Saturday, February 26, 2005

EU plan for world domination- new admin arrangements

I've been perusing EUROPA - Growth and Jobs - Working together for Europe's future: the EU's official website documenting their relaunched Lisbon Strategy. You remember- it was that ludicrous new millenium deal whereby EU leaders met up at some five star resort in Portugal and agreed to overtake the US by 2010.

Apparently "...the approach to implementing the Lisbon Strategy has had limited success. The Lisbon package consists of 28 main objectives and 120 sub-objectives, with 117 different indicators. The reporting system for 25 Member States adds up to 300 annual reports which clearly no-one reads."

You don't say.

"Urgent action is now needed. The Commission's proposal is simple, focussed, pragmatic and concrete. A new partnership between the European Commission and the Member States will be established. It shall make the EU more competitive by raising its productivity and by employing more people. Responsibilities for implementing these actions will be clearly assigned between the EU level and national level. To make things simpler and more coherent, there shall be just one national growth programme and one EU growth plan."

Crumbs.

And to think this sort of passed me by when it was announced earlier in the month.

Naturally, like any other new CEO taking over a corporate disaster, Barossa blamed the whole thing on his predecessor, Prodi. The Telegraph reported him pledging 'a radical shift in direction towards a business-friendly Brussels, focused narrowly on job creation, economic growth, and making Europe an attractive place for entrepreneurs.'

But because this is the EU he also said: "I have three children: the economy, our social agenda, and the environment. Like any modern father, if one of my children is sick, I'm ready to drop everything and focus on him until he is back to health. But that does not mean I love the others any less."

Now you and I know it doesn't matter a row of subsidised beans what he says, because absolutely nothing will come of it beyond further waste paper mountains. But a mob of cossetted MEPs immediately laid into him for failing to pay equal attention to environmental concerns and guaranteeing job security for workers.

It's difficult to read these Euro Parliament debates without seriously rising blood pressure, and it doesn't help that the MEPs all seem to have names like Tyssen, Goebbels, Cohn Bendit, and of course, Mussolini.

What was that thing about all our problems coming from Europe?

Stamp duty hits poor

According to the Halifax Bank, almost every first-time buyer now pays stamp duty. This is because the threshold at which the 1 per cent levy becomes payable has been left at £60,000 since 1993. If it had been raised in line with house price inflation it would now be £156,900.

This is classic fiscal drag, and it's one reason why this duty now raises £4 billion annually. Another nice little earner for Gordo, but it means that poor home buyers have been pulled into the tax net making it harder for them to get onto the property ladder.

Of course, G has increased the tax take from richer home buyers even more by sharp rises in the higher rates- up to 4 per cent for homes over £500,000. So at least the rich get super-squeezed, making us more equal. Right?

Well, wrong actually. The numbers are tricky to unravel, but in their recent Green Budget the IFS estimates that that G's increased duty rates hit the poor just as hard as the rich. They say that the hikes alone reduce average post-tax incomes for the poorest 10 per cent by the same percentage as for the richest 10 percent- by about half of one percent in both cases.

So the overall structure of stamp duty- even with the higher top rates- is still regressive. The latest ONS analysis shows that in 2002-03 this tax cost the poorest 10 per cent an average 1.1 per cent of their net incomes, against only 0.7 per cent for the richest.

It's another case of G's desperate need for stealth tax revenue producing inequity. He's crushing the very people he says he's trying to help.

Thursday, February 24, 2005

Did things get better?

Last night I attended a think-tank meeting, addressed by crack Guardian team, Polly Toynbee and David Walker. They were promoting their new book, an update of the 2001 assessment of New Labour in office.

Polly- looking more and more like late vintage Marianne Faithful- told us that the government has done a hell of a lot of things, spent loads of money, reduced waiting lists, reduced crime, reduced child poverty, reduced…umm…reduced some other stuff I can’t quite recall. The economy’s done well, and surely Gordo must have been responsible for at least some of it.

David Walker went further. I’d never seen him before, but he turns out to be a Planning Commissar- steel grey hair, thin intense face, and round wire rimmed glasses. He was very proud of all those targets and New Labour statistical reporting systems. “Targeting works! Previous governments have not set enough objectives or provided enough information! An amazingly successful government- the most successful EVER!” He spoke of ‘physical expansion of the plant’, and was about to launch into a couple of hours on production statistics for Volgograd Number 4 Tractor City, when mercifully he was stopped.

Polly reminded us that egalitarian Sweden was a much better place (see earlier post), and that the latest research showed their citizens to be infinitely happier than we Brits. Someone unkindly pointed out that their rates of alcoholism and suicide were through the roof, and of course we know all their brightest young people come to earn real money in the London financial sector.

Still, Polly evidently believes it, and she went on to argue that Labour in a third term would need to be far more explicit about their redistributional intent. So far, they’ve made virtually no impact on the overall distribution, even though they have given significant help to some important groups at the bottom, like the poorest pensioners. They need to pluck up the courage to tell people redistribution is good.

She ranted on about the Murdoch press, the Daily Mail, and by implication all those millions of stupid narrow-minded punters who choose to read them, rather than…ooh I don’t know, the Guardian say. She told stories of ignorant focus groups where people had never even heard of Tony’s pledge to abolish child poverty, let alone his five pledges on badger literacy.

Suddenly and bizarrely Walker told us we should all get more people to embrace the Polly T. I must say I thought it a bit much with Pol actually there, but she seemed totally unfazed. Several enthusiastic nods around the room, and I wondered if I might need to make my excuses.

But instead we moved to a show of hands vote on whether things really had got better under New Labour. Those few of us who voted against were uncomfortably exposed as diehard supporters of nastiness, because by a large majority the audience gave NL the thumbs up.

Unsurprising, you might think, for a meeting addressed by Pol and Dave. Serve me right for going.

