Thursday 31 October 2013

Is Steve Webb a hero?

The truth about pensions is that, partly thanks to the personal pensions ushered in by the Thatcher government in 1986, the world has changed - one of the reasons that the middle classes are shuffling off their mortal coil (see my book Broke for more about this).

The main difference is that the mixture of contributions from you, your employer and the government into defined benefit occupational pensions used to be about 22 per cent of your salary.

For personal pensions, which define your contributions but not what you get out (defined contribution), the average is only 9 per cent – even though you might be paying exactly the same amount into both schemes. Big difference.

It means that if you pay into a personal pension for forty years, you will get out 41 per cent of what you would have got from a defined benefit occupational pension. 

But then the implacable arithmetic of charges kicks in, as pensions minister Steve Webb said yesterday. For the personal pension, there are entry and exit charges. There are annual management charges and other hidden charges, some explicit, some not. 

Imagine that the annual charges are around 1.5 per cent a year. It seems like an insignificant amount, but it builds up implacably. For many people, 1.5 per cent a year over forty years will eat up almost half the contributions you make into your pension pot – a whacking £45,000 from payments of £108,000.

Then there is the cost of an annuity, which is 10 to 15 per cent higher for people in personal pensions. The terrifying conclusion is that your pension will be about a quarter of what it was if you had paid into an old-fashioned occupational pension. 

A quarter. That is a huge difference, and not one that was ever mentioned during that whole debate a generation ago.

For many of us, four years are enough anyway. Something happens, we stop paying in, the pension scheme falls dormant and our next employer starts up another one. We end up with multiple pots of money, each one leeching money in charges, unclear how to pool them, with no clear disinterested advice (I have three; Sarah has eight).

That is why Steve Webb's clampdown on charges is so important.  High charges have leached funds from savers, they encourage too much pointless activity, and unbalance the economy.  But let me ask this: how come Webb can act when so few others seem able to?

When it come to energy prices being hiked in a suspiciously similar fashion at the same time, Ed Davey's hands are bound - though there is the competition inquiry, of course.  Cameron can only mutter, like Edward VIII, that "something must be done".

When it comes to tax avoidance by Amazon and Google, you get a kind of show trial for the cameras at a select committee, and then - nothing.

But somehow Steve Webb has been able to redeem the reputation of politicians by acting against the unacknowledged scourge of the middle classes, the pensions providers.

I accept this is still only a proposal.  The consultation is only just beginning and the financial advisors are sharpening their knives, but it is at least a proposal.

It is worth thinking about why he can act when other ministers are bound and gagged and lashed to the traditional policies of successive governments, flailing around for some symbolic detail they can announce that gives the impression of action.  

Because, of all the Lib Dem actions in government, this is in some ways the most important and the bravest.  So how come it looks so effortless?

Wednesday 30 October 2013

When books disappear from libraries

Croydon's battered library system has not been exactly the envy of the world recently, closing six branch libraries and handing over the rest to be managed by John Laing Integrated Services, promising - you guessed it - investment in IT services.

They finally took over three weeks ago, and just had time to put all the library staff in uniforms, before - hey presto! - they were bought by the service company Carillion.

Nobody seems to have informed the council of this, least of all Carillion, and there are now said to be 'discussions', which is only to be expected when you suddenly find your libraries are being run by a company you haven't actually chosen.

My family just spent the first day of the half-term wandering around library branches in search of a particular book (don't ask!).  Their reaction, having eventually found the book in the central library was this:

Where on earth are all the books?

Thornton Heath Library has been recently redesigned at vast expense by architects FAT, but - as Sarah said when she arrived back - we've got more books in our house than they have.

I have noticed over the years that one of the first signs of a failing school is when the books start disappearing, usually replaced by gleaming computers - though there are precious few of these in the libraries either.  It is a wholesale replacement of content with process, precisely the same disease which public services suffered from during the New Labour years.

So how are we to understand the news, revealed today by Apple chief executive Tim Cook, that sales of iPads to UK schools doubled in the last year (though Apple's profits are still falling)?

My nine-year-old has been remarking at his primary school about how there are now iPads everywhere, so something strange is going on.

So.  Is this another example of the replacement of content with process, in a way that even McKinsey would approve of?  Or is it an early warning sign that UK schools are going the same way as UK libraries - a hollowing out leading to a decline?

And before you accuse me of cynicism, ask yourself where the money is coming from.  Was the Pupil Premium really intended to prop up Apple's profits?

Tuesday 29 October 2013

Deming, CQC and the new efficiency

Back in the 1940s, the great American theorist of 'total quality, W. Edwards
Deming warned that assembly lines, in themselves, were not efficient at all. We ought to listen to that, given that our public services are being re-designed by people who think that assembly lines are the apotheosis of efficiency.

Deming’s story is rather peculiar, because he found that his fellow Americans were not quite ready for this message, so he took his ideas to Japan after the Second World War, and was enormously influential.

Efficiency is all about getting things right first time, he said, because then you don’t have to do it again.

He was astonished at how much the American factory system wasted, in materials and time, just by failing to pay attention to quality. The result was the enormous sums of money were spent by organisations just to put right the mistakes they had made – and splitting up jobs means more mistakes.

Now Deming’s name is being gargled with at the moment by the influential NHS blogger Roy Lilley, as a way to explain how ineffective the CQC has been – in fact, about the whole business of inspection and how it has failed miserably to make hospitals safer.

It just so happens that I went to a fascinating conference yesterday, organised by Deming’s vicar on earth, the systems thinker John Seddon.

Seddon himself was stuck on a train thanks to the storm, but I did have the chance to hear from four amazing women from Monmouthshire County Council who are in the process of transforming social care assessments.

So much so that they seem to have provided a kind of template for the new flexible assessment system that the Welsh government are introducing in January.

Monmouthshire has developed a fascinating combination of systems thinking, Australian local area co-ordination. They call the result FISH (find individual solutions here).

It is about getting interventions right first time, the very essence of what Deming suggested.

What really excited me is the way they have turned the conventional call centre model on its head. No more phoning a call centre that will record details and hand over them over to back office experts, who will then set appointments and so on and so on, all before anything much happens.

Now people call up and speak direct to an expert, who can if at all possible sort things out there and then.

Some cases will need more complex assessments and work, but – by sorting out problems early and informally where possible – they have reduced the number of these by half.

There is a great deal more to say about all of this (which I won’t) but it does drive a coach and horses through the conventional, and evidence-free, government preference for shared back office services.

Seddon has been a lone voice describing how the front office/back office division has been increasing a sort of fake demand, at great expense. But there are two problems at the moment that have been bothering me.

First, how do you persuade Westminster and Whitehall that the whole caboodle of IT systems, back office divisions, and outcome-based management is actually undermining the effectiveness of services and making them more expensive?

Second, how do innovators like Monmouthshire confront the useless requirements of the existing regulatory system? Neither there, nor anywhere else, has the battle been won. In fact, it has hardly been joined yet.

Third, why on earth is Seddon describing his seminar roadshow as ‘Kittens are evil’?  I know what it means of course, but it seems to imply a modesty and self-deprecation that his ideas don’t deserve.

Too many negatives, I say. We need kittens.  Welcome to the new kittens, I say.

Monday 28 October 2013

Is Amazon included in the growth figures?

George Osborne is looking pleased with himself.  The coalition believes it has been vindicated on the economy.  Growth is now the fastest since - well only 2010, actually.

One of the casualties of the last few years, with Osborne anxiously scanning the horizon for the rescue he felt had to arrive, is a saner approach to the word 'growth'.  Most radicals since Bobby Kennedy have regarded the unadorned growth figures as wholly irrelevant - and sometimes downright corrosive - to prosperity.

I think they are right, personally.  If you can increase growth by spilling oil in the North Sea, by speeding up deaths on the roads or by going around blowing up the house price bubble, then it isn't a terribly meaningful figure.

I would leave that on one side, were it not for the handful of continuing mysteries about the growth figures.

Mystery 1: If growth is rising so fast, why are we not reducing the deficit this year?

Mystery 2: How much of it is actually just the ludicrous increase in house prices that is going on in London and the south east - fake prosperity if ever there was any?

