Recovering from the McKinsey 'disease'

The almost complete disappearance of Gordon Brown from public life has done little for his reputation.  Without him around to remind us of the huge contribution he made to staving off financial collapse, all we remember was his Sauron-like tendencies - the all-seeing eye, the moments of jealous rage.

Yet it is worth remembering that, as Chancellor and Prime Minister, it was Brown who presided over what I have come to regard as the most disastrous years for public services - the hollowing out, the digital nightmare, the targets and detailed management from the centre, the disempowering destruction of frontline initiative.

The coalition has only begun to counteract this, partly by default - by creating a funding crisis in frontline care and releasing the energy locally to innovate.

Unfortunately, the coalition's record on benefits has gone in the other direction, mainly because they have accelerated in the same direction that Brown laid down - disempowering targets, no local discretion, systems which can't deal with diversity.

The question is: has Ed Miliband's leadership been able to hammer out a new way forward for public services in a time of austerity?  The answer, as a fascinating blog by Rafael Behr on the New Statesman site suggests, is no ('Miliband's sheet is still blank on public services')

As Behr suggests, this is partly because of the legacy of the Blair/Brown struggle, but it is also partly because Labour remains a centralising force in UK politics.  They have not begun to face up to the problems of their legacy in public services.

Only Jon Cruddas seems to be making an attempt with his concept of the 'unresponsive state'.

Of course, this is all disputed territory - even if it isn't disputed very much in Westminster yet - but ideas are beginning to shift.  Even the author and cause of the unresponsive state itself, the management consultants McKinsey, seems to be having a bit of a re-think.  This is what they said:

"Government by design calls on public-sector leaders to favor the rational and the analytical over the purely ideological, and to be willing to abandon tools and techniques that no longer work. Four principles are at its core: the use of better evidence for decision making, greater engagement and empowerment of citizens, thoughtful investments in expertise and skill building, and closer collaboration with the private and social sectors. Each of these principles is central to creating more effective yet affordable government."

Quite so, but a closer examination reveals that they have only half understood the way the world is changing:

1.  They are too obsessed with data.  Yes, data is important, but there is no point in data if there are no systems and no people to use it.  So much energy goes into monitoring older people at home, and so little - so far - into how to prevent the alarm going off in the first place.

2.  They miss the human element.  The vital element in modern services is a fully responsible, innovative front line cadre of staff, able to take action flexibly so that they can deal with diversity then and there.  McKinsey doesn't yet get the power of 'human by default'.

3.  They are still in thrall to Goodhart's Law.  Which, as you may remember, is that any measure used as a control will always be inaccurate.  That is the problem with the Moscow city 'dashboard' of indicators they praise so highly.  If these are targets, then the figures will simply measure the ability of staff to massage the figures.

But let's give McKinsey their due.  They are beginning to understand the importance of co-production, where service users and their families and neighbours work alongside professionals to deliver services.  They praise the New York 311 system, quite rightly, but don't yet take it to its logical conclusion: that everyone has something to offer that is vital for the success of services.

In those circumstances, a website just isn't enough.  There needs to be some kind of infrastructure that makes this partnership possible, it needs to be extremely local - and it will only work, to start with, if it is human and face to face.

The McKinsey disease - that all effective action is strategic, distant and arms-length - wreaked the most devastating results in UK services during the Blair/Brown years.  They are beginning to shake off the infection, but they are not there yet.

Perhaps they need to take their own advice and "be willing to abandon tools and techniques that no longer work".

This is the last blog before Christmas, so thanks so much for reading over the year.  See you in 2014!  Subscribe to this blog on email; send me a message with the word subscribe to dcboyle@gmail.com.  When you want to stop, you can email me the word unsuscribe.

The slow, inexorable decline of Tesco

The queues to get in and out of the Lidl car park in Norbury this morning are disturbing to behold, and the news that half the UK population visited Aldi or Lidl - the discount supermarkets - in the last 12 weeks does concentrate the mind wonderfully.

It does so because, among others, Tesco has always been the Great Satan as far as I'm concerned, the very symbol of a corporate that has been allowed to get too powerful, and which corrodes the UK food industry as a result.  It is a glimpse of the emerging world of semi-monopoly.

Only a few years ago, I wrote an essay which imagined a kind of Lion, Witch and Wardrobe future where there are only two companies left in the world, one of which is TescoVirgin.  You can read it in my book The Age to Come.

I still fear the emerging monopolies, but my guess is that Tesco won't be among them because - despite everything I said - there is still capacity for competition in the supermarket sector.  Aldi and Lidl have pushed Tesco below its 30 per cent market share.

They will go down slowly because of the virtual monopolies they have managed to build up in so many times, but they will go down.

Because if you want to shop somewhere where there is nobody to help you, and the security guards keep you obviously under observation, then - well, you might as well go somewhere cheaper.  If you want a shop without soul, then why not go to Lidl.

They are the Woolworths of the 2010s.  We will see their like again, and it will be Aldi.  This is not an optimistic prospect, as half of us now know - it is the least sensitive to local markets of any supermarket model.  Go along to your local discount store, and see the downside of the vision of the future.

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The big question nobody is asking

I always read Anthony Hilton's finance column in the Evening Standard, and I always learn something from it.  He doesn't regard the duty of a financial columnist, as some do, to cheerlead for the financial sector.

So I was especially pleased to see his column earlier this week, writing about the Institute of Fiscal Studies (IFS) and their report suggesting that people born in the 1960s and 1970s would be less well off than those born in the 1940s and 1950s.

I was born on the glorious cusp: 1958, which makes me sitting marginally pretty - though not as pretty as my friends who went into financial services or IT or who took out risky mortgages.

But the reason I read the column with some relief was that he was asking the right question, and pretty much the same question that I put in my book Broke: Who Killed the Middle Classes? earlier this year:

"What no one has done is question how this can have come about. The older half of this disadvantaged cohort born in the 1960s would have entered the workforce in the Thatcher years of the 1980s. This was the time when the North Sea turned the UK into the world’s fourth-largest oil producer. It was also the time when Thatcher was allegedly transforming the British economy from being the sick man of Europe to being the envy of its rivals... So where did all the money go? If Thatcher really did change the British economy for the better, how come the generation that spent most time working in it is worse off than the generation earlier, which had to make its way in the 1960s and 1970s? That was when taxation was much higher with the top rate of income tax at 83p in the pound, the debt-to-gross domestic product ratio was much higher, inflation ran at up to 26 per cent, and the nation was saddled with all those lame-duck industries which, according to the Thatcher mantra, could no longer pay their way in the world..."

That is such an important question, in fact, that you can see why it isn't being asked in establishment circles - because it would require such serious self-examination that it might be painful.

Asking us to question the Thatcher-to-Brown legacy certainly doesn't mean anyone wants to embrace the 1970s again (though we do seem to be doing so in some ways).  But it does mean that we have to look fearlessly at the legacy of the so-called trickle down effect, because - although so much of our national policy is still based on this idea - it has manifestly failed to trickle.

Broke is coming out in a new, cheaper edition in mid-January, with a new subtitle (How to Survive the Middle Class Crisis), a new chapter and a new cover.  It gives me the chance again to ask that same question in as many ways as I can think of - and to do so, I hope, in such a way that I don't get pigeon-holed as a socialist nostalgic for the Spirit of '45 (I am absolutely, definitely not).