Except that this was a meeting of Policy Exchange, the supposedly right of centre think tank set up by Francis Maude, and headed by prospective Tory MP for Hove, Nick Boles. There were several Tory MPs in the audience.

It was depressing- a government that has ramped up tax and spend without doing anything substantive to reform the public services, that has spun and lied, turning millions more of us off democracy, that has abused civil liberties, that has taken us into an illegal war…this government is reckoned by these right of centre thinkers to have made things better.

Oh…groan…no…no…no…

See, they’re self-styled ‘modernisers’, bright engaging metro people who want to rescue the rest of us from the nastiness of Daily Mail World. Naturally they have far more in common with others inside the ‘polity’ bubble than with say my father-in-law, a Bernardo’s boy who was sent to Canada, made his own way in the world, fought for democracy, raised a family, paid his taxes, and yes, reads the Mail.

As I travelled home on the bendy-bus, I wondered if the gang of adolescent yobs intimidating passengers would be better behaved if incomes were distributed more equally.

Or whether some Swedish birch might not be more effective.

Talk about as tears go by.

Monday, February 21, 2005

ippr money bonfire

I’ve been trawling through the ippr- institute of public policy research- website (yes, I know all about capital letters, but ippr seeks to promote equal opportunity for letters of all cases, whatever their ethnic background or sexual orientation). Anyway, I came across something I'd previously missed- their 30 December contribution to the law and order debate:

“The design of police stations is a barrier to good public service…they have failed to keep pace with changing times.

The report recommends…turning the…police station…into a modern, open plan, user-friendly public building…Japanese Kobans, modern Tardis-style police boxes…every police force should have a Design Champion…architectural competitions for design, and initiatives like… removing screens and making stables and kennels accessible.”

Japanese Kobans- isn’t that brilliant? Given a big enough budget, I bet that bloke with the big frilly shirt off the telly could come up with some even more fabulous innovations.

The punters would probably respect the station’s new blond wood flooring by not throwing up over it. And there’s a fair chance they wouldn’t abuse the stylish open plan ambience by stabbing the desk sergeant.

All quite amusing…if it wasn’t for the fact that the ippr is Tony’s favourite think-tank. The same tank that spawned a thousand New Labour invertebrates including Patricia Hewitt, David Milliband, Baroness Amos…I’ll stop there- my nose is bleeding.

So given we’ve already seen the Met unveil a pricey logo revamp, these make-over copshops- an absolute snip at say a couple of mill each- are a virtual certainty.

Which reminded me that for some time I’ve been meaning to get to the bottom of ippr’s own finances. How much of it is funded by the taxpayer?

It should be easy to find out because as a registered charity it has to file financial returns with the Charities Commission. The latest declares an annual income of £3 million in 2003, not all government money, but a 200 per cent increase since New Labour came to power. Not bad on its own, and I have an odd feeling there’s a lot more besides, outside the charity.

Because back in 1997, within three months of Labour’s election victory, the ippr incorporated a new wholly owned subsidiary- ‘Public Policy Research Associates Ltd’- to carry out commercially commissioned research. And because it’s not a charity, the Charities Commission do not publish details of its finances.

I haven’t yet managed to track down the killer facts, but I’m guessing PPRA Ltd is a nice little earner. After all, under this government, spending on consultancy services has exploded to reach almost £2 billion annually. And a healthy chunk of it seems to be going to the commercial spin-offs of Westminster think-tanks.

Just last year we learned that Adam Smith International- of all people- had been paid £34 million by the Department for International Development between 1998 and 2003. Yes, yes, I know. ASI- as in the Adam Smith Institute - say they’re now completely separate from ASI- as in Adam Smith International. But either way, ASI are not natural soulmates of New Labour, so it naturally makes you wonder how much dosh reaches those bits of the Westminster village that are.

I really must find out.

Sunday, February 20, 2005

New Labour backstabbing

According to the Sunday Times and other papers, Tony is likely to make Brylcreem Bounce Milburn chancellor after the election. Remember, you read it here first- a whole month ago.

The Times says: "...if Blair wins another big majority he is being encouraged to 'deal with Brown' by telling him to take the post of foreign secretary or leave the cabinet. One insider said: 'Milburn has been talking about this and the term being used is "strong man strategy". They want Blair to be surrounded by two bruisers who are fully signed up to his agenda."

The 'two bruisers' are Reid and Milburn, laughingly seen as the party's "macho men". Brown is expected to reject the foreign secretary job, letting Reid in- can you imagine?

Other Blair loyalists slated for promotion include Tessa Jowell (presumably on the back of her recent triumphs extending binge drinking hours, inviting the Las Vegas Mob to run our bingo halls, and attempting to blow £10 billion on the Olympics), Patricia Hewitt (for burning £5 billion a year at the DTI), David Milliband (services to schools?!?), and various other nonentities far too irritating to enumerate.

Brown, Straw and the fatman must surely be sharpening their own stillettos by now, so we can look forward to some serious slashing action.

Why do we need these guys again?

Saturday, February 19, 2005

Cooking the books

Along with its monthly release of public finance stats, the Office for National Statistics announced it would make a "substantial" reclassification of road maintenance from current expenditure to capital expenditure.

According to the FT:

‘Since capital expenditure does not count as spending in Mr Brown's "golden rule" - only to borrow to invest over the economic cycle - the change could provide billions of pounds of additional leeway and make the difference between keeping the rule and breaking it.

Oliver Letwin, shadow chancellor, accused the government of cooking the books. "This is a classic case of fiddled figures . . . If ever there was proof that we needed an independent national statistics office, this is it."

In a statement on Friday night, the ONS acknowledged that the Treasury influenced its decision to reclassify the statistics but said the influence had not been "improper". It added: "There was a joint study with Treasury statisticians but the decision to make the revision was made by the national statistician alone."