Mystery 3: Given the continuing bubble in house prices (average home up £50,000 in value in a month), why is growth not actually much higher?

I ask the last of these because that key question, and one not being answered by any of the commentators now, is how much of the economy has been taken offshore and therefore not counted in the growth figures?  Because that might explain something about why, despite sticking to spending cuts, the deficit is still not coming down.

So here are the questions to ask any official statisticians you happen to find standing next to you.

What percentage of the UK economy is now operating offshore?

What tax would the offshore sector be paying if they were not being allowed an unfair advantage over businesses that are still operating in the light?

Is Amazon's considerable business, including the wreckage of the UK book trade, counted in UK growth figures given that it is said to be operating out of Luxembourg?

In other words, can we rely on any of these figures as being anything like accurate?

Sunday 27 October 2013

The radicalism of model railways

Maybe it is my age, but I find myself increasingly in the middle of other worlds - little universes complete in themselves.  The fine art world/economics world (strange that one), and yesterday the model railway world.

My two boys are fascinated by model railways.  I don't think I had been to any kind of display since I last left the annual Model Engineer exhibition in Victoria around 1971.  Things have moved on somewhat, as I discovered at the amazing show put on by the Beckenham and District Model Railway Society.

These were the most extraordinary miniature worlds, often set earlier in the twentieth century, often with their own timetables.  Hythe Station as it was before closing in 1951 (see picture of model above), docks, fishing ports, piles of coal, tiny wheelbarrows - not so much an evocation of a lost, perfect world, but a loving recreation of lost industrial landscapes.

And if you really want to be staggered, have a look at what this man built in the foundations of his house.

In the years between 1971 and 1979, I moved from models to politics (and one or two other things), and - since I can't get the models I saw yesterday out of my head - I have been wondering about their political significance.

One of the magazines I read as a student was called Vole.  It has long since disappeared, merged like everything else probably with Resurgence, the great green survivor.

But Vole pulled off a trick which has never quite been managed since.  It combined a green and local radicalism with a bit of humour and some apparently nostalgic articles about railways.  I found it so influential that I find myself almost stuck in the same track now.

Because there is a hidden radicalism about railway nostalgia.  It isn't for the days of state control - the people who rescued the Tallylyn Railway in 1951 were very conservative in that respect.  All I can say is what it means for me.

1.  The pre-Beeching railways are a kind of symbol of an alternative method of transport to unlimited motoring, a glimpse of a possible future not taken.

2.  Those carefully nurtured flowerbeds on the platforms of the 1950s are a sign of what genuine localism could make possible, when the centralisation of corporate control these days means broken tarmac, and leaving the heaters on all summer.

3.  The continuing success of preserved railway lines all over the country are an example of just what mutual communities of interest can achieve if left to themselves.

For me, the models I saw yesterday were all little utopias, miniature worlds with muck heaps and coal yards, where things broke down, but where attention to detail and a carefully manoeuvred screwdriver could sort things out.  They are supported by a growing pan-European cottage industry of small retailers and manufacturers, making equipment to the various scales.

I have met the members of my local model railway club when I visited them in the capacious headquarters in the basement of a largely empty office block.  I was staggered to find that most of them worked on the railways as well in the daytime.  You can hardly call the modelling bug escapism.

It certainly tends to be nostalgic, but in a creative way.  These models are so beautiful and intense that they can take the breath away.  No, I'm inclined to think that this is more confirmation that small is still beautiful, inspiring and radical, and the triumph of human ingenuity over mass consumption.

Saturday 26 October 2013

The strange story of the sinking of the Gulcemal

I have a feeling that the centenary events for the First World War are going to be a shock for some of us.

I am old enough to remember the Old Contemptibles, those survivors of the British Expeditionary Force in 1914, marching along Whitehall on Remembrance Day, and they have all gone now.  What next year will mark is the shift from remembrance to history - and to military historians in particular.

That means engaging with the former enemies properly, and on an equal basis.  I still hear bizarre stories from military conferences about how the German or Turkish points of view are completely sidelined by old buffers, and embarrassingly so if there are German or Turkish experts present.

I was thinking about this because of the strange story, which I have just written about in the e-magazine Fighting Times, about the sinking of the former White Star liner Gulcemal (ex-Germanic) in the Sea of Marmora in 1915 (briefly on sale for 99p).  The story is strange because - the gulf between British and Turkish military historians is still so wide - that it only just came to light, nearly a century later.

It happened because of a question whether the liner, once holder of the Blue Riband of the Atlantic, then carrying 6,000 Turkish reinforcements bound for Gallipoli, had actually sunk after its brush with the submarine E14.  Night fell, the British never saw what happened and, for some reason, British officials never thought of asking the Turks.

Consequently, the British Admiralty paid out a record sum in 'prize money' for the sinking in 1919, just as the very same ship was being chartered by the British Military Mission in Berlin to take Russian prisoners of war home from Hamburg.

A typically bureaucratic mistake, and the article explains why it was made.  You can hardly blame them, but why did nobody ask?

Friday 25 October 2013

Three urgent questions about bugging foreign leaders

"I would no more trust such MPs with my liberties than send them out to buy a pizza," said Simon Jenkins on the front page of the Guardian this morning.

He was comparing the political action, from both Democrats and Republicans in the USA, to control the business of total surveillance and the abject way that MPs over here stay silent in the face of their own failures to oversee the same process here.

The recent revelations that the USA has been bugging Angela Merkel ramps up the pressure.  It is a serious question - not that nations haven't always spied on each other's leaders, because they have, but because this kind of activity needs to be brought within the rule of law.

If if isn't, experience shows that surveillance loses focus.  Politicians and security mandarins are famously unable to distinguish between national security and their own dignity, and that has serious consequences for their own effectiveness.

The bugging of Angela Merkel's phone was so lazily achieved, and so pointlessly ordered, that these are becoming vital questions - and there are other urgent questions for us here too.

First one: are David Cameron's private conversations being listened to by the NSA, and reported to American security?

The second one is this: if not, what is the quid pro quo?  Is there some agreement to share in the contents of conversations by Merkel and Hollande?

These are very serious questions.  It does not threaten national security to ask them, though it will be embarrassing for politicians and officials - but, as I say, these things are very different.

Here is the third question: why are MPs over here not asking these questions?  Why is the Labour Party not holding the government to account?  Why is Miliband silent?

Wednesday 23 October 2013

John Major and the price of everyday life

The social democratic think tank the Policy Network has invited me, along with thousands of others I expect, to a seminar on what they call the Insider-Outsider Dilemma.

This is how it goes.  Parties of the left are unsure whether they should appeal to people excluded from mainstream markets (claimants, outsiders) or to the mainstream people who get by (middle classes, insiders).

If they go for the outsiders they can, at least, be clear about where they stand - but they risk alienating everyone else.

If they go for the insiders, they have a potential winning constituency but risk losing their purpose and core beliefs, which has other downsides - like losing voters to the left.

Polly Toynbee is a speaker in the seminar, which kind of gives the game away a bit.  I have to confess my own bias about this; that this is an irritatingly Fabian approach to the problem, which assumes that the purpose of the left is to defend the social democratic consensus exactly as it was circa 1970.  But, in their defence, that's not how they put it.

So perhaps I'm being terribly unfair.  But it seems to miss entirely the way the economy has been moving over the past generation, ever so slowly but inexorably.

The point is this.  It is increasingly difficult for mainstream people in work, including ever larger chunks of the middle classes, to get by without support from the government.

They need Help to Buy because the housing market is geared for the interests and prices of foreign investors.   They need housing benefit even though both partners are working.  They need Funding for Lending, which still doesn't work, if they want to borrow money from a bank to start or expand a business.  They get by on child tax credits or more old-fashioned kinds of credit via re-mortgaging or credit cards.  Their pensions, the mainstay of the middle classes, have been corroded by the kind of investment managers that Prince Charles lambasted last week.

Increasingly, ordinary people can't afford the vast rents and mortgages in southern England, and the government moves to subsidise - brushing the basic problem under the carpet, shelling out in housing benefit for working families because rents are shooting up..

What is happening is that everything we thought of as the economy is beginning to move to the margins, often subsidised by taxpayers.

