Thursday, July 31, 2008

That Miliband Manifesto

I've just steeled myself to read the Miliband manifesto. He's been going around saying it's policies not personalities, so presumably it's policies he's majoring on. But here's all I could find:

1. "More power and control to citizens over the education, healthcare and social services they receive". But isn't that what everyone now says? The tough question is how do you do it, and on that he's silent.

2. More government regulation over "high polluting products" - er... like what? Summer holidays in Menorca? (And remember, Labour's green policies have already ramped the cost of our annual domestic fuel bills by £77 per household)

3. New planning policy to "facilitate" nuclear power stations... so after Labour's 11 years of faffing around while Britain's energy gap gets ever closer, now suddenly he wants to build a nuke down the bottom of your garden.

4. Er... umm... that's it.

A pretty slim manifesto.

And on that issue of power to the people, he doesn't give us any clue as to why he wants to offer more choice. We want it so we can drive up the quality of public services via the operation of choice and competition, but Miliband doesn't mention that. Instead, he seems to view the desire for choice as "a challenge", which has somehow, and most unfortunately, welled up from our obsessively consumerist society.

True, he couldn't risk talking about real customer choice, given his dependence on all those public sector union votes to get elected. But much more fundamentally, he, just like the rest of Labour, still sees power and control in old fashioned socialist terms. "Citizens" are people from his old Dad's Marxist lectures he heard across the kitchen table; they are never the same thing as individually empowered consumers.

While he's poolside in Menorca, Mili might like to reflect on the latest appalling twist in the Maidstone and Tunbridge Wells NHS Trust C difficile scandal, in which 90 patients died (see all previous blogs on the "Kent and Snuff It" here). After a lengthy police and Health and Safety Exec investigation into the deaths, nobody is to face prosecution. Nobody.

As BOM's long-time correspondent HJ puts it:

"Nobody has paid the price, because it's a public sector monopoly. In the private sector, if they had let this sort of thing happen and if their money came from attracting patients, then they would have found that they were somewhat short of new patients because nobody would choose to use their hospital. They would pay the price financially and with their jobs. This would have provided strong incentives for it not to happen in the first place.
Somehow, because it's the NHS, everybody says "how dreadful" and carries on as normal."

Spot on.

And here's the latest grim NHS scorecard:

MRSA Deaths

C difficile Deaths

You see Mr M, we need consumer choice and competition because nothing else works. Your old Dad might have pined for local soviets of worker citizens in charge, and you were very fond of him. But in the real world beyond the niceties of Marxist philosophy, the market is the only thing that has any chance of working properly.

PS Tyler went to hospital for a regular check up last week. Fortunately, he has BUPA, so it was at the local private hospital. It has never had a single case of C diff or MRSA. But in conversation with a consultant who also works in the local NHS hospital, he was told the latter - despite its recent deep clean - is still rife with the bugs: "they've colonised the place". "So what's the solution?" asked Tyler. "Burn it down" was the serious reply. "Burn it down, and rebuild from scratch - it's the only sure way". And that's what we've come to.

Dependent Watchdog

"As the independent gas and electricity watchdog, our mission is simple: to get the best deal we can for energy consumers."

So says energywatch [sic]. And over the last 24 hours they have been mouthing off mightily over the hike in British Gas prices. Indeed, Campaign Director Adam Scorer has just laid into Centrica for daring to increase prices while still in profit:
"Prices are going up because £992 million profit in six months isn't enough. British Gas customers, still reeling from 35 per cent price hikes, might have expected Centrica to be losing money.

They will be staggered at the rude health of Centrica's half year profits. Customers will be outraged to learn that while they ponder how to make ends meet Centrica’s shareholders are enjoying an increase in their dividends."

Well, that's fair enough you say. Independent consumer watchdogs are quite entitled to put their case, even if it is a load of lefty anti-market bilge.

Well yes.

Except that energywatch is not independent. It is a tax-funded quango which costs us £15m pa (2006-07 Report and Accounts). Its twisted lefty rants are entirely dependent on us taxpayers for their funding.

It gets better.

In 2006-07, Campaign Director Adam Scorer got paid no less than £75 grand (including pension accrual). His boss Allan Assher got paid £125 grand (including pension). Of our flaming money.

Do you want to pay for this nonsense?

No, of course not.

That's another £15m pa saved.

Hope you're keeping a note of all this George.

Lest We Forget

Still scary

Earlier this week Tyler spent a day viewing the folly of man. He fulfilled a long-standing promise to take Tyler Snr to the RAF Museum at Hendon, and Tyler's sister and eight year old niece came along too.

We'll draw a veil over the catastrophic North Circular traffic, and the fact that the Sat Nav guided us to a point on the M1's hard shoulder, and the fact that the museum's sign-posting is absolute pants, and the fact that it took us 2 hours to travel 10 miles. Suffice it to say, we pressed on through hardship to the stars.

The stars are of course the planes. But standing with a button-bright 8 year old beneath the intimidating black bulk of a Lancaster bomber, it's impossible not to think of death. Not only did the bombs that fell from that gaping bomb bay kill hundreds of thousands of German civilians (half a million are reckoned to have died in the allied stategic bombing campaign during WW2), but the brave young men - often incredibly young men - who sat in that cramped cockpit and lay in that horribly exposed bomb-aiming window, died in their tens of thousands too (Bomber Command lost 55,573 killed out of a total of 125,000 aircrew - an horrific 44.4% death rate). A ghastly grinding war of industrial attrition: no wonder our Prog Con later tried to blame it all on a madman.

The Battle of Britain exhibition is much more upbeat. Much more Churchill's famous evocation of knightly chivalry:

"The Knights of the Round Table and Crusaders have fallen back into distant days, not only distant but prosaic; but these young men are going forth every morning, going forth holding in their hands an instrument of colossal shattering power, of whom it may be said that every morn brought forth a noble chance and every chance brought forth a noble deed."

(God, he was good, wasn't he - compare and contrast with Gordo's dire speech to the bruvvers last week).

But it isn't all "our finest hour". There are many more recent exhibits, including a prototype of that old BOM favourite, the Eurofighter Typhoon.

Ah yes, the Typhoon. As you will recall, MOD is now very cagey about what these things are going to cost us, citing "commercial sensitivity", but when last sighted it was c £20bn for 232 - over £80m apiece, making it by far the most expensive fighter the RAF has ever flown (the refurb'd Nimrod will hold the overall record for the most expensive plane ever flown - if it ever flies, that is).

The sight of the Typhoon naturally set Tyler thinking about the issue of costs generally. We know all about MOD's current procurement cock-ups, and the billions they cost us (see previous blogs gathered here). But what about the past?

Why for example has the RAF Museum got three types of long-range nuclear bombers from the 1950s- the Vulcan, the Victor, and the Valiant? Well yes, the Museum has three because the RAF flew three. But why? Given our extreme shortage of cash coming out of WW2, wouldn't you have thought our politicos would want to have just one? Why did they burden the taxpayer with the development and build costs of three?

Yes, that's right - nobody wanted to make a decision, and taxpayer interests were sacrificed to those of the three independent manufacturers and, ahem, "national prestige" (and see Peter Hennessey's excellent Having It So Good for how our rulers somehow convinced themselves we needed those vastly expensive "independent" nukes in the first place).

And even when they got it right, it was often more through luck than judgement. That famous Lancaster was a mainstay of the War, but it was a derivative of an earlier bungled bomber spec (the Manchester) which had already cost a fortune. And many of the other WW2 bombers ordered by the Air Ministry were complete duds.

So totting it all up, what did we think the Museum's contents cost British taxpayers? And how much could we have saved if taxpayer value had been the driver of procurement decisions rather than national prestige and industrial subsidy?