Having once worked at the Treasury, all I can say is…yeah, right. Ollie may have muffed his tax cuts, but he’s definitely right on this one- we need to make the ONS independent, just like the Bank.
Because we’re talking about some real money here:

‘The size of the "substantial" revision was unclear on Friday night, but was likely to run into billions of pounds because every past year of figures would be adjusted. The Highways Agency receives £4bn a year in current government expenditure and local authorities spend an additional £700m on road maintenance.’

The FT also reminds us that Gordo’s already massaged the calculation of cumulative borrowing over the cycle, not to mention the accounting treatment of all that rail borrowing. And we can look forward to many more such Enron style innovations, as the public finances continue to melt down.

As outlined in yesterday's post, the public sector debt/GDP ratio is much higher than Gordo would have us believe. Now, even on his preferred limited definition, the ONS says it was 33.4 per cent at the end of January, up from 31.8 per cent a year earlier. His Golden Rule limit of 40 per cent no longer looks so comfortable, and naturally his response is to cook the books.

Friday, February 18, 2005

Public sector pensions black hole

A useful piece today from Watson Wyatt on the government’s unfunded public sector pensions liability. They estimate this to be £690 billion, more than twice the size of our declared national debt. What’s more, it’s index-linked. And Watsons haven’t even included the substantial deficits in local authority pension schemes.

All of which makes Gordo’s boasting about how he’s slashed government debt ring pretty hollow. The second of his famous Golden Rules- his Sustainable Investment Rule- calls for net debt to be kept below 40 per cent of GDP. But adding in this unfunded pensions liability takes us to 92 per cent.

And let’s be clear- pension liabilities are a forward commitment to pay, just like any other kind of debt. In fact, just like those forward service contracts with the providers of all those PFI schools, hospitals, roads etc. Not to mention the massive off-balance sheet liabilities now being run up to renew the railways.

In this country, unfunded pensions only exist in the public sector, the idea being that members needn’t worry about not getting paid out, because when the time comes the government will raise the dosh by just taxing the rest of us. No private sector company would be allowed to get away with unfunded pensions on the basis that they can always screw more out of future customers. And certainly not since that fat Labour MP fell off his yacht.

Of course, as public sector employees are already discovering, governments will always welsh on their liabilities if they possible can. Which is why Unison is now balloting its 800,000 members on strike action over the plan to raise their retirement age from 60 to 65.

None of which takes any account of the other great slug of unfunded pension liabilities- the state pension. This runs at about 5 per cent of GDP annually (taking the sum of the basic state pension, State Second Pension, Minimum Income Guarantee and Pension Credit, Winter Fuel Payments, Over 75 TV licences, and Christmas Bonus). So capitalising that lot, using the same discount rate as Watson Wyatt, gives a further liability of 250-300 per cent of GDP!

So much for fiscal prudence, although I s’pose we have to blame Lloyd George and Bismarck, rather than Gordo, for unfunded state pensions.

(Footnote: S&M also has a post on the Watson figures, although he seems to think they’re not much help. Actually, it’s a slightly quirky post in which he seems more concerned with demonstrating to some teenage girls that economists have bigger ones than accountants. Maybe he’s reached that difficult age. Although surely he knows that Watsons are actuaries rather than accountants…you know, actuaries are those guys for whom accountancy was too exciting…)

Thursday, February 17, 2005

Socialist Republic of Scotland still sick

Eamonn Butler at ASI points out that, on a per capita basis, Scotland spends 14 per cent more than the rest of us on health. Indeed, it spends more than the European average. Does that mean shorter waiting lists?

‘Er, no. In fact 40,000 fewer patients are being treated now compared with 1997. Patients now wait 9 days longer for outpatient treatment and 21 days longer for inpatient stays. And recent reports have showed that many of Scotland's clinical outcomes trail badly behind those of England & Wales.’

Monopolistic state medicine can’t be made better just by massive injections of cash, even in the socialist paradise North of the border.

Viewed from down South of course, the really galling thing about this story is that we’re paying for it. Scotland gets a massive fiscal transfer from the rest of us- the last time I crunched the numbers, for 2000-01, it was equivalent to 10 per cent of their GDP!

Worse, the bit I live in- London and the Southeast- suffered a fiscal transfer out of the same amount. 10 per cent of our incomes confiscated to pay for socialism in the regions.

A 10 per cent transfer is huge: much bigger than the transfers that generate so much friction between EU members; bigger even than the reparations the French tried to make the Germans pay after WW1…and we all remember where that led.

And now I’ve checked out ASI’s numbers for myself, I see that although Scotland spends 14 per cent more than the UK average, compared to my own region, it was a heart-stopping 26 per cent!!! (HMT 2004 downloadable here)

It’s obviously time to send the red-coats back up there to stop them smoking all those fags, necking all that heavy, scoffing all those pies, and electing all those socialist MSPs, MPs, and other assorted commissars.

Either that or cut them loose… no more transfers, no more Gordon Brown, no John Reid, no irritating little jerk whose name escapes me…

Wednesday, February 16, 2005

BBC bashes Tesco

The state broadcaster spent some more of our money today bashing Britain’s top retailer.

This lunchtime Radio5 Live provided its regular platform for the usual crowd of turn-the-clock-back hippies, special pleading food producers, and Tesco’s unsuccessful competitors.

Someone called Joanna Blythe- who predictably seemed to be promoting her own anti-supermarket book- was encouraged to rant on about supermarket oppression, how it’s destroying our country and making us all fat, how we never voted for it, and how things are now so bad we’d be better off moving to France, where they have ‘saner’ attitudes.

I ask you.

This latest outburst was sparked by news that Tesco is now predicted to become the biggest operator of neighbourhood shops this year. This has to be an appalling development because of the all the above, and also because…er…well, did you know the company has just slipped down some league table of somebody’s opinions on corporate social responsibility? It was top in 2003, and now it’s crashed to like third or something.