The truth is that this is the very beginning of a shift in public policy that will be painful and exhausting, but is nonetheless overdue - a re-setting of the controls that happens every three or four decades or so (1940 and 1979 were the last ones).

The reason it will happen is that it is becoming increasingly clear that the existing system is not delivering - except under the self-referential measures of success that we cling to so blindly.  

This isn't about the success or failure of austerity.  It isn't about growth figures or leaping free of the recession, or the jobs figures - all of which are pointing in the right  direction.  It is the basic underlying theory behind it.  It isn't working.

Why London has become a bit vampiric

The great vacuous bubble of ambition that is Boris Johnson doesn’t seem to get the point of Vince Cable’s remarks about London – “a giant suction machine draining the life” out of the English regions.

Neither does the Evening Standard. Boris has hit back explaining that London is generating more of Britain’s GDP than ever, without apparently realising that this is exactly the problem.

London is an economic vacuum cleaner, sucking up the available people, investment and ability to earn from everywhere else. That is why the economy still needs re-balancing.

Of course, the ability to earn for the exchequer is hardly unimportant. Somebody has to do it. But taken it to its logical conclusion, as Boris seems to be urging, the tyranny becomes clear: where London earns on everyone else’s behalf and the rest of the nation lives on its largesse and hand-outs, a miserable put-upon, berated semi-slavery.

It isn’t sustainable or economic, and it isn’t humane.

Meanwhile, the Great Vacuum Cleaner continues to suck – airport capacity, financial services, people, talent, knowhow, culture. And this isn’t just a Boris problem either – his predecessor, Ken Livingstone presided over a selfish policy to deliberately increase the population of London.

What he doesn't seem to have thought about was who was going to build the necessary schools.  As a result, we queue to get out of the tube stations just as we queued to get in.  The stress on the system is increasingly obvious.

Vince was articulating an important message, and it is also a traditional Liberal one. This was Lord Rosebery, the former Liberal Prime Minister, speaking about London in 1891:

"Sixty years ago a great Englishman, Cobbett, called it a wen. If it was a wen then, what is it now? A tumour, an elephantiasis sucking into its gorged system half the life and the blood and the bone of the rural districts."

Ebenezer Howard's book Garden Cities of Tomorrow quoted Liberal politicians describing London as a Moloch, gorging itself on the blood of youth.  Ask yourself, as Rosebery did, what is it now?

The truth is that London has become a kind of vampire, sucking in not just the wealth but the ability to create wealth.  Nor is an overheating, overcrowded Londion much fun to live in either.

Towards more experimental money

The news that UK banknotes are going to be made of plastic has got more coverage than it really quite deserves.

Canadian dollar bills have been made of plastic for years (when they are worn out, they get made into plastic wheelbarrows). This is not monetary news, especially since notes and coins now only make up about 3 per cent of money in circulation.

But it happens to coincide with a very interesting and thoughtful report by the Bank of England’s bank note department about the likely impact and future regulation of local and complementary currencies.

The officials who wrote it know their stuff. They have read the right things and the report is worth reading.

They are also right that the existence of a few local currencies in the UK – the Bristol pound and Brixton pound are the best known – have not yet made a major impact on local economies.

But things are stirring out there. The European initiative, Community Currencies in Action is now up and running and increasingly bringing together the knowhow across the continent,  The ambitious new currency in Nantes, the brainchild of the French prime minister, will soon be making loans and supporting small business.

And of course there is an urgent need for new mediums of exchange that are disconnected from the euro in the struggling regions of southern Europe.

There is an obvious new approach to monetary politics emerging which is neither clinging to national currencies, nor subsuming national sovereignty into 'optimal currency zones' which actually turn out not to be optimal at all.

It is an approach where parallel currencies circulate alongside each other, keeping people alive in Greece or Portugal, for example, while the euro debts are paid off.

The coming political disaster in Europe will be a subject for this blog next year (and probably rather too much), so I won't bang on about it here – but multiple currencies way to rebuild.

Quick note on bitcoin. Yes, it proves the basic case that other currencies are possible, regionally, locally or internationally.  No, I personally wouldn't use it – I don’t trust it to keep its value.

Which brings me back to the Bank of England. Their main concern is that people will confuse local currencies with national ones and believe they have some kind of regulatory protection. This is an information problem and is solvable.

Their concern, which they admit is theoretical, that local currencies could be inflationary.

This is true. But inflation in a local currency involves a catastrophic loss of belief, which kills it.  It doesn't work like inflation in a national currency.  It does not, even theoretically, spread into the national currency. That is its virtue, and why these tools are potentially useful.

From what I see, after writing about this field for more than two decades, is that there is now the beginning of a body of knowledge, practical and theoretical, and a cadre of people who know what they talk about (I’m not talking about myself either).

What complementary currencies urgently need is a licence to experiment, to push forward the boundaries of monetary possibility.

My fear is that the Bundesbank or some of the other central banks of Europe, which have a more Napoleonic approach to this, would tend to regulate the emerging sector out of existence. The Bank of England may be the only one that really understands the importance of experiment.

What I hope is that they will now take a lead in bringing together their continental colleagues to find a permissive framework that will keep the regulators happy - but allow experiments to press onwards.

Because, even if multiple currencies don't yet exist on the scale they would need to if they are going to have a real impact on people's lives in struggling local economies – they could do. That's enough for me.

When the media colludes with news management

I have only two comments on the interim findings by Howard Davies about airport capacity in the south east, which was sort of disappointing - because it seems to make no reference either to climate change or to the coalition's promise not to expand Heathrow made when they came to office.

First, just to ask - are there any limits at all to the expansion of air capacity?  Is there any point where we would say that, despite the supposed rewards, the cost - in destruction of homes, lives and well-being - is just too high?  Because if there is, let's say so now and make sure we stick to it.

Second, that I'm not sure this emphasis on noise is really the point.  Yes, the noise stress that Heathrow imposes on West London is huge, but does it really make any difference if we change the climate to do so quietly?

But the really infuriating thing about the debate today has been that it has allowed the banks to avoid discussion about their postcode lending data.  Which is presumably why they announced so recently that it would be published today.

Only one major newspaper seems to have covered the story, and then it was just about the mortgage data - there is more money in outstanding mortgages in London than in the whole of Wales, I gather.

Given the house price bubble, this is hardly surprising - but there is a far more important angle they seem to have mislaid.  Why has the media been so craven in their failure to cover the story?  I'm aware that they are sometimes unable to concentrate on two things at once, but this is important.

What really caught my attention was the figure that London and the South East account for 34 per cent of small business lending.

Now that is important.  The British Bankers Association list these figures very carefully next to the estimated turnover of SMEs in that region, which is broadly similar, but you have to ask what comes first - the chicken of small business turnover or the egg of small business lending.

Maybe the other regions have such low levels of SME activity is precisely because they are so badly served by the banks.

If that was so, we would know what to do about it: find ways to make sure the big banks pay for a lending infrastructure that is capable of shaping a new generation of SMEs.

