Friday, August 31, 2007

Spending Without Result


Special plugholes for public spending surges

Education, education, education.

And as everyone should have understood, that was going to cost money, money, money.

Since Labour came to power, spending on Britain's state schools has more than doubled. Last year they spent £44.7bn, up from £22.2bn in 1996-97 (see here and prior PESAs). Even adjusting for general inflation, the increase is over 60%, a massive uplift.

Fair enough you say. That's what the voters wanted.

But spending money is easy. What we haven't had is the results.

Let's just recap the latest revelations:
  • Pre-primary skills among five-year olds are unchanged despite a £21bn programme to improve them (see this blog)

  • 3Rs skills among seven-year olds are stalled, with eg 20% failing to reach the minimum expected standard in writing (see here)

  • 3Rs skills among eleven-year olds are stalled, with 60% failing to reach the minimum expected standard in reading, writing, and maths (see this blog and this)

  • Core attainment among fourteen-year olds is also stalled, with nearly 40% failing to reach the minimum expected standard in English, maths, and science (see here)
  • At GCSE 54% still fail to gain 5 A-C grades including both English and Maths (see excellent Chris Woodhead article here)

  • A Level results continue to soar, but we now know they are two whole grades easier than twenty years ago (see this blog)

Once again- as if we needed any further proof- the dirigiste techniques of Stalinist central planning and tractor output targets have simply failed to deliver.

And today, we have an update on a key reason behind the failure: the escalating crisis in head teacher recruitment. Suitably qualified candidates are simply not putting themselves forward, because they don't fancy being the stressed-out disempowered middle management sandwich meat stuck between the commissars and the parents. And who can blame them?

We've blogged this many times (eg see here), but until now the main problem has been in secondary schools. It's now spread to primaries, with more than one-third of schools being unable to appoint after advertising the post.

As we've noted before, this problem simply doesn't exist in the independent sector. There, head teachers are much more firmly in charge of their schools. And they answer directly to the paying customers rather than indirectly through those ignorant self-serving spineless commissars.

The bottom line?

We're now spending 60% more in real terms on our schools, but our children's education is no better than it was. Indeed, given that schools now routinely teach to the test, it may very well be worse (see this blog).

Thursday, August 30, 2007

Another Bonus Farce


No wonder he's laughing
As regular BOM readers will know, the Learning and Skills Council is a complete and utter waste of money.

It presides over the nationalised "skills industry", an underperforming quagmire of 500 separate organisations and bureaucracies which costs us over £10bn pa (see previous blogs here - including video - here, and here).

Worse, the "skills" it produces are not wanted or valued by employers, who constantly complain about its dire performance and have to spend a further £20bn pa of their own money training people properly. Indeed its latest effort- the "flagship" skills project Train to Gain- hasn't even been able to spend its budget allocation because most employers won't touch it with bargepole.

If there was ever a candidate for the chop, this dismal quango is it.

And yet... now, you'd better sit down... its CEO has just been awarded a £36,000 performance bonus.

Yes, you heard right. CEO Mark Haysom was handed the money because "he and the organisation had exceeded their targets".

Gah? Just what targets might they have been? Holding more than 100,000 internal meetings? Pushing paperclip consumption to new highs? Nobody knows.

Of course this is by no means the first bonus farce in the public sector. Officials routinely seem to get them whether the organisations they run are performing or not (eg the £20m bonuses recently paid out to bosses at the dysfunctional imploding BBC). All they have to do is make sure the appropriate internal boxes get ticked.

When Tyler was a Civil Servant 30 years ago, we didn't get bonuses. We got our salary and that was that. But at some point the mandarins obviously looked at the City and elsewhere in the private sector and thought Aha- they must be performing better than us because they incentivise their people with bonuses. We'll do the same and our performance will obviously improve likewise.
Er... yeesss.
For one thing, City bonuses originated in the old partnership structures, less as an incentive scheme, and more as a way of de-risking the volatility of earnings. By paying partners- and later employees- a share of the profit in the form of variable bonus, staff costs could be kept more in line with the firm's year to year capacity to pay.
Of course, there was always an element of individual incentive, and this gradually became more important. But as all those Canary Wharf bankers will doubtless discover this Christmas, overall profit is still the key driver.
But the public sector is not targeting profit, or any such clearcut objective. Indeed, that's one of its manifold organisational problems.
There is no transparent and robust linkage back to a real world objective. Just another pile of box ticking commissariate wibble that has us paying out more than we need for things we never wanted in the first place.
Public sector bonuses are awarded pretty well irrespective of overall performance. As the BBC spokesman put it, “bonuses are part of staff’s contractual entitlement”. In other words, they're part of salary.
PS Talking of the BBC, Keith MacMahon has a jaw-clenching post here showing how the young and poor subsidise the old and rich in paying for it.

Politics Of Envy Meets Winter Of Discontent


How come he's got such a big lyre? It's not fair

The lib media has been crammed with politics of envy stories this week.

Those egregious investment bankers, private equity gangsters, and hedge fund cowboys in the City have apparently helped themselves to £14bn! Just like that. Even though everyone knows they hardly lift a finger. 4,200 of them got bonuses of over £1m each! Shameful.

Closer to the real world, the Grauniad has surveyed the scene in British boardrooms and reckons bosses are now getting 100 times what they pay their own workers! Although oddly the BBC has surveyed the same scene and reckons they're only getting 67 times more. Which would imply they're getting hundreds of thousands less than the Grauniad figure...

Well, whatever. The main thing is they're getting a shed load of dosh and there's no way they deserve it. Impartial observer Brendon Barber says:

"This growing gap is not just morally offensive but hits workforce morale, feeds through into house price inflation and threatens social cohesion. Britain's boardrooms are slowly losing touch with reality."

Well, don't worry Bren- reality is biting back. Because as you will also know, the same lib media has been chortling with delight at the thick black smoke pouring out of the credit markets. Mammon has hurled down one of his periodic thunderbolts on the unrighteous, bank profits are set to halve, the money changers are being slaughtered, and great is the rejoicing in the land. Those stinking piles of bonus ordure and long-term incentive evil will surely be cleansed from the face of the earth.

Ah. Well. Hmmm.

There may be one or two slightly less welcome knock-ons.

Jobs may go. The financial sector has grown massively over the last twenty years and now accounts for almost 10% of GDP (see here):



If that goes into reverse- as it did in the nineties recession- there'll be a world of pain. The City itself provides about 350,000 direct finance jobs, plus hundreds of thousands of support jobs. And in a credit crunch environment, the jobs outlook in other more traditional sectors would be little better.

None of which need worry Bren overmuch of course. As General Secretary of the TUC, around 60% of his 6.5m brothers and sisters work in the public sector (see here), so will be sheltered from the worst consequences.

Or will they? Because there is one small problemette.

It turns out that - odious though they may be - those appalling bankers and other assorted high-rollers have been contributing one big fat wad of cash to the Treasury.

Consider this chart taken from the NAO Report we blogged yesterday. It shows which sectors paid most Corporation Tax in 2005-06:


As we can see, banking and insurance accounted for over £10bn in 2005-06, about one-quarter of the total. A 50% fall in their profits would therefore blow a pretty big hole in the Treasury's revenue forecasts - maybe £5-6bn. Plus, the corresponding cut in those bonus payments would slash personal tax receipts - PWC estimates that could cost another £2bn (see here). So we could easily be looking at a £7-8bn shortfall.