The short answer is we just don't know. Most of the data is not available. But the RAF Museum is a sobering monument to the folly and incompetence of our defence bureaucrats and their vainglorious political "masters".

PS We've always been fascinated by what things from the past would cost in today's money. To get even a halfway fair comparison you need to uprate historic prices in line with per capita incomes rather than just RPI, and even that is rough and ready. But on that basis, a Lancaster - which cost about £50,000 apiece during WW2 - would cost c £6m apiece now. A veritable bargain against the £80m Eurofighter. And the entire WW2 production run of some 7,000 aircraft would cost us just £42bn. A snip.

Wednesday, July 30, 2008

Worse Than The Seventies

How we kept warm

In the last four years, domestic gas prices have risen by c 80%. But that reading was taken before the latest round of price hikes, and certainly before today's jaw-dropping 35% whack from British Gas. Taking account of them, prices will by now have doubled in less than five years.

Short of WW3, we used to think things could never get worse than the seventies. But we were wrong: it took seven years from 1972 to 1979 for gas prices to rise by a mere 86%.

And compared to the present incumbent, it turns out Grocer, Wislon, and Sunny Jim were political colussi.

If only we'd known at the time.

PS Even amidst all the sharpening of knives, we're still hearing claims that Gordo was the best Chancellor we've ever had. The reality is that he was the jammiest Chancellor we've ever had. He had the great good fortune to take over during a period of extraordinarily benign global economic conditions. And energy and commodity prices played a crucial role in remaining very subdued. Indeed, during his first five years, the index of sterling commodity prices fell by over 30%. In the last twelve months alone that same index is up by nearly 30%, and it's this pitiless reversal in global conditions that has exposed his ramshackle economic management for the fraud it always was.

Never Never Politicos

Good news for fluffy white bunnies
According to the usual sources, Gordo and Darling's latest wheeze is to rescue the plunging property market with hundreds of billions of HMG mortgage guarantees. Apparently they've seized on a suggestion in the unpublished Crosby Report:

"...for the Government to guarantee, on commercial terms, billions of pounds of better quality tranches of new mortgage-backed securities.

Or to put it another way, the taxpayer would be providing a promise that it would pick up the tab in the event that the value of of those securities was impaired by a huge rise in repayment difficulties or defaults by mortgage borrowers."

So what do we taxpayers get out of it?

Supposedly, any guarantees would be done "on commercial terms" - ie we (presumably!) get paid a fee. But the whole point is there are no commercial terms - if there were, taxpayers wouldn't need to be involved in the first place.

So what else do we get?

Well, if we don't do it, mortgage lenders might go bust.

So? As we've blogged many times, as long as we safeguard retail depositors, we couldn't care less what happens to bank shareholders - they've had the good times, and IIRC they never offered to share the profits with us then.

Builders might go bust.

Er... see previous comments above (plus the owners of Tyler Towers might finally be able to afford repairs to those gaping holes in the roof).

Property prices might plunge even further? But prices are c 30% above what most serious analysts see as long-term sustainable levels: for example, the IMF recently concluded we have the third most overvalued market in the world (see this blog):

Umm... it would help First Time Buyers, Hard-Working Families, and... oh, yes - fluffy white bunnies.

No. The thing that will most help junior Tylers and other first time buyers is lower prices and a serious scorching for houseprice speculators. We need to see some real pain.

Er... umm... ah... hmmmm...

The truth of course is that doomed Labour are doing what they know best - maxxing every single credit card they can lay their slippery little hands on in a desperate bid to buy votes.

We already know they're going to ditch the fiscal rules (see this blog), but that will all be recorded on the official government balance sheet. Their real speciality is Enron borrowing, well away from the official accounts -PFI, unfunded public pensions, nuclear decommissioning, etc etc.

We've blogged this many times (eg here), and whereas the official national debt is just over £0.5 trillion, once we include all the various Enron liabilities, the true figure is over £1.8 trillion. Or 130% of GDP. Or £74 grand per household. And remember, that undeclared debt is growing by around £80bn pa (the figure you should mentally add to Darling's announced annual borrowing totals).

A mortgage guarantee is yet another Enron scam. It is aimed at boosting spending in the economy (aka the feelgood factor), without the tedious necessity of recognising the debt on the official credit card statement.

Guaranteeing property debt is not something taxpayers should ever want their governments to do. The lesson from our American cousins Freddie and Fannie is that even implicit guarantees can turn out to be horrifically expensive.

One other thing - when George finally publishes his own promised fiscal rules, we'll need to look very carefully at how he deals with Enron debt in all its manifold and sneaky forms.

PS So what exactly has happened to Darling's revamped bank regulatory system? Having copped out on increasing the depositor guarantee to £100K (paid for by the banks), and despite all the talk about swift action, the whole thing seems to have been mislaid in the summer long grass. Clearly, the banks are in no hurry - why should they agree to more regulation when they can scare this bunch of clowns into providing as much taxpayer support as they may need.

Tuesday, July 29, 2008

Lives In A Dream

Where the Prog Con gets its ideas

Tyler is fretting that something bad is happening to him. Last night he found himself feeling sorry for Pol. Pol!

Along with Labour's Steve Richards she was attending a funeral, and Tyler unforgivably eavesdropped their graveside conversation with the Rev Gavin Esler. Richards was trying to put a brave face on things, but Pol was devastated. She looked old and grey, any resemblence to late-vintage Marianne Faithful blown clean away.

Her voice cracking with emotion, she poured out her regrets.

Why had she hustled the deceased into the arms of a killer? If only she'd known! But how could she? How could she have guessed that that highly intelligent man who'd lived next door all those years would turn out to be a brute? She'd thought it was for the best. How could she possibly have seen the truth? An innocent at large in an extraordinarily naughty world, she could only do her best.

She collapsed into a prolonged sob, and the Rev Esler awkwardly put his arm round her shoulders. Mr Richards mouthed platitudes about resurrection and the life eternal, as they walked from the grave.

No one was saved.

Clearly, the brute Brown will now be dealt with by the forces of justice, but where's the comfort in that? There's nobody halfway credible to take over, and Labour is going down to a massive defeat. Everything that Pol and Steve and Jackie and all the rest of the Prog Con hold dear will be buried for a generation.

Well, you and I know that isn't true of course - when it comes to dismantling the Prog Con superstate, a Cam government will be timid in the extreme. But for Pol and her chums even a pause in its expansion represents disaster.

This morning she wrings her hands even more tightly, praising the Milibands, Ed Balls, Harriet Harman, Douglas Alexander, John Denham (no relation I assure you) and Yvette Cooper, who apparently think the post-Blair era of recession needs new policies:

"These progressives would tax the top 1% to make them share the pain of recession to ease the bills of the poor and cut council tax. They would windfall tax profiteering energy companies. They would turn more radically green and create a million jobs in the renewables industry. They would pursue tax havens and tax avoiders, confronting bonus-heavy bankers who demand the state shoulder all risk while the banks reap all rewards. The progressives warn that without the verve and the nerve to stand for anything, Labour will be obliterated."

Oh, Pol. It's a dream. The power to push through any of this has gone.

The other morning we caught a snatch of Lady Antonia Fraser. No not the perfume, but the toff historian married to Harold Pinter, speaking on Desert Island Discs.

Now, Mr and Mrs Pinter are Prog Con Central, and even live in Holland Park. But her Ladyship candidly revealed she knows absolutely nothing of how families in the village live. Rather pathetically, she talked of how her key insights came from visiting some ghastly state school for two days. Two whole days.

And that's a big problem for the entire Prog Con. Their lives are every bit as privileged and detached from everyday life as the Tory frontbench - possibly more so. Yet the way they harangue and campaign for the order and control life of village life, you'd imagine they knew more than the villagers themselves.