But why aren't these things being discussed today?  If the banks had requested media outlets not to cover it, I'm sure they would have refused.  But all they have to do is release the data on Heathrow Airport day and the media gets discombobulated.

It is rather pathetic.  Because this is the urgent debate we need to have about how to genuinely re-balance the economy.  And our futures all depend on it - and far more than the question of whether BAA is able to re-organise its landing slots to include Chinese flights.

This might be the secret to unlock local economics

It is all a matter of cause and effect.  Does lending to small businesses create an SME sector, or does the lending happen because there is a small business sector there already?

That may seem an abstruse angels-on-the-head-of-a-pin question, but it goes to the heart of the issue which looks set to be revealed tomorrow: the long-awaited, little-debated, tremendously creative moment when the UK banks reveal the geographical spread of their lending.

Which, thanks to the efforts of Lib Dems in the House of Lords - Baroness Kramer and Lord Sharkey - will be down to postcode level, about 9,000 of them.

Tuesday will see one of those moments which may prove a turning point in the development of an effective UK banking system.

The position of the big banks was flagged up in the Saturday papers, because they fear the reaction.

It would be a pity of their transparency, even if it was enforced over a barrel, was used as a stick to beat them.  But we must not allow either politicians and bankers to avoid the key issue: it will show - by the huge diversity of lending in different areas - that some areas are not well served by the big banks.

We have to be clear that this is nobody's fault.  The problem is that they are no longer geared to lend to small businesses, except apparently in the south east.  The issue is what we do about that.

And here we get to the nitty-gritty.  This is what the Daily Telegraph wrote, quoting banking 'sources':

"Sources said that the reason much of the money went to support SMEs in the South East was because there were many more businesses in that area."

Maybe that is true, but maybe the causality is the other way around.  Maybe there are so many small businesses in the south east because there is a responsive lending infrastructure there.

Just imagine if that was the case.  It would mean that we had a vital clue to how to rebuild local economies, sustainably and effectively.  It would mean that, as you might expect, people's imagination and entrepreneurial zeal was spread pretty evenly.

All we would need is an effective local lending infrastructure.  That must now be organised, and organised urgently, paid for by the big banks in lieu of the money they are unable to lend themselves.

The trouble with inspection

The NHS blogger Roy Lilley has accelerated his campaign against the Care Quality Commission (CQC), and he is now so influential that he may succeed in winding the old dinosaur up single-handed.

His blog earlier this week, with snippets he has been sent by NHS staff, was pretty devastating. Apparently, a coachload of 130 inspectors turned up to inspect Barking & Dagenham hospital last week.

Yet there were the complaints in other places (not B&D, as far as I know) that, because there had been a tip-off about the arrival of inspectors, staff numbers had been doubled for the day – with managers on the wards handing out biscuits.

As Lilley says, inspection doesn’t drive up quality. Quite the reverse; you can just imagine how much energy has gone into working out when the inspectors would arrive.

But what really caught my attention was the automatic email from CQC, written in response to the complaint about the tip-off:

"Please note that should we not hear back from you within the next 7 working days, we'll assume that you no longer require our assistance. Should this not be the case, we'd request that you resubmit your original email detailing these concerns plus the important details we've requested above, and we'll be happy to assist you."

Now, here, in a nutshell is what happens when government shifts over go digital-by-default. You get the kind of automation dreamed up, if not by someone from McKinsey, then by the McKinseyite demon that stalks the corridors of Whitehall.

It is digital-for-the-convenience-of-the-managers, digital-unrelated-to-the-central-objectives, digital-to-obsess-about-irrelevant detail, digital-to-disempower-the-outside-world.

You do need an NHS watchdog, but there is no point if it just watches and never helps improve. There is no point if it never barks for political reasons.

The real question is this: if targets and inspection shift energy so much in the wrong directions, and away from holistic good care - where are the levers that managers or politicians can use to shift the system.

Friends and Family tests?  Yes, but that isn't the same as quality; though it may be an early warning system.  Minimum standards?  They then tend to act as maximum standards?  

This is the great unanswered question.  How do you roll back from the McKinseyite transformation of public services so uselessly into assembly lines?  I don't know the answer, because it needs to combine the maximum of local creativity and imagination with the maximum of rigour, and it isn't clear how they can be combined.

But although I don't know the answer, I think I know where to look.  It means that transparency assisted by small units and local control, and a powerful leadership for imagination from the centre.  Yes, it is all about culture change - which is difficult, since we have fostered a disempowering culture of compliance.

Why testing seven-year-olds will backfire

A generation ago, the former Bank of England director Sir Charles Goodhart developed what is now known as ‘Goodhart’s Law’.

It was originally a principle in macro-economics, but it is now more usually used about the distortions of public service targets.  The principle is that numerical measurements will always be inaccurate if they are used to control people.

The reason is that, however incompetent staff may be, they will always be skillful enough to make targets work for them rather than against them. 

Take for example, the original response – more than a decade ago now – to the rule that patients shouldn’t be kept on hospital trolleys for more than four hours.  In practice, some hospitals got round it by putting them in chairs.  Others bought more expensive kinds of trolleys and re-designated them as ‘mobile beds’.

What I don’t think those of us who were talking about the impact of Goodhart’s Law understood, even then, was how deep the effects would be – and how devastatingly wasteful.

I got a clue a few years ago watching a documentary about airport security staff.  It was quite clear that most of their energy, by a long way, was dedicated – not to seeking out terrorists - but trying to spot the inspectors posing as members of the public.

Now imagine that same situation, turbo-charged by targets and payment-by-results contracts, in nearly every corner of public services, and you begin to see why they have become so ineffective – and so expensive.

It is, I believe, the great disaster of our services, and it may still bring about their demise. Let’s hope not.

So when the chief inspector at Ofsted, Michael Wilshaw, says he wants to bring back exams at the age of seven, we ought to separate out the laudable intention – to bring rigour to the crucial first few years of primary school – but we also need to look at the likely effects.

Goodhart’s Law says nothing about testing in itself.  The problems come when the results of that testing are used to control the behaviour of teachers.

Then I think we know enough to be able to predict.  Primary education will become dryer, more narrow, more suited to the results of the test.  It will become more alienating.

That is not to say that schools don’t need rigour or that teachers shouldn’t be held to account – or that they shouldn’t pinpoint the children who are being left behind (a symptom of a dysfunctional system where the schools and classes are too big).  Nor that these side-effects will happen in the best schools, as Wilshaw said.

The question is this.  How can you do that without hollowing out the system which is supposed to be inspiring children with the idea of knowledge and reading and the possibilities of life?

What we do know is that, so far, testing as a means of controlling the teachers leads to a technocratic approach that tends to leave some children behind.  The cure may well be worse than the disease.

And I also know this.  We desperately need to get beyond the current stand-off in education.  It turns children into pawns in a greater battle and future generations are likely to curse us for failing to notice the only possible solution – closer personal attention, more investment in people and relationships, and using the pupil premium for than, not more generous dollops of iPads.

What schools do to poetry sometimes

Did I like poetry when I was nine, I was asked yesterday?  I was asked, in fact, by my nine-year-old son.  I thought about it and could barely remember.  Then suddenly, a painful vision of myself aged nine reciting a terrible poem about a camel, flashed into my mind.

