Saturday, June 30, 2007

Money Comes From Daddy


You can say that again

I'm afraid I can't remember exactly which blogger came up with the expression "Money? Oh that comes from Daddy, doesn't it?" But it's a wonderful encapsulation of the BBC's approach to the whole grubby subject.

BBC broadcasters routinely display both extreme distaste for, and woeful ignorance of, anything to do with making money. They seem to believe it's just there, to be spent on whatever enthusiasm they deem worthy.

And their big bosses- the ones who supposedly have direct responsibility for stewarding £3bn pa of taxpayers' funds- are no better.

This week the Public Accounts Committee reported on the outsourcing contract between the BBC and Siemens Business Service. That's a ten-year deal, signed in 2004, for the provision of a range of technology services provided previously by the BBC’s commercial subsidiary BBC Technology.

What the PAC discovered (original NAO Report here) was an approach towards securing value for money that is at best shambolic, and at worst, downright dishonest.

In particular, the deal was originally sold to BBC governors on the basis "that savings were guaranteed at £35.2 million a year". Persuaded by such a large number, the governors agreed it.

But actual savings have turned out to be much less: in the first year they were a mere £22m pa, and it's by no means clear all of them are attributable to the deal itself.

The explanation from BBC executives?

The BBC Group Finance Director said:

"The use of the word “guaranteed” relating to the savings in the documentation put to the governors was inappropriate."

Inappropriate?

Inappropriate!

Sorry. Not good enough.

It was either intentionally misleading (ie A LIE), or grossly incompetent.

This is by no means the first instance of BBC execs getting the governors to make major financial decisions on the basis of grossly misleading information. When they approved the White City property deal in 2001, costs totalling £60 million were excluded from the approval submissions.

To make one inappropriate submission is unfortunate. To make two, sounds like A Very Big Pork Pie Indeed.

PAC found a raft of other failures with the Siemens deal:
  • The contract with Siemens does not provide for the BBC to share profits if Siemens’s return exceeds a specified level- contrary to normal outsourcing practice

  • The BBC has chosen not to exercise its rights of open book access to check how profitable the contract is for Siemens- even though they could have, they haven't bothered

  • The BBC has been slow to introduce effective management of the contract- they just sort of muddled along

  • 60% of the key technology projects commissioned directly from Siemens in the first year of the contract suffered delays or went over budget- Siemens picked up the cost, but the BBC suffered the delays

The BBC- like many other state bodies- simply does not take the stewardship of public money seriously. And the fundamental reason is that unlike commercial businesses, they don't have to earn it from customers.

It just comes from Daddy.

Who confiscates it from taxpayers.

Roll on privatisation (and before that, regular value audits of the BBC by the NAO).


(htp Keith at Telebusillis)

A Nation Of Criminalised Shopkeepers


They were valued once

A small shopkeeper has just been fined £250 for hitting back against thieves:

"Jacob Smyth chased three youths out of his hardware shop in Penzance, Cornwall, when he was set upon. When he was kicked in the groin by one of the hooded youths who had stolen cans of spray paint Mr Smyth hit back.

Police issued fixed penalty tickets to the shoplifters but charged Mr Smyth and a colleague with assault.

Yesterday he pleaded guilty to assault at Truro Magistrates’ Court. He claimed after the hearing that he had been advised to plead guilty because otherwise he could have faced a six month prison sentence."

Absolutely abysmal.

Mr Smyth added: “I did nothing wrong. I was getting a good beating from this lad. I had no choice but to defend myself.

“We get shoplifters all the time one after the other. We call the police but nothing is ever done. We called them on this occasion and ran after the lads to try and get my property back but then they turned on us. “Am I not allowed to protect my stock and premises from thieves?”

The answer is of course "no".

The police may be completely useless when it comes to protecting any of us from anything, but small shopkeepers get an especially raw deal.

At root, the government doesn't even acknowledge shoplifting as a crime worthy of the name. Its chosen measure of crime, the British Crime Survey, specifically excludes shoplifting, and indeed all other crime committed on commercial premises (eg see this from Civitas).

So, despite the fact that it's running at an estimated £2bn pa, they introduced these non-criminalising fixed penalty notices. As the British Retail Consortium says:

"Retailers feel police don't take retail crime seriously - it is way, way down on their list of priorities.

At government level sentencing is so weak that people are just not put off stealing from shops."

The government's unspoken view is that crime against business is victimless (cf credit card fraud). Businesses can afford it, and ministers have got all those much more important priorities. Besides, if all crime was properly declared, the survey's total crime figure would at least double (see Civitas).

At least the big retailers can "afford" (translation: pass the cost onto honest shoppers) to employ permanent security guards and "always prosecute" (doubtless they also have longstop arrangements with Mr Gomulka's Social Outreach team).

Small shopkeepers can't afford any of that. They are fully exposed to the incompetence and indifference of government. On their own in terms of protecting their property, if they actually dare to take action themselves, as like as not, they will be the ones who find themselves criminalised.

But many more of them will soon be picking up criminal records as a consequence of Fascist Nanny's new "smokefree" Britain.

As we've mentioned before, on 1 October, the government is increasing the customer age at which it's legal to sell tobacco products from 16 to 18.

Good thing too you say.

And yes, it is.

Surely.

It must be.

Well, let's gloss over the obvious fact that this will drive even more of the tobacco market into the hands of smugglers (see this blog).

Let's also gloss over the obvious fact that it's changing attitudes rather than yet more regulation that surely has the real impact on smoking. Attitudes have been transformed over the last 30 years, with a huge fall in the percentage smoking:



Let's consider instead how it's going to work at the level of the small shop. Because the Village Postmaster and his fellow small tobacco retailers are much exercised about this.

In essence, their problem is that the government, in the much fancied shape of "that Flint woman" (see splendidly unflattering biog here), is placing all the onus for enforcing the new regulation on shopkeepers. Whereas shopkeepers will face the full penalty of the criminal law if they mistakenly sell ciggies to an under-18 year old, the adolescent miscreant him/herself will walk off scot free. Half-baked and unfair.

What's more, small shopkeepers are very concerned about the abuse and worse they will receive when they refuse to serve hulking great hoodie teenagers, especially the ones between 16 and 18 who've previously been served. They know the police won't help, so what will they do?

The Postmaster is so concerned, he wrote to his MP. Who wrote to Ms Flint. Her all too predictable reply is "tough" (see here for Postmaster's enraged spittle-flecked response).

Caroline does say she's working "to ensure that further detailed guidance is available about how staff to deal with difficult and abusive customers. This guidance will be sent to retailers over the summer."

Gawd knows what drivel that will be, but meanwhile following his regular Friday night beverage with Mr Gomulka, the Major has come up with some alternative suggestions :
1. Keep a baseball bat behind the counter
2. Use it
3. Remember to wipe the CCTV tapes

Small shopkeepers have zero traction over the governmnet or the local police. They used to pay business rates to their own local authorities giving them some clout in setting local priorities. No longer. Their business rates just disappear into the Big Black Pot along with all the other tax they pay (and collect).

They're on their own.

And heading for jail.


PS A further alternative to the Major's suggestion of course is to stock Mountain Dew and hope Mr Seagal becomes a customer:

Friday, June 29, 2007

Warning: Government Seriously Damages Your Income


Every so often I like to draw up the chart above. It shows the latest (2005) OECD figures on GDP per capita plotted against the size of government for each of the G7 major economies.