The sad reality is that they can't even spot a party killer when he comes up and massages their egos.

Monday, July 28, 2008


And damn the evil capitalists

We've been shouting at the radio coverage of the mooted £9bn windfall tax on energy companies. On PM Dave Spart was given an extended BBC platform to lay into the evil profiteers who are once again grinding the faces of the poor. Some Labour MP then told us how nobody is against "normal" profits, but these evil people are taking the piss, and a windfall tax is the fair thing to do. Eddie Mair was on-hand to softball approvingly, and then to rip into the poor schmuck put up by the energy companies.

What escaped explanation altogether was what generated these so-called excess profits in the first place. The real villain is not the unalloyed evil of the power companies, but the unalloyed stupidity of the EUs Emissions Trading Scheme.

We've blogged the ETS fiasco many times of course. Hailed at its inception by eco-druids, EU bureaucrats, and the BBC, as being the path to global salvation, in practice the ETS has mainly resulted in stacks of free emissions permits being dished out to the biggest emitters (like energy companies), while we consumers and taxpayers have had to stump up to pay for them (see previous blogs gathered here). They've all made money while we've suffered.

Now, let's take as read the fact that sensible people never thought this was a good idea in the first place. But we are where we are, and changing the rules retrospectively sure ain't going to encourage anyone - least of all the companies - to make the long-term investment decisions we need for cheap and secure energy in the future.

It all puts us in mind of that other ongoing eco-policy disaster: the one over biofuels. It wasn't long ago the eco druids told us that biofuel would be a great way of reducing carbon emissions. But now, with vast swathes of agriculture diverted to its production, and with world grain prices driven through the roof, these same druids have flip-flopped. They're now saying "oh... no... slight miscalculation... we actually need to stop bio-fuel production immediately because it's actually increasing carbon emissions through the entirely unforeseen impact of increased grain production, which we never imagined would happen... sorry about that."

Why, you'd almost think these eco-druids don't have the faintest effin' idea what they're talking about.

PS While we're on the subject of druids who don't knowing what they're talking about, we can't pass up the opportunity to chortle over Mrs Marr's flipflop. Having been such a strong backer of Gordo's leadership - a key judgement for one paid to read Labour's entrails - she now simply says "I was wrong". Fine. We all make mistakes. But everybody should remember the next time she comes up with a bright idea.

British Energy - Another Giveaway?

Taxpayers heading for a second nuking?

The imminent £11-12bn sale of British Energy is something taxpayers need to watch very closely, because we own 35% of the company. And our interests are in the hands of a panicky discredited government that is desperate for money.

Regular readers will recall that taxpayers have already suffered one serious nuking over BE (see this blog). Back in 2002, the company virtually went bust, and was only saved by the government chucking in a large wad of our cash.

As the National Audit Office subsequently reported, the DTI not only bailed out the company- which nobody else would have done- but it then led a financial restructuring that left taxpayers holding a £5.3bn nuclear decommissioning liability, while the majority de-risked ownership stake was left with the original shareholders and creditors. It was a dismally naive Simple Shopper deal, only partially rescued by the subsequent sharp rise in energy prices which gave taxpayers a windfall additional share allocation (cf the abysmal sale of Qinetiq - see previous blogs eg here).

So here we are again. EDF is currently bidding to buy British Energy so it can acquire the sites and rights to build our new generation of nukes. And there are some BIG question marks.

For one thing, EDF is owned by A Foreign Power, and as Oxford Prof Dieter Helm asks, "do we want to hand over our nuclear the British nuclear industry to the French government?" Yes, yes, of course, Waterloo was a long time ago, these days we've got the Chunnel, we love their surrender cheese, and we're all friends together. Marvellous. But do you reckon Les Grenouilles would permit the same thing in reverse? It certainly needs discussing out in the open.

Second, British Energy is currently our largest independent electricity generator - ie the largest wholesale electricity supplier that is is not part of an integrated retail/generation company. And as today's report from the Commons Business and Enterprise Committee details, there are growing concerns about the competitiveness of the wholesale elecricity market, where the Big Six integrated firms (EDF, Npower/RWE, Centrica, Eon, Scottish Power, and Scottish and Southern) produce 55% of the output themselves.

If British Energy now disappears into EDF, EDF's output share goes up to 27%, and the Big Six controls three-quarters of our electricity generation. Which means that the residual wholesale market becomes little more than an illiquid rump, rather than the place where demand and supply meet to set the fair market price, like the textbooks say is supposed to happen.

Does that sound like a good idea for taxpaying consumers?

Clearly, the Big Six vehemently deny any price collusion - but see here for how their top executives do meet together regularly, carrying with them "a laminated print-out" reminding them not to use language such as “stitch up the market”.

Ah, you say, surely we don't need to worry because we've got a regulator to safeguard us against abuses. Well, yes, except that as the Commons Committee points out, "Ofgem’s terms of reference suggest it may pay relatively little attention to the wholesale markets".

Now in truth, we don't want the government to own an electricity generator, so we support a sale. We're just worried that our clownish government will be bounced into yet another giveaway, either in terms of the sale price, or in terms of the longer term erosion of competition in the wholesale electricity market. To summarise:

  • EDF is currently the only bidder, RWE and others having reportedly declined to bid (Centrica may take a minority stake, but that's not a competitive bid)
  • The government is desperate for cash
  • The government is also desperate to get the new nukes built, having faffed around for a decade
  • The Shopper has a dire record on asset sales

In the circs, EDF has every incentive to play hardball. And this morning we hear that's precisely what they're doing. They're sticking at a price that's way below what the government and the BE Board thinks it's worth (reports suggest the gap is at least 10%), and they're offering precisely the same deal to taxpayers that we got back in 2002 - ie a further payment sometime in the future, conditional on future revenues.

It's called an "earn-out", and the FT Lex column is scathing:

"Earn-outs are normally seen in creative and knowledge-intensive industries such as technology and pharmaceuticals, where there may be genuine differences of opinion over the value of the intellectual capital the seller is bringing to the table. Here, there are hard (albeit ageing) assets in the form of eight nuclear plants, sites for a lot more, and a tangible trading history...

If a structure emerges as reported, it will reflect a cash-strapped Treasury’s determination to keep buyers onside... As long as an earn-out lets a value discrepancy stand between buyer and seller, both sides are forestalling the inevitable. As with the consumer credit bubble, somebody will win eventually and somebody will lose." (HTP Joan W)

Given that future earn-out revenues will depend principally on future energy prices, and given that energy prices are currently at an all-time peak, there are no prizes whatsoever for guessing who would be the loser.

Sunday, July 27, 2008

The Great Unelected Helmsman

The Major had another seizure this morning.

For some reason best known to himself, he watched the Andy Marr Show, and saw Comrade Harperson being "interviewed" by Comrade Huw Edwards. Apparently, Harperson is now asserting that Gordo cannot be replaced because he is the world's foremost expert on managing economies through difficult times. The world needs him, and world leaders are constantly phoning him to seek advice. It would clearly be the height of folly and indeed irresponsibility for Labour to ditch him.

So just to be clear, the man who maxxed the credit card and left nothing for our rainy day, the man who who racked up our taxes when all around were cutting theirs, the man who took the rewards for indolence to new heights of expense and complexity, the man who dithered and fumbled the Crock crisis (cf Beer Stains), the man whose "solution" to soaring oil prices was cringe-making prostration at the feet of the Saudis, etc etc etc.... that same man is the one the world now needs in a time of crisis.

It's tragic and pafetic.