I was interested and pleased that the school is pushing poems at them, though my son is not.

Why not? I asked  What's wrong with them?

Because they only give us poems by Michael Rosen, he said.

Now there I could understand.  Actually, I have huge respect for Michael Rosen as a tireless populariser of good writing to children.  His work is fun and often funny, but he has spawned so many poor competitors that I could begin to see the problem.

Don't you like any poems, I asked?

Yes, he said: he liked the line: "In the land of Mordor where the shadows lie..." 

Now I am writing as a fully paid up Liberal.  I believe in education, but my kind of Liberal has to be pretty clear what that education is for.  It isn't to turn our children into cogs that fit more neatly into the system.  Nor is it to turn them into the shock troops going over the top in the battle of statistics with the Far East, or just to get their school to the top of the narrow league tables.

There are other kinds of utilitarian liberal who might say otherwise.  Not me.

None of those are bad things, but they are absolutely pointless if education doesn't move, inspire, shape and create imagination.  If it doesn't foster creativity.  If it doesn't help humanity evolve a little beyond the assembly line.

I know why the curriculum specifies poems-as-jokes, and fights shy of inspiration at the age of nine. I know why it fears anything more than talking down to the children. Yet my nine-year-old could be inspired with the right brand of Tolkein-esque romanticism.

It won't work for everyone, but then nothing will.  The alternative is the lowest common denominator screed of words that might capture their attention and make them smile for a moment.

Because, actually, I do remember my own terrible recitation experience.  My own poem I've forgotten completely, except for the word 'camel', but I remember every word of the poem that was recited after mine - Rudyard Kipling's 'The Way Through the Woods'.

This may be a character flaw of mine, but I was moved and inspired.  As a Liberal, opening that possibility has to be the kind of education I aspire to.

What's wrong with the special shop for poor people?

I remember hearing the visionary co-production pioneer Edgar Cahn talk about the defence of his National Legal Services Programme, the service that helped organisations to sue the government to enforce their rights.

He had urged the programme over the years to ask the people they were helping to give something back, but they never quite got round to doing so. Then suddenly, in 1994, there was a Republican landslide, determined to reduce the federal budget deficit, and a young maverick called Newt Gingrich was in the House of Representatives, looking for ways of saving money.

The Republicans had never much liked the Legal Services Programme anyway, so the scene was set for the inevitable congressional hearings before it was shut down.

Only the California Rural Legal Assistance Programme agreed to his giving back plan, and the programme was duly cut by a third and hamstrung in other ways. 

The hearings were held in Congress. But out of the three million people a year which the programme had helped for 33 years – that’s about 100 million households – not one client turned up at the hearings to defend it. 

A year or so later, Cahn’s own law school was also under threat. This was the District of Columbia School of Law, which was modelled on a teaching hospital. Students follow the proposals that Cahn put forward. They go out into the community and give legal help, but they don’t just give it. They ask for something back through one of the time banks in a Baptist church or in local housing complexes. 

It was a difficult campaign to win, given that Washington already had six law schools and a massive budget deficit. Even the Washington Post was calling for it to be closed. But hearings organised by the District of Columbia Council didn’t go the same way as the ones in Congress. 

Those who had been helped, and paid back, came out in droves to support the law school and it stayed open. Giving something back for the help they had received had made people defend the law school. Perhaps because it was more equal. It wasn’t charity any more.

Cahn describes this as the power of ‘reciprocity’. It provides an accelerating energy for organisations and businesses. Without those ties of obligation, and that sense of a relationship, the energy dips and dissipates; with it, the energy carries on. 

When there are these reciprocal links between people, the organisations seem to get a kind of stickiness about them: they generate a power to keep people involved.  More about this in my book The Human Element.

I thought of that when the Daily Mail reported yesterday the emergence of a new kind of community shop which has just opened in Barnsley.  It is just for people on benefits, and only 500 can join.  It sells food rejected by the big supermarkets because of minor packaging mistakes, and which would otherwise go in the anaerobic digester, and it sells it at 70 per cent less than the supermarkets.

The shop has come in for criticism in some circles, as you might expect for a special shop for poor people.  I don't share their concern, except in one respect: there is no reciprocity.

That is why it seems uncomfortable.  Without giving back, perhaps by working in the shop as co-owners, perhaps in some other way, the shop would provide some dignity and standing for those using it.  It would build energy and become a community; without that, the energy will dissipate.

Without any reciprocal involvement it is just charity, and charity - as Mary Douglas put it - tends to wound.  If you just accept charity and give nothing back, it undermines your dignity and  sense of self.  In short, there may be an opportunity missed here.

The Barnsley community shop is a template for another 20 branches due to open around the country.  It is a good idea, enlightened and important, but it is missing something that could make it transformative.

Turning the PR industry on its head at long last

Lord Leverhulme famously said this about advertising: "Half the money I spend on advertising is wasted, and the problem is I do not know which half".

If that was true of advertising, then how much more true of it in public relations. You would be lucky just to waste half your money, certainly if you add up the retainer, the vast amount of wasted stuff pushed into envelopes, the sheer irritation of PR as conventionally delivered.

I speak as someone who has been too often on the wrong end of PR. I remember, in the days when I was editor of Town & Country Planning in the late 1980s, I came to learn which envelopes should go straight in the bin. Among them were the wads of press releases published by the British Standards Institution, and delivered to me and thousands of others, at vast expense.

All of this mild rant is a way of explaining why I was excited to see a new model emerge, and I need a bit of transparency here - the co-founder, Kate Vick, is a friend. But I think she and her business partner Alie Griffiths have hit on a big idea when they launched One Day a Month.

PR is so much more complicated than it was when I used to open envelopes and get press releases. Who in their right mind uses press releases these days, except as a way of controlling what their spokespeople say? Social media opens the whole thing up.

The reason I was interested in this is that it is a potential game-changer in the PR industry, opening it up far more widely - and to people who would never accept, and can't afford, the usual way of doing things.

And it doesn't rely on IT. This is a new model the old-fashioned way: a new conception of how business can be organised. It can work...

Why our cities are going to change

I spent the last few days of last week teaching at Schumacher College. My task: to talk about how to change the world.

This involved talking about how to get politicians onside, and what makes them tick as a breed, and I found myself taking at not altogether welcome sideways look at myself – one foot ion the world of idealistic green economics and the other in the world of formal politics, in the shape of the Lib Dems.

The trouble with talking to idealists about parliamentary politics is that, for very good reasons, it looks like the art of compromise. From outside, it can look a little grubby. From inside Westminster, of course, the outside world looks alternatively feckless, sometimes apathetic and occasionally raucous.

None of these impressions is accurate, but they don't help communication.

I had to remind myself afterwards why I feel so hopeful about the future. The main reason goes back to the Schumacher Lectures in Bristol some years ago.

I gave my habitual seminar about the future of money and, to my surprise, over a hundred people turned up in the morning and another hundred in the afternoon, and that was just the fringe.

After one of these seminars, a very attractive girl called Rowena came up to me and asked my advice about how to start a goat farm.

This is not something that I've ever been asked before, but it occurred to me that – for the first time since the 1890s – there was a group of young people who interpreted their radicalism in terms of growing stuff.

