Thursday, June 04, 2009

The MP Expenses Scandal in the U.K. Highlights the Difficulty of Cutting Losses

The fallout from the British scandal over improper expenses claimed by MPs* provides lessons in how not to manage risk.

The cash value of improperly claimed expenses appears to be quite modest. The amount returned so far by the MPs on improper expense claims as related by this NYT report—$500,000 from 50 MPs, incurred between 2004-2008 as far as I can gather from the lists at the Daily Telegraph MPs’ expenses portal—averages out to about $10,000 per MP, that is, $2,000 per year, or $167 per month. (That’s peanuts compared to the Y5,000,000 that Toshikatsu Matsuoka claimed in 2005 alone for alkali ion water and other unmentionables at his tiny two-room office provided by the Diet. Hint: it does not have a sink.) Yet the British public is furious, offending MPs are being forced to retire, and incumbents are expected to suffer across the board in the upcoming general election.

But that’s not all. A cursory look at the lists of PMs at the Telegraph portal shows that Labor Party MPs had been no more complicit than their Tory counterparts. Bu the Labor Party has fallen behind the puny Liberal Democratic Party in the public polls and is sure to lose badly in the upcoming European Parliamentary and local elections. It is also expected to be thrown out in the next general election regardless of who winds up leading the Labor Party. Sure, the Tories have been discredited as well. But they only have to outrun the other side when the hungry bear comes a-chasing.

So what went wrong?

It takes no leap of the imagination to see that the issue was magnified beyond anything its numbers—the MPs and the money—would have warranted if those MPs and their protective colleagues had not pursued every legal and political means available in what turned out to be a futile, five-year bid to avoid disclosure. In the process, they also forfeited any excuse that that their expense claims had been made in good faith, if poor judgment. The global economic crisis and the hardships that it has caused, unfolding just as the parliamentary turmoil lurched through its end game, merely provided an unsightly backdrop to the spectacle of MPs feeding from the public trough. The entire political class had been dealt a blow.

Turning to the Labor Party, once the dam broke, the Prime Minister tried to wave it off as a trifle. This turned out to be a big mistake. David Cameron as leader of the Tories managed to get ahead of the curve, forcing the offenders to step down when the general election comes around. Although the Prime Minister soon followed suit, it was too late; he’d lost the race when the hungry bear came charging.

So, misunderestimate the problem and hope it will blow away, protecting your friends until they’re beyond salvation: That’s a scenario that has been played out too many times over in Japanese politics, not least by Prime Minister Aso and his two immediate predecessors as they dithered over political crises precipitated by wayward cabinet ministers and sub-cabinet appointees. And you know how they’ve turned out**.

* For those of you who want a quick overview of the whole affair, there’s this Wikipedia entry.

** To be fair, even Prime Minister Koizumi had his share of mishaps. He almost allowed Makiko Tanaka threatened to ruin his administration almost as soon as it had gotten underway by letting the woefully unprepared Foreign Minister to run amok. In his defense, Tanaka had much of the public behind her in her feud with the MOFA diplomats.


Janne Morén said...

It's largely not about the expenses anymore I would say. Whole some of them - like having the moat cleaned on your private residence - were quite over the top, a fair number are really not. For instance, one MP apparently used a few pounds to buy a "Windows for Dummies" book. I would argue that that's exactly the sort of thing for which such expense accounts were set up in the first place; why should an MP not take the chance to learn how to use perhaps their most common office tool after all?

No, this is just a hook on which people can hang many years of anger and frustration. I'm not sure there was any approach Gordon Brown could have taken that would have stopped this from exploding in his face.

Instead the question is if the coming election will be enough of a public catharsis - an electoral primal scream if you will - for Labour to bounce back and have a fighting chance in the next election (or, failing that, at least avoid a total collapse).

Brown's win is Europe's loss, though, if this catharsis means getting British racist and far-right parties in the European parliament.

Jun Okumura said...

Janne: Three years into the making when Brown came into power, it is possible that the seeds of the scandal had been sown too long ago for all but the most courageous Prime Minister to do anything before it broke out. But if Brown had opened his bidding with the same solution as Cameron’s, I think he would have fought his rival to a draw. Remember, you don’t have to be good; you only have to be better.

As for the extremists gaining seats in the European Parliament, I think it’s good for the U.K. to have these people come out of the woodworks and have their views aired in the mass media. Sunlight is the best disinfectant.

Tinter said...

Little late to the post but as a Brit feel I may as well finally chime in after a long time being a plain old reader.

Brown couldn't draw with Cameron. Cameron is a winner. This means he is in charge and his party is behind him, so he had no difficulty crushing any MP with poor expenses.

Several senior Labour ministers were heavily implicated, and with Browns position so precarious he could not trigger a faction fight because, well, he could very well have lost. Most have very recently left the cabinet under various circumstances- and Brown is barely still in his job, with a very weak cabinet team. Janne, its not that he couldn't have dealt with it without the issue exploding- the problem was the party exploding.

Really, I think what sealed it was that the initial response by the labour MP's (whos accusations came out first as it was leaked to a right-wing paper) was to simply say it was fine as it was "within the rules".

The Far-right may or may not win seats, but so did UKIP and the Greens and it didn't really push them anywhere- as shown by their negligible seats in the local elections. People overstate the danger. Oh, and labour will avoid a total collapse in the GE as they have areas where their support is very concentrated. They do risk regionalisation however.

On a personal note, its deeply hurtful for you to call my party puny! We may not have the organisational depth of parties of government but we are one of the strongest third parties to be found...

Jun Okumura said...

My heartfelt apologies to you, Tinter, for calling the Liberal Democratic Party puny. Of course it is one of the more vibrant non-regional, secular, third parties in first-past-the-stile parliamentary systems. Besides, a party that has overtaken the ruling party in the polls (and now elections) is by definition not puny. And I thank you for the persuasive explanation of Brown's circumstances.