On one level, the Brown "leadership" crisis epitomises the chronic inability of Labour to take tough decisions. They all know he has to go, yet they have no plan to deal with the possibility, and they patently lack the guts to grip it. All they can do is unattributably moan to their mates in the media and hope someone else does the necessary.

But there's a much deeper issue here as well.

Many many years ago, Tyler took a degree paper in Political Institutions. It focused on a comparison of the governmental systems in the UK, the US, and what was then the USSR. Needless to say, the αβ++ "right" answer was that, on balance, our system - the so-called Westminster system - was best.

Why? Well, we were blessed with the right balance between the unaccountability of the Soviet system on the one hand, and those "highly damaging" logjam standoffs the US gets when it has a directly elected President who faces an opposing legislature over which he has no direct control.


What we actually have today is a system in which we elect a President with Soviet style command during his tenure, and who cannot be removed unless his whipped low-grade underlings somehow get a collective balls transplant.

Actually of course, it's even worse that that.

For one thing Gordo was never elected in the first place. As a stream of callers to the R5 phone-in said on Friday morning, they'd voted for Blair: they have never voted for Gordo.

Twice during Tyler's lifetime in the US a Vice President has taken over from an elected President and neither time was he required to face immediate election. But that's because US electors elect a Pres and a spare on the original ticket (OK, Ford wasn't elected, but that was because of Spiro T's unfortunate prediliction for extortion, tax fraud, bribery, and conspiracy).

And then there's the fact that, although we now have a Presidential system of government, our electoral arrangements still operate under the pretence that we elect an MP who then decides whom to support as PM. Combined with our first-past-the-post constituency system, that means only those who live in the 100 key marginals have any say at all in who rules the country. Which is disgraceful.

And it also means we get a barrel-load of low-grade monkeys for MPs. People such as the Blair Babes who only got in on his coat-tails. Did anyone ever imagine they'd be any good in a crisis?

Look, when it comes to government, there is no magic bullet (which is why it needs to be shrunk drastically). But compared to what we have now, a directly elected Presidential system would give us all an equal say in who rules us. And combined with a separately elected more independent legislature, it might even give us higher quality MPs.

Must rush now - we're off to see if the hospital has managed to jump start the Major.

Friday, July 25, 2008

Feed The World

The truth and nothing but the truth

Have we all read Irish journo Kevin Myers' teeth-grinding articles on aid to Africa (HTP DTH)? If not, you really should, and you can do so here, here, and here.

In summary - and treading a non-PC path few dare to venture along - Myers argues that Western aid to Africa is condemning that tragic continent to a demographic disaster. Highlighting the case of Ethiopia, where he was a reporter during the great 1980s "Feed the World" famine, he says:

"By 2050, the population of Ethiopia will be 177 million: The equivalent of France, Germany and Benelux today, but located on the parched and increasingly protein-free wastelands of the Great Rift Valley.

So, how much sense does it make for us actively to increase the adult population of what is already a vastly over-populated, environmentally devastated and economically dependent country? How much morality is there in saving an Ethiopian child from starvation today, for it to survive to a life of brutal circumcision, poverty, hunger, violence and sexual abuse, resulting in another half-dozen such wide-eyed children, with comparably jolly little lives ahead of them? Of course, it might make you feel better, which is a prime reason for so much charity. But that is not good enough.

For self-serving generosity has been one of the curses of Africa. It has sustained political systems which would otherwise have collapsed. It prolonged the Eritrean-Ethiopian war by nearly a decade. It is inspiring Bill Gates' programme to rid the continent of malaria, when, in the almost complete absence of personal self-discipline, that disease is one of the most efficacious forms of population-control now operating. If his programme is successful, tens of millions of children who would otherwise have died in infancy will survive to adulthood, he boasts. Oh good: then what?

I know. Let them all come here. Yes, that's an idea."

It's the Heart of Darkness, made infinitely worse by hundreds of billions of guilt money poured in by Western governments. It's truly sick.

Now, as you'd expect, the PC Gestapo have demanded Myer's immediate arrest:

"Denise Charlton, of the Immigrant Council of Ireland, has urged An Garda Siochana to investigate me under a special law, by which I could be tried and imprisoned for two years without even the benefit of a jury."

But whatever the Thought Police may do, the cat's out of the bag. The courageous Myers has clearly connected. He reckons 90% of his feedback has been supportive, including the feedback he's had from Africa itself (cf my own experience on the World Service phone-in).

I've just taken a look at the UN's population stats for Africa. They are very scary. In the twenty years since the Feed the World concert the population of Africa has very nearly doubled to around 1 billion people:

The UN reckons the rate of growth will now slow down, so 2 billion won't be reached until 2050. But there's absolutely no sign of a slow down so far, and not for the first time, the UN is whistling in the wind.

So just to recap: $1 trillion of Western aid has failed to give Africa its promised self-sustaining economic growth (see this blog); and if Myers is right, the money we spend on humanitarian relief has sown the seeds for a disaster of Malthusian proportions.

Just like with welfare spending here in the UK, it seems the £5bn pa we spend on "international development" really is consigning its recipients to hell on earth.

As I may have mentioned before, Mrs T and I actually met while raising money for Oxfam. So to be honest, I'm reeling. But we clearly need to demand a halt to this entirely man-made disaster.

PS Another gut-wrenching point in Myers' articles is his shame at having covered up the truth about Ethiopia when he was there in the 80s. He now writes:

"I am not innocent in all this. The people of Ireland remained in ignorance of the reality of Africa because of cowardly journalists like me. When I went to Ethiopia just over 20 years ago, I saw many things I never reported -- such as the menacing effect of gangs of young men with Kalashnikovs everywhere, while women did all the work.

In the very middle of starvation and death, men spent their time drinking the local hooch in the boonabate shebeens. Alongside the boonabates were shanty-brothels, to which drinkers would casually repair, to briefly relieve themselves in the scarred orifice of some wretched prostitute (whom God preserve and protect). I saw all this and did not report it, nor the anger of the Irish aid workers at the sexual incontinence and fecklessness of Ethiopian men. Why? Because I wanted to write much-acclaimed, tear-jerkingly purple prose about wide-eyed, fly-infested children -- not cold, unpopular and even "racist" accusations about African male culpability."

What chance Michael Buerk now makes a similar confession?

Life Under Fag-End Government

Time for the sunlit uplands

Shattered. Yet we've still got them for another two years. How much more damage can they do in their desperate attempts to save their reptilian skins?

It looks grim. Staggering out of the ruins of Glasgow East, they're already meeting with the unions. You and I understand the bruvvers are now Labour's only source of funds, yet one shell-shocked Brown adviser says of the Glasgow result "If we're lucky it could focus minds and weaken [sic] the trade unions. Which would be good for Gordon."

Back in the real world, the unions know the game's up and are intent on looting as much as they can before the final day of reckoning. They've drawn up 100 demands for new "workers rights", including an entitlement to six months paternity leave and a right to secondary picketing as per Arfer Scargill. The public sector unions - ie most of the unions - are also demanding an end to the 2% pay policy. Oh, and a new 50% tax rate for the undeserving rich.

Beyond that, we should expect more tax bribery all round. We've already had U-turns on the 10p tax rate and fuel duty, and a flip-flop on Vehicle Excise Duty isn't far away. We could see more. A US style income tax cut in the face of unprecedented global wossnames? Action on stamp duty to help first time buyers? We can all put together a list.

Clearly we're strongly in favour of lower taxes, but not like this. Not a random series of panicky retreats in response to the latest dire headlines, which will balloon the fiscal deficit and we'll have to repay after the election. What we want is a clear and sustainable strategy for smaller government.