They were a subset of a much larger cohort of highly intelligent, highly motivated group of 20-somethings, who might best be described as social entrepreneurs. They are now active in most cities and towns in the UK, often through the Transition Towns movement.

It must have felt like this in the 1930s, looking at the new cadre of young enthusiasts who were socialists in those days socialists and realising that –  in a decade's time – they would be running the cities.  And so it proved.

I feel the same now.  In a decades time, those young people will be in their 30s and running our cities. A decade after that, no Westminster government will be able to act without them. They represent the future, and it is now steeped in transition economics.

The only thing that can stop them is the way that our Westminster politics manages to stay insulated from almost everything. There is a hideous self-perpetuating element to it, talented, intelligent, imaginative - and yet still boneheaded.

The phenomenon I’m talking about goes way beyond the Transition movement, but Transition provides part of the inspiration - which comes, in this case, from Rob Hopkins and his emphasis on the critical importance of doing things - hence his new book The Power of Just Doing Stuff.  Previous local green action, like Local Agenda 21, was all about begging the local authority to do things - Transition realises that, to make things happen, you have to do it yourself.

The lesson here is partly for the Transition movement itself.  It needs to rise to the next challenge.  Now they are influencing city government, or just beginning to.  Within a decade, they have to run the places.

What this means is not that they will be a political party, or an opposition administration in waiting, but that their skill at making things happen will make them indispensible to every political party.

Why zoos used to be so funny

The news that an American court is being asked to decide if chimpanzees have the equivalent of human rights seems to me to be an important milestone.

The interview on the Today programme yesterday singled out elephants, whales and dolphins, as deserving similar treatment.  They are self-aware, deeply intelligent and sentient.  Of course they should be given 'personhood' under the law.

In fact, by the end of the interview - which had clearly been arranged for tongue-in-cheek treatment by John Humphreys - I was completely convinced.

I've no idea what the court will decide, but it does seem to be another nail in the coffin for zoos.

I have a theory about this.  About two decades ago, I was working on a brilliant schools TV history series called Time Capsule (made by the equally brilliant Colin Still) and found myself ploughing through copy after copy of Victorian editions of Punch, in search of illustrations for the rostrum camera.

There were a large number of cartoons about zoos and it slowly dawned on me that they nearly all had something important in common.  The zoo visitors were nearly always portrayed as roaring with laughter.

These days, zoos are rather po-faced, serious, politically correct places.  The Victorian purpose of zoos - an afternoon of comedy - did survive into my lifetime in the form of the chimpanzees' tea party, but not for long.  I believe that was why people used to visit them.  The animals were funny.

Of course this is all very regrettable.  Yes, there is a parallel with the previous century's recourse to Bedlam for a good laugh.  But equally, I'm not sure that - when we laugh at and with our pets the whole time - the disappearance of laughter from zoos is altogether healthy.

Perhaps I'm just insensitive.  But I'm not sure that the current very SERIOUS zoos are going to survive, at least in their current form - and it is pretty vital, if chimpanzees are going to get any kind of rights, that people are exposed to the existence of other species apart from their own.

The economic consequences of Boris

The transcript of Boris Johnson’s notorious speech about IQ reveals it wasn’t quite as crass as it was portrayed. But it nearly was, and it also contains a tremendously important mistake about inequality.

I personally find the whole idea of Boris infuriating. This is because, since I had second preference vote in 2008I bestowed it on him rather than Ken Livingstone because of one issue alone: the blight of skyscrapers in London,

Ken used to call in architects and ask if they couldn’t make their plans any taller. It was part of his disastrous scheme to increase the population of London (now you have to queue to get out of the tube stations as well as queuing to get in, and still nobody has funded the necessary new schools).

Boris ran with the issue in his first election. The result: now he can hardly see a skyscraper without giving it permission.

So I feel a special sense of betrayal now that I discover that his stance, and maybe all his stances, was pure electoral cant.

Perhaps it is the authentic whiff of Blair: a man with a certain charm and apparently without convictions.

What do I have against skyscrapers? They are inhuman. They reduce us all by their brash monument to architectural or financier ego. They undermine our humanity. I hate them: the essence of London is to be human-scale – or it was.

And there in a nutshell is also my problem with Boris’ speech. Because greed, when it is exercised without restraint, has consequences for the rest of us. It is inhuman. It has architectural consequences, but it also has economic consequences.

He is right, of course, that some measure of inequality is necessary for the proper functioning of everything. “A man’s reach should exceed his grasp,” said Robert Louis Stevenson, and he was right.

Nobody believes everyone should be the same. But that isn’t the same as condoning a repulsive inequality, or the emergence of a new cadre of ubermensch, who cannot be regulated, who corrode what they touch and who are paid in king’s ransoms.

I know that Richard Wilkinson and his colleagues in the Equality Trust have discovered statistical links between inequality and a whole range of social problems. I’m not talking about that here. What worries me is the very specific economic consequences of the new elite.

They can be summed up in one word: inflation.

Why are house prices now unaffordable in London? Because of banker’s bonuses. It is Boris’ bankers that are driving out the middle classes – and raising the prices of a whole range of goods, making life less affordable. See my book Broke for more of an explanation.

Not to mention the speculation on food commodities, pushing up the prices.

No, the consequences of Boris’ financial elite is that civilised life is more difficult, less possible for the rest of us. It is the precise reverse of a property-owning democracy.

It is all very well to say that the elite pay a heavy proportion of tax. They also raise the property prices, adding disastrously to the costs of housing benefit – through no fault to the poor. They are walking inflation machines.

Boris wraps himself in the union jack in a subtle way, but let’s be clear. This kind of inequality is precisely the opposite of patriotic. It is corroding our way of life.

Less should be more: the mismatch emerging in public services

I get my gas from British Gas.  It isn't a perfect solution, and I will be getting £53 of their vast price increase back, I gather.  Whoopee.  I can't quite get my head around why this tweak works, but it has made me think about the way our services are currently structured.

Either way, I am not exactly celebrating.

Let me say, before anyone categorises me, that I have no problem with private companies delivering services, as long as they do so on a human-scale, and do so without so narrowing what they deliver that they spread extra costs around the system.

You might say that I am therefore against privatisation, but it isn't the principle that bothers me.  It is the current practice.

But there is a more fundamental problem about the way privatised services behave, especially when it comes to cost-saving.  It is the need they have to maximise profits.

The way this is usually tackled, at least for privatised utilities, is to impose a regulator in the situation which prevents profits from being maximised at the expense of consumers.  That is all well and good, but it covers up the fact that there is an increasingly important mismatch between the needs of the shareholders and the needs of the public as a whole.

Take energy for example.  The overwhelming need, for government and people alike, is to help people use less energy.  The overwhelming imperative for the energy utilities is to encourage them to use more.

We cover up this mismatch using profit-making financial institutions, like ESCOs, that can share in the benefits of energy-saving.  But there comes a point when it isn't enough - and it isn't enough now.

That is why I am unhappy about the responsibility for insulating poorly-build UK homes shifting from the energy companies to tax-payers.  It means that this basic mismatch is now absolutely stark.

It is equally stark in privatised healthcare.  Again, the needs of the public and the government are aligned.  They both want less demand, less ill-health.  The healthcare companies want something different.