And Treasury finances are already rocky enough. After the spending binge, the hangover is heading our way (see many previous blogs). And as always, much of the pain will be felt on public sector pay.

The total public sector paybill is currently running at around £170bn pa, so every 1% increase costs around £1.7bn pa cumulative. Which is why last year Gordo decreed future settlements must not exceed 2% (see this blog).

Sadly, the real world is a lot trickier than simply issuing a decree. For one thing, the government's own "independent" pay review bodies may award more than that, as they've done for both nurses and prison officers. Obviously government can respond with its usual dirty old-time incomes policy trick of "phasing" the awards, but nobody is fooled by that any more.

Anyway, aren't public servants grotesquely underpaid relative to those bankers and bosses? The BBC says they are.

All of which means strikes, even if they are illegal (yeah? wotyougonnadoabahtit?). And more Al Johnson style pay cave-ins. A world of pain that will spill over to affect everyone.

So after all the promises, and all the money, we're right back to staring at another Winter of Discontent. And don't bank on this sun of manse making it glorious summer.

There's just one slim hope. Maybe those bankers can find some way to put out the fires, somehow keep the pain to themselves, and somehow keep the whole show on the road. Fingers crossed. Evil they may be, but boy, do we need them now.

Wednesday, August 29, 2007

Corporation Tax Too Complex For HMRC

The long view- lower tax rates have not cut revenue


Yesterday's FT story on Corporation Tax got a deal of coverage. As you will recall, it said that one-third of Britain's 700 biggest companies pay no CT.

On the face of it, that's surprising because almost all of those companies will be making profits in the normal sense of the term.

Company taxation in the age of the multinational is fiendishly complex, and major governments are constantly battling to close down loopholes (eg stricter rules on transfer pricing and controlled foreign corporations).

But the principal reason profitable British companies pay no CT is that they can set off a multitude of tax allowances against earnings.

To start with, successive governments have established a raft of capital allowances, supposedly to boost investment in things they consider desirable. Closely related is Gordon Brown's R&D tax credit, which reduces the CT take by £0.6bn pa. And in that case, we know that at least half of it is pure bunce to the recipients- ie a windfall gain requiring no action on their part other than filling in the claim form (see here).

Then there is the issue of debt interest, which is an allowable expense. That means companies can reduce their CT liability by switching from equity to debt finance, as many have been doing. The Law of Unintended-But-Entirely-Predictable-Consequences highlights Brown's notorious abolition of ACT relief (the Great Pensions Grab) because that introduced the asymmetry in the first place (see this blog).

Thus have the Commissars ensured that complexity and unintended consequences are built into the very core of the system. No wonder that the true tax liability is often a "grey area" .

One curious aspect of all this is that the FT was reporting a National Audit Office report published six weeks ago. Quite why it resurfaced yesterday is unclear: presumably it got overlooked in the rush of reports issued at the end of "last term".

In any case, the report was essentially probing HMRC's capability in taxing big companies. And it did not paint a happy picture. In the face of rapidly mounting complexity and burgeoning multinationals who get the very best advice going:
  • "The Department does not have a coordinated long-term strategy for staff continuity and recruitment of tax specialists into its large business work other than through internal transfer." (para 4.4). In contrast, faced with similar challenges, the US IRS has a programme to recruit 900 external specialists over the next 12 months

  • "Large businesses considered that HMRC client relationship managers and tax specialists did not always possess sufficient knowledge of the industry." (para 4.7)

  • "...they considered that the Department often failed to appreciate the practical issues and uncertainties surrounding international factors such as controlled foreign companies’ legislation, double taxation reliefs, transfer pricing and cross border-financing arrangements" (4.8)

The overall impression is of an organisation increasingly out of its depth- "staff ‘remain in their comfort zones, carrying out familiar tasks in familiar ways’ (2.38). They are bamboozled by the new challenges facing them.

So how much tax do they fail to collect? Amazingly, they have no idea. Whereas for other taxes, such as VAT, they estimate a "gap" against which they're shooting (16% in the case of VAT), they reckon it's too hard to do that for CT.

Others have been less reticent. The Tax Justice Network reckons it could be as much as 28%, or around £15bn this year.

So what to do?

It's pointless pining for a simpler world where companies stay still while governments help themselves to the till. Globalisation blows all that away.

It's also pretty pointless hoping we can somehow attract and retain enough one-step-ahead tax whizzos to work for HMRC: if they're that good, they'll follow the money down to the City, where they'll also escape working for the Commissars.

As we've argued before, the best and only realistic way forward is massive simplification and lower CT rates (see here for the Taxpayers' Alliance position).

PS The chart above is taken from WHY HAS THE UK CORPORATION TAX RAISED SO MUCH REVENUE? by Devereux, Griffith, and Klemm (IFS 2004). It shows that reductions in the statutory CT rate have not cut CT revenue as a percentage of GDP. Part of the explanation is that allowances have also been reduced (ie the tax base has been expanded), but another driver is that overall profitability has also improved, supported of course by the cut in CT rates.

Tuesday, August 28, 2007

Wild World



Hippies. What can you do with 'em, eh? One way or another, they always reckon they can save us from that wild world.

Well, of course, in 1971 there was some excuse for believing. The Vietnam War was still on, and we hadn't yet experienced the full horror of the kipper tie. Let alone Class A incomes policy, the three day week, and the Winter of Discontent.

But now we're in 2007. We know about some stuff shrouded in mystery back then. Like the fact that government is incapable of delivering even one-tenth of what it promises, and that our prosperity is entirely dependent on private enterprise.

So how can it possibly be that some highly intelligent, very well informed people, still seem to think that the way forward is more government and less private enterprise?

Is it perhaps because private enterprise is teeming with grasping, self-serving, lying, cheating banditos who want nothing more than to rob grannies and destroy the planet?

That's certainly part of it.

Richard Murphy, who runs the excellent Tax Research UK, is in no doubt. He campaigns for what he calls tax justice, and among other things, was probably instrumental in getting the FT to run yesterday's report on how a third of Britain's largest companies pay no corporation tax (based on warmed over figures that were taken from a National Audit Office report actually published six weeks ago).

Here's a sample of what Richard thinks about Britain's most successful private enterprise sector (30% of GDP etc):

"The financial services industry is not about achieving long term value for those who provide it with funds. It’s about achieving short term value for those in the financial elite who have hijacked the funds others have saved to provide themselves with an unethical reward."

On one level I agree with him. The City is out for itself. No question.

But so what? Surely nobody ever believed the City comprised Mother Teresa clones: it's the blood spattered coalface of global capitalism. Criminalise outright fraud of course, but otherwise it's caveat emptor.

And what's the real world alternative? The Commissars sitting in special all-night session, under the sea green chairmanship of Chief Secretary Andy Burnham, allocating pension fund assets to socially worthwhile investment projects? I don't reckon financial services would be generating 30%+ of Britain's income for much longer. But I do reckon the funds would get much worse returns.

No. There are certainly a lot of bad things out there, but in the real world, the seventies demonstrated beyond dispute that private enterprise beats government on virtually every count.

PS I've finally got round to reading Why Globalisation Works, by Martin Woolf. It gives an excellent account of why governments should restrict themselves to what they have to do- law and order, protection of property rights etc- rather than straying into broader areas where they do more damage than good.

Platform BBC


This morning's Today programme

It's been a few weeks, so I think I can allow myself another short BBC post.

Which is that this morning's Today programme scored a near maximum in terms of platform provision for its causes:


1. Politics of envy

They've spent another few grand of our taxes conducting a survey which found FTSE100 CEOs now earning 67 times what their average worker earns. Disgraceful (see also today's Grauniad).