The negative relationship jumps off the page.

GDP per head is highest in the US, at $41,900 pa, and lowest in Italy, at $28,500 pa. But on government spending as a percentage of GDP, the situations are somewhat reversed: the US (even after the Bush splurge) is on 36.4%, while Italy is on an eye-popping 48.2%.

If we draw a simple line between the two, it says that for every one percentage point increase in the share of government in GDP, GDP per capita is lower by 2.9%. On average, for every one percentage point extra of governmnet spending they get, Italians are worse off by 2.9%.

That's one helluva price to pay for... er, whatever it is Big Government provides.
The UK does only marginally better. We get 9.1 percentage points more of government spending than the US, but our per capita GDP is 23.4% lower. That's a trade-off rate of 2.6 to 1, compared to say, France's 1.6 to one.

What's that?

Laughably simplistic? Correlation does not imply causation?

Hmmm.

As regular readers will know, the OECD itself has done stacks of work on this. And they've got people who have taken econometrics far beyond anything Tyler has forgotten from his LSE Masters. Their conclusion is:

"Taxes...seem to affect growth both directly and indirectly through investment. An increase of about one percentage point in the tax pressure... could be associated with a direct reduction of about 0.3 per cent in output per capita. If the investment effect is taken into account, the overall reduction would be about 0.6-0.7 per cent." (The Sources of Economic Growth in OECD Countries, Section 2.3)

Yes, they look at tax rather than spend, but Ricardian equivalence says they're pretty much the same because taxpayers will have to pay eventually. And unlike the OECD, I don't have to time to disentangle the "tax pressure" effects of all those fiscal deficits.

Still, I'm happy to bow to the OECD. Let's agree the impact of every additional percent of GDP taken by government is to reduce per capita GDP by 0.7%.

Bear that figure in mind next time you vote for one or other of our indistinguishable high spending politicos.

PS Why is Japan such a poorly performing outlier? My guess is that they are still recovering from their huge credit based financial bubble in the 1980s. Thank God we could never get ourselves into a situation like that.
PPS Just for the record, per capita GDP is shown in 2005 US$ based on the OECD's current Purchasing Power Parities

Dumbing Down


Ex-teacher Mrs T is spitting red biros. "I'd have never let my 8 year olds get away with that. It's the worst kind of sloppiness!"
Don't these people understand basic literacy? Don't they know that "we always use a Capital Letter for the first letter of a proper noun (name). This includes names of people, places, companies, days of the week and months"? (source: EnglishClub Learning Centre- EFL).
Mrs T proposes a crash remedial course. It should include practical examples to help overcome the "challenges" of a difficult home environment. For example, pupils could:
  • Share examples from their own experience of different types of proper noun; devise a chart/list/table to record words and add to this new examples that they find in their own reading.
  • Compose some e-mails using a list of proper nouns, e.g. to a TV station to request the return of a programme, to a local radio show asking them to play a friend's favourite track, to a newsagent to order a new magazine

Not Mrs T's ideas- they come from the department for children, schools and families website on teaching adult literacy.

WTF do we let these arrogant clowns spend tens of billions of our money and tell us how to educate our own children?

Does anyone know?

Thursday, June 28, 2007

Gratuitous Violence


A fresh start

As Nick Robinson keeps telling us, Brown's shuffle is the biggest cabinet shake-up since the War (the other one), more gore even than Mac's Night of the Longknives.

What should we make of it?

Better government?

Hah!

At the Treasury, Darling will continue Brown's high tax, high meddling programme as is (it's unclear why Chief Secretary Stephen Timms got the bullet, especially to be replaced by Shaky- and see here).

At Health, Johnson will call a halt to anything that hints at "contestability".

At Children, Schools and Families (yes that's what Education is called now), Balls will press on with levelling up through dumbing down.

At Work and Pensions, the Orange One will hold court over the ongoing morass of fraud, error, and mass welfare dependency.

At...

You know, I was going to go through the whole lot, but I'm now so depressed I think I'll have a large shot of absinthe.

Never in the history of Big Government has so much blood been spilled on so many ministerial carpets for so few benefits.

New Money Burner


The People's Flag

A huge cheer has gone up from Brest-Litovsk to Whipps Cross! With the Commissar now safely under house arrest in her dacha, it has fallen to Comrade Hero Johnson to rally our forces and advance to final victory!

We should brace ourselves for the task ahead. Doubtless, when the full facts emerge during the forthcoming trials, we will be shocked at the Commissar's many acts of unparalleled mendacity during her reign of terror against the workers.

But Comrade Johnson is made of finer mettle. He is as one with the brothers and sisters, forged in the comradely traditions of King Arthur and fully cogniscent of Composites 1-248 proposed by Brother Prentis.

It's back to the good old days.

Taxing Income As Capital


The road to riches
Click on image to enlarge
The ever excellent Jeff Randall explains exactly how Brown's accelerated taper relief benefits private equity operatives:

"In a typical private-equity deal, involving the likes of Charterhouse or CVC, the firm's partners might cough up 2pc, ie £10m, of the £500m of equity funds required to pay £3bn for BusyBiz, an underperforming subsidiary of DozyCorp.

Outside investors put in the rest of the equity funds, £490m, and the balance of the purchase price, £2.5bn, comes from bank borrowings.

Having knocked the ailing BusyBiz into shape, the partners then offload it to a rival or float the company on the stock market, realising handsome gains for themselves and their backers. On a normal day, the partners will collect 20pc of the value created.

Thus, if BusyBiz is sold for £4bn, they collect 20pc of the £1bn profit (£4bn minus £3bn), ie £200m.

Under existing rules, as long as the investment had been held for a minimum of two years, all of this personal profit would attract a 10pc tax rate, not 40pc, because it counts as a capital gain, not regular income. So the partners would pay only £20m in tax, instead of £80m.

You have, I hope, spotted the anomaly. The private-equity partners put up only 2pc of the original risk money, a small fraction of the total purchase price, yet collect 20pc of the overall payback.

If their bankers and outside investors are happy with this ratio, it is because they recognise the exceptional contribution of private-equity managers in creating value where little had seemed to exist.

But it is, quite frankly, outrageous that the Inland Revenue is content to reward private-equity partners with a low tax rate for taking a large punt with OPM - Other People's Money.
It's providing reward without risk.

If the partners are prepared to inject "only" 2pc of the risk equity, they should be entitled to a special tax rate on no more than 2pc of their share of the overall profit."

Not for the first time, Randall has put his finger on the nub of the problem. Brown's taper relief has exacerbated the asymmetry of risk and reward as between the owners of the capital (such as pension funds), and their fund managers. It's not really an issue of moral "outrage". It's actually worse than that.

Private equity was always a risky business, and there were always "principal/agent" issues. But Brown's taper relief has poured petrol on the flames.

With little personal capital actually at stake, highly savvy private equity partners have been even more hugely incentivised to risk capital belonging to much less well informed punters, including pension fund members.

That's all very well so long as markets are heading North- as they have been for the last few years. In that environment, private equity, geared up to the hilt on a nice big pile of debt, performs like a train. And doubtless that's helped many final salary pension schemes to surge back into surplus over the last year.

But when the next downturn arrives, watch out. The whole process goes into reverse. And the people left holding the baby won't be those private equity partners.