Often the mismatch goes beyond stark, especially when contractors are paid for throughput, or paid for the number of calls they answer - never mind whether the calls are actually what the systems thinker John Seddon calls failure demand (people phoning up to find out why nothing happened last time they called).

This is a serious problem with the current public services agenda.  It is a system problem.  If it isn't solved, it will lead to rocketing costs.  Because there comes a point where privatising services is no longer a useful way of saving money, because the efficiency savings have long since been made, and all they can do is get people to burn more energy.

The strange irony about literary Hay-on-Wye

Thank you to everyone who came along to talk about What If Money Grew on Trees with Andrew Simms and I.  There is obviously an appetite to talk about other possibilities – and their strange side-effects, and we both had a brilliant time.

The Hay Winter Festival is not quite the same as Hay-on-Wye in the vast tents in the summer, but it is rather wonderful nonetheless.  In fact, I found Hay particularly life-enhancing last weekend, with its little Christmas lights, its beautiful bookshops and its dark, dark nights.

I was particularly pleased to visit Richard Booth’s new bookshop and to see, almost at a glance, the future of publishing.

Ebooks are driving old-fashioned book publishing in new directions, or rather old, more authentic directions, publishing real books as beautiful objects.  Why would you buy a badly-published book if you could buy an ebook cheaper, after all?

Booth is the great pioneer of Hay as a book town.  Back in 1973, he declared himself king of an independent Hay and led torchlight processions through the town.  He was careful to avoid a charge of possible sedition by doing so on April Fool’s Day.

I was just interested in politics at the time (I was 14) and was thrilled by the idea, and collected Hay national memorabilia, which I still have in the back of my sock draw.

In fact, looking back, that may remain the big difference between Liberals and Social Democrats, before the famous merger of the two parties 15 years later.  Liberals are fascinated by the idea of micro-states declaring UDI, of the continuing Passport to Pimlico tendency in our national life; social democrats are rather revolted by it.

Booth is one of the great pioneers of ultra-local economics, and I have huge respect for him.  But there is an irony about Hay, which I recently discovered by reading Booth’s autobiography.

He made his money, and launched himself as the bookish saviour of an otherwise ordinary market town in the Welsh borders, by buying up the libraries of the working men’s clubs, which were being sold off in the 1960s – a kind of working class privatisation.

It is peculiar that the foundations of Hay today, that monument to middle class dreams, is based on the self-immolation of the tradition of working class self-help.

The staggering re-invention of Clegg

This is a post about an aspect of the benefits for immigrants debate last week which has gone without comment - and it isn't really about immigration, but let's get that bit out of the way first.

Not everyone has found themselves supporting Nick Clegg's qualified support for Cameron's proposal on benefits for East European immigrants in the first three months of their stay.  Including some people I usually agree with in every nuance, like Jonathan Calder.

I understand the argument that politicians should try to change perceptions not pander to them, but there may be moments where making that kind of stand simply drives people apart.  I don't know (I know, I should know).

But I want to draw a Liberal distinction here, between hospitality, open cultures and open borders for refugees, who have - after all - given so much back to the UK.  And, on the other side, encouraging people for boneheaded economic reasons to be footloose - and it may be that borders can be so open that they do that.

I believe in a multi-racial society.  I believe in travel and the transmission of ideas between cultures.  But I don't think that we should be discouraging community, and roots, and commitment to place.

I don't want to live in the kind of world where economic disadvantage can only be solved by getting onto a boat - as Norman Tebbitt's father famously got on a bike - and looking for work.  As if we just abandon towns, cities and nations as the American pioneers abandoned their land, having exhausted it, and move east.

It is no basis for a happy, fulfilled and peaceful world.  So yes, move if you have to - certainly if your life depends on it.  But otherwise, let's find the economic tools we need to regenerate places.  Don't let the narrow doctrine of comparative advantage lead us to abandon half the world.

But I must admit, that isn't the reason today for putting finger to keyboard.

It was at the end of the BBC news that I heard it.  They reported Cameron's plans and then, at the end of the headline - as if it was a throwaway line - they said: "The deputy prime minister, Nick Clegg, has agreed to this."

I did a double take.  This was the BBC recognising what makes the difference between Cameron's proposal happening and it not happening, and it has huge implications for the way the two men are perceived.

Suddenly you realise that, behind every prime ministerial announcement, is this element of doubt in the minds of broadcasters.  Has he got permission for this?  Will it happen?

It really is staggering how far the DPM has travelled in just three years in post.  Gone are the days when he was the supplicant as the leader of the smaller party.  Now he appears as this supra-national, supra-political figure - hovering like a Lord Chief Justice over the political array - lending his benediction to some of Cameron's ideas and withholding it from others.

Perhaps the most skillful positioning, and despite a weekly radio phone-in, is that Clegg manages to appear careful and sparing in his public pronouncements, while Cameron's public pronouncements seem increasingly frequent and increasingly stressed.

I don't know how this has been achieved.  I don't even know if it is a good thing for the Lib Dems, let alone the coalition, though it must irritate the prime minister beyond all measure.  But it is astonishing and it is impressive.

When free trade gets twisted

I speak as a Liberal when I say that nine score and a handful of years ago, our fathers brought forth a great idea into the political firmament.  It was a logical extension of the anti-slavery movement, and it was called 'free trade'.

It framed the debate about business in terms of human liberty, explaining that when businesses get too big, or when they join forces with governments or ally with landed interests, then the prices rise - and those people who have been released from slavery fall victim to a new economic tyranny.

That was the 1830s.  Thirty years later, simultaneously on both sides of the world - the North American slaves and the Russian serfs were declared free (both in 1863).  In both cases, the worst fears of the new free-traders came to pass.  The liberated slaves of the deep south and the newly freed peasants of Russia and Poland were both loaded down with debt which they could never repay - a new form of economic control.

Forty years after that, the American free traders took on the robber barons and monopolists in a series of actions, breaking up Rockefeller's Standard Oil and others.  At the same time, the British Liberals were winning a landslide election on the cause of free trade - which they regarded as the right of small enterprise to challenge the status quo.

Over the following century, something peculiar happened.  'Free trade' became muddled.  The Liberal campaigners turned to other things.  Free trade slowly came to mean the rights of all business, however large.  Later on, it became even more twisted to mean the right of the richest and most powerful to ride roughshod over everyone else, almost the precise opposite of its original intention.

Now, the news emerges that the long-term negotiations to bring about a EU-US trade agreement are back on.

What is in it?  Some sensible stuff about recognising each other's standards and regulations probably.  The issue of GM food and cloned meat will take a bit of unpicking, and probably remains unpicked.

Why worry about it?  Because of what has appeared on Wikileaks about the draft of the new US-Pacific trade agreement, which was to have been 'fast-tracked' through Congress, and which includes a supra-national court system whereby any corporation can sue a government if it felt it was infringing its rights.

There is no way that a package of measures that pits the commercial objectives of the richest above our democratic rights to shape our lives is related to free trade in any sense.  It is a kind of protectionism for the powerful, and for the status quo.  It is the precise opposite of anything Cobden and Bright would have recognised.