According to the spokesman from the Fabian Society, paying them that much reduces social mobility by imposing an even greater "mountain" for poor kids to climb. You and I might call that opportunity, but for the Fabian BBC it's A Problem for government to address. Their case is supposedly supported by a Fabian poll which they reckon shows how "people" want something done (see this blog for the real picture on such polls).

Oh yes, they did have a spokesman for our side, but he was Lord Young- deliberately chosen because he is a Thatcher era throwback and also frankly well passed his prime.

2. Evil supermarkets

They've spent another few grand of our taxes conducting a poll on just how evil people reckon supermarkets are. Inconveniently, it turns out that nearly 80% of us think supermarkets are just great. Still, they didn't let that interfere with a good story, and they interviewed Alexei Sayle (remember him? he was the "alternative" comedian who wasn't even slightly funny). Alex told us that people only think supermarkets aren't evil because the "monopolists" have used powerful mindbending techniques to confuse everyone- The People don't know what's best for them. Luckily, Alexei and his Marxist colleagues do.

3. Wind Power

Somebody whose name escapes me was given a lengthy slot- and repeater news headlines- to tell us that the government needs to spend more of our taxes on subsidising the installation of those wildly expensive and inefficient wind turbines. BEFORE IT'S TOO LATE (no mention of this).
4. Subsidised farming
Apparently farmers used to get paid £180 per cow by taxpayers. If we don't start paying it again something bad is going to happen. Especially now that our farmers are abused by those evil supermarkets.
5. Hedgehogs
Apparently, hedgehogs and songbirds are in a very bad way. I must confess I temporarily lost consciousness during this "report", but I'm guessing the culprits are evil supermarkets working hand in glove with overpaid bosses. Anyway, taxpayers have to stump up more cash or something real bad is going to happen.
Gah. That's enough.

Early Learning Splurge Flops


And we thought we'd got rid of her
As mentioned previously, back in the days when the original Mrs T was Education Secretary, Tyler had a brief fling with teaching. And one of the Big Things he learned was that nursery education is meant to be one of the most cost effective ways of raising overall attainment. Head start, flying start, whatever snappy name the lobbyists and politicos hang on it, it's money well spent.

So you can understand why Labour has pumped money in, launching a raft of programmes and extending free nursery education to all three-year olds. So far it's cost us £21bn.

The trouble is, it's flopped.

New research from Durham University's Curriculum, Evaluation and Management Centre reveals that children's development and skills as they enter primary school are no different today than they were in 2000. No progress at all.

Naturally the government's response is to shrug it off. Minister for Children Beverley Hughes (the one who already resigned once from the Home Office over the scandal of visas being issued on false papers) says:
"Early indications are that this investment is improving outcomes for children. However, as the author of this report acknowledges, it is still too early to measure this with any great authority."

I'm just listening to the author of the report on BBC R4 Today. She actually says we should have seen some measurable changes by now, and we haven't.

So what's gone wrong?

Nobody seems quite sure, but I think we can guess:
  • Great Leap Forward- this is yet another top-down plan imposed from above- eg the boilerplate early childhood curriculum

  • Social engineering disguised as education

  • Unintended consequences- we already know Sure Start has been a disaster, making life worse for the most disadvantaged kids (eg see this blog)

£21bn.

There are no changes in prospect: as always, the Commissars' response to inconvenient evidence is to press on regardless. Just like Stalingrad.

Monday, August 27, 2007

Street Murder


One of the most shocking things about the nightmare shooting of 11 year old Rhys Jones is the fact that Merseyside Police have been so derelict at protecting the local community.

Because it turns out that last April they were supposed to set up a mobile patrol unit (a "pod"), targeting burgeoning youth crime, on the very pub carpark where Rhys died:

"The £22,000 of funding had been approved to build the unit, and permission had been given by the pub landlord to use a portion of the car park for the site. But when the residents' association announced to the community that the pod would be arriving in April, police said they did not have the resources to follow the project through.

The nearest police station is at Aintree, a 15-minute drive away, and the area lost its local policeman, "Robbie the Bobbie", two years ago. [A member of the residents association] said that the community had been becoming concerned by the lack of police presence. "It was rare that you ever saw police on the estate", she said. "The residents said loud and clear that we needed to have more police."

Merseyside Police will cost taxpayers £307.3m this year, or some £500 per local household. According to their Strategy Plan, they pursue "Total Policing"- "total war on crime, total care to victims, and total professionalism... blitzing antisocial behaviour... Tackling Gang Related Crime... etc" (for their glossy Sweeney style video report see here).

Unfortunately, their performance doesn't live up to their hard-man rhetoric. As their report indirectly acknowledges, there were a shocking 2,000 "life threatening and gun crimes last year", 50% over their own target, and getting on for 1.5 per 1000 population. Their own Performance Assessment rates them as Poor.

Merseyside Police have 4,500 officers, or 3 per 1000 population. But as per, their approach is reactive rather than proactive. And as this case tragically underlines, even when frightened residents do manage to extract a promise of proper local policing, they can't depend on the police to actually deliver it.

Solutions?

Following Rhys's death, the Primrose Hill solution of private security patrols must be sounding very attractive to residents of the Croxteth Park Estate, sandwiched as it is between two warring gang council estates. But it costs Primrose Hill households £1,000 pa each, which may be more than locals can afford (see this blog). Cheaper alternatives do suggest themselves, possibly involving some of the battle-hardened Scousers currently leaving in droves from our overstretched army.

Elected sheriffs also have an important role, as we've blogged many times. In this case it would have been much more difficult for the police to renege on their promises if their chief was facing re-election. Much more difficult to wriggle out of that than simply ticking a few more boxes for Whitehall.

And then of course, there is the huge amount we must do to toughen up our criminal justice system (see many previous blogs eg gathered here).

Meanwhile, the killing goes on and another innocent child is dead. And those of us who live in the relative safety of leafy enclaves down South should feel ashamed we have not forced our politicians to make the changes the people in less fortunate places so desperately need.

Tax Funded Monkeys


Pre-lottery success
While we were away, winning former Olympian John Regis slammed lottery funding for British athletes:

"If you spray peanuts around you get monkeys, and at the moment we have a load of peanuts going out, so we have a load of monkeys running around.

"I am thinking, 'If this is how you think the sport is going to go forward, you guys at the top do not have the foggiest idea of what it took to get there in the beginning'."

"Of the guys on the lottery, some of them are European class, some are UK class but very few are world class. There should be no more than 10 athletes on lottery funding in the whole of Britain."


Regis is by no means the first former Olympian to slam the new welfare dependency in British althletics: regular BOM readers will recall five times gold medallist Michael Johnson saying the same thing last year (see this blog):

"They (British sprinters) have lost the hunger and it is the system which causes them to lose the hunger. The system rewards mediocrity. It rewards Great Britain's best, not the world's best. These athletes have it before they have done anything at all. They have celebrity and sponsorship and things we work hard for in the US."

At present the quango UK Athletics pays welfare at three levels. The top- the "World Class Podium"- pays up to £24,000 pa income support, plus various expenses. And overall, eyeballing the lists on the website, total dependents number well over 200.

The results (just one bronze medal in Osaka) speak for themselves.