Retailing is a fearsomely competitive business, as the shareholders of Sainsburys and M&S can testify. Tesco has got big by working out what customers want, and giving it to them.

Unlike, say, the BBC.

One size doesn't fit all

Times Business reports:

"The German and Italian economies shrank abruptly in the final quarter of last year, confronting the European Central Bank with a dilemma over a two-speed eurozone.
Bleak official figures revealed that Germany slid back to the brink of technical recession in the quarter as its economy shrank by 0.2 per cent, after stagnating in the previous three months.

Italy, too, succumbed to a surprise fourth-quarter drop in its output, which tumbled by 0.3 per cent, all but reversing a third-quarter gain of 0.4 per cent.


Domenico Siniscalco, Italy's Economy Minister, said that this was 'a nasty surprise'.

But the surprise setback for Germany and Italy coincided with a marked acceleration in growth in France and Spain, facing the ECB with a growing quandary over diverging eurozone performance. "

Quelle catastrophe.

If I were German I'd demand my money back.


Voters turned off

The Tories are today claiming that their plans for changing the structure of hospital bureaucracy are better than Labour’s. As I understand it, they intend to allow Hattie Jacques to overrule Kenneth Williams, at least when it comes cleaning the wards. They reckon it will help matron get on top of MRSA. Not to mention getting on top of Dr Willie.

Will it work? Personally, I’m still concerned about who’s going to deal with Sid James when he asks Barbara Windsor to plump up his pillow. Or Charles Hawtry when he gets that daffodil stuck up his bum again.

The thing is, I don’t know if it will work because I don’t manage a hospital.

And of course, neither do any of our politicos.

So why on earth do they imagine we will believe their plans for yet more disruptive internal hospital reorganisation will do anything useful?

For voters, this kind of big-end/little-end squabbling is not a coherent political choice, but just so much stuff. No wonder they've been turning-off in droves.

According to a poll in today's Independent: ‘…voters see less difference between the parties, in spite of Mr Blair's strategy for picking a fight with the Tories on Labour's main issues. Just 21 per cent think that there is a difference between the Tories and New Labour.’

With only 55 per cent saying they are ‘certain’ to vote, it seems very likely that turnout will be even lower that the previous rock bottom of 57 per cent in 1918.

Well done Tony, and the all the cynical manipulative vacuous legions of New Labour.

But well done Tories as well. For failing to give us any real choice, on public service reform, tax and spend, and the whole morass of ruling elite groupthink.

Surely there’s something we can do. Something that is, other than voting for Kilroy or those Carry On Round The Bend guys who want to have their women behind the fridge.

Could the blogosphere really be our only hope? Oooh, matron.

Tuesday, February 15, 2005

Egregious politicians

Ken Livingstone’s latest outburst really shouldn’t surprise anyone. His whole career has been one dark catalogue of swagger, bluster and bullying.

But what I want to know is why he thought it was OK to spend our money on throwing a party for Chris Smith? And what did it cost us?

Previous Livingstone bunfights have included the party to mark the pedestrianisation of Trafalgar Square- cost to us £210,000- and his St Patrick’s Day outrage- cost to us £100,000.

Still, with the IOC in London and enjoying a ringside seat, this must have kiboshed any lingering chance of us getting the Olympics. Even someone like Livingstone has a use.

Fingers crossed.

Monday, February 14, 2005

Welfare states and growth

Hard on the heels of Monbiot and the Swedish model, it was interesting to find Stumbling and Mumbling commenting on a Spanish/Italian co-production ‘Is the welfare state really harmful for growth?’ (academic paper by Beraldo, Montolio, and Turati).

The authors have found a statistical link, across 19 OECD countries, between higher GDP growth and higher growth of spending on health and education. They reckon their ‘results are consistent with the hypothesis that the contribution of welfare expenditures more than compensates for the distortions caused by the tax system.’

This conclusion would support Labour’s relabeling of welfare spending as ‘investment’, but would run contrary to most mainstream studies that treat such spending largely as consumption.

S&M has a pretty good go at the paper, pointing out that the authors fail to provide any causal mechanism, or to examine the complex lags that you’d expect in the real world. And also the fact that it is health spending- not education- that registers the strongest relationship to growth. Hardly supportive of the old ‘education, education, education’ mantra.

More generally, we shouldn’t be surprised that there’s a statistical association between income growth and welfare spending. It has long been observed that health and education have a high income elasticity, with proportionately richer countries tending to consume proportionately more. The world’s richest economy, the US, spends most on health (14 per cent of GDP).

Just demonstrating this statistical relationship once again proves nothing. The results may be consistent with the authors’ hypothesis, but they may also be consistent with the more usual explanation.

In fairness, deep within the paper, the authors do concede that the direction of causality is ‘inconclusive’ and that they have not addressed the issue. This is obviously a bit of a hole, so to distract attention they immediately treat us to some graphic detail on how they tortured their data attempting to extract a confession of endogeneity. This included ‘…instrumental variable estimation…using GMM…variables transformed in terms of orthogonal deviations, and a full set of time dummies …results based on consistent one-step estimators… dynamic IV estimations…Sargan test…no autocorrelation in the error term…series of differentiated residuals should present a significant first-order correlation…’

Any the wiser? Neither am I, and I once did a whole Masters level course in econometrics at the LSE. These days, if it can’t be explained in English, I generally ignore it.

S&M quite reasonably suggests we should ponder this paper. Having done so, I think we can move on.

I just hope that, through all those dark twisted byways of euro-research funding, we didn’t somehow pay for it.

Sunday, February 13, 2005

Are the Olympics any of our business?