Energy prices rise as the big utilities extract the benefits of monopoly (and so do the French and the Chinese), and because successive governments wasted the returns from North Sea Oil.

Public services become increasingly unaffordable as the PFI contractors extract the benefits of successive governments determination - at whatever cost - to take their debts off their balance sheet.

Other monopolies make best use of the UK's bizarrely forgiving corporate tax regime to move whole sectors offshore (Amazon has done so for the book trade).

No one party has been responsible for the sheer unaffordability of mainstream life, so it isn't remarked on.

The Resolution Foundation has been tracking this trend as it spreads up through people and families on middle incomes - but it increasingly now afflicts families beyond Resolution's remit.

It is this peculiar and largely unremarked process that was at the heart of my book Broke: Who Killed the Middle Classes? (which also suggests some ways out).

And here is the answer to the Insider-Outsider Dilemma.  There need be no real dilemma, because the insiders are increasingly outside the economy too.

In fact, the insider-outsider dilemma ought increasingly to afflict parties of the right, as they struggle to find anyone who benefits much from the status quo.

This is also the background to what looked like a critically important intervention by John Major yesterday on energy bills.

Major may have been the great privatising prime minister, but he is also a bellwether for middle England.  What makes his intervention so important is that he can see, just in the energy market, how people in mainstream society are beginning to need subsidy - and he doesn't see why the energy companies shouldn't pay for it.

That is symptom rather than cause.  No political party has dared yet articulate the cause.  It is time we started to knit together the bits of the picture so that they might have some chance of doing so.

Tuesday 22 October 2013

Energy, free schools and the search for flexibility

I first got interested in energy policy when I was at university at the end of the 1970s.  It is strange to remember quite what we were up against in those days: a strange semi-soviet state organisation, the Central Electricity Generating Board, presided over by a Gromyko-like figure called Lord Marshall.

It poured money into nuclear energy (with little to show for it).  It throttled research into renewables, and miserably failed to solve the problem of nuclear waste.  Oh yes, and there was also Tony Benn's nuclear police force.

Ah, yes, it all comes flooding back.  The Edge of Darkness and all that (I think it should be on TV again).

We may not want a profit-making oligopoly running our energy, paying vast salaries to managers, but the last thing we want is the CEGB back again.  What we desperately need is some kind of system that is flexible and responsive, which encourages people and communities to invest in generating their own energy.

I thought of this as I received a number of emails forwarded from the ubiquitous internet campaigners 38 Degrees, urging me to sign a petition on their site calling for energy to be re-nationalised.  An amazing 14,000 people seem to have signed it.  Clearly they don't remember the CEGB.

But then, this isn't a blog post about energy - it is a post about flexibility.

I got interested in how we might make our public services flexible enough to suit a very wide variety of needs when I was looking at choice for the Barriers to Choice Review.

The mechanisms that allow for choice in health and education, for example, really ought to make the systems more flexible.  In practice, thanks to the way these systems were designed under Tony Blair - largely by economists - they can often make the services more inflexible instead.  You then get formal, approved 'choices', but they all look much the same.

Nick Clegg's intervention on free schools seems to have ruffled some feathers, but a close examination of what he said seems to reveal - well, what?  It is hard to read, but I'm kind of imagining he is making a similar point: we need basic standards for all schools, but more flexibility everywhere, not just for the favoured few.

Yes, the point he makes most strongly appears at first to be the opposite of this - that schools should only employ qualified teachers and that the national curriculum should apply.  Then he says this:

"I'm proud of our work over the last three years to increase school autonomy, which, in government with the Conservatives, has been through the academies programme."

So why the fury from backbench Conservatives?  Odd and, yes I have to admit, I don't agree about the qualified teachers.  There may well be people out there who have life experience that would be valuable for schools.  I wouldn't want to force everyone through teacher training. 

Flexibility means going with local energy, and the energy of local people, rather than clamping down on it - whether that is unqualified people who have something to offer or the energy of local parents shaping a new school.

But where Nick Clegg was absolutely right is that the artificial division emerging between local authority schools, forced into rigid adherence to a national curriculum that doesn't apply to free schools and academies, is divisive and quite unnecessary.

We have learned from the kind of flexibility that the free schools have provided.  That flexibility should now be extended to all schools.  A very basic curriculum should apply to all schools too.  Flexibility works, as long as people are held to account for the education their schools deliver.

And actually, in the long run, the direct connection between the academies and free schools to central government is a threat to this flexibility.  They need to come under the auspices of co-ordinating local authorities in the same way, but with the flexibilities guaranteed.

Public services are not very flexible these days.  They are more expensive and less effective as a result.  But the last thing they need, and the last thing the energy market needs, is to swap the current mildly inflexible system for something completely turgid.

Therein lies the edge of darkness.

Monday 21 October 2013

Read my lips. No nuclear subsidies

Picture the scene.  There we were, May 2010, exhausted, flushed, staggered, the Lib Dems taking part in the special conference at the National Exhibition Centre in Birmingham, to agree the coalition on the terms offered.

I was so staggered myself that I lost my diary (email me if anyone found it, I'd like to know what I was supposed to be doing for the rest of 2010).

At some point during the business of wandering round the fake corridors and escalators that bedevil conference centres of all kinds, I was hailed by Chris Huhne, the new Secretary of State with responsibility for delivering a greener energy policy.

I turned around and saw him at the top of the escalator, and remember thinking that I had never seen anyone look so exhilarated - as well he might, joining the Liberal Democrats decades before and finding himself in the cabinet.  He was also, as we know now, in love.

I knew, of course, as we all did, that the chances of him delivering a genuinely green energy policy were remote.  The political difficulties were immense, and certainly haven't reduced since.  But I believed that he would be able to shift the wasteful, creaking old monster we know as UK Energy Policy in a greener direction - and that it would help re-balance the economy too.

There was a problem: he would clearly not be able to adopt a strict Lib Dem position on nuclear energy, but there would be conditions, as Chris Huhne spelled out from the rostrum.

I was probably more reassured than I was by any other remark - in fact it is the only sentence I remember from the whole day.  This was the moment when he borrowed from George Bush Sr: "Read my lips," he said.  "No nuclear subsidies."

I am sure that, at the time, he believed this.  This is not an attack on his honesty, or an attack on Huhne at all - he is a huge loss to frontline politics.

But what are we to make of this morning's announcement of the deal with French company EDF, giving it a guaranteed price for electricity for 35 years amounting to a subsidy of somewhere around £1 billion a year (if electricity prices stay the same)?

Everyone knows that nuclear energy would be impossible without some kind of guarantee, and I seriously doubt whether EDF will ever make money even on that one.  But that was not what we promised ourselves - let alone anyone else.

The party's embarrassing new policy repeats the same glib non-position - no nuclear subsidies, when that is precisely what is now being agreed.

Don't get me wrong.  I support the coalition.  I think Ed Davey is doing an impressive job in the increasingly embattled position as Secretary of State for Energy and Climate Change.  I know how hard he has worked for a better deal on the new Hinkley Point nuclear power station.

I also know that everything now depends politically on denying that the fixed price guarantee is a subsidy.  It is - and it isn't the only one: there is another subsidy in the insurance against nuclear accidents and in the storage of nuclear waste for some centuries to come.  There are also loan guarantees to EDF.

It also needs to get through rapidly-changing EU regulations about energy subsidies, currently being taken apart by the Germans.

But it is the opportunity cost which enrages me.  Billion-pound-a-year subsidies are not that common, and imagine what we could do to the UK economy if that money - about £37.5 billion over 35 years - went into making the UK the manufacturing centre for renewable energy for the world.

And imagine, if we did so, how much lower our power bills would be at the end of it.

Sunday 20 October 2013

Why Ocado needs to take on Amazon

I must admit, I am caught on the horns of a dilemma.  I've been writing this blog nearly every day since February, since completing the Barriers to Choice Review for the government.

I am in favour of choice.  It is a difficult word; I've sat in meetings with hospital doctors when they all folded their arms and stared at me, just because the conversation was supposed to be about choice.  But, for all the ambiguities and difficulties, there is something a good deal worse than choice - no choice.