But even more concerning than our looming fiscal Götterdämmerung are the decisions that will be delayed even further: the new power stations urgently needed to handle our fast approaching energy gap, fundamental welfare reform, more prison places so we can stop releasing dangerous thugs onto our streets, etc etc. None of that will even start to happen until May 2010.

The Major's friend Mr Gomulka can't stand any more. He reckons he's joining the rush to Canada, which is apparently the new bolt-hole of choice, Oz having gone communist. The air in Alberta (pic above) is clean, living costs are low, they'll welcome you with open arms, and the whole place is floating on the second largest proven oil reserves in the world. Which is nice. You just need to wrap up warm in winter (like, -81.4F warm).

Thursday, July 24, 2008

Taking Our Responsibilities Seriously

Our moral duty

As we all understand, the fundamental divide between left and right is the issue of personal responsibility.

We on the right believe that the world is a better place if individuals - or more specifically families - take responsibility for themselves. Economics is all about how self-interest not only drives our lives, but underpins stable and mutually beneficial relationships between us (eg see this blog). From the economy, to education, to health, to welfare, the right believes when governments get involved beyond law and war, the long-term consequences are almost always dire.

The left believes the exact opposite. They believe the world is better if planned and managed by a benevolent dictator who goes by the name of "Society". For the left, the apparent randomness of markets is the law of the jungle, and individual differences in talent and interest a monstrous inequity. They believe that markets are an indulgence, or as the late John Smith put it to Tyler on a City lunch tour, "markets where possible, government where necessary". They believe "equity" trumps growth, and they believe there is no such thing as individual failure, only social failure.

Of course, to go along with the left you have to believe that government can actually deliver what it promises. And as we document on BOM every day, there is precious little evidence of that. Indeed, even if you accept markets fail from time to time (eg the current credit crunch), government failure is a whole lot worse: lack of competition, one-size-fits-all, producer capture, lack of innovation, perverse incentives... we blog it all right here.

In essence, the left believes markets fail and governments succeed. We believe the opposite (see this highly readable IEA paper by Helen Evans for a discussion of this key difference in the context of the NHS).

This morning Commissar Johnson returns to the issue of obesity. Rejecting Cam's view that fatties should take responsibility for themselves, the Commissar says:

'It's easy for politicians to stand on the sidelines accusing the impoverished, the fat and the excluded of only having themselves to blame.

Just as the Government has a moral duty to tackle poverty and exclusion, so it also has a duty to address obesity.

But this is not a licence to hector and lecture people on how they should spend their lives - not least because this simply won't work. Tackling obesity requires a much broader partnership.'

Exclusion, moral duty, partnership... great words. You are excluded from the ability to manage your own calorie intake, so the rest of us in partnership have a moral duty to stump up for huge government programmes to get you off the hook of your own self-indulgence.

OK, so how would we on the right discharge our moral duty?

A few months back we looked at Moorside Road Dewsbury, the road where "kidnapped" Shannon Matthews lived. Some of the neighbours are pictured above celebrating Shannon's return. We surmise one or two of them might be suitable candidates for our moral duty.

As we discovered, the residents of Moorside Road have some serious issues: high crime, poor education, high unemployment/incapacity/lone parent welfare dependency, and family dysfunction. Looking at the pic, I'm guessing life expectancy is also low.

The left's response is more welfare and more government support. But in truth, money is not the issue. As we discovered, the average household income is getting on for £30 grand pa, and is within 20% of the national average.

The issue is the people, and how they choose to live their lives. And the 60 years of welfare state which has clearly failed them so badly (cf Glasgow East).

So what is our real moral duty?

It's surely to help them take responsibility for themselves. And for Moorside Road, that means above all else, increasing the financial incentive to work, and cutting the financial incentive to doss around drinking 22p lager and producing stacks of no-hope kids.

It also means freezing Labour's minimum wage (better still, abolish it). As we pointed out in the original blog, there are private sector jobs in Dewsbury, and there'd be a whole lot more if employers could pay rates which actually reflected the low productivity of their prospective new employees.

Our real moral duty here is not about more state hand-outs and trying to live other people's lives for them. It's about taking tough decisions like Clinton did over his welfare reforms. Decisions which recalibrate financial incentives and ensure individuals are not paid to harm themselves and others.

Yes, such decisions might produce some casualties in the short-term, but the US reforms have clearly not produced the catastrophe the left predicted.

And besides, nobody ever said moral duty was an easy option.

PS The minimum wage is a totem for Labour. And it's often argued that every civilised country needs one - "90% of countries have one, even the US". But the critical issue is really its level. Ours is now £5.52 per hour. In the US, the Federal Minimum Wage is $6.55, or just £3.29 - plus the US is richer. In places like Dewsbury, a minimum wage of £5.52 is almost certainly too high to expand labour demand for low-skill workers.

PPS Accompanying Rockin' Al's speech today is the latest official estimate of what obesity costs the rest of us - we're apparently now up to £50bn in NHS costs alone. As regular readers will know, these estimates get bigger every time they're wheeled out. Just two years ago, then Fit Minister Caroline Flint told us the NHS costs were £1bn pa. But virtually simultaneously, the then Dear Leader told us the costs were £4bn pa just on treating T2 diabetes. Compare and contrast with the NAO's 2001 estimate of £0.5bn pa. Pick a number: any number, as long as it's A Big One. (NB Tyler wishes to disassociate himself from the Major's recent appallingly fattist and sexist remarks to the effect that our ex-Fit Minister is "fattening up nicely").

Wednesday, July 23, 2008

Yet More On Crime Stats

Can't you see I'm busy

Look, cards on the table - I don't like feeling I might be stupid.

So I've been digging further into the crime stats, trying to discover whether we should perhaps take them a bit more seriously, just like the Prog Con says. So far I haven't found anything that convinces me, but I have stumbled across a couple of interesting snippets.

1. The X-files theory

Prog Con spokesman Mark Easton reckons sceptics like me are in the grip of an X-files style conspiracy theory. Apparently we believe:

"...the figures are lies, manufactured by corrupt politicians. This conspiracy theory requires us to believe that literally thousands of professional statisticians, police officers, academics and civilian staff are fiddling the data for no personal gain and in some cases risking professional suicide. I have met no-one who has produced a shred of evidence that the numbers have been got at."

Hmm. Assuming Easton actually believes this, and isn't just wheeling out a Sixth Form Debating Soc straw man, he's clearly never spoken off the record to a serving police officer. Maybe he should check out the world weary Inspector Gadget discussing what happens in the real world of police crime stats:

"Almost exactly one year ago, I wrote about Section 5 of the Public Order Act (popularly known as Threatening Behaviour).

Section Five is classified by the Home Office as a ‘violent crime’.

When the Government want to reduce crime, it is important that we stop arresting offenders for this, and use Drunk & Disorderly arrest powers instead. D & D does not show up on Government statistics.

Thanks to this (and other Spanish Practices) the Government can now show a reduction the amount of crime.

It now becomes important to show an increase in the detection of crime. We have now been told to start arresting for Section Five again. We can detect this with one of the laughable new Penalty Notice tickets.

So now we suddenly find that Section Five is back in fashion. It is the new ‘black’. ‘Senior Officers are just insisting on it darling!’

Is that a "conspiracy"? Tens of thousands of police officers gaming the recorded crime stats in order to advance their professional careers?

I prefer to think of it as what inevitably happens when politicos try to manage everything from Whitehall via stats and targets, rather than allowing local communities to control their own policing.

But it does mean you should never trust what the recorded crime stats say.

2. Can you spare a few minutes... er, hours?

We hear a lot about the British Crime Survey - the government's opinion poll - but how many of us have actually seen it? I decided to take a peek.

Blimey! It turns out to be huge - 285 pages of questions. 285 pages!