The Telegraph has a useful overview of the supposed business case for the Olympics:

"The Government estimates that 12,000 jobs could be created in the UK in the years before the Games. But, critically, Accenture is unable to provide any concrete figures for the economic benefit, in GDP terms, of holding the Olympics in the UK. 'Any figure would be academic,' a spokesman said.

Despite the flag-waving, this lack of financial analysis makes it far harder to convince the sceptics who claim that the Olympics would be a huge drain on the public purse.
However, so far no one has found a way to come up with reliable data about whether winning the right to stage the Games provides a cost-effective way of boosting investment.
Until that happens, the business case for hosting the Olympic Games in 2012 will remain unproven."


If by some mischance the IOC likes what it sees during this week's visit, the poor British taxpayer remains on course to spend at least £5-10 billion.

Friday, February 11, 2005

Sir Peter and NHS Direct

I’m possibly the only person in the world that watched the repeat of Sir Peter Gershon’s appearance before the HoC Public Administration Committee (see previous post on Gershon Review). I don’t know what kind of audience BBC Parliament normally gets- the fingers of one hand presumably- but I’ll wager Sir Peter would have been even lower.

Anyway, he turns out to be the spitting image of a middle age Rimmer from Red Dwarf- strangled and nerdy, but with a strong sense of his own superiority. And as he burbled away- fielding questions by repeating them while waving his hands around a lot- I started to drift off.

Until that is, he was asked why we should believe all those savings that he reckoned would come from successful public sector IT projects. After all, there had never been any successful projects in the public sector.

Not true, he said, there’d been lots- it was just that the media didn’t report them ‘because that doesn’t sell newspapers’. He then listed a few. Obviously most of them were obscure computer programmes for counting paper clips etc, but my ears pricked when he mentioned NHS Direct. Because I have first hand experience of that.

That was the 3am episode where I somehow managed to swig a couple of mouthfuls of something that turned out not to be Gaviscon, but menthol and eucalyptus vaporiser fluid (embarrassing details here).

After a blood pressure raising conversation with NHS Direct, during which it was obvious they had no information, and at their suggestion, I went to A&E. The receptionist checked me in:

‘Ah… I phoned NHS Direct and they...’

‘…they told you to come here.’ This was not the first time she'd heard this. In fact, they get more visits from people referred on and generally scared stiff by NHS Direct than they get from people who are making their own decisions whether to come or not.

I was seen very quickly by a nurse who contacted the Toxicology Unit at Guy's Hospital. They immediately told us I’d need to ingest a swimming pool full of menthol and eucalyptus before it would do me any harm.

What a relief. I make to leave, but I can’t because I now have to see a doctor, because…well, those are just the rules.

A couple of hours later the doc pitches up, glances at the nurse’s notes, and confirms there’s no danger.

‘Yes well... ha ha... that's what I thought really. I'm sorry to have wasted your time but NHS Direct...’

‘... told you to come. Yes I'm sure they did.’ He smiles a thin I’ve-just-worked-ten-back-to-back-twenty-hour-shifts-and-now-I-not-only-have-to-deal-with-stupid-bastards-like-you-but-I’ve-got-to-deal-with-NHS-Direct-as-well kind of smile.

Now the aim of NHS Direct was to save money by screening out people who otherwise might call an ambulance for a minor cold. But my experience shows just as many people phone them with a headache only to be told they'd better pop along to casualty to get a brain scan just in case it’s a tumor.

And it turns out that’s exactly what the National Audit Office found when they looked at it. It costs more than £100 million a year to run- over and above the original £70 million cost of the IT system- and less than half of that is saved elsewhere by screening out minor complaints. The rest is a net addition to overall NHS costs.

Thus in the public sector even a successful IT project ends up costing us more. It’s an iron law (not quite sure which law- either Parkinson’s or LUC- Law of Unintended Consequences).

If Sir Peter really does think we’re going to save money by undertaking even more public sector IT projects, then my advice is to phone NHS Direct. They’ll probably refer him to A&E.

Thursday, February 10, 2005

Monbiot grapples with Swedish model

When it comes to burning taxpayers’ money, Sweden is in the Champions’ League. Tax and spend runs at around 60% of GDP, compared to our 40%. But big government is surely bad for your wealth, so how come those Swedes have such a high income level? It can’t all be Abba’s royalties, surely.

Anti-market types always like the Swedish model, and good old George Monbiot is no exception:
‘The surprise, for anyone who has swallowed the stories about Britain’s unrivalled economic dynamism, is that, in terms of gross domestic product, Sweden has done as well as we have. In 2002 its GDP per capita was $27,310, and the UK's was $26,240. This is no blip. In only seven years between 1960 and 2001 did Sweden's per capita GDP fall behind the UK's.’

As always you have to check George’s facts, and the latest OECD figures (for 2003) actually put us on $29,000 with the Swedes on $28,100. And those seven years he mentions were actually the most recent years, which kind of suggests their success is waning. But still, they’ve only fallen a bit behind so let’s hear him out:

‘For countries hoping to reach the promised land, there is a choice. They could seek to replicate the Swedish model of development - in which the benefits of growth are widely distributed - or the UK's, in which they are concentrated in the hands of the rich.’

Ah.

Well, where to start?

Let’s look a bit more closely at the history. Up until the sixties, Sweden’s public spending (as a percentage of GDP) was actually lower than ours. In the thirties it was only about half, and in the forties they saved loads more by contracting out of the fight against fascism. Even in 1960 they were only on 31% compared to our 32% (source: Public Spending in the Twentieth Century, Tanzi and Schuknecht).

And guess what- it was during that period that Sweden overtook us in terms of GDP per head. The crossover year was 1957.

Of course, in the swingin’ sixties, most western governments started binge spending, with the appalling Wilson ramping us up to 37%. Even so, by 1970 Sweden was still ‘only’ on 42%.