But what I see around me is often the signs of shrinking choices.  Most of the secondary schools in the area I live in have been taken over by a carpet millionaire.  Where is the choice there?

I would like to move my business account to a local bank which will invest my savings in local enterprise.  There isn't one.  Where is the choice there?

And I would like to use this blog to link to my books so that people can buy them somewhere else apart from a monopolistic website like Amazon.  Where is the choice there?

There is my dilemma.  I write this blog partly to remind people occasionally that I've written some rather readable books which they have almost certainly failed to read yet.  There are other websites to rival Amazon, but they don't really fit the bill.

There is Hive, which is brilliant, but they charge postage on orders under £15 (I use them to buy books, but it is more difficult selling books that way).  There is the Book Depository, but the regulators - in their wisdom - allowed Amazon to take them over.  There is Waterstone's, but they don't sell my ebooks.

It is a sure sign of monopoly when you don't actually have any choice.  I have a choice when it comes to buying, and I certainly exercise it, but Amazon is now so powerful that it seems pointless to sell books by linking to anywhere else.

In any case, this isn't just about books.  Amazon already operate an unfair advantage by doing their business offshore and avoiding UK tax, which their UK competitors can't.  The future for any competition seems bleak - not to mention the tax receipts from retailing.

What we urgently need is a potential UK competitor to Amazon.  I would certainly use them - no, let's be clear - as long as they are efficient, I am absolutely aching to use them.  So here is my solution: it is time for Ocado to gear up and take their rightful place.  I'm right behind them...

But it will require the UK government to step in and make sure that any new UK competitor can operate effectively and fairly against tax avoiders like Amazon.  They can't allow the tax avoiders to drive out the rest - but that will happen, unless they ACT.

Saturday 19 October 2013

The unexamined trolley wheel is not worth pushing

Some years ago now, I sat down to write a book about public services, partly because I was so angry with the way the Labour government had subverted them - making them more expensive and less effective - and partly because I hoped to provide an agenda for Nick Clegg, in case he ever became leader of the party.

The trouble was, I was too angry.  I had to re-write the book twice before it was finally coherent enough to be read, which it is being now, I'm glad to say (The Human Element).  By then, Nick Clegg had become deputy prime minister.

Ah yes, the travails of an author's life.

I mention it now, having read the interview yesterday with Jeremy Browne in the Times, because I wonder if my rage at the last government for their public service record was a sign that my wonky trolley (as he put it) veered to the left or that it veered to the right?

The wonky trolley metaphor is Jeremy's not mine.  All parties have a few wonky wheels, but then so do we all as individuals.  Some of us veer of left or right at the slightest provocation.  The unexamined trolley wheel is not worth pushing, but - having examined my own wheels pretty closely - I still can't see which way they veer.

Maybe it is obvious to everyone around me, and they daren't tell me, but it isn't obvious to me.

We have to be kind to Jeremy Browne, who hasn't finished his deprogramming after his escape from the clutches of the Home Office.

He is right that the Lib Dems will be making a mistake if they paint themselves too much as outsiders in the coalition - they haven't often got their own way, but there are achievements of recent years they will want to share the credit for.

I know, it won't be the bedroom tax, or subsidising Chinese nuclear companies.  But if there is nothing Lib Dems are proud of, then their tactics would be quite different - and some of what they are proud of is not going to be their achievement alone.

He is also quite right that the Lib Dems have the occasional wonky wheel.  Some undoubtedly veer to the left, whenever the party starts worrying about private ownership instead of scale and flexibility and humanity.

But it worries me far more when it veers in a corporate direction - suspicious of what people and communities can achieve on their own account.  When it puts safeguards ahead of community enthusiasm (free schools).  When it prefers centralised solutions to local ones (nuclear energy).

But they also have another wheel that, rather than veering, just stays completely stuck - so stuck that you might imagine it veers the trolley to the right.  It is the wheel marked economics, and for some reason - even when they put on their glasses - many Lib Dems are unable to see it.

I've wondered often why this is.  I think it is because, when socialists are naive about power and can't see it as a problem, liberals tend to be naive about money in the same way.  They somehow see it as outside their responsibility - isn't Captain Mainwaring dealing with that? (No, he's been replaced by risk software at regional office).

This is not a criticism of Danny Alexander, who has been very effective, but his responsibility is saving money, not shifting the way the economy works.

But the real problem with the trolley metaphor is that assumes the right path for a Lib Dem trolley is rigorously central, turning neither this way nor that, as if Liberalism was about compromise.  Whereas the truth is that the absence of the Liberal tradition in UK government for a century has been a tragedy for this country and the world.

No, the problem with the Lib Dem trolley, as far as I'm concerned, is not that it veers one way or the other (though it does), but whether all its wheels are working - and, above all, whether it is designed to move in a Liberal direction in the first place.

Friday 18 October 2013

It isn't just bankers' bonuses - it's ALL bonuses

The European Union's financial services commissioner Michel Barnier has warned of the UK's isolation on the issue of bankers' bonuses.  It is true that, of all the aspects of Europe that annoys the Conservatives, it is this issue which has taken George Osborne to the European Court of Justice.

But the real problem isn't really capping bonuses - though that may have been the most possible of all the political alternatives - but of paying bonuses at all.  And not just bonuses to bankers, but bonuses to pubic service managers and everyone else.

I say this partly because of my scepticism about reducing complex tasks to simple numbers, but also because of reading Michael Lewis' classic The Big Short.

This book is destined to become the non-fiction classic of the sub-prime crisis, following the handful of traders and financiers on Wall Street who could see what was about to happen.

At every level, in the disaster that destroyed the world's banks, the behaviour of staff was dominated by bonuses related to narrow targets.

The mortgage sales teams were only interested in how many mortgages they could sell, not whether they could ever be repaid. The bond departments were only interested in packaging up new bonds, packed with mortgage debt, rather than whether or not the debts were sound.

Even the ratings agencies were dominated by targets, by how much they could earn from the bond departments, rather than whether the bonds were accurately rated.

And here's the problem: bonuses over-simplify jobs, sometimes disastrously.  Just like targets, bonuses persuade people to focus on reaching simplified numerical targets which can't possibly sum up the complexity of the broad objectives they really need to strive for.

They are also easy to game.  Like targets, bonuses narrow complex objectives down to impoverished output figures.  They sacrifice broad improvement for narrow outputs. You might as well replace highly paid human beings with extremely expensive machines (hence the picture above).

They also fall foul of Goodhart's Law (when numbers are used for control purposes those figures will always be inaccurate).

So, yes I would cap them.  It would reduce house price inflation in London, which is exacerbated by bank bonuses.  But I would go further: I would tax all bonuses at 90 per cent.

All bonuses boulderise and subvert.  Everybody's.  Our companies would be better managed as a result and so would our services.

Thursday 17 October 2013

Why politicians love monopoly

I don’t mean Monopoly, of course, a game designed originally by land tax campaigners to raise the issue – but the threat that comes to our economy and well-being from allowing companies to build up a stranglehold on their market.

Why don’t they get it?

Environment minister Owen Paterson is an intelligent enough fellow, yet he ranted on this week about opponents to GM crops as “wicked” and as a “dark shadow”.  For a moment it appeared that he didn’t understand what the objection is.

So in case he is reading this (hello, Owen!), here is a guide to what the economic objection is to GM crops as the only way to feed the world:

1.     The evidence that monoculture is the only way to feed a growing population depends on peculiar, monocultural surveys of crop growing in developing countries, which ignore everything unless they are the main product of any farm – giving an agri-business of view of what is actually the sheer diversity of small farms, and encouraging a wrong-headed and large-scale solution.

2.    Most evidence (Amartya Sen, for example) also suggests that small-scale farming is considerably more efficient than large-scale farming, certainly when it comes to how much is produced on marginal land.

3.    Diverse, small-scale farming – on which so many lives depend – becomes increasingly difficult if farmers can’t share seeds, which they are forbidden to do using GM technology, driving many into ruinous debt.

4.    Ten companies already control three quarters of the global seed market.  Monopolies drive up costs.  Costs create poverty.  Poverty creates poor diets and vitamin deficiencies that so-called ‘golden rice’ is supposed to put right.