Things are now so desperate, "Britain’s sports coaches have been scouring the world for an athletes’ “foreign legion” in an attempt to boost the country’s medal-winning hopes for the 2012 Olympics... Britain’s sports associations are signing up competitors from overseas who may also be eligible for British citizenship. Targets so far include a basketball player for the Chicago Bulls, a Jamaican high jumper and an Afghan wrestler."

Whatever happened to that brilliant masterplan produced by UKSport to achieve fourth medal place in the 2012 medal table by "investing" £110,457,000 pa every year for seven years? You remember- they reckoned they'd developed "a sophisticated investment model to determine the level of additional funding required...it is logical, measurable, and scalable." (see this blog).

Monkeys led by nincompoops.

I'm not hopeful.

Sunday, August 26, 2007

Home Thoughts From Abroad


Lamborghini style police

Didn't encounter too many gaudy melon-flowers, but did find...

1. The Wacky Races

Driving in Italy is always a life affirming experience, especially in towns and on those twisty mountain roads. The combination of wild dodgem drivers, suicidal scooterists, and sheer naked machismo is a rejuvenating reminder that, for all our Home Counties good sense, actually we are still alive. I stay calm by pumping up the expletives, laughing hysterically, and hyperventilating.

With every outing a whirlwind blur of near misses, we guessed Italy's road fatalities must be catastrophic. But in truth, they turn out to be not much different to international averages. In terms of annual fatalities per million population, they clock up about 90, just above France and Spain, and just below Austria and New Zealand (see here). That's miles less than the Yanks, on 150, and the Ruskies on a terminal 240.

Of course, we Sensible Timmy Brits- 172mph Porsches aside- are right down at the bottom of the league, with only 50 fatalities per million population.

But wait, you say. Isn't the Pope Catholic? Aren't Italians car-mad? Surely, fatalities per head can't be a fair comparison, because they have far more vehicles per head than we do.

Yes, they surely do. Whereas the average Brit - children included - runs only about half a vehicle, the average Italian runs getting on for three-quarters. And when you take account of that, looking at the league table of fatalities per vehicle (see here), it turns out those hot-blooded Ferrari F1 wannabes* are relatively safe drivers:



So whereas the US loses nearly 200 people per million vehicles per annum, the Italians lose a mere 130. That's only marginally worse than us on about 100, and just one-tenth of the eye-popping 1222 pa Russia loses.

Conclusion? Although you feel like you're never more than a hairs-breadth from motoring disaster, and although you should never even consider driving in Italy without fully comp insurance (see below), it's actually not much more dangerous than Surrey. Maybe.

One other thing- why do successive British governments spend so much money and effort seeking to cut our road fatalities when we are already among the very safest countries around?


*F1 trivia- they may all drive like drop dead Formula One contenders, but in reality no Italian has been F1 champ for over half a century (see here). IIRC Ferrari even had to recruit an icy Me109 pilot to revive the marque.


2. Voting by wallet

For the last quarter century, Tyler has been a regular customer of Hertz car rentals. But alas, both of this summer's rentals have now been bad experiences.

To start with, there have been lengthy delays at pick-up, seemingly the result of serious undermanning. Naturally enough, the stressed-out staff have been singularly unhelpful - brusque even.
Then, there have been unexpected additional charges presented when you finally make it to the desk. Their standard collision damage and theft insurance covers have always had an excess, but those excesses have now ballooned to well over £1,000. Since only a fool would drive the wacky races round Naples carrying that sort of liability, that means you're more or less locked in to buying their excess waivers, at around £12 per day.

Refueling charges have also gone up, pressuring you to take their "special price" deal for refilling the whole tank- another forty odd quid- whether you empty the whole tank or not.

The old Hertz always imposed insurance excesses and refueling surchages of course. But not on this scale. And the old Hertz was much sharper on customer service. Not to mention supplying cars with all the standard appointments, such as a fuel filler cap and a manual (both missing on last week's hire).

So why's this happened? Here's a clue- in 2005 Hertz was bought by a private equity consortium, and just seven months later flipped into an IPO. The private equity boys did very nicely out of it, thank you very much- they recouped $1bn of their intitial $2.3bn investment within just six months via a special dividend. Or as Business Week put it, by "backing up the Brinks truck".

But of course someone has to pay for the huge debt mountain taken on to fund the deal. And that someone is ultimately the customer. Tyler and all those other poor schmucks in the one hour queue at at the Naples Airport rental desk, faced with coughing up an unanticipated extra £150 each for cars that have bits missing, we're the ones who have to pay.

Except... except... there is one teensy flaw in this brilliant plan: each and every one of us punters in that queue- and I'm guessing thousands of others- have sworn never ever to use Hertz again.

Because you see, we're the customers. We always retain the right to vote with our wallets. We want value, and we simply don't care how much LBO debt Hertz is struggling with, or any of the other manifold problems they may have. If they don't deliver value, they don't get our money. It's that direct, and that powerful.

That's how those brilliant magical markets work.

Now just take a moment to compare that power with the position of, let's say, a typical NHS customer. Just like us ex-Hertz customers, the NHS customer pays plenty for the service. But unlike us, she has absolutely no control over it. She may not like the fact that local maternity facilities are being abolished as part of a drive to fund a huge PFI debt mountain. But she can do SFA about it.

Vote with her wallet? Not permitted, by order of the Commissars (unless your wallet is big enough enough to pay twice, that is).

Write to her MP? Heat maps aside, don't make me laugh.

Vote out the current Commissars and replace them with new Commissars? Apart from the fact that you can only do that once every four or five years, and apart from the fact that your vote only counts in about 100 constituencies, and apart from the fact that you're voting on a whole stack of other things besides maternity provision, all the Westminster parties' NHS policy platforms are virtually identical. You could swap the names round and I'd defy you to spot the difference.

So our NHS customer is stuck. Locked in to a health system that costs a packet, routinely underperforms (eg our abysmal cancer survival rates), and is lumberingly unresponsive to her wishes.

No wonder it hertz. (Sorry).

3. Splendido... but how can it possibly work?


We love Italy. The warmth... the life... the fantastico posing police uniforms... it's all so brilliantly chaotically different to Guildford High Street.

But how does it actually work? How can it work?

On one level of course, it doesn't. According to the latest OECD stats, Italian per capita GDP is between 12 and 18 per cent lower than ours (depending on whether you convert using current exchange rates or Purchasing Power Parities).

Ah well, you say, that's because they work much shorter hours, so they're taking their incomes as sun-kissed leisure. And who wouldn't? We tight-assed Brits work far too hard.

Which sounds entirely plausible, until you look at the facts. The OECD data tells us that whereas the average Brit works for 1672 hours pa, the average Italian puts in 1815 hours- about three hours a week more. The reason they're poorer is not because they put in fewer hours, but because they're significantly less efficient (econonerd point- virtually alone among developed economies, Italy's Multi-Factor Productivity has actually fallen over the last decade- their efficiency levels have gone backwards- see here).

Longer hours, lower incomes, and higher taxes- which is why Tyler's Italian barber says there's no way he'd ever go back to live in Naples.

Great for a holiday. Not so great as a workplace.

Thursday, August 16, 2007

Italian Non-Job


Mrs T and I are off for a spot of the old dolce vita. So blogging may be sporadic to non-existent for a week or so.

Is There Anyone Out There Who Doesn't Have 3 As?


Hurrah! A's all round

BBC R5 are doing their annual phone-in on the A Level results. And the jock has just asked desperately if someone could phone who hasn't got three A grades. She's just talked to one girl who has five. A quarter of all grades are now A, and the overall pass rate has reached a staggering 96.9% (see this blog for a comparison with the pass rate in a real exam).