PS In case you're unsure, the growth of the UK's private equity biz has been spectacular over the last decade. According to the British Venture Capital Association, the industry raised £27bn of new funding in 2005, and investments hit a record £11.7bn (in case you're wondering, their chart above only goes up to 2004). That's a threefold increase since Labour came to power, reflecting in no small measure Labour's tax changes- not just the taper relief but also the abolition of ACT refunds for pension funds (see this blog).
PPS For the avoidance of doubt, yes, we think private equity firms overall do an excellent job increasing economic efficiency, and no, we don't want tax increases. But taxes shouldn't be skewed in this way because it seriously distorts economic decision making. Low and simple is what we need.

Wednesday, June 27, 2007

Education x 3


Degree subject by UCAS points

Education, education, education.

As our new Change to Win PM takes over, three choruses on education:

1. "My passion":

"I am passionate about education because I want a Britain where there is no cap on ambition, no ceiling on talent, no limit to where your potential will take you and how far you can rise. A Britain of talent unleashed, driving our economy and future prosperity.

I believe that taking private and public investments together, advanced industrial countries will have in future aspire to invest not 5-6-7-8 per cent of their national income, on education science and innovation but 10 per cent, one pound in every ten.
" (Brown's Mansion House speech 20.6.07)

As Reform points out, 10% of GDP spent on education represents an increase of 4.5 percentage points from today, which would likely cost taxpayers over £50bn pa (16p on the standard rate of income tax).

2. Overqualified workers:

According to the OECD, Britain already has some of the most overqualified workers in the world. 15% of our native workers are overqualified for what they do, which ranks us 5th in the international overqualification league. The US, Germany and France all do better. Overall, it seems we taxpayers already fund too much education. And we haven't even got to 50% of the population taking media studies degrees yet.


3. Deckchairs:

According to tonight's reports, Brown is going to split the Department for Education and Skills into a Schools Department and a Higher Education and Skills Department. The idea seems to be that "skills" haven't been given enough attention.

As regular readers of BOM will know, taxpayers already spend over £10bn pa plus on the nationalised "skills" industry, and it's a total disaster (eg see this blog and this). Giving it a separate department will change nothing, other than adding yet more bureaucrats.

Far better to take the money and cut business taxes. That would help businesses expand the £20bn pa they already spend on the training that actually has some value.

solutions.not

Private Eye has a regular feature called Solutions, where readers send in ludicrous examples of organisations that so describe their services. EG:

"Uniq's Vision is to be the most exciting provider of chilled food solutions to our customers across Europe "
READY MEALS

"The Blue Team: Outsourced Vehicle Movement Solutions "
CAR DELIVERIES


"Integrated Care Solutions (Shropshire): working in partnership to deliver Residential, Day-care and Extra-care solutions "
NURSING HOMES


One the Eye may have missed is the government's procurement agency. That not only describes its service as a solution, but it actually brands itself that way:



What's more- as you can see- it also incorporates a dot.com stylee. Could anything be more cutting edge?

Weelllll.... it turns out that to be a "solution" you really need more than a snappy logo.

The Public Accounts Committee is distinctly underwhelmed (to use the Chairman's favourite phrase). In fact in today's report they pretty well tear OGCbuying.solutions to pieces. Sir Edward summarises:

"OGCbuying.solutions really should be centre stage in the drive to achieve better value public sector procurement – at present it is just one of the chorus.

Very little public sector spending benefits at the moment... Attracting more customers from the public sector will require OGCbuying.solutions driving down the prices it can offer.

The agency acknowledges that it currently lacks the level of commercial acumen to negotiate attractive deals with its suppliers. OGCbuying.solutions must get a better idea of what its customers want... And the agency should ensure that its suppliers are left in no doubt over what they need to do to meet customer requirements better.”

So not much of a solution.

We blogged the damning National Audit Report on OGC here. That showed how the OGC lacks commercial skills (who'd want to work for the commissars if they had those skills?), and is extraordinarily distant from its public sector "customers".

In reality, OGCbuying.solutions is just one more bureaucratic arm of our £175bn pa Simple Shopper.

New Big Red Book

To mark Bliar's departure, Mssrs Dale and Fawkes have once again girded their loins... well they've done something with their loins anyway... and driven through the publication of a second edition of the Labour Sleaze Book. As you will know, its USP is that it is written entirely by bloggers, including iirc Tyler.
Well worth £9.99 of anyone's money, and the good news you can buy through their thoughtfully provided link here (click image):


And Don't Come Back


Men of destiny were cheaper back then
Today is Bliar's last day.

Hurrah!

So far we know it's cost us at least £1m for his Blairwell World Tour, and now he's going to cop the ex-PM's package worth £300 grand pa for life (htp TS).

As others have pointed out, that is in sharp contrast to what Churchill got- or rather didn't get- when he was hoofed out at the end of WW2. Then, if it hadn't been for the generosity of his rich friends, he would have been forced to sell his house to make ends meet.

But of course, all that's small beer compared to what Bliar can now earn on the lecture circuit by cashing in on his carefully cultivated celebrity. It's reckoned his memoirs are "worth" £5m , and he will be able to charge £75 grand a throw for lectures in the US.

Did Churchill charge for his famous Iron Curtain speech in Fulton, Missouri, we wonder.

Yes, it's tacky. Yes, we resent the money. And yes, we squirm at the thought of what "man of destiny" nonsense he might come up with to earn a buck or squillion in future.

But at least he's gone. And when history counts the cost in terms of broken promises, illegality, and all round incompetence, the judgement will be harsh.

Real Supercomputers


They look like this
From time to time BOM correspondents take us to task for referring to the dire NPfIT as the NHS "Supercomputer". They point out the grave disservice we do to real supercomputers.

Our excuse is that we're not computer experts, just angry taxpayers. But today we get news of how the real supercomputers are coming along. So we can educate ourselves.

It seems the World's Top Supercomputer battle is back on between Sun and IBM:

"The first contender, Constellation, has been built by Sun Microsystems at a cost of $59m (£30m) and boasts a 1.7 petabytes hard disk. The machine can operate at speeds of 421 teraflops, or 421 trillion calculations a second. But operating at such levels will be a significant power drain, requiring the same amount of power to run as a high-speed intercity train."

But IBM is not taking it lying down:

"IBM has announced its plan to build the latest Blue Gene computer, dubbed "P". Blue Gene/P is expected to be almost three times more powerful than its IBM predecessor, and will run continuously at speeds of around 1 petaflop - one quadrillion calculations a second. It is also claimed to be more energy efficient than its rivals."

After we've said gee-whizz, let's see if we can understand the differences between real supercomputers and the NPfIT:
  • Real supercomputers only cost £30m- not £20bn (the Health Minister's estimate for NPfIT)

  • Real supercomputers work

  • Real supercomputers are the product of competition- not Stalinist planners operating through huge nationalised blobs
Of course, in one respect the NPfIT is way ahead of the game. When it comes to flops, tera, peta, or even zetta, it leaves Sun and IBM in the dust.
PS Yes, I know we're comparing hardware and software. But come on, cut us a little slack.

Tuesday, June 26, 2007

Stuck In IT Hell With The Commissars


You fools will never learn
A Reader sends us a link to an excellent IT blog, Coding Horror, written by Jeff Atwood, a Californian software developer. It explains in everyday language exactly how it is our government manages to produce all those eye-wateringly expensive IT projects that keep blowing up (NPfIT, Defra's farm subsidy system, the National Firearms Licensing Management System, LIBRA, most DWP systems, etc etc).