The technology itself may be healthy enough – I don’t know, I’m not a scientist – but this isn’t about science; it is about economics and the likely effect of increasing the power of the seed company oligopoly on the world market.

A generation ago, it would have been obvious – partly because the Liberal warning against monopoly was stronger – that this would have increased poverty.  Why not now?

Why do politicians ignore monopoly in the energy market (but fiddle about trying to reduce green levies)?  Why do they ignore monopoly in the media market (but fiddle about trying to regulate)? 

Why don’t they see that it was Amazon and Google, two semi-monopolies, which failed to respond to their criticism about paying tax – and Starbucks (not a monopoly) which did respond?

But if I'm honest, I may have a clue about the answer.  Conservatives welcome monopolies if they have been legitimately created, because they fetishise the laws of the market, even when markets fail.  

Socialists welcome monopolies because they have an old-fashioned and fatal attraction for strong, centralised authority, which explains perhaps why Blair and Brown preferred a few monopolistic retailers - they felt, rather naively, that they were easier to control.

Do we really believe that handing ownership of seed technology to a handful of global corporations will make them easier to control?  

If GM is ever going to work, it has to create more competition in the market, not less - and more diversity, not less.  It has to specifically help small farmers.  If it helps small farmers now, then it does so despite the growing monopoly involved, not because of it.  

Now, Owen, am I really wicked to say that?

Wednesday 16 October 2013

The art of not devouring our children

I remember, years ago, maybe even as many as 20 years, I happened uto come across a copy of the Green Party’s newspaper.  I was interested in party newspapers at the time because I had just accidentally become editor of Liberal Democrat News.

The Greens' equivalent included an article on the front page explaining that the party was in the midst of a financial crisis, and they were therefore making their fund-raising department redundant.

It was a wonderful example of how politicians of all kinds (and not just politicians either) get fatally muddled between short and medium term objectives.

It didn’t matter that this was, at the time, a very small political party. They still got muddled.

The same muddle feeds into decisions like closing community support schemes for mental health, and then wondering why demand for beds starts to increase, and all the other failures to prevent that bedevil public services in the UK.

I thought of all this, reading Nick Clegg’s very sensible comments about green energy yesterday. It ought not to need saying, but of course reducing funding for green energy now will leave us that much more dependent on foreign fossil fuels in the future.  Unfortunately, it does need saying.

For some reason, the government is reviewing its green levies on the grounds that we need to bring down people’s rapidly rising bills. If that was the only reason for the rising bills, they might have a point – but they are not.

Like the Green Party’s fundraising department, making the fund-raisers redundant would cut costs for a while – but then multiply the problems.

Energy bills is Exhibit A. They are rising partly because the supply market is a semi-monopoly, very hard to break into, and partly because of our continuing dependence on fossil fuels which are increasingly expensive.  Of course, it is partly also investment to try and make us more independent in the future - and to bring down bills then.

Cutting the green levy would mean slightly cheaper bills now, but only at the cost of increasing them in the future, for our children.

But Exhibit B is more discouraging. This time, the Lib Dem side of the coalition stays silent.

As David Cameron and Ed Balls both seem to agree, everyone should have the right to own their own home. But instead of hammering out a policy package that might bring house prices down in the southern half of England and the other hotspots, the Treasury puts in place the Help to Buy scheme.

Most economists seem to agree this will raise house prices in the medium-term, though not always for the same reasons.  Prices are now rising at 0.5 per cent a month, which all adds up...

The point is that, if you make mortgages more affordable, by extending mortgage terms or calculating income in new ways, or by subsidising the deposit – but still fail to do anything to bring down the prices – then they will rise.  Of course they will: it is a classic example of inflation - houses will always be too scarce, so more money will always make prices rise.

There used to be a policy mechanism to keep them low, but they abolished the Corset in 1980, and I tell the strange story in my book Broke: Who killed the middle classes?.

So yes, Cameron and Balls are right. People should be helped onto the property ladder – but not at the expense of their children, who will be condemned to a life of dependence on the whims of landlords, paying exorbitant rents because these are linked to property prices too.

There has been comment from the direction of the Treasury that we are not in fact in the middle of a house price bubble.  This may be true compared to 2006 (it may not too), but we are still in a gigantic and ultimately ruinous house price bubble that has lasted three decades.

If average UK house prices rise in the next 30 years as they did in the last 30 years – thanks to Help to Buy and whatever follows it – then the average home will cost £1.2m.  A disaster for our children.

A disaster for governments too, because they will have to keep on subsidising deposits to keep up with the rises.

For some reason, as well as getting muddled about short and medium term objectives, politicians seem to get confused by anything that stretches back beyond the previous government's term of office.  If there isn't someone to blame, perhaps, it isn't a problem.

It is easy to be rhetorical about this, and wring hands in despair.  But the system encourages short-termism.  We've known that for years.  But when it seems likely to solve my problems temporarily at the expense of my childrens' lives later, I start to get cross.

So will other parents.  This isn't a technical issue, it is an issue about looking after our children's futures.

Tuesday 15 October 2013

The American radical optimist, and what he implies for us

We don’t have anyone quite like Gar Alperovitz in the UK. He is both a Washington insider, a thinking journalist and a political academic.

He is compelling and inspirational. I have watched him hold an audience in the palm of his hand, speaking without notes for over an hour, in a small rural town hall on a snowy night in Massachusetts.

But he is another rare thing: he is a radical optimist in the great gridlock that is American politics, now apparently shut down for all eternity.

His new book What Then Must We Do? sets out how a new economy – mutual, local and innovative – will underpin a new future for the USA, which will be every bit as revolutionary as the original Declaration of Independence.

For the USA, you could also read UK – the same prescription applies here. For Alperovitz, it is an approach that has the potential to break through the logjam consensus around economic solutions that patently no longer work.

This is New Economy Week in the USA, run by the New Economy Coalition, to which I have been distantly involved in giving life, and Gar is a board member.  The week's slogan is: ‘A Just And Sustainable Economy Is Emerging. Let's Make It Visible.’

This is how he puts it:

"I don’t think we here are talking about projects alone, I don’t think we are talking only about entrepreneurship, I don’t think we are talking only about impact investing.  I think we are talking — and I sometimes wear a historian’s hat — I think we are talking about laying down the foundations. … We are establishing the pre-history in this work, step by step, of the possible great transformation."

This is interesting.  Back in 1999, my colleagues at the New Economics Foundation described the similar shift that was happening here, but achingly slowly, as the 'new economy'.  It conflicted somewhat with the similar way of describing the boom going on at the same time, and it was earlier in the process.

But Alperovitz goes further.  He sees this potentially game-changing sector emerging, not despite the logjam in politics and the economic downturn, but because of it.

Simply because the normal channels for achieving change have seized up, then this combination of mutuals, local banks, social enterprises and local government 'social value' procurement, is beginning to flicker into life.  The only thing that can stop it is if conventional politics and economics recovers, and that seems unlikely.  It is a win-win situation.

He describes the birth of this movement in an article for The Nation as the disastrous moment in 1977 when Youngstown Sheet and Tube closed down in Ohio, putting 5,000 steel-workers out of work.  A plan by a steelworker called Gerald Dickey came within a hairsbreadth of re-opening the plant under the ownership of the previous employees, but the Carter administration unravelled before it could work.

Yet the debate and publicity around the idea was so widespread that Ohio is now a kind of Ground Zero for mutual enterprise, providing a democratisation of the economy, and also - as it happens - a broadening of the tax base in the rust belt.

I think he is onto something, and it is the same here.  The emergence of a mutuals and social enterprise sector has to be local, so it is held back by the absence of local banks in the UK, but the ice is cracking and - as long as the economy fails to deliver for most of us - it will continue to develop.  

It is a potentially life-giving kind of economic development, and - if it goes far enough - it will change everything, driving out conventional Right and Left.

More on why we need a new kind of enterprise in my book Broke.

Monday 14 October 2013

Targets culture and the spirit of '52

"We're sick and tired of your voice in this country," Stanley Holloway tells the bureau-crat speaking from the loudspeaker in the Ealing comedy Passport to Pimlico, released in 1948 in the midst of a Labour government dedicated to the 'spirit of '45'.

