Thursday 29 March 2012

Punishing failure

One of the suggestions made this week in the wake of last year’s riots is that schools should be fined for every pupil who leaves school illiterate.  It sounds like a politician’s answer: find a problem, criminalise it, and punish the transgressors.  No, they’re not, as I understand it, actually talking about the use of the criminal law in this case; but the thinking is very similar.
There’s a danger, of course, in generalisation and stereotyping.  I don’t accept the simplistic response which has been used by too many politicians that poor educational performance is the result of inadequate resourcing.  I think we can say, though, with a reasonable level of confidence, that taking resources away from those schools with the highest levels of illiteracy is unlikely to be the most effective way of targeting resources to where they are needed.
Admittedly, the current approach on targets and inspections isn’t working; but that doesn’t mean a system of penalties for failure is any more likely to succeed.
I’m reminded of a story I heard on a training course many years ago.  A UK company, it was said, had ordered one million microchips from a Japanese company, specifying a defect rate of .1%.  When the order was delivered, a small package of chips was separately packed along with a note saying that they didn’t understand why the customer wanted 1000 defective chips, but they’d packed them separately so they could be easily identified.
It’s almost certainly apocryphal, but it does highlight a difference in approach to quality control, where the Japanese company had built quality into its processes and procedures from the outset to ensure that the system as a whole succeeded, whilst the UK company accepted a level of failure as a given.
Schools are not factories and pupils are not coming off production lines.  Nevertheless, there is surely something to be gained from the idea that we build systems and process to ensure that pupils do not fail, rather than identifying failure at the end of the process and then punishing the schools.

Wednesday 28 March 2012

More lords a'leaping

It’s not that long ago that one Conservative peer decided to ‘help’ the cause of maintaining the Union by explaining the circumstances in which England might find it necessary to bomb Glasgow and Edinburgh airports.
Two more conservative peers used the Scottish Conservatives conference last week to offer further ‘help’ of their own.  Lord Trimble first tried to somehow link the SNP and violence and Lord Strathclyde referred to the ‘vanity-driven egotistical policies’ of the SNP.
Now it’s possible, of course, that Strathclyde merely got carried away with the rhythm of his own rhetoric, and doesn’t really believe that the SNP’s policies are based on vanity and egotism.  I tend to the view, however, that he really does believe what he said.
There are, of course, politicians in many parties who are driven by vanity and egotism, and success breeds success, so not even nationalist parties are likely to be immune to the disease.  But the idea that such thinking is the driving force for a party whose members have worked and sacrificed for generations – largely with little apparent prospect of success – in pursuit of a shared goal of independence for their nation is laughable.  There are far easier ways of sating vanity and egotism than that.
What his lordship demonstrates, however, is that many of the more traditional politicians have more than a little difficulty in understanding those who are interested in a goal rather than a rôle, and simply fall back on the facile assumption that everybody else must be motivated in the same way that they themselves are motivated.
It may be easier to portray the increasing numbers of Scots supporting independence as being somehow the dupes of the SNP's ambition and vanity, but the result is that he also demonstrates is why the defenders of the union are losing the argument.  Those who cannot understand the motivations of others cannot engage with them or respond effectively to their arguments.

Tuesday 27 March 2012

Dinners and donors

The rapid and inevitable resignation of the Conservatives’ co-treasurer as a result of the Sunday Times’ exposé was presumably designed to draw a line and move on.  I doubt that it will work though.  With a senior party official having told the media, albeit whilst thinking he was talking to potential donors, about private dinners with Cameron at Number 10, I don’t see how Cameron will escape the suspicion of dubious dealings unless and until he publishes the full list of those who have been his guests, rather than showing an initial reluctance, and then releasing a list of the guests who've given substantial sums when he came under pressure.
I can see why he might think that to be a private matter, particularly since it is likely to name genuinely private guests who’ve never donated a penny to his party, but it’s going to be difficult for him to escape that.  The idea that people donating £250,000 may have bought themselves an invitation to Number 10 may indeed be simply ‘bluster’ by a man trying to extract large donations (although that, in itself raises some interesting questions about obtaining money under false pretences), but it will not be proved to be such without more openness and honesty from Cameron.