Mr Atwood never actually mentions the NHS supercomputer or the others, but it turns out that they're a continuous loop replay of some very well known themes.

In The Long Dismal History of Software Failure, he runs us through the global catalogue of IT woe. It stretches all the way from mighty financial sector disasters at Allstate Insurance and Westpac Bank, through to the notorious $526m write-off at Sainsburys after its whizz-bang automated supply chain management system decided the shelves were best left empty.

And in this post he lists the 36 classic mistakes of software development, first identified by software writer Steve McConnell. Tyler had never seen them before, but to anyone who has any knowledge of the NPfIT they are immediately familiar. Try these for starters:


  • Silver bullet syndrome

  • Lack of stakeholder buy-in

  • Lack of user input

  • Politics placed over substance

  • Wishful thinking

  • Insufficient risk management

  • Contractor failure

All very well known problems, so I guess we shouldn't be too surprised when our Big Government gets whacked by them.

Except... except... wouldn't you expect people to learn from such ghastly mistakes? I mean according to Atwood, "this year organizations and governments will spend an estimated $1 trillion on IT hardware, software, and services worldwide." That's one cack load of cash, and surely the customers would have learned by now how to get better value.

Well, guess what. Most customers have learned. As Atwood reports:

"The 10th edition of the annual CHAOS report from The Standish Group, which researches the reasons for IT project failure in the United States, indicates that project success rates have increased to 34 percent of all projects. That’s more than a 100-percent improvement from the success rate found in the first study in 1994."

Just pause there. The overall success rate has more than doubled in the last ten years- hurrah! But it's still only 34%- boo!

"Asked for the chief reasons project success rates have improved, Standish Chairman Jim Johnson says, “The primary reason is the projects have gotten a lot smaller. Doing projects with iterative processing as opposed to the waterfall method, which called for all project requirements to be defined up front, is a major step forward.”

Pause again, to let that sink in. The key industry improvement has been to do projects in small "iterative" steps. Not to launch the world's biggest ever civilian IT project.

"The Standish Group has studied over 40,000 projects in 10 years to reach the findings.
Project failures have declined to 15 percent of all projects, a vast improvement over the 31-percent failure rate reported in 1994."

Overall then, outright failures are now down to a mere 15%, but projects are much smaller.

So should we now expect UK government IT projects to reach a similar standard?
Given that that our top-down Big Plan Big Government doesn't seem to have learned from any of McConnell's existing 36 mistakes, let alone the new mistakes that are being added to the list all the time?
It simply doesn't compute.
No, as long as the commissars are at the controls, we are doomed to the hellish eternity of massive spend and massive failure.

Another Day In The Life


Our overpriced, underdelivering, bungling, lying, hopeless "government" lurches through another day:

NHS fiasco leaves 4,000 jobs unfilled:

"The full extent of the junior doctor recruitment crisis was laid bare yesterday after figures showed that thousands of training posts have not yet been filled.

A leaked document from the Department of Health showed that almost a quarter of specialist training positions for young medics - the equivalent of more than 4,000 jobs - were still empty.


Matt Jameson Evans, a spokesman for Remedy UK and a trainee surgeon, said the online Medical Training Application Service (MTAS), which the Government was forced to shelve in April, had failed patients as well as doctors.

"The situation is even worse than we thought," he said. "We now find ourselves in the Kafkaesque situation of having thousands of excellent doctors with no job for August and thousands of empty posts. It's difficult to see how this won't impact on patients."

The BMA voted overwhelmingly yesterday for Sir Liam Donaldson, England's Chief Medical Officer, to resign. After a vote of no confidence, doctors said he had allowed the fiasco to "freefall into chaos" and should step down immediately."

We've blogged the MTAS fiasco several times. It resulted from the Commissars deciding that the previous recruitment system wasn't sufficiently systematised. According to James Bartholmew, "systematisation" was they key reason given by Bevan and his New Jerusalem chums for nationalising healthcare in the first place.

As our old friend observed:

"The man of system... is apt to be very wise in his own conceit; and is often so enamoured with the supposed beauty of his own ideal plan of government, that he cannot suffer the smallest deviation from any part of it. He goes on to establish it completely and in all its parts, without any regard either to the great interests, or to the strong prejudices which may oppose it. He seems to imagine that he can arrange the different members of a great society with as much ease as the hand arranges the different pieces upon a chess-board."


Three million crimes 'omitted from statistics':

"More than three million crimes - many of them violent assaults - are omitted from official statistics because repeat victims are excluded from the figures, a study has revealed.

Research by criminologists suggests that the public is being misled about the true extent of offending, particularly violent offending, as measured by the
British Crime Survey (BCS).

It reveals that the BCS simply fails to register many crimes committed against people who have been repeat victims.

If people are victimised in the same way by the same perpetrators more than five times in a year, the number of crimes is put down as a maximum of five."

We've always distrusted the BCS. It's essentially an opinion poll with all the massage and spin they're subject to (eg see this blog). And being in such sharp contrast to the observation of our own eyes, it's exactly the kind of thing that brings government into such disrepute.

But the really alarming bit is that the commissars actually believe it to be reality.

Monday, June 25, 2007

Worked To Death

Hours worked annually
Click on image to enlarge
Have you noticed how much the lib media complains about our work hours? Here's one from the Gruaniad:

Work until you drop: how the long-hours culture is killing us

With the longest working week in Europe, experts say Britain's health and productivity will decline unless something is done about it


In Japan they call it karoshi and in China it is guolaosi. As yet there is no word in English for working yourself to death, but as more and more people put in longer hours and suffer more stress there may soon be.

Ronald Reagan was wrong, it seems, when he said: "Hard work never killed anyone."

Etc

In reality, of course, on 1672 hours pa, average British working hours are around mid-table, and significantly less than say the US on 1804, or Korea on 2354 (see OECD chart above and data here).

Assuming six weeks holiday pa (including public holidays), that implies a working week of 36 hours- less than 8 hours a day for a five day week.

Which hardly seems karoshi.

I'm reminded of this because the Doc has just blogged about all his whining junior colleagues and wannabe docs who complain about the hours they're expected to work while training. Doc says he "spent five precious years of his life working 100 to 120 hours a week with overtime pay rates that were derisory. It was ridiculous. Absurd. No one should have to work in that fashion. But there was an upside. Experience. Experience that benefited both doctors and patients."

Doc reckons people who want to be doctors need to recognise that's a price they have to pay. The needs of the job must come first.
But against the background of that "Killer Hours Narrative", he's naturally taken some flak (possibly exacerbated by his doubtless well-intentioned reference to more "girlies" entering the doctoring biz).
So who's right?