Holloway plays a salt-of-the-earth type whose ambition is to build a playground on the local bomb site.  You might have dismissed such an insult from any other character in the film, but it carries weight because it comes from him.

Those who currently wrap themselves in the Spirit of '45 forget how quickly and how resoundingly the public rejected that mixture of suffocating, detailed, bureaucratic control that hung over from the war, but also seemed to go hand in hand with the spirit of the Attlee government.

It is no coincidence that the Ealing comedies often seemed to include Whitehall characters who, though not tyrants, were horribly stuck.

I was thinking of this yesterday afternoon, which - because of the incessant rain - involved watching the 1952 film The Titfield Thunderbolt again.  I can now almost recite it.  It is one of the most underrated of the Ealing films, and there is a sub-plot about the humanising of the town clerk.

But there is also another symbolic Whitehall figure, the railway inspector from the Ministry of Transport (Mr Clegg), and here - although I had watched this many, many times before - my attention perked up.

This was the man who sits measuring things and making his calculations on his forms, while he misses entirely the fact that the train he is inspecting has broken free from its engine, and is being pushed along the track by crowds of local people.

Both films were written by T. E. B. Clarke, one of the only Brits to get a screenwriting Oscar, and you can see the kind of way his mind worked: both films are, in their different ways, hymns to what we once called the Big Society - they are about communities taking local institutions into their own hands.  And in both cases, Whitehall is a major threat.

This was fascinating to me because I realised that the targets debate is not a new one.  Even under Attlee, we had targets in public services, and - just like they did under Blair and Brown - they bore remarkably little resemblance to what was actually happening.

I have a friend who was a teaching assistant some years ago and had to put up with the form teacher (also an Ofsted inspector) hiding in the stationery cupboard for most of the year, while the school rose rapidly in the league tables.

But something has changed since 1952.  We are in much more confusion about how much the numbers relate to reality.  In 1952, it was obvious that they didn't.  Now, after being battered by New Labour and McKinsey and PA Consulting, and all the other apologists for targets, we are less inoculated against it.

There were black holes in public services in 1952, from the geriatric wards and mental health services to the secondary moderns.  But what about the rest?  If people could tell the difference in those days between target statistics and reality, we might imagine that - at their best - 1952 services were more effective than they are now

They certainly relied more on face-to-face dealings with professionals, which are able to deal with variety far better than IT systems.  That is the proposition - how can we tell?

More about incessant and obsessive measurement in my 2001 book The Tyranny of Numbers.

Sunday 13 October 2013

Why framing doesn't work

"We are now fully into the swing of things and [REDACTED] is a busy learning hub.  We have a number of clubs operating before and after school and some of our enrichment visits have already taken place..."

So begins the latest newsletter from my children's primary school, and there is a problem here.

I don't know what a 'learning hub' is, and - even having googled it - I'm none the wiser.  'Clubs' I understand, but for 'enrichment visits' I think this is little more than what we used to know as good old 'school trips'.

Does this slavish devotion to jargon matter?  Well, I think it does, because it is imprecise - because it gives the impression that something new has been described: some new idea or institution that deserves management time, when actually something new hasn't been described after all.  It's the same old same old.

Which brings me to the irritating contagion of a new buzzword in political circles, called 'framing'.  Actually, it isn't new at all: it is a highly complex set of social science concepts first coined in 1972, and thanks to George Lakoff - a cognitive linguist with an interest in metaphors - it has been in American Democratic Party circles for ages.

Metaphors are important, because they set up a political argument for success or failure.  But there is a problem in practice.  Because it doesn't doesn't really mean much more than tweaking a few mild metaphors.

The UK left has been particularly gargling with the idea, but - despite all the effort - the huge framing imperative tends to be conjuring with rather familiar metaphors (otherwise the old left gets suspicious) or new kinds of description (basically, another mind-numbing kind of political correctness).

I have a theory about this.

The problem seems to be that, once again, the technocrats have taken over.  Campaigners seem to believe that this is a form of calculation, that all they need to do is to move ideas around in some calculated way, whereas - like any other kind of endeavour - it requires a burst of inspiration.

I have a feeling this is why we get so many clod-hopping attempts at 'framing', especially on the left.

 They think it is a technical matter, and they are nervous about anything too new. See for example this recent critique.  "In a civilised society, the answer to Unspeak is not more Unspeak," said Steven Poole, and he's right.

The campaign I was involved with which really 're-framed' the debate was the Clone Town Britain campaign from 2004 onwards, which successfully re-set the terms of the debate about small shops as an aesthetic issue - and had huge impact as a result.

It involved no systematic consideration of 'frames' or anything like them.  It stemmed from a moment's inspiration by my friend and colleague Andrew Simms.  No attempt at framing, not even any mention of framing, no re-arrangement of very familiar phrases in a slightly different order.  

It was something new, and I have a horrible feeling that the whole business of framing in practice gets in the way of anything very new at all.  It may in fact be a blind alley.

Saturday 12 October 2013

Why we should all have been artists, actually

I've respected Andrew Marr's writing for years, since his days as a columnist on the Independent on Sunday.  

To be honest, it is that print journalism that I remember.  Broadcasting is so ephemeral that it is really hard to remember more than a few snatches.  I wonder if that is one of the reasons why he revealed that he wished he had been an artist.

This is not how the technocrats see things, of course.  They prefer to label people definitively so that they can count them, but most of us break out of categories and I believe most of us also hanker to create.

I've written three novels (see Leaves the World to Darkness, for example) and rather too many poems for the good of the world.  But the fact that I managed it gives me great satisfaction too.  I have produced physical books (yes, the website of The Real Press needs updating, but I have lost the code - a shocking revelation).  Yes, I want to create too.

I know conventional economics suggests that we hanker to consume.  I think we also hanker to produce, and more of us are finding ways to do that.

This is not a new idea.  Alvin Toffler came up with the concept of a pro-sumer in the 1980s.  But it is beginning to happen, with artisan foods and Etsy and creative writing workshops until we are knee deep in them.

And this is also the antidote to the inhumane idea that we should be one thing, and the failed economic doctrine of comparative advantage, where one place in the world specialises in making radios and one place carrots, and the rest of us get poorer.

The truth is that we are creative, diverse people, and the more we produce as well as consume, the more money money will flow locally as well as internationally, and the more we will claw back a little economic self-determination.

Well balanced economies require both, and preferably near to each other - even better if we are both doing both functions.

Friday 11 October 2013

The silence of the lambs

"What's sad, baffling and dangerous is that the attacks now come not only from governments but from other newspapers too. We need newspapers willing to do their job, rather than those ready to cheer on the self-interested deceptions of the powerful."

So says the editor of El Pais in defence of the Guardian this morning, after its mauling by the Daily Mail yesterday.  Nick Clegg also says that: "There is a totally legitimate debate about the power of these technologies."  Quite right.

But where are the other voices from the UK defending the right of the press to ask difficult questions?

I remember, it was the scandal at an animal lab called Huntingdon Life Sciences that made me realise the urgent truth of Lord Acton’s famous dictum about power.  Secret filming in 1997 revealed that some of those who worked there were systematically cruel to the animals in their care, secretly punching dogs in cages.

It was never really explained why.  Just because they could, apparently. It happens again and again, in hospital scandal and care home scandal. When people are given unfettered power over others, there is a tendency for contempt to creep in as well, and priorities tend to get confused.  Power corrupts.

That is why the Guardian’s revelations of some of the information leaked by Edward Snowden was important to me. Here was a huge security apparatus, operating on both sides of the Atlantic and without the knowledge of the cabinet, and without proper oversight, authorised by themselves to crack the codes of the internet providers to listen and read.

Nobody, least of all the Guardian, has denied that interception needs to happen and to happen secretly.  But watch security staff in operation and you will see why this activity needs to be overseen.  Left to themselves, there is a tendency to concentrate - not on the really dangerous stuff - but on those who question them or fail to look sufficiently compliant.

These things matter.  That is why the USA is now moving to bring it under some political control, without which experience shows things tend to unravel.

So what are we to make of the pompous, not to say portentous attack, in page after page of yesterday's Daily Mail on the Guardian's editor Alan Rusbridger?