So you're sitting at home watching the Midsomer Murders.

Ding dong.

You shuffle to the door.

"Whatever it is I'm not interested. Go away before I set the wife on you."

"No, hah-hah, I'm not selling anything. No. I'm from the government and I wondered if you could spare the next three hours to answer 285 pages of questions, many of which are extraordinarily repetitive and/or grossly intrusive?"

"Why, that's different. Yes, of course, I'd be delighted to help. Do come in."

So who do they get to answer? They say there's an overall response rate of 75% (2006-07), which sounds reasonable. But who are the ones who don't respond? I've certainly never come across anyone who's done it. Why should you? It's not compulsory and it takes nearly an hour.

They say that reponse rates are highest in rural areas, and lowest in inner cities, especially London, where the overall response was only 62%. Which surely means they under-represent the crime blackspots, doesn't it?

Well, yes, of course they can adjust their sample weights to compensate, but you can never be absolutely confident you've compensated properly for information you don't have. The Home Office puts a +/-3.5% statistical confidence interval around its estimate of total crime (an uncertainty margin that rarely gets mentioned by ministers). But that is not the sum total of the uncertainty.

As always, you don't know what you don't know. What if there's a hidden relationship, which seems quite likely, between willingness to respond and experience of crime? Surely then crime will be understated in the survey. Or maybe overstated. Or maybe... in truth, we have absolutely no idea.

To be continued...

Smashing Up The Taxman

Integration strategy in action

As regular readers will know, Gordo has done incalculable damage to Britain's taxman (eg see this blog).

It was Gordo who smashed together HM Revenue and HM Customs and Excise into mega department HMRC (directly answerable to him) with absolutely no idea how it was supposed to work; it was Gordo who dreamed up taxes (and tax credits) of such mind-boggling complexity even his officials can't fathom them; and it was Gordo who imposed the half-baked Gershon cuts on an organisation already reeling from all of the above.

The entire HMRC operation is now in chaos, barely able to lurch from one crisis to next.

We've blogged this many times of course (eg see here and see also Ken Frost's splendidly restrained dedicated blog HMRC Is Shite). But it's worth recapping:

  • Tax credit fraud and overpayment - currently running at £1.3bn - £1.5bn pa (7.2% to 8.4% of the final value of awards (see here)
  • Missing Trader VAT fraud - last officially estimated at up to £1.9bn pa (see previous blogs, eg here and here)
  • Incorrect tax assessments - 1.6m people over or undercharged income tax as a result of processing errors at HMRC. The total sum involved was £0.6bn, or around 400 quid each
  • Inadequate accounts - HMRC accounts have just been qualified by the NAO for the sixth successive year - any private sector company that bad would have been closed long ago and the directors jailed
  • Hopeless IT systems - over 250 separate "major" computer systems (actually, some estimates say 850 separate systems)
  • Ramshackle organisation - hundreds of disparate local offices
  • Wildly unrealistic Gershon staff cuts- Pacesetter programme cutting 8,500 jobs soonest
  • Half-baked management- introducing "lean production" methods, originally designed for car manufacturing, and including whacky rules for positioning bananas on desks
  • Rock-bottom staff morale- some offices now suffering annual sick leave averaging 23 days, or nearly five weeks pa (the private sector average is just 6 days pa); so many people have left, some offices are 25% staffed by temporary contractors
  • Non-existent security - 25 million personal records, including bank account details, gone walkabout... and that's just the known known.

This is an operation so bad, it's on its third head in two years, the last having been "resigned", and the one before that having been abruptly "moved". Mind you, that didn't stop the last one getting £400,000 compensation for said "resignation" (see this HMRC Is Shite post). Nor did the unmitigated catalogue of disasters stop HMRC staff receiving bonus increases of 60% last year.

Now, the National Audit Office has just taken a look at HMRC's "Transformation Programme". Its findings are not very pretty.

The much hyped Transformation Programme is going to cost us £2.7bn (including the usual wad for consultants), and is supposedly going to bring benefits of "£11.5 billion by 2011, giving a benefit: cost ratio of 4.3:1, with further benefits beyond that date".

Hah hah.

Does anyone believe that? No, of course not.

According to the NAO, the truth is that the programme is all over the place, a bundle of vague hopes rather than a clear plan for getting stuff done. And although it's only been going since 2006, it's already had its budget seriously squeezed by Gordo, and has been chopped and changed a number of times.

Also, just like Gershon, it's been artifically plumped up by including all manner of detritus that has nothing to do with the grandiose Transformation Programme at all - projects that were already in train, "projects" that are little more than day to day management, etc etc.

But the bit that really catches Tyler's eye is the following chart. It shows HMRC's projections of the increase in tax revenue it expects from its punchy sounding Compliance and Enforcement Change Programme, against the loss in revenue it expects from staff cuts:

As we can see, the increase from the programme is put at over £4bn pa by 2010-11, more than compensating for the c£2.5bn pa losses anticipated from staff cuts. A net gain of nearly £2bn pa. Nice.

Except... umm... how much did they say they're going to save in salary costs from those staff cuts? According to para 2.21, 18,000 staff will go, saving £600m pa by 2010-11. So that's... Have I got this right? That's £600m pa saved on staff cuts, against £2.5bn pa lost on the consequent loss in revenue. Or a net loss of almost £2bn pa.

What genius thought that would be a good idea? Why would anyone cut staff if they lost more than they saved? Would Terry Leahy do that at Tesco?

And hands up anyone who thinks the genius reponsible should be in charge of tax collection.

Or anything else, come to that.

It's a classic example of Gordo micro management - he's set HMRC so many conflicting targets and boxes to tick, they've forgotten what it is they're meant to be doing.

These Foolish Things

Fooled by a gigantic nail

Picking up our disbelief about those "falling crime stats", Mr Fink tells us:

"Tougher prison sentences and tougher policing are working. Denying the facts only makes the Right look stupid...

...Why? Because the British Crime Survey is already, very precisely, a survey of what we “know” about crime. It is a statistically valid review of our experiences. That is the whole point of it. The rest is just anecdote. Are we seriously supposed to measure what is happening to crime by counting the column inches devoted to terrible stories about victims?

Crime is falling. Sorry, but it just is"

Interesting. Can he really think the BCS opinion poll is a "statistically valid review of our experiences"? Even though it's put together by Home Office officials who have an all too obvious axe to grind? And even though pretty well all high profile government figures are now routinely spun and distorted? And even though the government ignored the specific recommendation of the Statistics Commission that the BCS should be taken away from the Home Office and switched across to the ONS?

Fink seems a very nice man, but as George W is wont to say, "you can fool some of the people all the time, and those are the ones you want to concentrate on."

As it happens, there's another interesting article today on numbers and government targets. The excellent John Kay writing in the FT says:

"Performance in any but the simplest tasks has many dimensions. Focusing on a small number of these dimensions as targets directs attention on these at the expense of others of equal importance. The difficulty is compounded when there is a shared interest on the part of target setter and target recipient in asserting that the goal has been met.

The story of the Soviet factory that achieved a quota based on weight of output by manufacturing a single gigantic nail is no doubt apocryphal. But the story that ambulance crews that were set a target of meeting emergency calls within eight minutes met a large proportion of calls in seven minutes and 50 seconds is true. We do not know how far figures were doctored or the workload prioritised to enable the target to be met. All we know is that the reported statistics ceased to give useful information."

Now, that's the world we actually live in.

To spell it out, the reason we discount the BCS is that it's being used as a target scorecard, and it's compiled by the very same people whose performance is being targeted. It's a single gigantic nail that no longer impresses anyone - or at least, nobody I've been able to discover who's sampled the crime scene round our way.