As we blogged here, it is now incontrovertible that A Levels have got easier- the best independent estimate is that over the last two decades on average they've got two whole grades easier (some, like Maths, have been devalued even more).

The evidence is now so compelling that even the lamentable Jim Knight- the schools minister- sounded a little embarrassed this morning as he attempted to deny it. But that may have been because he was talking through his backside.

Earlier in the week, the ever excellent Reform published a paper on the crisis in state schools by BOM hero Dr Martin Stephen, the High Master of St Paul's School in London. It's well worth reading (see here).

On exam standards he highlights the deeply corrosive role of the Qualifications and Curriculum Authority quango (QCA). It's worth quoting at length:

"QCA is a wholly-owned subsidiary of the Government. In effect this means that a branch of government decides the qualifications and the curriculum available to the majority of young people in England. It has a dangerous capacity to work the system in the best interests of government rather than in the best interests of employers or universities: the two interests can be very different."

You can say that again.

"The two interests can be very different...

[The QCA] is increasingly staffed by civil servants and career examiners, rather than by those with extensive experience of teaching or lecturing."


Eg its head, leftie Aussie bureaucrat Dr Ken Boston (see this blog).

"The combination of QCA and the examination boards acts similarly as a block between consumer and end-user. The old examination boards (University of London, Oxford, Cambridge, Oxford and Cambridge), both by their name and by their employees, used to be far more linked to and with the university structure in the UK . One is hard pressed to find a university lecturer setting or marking secondary examinations, and universities seem to have little or no say in the content and difficulty of the qualifications that decide who comes to their institution."

Yet again, government intermediates itself between consumer and producer, imposes its own priorities, and ends up not meeting anyone's needs. Except its own.

As we've blogged many times, the only way of cutting through this nonsense is to put the spending power directly in the hands of the consumers. Just as it is in the independent sector where Dr Stephen and his colleagues are accountable to the paying parents, not to government.

Wednesday, August 15, 2007

Chopper Coppers



I spy a barbeque


Mrs T and I spent last Sunday afternoon in a pleasant Surrey garden at a family gathering. So I got the chance to have another entertaining chat with her ex-cop brother.

As mentioned previously, in the late sixties he was the youngest DI in the Sweeney. But he resigned long ago, and is somewhat less than impressed with today's policing methods. In particular, he reckons many of the problems of loutish behaviour in public places could be eliminated if there was a much more visible and regular police presence:

"When I was a young PC at Holborn nick, I'd be be out on foot patrol for my whole shift. Eight hours on the beat, day and night. These days you hardly ever see a copper walking the streets, certainly not after dark. And if you do, they're in pairs- I used to be alone. Straightaway you've halved the number of patrols."

Yes, but isn't that because these days, things are jolly dangerous?

"Bollocks. We used to have some right thugs around, but they weren't allowed to run riot and terrorise the neighbourhood. We stepped in long before that. It was a deterrent."

But today's policemen do get stabbed.

"And why's that? Because there are no consequences. When I started, if you killed a copper, you knew you were going to swing..."

The next section of the conversation has been expurgated (see here).

So what do you think of these Community Support Officers? As if I couldn't guess.

"That's another load of bollocks. Those guys are people who couldn't get into the proper police. They've got no real powers, and everybody knows it. But the public are being conned into accepting them out on the streets while the real cops stay safely out of the way back at the nick, or driving round in a nice warm patrol car." (Note- we were speaking before we'd heard the very latest lunacy on Community Support Officers- Thames Valley Police hiring two 16 year olds).

At which point he was drowned out by the roar of a helicopter that had appeared directly overhead. Yes, it was another police chopper (see here). And it hovered for a couple of minutes clearly observing us (see video above).

Why on earth would they do that? Sure, we were under the flight path into Heathrow, and the barbeque could have been a missile installation. But I'm guessing there would have been loads of other Sunday barbeques in exactly the same situation. Or did they perhaps think we were the eco hippies? Or do they now check out all gatherings where ten or more OAPs are gathered together round a smoking griddle?

Brother-in-law was not amused. "That's another load of bollocks. For the cost of that thing you could have 20 or 30 coppers back on the beat" (he's right too- the Surrey Police chopper cost £3.2m to buy and another £1.2m pa to run).

And just what do they get up to in those choppers?

Well, we know they use them to pursue errant motorists who refuse to accept spot fines. We also know they use them to investigate the paranormal. Last year one was used to track a "ghostly figure" haunting the Caterham bypass- no, I'm not making it up:

"Matthew, who did not want to reveal his surname, was driving along the road at 2.30am on Thursday, April 13 with two of his work colleagues. The 36-year-old from Whyteleafe said: 'We saw a young girl's figure cross the road in front of us. The girl did not have any features on her face. It totally freaked me out.'

A spokesman from Surrey Police said: 'Officers, including a dog unit and the Metropolitan Police helicopter, searched the surrounding area but could find no trace of her'. He was aware that similar incidents had been reported over the years on that stretch of road.

The Paranormal Database records another spooky incident in the area around the A22 on July 28, 1963. It states that eight figures dressed in black cloaks were seen running and leaping around heading towards the dual carriageway."

They were probably just trying to hold a barbeque in peace.

Meanwhile, back in the real world, two more appalling murders-

Gary Newlove was beaten to death by drunken yobs outside his house.

Evren Anil was beaten to death while challenging litter louts.

There were no beat coppers around, and the choppers didn't seem to help.

PS See this blog for a reminder of how the police have failed to use their massively increased budgets to recruit more coppers. Instead, the dosh has been "wisely invested across a range of initiatives so as to maximise the return in relation to service performance." Which I think means they spent it on choppers.

PPS For some reason You Tube chopped off the bottom half of the first version of this vid. So I've redone it as the Director's Cut. Technical anorak note- You Tube clearly can't handle direct uploads from the Sanyo Xacti, which as 18DS citizen journalists will know, records in its own peculiar mpeg4 format.

Finance Genius Returns


BOM readers will be only too familiar with finance genius Tess Jowell. Gordo apparently likes the feel of her steadying hand on his tiller so much that, against all rational expectations, he kept her on in June to keep a "firm grip" on the Olympics fiasco.

She's been remarkably silent since then. But now she's suddenly sprung out of her box to biff the TaxPayers' Alliance over their 2012 Watchdog report on construction cost inflation.

As you will recall, the TPA report estimates that by increasing cost pressures, the Olympics will add around £4bn to construction costs outside the Olympics project itself. Tess's response- in letters to the Telegraph and Metro- is a classic of misunderstanding (has she even read the report?) and spin. She even asserts that it "is a mistake to view 2012 as a cost, rather than an investment". So that's alright then.

Matt Sinclair has fun bashing her back into her box here.

PS In the real world of course, Tess's pretty little head knows nothing of finance- not even how her own home was mortgaged by her husband. But that has never stopped her coming out with all kinds of vacuous financial assertions. Tyler's favourite was when Jack Lemley, the world expert construction chief who resigned in disgust from chairing the Olympics Delivery Authority, said the budget was totally out of control. Featherwight Tess's weighty response? "I disagree with him" (see this blog).

Cost Of Renewable Fantasies


EU renewables plan
I've taken a look at the leaked Whitehall paper that spells out for ministers the likely costs to Britain of accepting the EU's fantasy target for renewable energy.