For years, we in the political West have comforted ourselves that free trade in China would transform it into a genuine tolerant democracy.  I'm not so sure that this perversion of free trade, monopolistic control bolstered by law - a kind of compulsory trade - will not eventually work the other way, and turn us into China.

But there is a more prosaic reason to worry about this.

The EU has a reputation in some circles for its mind-numbing regulation.  Most of these are, in fact, as a direct result of the single market that the UK pushed through in the 1990s.  Ironic, isn't it.  Regulations about transparent procurement processes, and permission for state aid payments, all stem from the same source.  Probably the US trade agreement, if it happens, will mean more of it.

That is free trade, of a kind.  But in practice, it privileges large foreign competition against homegrown small business competition.  It needn't do, but in practice it does - because only the biggest players can jump through the bureaucratic hoops (and that's before you get to the minimum size thresholds).

Like so much of the rest of the ersatz free trade agenda, it gives power to the powerful and protects them against competition from below.  It is the very opposite of a Liberal free trade policy as recognised by Cobden and Bright all those decades ago.

The meaning of the housing bubble

"Sometimes thing don't always go/
From bad to worse..."

So wrote the poet Sheelagh Pugh, and I kind of agreed with her yesterday when I read about the Bank of England's decision to rein in Funding for Lending, and to provide a kind of ratchet effect that will reduce the dangerous acceleration of the housing market.

It isn't much and it isn't enough, but it is a start.

But first a bit of background.  One of the stories I told earlier this year in my book Broke: Who Killed the Middle Classes? was about the demise of the so-called Corset in 1980.

The Corset was the mechanism which restricted the flow of money into the mortgage market, so that house prices stayed stable, but housebuilders still made a profit.

Since it disappeared, the 30-year house price bubble - especially in the south east - first thrilled the middle classes and now looks set to destroy them (my children will be unable to rent or buy in London or the south east unless they work in financial services, a fate worse than death as far as I'm concerned).

The issue isn't really that the Corset should have stayed in place.  The end of exchange controls in 1979 guaranteed its demise.  The problem was that nothing was put in to replace it.  In fact, within months of the decision to end the Corset, the whole tenor of the debate had shifted.

We know now that the idea that somehow all prices reflected something real was a fundamental mistake which still infects many – especially in banks, where they still bolster their balance sheets with property values, only to have those values slip through their fingers.

We might know that now but, by the end of the Corset, it flew in the face of the new spirit of the times to point it out.

Hidden in the archives of the Bank of England, I discovered a revealing note. It was a memo from the governor (Gordon Richardson) in May 1980, weeks before the Corset was finally loosened, and described meeting a City grandee who asked him why nothing had been put in place to replace it.

The deputy governor had added his own note on the file describing the hapless grandee:

"Were he a Tory MP he would I fear rightly qualify for a certain adjective in rather wide current use."

The adjective he referred to was ‘wet’, Margaret Thatcher’s new designation for her opponents in the cabinet. ‘Rather sad, I think,’ wrote the governor.

Nothing has replaced the Corset, and Thatcherism – heralded by the new and vigorously enforced consensus implied by this note – would countenance no such defences against insanity.  House prices would find their proper level, whatever they happened to be, and the acceleration upwards had barely begun. The consequences have been profound.

Carney hasn't proposed a return to the Corset, but he has tiptoed in that direction.  Banks will have to assess whether people taking out mortgages will be able to afford an increase in base rates to 3%.  They will have to raise extra capital against the mortgages they lend.

There is no doubt that this will contract mortgage lending, though whether it will really increase small business lending remains to be seen - the evidence so far is that the big banks are no longer geared up or able to do this effectively.

I've just got two thoughts about this.

First, property prices in London and the south east are unsustainable.  They are geared for the pockets of the ultra-rich, for bankers bonuses and foreign investors.  They need to come down, slowly but surely, to make civilised life possible for the next generation.

Second, nobody seems to talk about this much, but the main source of money-creation in the economy these days is in the form of mortgage loans.  If they contract, and nothing replaces them, there will be less money in the economy - and we will all be wondering why the world is deflating around us again.

That is the consequences of our collective failure to rebalance the economy.

The antidote to sclerosis brought on by complexity

The blogpost is cross-posted from www. newweather.org...

I listened to the Localis lecture by Penrith MP Rory Stewart yesterday, talking about the importance of local action - if we are going to fulfil our promise to our children that they can grow up and re-make the world.

He told the story of a small village in his constituency and their long battle to get a broadband connection, digging the trench, raising money and eventually persuading the government to fund the remaining £17,500 - a long, exhausting process.

Exhausting because of the complications which inevitably emerge for this kind of project: was the decision to choose the only possible contractor open and transparent?  Would Brussels give permission to pay this money in state aid?  You can imagine the kind of thing.

All this is, of course, paradoxically the result of the single market, the side-effects of a certain interpretation of free trade - and I expect there will be even more of it imposed on us under the new EU-US trade agreement.

But it also demonstrates the sheer complexity of making anything happen now, however simple and uncontroversial.  The sheer complexity of government at all levels discourages action: we don't know what side-effects there will be.  It is often just too much of a risk to experiment by finding out.

If the political world is too complicated then the same is even more true of economics.  The economic world is so staggeringly complex that no sane economist will be able to predict the consequences of anything much.  The result is that economists, like civil servants and politicians, are like deer caught in the headlights.  They dare not even imagine major changes.  They dare not, even in their sleep, dream of different worlds.

Which brings me to the new book I have edited called What If Money Grew on Trees?  It is a series of very short contributions, by economics writers, in answer to 50 different What If questions - what if money did grow on trees?  What would happen?

These are alternative tales of the present and immediate future, written as honestly as possible about the effects and side-effects.  And one of my co-authors (Andrew Simms) and I are delving into the world of other possibilities, at the winter version of the Hay Literary Festival at 1.55pm on Sunday.

Do come along and imagine with us!

Why Vince needs to call in the police

I know this isn't the kind of thing that we bloggers are supposed to admit, but really I have been staggeringly naive about banking in practice.

Let's set the Co-op Bank on one side quickly.  I realised that the Co-op Group gave money to the utterly toothless Co-operative Party, and didn't think about it, but I never realised - and this is entirely my fault - that Co-op Bank funded the Labour Party directly.  Everybody else seems to have known.

There is no way that I will keep my accounts there if they carry on doing so, no matter how good their call centre is.  I joined the Co-op Bank to make the world a better place.  Giving money to the Labour Party actively frustrates that objective as far as I'm concerned.

But there is more to confess.  For years, I've been hearing rumours and accusations from small businesses that the big banks were deliberately forcing them into difficulties, so that they could drive them into the arms of the equivalent of their restructuring advisors.

I've heard rumours that banks had been going through the fine print of loan agreements in order to force small businesses under.

I never imagined that this might have been a deliberately organised instrument of banking policy, yet that is what the Tomlinson Report suggests, now in the hands of Vince Cable.

The accusation here is that RBS deliberately drove viable small businesses into difficulties, so that they could earn considerable fees from the bank's Global Restructuring Group, and get their hands on their underlying securities and assets.