No evidence is offered that the Snowden revelations have actually damaged national security, except the word of the new head of MI5.  And since he and colleagues are using strangely high-flown political rhetoric - "the worst blow to British intelligence ever" - it isn't wholly convincing.  What about Philby?  

But when one newspaper, which had previously been standing up for press freedom, launches such an attack on a fellow newspaper editor, you might expect other journalists to ride to his defence.  Or perhaps someone in the Labour Party.

Not a bit of it. They seem cowed in the face of the Daily Mail, and their claim that somehow press freedom means only asking the difficult questions they approve.  A deafening, slightly fearful, silence has descended.

The Mail also has the BBC in its sights, which has also been bizarrely silent on this story throughout.  But the real story emerged at the end of an equally portentous Mail editorial yesterday, which said this about Rusbridger:

"As for his paper's attack on us over the Labour leader's father..."

It appears that yesterday was also about the interest the Guardian took in flurry of excitement after the Ralph Miliband attack last week, reminding readers of the Mail's support for Mosley and Mussolini in days gone by.  

Yet Ed Miliband is among the silent lambs now.

Thursday 10 October 2013

Outcomes, McKinsey and King Canute

Some years ago (2005, in fact), I was asked by the Environment Agency to review their new indicators, as we used to put it in those days.  They all seemed very sensible but one, in particular stood out.  It was the indicator which specified the number of centimetres the sea levels have risen.

There was a true outcome measure, at last.  I knew I would recognise one if I ever saw one.  Yet it was also a measure they had almost no power to affect.

It was as if King Canute had set it as a priority indicator for his own government (hence his picture here).

Most management consultants still talk about outputs and outcomes as if they were absolute categories, as if an outcome was a concrete thing beyond argument.

Nothing could be further from the case. What is the outcome of the NHS for example? The number of patients successfully treated? Or is it the health of the population? Because those are diametrically different ideas and require different measurements and probably different institutions altogether.

Outcome measurements assume that our institutions should be permanent. They are about organisational control. They don't let us imagine whether we might be better off with different institutions instead. There is a whole continuum of potential outcomes, none of which are definitive - except possibly sea level rises, but even then I have my doubts.

All these measures, outputs and outcomes alike, are susceptible to the little boy's question in the Emperor's New Clothes.  Yes, the sea levels are still low, but is the environment safe?  Yes, the school league tables are rising, but is their education any good?

At one end of the outcomes continuum, they are little more than the simple purpose of existing institutions. At the other end, they are usually outside the control of institutions anyway.

I know this is shocking to some people.  What, you don't believe in outcomes?  The jaw falls open.  But, no I don't.  The whole idea is a wrong-headed attempt to rescue clapped out targets from the wastepaper basket.

I've subjected you to this small rant because I have been sent an article by the management consultants McKinsey, who are after all the consultancy most associated with this nonsense.  And, staggeringly, it is still pedalling this old stuff.  It is called Delivery 2.0.

I long to take them by the scruff of the neck and point to our public services, hollowed out by the business of assigning measures to a handful of 'deliverables', and setting up elite delivery units to browbeat officials - and gargling with measures which, by their very nature, are one-dimensional, bowlderising, distorting and rendering ineffective.

Yet here is the McKinsey Museum Piece:

"It’s a cliché, but it’s true: what gets measured gets managed. Performance improves when it is managed. Internal performance management should begin by assigning accountability for outcomes to individuals. Once accountability is established, performance dialogues—regular conversations about each goal—are essential. One prime minister reviews the progress of six priorities every week; every six months, he holds a face-to-face performance dialogue with each minister.  These conversations must be based on standardized, clear management data (ideally available online) that can be reviewed and managed in real time. And the dialogues must be reinforced by rigorous evaluation and consequences (good and bad). Many governments are constrained in this regard; they may not be able to reward great performances with bonuses or condemn bad ones by firing the perpetrators. But they can publicly acknowledge outstanding people, promote highfliers faster, and move laggards to lower-profile roles."

What I find most enraging is that McKinsey seem unaware of Goodhart's Law, which explains why this approach has failed so miserably: a measure used to control will always be inaccurate.  However useless frontline staff and their managers may be, they will always know how to finesse the data.

In fact, this kind of approach makes finessing data their absolute priority, and far more important than delivering a good service.

McKinsey are desperately behind the times here.  The governments and organisations that can embrace complex interconnected objectives, by operating as close as possible to the frontline, are going to inherit the world.  Those which try to subject them to the McKinsey approach are going to slap themselves on the back and wonder vaguely why nothing works. 

Wednesday 9 October 2013

Big Landlord is watching you

I've been listening to a programme about a man from East Germany bursting through the Berlin Wall in an armoured car in 1963.  It reminded me of a good test of Liberalism, which is this: where would you rather live?

Despite the sympathy from the left in Western Europe that East Germany occasionally managed to conjure up, I am not aware of any examples of people from the West trying to escape to the East across the Berlin Wall.  It was all the other way.  Ask yourself: where would you rather live?

I try and use that simple question for deciding - just to conjure a question out of the hat - whether we ought to support home ownership or home renting for the mass of the population.

The reason I choose this example particularly is because I was on the receiving end of a particularly thoughtful review of my book Broke: Who Killed the Middle Classes? by the doyen of Lib Dem bloggers, Mark Pack (thank you, Mark).  In it, he says that I am "not easily categorisable on the left/right spectrum" - which I take as a huge compliment.

But he also says this:

"It would have been interesting to hear more about whether or not David Boyle wants to make renting become a middle class norm and if so,the policies to make this a good outcome..."

The answer is that I don't.  Not because I believe that the current method of distributing homes to people works - it patently doesn't, plunging people into 25 years of indentured servitude to their mortgage provider.  But because I tend towards John Maynard Keynes' enthusiasm for "the euthanasia of the rentier".

For all the effort by the Fabian left to enthuse people about a life of renting, it is only too obvious why - generally speaking - people want to own homes rather than rent them if they possibly can (there are obvious exceptions to this, but you get the point).

It means there will come a time when they are not paying out rent.  It means they can have funny wallpaper or pull down walls or do strange things to the garden.  It means that, once the mortgage is paid off, they have an asset which nobody can take away, even when they fall on hard times.  It means they can work as authors or artists or  poets without worrying where the rent is going to come from.  In short, it underpins their independence.

Of course people want to own.  It makes them that much more economically independent, and in an uncertain world that is enormously important - it means that their home will not be taken away either by state authority or by the power of the market.  That is why people like G. K. Chesterton supported small-scale property ownership as the radical solution - and why I do.

To suggest that people should embrace renting because it might be good for them may not be a lordly 'let them eat cake!'  But it is a lordly 'let them live in rented accommodation!'.

It really makes no difference if the landlord is the public or voluntary sector.  As yourself: what would you prefer?  Especially as the public sector has an appalling record since 1960 of designing homes for their  poor tenants.

But don't let's muddle this up with the wholly indefensible housing market, which - far from underpinning independence is now actually hastening slavery.  It spreads indebtedness, undermines our ability to choose a career (we have to work in financial services) and looks set to impoverish our children.  It also raises rents. 

And it excludes an increasing proportion of the population.  So much for a property-owning democracy.

The decision to press ahead further with the Help to Buy scheme this week is a particular disaster.  It makes homes more affordable without doing anything to bring down prices, which can only push them up further.  If prices rise in the next 30 years in the UK like they have in the last 30 years, the average UK will cost £1.2m - a kind of debt bondage for nearly all of us.

So what should we do?  The answer has to be create parallel home ownership schemes which makes homes available to more people on a different basis, and which also brings down prices in the market.

Community Land Trusts are one way forward, dividing the ownership of the home itself from the ownership of the underlying land, which is then held mutually.  But that relies on getting hold of the land affordably.

My own priority would be to shift money from regeneration into building homes for sale at a nominal price - an end to the lie of 'affordable' homes at £350,000 - on condition that the home can only be sold on at the same price it was originally sold for.

If we can build enough, and if it provides a genuine alternative, a parallel housing market, then it may offer a lifeline out of the bizarre and tyrannical pyramid scheme that our homes have become.