It's part of the dismal Bliar legacy, the part where he spent his last few months jetting off to Europe and agreeing to everything they asked for- the Constitution, the abolition of the UK budget rebate (official cost £1bn, real cost more like £20bn), and this 2020 target for 20% of energy usage to come from renewables.

Reading the paper (here) the first thing you realise is that it's even less well baked than the EU's Emissions Trading Scheme (ETS). We estimated that costs British taxpaying consumers about £1bn pa, largely to the benefit of the big energy companies (see this blog).

But this new policy is something else again. To start with, nobody has a clue how it fits with the existing ETS. The paper says:

"The renewables target and energy efficiency measures risk making the existing EU ETS redundant, and prices prone to collapse. Given that the ETS is the EU's main existing vehicle for delivering least cost reductions in greenhouse gases, and the basis on which the EU seeks to build a global carbon market, this is a major risk."

To impose one half-baked eco cost burden, Mr Barrossa, may be regarded as a misfortune; to impose two looks like sheer blithering incompetence. Especially when the second directly undermines the first.

The new approach will also cost much much more than even the ETS. That's because, although ETS was implemented in an extraordinarily cack-handed manner, in essence it harnesses a market mechanism to seek out the cheapest and most efficient ways of reducing emissions, be that renewables or something else.

Specifying a fixed quantified target for the proportion of energy use that must come from renewables means the Commissars not only want to set the target for reducing emissions, but also specify how that reduction must be achieved. Despite all the evidence to the contrary, they still reckon they know better than the market how to get stuff done. It is a return to traditional EU Stalinist planning. The paper says:

"The costs of increasing renewable energy technology... is around three times higher than allowing flexibility in reduction options through emissions trading."

The paper models five possible cost scenarios, based on different ways in which the overall 20% EU target could get divied up between member states. For future reference here's the key table:

As we can see, in the event that we are forced to accept the full 20% target (and given the way our negotiators roll over, who'd want to bet against that), the estimated costs to us taxpaying consumers are put at about £20bn pa. That's a jaw-dropping £800 per household per year, or 6p on the standard rate of income tax.

But our guess is that the real costs will be even higher than that. As the paper acknowledges, its cost projections assume a very high availability of biomass technologies- way beyond anything we currently have, and way beyond anything Whitehall's own studies have previously envisaged as being realistic. It's akin to assuming we can somehow invent a perpetual motion machine. The paper warns:

"If less biomass is available and other heat technologies need to be
deployed, costs would rise rapidly."

There are also big uncertainties about the cost of using biofuels in transport.

So what shall we say?

Double the £20bn estimate?

Treble?

The truth is nobody has the foggiest idea. Our rulers have entered into yet another half baked, open ended commitment they haven't a clue how to deliver.

The only thing we can really be sure about is that we're committed to paying a HUGE AMOUNT OF MONEY for TECHNOLOGY THAT DOESN'T REALLY EXIST AND MAY NOT BE THE BEST WAY FORWARD in pursuit of a DRAGON THAT MAY YET TURN OUT TO BE STATISTICAL ARTEFACT.

Tuesday, August 14, 2007

Micro Managing Conman Moves Next Door


Now listen Crilly- here's what I want you to do...

The Guardian is trumpeting an extra £39bn spending Gordo has apparently pledged since he moved next door.

Needless to say, looking at the detail reveals the usual mix of apples and pears, multi-year figures aggregated to sound much bigger than they are, and re-announcements of figures already included in existing budgets. For example, the first item is:

"An extra £7.7bn for defence to 2011, a 1.5% average real terms increase, excluding the cost of operations met from the reserve."

First, it's a cumulative figure. And second, 1.5% pa real growth is actually less than the 1.9% pa growth he'd already pencilled in for the next Comprehensive Spending Review to be announced in October. Indeed, the MOD has already conceded to the FT that it's not really enough: “at the margins of our programme there might be some changed priorities”. Still, Gordo's son isn't out East driving round in an unarmoured Land Rover and wishing there was better helicopter support.

Micro management? How about the £4bn extra education money already earmarked for Sure Start (yes that Surestart- the one that's already been proved to make life even worse for those it's meant to help- see this blog).

He may now have got the top job, but anyone who imagined he'd change his ways was way offbeam. With his old mate Father Ted in No 11, Bishop Brennan is free to spin and micro manage his way right down to the last paperclip.
PS At least Pol is happy. Hugging herself with delight at the Fist's anihilation of bantam weight Dave, she lays into the Redwood red tape plan: "Redwood is deadwood, a neocon throwback from the Thatcher era... We live in different and prosperous times now: present perils are to quality of life, the rupture between the rich and poor, the survival of the planet. Why would the patient swallow bitter old medicine, when the need is for quite different remedies - all requiring a stronger, not a weaker, state; stronger, not weaker, international action?" Never mind that in the real world the state is absolutely totally pants at sorting anything, and never mind that in the real world "international action" gives us costly corrupt excrescenses like the EU, the UN and the World Bank.

Monday, August 13, 2007

Heathrow Eco Camp


Number Watch gives us the real facts

Mrs T and I are off to Italy later this week so we're watching events at the Heathrow hippy encampment with more than usual interest. We reckon it's a cynical attempt to wreck our holiday, along with tens of thousands of others. Not to mention taking 1800 police officers off the crime ridden streets of London.

Why are they doing it? I've just heard their spokesman being given a platform on BBC R5 to tell us. Apparently, air travel already accounts for 20% of global emissions (he simply dismisses the generally accepted figure of 6% as being out of date), and if we don't stop it now, 400 million people will die.

Is that what you want?

A few weeks back, we asked if anyone knew about the data which apparently shows global warming has stopped. We got a lot of very interesting comments and links, and over at the excellent Number Watch John Brignell gives us a good summary of key points.

The bottom line is that the temperature data gathered from satellites differs markedly from what traditional earth stations tell us. Whereas earth station data says temperatures continue on a rising trend, 28 years of high quality satellite data says there's been little or no change (see chart above). A huge discrepancy.

John comments:

"In any other field (with the possible exception of epidemiology) such a discrepancy would result in an international conference to hammer out which version was correct. When you take into account that the difference is responsible for a multi-billion dollar international industry and a world-wide raft of draconian, liberty-crushing legislation, the silence is leaden."

He also highlights the growing controversy over the siting of earth stations, when poor siting in urban areas can hugely distort results. The blog shows one right next to an aircon plant.

And then there's the fact that the temperature data presented to us as "fact" by celebrity warming scientists is seldom pure data as you or I might imagine- ie straight from the thermometer. It's usually been "adjusted" (aka fudged). As John shows, one of the most widely used series has been subjected to such a massive fudge that the "adjustment" actually accounts for much of the upward trend in the final eye-grabbing chart.

This is a scandal that has had far too little exposure, and it's well worth reading the blog.

Regular BOM readers may be grinding their teeth at this point, remembering the BBC's unilateral decision not to challenge the Gore climate "consensus" because "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."

We'll be watching the way the BBC covers this week very carefully (see here for early report).

Better Off With A Take Out Macky


Tuck in

Now you know. Next time you're in an NHS hospital and feel a bit peckish, either get someone to fetch you a Big Mac, or phone Dominos Pizza. Do not on any account eat the food they bring round on those salmonella incubator trolleys:

"Inspections at 377 hospitals in England revealed that nearly one-fifth of hospitals were failing to store food at the correct temperature and 18 contained food that was out of date. Cockroaches, mouse droppings and vermin were found at 11 of the hospitals and 173 displayed poor cleanliness. Sixty-eight fell below the legal requirements for food storage conditions, and 57 had staff with poor personal hygiene."