Vince Cable says the allegations are 'shocking'.  Robert Peston says it is "not altogether surprising".  I find both of these responses strange.  Of course they are shocking.  But the truth is that these are by far the most serious allegations made against the big banks so far.  They go beyond selling sub-prime mortgages or fixing Libor rates, and yet we appear to have become so used to allegations of very well paid wrong-doing that we barely notice it any more.

If these revelations had been made against small banks, it seems to me that the police would have been called in by now - and quite rightly.  We are talking about the theft of people's businesses and assets.  We are talking about the deliberate destruction of viable businesses by the only people who can rebuild the real economy: local entrepreneurs.

It is worse somehow than anonymous burglary.  It is mugging by those who you trusted and who owed you a duty of care, because you paid them to look after your interests, more like family abuse than fraud.

The Daily Mail led on the story yesterday morning, but generally speaking the story has received far less attention than it should, and very much less than the spectacle of the Rev. Mr. Paul Flowers and the drugs.

So if I were Vince Cable, I would call in the police immediately.

No other news has so emphasised the basic underlying mistake the opinion-formers and politicians have been making about the big banks.  They consistently behave as if the sins of the big banks were sins of omission: they failed to lend when they should have done.

The truth is much more worrying, and has been clear long before the recent revelations.  They have been actively corroding our local economies and unbalancing the economy.

The perils and pitfalls of electoral themes

Richard Morris at the the blog A View from Ham Common has done us all a service with an online poll among Lib Dems about which policies should be emphasised in the next party manifesto.

Top of the list, perhaps unexpectedly, came housing.  Followed by jobs & sustainability, bracketed together.  Not sure which I would have chosen to go first, given the choice: probably jobs & sustainability, followed by 'children'.

Two things occur to me about this which make it slightly uncomfortable.reading, and all because the the besetting Lib Dem sin about this kind of thing - the fantasy that somehow electoral success is all about polling and positioning.

This is not a criticism of the poll, quite the reverse.  But the first problem is this.  It is one thing to say that housing should be top of the party's campaigning list, but quite another thing to develop real solutions that are up to the enormity of the task.

Party president Tim Farron has important proposals to make about rural housing.  There are Lib Dem councils which have done imaginative work backing community land trusts, to keep the value of the homes low.  But where are the policies to ratchet down ballooning house prices?  Where are the proposals that back up Nick Clegg's lead on garden cities?  These might be forthcoming, but the party needs a distinctive role to play in the national debate about housing, and at the moment it doesn't.

The second problem is that all these topics actually beg questions.  They seem to imply specific policies, but may not actually do so.

I'm assuming that the people who picked 'housing' meant the rapid building of social housing, by system or systems unknown, but actually we don't know.

Previous polls - and I've seen so many of them - have tended to put 'environment' low.  Bracketing sustainability with jobs forces it up the list, and we assume this implies some kind of systematic development of green jobs - but, actually, we don't know.

I've always believed that the sensible move for the party would be to bracket the environment with health.  In fact, health usually has its own category, and we assume this is ticked by people who want more health spending - but actually we don't know.

Often, in fact, this kind of poll tends to reflect what's in the newspapers.  To be useful, it needs to test specific policy proposals.

What Richard's poll gives us is a guide to where we should put our efforts to develop those specific policies - housing, jobs, environment and (because it needs to be linked to the environment) public health.

Gradgrindism dressed as objectivity

The planning minister Nick Boles has suggested reviving the National Liberal Party, the strange hangover from the 1931 National Government that eventually petered out when the electoral alliance with the Conservatives petered out, in the 1950s.

Let’s leave aside his motives, or whether they are in any way achievable, and just say that – rather to my surprise – the Lib Dem group in the House of Commons has been really staggeringly united during the difficulties of the coalition.

This is a tribute partly to the Clegg leadership, despite the background noise, but also to five decades of electoral discipline – learning it the hard way.

And, also unexpectedly perhaps, what must - whether we like it or not - be a degree of common understanding of the issues, a shared ideology, again despite the clear disagreements and the background noise.

So I don’t think – though I may be wrong – that there will be any sign of a breakaway grouping of Conservative-leaning Lib Dems.

But what fascinated me most about this debate was Jonathan Calder’s description of the new political class:

“These days mainstream politicians are overwhelmingly likely to come from the same wealthy middle-class families, to have been to the same limited range of schools and universities, to have worked as special advisers (and perhaps in a more lucrative career and then to have been selected to fight winnable seats. The are all light on ideology and tend to buy in their policies from charities and think tanks. Their shared enthusiasm for ‘evidence-based policy’ disguises a tacit, unexamined agreement about the nature of the problems we face. Where is the evidence-based policy for reducing income inequality, for instance?”

Jonathan is quite right to link the distrust of ideology with the strange growth of platitudes around ‘evidence-based policy’.  So let’s peer at this phenomenon a little more closely.

Nobody is in favour of evidence-free policy, of course. The problem is that ‘evidence-based policy’ is not the opposite. As currently understood, it is a discrete branch of utilitarianism.

Underlying evidence-based policy is the assumption that, before change can happen, the right kind of numerical evidence must appear. Often this kind of evidence is quite impossible, one way or the other – and evidence-based policy thus becomes an argument for inaction, dressed up as hard-headed objectivity.

It isn't objective, of course.  Numbers look hard-headed but they are actually chained to definitions, which are endlessly malleable.  Numbers can take you by surprise, yes, but you can't rely on numbers alone.

Evidence-based policy is at the same time a deep and abiding scepticism about change of any kind, except tiny changes, linked to a deep and abiding reliance on a particular kind of statistics – an implicit belief that, despite indications to the contrary, that the target figures (any figures actually) must be true and accurate.

It isn’t really about evidence at all. It is Gradgrindism dressed up as open-mindedness.

“He had an open mind for so long,” somebody said of Bertrand Russell, “that he couldn’t get the damn thing shut.” That’s evidence-based policy.

It leads to inaction, as I said, but it also leads to a great deal of absolute tosh. Because the Prime Minister wants evidence-based policy, then he must be given graphs. The figures may be based on the tiniest samples – they may be wholly inaccurate – but it is evidence.

Then there is the worst of it.  Evidence-based policy, as currently understood, can only compute evidence from institutions as they currently exist. That is the only possible source of this kind of evidence.

It rules out consideration that those institutions might be very different. Why? Because not only is there no evidence in the approved shape, but there can’t be – the world will have shifted and the definitions changed.

I’ve talked to medical statisticians about how flimsy the evidence used by NICE is. I know from my own experience in government departments how graphs get created out of the flimsiest stuff. But it’s evidence-based policy – how can anyone possibly be against it?

Jonathan is quite right that this tends to go hand in hand with a scepticism about ideology.

Ideological approaches certainly need to be subjected to common sense, and real evidence – the stuff you get by looking at things and talking to people.

I can think of so many ways in which ideology has undermined policy. But there is another way of looking at these things: bringing ideology to bear on problems is to look at them sideways, from the point of view of a philosophy and a tradition.

Often that is the only way you can break free of intractable problems. You can’t do it regardless of evidence, of course. But don’t let’s allow ‘evidence-based policy’ to stop us, because it isn’t what it seems.

It looks like a hard-headed guide for common sense. It actually conceals a delusory lens that will always support the status quo.