PS Danny F quite rightly discounts the recorded crime stats. Not only have the counting rules changed twice in a decade, data collection is now seriously distorted by the police forces making the returns. For chapter and verse on the scams involved see Inspector Gadget. Yet another example of the gigantic nail syndrome.

Tuesday, July 22, 2008

Welfare Reform

One small step

On the face of it we should join the Tories in welcoming the welfare reforms announced yesterday by James Purnell. The headline reforms are:
  • Incapacity benefit to be scrapped... well, actually, no - it's just being renamed to the Employment and Support Allowance. But as we've blogged before, recipients will need to have tough new government "fit for work" assessments, with "the expectation" that "all but those with the most severe disabilities" will be required to get back to work
  • Jobseekers Allowance - after a year out of work, the able-bodied unemployed will be handed over to private sector contractors, who will have the power to make them work on community or other projects. If still unemployed after two years, they will be put to full-time work on collecting litter etc.
  • Migrants - including those from the EU - will not be eligible for incapacity benefit until they've worked here for at least 6 months
  • Private sector workfare contractors - as recommended in the Freud Report, commercial and voluntary job brokers will be paid by results to get people back to work.

It all sounds a step in the right direction.

But as others have pointed out, headline announcements are one thing, action is quite another. And reading the Green Paper, we can see that several of the key changes are not even planned to come in for years (and safely past the next election).

Take, for example, those private sector workfare contractors, who right now are everyone's Great Idea. Unfortunately, as we've blogged before, there's an awful lot of devil in their detail (eg see here). For example, how will the contractors be remunerated? How much? How much should fees be back-loaded to incentivise sustained employment? How will the contracts avoid cream skimming (ie the private contractor simply picking the easy cases)? And how on earth will the Simple Shopper manage all that, and still hire competent suppliers (cf the SATs fiasco)?

So what does the Green Paper say?

"The contracts with providers will be underpinned by a new and innovative financing arrangement between the Department for Work and Pensions and HM Treasury, which will allow the Department to directly capture the benefit savings, out of which providers will be paid, but offset by increased obligations." (para 3.27)

New and innovative financing arrangements? From the Shopper? Sounds very scary. No wonder the Green Paper says it will run a handful of pilot projects first, and that the scheme will not be "rolled out" nationally before 2013-14 at the earliest (para 3.28). A small detail that somehow didn't make it into the headlines.

And remember: all the billions that Labour has already spent on workfare - its New Deal programmes - have cost taxpayers more than we've saved in lower benefits payments and higher tax receipts. Yes that's right - they've actually cost us more money than we were spending already (see this blog on the Public Accounts Committee probe).

The redoubtable Frank is unimpressed:

"The first part of any serious reform should have been to create a single rate of benefit for all claimants of working age, thus taking away the perverse incentive to join the ranks of the officially long-term sick. Claimants with a disability would still be able to claim the disability living allowance - which all disabled people can receive, regardless of whether they are in work or not."

Spot on: as always, follow the money, especially when it comes to personal incentives. As for those new and supposedly tougher medical tests for getting onto IB, Field says:

"The Government may think that its new test is on a par with the Enigma Codes, but past experience shows that the best schemes that the Department for Work and Pensions can devise are quickly broken by groups of highly talented code-breaking claimants."

So overall score?

Purnell has certainly moved in the right direction (and has got the headlines to prove it). But the details are still flakey, and what he's not done is to copy the highly successful US innovations in time limiting benefits. Yesterday a BBC reporter opined that was because UK public opinion is more civilised than US opinion, and we would never condone such harsh measures.

To which we say, try us.

PS While we were away we missed the story of website Benefits and Work which for £95 gives advice on "how to milk the benefits system. Tips include making sure walking sticks look well used and ensuring people arrive at benefits hearings in a taxi, so it looks like they are too unwell to take the bus". Mind you, the DWP's own Jobcentres do a pretty good job on that score. Mrs T has a friend who in her fifties unexpectedly found herself back in the job market (don't ask). She went to the Jobcentre and, while they had absolutely zip in terms of suitable work, they were able to get her some superb advice on milking the benefits system. She was shocked at just how much she could get. So shocked in fact, she marched straight out and found herself a job within a couple of days.

Monday, July 21, 2008

Pump It Up

The drugs don't work

Once again the indefatigable Mr Dale is running his annual political blog poll, which will feature in his forthcoming and certainly indispensable 2008-9 Guide to Political Blogging in the UK.

He is now inviting your votes for the top ten political blogs, and you can vote by emailing your Top Ten (ranked from 1 to 10) to . Why, he's even offering entry into A Grand Prize Draw with the winner to receive £100 of political books!

Now normally of course, modesty would forbid canvassing your votes. But these are not normal times. Due to global factors totally beyond his control, Tyler finds himself in need of a serious ego boost. The sad fact is that even those drugs Pelé advertises on Latin American TV don't seem to work any more. The one remaining hope is Iain's poll.

Please... you must help.


We've blogged the Doom Industry before (see also Scared to death by Mssrs Booker and North). This morning we have its latest offering - a report from the House of Lords Intergovernmental Organisations Committee. It tells us we face an "inevitable pandemic" which will kill 50m people worldwide.

Now, unlike the people from the Doom Industry who've clearly scared the pants off their lordships, we make no claim to being Experts on pandemics. But we're left wondering why this "inevitable pandemic" should cause so many more deaths than the last two?

50m deaths is 50 times worse than the last pandemic in 1968-69 (Hong Kong flu), and 12 times worse than the the one before that (Asian flu in 1957-58). It's even worse than the devastating Spanish flu in 1918-19.

Yet science and medicine have advanced immeasurably, even since 1968. And in general, we're all so much healthier, which is why life expectancy has gone through the roof: in 1919, life expectancy in Britain began with a 5 - today it begins with an 8 (see this blog).

So what gives?

Other than the Doom Industry pitching for yet more taxpayers' cash.

PS Tyler has personal experience of flu pandemics, having lost his three-year old sister to Asian Flu in 1957. So he's very much in favour of spending on vaccine development. But global quangos like the World Health Organisation have shown themselves to be gigantic self-serving health and safety bureaucracies, whose main activity is to extract more taxpayer cash by scaring us to death. Their problem is that the more often the wolf fails to materialise, the more hysterical they become. They need a good slap.

Sunday, July 20, 2008

Vicar Giveaway

Ted, I just thought I'd give away the company

DfID's dubious investment quango CDC will be familiar to BOM readers, and now it's been probed by BBC R4's File On Four.

As we know, CDC (originally the Commonwealth Development Corporation) invests UK taxpayers' money in a range of projects in developing countries. Correction - it used to invest in such development projects. It now invests in private equity deals in India and China.


Well, you see, that's where the money is. Which thinking also explains why its investments are now made via the usual battery of offshore tax havens employed by any self-respecting private equity group: the last thing you want is to pay tax to the governments of developing countries.

Which is a further example of just what a con UK tax-funded development aid actually is (see previous blogs eg here).

But there's worse.

The fund management company that actually manages the investments, Actis, used to be in the public sector. But in 2004, under the astute financial guidance of the Rev H Benn, Vicar of DfID at the time, it was privatised. 40% was retained by DfID, but 60% was sold to the incumbent management. And you'll never guess what. Oh, you guessed... yes, it was done at a ludicrously knock-down price. According to FoF:

"A majority stake in the new company, which was set up to manage public funds of £1.5bn, was bought without competition for £373,000. Also, there was a post-transaction bonus paid of £2.3m. So they the management didn't risk any of their own money."

Fantastic. The Vicar paid them a post-transaction bonus - normally paid as an inducement to senior staff to stay with a company while it's sold - and they then used a small part of that dosh to buy the company. Sweet.