Yuk.

Do you reckon McDonalds works like that? Pizza Hut?

Of course not. They'd get closed down.

But in the NHS, it just rumbles right along.

PS Tyler has recently been a day patient in a Nuffield hospital. It's a great pity they've abolished the wine list, but I can report the tuna mayo sandwich was fresh and came without cockroach garnish. Thank God we kept up the BUPA subs.

Sunday, August 12, 2007

Recent Bonfires 75


He's meant to work for us

In the news this week:

£17,300 to hide MPs expenses from us- "A committee run by the Speaker of the Commons squandered more than £17,000 of taxpayers' money on barristers in an attempt to keep MPs' travel expenses secret. The House of Commons Commission - chaired by Michael Martin - spent two years trying to keep MPs' car, train and plane claims, which ran into millions of pounds, from the public. It forked out nearly £17,300 on lawyers and barristers to challenge a ruling by Information Commissioner Richard Thomas that taxpayers had a right to know much public money was being spent on politicians' travel." (Mail 11.8.07)

Balls junket costs us £5,000- "Cabinet minister Ed Balls spent thousands of pounds of taxpayers' money attending a private meeting of one of the world's most powerful and secretive organisations. Mr Balls travelled to Canada for the four-day conference of the shadowy Bilderberg Group of businessmen and politicians... The cost of the trip, in air fares, hotel bills and expenses is estimated at up to £5,000. The group's rules insist that "all participants attend in a private and not an official capacity". However, a Treasury spokesman said Mr Balls had attended "in his capacity as a minister" and confirmed that all expenses had been met from public funds." (Sunday Telegraph 12.8.07)

£1.7m wasted on re-importing radiocative waste- "DOUNREAY officials yesterday defended the £1.7 million cost of returning a batch of radioactive waste which was exported from the site to Peru nine years ago... As Peru lacks any specialist treatment or disposal facilities, a dozen-strong team from Dounreay went over to Lima... to move the 43 drums of the waste... Dounreay director Simon Middlemas denied the £1.7 million bill was a waste of money that could otherwise have been devoted to the clean-up of the site. He said: "I suppose you could look at it like that but... I wouldn't say it's been an embarrassment... that was in the past and practices then are completely different to what they are now." (John O'Groat Journal 10.8.07)

Human rights commissariate costs £1m pa- "MSPs last night demanded that Holyrood abandon moves to appoint a £75,000-a-year human rights "tsar". The calls came after advertisements were published for a full-time chairman of the Scottish Human Rights Commission, who will head a panel of four part-time members and have an annual budget of £1 million." (Scotsman 21.7.07)

Teaching vandals how to waste £400K pa- "Daft council chiefs who paid £400,000 to clean up paint-daubed walls are giving kids free lessons - in GRAFFITI. Teenagers will be taught techniques in spray painting as part of a summer scheme. The classes are the brainwave of Islington council, north London, whose workers scrubbed off 25,000 square metres of graffiti last year." (People 12.8.07)

Total for week- £3,122,300

Saturday, August 11, 2007

One For You And Three For Me


Sliced up a treat
We've blogged the grossly unpalatable issue of public sector pensions many times (eg see here). During the week, the Lib Dems calculated that for every £1 a private sector employee pays into his or her pension, he has to pay 81p to fund public sector pensions. More than a tad unfair, especially when you recall there are four private sector workers for each one in the public sector.

But now consulting actuaries Watson Wyatt point out that, on this basis, the real burden of public sector pensions is even higher. They say:

"In fact, for every pound paid by private sector workers into their own pension, they will have to pay £2.99 to cover the promises of public sector pensions being made in taxpayers' names today."

Three to one.
And remember, far from tackling the issue by increasing the public sector pension age beyond 60, all this government has done is to increase the burden even further by adding 600,000 to their payroll.

A Haircut From The Grim Reaper


Come back- we haven't finished yet

Plenty of headlines today about a global credit crunch. Crisis, meltdown, giant snakes- whatever will become of us?

Clearly these situations can get out of hand. If central banks pull the wrong levers (as the Fed notoriously did during the Wall Street Crash and the Great Depression), things can get very ugly indeed.

But these days central banks understand what to do. As the 1998 LTCM crisis most recently demonstrated, they do know how to turn on the liquidity taps to keep everyone afloat.

We ordinary mortals should actually be much more concerned that they turn on those taps too soon and too much.

Because as we've blogged many times, Britain- and indeed the entire global economic system- is wobbling on a giant bubble of indebtedness. Credit has been incredibly easy for a long time, and debt has ballooned.

And it is simply not sustainable. No matter how sophisticated the financial engineering, sooner or later, someone in the real world has to pay for it. But as highlighted by the US sub-prime mortgages, many of those who've taken on the debt simply can't afford to pay.

Which means that the lenders have to take what's known in the trade as "a haircut". And right now, it looks like that will be more than a light trim.

Some of those high rolling hedge funds are set to go down for sure. Fine- a salutary reminder of risk and return.

Same goes for insurance companies and pension funds- tough on those who've invested with them, but investment always carries risks.

The more problematic area is the banks. Almost all of them have exposure one way or another, and although hard information is scarce, the volume of squawking suggests the pain could be considerable.

The difficulty is that the banks hold our money for us. If they go down, we all go down- even though we'd never imagined we were taking any risks.

We're back to the familiar moral hazard problem- because the public rightly expects their bank deposits wil be safe, the banks have every incentive to chase high yields when lending money knowing that they'll be baled out by the central bank if their loans go bad.

Well, it's not quite as simple as that of course- the banks still lose money on bad loans, and there are meant to be all kinds of regulations and prudential supervision to restrain the whackier lending. But the basic problem remains.

So central banks must not be too ready to bale them out. Having enjoyed all those years of fantastic returns, bank shareholders must be made to take their haircuts. This is not a one-way bet.

In particular, simply turning on the liquidity taps- as the European Central Bank seems to be doing- will end up making us all poorer. Baling out the banks on this scale (£100bn + just in the last couple of days) jeopardises low inflation. Morever, it actually only defers the haircut to another day, when it will need to be even more severe.

Let the Reaper get to the shears.


PS No we're not advocating letting a high street bank go under. But before we taxpayers have to bale them out, we need to see their shareholders lose everything. Simple as.

Friday, August 10, 2007

A Walk In The Country


The Bloke has been for a walk in the country. He's been trying to find out exactly what's going on down the road at the Plague Lab (see previous blogs here and here).

For once, he didn't get arrested. But he did return fuming about the hundreds of people the MSM employ to produce their epics.

Destroying Civil Society


Extremely dangerous gardening
Big Government destroys civil society.

Until quite recently most of us had never even thought about that. We'd sort of bought the myth that before Big Government and its all encompassing cradle to grave care, we lived in a perpetual state of nasty brutishness. Big G might be costly and inefficient, but at least it kept us safe. It was the mark of an advanced civilised society.

Now we know different. We know that far from keeping us safe and secure, Big Government corrodes and destroys the very fabric of our social cohesion (and if you haven't, do read James Bartholomew's excellent Welfare State We're In for some history).

Once you start looking at the world that way, you find dozens of everyday examples of the process in action. This morning it comes from Urchfont in Wiltshire:

"She has needed little more than a trowel and a dedicated green thumb to turn her village flowerbed into a work of art.

Unfortunately for June Turnbull, council officials say she also needs a few other accessories - namely, three warning signs, a "lookout" and a fluorescent safety jacket - before she so much as pulls another weed.