Certainly those junior docs are not alone. A thrusting young investment banker of my acquaintance routinely worked 18 hour days at least six days per week when he first started. And even after three years and a promotion (yes, they've given him a brush), he still works 14 hour days. And as blogged here, when he started he was on £6.73 per hour, admittedly above the minimum wage, but only just.
The thing is, there is no alternative. Fight to the death competition means the investment banks have to pay up to attract the brightest and best, and then pay them while they get trained. After which, slavery having been inconveniently abolished, they might well upsticks for a competitor. No wonder the banks work them to the edge of reason in an attempt to recoup costs.
On the other hand, just like the junior docs, the slaves get a load of experience very quickly.
Yes, in theory, you could pay them less and work them less, but then they wouldn't "qualify" until into their thirties. Not only would it take longer for the employers to get any real payback, but these ambitious driven people would get awfully frustrated. They want to start the real job as soon as possible, not spend a decade training.
Similar arguments apply across the whole range of other demanding high skill occupations, such as commercial lawyering and consultancy.
Doctors? Surely they could get Doc's desired experience over a much longer period? Especially since that might also avoid knackered inexperienced medicos doing your emergency brain op at 2.30am.
Actually, I don't know anything about doctoring so I can't comment on the technicalities. But I'm guessing most junior docs also want to start the "real" job before they have grandchildren. Plus of course, these guys are fiendishly expensive to train (each one costs us taxpayers an estimated £250 grand). So the sooner they start real work the better.
So I'm with the Doc on this one: if you want that Gruaniad work-life balance thing, you should forget investment banking.
Forget commercial law.
Forget management consultancy.
And forget doctoring.

Target Triage


Marked for the reading morgue
Nick Ross, the ex-presenter of of BBC Crimewatch, has laid into police targets. He's seen a lot of the police during his 23 years on the programme and blames government targets for distorting police priorities and making them less effective at fighting crime:

“They are really not into crime prevention, which is what they should be about. Their job these days is much more about detection rates and meeting those targets.”

True, he also points to a lot of other problems with our police, such as "a ‘tick-box mentality’ where filling out forms and questionnaires has taken over so much time", and restrictive practices (like Community Support Officers always patrolling in pairs). But his comments on targets are... er, right on target.

Coincidentally (?) last week I watched Rod Morgan on C4's "the Insider" arguing that the Government’s policy of targets and incentives is resulting in the police arresting minor delinquents repeatedly. He reckons it's counter-productive. It stops the police focusing on serious crime and is turning a generation into criminals.

Normally of course, I discount anything bearded leftie Morgan says, but this made me sit up. Because according to him, many forces financially incentivise officers to achieve a certain arrest rate so they can hit detection targets. And it seems nicking a teenage tearaway on an estate counts just as much as incacerating Al Capone.

The result is that resources are switched from tackling more difficult crimes (such as credit card fraud, now virtually abandoned by the police), making real crime even worse.

This is a major problem with targets. At best, they are a very blunt instrument for tackling what are generally very complex issues. At worst- and boy, have we had the worst- they are simply political constructs driven by the commissars' need to "prove" what a good job they're doing. Either way, they often end up diverting resources from the things we taxpaying customers really care about.

Consider some other examples.

In education, we've had rafts of targets. And quite naturally, schools manage to the targets rather than managing to the customers. And even setting aside the dumbing down of exam standards, what that means in practice is that they focus their efforts and resources on the pupils who are marginal to hitting the targets. Those outside the critical margin don't have a shout.

According to the Rowntree Trust's report on low-achievers last week (here and see this blog):

"There is much research evidence for ‘triage’ within schools (concentrating resources on the students who can be helped to turn Ds into Cs, at the expense of the low performers and the best: West and Pennell, 2000; Golden et al., 2002; Burgess et al., 2005b; Wilson et al., 2006)."

And they point out exactly the same thing happened with the National Literacy Strategy: the kids that could be taught to jump through the specific target hoop got all the effort, while the 20% of kids who have real problems reading were left behind. The result is that while the first few years of the NLS showed rapid progress on the target as schools learned how to "teach to the test", the whole thing has now stalled. The really low achievers are not only still stuck, they're almost certainly in a worse position because teaching resources have been focused on the triaged "minor" and "immediate" cases.

In health, yet more targets, and doubtless the same process of intensive help for those who can be tipped over the target level. Indeed, on the famous waiting lists, the progress in cutting maximum waiting times has often been at the cost of increasing average waiting times. Plus of course, all the other gaming, like waiting lists to get on waiting lists, 48 hour GP appointments etc etc.

Or take child poverty, where vast amounts of money have been spent on a programme to "end child poverty". But the target is the government's arbitrary measure of 60% of median incomes, taking no account of the fact that these days, money is rarely the real problem with poor families.

Even programmes which are more than just dolloping out cash- such as the notorious £5bn Sure Start programme- have triaged those just below the target levels rather than the really hard cases further down (eg see this blog). As a result, resources have been diverted from the really tough cases, who have been left in a worse condition. The National Evaluation of Sure Start concluded:

"The programme is setting back the behaviour and development of young children in the most alienated households...Children of teenage mothers and unemployed or lone parents did worse in Sure Start areas than those in similarly deprived communities elsewhere."

Isn't that brilliant?

So what do we conclude? Targets clearly have a place in many management situations. But using them to implement a gigantic top-down state planning system is a disaster. It was a disaster in the Soviet Union, and it remains a disaster in 21st Century public services.


We've said it before- many many times- but we have to say it again. The only sustainable path to improvement is to put control in the hands of customers. And where that can't be done (as perhaps with those Sure Start losers), control should rest with local taxpayers. Not with the commissars.

Sunday, June 24, 2007

Where Now Sir John?


One rule for all

Last week the Public Audit Commission ruled on the case of Sir John Bourn's travel expenses (see here for PAC papers). They were responding to Private Eye's revelations that he had been jetting around the world first class with his wife in tow, and all at our expense.

To those of us intent on the prosecution of government waste it was all a great shock and a serious disappointment. We blogged it here, and called for Sir John's resignation/immediate retirement here.

But the PAC has decided that is unnecessary:

"The Commission concluded that there was no evidence of impropriety in the use of public money, and that the expenditure had been in accordance with the existing rules on such expenditure."

True, "in the light of the public concern", they've agreed the rules need to be tightened:

"There was a need for a more transparent system for the Comptroller and Auditor General’s travel expenses. Such a system would include prior oversight of the travel expenses by someone other than the Comptroller and Auditor General."

But to us, tightening the travel rules is not really the point. The Comptroller and Auditor General certainly needs to be above the boondoggling first class travel which is apparently the "established practice for senior diplomats". But he needs more than that. Most of all, as we said before, he needs to be above suspicion.

We expected better of our WasteFinder General, and we stick to our view that he is now fatally compromised.

In 1647, when Witchfinder General Matthew Hopkins failed his own test for witchcraft, angry villagers reportedly hanged him. In 2007, it's surely not too much for us taxpayers to demand that 73 year old Sir John fall on his index-linked pension.


PS A well-informed BOM correspondent has pointed out that we are virtually the only major country in the world where the Auditor General holds his post indefinitely. That's right. If he doesn't go gracefully, he can only be removed by a vote in both Houses of Parliament. Virtually everywhere else this vital job has a fixed tenure. Why can't we have the same? Especially since we reckon with 19 years under his belt, Bourn may be the longest serving C&AG since the modern post was established in 1866. Tyler will dig further.