Tuesday 8 October 2013

Dreaming of target-free schooling

I had a short argument about targets last week. It made me feel quite nostalgic. I haven’t had one for years, not since the coalition promised to do away with them.

They haven’t of course, though many targets have gone.   In fact, they have introduced new ones in the form of payment-by-results contracts, turbo-charged with money. But for some reason, the arguments stopped.

Maybe this is a sign that people are hankering a little after the old days, though they are not that different to today. Yes, I know that payment-by-results targets are supposed to be about ‘outcomes’ and old-fashioned targets are about ‘outputs’ – but, in practice, those are not very different, and equally perverting.  Real outcomes are not susceptible to counting.

There is a great deal of evidence that targets achieved what they were trying to do - of course they made the targets higher - but I’ve come across almost no evidence that they made services better.

Nobody after the Mid Staffs Hospital furore could possibly believe they also provide accountability or transparency – only for the narrow stuff that is actually being counted.

Perhaps there is a nostalgia setting in for the good old-bad old days of Deliverology and my book The Tyranny of Numbers (both circa 2001).

I thought of all this opening my Evening Standard yesterday evening to read, to my great astonishment, an op-ed article about education which I completely agreed with. I don’t think this has ever happened before. I am more crotchetty about education than anything else.

It is by the headteacher of School 21 in Stratford, Peter Hyman.  School 21 is a non-selective free school in Newham with pupils all the way from 4-18.

He argues, quite correctly, that we are getting increasingly good at organising schools as they were designed a century or so ago, and then he gives a brief portrait – though he doesn’t put it like this – of a target-driven school:

“A relentless focus on the basics, a boot-camp approach to behaviour management and massive intervention in Years 10 and 11 to convert every D grade into a C grade.”

There is the basic New Labour school design (though ironically, Hyman was an education advisor to Tony Blair). That is what targets did to our schools, and it is a credit to teachers that – despite this hollowing out – they are as good as they are.  Not just targets either but best practice, approved process, standards and single bottom lines in the shape of league tables geared too narrowly.

But of course Hyman is right. We need to get with what we need now.

As he says, we need to teach character as well as facts (and I’m not as much against facts as the chattering classes would suggest I should be). We need to teach children to be resilient and articulate and creative.

But what really grabbed my attention was this sentence:

“We believe that schools should be small, so that no child falls through the cracks and everyone has an education tailored to their needs.”

That is absolutely right. Factory-scale schools have been the direction now for a generation. They are the prime underlying cause of the middle-class panic. They infect our education system with alienation and inflexible systems – they are the precise opposite of the way we should be going.

According to American educationalists, the reason why received wisdom originally suggested that schools should be big was after the panic in American circles int he late 1950s, when they believed that the Russian edge in the Space Race was down to big schools.

Later, it was so obviously in the interests of the salaries of senior teachers that they have continued growing.

The first challenge to it came from Roger Barker, whose 1964 book Big School, Small School, with his colleague Paul Gump, first revealed that – despite what you might expect – there were more activities outside the classroom in the smaller schools than there were in the bigger schools. There were more pupils involved in them in the smaller schools, between three and twenty times more in fact. He also found children were more tolerant of each other in small schools.

This was precisely the opposite of what the big school advocates had suggested: big schools were supposed to mean more choice and opportunity. It wasn’t so.

Nor was this a research anomaly. Most of research has been carried out in the United States, rather than the UK, but it consistently shows that small schools (300-800 pupils at secondary level) have better results, better behaviour, less truancy and vandalism and better relationships than bigger schools. They show better achievement by pupils from ethnic minorities and from very poor families.

More on this in my book The Human Element.

But small schools is a long way from where we are now. And thanks to the failure of successive administrations in London to plan for their policies to raise the population, we now have even bigger schools, squeezed onto tiny concrete sites, crammers in more than one sense.

It is another reason why we need to reform and embrace the free schools idea, as eminently Liberal – as long as they are knitted into local authorities alongside other schools.

Monday 7 October 2013

Gagging, the Koch brothers and 38 Degrees

I showed my face at two of the party conferences this year, and I won’t say which one I was at on this occasion. But I heard an MP refer to what he called “the curse of 38 Degrees”.

For the uninitiated, 38 Degrees is a powerful campaigning platform, on the American model, that allows people to sign up for campaigns and to send emails to recalcitrant MPs or anyone else.

It claims to have achieved some amazing things, including the provision of free school meals. Extraordinary – and all this time, I was under the naive impression that Nick Clegg and team had been working on how to make that happen.  Apparently not.

I have taken part in some 38 Degrees campaigns. I knew the people who set it up. I even helped by advising them in its early stages.

But there clearly is a problem if MPs regard the process as a curse, when tens of thousands – maybe more – emails arrive in their in-boxes.

The problem isn’t around campaigning. It is the worry I have that none of my emails have ever been answered, and a nagging fear that they may actually be counter-productive or, more specifically, mistargeted.

On the occasions when I happen to know about the politics behind one of their campaigns, usually when it is directed at Lib Dem MPs or conference representatives, the political intelligence behind it is staggeringly inadequate. I don’t know about the other campaigns, but I worry about it.

I suppose it is my fault too. I know how few staff there are at the heart of the 38 Degrees machine.  Perhaps I should have picked up the phone and advised them again, but there is something about their raucous tone that now prevents me.

But here is why I’m writing about it now. Because I have just received another message from 38 Degrees urging me to give them money to help them campaign against what they call the ‘Gagging Law’, actually the Transparency Bill now going through Parliament.  Their description of the position is farcical.

And this is where my sympathy has finally expired, because it represents not just a misunderstanding – but a dangerous one, and one that will do nothing to prevent American-style oligarchs intervening in UK elections as they have in US ones.

As I write, the government has agreed – as they said they would – to make sure there is no misunderstanding, and to return the definition of ‘political activity’ to what it has been since 2000, when the Labour government first introduced the definition (but including rallies with an electoral purpose).

This is how John Thurso put the case, given that the changes he asked for have now been agreed:

"First the government has agreed to retain the existing definition of what non-party campaigning actually is: that is, activity that can “reasonably be regarded as intended to promote or procure the electoral success” of a party or candidate. Secondly, they have reverted to an existing definition of what constitutes 'election material', on which there is long established Electoral Commission guidance. These are crucial concessions, since those definitions have been in play since 2000, and no charity or non-party campaigner has ever claimed they were 'gagged' as a result."

Most charities operate under regulations from the Charity Commission which prevent them from getting involved in elections, and always have done, and it never stopped them from campaigning on the issues they care about whenever they need to. Nor should it.

I've got to be fair here.  38 Degrees have made the running, but they are backed by charities like NCVO and others.  I've read their briefings and I don't understand how using the existing definition will make the law any more ambiguous, but I do accept there is some existing ambiguity which this bill doesn't clear up.

So you might reasonably ask why the UK should have legislation about electoral activity by non-candidates at all.  The answer is summed up in one word: Koch.

The reason why this is so important is because of the Koch Brothers and their activities funding ultra-conservative election support in the USA, and those like them.

They set up lobby groups and non-profits to intervene, most of them well below the radar – but tax returns show that they spent $230 million in local interventions in the USA in the year before the last presidential election, and that was just through one of their organisations.

Look at the government shut-down, the blinkered oppositionism that has degraded American politics at federal level. That isn’t just about the Koch brothers, but we don’t want it here – we don’t want an open door to every oligarch who thinks they can intervene in our elections.

But 38 Degrees appears not to be bothered about that, as if somehow – if Koch UK was to land here – someone would rush in a law to prevent them. Some hope.

I’m not saying that they are somehow in league with Koch-style conservatism. That would be stupid. But they are being unbelievably naive – or they listened to the wrong people. Or something.

I know the bill doesn’t go far enough to rein in the lobbyists.  But the last thing we need in this country is shadowy Koch-like figures among the ultra-rich intervening in constituencies for elections and using their considerable wealth to do so.

Why doesn’t 38 Degrees? And why don’t they see that, if they allow themselves to become so politically partisan - as they are doing - they are more easily dismissed as a ‘curse’ and their power, such as it is, will slip through their fingers?

Which is a pity, because it is a good idea - or it ought to be.