It wasn’t until Abba came along that things really started going haywire. Guided by the insights in Money Money Money (‘ah-ha, ah-ha, there’s a lot I could do, if I had a little money- it’s a rich man’s world’), Swedish tax and spend soared through 60% by 1985, eventually peaking at almost 70%! Only the Soviet Union was higher.

And that’s when the bills started to come in. By the early nineties the fiscal position was collapsing, growth had slowed and unemployment was rising.

It was no passing aberration, but a crisis of a kind that Britain had faced two decades earlier. The Swedes were forced into an anguished public debate, and all credit to them, they decided to confront reality. A savage programme of fiscal retrenchment began. Cash limits were imposed, and welfare payments cut.

But history shows the debilitating effects of fiscal indulgence last for years. The body economic becomes very fond of its welfare diet. Arteries get clogged, and the desire for ten-mile runs or even just getting off the butt dims. Wriggling back into those electric blue sateen culottes takes a superhuman effort.

Sweden had a quarter century of world leading tax and spend. During that period it enjoyed the fruits of its strong industrial base, which had actually been built up during an era of much lower taxes. It apparently had its cake and ate it.

Now the process has gone into reverse, it will be very interesting to see whether Sweden can stick at 60% or will need to get down closer to the European average. I wouldn’t want to be Swedish and poor.

In any event, for George or anyone else to hold us up as the model of small government, to be compared to redistributive big government Sweden, is grossly misleading. Predictably, Britain under New Labour is muddling along somewhere in the middle, quite possibly getting the worst of both worlds.

The real choice is between the Swedish model, with 60% tax, and the United States with 30%. Sweden certainly has much lower income inequality, but only at the cost of per capita GDP that is 25% lower. And that gap is growing.

Tuesday, February 08, 2005

Minister for Europe

Is this job a deliberate wind-up? It used to be filled by the pompous vacuity that is Peter Hain. Now we’ve got New Labour europhiliac Denis MacShane, a man whose main distinction, according to the Almanac of British Politics, is that he bears a passing resemblance to Bugs Bunny. If I were Bugs I’d sue.

I’ve just heard him pontificating on BBC5 Live about the euro-constitution. Pretty well unchallenged, he told us if we rejected the constitution we’d be shown up as isolationist, europhobic Little Englanders, turning our backs on the future, certain to go green and scaly, blah, blah, blah.

Then he was asked to identify the single key advantage to us of the constitution- a gently underarm delivery you might think. Alas, once asked for a specific, all he could come up with was ‘jobs’.

Say what?

Jobs?

Are we talking about the same euro-sclerotic hulk that’s condemned Germany to those scary Weimar Republic levels of unemployment, etc etc? Jobs?

Maybe he meant jobs for the boys. Like the ones we saw in that fly-on-the-wall about Kilroy at the eurowaffleshop. Those jobs like their graces the Lord and Lady Kinnock had.

He probably didn’t mean jobs at all but more that business about the EU constitution being the only thing standing between us and the panzers rolling again. Unfortunately when asked the specific question, he panicked, and his brain stylus jumped a groove onto the next track- about Labour’s economic miracle.

Anyway the underlying idea seemed to be that if we vote against the constitution, and if everyone else wants to go ahead anyway, and if they decide to kick us out, and if they ban our beef, and if we don’t retaliate by banning their surrender-cheese and cars, and if we can’t join NAFTA, and if the polar ice caps melt, and if the Da Vinci Code turns out to be true, and if those crop circles…oh man, we’re in deep shit…you know what I’m sayin’?

Now look Den, every serious analysis of our EU membership shows the economic costs and benefits are now pretty well a wash. Yes, we would suffer some disadvantage from being outside the EU tariff wall, but world tariffs are much lower now than when we joined. And we’d escape the CAP with all those budget contributions and inflated food prices. Not to mention all that social chapter style anti-market nonsense. And of course, if we lost our rebate or we were forced into the one-size-fits-all Euro, the economic balance would swing heavily in favour of leaving. (For a good analysis of the economic costs and benefits, see ‘Better Off Out?’ an IEA paper by Brian Hindley and Martin Howe).

So Den, do yourself a favour mate- when you’re next asked how the constitution benefits us, for gawd’s sake, don’t mention jobs. In fact don’t go anywhere near the economic balance sheet. Stick with those panzers, or some major arm waving about our place at the top table, or our freedom to live in Tuscany, or crop circles, or…well, just think of something.

I’m sure Bugs would have done a lot better.

Three strikes

The Tories are promising to revive their three-strikes plan for sentencing persistent offenders. The Telegraph reports:

‘In 1997, Howard introduced legislation that laid down a mandatory minimum sentence of seven years for those convicted for a third time of a drug trafficking offence involving a class A drug and… three years for those convicted for the third time of burglary.

However, Labour secured an amendment to the Act that stated that mandatory sentences should not be imposed if the judge considered it "unjust".

Of course, this is the same Labour whose early release scheme has already resulted in 3,500 additional crimes- 500 of them violent- being committed by people who hadn’t served their original full sentence. The Tories have also undertaken to end that nonsense.

There has been the usual outcry from the usual people- including the mandatory BBC platform for some wide-eyed loon from the Institute for Public Policy Research. Their argument is that recidivism is rife, so prison doesn’t work. But neither do expensive rehabilitation programmes, and I’d rather sleep soundly in my bed knowing at least the three-strikers are out.

Forever, if necessary.

And neither does it wash that we already have a ‘shamingly’ high number of prisoners by international standards. The UK currently has about 70,000: if we had the same number as the US, relative to population, we’d have well over 300,000.

Costs? As noted in a previous post, at nearly 40 grand a year, prison accommodation is not cheap, and Tory plans envisage another 20,000 places. That could be…gulp… three-quarters of a billion more every year. No wonder there are people round our way- rough uncaring people- who point out that a length of rope from B&Q only costs a fiver.

