to impose a cap on the market share of the biggest banks, a proposal that could cost the lenders hundreds in lost revenues, analysts have claimed.

This second policy could undermine the government’s ability to sell off its stakes in the banks at a profit.

This is not to suggest that contradictory policies are a problem unique to Labour. It would be worth a further investigation to see if a political party proposing incoherent policies leads to reductions in their credibility among voters.

References

[1] Trinity College, Dublin, 2010. What is policy coherence? Available from: https://www.tcd.ie/iiis/policycoherence/concept/what-is.php [Accessed: 25th September 2015]

[2] Labour in Europe, 2014. Labour MEPs welcome top lawyer’s claim that EU bonus cap is “valid“. Available from: http://www.eurolabour.org.uk/ecj-bankers-bonus-cap [Accessed: 25th September 2015]

[3] Labour, 2015. Changing Britain Together. Available from: http://action.labour.org.uk/page/-/Changing_Britain_Together.pdf [Accessed: 25th September 2015]

[4] Asthana, A., 2010. New poll reveals depth of outrage at bankers’ bonuses. The Observer. Available from: http://www.theguardian.com/business/2010/feb/21/bank-bonuses-outrage-opinion-poll [Accessed: 25th September 2015]

[5] Dahlgreen, W., 2014. Strong public support for bank bonus cap. YouGov. Available from: https://yougov.co.uk/news/2014/11/22/strong-public-support-banker-bonus-cap/ [Accessed: 25th September 2015]

[6] Titcomb, J., 2015. Analysts rap Labour’s contradictory banking policies. The Telegraph. Available from: http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/11532752/Analysts-rap-Labours-contradictory-banking-policies.html [Accessed: 25th September 2015]

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This entry was posted on September 25, 2015 by in National Politics and tagged , , .
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