Recent Bonfires 68



In the news this week:

£50,000 for dangerous road signs- "Motorists are going round the bend after a barmy artist spent taxpayers cash on putting up ten random road signs at a busy junction. The art installation - part of a series of outdoor shows which pocketed a £50,000 grant from the Arts Council - has been slammed as "ridiculous" and "dangerous" by drivers and transport chiefs. The artwork, which includes signs such as one-way, mini-roundabout, no entry and 30mph, was erected on a busy ring-road in Ashford, Kent this week." (Mail 22.6.07)

Early release convicts get £4.5m compensation- "Prisoners released early are to receive a cash payout of up to £172 to compensate them for loss of bed and board, the Government has said. Some 25,500 prisoners are expected to be released up to 18 days early to solve the prisons overcrowding crisis, and will receive cash payments totalling £4.5m. The payments - equivalent to £10 each day - are intended to cover living costs during the time the ex-convicts would have been in prison because legally, as prisoners, they cannot receive benefits." (Express 23.6.07)

£1.5m bonuses for senior health bureaucrats- "Nearly £1.5 million was paid in bonuses to 231 "senior" civil servants in the Department of Health and related agencies last financial year, a rise of 29 per cent. During the same year, 27,000 NHS posts were cut, with widespread redundancies. Katherine Murphy, from the Patients Association, said: "If everything was rosy in the NHS these people would deserve the money. It's not." (Sunday Telegraph 24.6.07)
Prescott keeps £100,000 pa flat- "JOHN PRESCOTT is to be allowed to remain in his grace-and-favour flat at Admiralty House in Whitehall after leaving the government this week. He has lived in one of the three luxury flats reserved for ministers in Admiralty House since 1997. The unusual arrangement to stay on is set to be challenged as the flat is estimated to cost the taxpayer £100,000 a year. Tax experts claim he should face a hefty bill on the accommodation as he can no longer claim it is an essential perk of his job." (Sunday Times 24.6.07)
Council spends £95,000 on box at Dome- "When council bosses in Greenwich announced £24million of budget cuts, local taxpayers thought it would be case of belt-tightening all round. So it might surprise them to learn that £95,000 of their cash has been spent on a luxury box at the Millennium Dome. Councillors and staff will have one year's exclusive use of the 15-seat glassfronted suite at the controversial building in South-East London. From the comfort of sofas, they will be able to watch concerts by Justin Timberlake, The Rolling Stones, Elton John and Prince. The lease starts on Saturday - just in time for Sunday's Bon Jovi concert, which is the first at the arena renamed as the O2." (Mail 22.6.07)
This week's total- £6,245,000

Saturday, June 23, 2007

BBC Bias


Officially approved by BBC
It's been a struggle involving a six inch nail stabbed into my thigh to stay awake, but I've had a go at reading the BBC Trust's report on "Safeguarding impartiality in the 21st century".

According to the BBC's own media correspondent, despite extensive reports to the contrary, the report does not say the BBC is institutionally biased to fashionable leftie causes and the celebs that go with them.

You could have fooled me.

True, it doesn't actually say "the BBC is institutionally biased", but it does say all kinds of things that give an extraordinary insight into the way they think.

For example, we all know how they promote the "green agenda" like it's gospel truth, and rarely if ever allow a contrary voice. But do you know why?

Here's why:

"The BBC has held a high-level seminar with some of the best scientific experts, and has come to the view that the weight of evidence no longer justifies equal space being given to the opponents of the consensus."

Did you know that?

On this highly contentious issue, where there has been virtually no proper public debate- certainly not on the BBC- the state broadcaster has held some private meeting, to which we pleb taxpayers were not invited, and decided to load its coverage in favour of Al Gore.

I'm sorry, but as a press-ganged customer of theirs, I want to hear the other side. And I don't just mean Ruth Lea being invited onto Any Questions and treated like she's a representative of the Flat Earth Society. I mean "balanced" coverage.

Justin Webb, BBC Washington correspondent, is quoted in the Report as saying "that so many Americans got their news from the internet that ‘it is now a commonplace in America to believe that all there is in the world is a set of competing opinions. There is not such a thing as judgment that is separate from those opinions.’ He argued that simply holding the ring was ‘journalism for scaredies. If we think that we have a role and something to say, we should have the guts to say it and stand behind it.’

Actually, I agree with the last bit of that, Justin. But wtf should you get a £3bn pa tax-funded platform to promote your particular opinions? Why shouldn't BBC opinions be forced to compete in the marketplace just like everyone else's?

Roll on privatisation.

Incapability Review


To enlarge, click on image
The Cabinet Office has been conducting a series of departmental "capability reviews" (see website here). This week they published the one for the Department of Health. And it's an absolute shocker.

Key conclusions are:
  • No clearly articulated vision for the future of health and social care and how to get there

  • Poor staff leadership- morale is rock bottom

  • Silo operation and poor governance structures

  • Lack of skills and no plan to get them

And as the chart shows, they don't score a "green" rating for any of the main capability criteria. Not one.

Yet this is the very Department that has been given a doubling in its budget over the last few years, and is now spending £90bn pa of our money. It is also the Whitehall-knows-best department that has imposed no end of top-down flipflop reorganisations, distorting targets, and general financial mayhem on the sharp-end health professionals who actually have to make the thing work.

If we ever needed an incontrovertible example of Big Government over-reach, this is surely it.

Here's A Funny Thing


The joke's wearing very thin

Much coverage this morning of the Halifax report which once again highlights the burden of Council Tax:
  • The average bill in Great Britain has increased by 91% over the past decade

  • That's three times faster than inflation (RPI is up 31%)

  • The average council tax per dwelling in 2007-08 is £1,078 compared to £564 in 1997-98

All of which is pretty unamusing. But nothing compared to the "jokes" that follow.

Did you know that none of the top ten charging councils is Labour? The very highest one (Richmond on Thames on £1,665) is Lib Dem. The others comprise seven Tory, one LD, and one NOC.
Contrast that with the ten lowest charging councils. No fewer than five of them are Labour (four Welsh councils and Manchester).
Why the difference? Yes that's right, it's the old Revenue Support Grant again, the central government funding system which takes money from Tory and LibDem areas and gives it to Labour areas (see this blog).
Sensationally, despite this notorious built-in bias of the RSG, the very lowest charging council is still good old Tory Wandsworth (£641), longtime favourite of the Iron Lady and a shining example of what councils can achieve in terms of taxpayer value if they put their minds to it.

Friday, June 22, 2007

This Year's Silver Bullet


Would you like them in a house?
Would you like them with a mouse?
I do not like them in a house.
I do not like them with a mouse.
I do not like them here or there.
I do not like them anywhere.
I do not like green eggs and ham.
I do not like them, Sam-I-am.

Synthetic Phonics. Most of us had never heard of it until David Cameron made this particular method of teaching reading a political issue during his brief spell as Shadow Education Minister in 2005. He confidently told us:

"Based on the evidence, we believe synthetic phonics is a far more effective teaching method than the combination of methods currently advocated by the National Literacy Strategy."

Since then, this specific of primary teaching method has become a key plank in the Tories' national education policy. And such is its political momentum and presumed electoral appeal, that Gordon Brown is being forced to neutralise it by adopting synthetic phonics as his own national reading policy.

Why the heat?

Well, because our state primary schools are still failing to teach around 20% of their pupils to read properly before they go on to secondary school (ie they fail to reach so-called Level 4 attainment). Which is clearly a disgrace.

Of course Blunkett's National Literacy Strategy was meant to sort it. You remember, his much hyped top-down programme, including the Literacy Hour, when all Britain's kids would sit down together at the same time and chant out loud from an improving book personally selected by education expert Blunkett.

Sadly, after some initial success, the NLS has stalled. According to this week's report from the Joseph Rowntree Foundation on Tackling Low Educational Achievement, that's because it followed an "excessively mechanical approach, cutting classes into bite-size pieces, divorcing reading texts from books, and overdoing quantitative criteria – even for deskilling teachers".