Obviously you wouldn’t start from here, but protecting us from bad guys is one of the state’s genuinely unavoidable responsibilities. And the cost of more prison places has to be weighed against the cost of crime, which even the mushy Home Office puts at some £60 billion pa.

In an ideal world I’m sure we’d all like to believe in the redemption of miserable sinners. It’s just that we don’t actually know how to arrange it in this less than ideal world.

All we can do down here is bang 'em up.

Either that, or hang 'em up.

Monday, February 07, 2005

Scrap the London Olympics

I used to think those anti-capitalism anarchists were just a bunch of bright green dreadlocks and mangy dogs on bits of string. But that was before I checked out enrager.net’s Scrap the London Olympics page. Now I’m with them.

They highlight the huge costs of the bid, and the spurious nature of the much hyped spin-off benefits like regeneration. To the extent these are important, they should be provided directly, not as part of some sprawling circus that will inevitably run way over budget, draining resources from all manner of good causes elsewhere (see earlier post).

I couldn’t agree more. The facts are these: the government estimates the games will cost £4.7 billion, but will bring in £2.4 billion of revenue. Against that, the Sydney Olympics cost more than twice their original budget, while Athens ran at least four times over. And as the Picketts Lock and Dome fiascos amply demonstrated, the ability of our government to stay within project budgets is roughly zero.

So the final cost of the games would probably be upwards of five to ten billion. On top of the complete disruption of London for months.

Like me, you’re probably already rooting for our new good friends across the Channel, but we can now link arms with some even newer friends closer to home.

I’m off out to get a couple of nose studs.

Sunday, February 06, 2005

Latest trough snufflings

According to the Sunday Times: "No expense is being spared on Cherie Blair's lecture tour to New Zealand and Australia this week. Gulf Air is donating first-class flights; Jaguar is donating chauffeur-driven cars. But the financial structure of Blair’s visit remains opaque."

A six figure fee is being widely mooted.

Hmmm...
(for more see previous post)

More on dangerous NHS

The Sunday Times front page reports more frightening evidence of NHS failure:

"In the past two years the Department of Health has made at least 20 announcements claiming big improvements in cancer care, citing an increase of nearly 1,200 cancer specialists and improvements in cancer survival rates.

However, the latest analysis estimates Britain still has one of the lowest survival rates in western Europe with only 36% of men likely to survive beyond five years compared with 55% in Austria, 50% in Sweden, 45% in France and Germany, and 44% in Spain."

(The full report is available at Reform)

This stark reality contrasts horribly with the parallel universe inhabited by the abominable John Reid.

The sooner we get our health services right away from the politicians, the safer we'll be.

Friday, February 04, 2005

Pensions fiasco

Most of us can’t bear to think about this, but Eamonn Butler insensitively reminds us (Why Bush is right to privatise pensions) of Gordon Brown's demolition job on our pension funds.

The £5 billion pa tax grab blew a hole of £100 billion in the funds’ combined balance sheet (£5 billion pa capitalised at 5%), and his compulsive tinkering with regulations and accounting standards has had company sponsors scrambling for the exit. So the jewel in Britain’s pension provision- the traditional final salary (defined benefit) company pension scheme- is now a thing of the past. More than three-quarters of employers have closed their schemes to new members, and the next step will be to close to existing members, particularly given the onerous new euro funding regulations (the EU Pensions Directive).

Gordo never intended this consequence of course, never even thought about it. Just like he never thought through the reality of his alternative- the stakeholder pension. All businesses with more than five employees were made to offer this people’s pension, to be managed by major City firms, but with charges capped at one percent pa.

Well, yes…except that those dastardly City firms reckoned that at one percent, they’d lose money. So naturally they didn’t offer them. And it turned out not many others wanted them either. Zillions of stakeholder schemes have had to be established by employers on the usual box-ticking principle, but when last sighted, 75% of them didn’t have one single active member! True, the government has now panicked and increased the charge cap to 1.5%, but don’t hold your breath.

Now, most of this is just down to the iron law of unintended consequences, but you can also make out the distant twang of Billy Bragg’s Greatest Hits. The workers must be protected from having their faces ground by the oppressive bosses, or ripped off entirely by the undeserving fat cats of the City. The stock market is a fascist casino run entirely for the benefit of global capitalism, so if pension or life insurance funds choose to play the tables, then the bosses must bear all the risk.

The trouble is…the world just ain’t like that. If you want good investment returns, then unfortunately you’ve got to take investment risk. This risk used to be shared between the workers and the bosses- sponsors provided a final salary pension promise on the basis of best endeavours, but reserved the theoretical- and admittedly unstated- right to cut payouts in extreme circumstances. Like if we ever returned to the thirties, and the markets fell so far as to turn the pension fund into a liability that threatened the company’s very existence. Risk was shared, generally to everyone's long-term advantage.

The new regime has changed this, by making the risks very explicit and attempting to load them all on to one party- the bosses. Or as we call them these days, our pensions and savings funds. And the inevitable consequence is the one we see. By trying to de-risk their lives, Gordo has in fact robbed the workers of their pensions.

Billy should write a song about it.

It’s difficult to imagine how any government could have done a better job of destroying our willingness to save and invest than this one. Besides the pensions fiasco, we’ve had the replacement of our familiar Peps and Tessas with their mystifying ISA system based on 1970s skirt lengths, their ‘name and shame’ undermining of confidence in our financial sector, particularly our life companies, and most pervasively, their business-unfriendly approach to tax and regulation which has resulted in the UK stock market substantially underperforming every single major market except bubble-stricken Japan.