Surely even Father Ted's dopey sidekick wouldn't have agreed to such a soppy deal.

But there's even worse.

According to FoF, the Vicar convinced himself Actis was going to operate on a breakeven basis for the first five years. But guess what actually happened. Oh, you guessed again... yes, that's right, Actis has somehow already made tens of millions which have been divvied up among the partners. In one year alone, the top guy got £2.1m, compared to the £200K pa he used to get as a "public servant".

According to DfID, Actis is operating on a breakeven basis. But apparently it's only breakeven after paying out the partners and paying for their plush new Thameside penthouse offices.

Verily I say unto you, it is easier for a private equity partnership to enter into a heavenly deal with the Simple Shopper than it is for taxpayers to find even the slightest competence in government.

Here endeth the lesson.

Though not the misuse of our money.

PS The NAO are now investigating - should be interesting.

Update As commenters have pointed out, the credit for uncovering this outrage belongs to Richard Brook of Private Eye, who has been pursuing the story relentlessly. It was appallingly remiss of Tyler not to say that, for which many many humble apologies.

Saturday, July 19, 2008

Nothing To Worry About

Look, I'm sure it's nothing to worry about, but the Major's just been round with a couple of mpegs he's ripped from You Tube.

The first is the EU... er, "National Anthem":

And the second is some tune legendary conductor Wilhelm Furtwängler played in Berlin on the occasion of the Fuhrer's birthday in 1942.

The Major reckons they're both the same tune, and is highly agitated.

I'm sure it can't be anything to worry about.

Great Turning Points In History

Fiscal Götterdämmerung - but the fat lady hasn't quite sung yet

As we've noted more than once, back on the doorsteps in 2005 the proposition that tax was too high just didn't land. You couldn't give it away. In those dark days, the tax and spend consensus seemed all-powerful, especially once Dave had taken charge of the Tories. Low tax zealots like Tyler got so depressed we formed secret societies pledged to keep the flame alive. We gritted our teeth for a long hard slog, with nothing to offer but blood sweat and immolation.

But wow! Just three short years later, we've suddenly burst into the sunlight. That all-powerful consensus has crumbled at the first serious assault. The tax and spend game's up, and politicos of all colours are running for cover.

This week we've had the high tax Lib Dems promising tax cuts - tax cuts! - and this morning Chancellor Darling says:

"There are a lot of people in this country who feel they work hard, they make their contribution and they’re feeling squeezed. People will accept that they have got to pay for the schools for their children and for the hospitals in case they get ill, but they want to make sure the Government is fair about taxation. Every Chancellor has to be very conscious that there is a balance to be struck between how much you can spend and how much people will say, ‘OK if you’ ve got another pound to spend remember me as well’.”

Ah, well... hmm... OK, maybe the fat lady hasn't quite sung yet. "Fair about taxation" doesn't exactly sound like the clarion for lower taxes.

And just clock the way he thinks about whose money he's spending. Do taxpayers really say to him "if you’ ve got another pound to spend remember me as well"? If they do, they need some serious re-education. These aren't Darling's pounds to spend, they're OURS. Every single penny he spends, he's taken from us, the people who've earned it. He's the one who should be asking us for money, not the other way round.

Is that so hard to understand?

If so, repeat to yourself 500 times:


And where's Dave on this?

During the week he talked depressingly of the possible need to increase taxes when he gets in. He may be right. The dark forces of Gordo are going for fiscal Götterdämmerung between now and 2010, and the mess will be stomach churning. But what we'd really like to see is more flesh on the bones of George's longer-term fiscal rules: great that they'll be independently monitored, but "sharing the proceeds" remains vague in the extreme.

PS That Clegg pledge to cut taxes is contingent on finding £20bn of "efficiency savings" - ie it's to be funded painlessly so far as taxpayers are concerned. Sadly, in the real Yes Minister world, such "efficiency savings" never ever materialise. As regular readers will know, the massively hyped Gershon exercise turned into an expensive joke, which actually increased spending in some areas. The only sure way of making savings is to close down activities altogether (eg the useless Regional Development Agencies, or the equally useless British Council... there, I've just saved £3bn pa).

Friday, July 18, 2008

Wise Men In Semi-Detached Reality

They're really sorry now for what they've done

They were three wise men just trying to have some fun...

And now they've escaped from Gordo's iPod

So who were the three - for want of a better term - "wise men" who concocted Gordo's Gold? Well, there was Gordo and Balls of course. And then there was the Third Man, now known to be Geoffrey Robinson. In case you don't know, he's a multi-millionaire ex-Paymaster General who owns the Park Lane penthouse where most of this nonsense was cobbled together before the 1997 election (he's also the high-roller who bunged Mandy for £373 grand - a snip at the price).

Robinson's been on the wireless today saying that the Fiscal Rules should be abandoned. After all, we are in unprecedented conditions totally beyond anything that could possibly have been foreseen. Global kreditkrunch, oil and commodity prices, giant snakes roaming the streets... nobody could have anticipated any of that.

Oddly, the fully and comprehensively independent chairman of the Treasury Select Committee, John McFall (Labour and Cooperative MP for West Dunbartonshire) agrees. He says since Brown's "Golden Rules" were never any more than an arbitrary collection of numbers designed to fool the electorate and the City into thinking the economy was safe in Labour's hands, what the hell?

Quite extraordinarily, Darling also agrees, pointing out our borrowing relative to GDP is much less than most other major economies, so what the hell?

And on the face of it, they're right. Here's a chart showing the European Commission's track of where our borrowing ranks relative to the EU average, and against the Maastricht limit of 60% of GDP (data here and note that Eurostat's definition of government debt is gross, whereas HMG nets off borrowing to finance various loans and investments):

So yippee! We're out of jail free. we could increase debt by at least another 15% of GDP and we'd still be within the EU's Good Housekeeping 60% rule: that's at least another £200bn of borrowing we can do.

Hmm. Before breaking out the celebratory Vimto, we ought to note a couple of key points.

First, the average of other EU economies has been coming down, whereas we're most decidely going up. Do they know something we don't?

Second, the official debt figures barely scratch the surface of our real debt. As we've blogged many times, once you add in all Gordo's off-balance sheet Enron debt - like PFI and public sector pensions - you come to a very scary total for our real debt. Last time we ran the calcs, we reckoned it amounted to £1.85 trillion, or 130% of GDP.

In the immediate future our debt is heading up whatever Gordo may say or do. It's clear from last month's public borrowing numbers that tax revenues are falling way short of what was forecast. Just three months in, we've already borrowed more than half of the total forecast borrowing for the entire fiscal year, and short of an emergency tax raising budget (OMG), borrowing is going to overshoot.

Does it matter?

Keynesian economics says in a recession governments should cut taxes and increase spending. And that sounds kinda reasonable. Except that 30 years of accelerating post-War inflation eventually told us that in practice, governments are not much good at it. They'll do the reflation bit all right - fine, no problem - but then they find it impossible to rein back again when times get better. Instead, we get a upward ratchet in the size of government, and a downward ratchet in the wealth generating part of the economy.

Brown's actually done even worse than those post-War governments. He ramped up spending during a boom, and now has nothing left for a recession.

In the pit of the early-80s recession, Maggie increased taxes to put the public finances back on track. It wasn't very popular - not least with academic economists -but she was at least grappling with reality (she was also laying the foundations for twenty-five years of prosperity). This lot wouldn't recognise reality if it crept up and bit them on the James Blunts.

PS D'you reckon Gordo has Blunt on that famous iPod of his? Blunt certainly sounds more likely than the Monkeys, and just like Gordo, he attracts nothing but criticism (well, apart from his multi-million record sales that is).