Worse, Rowntree reckons the NLS was never properly thought through in the first place:

"It appears to have been introduced without rigorous attention to the findings of research about the teaching of reading."

Difficult to believe, I know. A didactic education policy based not on research, but on hunch and intuition from the Secretary of State's sofa.

But what makes anyone think this next silver bullet will be any more successful? Here's the Rowntree Report again:

"Even [the government's own] review suggested synthetic phonics had to be used in association with other techniques to enrich the learning experience; but some doubt both the overwhelming superiority credited to the method by the review and the evidence on which the recommendations were based, particularly the famous study of Clackmannanshire, where the good results may have been due to other factors besides synthetic phonics."

That won't stop their enforced introduction of course. Once again, political imperatives have already decided that, and the nation's non-reading kids will pay the price.

None of this happens in independent schools. There, politicians hold no sway. Prep and pre-prep schools teach reading according to how the teachers decide results can be best achieved, and they answer direct to customers for the outcome. In practice, that means they've stuck with traditional phonic based methods throughout the last fifty years, whatever crazy silver bullets may have been ricocheting around in the politico blighted state sector.

How much better if state funded schools worked in the same way.

PS Anyone who has ever read Dr Seuss for pleasure or profit- or even as a bedtime story- will know his books are both highly addictive and severely damaging to adult mental faculties. It's the surreal repetition- great for new young readers, but deeply unsettling for anyone else (if you don't believe me, try reading aloud Green Eggs and Ham). Anyway, not to be left behind by the new speeding bullet, the Seuss empire has come out with Dr Seuss and Synthetic Phonics. That's what I love about free markets.

Strangling The Third Sector


Scam free zone

Last night I was standing outside a central London pub plotting with a group of like-minded tax activists, when we were approached by a charming lady rattling a collection tin for some hospice charity I'd never heard of.

My companions were naturally suspicious and politely declined her offer of a lollipop, but given Mrs T's tales of long days spent rattling an NSPCC tin around Surrey, I'm always far more susceptible. Especially when lollipops are blandished.

Being on my second Adnams, I made bold, observed there were loads of scammers around and demanded to inspect her credentials. She immediately produced a thick book with thank-you letters from all the various charities she'd collected for. Were they genuine? No real way of telling, even though there were letters there from many big charities.

Tricky. But then it struck me that if we small staters are to get anywhere in rolling back Leviathan, we do need to encourage the charitable sector. And especailly the small innovative ones. I figured that had to be worth a couple of quid, even at the risk of being scammed.

The unappealing alternative is highlighted once again in today's National Audit Office report on strengthening the relationship between local authorities and the so-called Third Sector Organisations (TSOs)- charities, voluntary and community organisations and social enterprises. They want local authorities to make it easier for TSOs to bid for providing various outsourced services. In exchange, the TSOs would get paid by the LAs.

Despite our great respect for the NAO, in terms of taxpayer value, we think they've got this one wrong.

We've blogged government funding for TSOs before (see here and here). As we noted, the world and his wife now share the Big Idea that TSOs should take over the provision of many services currently provided, very badly, by the state. But the question is how do we get there?

Because making a charity or a voluntary organisation a paid supplier to government has very serious consequences. In particular, reliance on state funding:
  • Distorts priorities Charities are set up to pursue worthy objectives, which are most unlikely to square with those of our elected politicos. But once they take the Queen's shilling, they have to play the politicos' tune. The Charity Commission survey found that three-quarters of those doing so are put under pressure to do what the politicos want

  • Stifles vitality The closer relationship between charities and the state is still new, and neither side has a clue how to manage it. The inevitable result is that the government bureaucracy's instinct to impose huge new monitoring, reporting, and regulatory burdens runs unchecked. When they examined it, the PAC reckoned that government requires much more information- on for example costs- than they ever demand from private sector counterparties

  • Damages private funding People are already very sceptical about whether their charitable donations actually go to the underlying good cause: a recent MORI poll found that only 10% agree with the statement "when I give money to charity, I feel confident that most of it will go directly to the cause". More state funding is likely to reinforce the view that charities are not in reality what they pretend to be.

The state already provides £5bn pa of TSO funding. Some of our great national charities get so much that way, they are effectively quangos: Barnardos (78% state funded, and now run by an ex-civil servant), NCH (88%), and Leonard Cheshire (88%), are all quangos by any other name. Overall, according the Charities Commission, one-third of our biggest charities (turnover exceeding £500,000 pa) get at least 80% of their funding from the state.

It just won't work. As recounted so graphically in James Bartholomew's excellent book, over and over again we've seen government assume funding responsibility for previously privately financed organisations (eg universities) only to end up stifling the life out of them.

It must not be allowed to happen to our charities and voluntary organisations. Even if the alternative does involve Tyler sometimes getting scammed outside a London pub.


PS What to do instead? As we blogged before, we should switch the £5bn pa of public funds currently going into TSOs into vastly increasing the tax breaks for charitable giving.

Thursday, June 21, 2007

Islamic Republic Slams Consultants Profligacy


You are squandering taxpayers' funds

The Islamic Republic News Agency has joined the Public Accounts Committee and BOM in slamming our government's profligate use of consultants (the Islamic Republic in question being Iran, of course).

We blogged the PAC report here, and now the IRNA says:

"£500 million-a-year was being wasted and departments often hire advisers without first finding out whether their own in-house staff already have the skills to do the job themselves."

Quite right Tehran. If only our own government was quite as enlightened.

Exposing The Disclosure Hypocrites


No... you see our job is to make money, not spend it... that's what you guys do

Yesterday's "grilling" of those private equity blackguards by the Treasury Select Committee turned out to be a very soggy affair. As the Grauniad comments:

"The MPs... concentrated on the financing and taxation of the industry. This is an important area but it is dense and technical. You have to know your stuff, and most of the committee did not.

One passage about "cov-lite" loans - a recent innovation whereby lenders accept less security over assets - was excruciating. It descended into a debate about terminology from which the committee emerged more baffled and frustrated than it started.

The frustration for the private equity chiefs was obvious: they had expected financial fluency, and got next to none."

We've no idea why anyone would expect financial fluency from the old-time socialist Treasury Select Committee, but let's proceed:

"They asked a handful of good questions but simply didn't understand the answers to ask decent supplementaries.

It was not the promised grilling. It was embarrassing."

We should remember that the next time one of these grandstanding legislators lectures us on what's good for the economy.

There was apparently one somewhat less embarrassing bit, which was where Chairman John McFall (Labour, Dunbartonshire West) had som fun asking the city guys how much tax they paid. They said they didn't know (translation: why the hell should I tell you and everyone else my personal financial arrangements?). McFall play-acted incredulity:

"You're the masters of the universe. I'm asking how much capital gains tax you pay and you cannot tell me? I find that amazing."

Almost as amazing in fact as, say, an MP voting to exclude himself from the Freedom of Information Act so he didn't have to disclose his personal financial arrangements to the people who pay his wages.

Although... wait... is this John McFall (Labour, Dunbartenshire West) the same John McFall who did precisely that just last month (see here and this blog)? Crumbs. I think it is.

And now you come to mention it, isn't hardline Committee member Angela Eagle (Labour, Wallasey) the same Angela Eagle who voted to exclude herself from the Freedom of Information Act so she didn't have to disclose her personal financial arrangements to the people who pay her wages? Well, what do you know.