No wonder we Brits have been putting all our spare cash into bricks and mortar and simultaneously borrowing up to the hilt. We may well have created a housing bubble that isn’t going to generate the long-term return we need to support our old age. But at least we get a roof over our heads- even if we won’t be able to afford to have it repaired- and real savings are never safe under socialism anyway.

So what the hell?

God knows it's difficult enough to get most people to save at all. Governments who raid the piggy-bank and constantly chop and change the rules discourage it even more. Gordo leaves us all poorer, and more dependent on the state in the years to come.

Grrr.

Wednesday, February 02, 2005

Arts anxiety

Don’t get me wrong. Mrs Tyler and I think there’s nothing better of a warm summer’s evening than poodling down to the Chichester Festival Theatre. The productions are invariably enjoyable, the interval drinks on the lawn quite splendid, and there’s even a Leith’s restaurant on site.

Of course there’s no riff-raff, just the educated middle class of Surrey, Hampshire and Sussex having a genteel night out. No top hats maybe, but definitely going out my dear to breathe an atmosphere that simply reeks of class…and money, obviously.

So…er…and I know I’ve asked this before, but…why on earth should the taxpayer subsidise it? Because it turns out the Theatre cops a million quid a year from the Arts Council.

Glyndebourne? Yes, please. Their touring department gets £1.4 million. The National Theatre? £17 million. The RSC £14 million. And top of the list, the Royal Opera House gets a whacking £25 million. That’s…why, that’s a quid each for every family in the land, most of whom have absolutely no interest in opera and ballet whatsoever. And as anyone who’s ever been to Covent Garden knows, the entire audience is made up of plutocrats, freeloaders on corporate entertainment boonies, and…er, well those middle class thingies again.

The Department of Media Culture and Sport sprays around £1.5 billion of our money every year, of which a third goes to the Arts Council. Its funds are then split between a predictable mix of inaccessible fringe dance troupes and expensive treats for the affluent middle class.

Now, I’m sure Mrs T and I get far more than our fair share of these subsidies. But we don’t feel good about it. Not good at all. In fact, it quite takes the fizz out of that second glass of champagne. The state doesn’t subsidise whippet racing for those guys with flat caps up North, and deep down we know it shouldn’t subsidise us.

And an arts industry that is dependent on state bureaucracy for its funding is not one that is ever going to be at the forefront of developing new products and new customers. The Arts Council should be wound up.


Tuesday, February 01, 2005

Cutting the cost of crime

Round our way the crime wave continues unabated. Neighbours have just had a garden statue nicked, even though it was chained down and, scarily, they were at home at the time. The police response was ‘yeah well, we can’t send anyone out, but we’ll send you a form for the insurance.’

This latest incident joins the burgeoning neighbourhood catalogue of muggings, burglaries, car-jackings, assaulted teenage children, and even a probable gangland murder. None of which seem to have been solved by the elusive officers of law enforcement, even though they have just found time to book my father-in-law for driving at six mph over the speed limit- twice in the same day.

Not that our neighbourhood is anything special- it’s leafy Surrey rather than Miami Vice. In fact the Home Office statistics say there are only 18 recorded crimes per thousand population compared to a national average of 28. God knows what it’s like living in the inner cities.

The government’s line of course is that the crime wave is a figment of our imaginations. They bang on about the British Crime Survey, which purports to show that crime has dropped to the lowest level since the Garden of Eden. What they don’t emphasise is that the BCS is effectively an opinion poll, based on interviews with a sample of punters, sifted, tweaked and massaged with all the artistry we’ve come to associate with sensitive government statistics. These are not hard numbers, and the results conflict with both police recorded crime statistics and the evidence of our own eyes.

What to do? Well, unless the late lamented Inspector Morse is going to return, we should lay aside any thought that the police will solve more crime- ie that somehow the clear-up rate can be increased from its present abysmal level of under a quarter. It may be a convenient fantasy for our mushy politicians, but the chance of criminals getting caught is going to remain minimal.

Which means we must fall back on the only other tools we have available: prevention and deterrence.

In terms of prevention, we’d all like to see some zero-tolerance policing…but not just for people driving a bit fast, or eating an apple at the wheel. Technology can help too, hence the growth in the alarm/CCTV industry. But every time we make it harder to steal unattended property, we make it more likely that thieves will be driven to snatch things from us while we are actually there- muggings, car-jackings, and breaking in while we’re asleep.

Which is why deterrence is so important. We don’t need the Home Office to spend another fortune explaining why peaceable householders really shouldn’t need more freedom to bash intruders- we need a law that says ‘if-you-break-into-my-house-buddy-boy-all-bets-are-off’.

And we also need much more severe penalties for the small number of criminals who actually do get caught. The message has to be ‘yes, you can probably get away with a life of crime, but you need to think very carefully because if you do get caught you are going to be locked up for a very long time in some very uncomfortable conditions.’ It goes without saying that we need our own ‘three strikes’ arrangement to keep habitual offenders well away from the rest of us. And we should forget all that nonsense about rehabilitation- I'd rather be safe.

Unfortunately, this is not the government’s view. In ‘Confident Communities in a Secure Britain’, they say:

“We intend to introduce a new requirement for the Sentencing Guidelines Council to have regard to overall custodial and community capacity when producing its guidelines. This combination of reforms aims to stabilise the prison population at 80,000 by 2008”

What this means in plain English, is that once we have filled up the arbitrary 80,000 prison places, the courts will only be able to pass non-custodial sentences. Which from the perspective of us out here is completely hopeless.

How much would more prisons cost? Using present arrangements probably more than it should- every couple of dozen prisoners costs a staggering million a year, so an extra 10,000 would cost £400 million.

But I’m sure citizens of goodwill could come up with more cost effective arrangements. Personally I go along with my Dad, who suggests doing a cut price deal with Russia- they’ve got plenty of surplus prison accommodation, and they could use some foreign currency earnings and prison warder jobs.