The 79-year-old, whose voluntary work on the public flowerbed has produced a much-admired blaze of colour, has been told she poses a health and safety risk. Council officials have ordered her to stay away from the flowers until she complies with their safety regulations."

Never mind that June is doing this voluntarily, using her own pension to buy plants and compost. Never mind that her neighbours all love her work, she's helped Urchfont win the award for best kept village in Wiltshire, and there's never been a health or safety issue. Never mind that we're the customers and those council bureaucrats are supposed to be our servants.

The health and safety police may not have prevented the disastrous Buncefield explosion (see here), nor the current escape of foot and mouth virus from a government facility. But, by God, they do a great job stamping out the last vestiges of Miss Marple's England.

PS Tyler recently heard from another blogger who is putting together a local history website. It will document how, over the years, the growth of government crushed the life out of one particular local community. We look forward to seeing it.

Thursday, August 09, 2007

Hidden Costs Of Olympics


We all know about the declared budget for 2012, and how much it's escalated (see many previous blogs). But there are also important hidden costs, not included in the official budget but just as onerous for those who have to bear them.

One of the biggest hidden extras is the extra inflation in construction costs caused by the huge boost to demand in London.

The TaxPayer's Alliance 2012 Watchdog has analysed this and today publishes its conclusions. Based on existing work by leading industry researchers at EC Harris, the TPA estimates 2012 will impose additional construction costs of £4bn.

In brief, 2012 is expected to add 1 to 1.5 per cent pa to construction cost inflation. Applying this to projections of non-2012 construction spending gives before and after spends. The cumulative difference is £4bn.

Against the government's currently declared budget of £9.35bn, another £4bn is a huge addition. But many industry insiders think 1-1.5% may still be understating the likely 2012 impact on construction inflation. Which is why the last NAO Olympics report placed inflation as one of the project's major risks.

If you're thinking of having an extension built on your kitchen, our advice is to get the work done right now.

Wednesday, August 08, 2007

Dentistry Fiasco Update


Open your wallet very wide please
We've blogged the NHS dentist fiasco many times (eg here). And today we hear that the Department of Health's latest convoluted attempt to increase availability has flopped.

Their new contract for NHS dentists was supposed to end the piecework "drill and fill" culture, yet at the same time somehow expand supply. In reality it's made even more dentists jump ship altogether: in the year to end-March, the number of NHS dentists actually fell from 21,111 to 21,038.

Health minister Ann Keen ludicrously claims:

"Putting right nearly two decades of deterioration in NHS coverage is not the work of 12 months. It will take longer to develop services to a position where all primary care trusts are able to meet local requirements fully."

She's clearly overlooked Tony Blair's notorious "pledge" nearly a decade ago:

"Everyone within the next two years will be able once again to see an NHS dentist."

NHS dentistry now costs us nearly £2bn pa. Yet patient numbers are lower than ever.

The hopeless Department of Health is incapable of even managing itself (eg see this blog). So why on earth should we believe its claims to manage dentistry?

Bonkers Box Tickers

Abigail- still smiling despite discrimination



"A teenage science student has been banned from applying for a training programme with the Environment Agency because she is white and English.

The recruitment agency handling the scheme told Abigail Howarth, 18, that there was no point in her submitting an application because of her ethnic background.

But bizarrely she could have applied if she had been white and Welsh, Scottish or Irish." (Daily Mail)

This morning BBC R4 Today interviewed somebody from the Environment Agency about their extraordinary ethnic quota system, which openly and outrageously discriminates against native born white English applicants.

"Our hands are tied", was the response. "Under current legislation we are forced to behave in this blatantly racist manner".

Well, OK, their spokeswoman... sorry, spokesperson... didn't quite use those words. But that's what she said.

As we know, all public sector organisations have to tick a lot of these boxes. They need to demonstrate action- positive discrimination- to address all manner of supposed imbalances among their employees. Sod doing the job- the priority is to achieve the right ethnic, sex, and disability mixes.

It turns out the £1.1bn pa Environment Agency is way behind on its ethnic mix targets. Their Annual Report says:

"At the beginning of 2005 only 1.6 per cent of our workforce were from BME (Black and Minority Ethnic) groups. Through a proactive recruitment strategy we have increased the number of our employees from BME groups by one-third and BME employees now make up 2.7 percent of our workforce. In 2006-07 we recruited 109 BME starters against a target of 94. The net increase (allowing for starter and leavers) for the year was 54, which, although lower than our aspirational target of 80, is nevertheless our highest annual increase to date." (p 19)

So they're going hell for leather to tick the BME box. But take a good look at those figures- 109 recruits, but a net increase of only 54. Looks like massive turnover with maybe half of BME joiners leaving again very quickly.

That's what happens when you recruit people so you can tick boxes, rather than picking the most suitable applicants for the actual job.

Meanwhile we punters have to keep paying.

Better stock up with sandbags.

Update: Eagle-eyed A Reader has kindly emailed to point out there's something very peculiar about the EA's numbers for BME staff- "If the size of the workforce is constant, then increasing the BME numbers by one third gets one from 1.6% to just over 2.1%. The only way such an increase in BMEs could get one to 2.7% is if the total workforce size had been reduced by more than 20% over the same time period." We know that hasn't happened, so it looks like they can't add up either. Although I think we'd sort of guessed that a while ago.

Tuesday, August 07, 2007

Pass Or Fail?

Qualification A- pass rate 96%


Qualification B- pass rate 44%


The charts above show the history of pass rates for two qualifications.

One is a highly respected, highly prized qualification that opens career doors all over the world.

The other isn't.

Can you guess which is which?

Here are some clues. Qualifiction B where the pass rate has plummeted from 95% to 44% is clearly in Big Trouble. What's more, the people who run it are so complacent that they blame the failure on their candidates! Just listen to the way they talk:

"The pass rates have dropped rather dramatically over time. [And] if we were to include the approximately 25 percent of enrolled candidates who do not sit for the examination each year (no-shows), pass rates would be dramatically lower still... Falling pass rates reflect... the expansion of the candidate pool and deteriorating preparation habits."

Can you believe that? Talk about negativity!

Now, just compare that to the Can-Do Attitude of the guy behind the high success Qualification A. He says:

"My gut instinct is that those who take the position that standards have changed would really like to see us go back to the old system when only certain proportions of students could achieve a grade A, B, C or whatever, which meant that, say, only the top 5 per cent in any year could get an A grade and therefore go on to university. To have kept that system would have been absurd."

Absurd indeed.

Which is why the 96.4% pass rate A Level is in terminal decline, hardly worth the multiple choice paper it's written on. Whereas the 44% pass rate Chartered Financial Analyst qualification is one of the most sought after bits of paper in the world.

The CFA shows what happens when soaring candidate numbers meet a real determination to maintain standards: far from simply limiting the proportion of passes, the CFA has been so focused on standards it has allowed the proportion to fall. The fact that the A Level examiners haven't even kept their old fixed proportions underlines just how far their standards have slumped.

(See this blog for more from Dr Ken Boston, the left-wing educational administrator in charge of A Level standards).

PS For those of you interested in the A Level standards debate, I strongly recommend you take a look at Y Safle, which describes itself as "pretentious waffle from Wales", but is in fact a great source of analysis of A Level results and grade inflation. Not to mention some terrific charts (one of which I've ripped off above). And a Big Htp too to pommygranate who told us about the falling CFA pass rate.