And what about George Mudie (Labour Leeds East) and George Mudie (Labour Leeds East). Could they be one and the same?
Etc
Like they never actually say: don't do as we do, do as we say.
PS For a useful bond investor's view of cov-lites, wrap a towel round your head and see here

Wednesday, June 20, 2007

Private Equity- We Name The Guilty Man


All dancing to "Mr Brown's" tune
Today on BOM we can exclusively reveal that the grisly gang of international speculators and profiteeers known as the Private Equity Investors are lead by a single Mastermind! And such is the fiendish cunning of this arch villain that the gang don't even realise he's their leader!

We all know the gang's crimes- the tabloids are full of them. Today's sales-driven Independent devotes its entire frontpage to them, under the snappy headline "Tax and the City". It gleefully reports that notorious consigliere Damon Buffini is being hauled before "angry MPs" and forced to explain the gang's two biggest blags:

"First, he will be required to address the advantageous treatment given to companies that borrow money rather than raise it through issuing shares... Private equity is often funded by huge levels of borrowings to take advantage of low interest rates, and thus has been the most spectacular beneficiary of the current rules.

Second, private equity has exploited a measure introduced by Mr Brown in his 1998 Budget aimed at rewarding small businesses by allowing them to keep 90 per cent of the capital gains on their assets after only two years. With a little financial engineering that can be converted into an effective income tax rate of 10 per cent."

But why are these MPs wasting time questioning Buffini? They must realise he's no more than a pawn, doing no more or less than simply following the rules laid down by someone else.

And that someone else- the evil genius behind the whole rotten business- is none other than "Mr Brown"!

Consider the evidence. Not only was it he who changed the capital gains tax regime to allow this accelerated taper relief on business assets (introduced in 1998 but accelerated even further in 2002). It was also he who abolished ACT refunds on share dividends paid to pension funds, and thus hugely increased the relative attractiveness of companies funding themselves through debt issuance (see this blog for full, and hopefully not too tedious, explanation).

No, Mr Brown is the man: the Professor Moriarty of the New Millenium. He may or may not be benefiting directly in financial terms today, but what evil genius ever did it for the money?


PS The Major reckons I've got this one wrong. He reckons Brown is not an evil criminal genius at all. He reckons he's an incompetent nincompoop who's introduced so many convoluted tax and benefit schemes that the whole economy is now shot through with unintended consequences and wealth threatening contradictions. Sometimes the Major can be so literal.

Prison Lies

Nobody could possibly have predicted it


We can hardly be surprised that Mr Liar is signing off with yet more lies, but he served up some truly classic porkies at PMQs today.

Dave was quizzing him on the latest stage of the prisons fiasco. As you will know, our prisons now have a record 81,000 inmates, and with the cells now bursting, 25,000 convicts are to be released early onto our streets over the next year.

Although we all know this results from the catastrophic failure of his government, Liar had the brassneck to claim nobody could have forseen the problem:

"As a result of the fact that we've exceeded even the top-end projection for the numbers of people in prison - that projection having been made last year - then there is a requirement for us to release prisoners early, 18 days before the end of their sentence..."

We've blogged the prisons crisis many times of course, and last year we took a look at the Home Office projections- the ones Liar refers to (see this blog and chart above). We said:


"Back in 1998 the Home Office forecast a need for 82,800 places by last year (central projection). And in 2002 they forecast a range of possible requirements for this year, ranging from 86,700 to 100,700. Yes that's right, somewhere between 7,000 and 21,000 more places than they've actually built."


Now it is true that the published HO projections seem to wang about all over the place from year to year. But that's because they're driven by the political pressures of the moment. And these days that means Gordo's arbitrary HO spending freeze (albeit it was partially reversed yesterday in his panicky announcement to police chiefs of £50m for extra places).


After a decade in which the prison population has grown by one-third (20,000) and which has seen a continuing and unbroken capacity crisis, nobody could possibly have believed some rose tinted projection that suddenly the problem had gone away. Could they?


Liar ain't an idiot, so he can only be the other thing.

PS Falconer's line on his humiliating U-turn is another classic. Just five weeks ago he specifically denied that he was even considering early releases. Yet according to the anonymous gremlin he pushed forward to answer questions on it last night, although there has now been a U-turn, in point of fact there hasn't been. Either Charlie thinks we're all too stupid to notice, or like the rest of them he's disappeared up his own mucoid spin gland.

Tuesday, June 19, 2007

Spanish Practices Stump Francophile Italian


If only it was that simple

You will recall Gerry Robinson's reality TV series, where he attempted to sort out the problems of Rotherham General Hospital. Sir Gerry reckoned the lengthy waiting lists were largely down to the Spanish practices of consultant surgeons. But he found such practices are much more complex than the mythical afternoon on the golf course, and he expended much effort even trying to understand them, let alone persuading the consultants to work more efficiently (see this blog).

Gerry would have loved John Petri. He's a consultant orthopaedic surgeon who came to Britain from Italy and decided he could slash NHS waiting lists at the James Paget Hospital in Norfolk by switching from Spanish to French practices:

"He began to employ French working methods by starting to operate earlier in the day, extending shifts by up to two hours, and introducing a "production line" system. He uses two anaesthetists, which means that there is always another patient ready to be operated on.

"People were waiting a year to have a hip replacement," he said. "By the end of the pilot scheme, they were waiting three weeks. Under the standard method, you wouldn't believe how badly things were organised. We have to find a way of surgeons not wasting their time. A surgeon is the most important link in the chain."

Hurrah.

Well, no. Not hurrah.

Despite being feted by everyone from Tony Blair down, he's met so much opposition to his methods among other NHS consultants that he's jacked it in and gone to work in Switzerland. He told the Norwich Evening News:

“When I started all this I was a bit na├»ve in thinking that other people would take it on and do the same. I thought it was very desirable thing to cut waiting lists. I thought I had found the solution. Then I found that no one was interested.

I wanted this to go around the NHS and be taken on by other surgeons but not a single surgeon came to see me. They said I do conveyor belt surgery and that I treat people like objects not people.

The problem is that the bigger waiting lists you have, the more private patients you will also have so the incentive is actually to have waiting lists. I proved the point that you can cut lists, but I also cut my private patients by half.

People in the NHS are not paid by results. If you do five operations or 500, you are paid the same. The Government needs to create incentives."

He's reportedly taken a hefty pay cut to work in Switzerland (£70,000pa from £125,000pa). That's how bad it was.

The relationship between the NHS and its consultants has always been poisonous. Bevan hated them and reckoned he only got them to go along with the NHS by stuffing their mouths with gold; Babs Castle hated them and tried to bludgeon them into giving up their private work; doubtless the 10 (yes 10!) Health Secretaries we've had since 1985 have all hated them. And we may be assured the feeling is entirely mutual.

Poor old Petri sided with the enemy and paid the price.

There are clearly major problems with the way out hospitals are organised. Sadly, our blundering guargantuan pea-brained NHS doesn't have the faintest prayer of addressing them. (htp HJ)

PS I've just been refreshing my memory of James Bartholomew's excellent The Welfare State We're In. As he reminds us, most of our hospitals pre-date the NHS and were actually working pretty well before 1948. Indeed, in terms of results achieved, there was little contemporary criticism of them. How different we feel today.