And if he really wanted to get ahead of the game rather than display the bunker mentality which seems endemic to politicians in power, then he'd already be preparing to release lists of guests of private dinners given by other senior cabinet ministers as well.  The press will inevitably move on to ask what the chancellor's been up to once they've finished with the PM.  Better by far to be pro-active.  Who knows, he might even strike lucky - full disclosure might throw up some interesting guests of Lib Dem ministers, and turn a bit of the heat in another direction.
I was also interested in another aspect of the story which doesn’t seem to have received so much attention as the headline.  According to the Sunday Times story, both Cruddas and the lobbyist who acted as a go-between were well aware that accepting a donation from a foreign source was illegal, but were happy to both condone and facilitate such a donation.
Whilst the suggestion of setting up a UK subsidiary as a channel for money is not illegal – that is, after all, the route by which most of Ashcroft’s money reaches Tory coffers – the idea that the money could be passed by a company to individuals and then apparently donated by them is most certainly illegal.  Yet, if the story is to be believed, not only did both the co-treasurer and the lobbyist agree that this was an option, the lobbyist actually claimed to have discussed it with one of the party’s compliance officers, and reported that he had agreed it.  She even reported that the party would accept this because it did not ‘pry’.
It’s possible, of course, that this is just more ‘bluster’, but it at least hints at an institutionalised willingness to flout electoral law by turning a blind eye and not asking too many questions.  David Cameron may well be proud of his achievement in turning his party’s finances around, from a £20 million debt to being virtually debt-free.  But the questions as to how that has been achieved aren’t lust going to go away.

Monday 26 March 2012

More on regional pay

There was an interesting little sentence in the Treasury’s evidence backing up the issue of regional pay for last week’s budget.  It said “the public sector pays more than is necessary to recruit, retain, and motivate staff in some areas”.  In some ways it reveals a lot about the thinking and ideology behind government policies (and let us not forget that Labour also wanted regional pay when in government).
At one level, it displays an almost incredible degree of double standards.  The higher-paid, we have been told incessantly, have to be highly paid to reward their efforts; but it seems that the lower-paid should be employed for the lowest rate at which their labour can be purchased.  If we were to employ the same standards at both ends of the spectrum, the income gap would be a great deal smaller.  Does anybody really believe that we couldn’t “recruit, retain, and motivate” bankers (or politicians, for that matter!) for lower salaries than they’re currently paid?
At another level, it’s merely an obvious statement of a classic concept in economics – employers will seek to employ labour at the minimum pay for which their labour can be purchased.  The counter concept is that labour should seek to extract the maximum wage that it can obtain from employers; balancing the two is a major part of what collective bargaining is all about.
In one sentence, however, the government have effectively abandoned any pretence at neutrality in the capital vs. labour equation; they are coming down very firmly on one side.  Whilst, in context, this applies only to employment by the public sector, I cannot believe that they wouldn’t be guided by the same principle in more general terms; nor that other employers won't take their cue.
Perhaps we shouldn’t be surprised at that, but I can’t recall any government having previously stated so clearly and explicitly that it is in favour of lowering wages to the minimum level at which staff can be attracted and retained, as a matter of policy.  Not during the post-world war 2 consensus, anyway.
Little by little, over the past 30 years, the gains made by organised labour in the past have been eroded, by successive government of both colours, in the name of progress and flexibility.  The power of capital has increased while the power of labour has decreased.  Regional pay, on a rationale like this, is another step along the same road.

Friday 23 March 2012

Entrepreneurs and managers

The Government claim – of course – that their budget was ‘business-friendly’, and therefore likely to boost economic growth.  The aim is not unreasonable; but is their claim really true?
Certainly, there’s a good argument for reducing the level of corporation tax.  Leaving profits in companies to allow for reinvestment and taxing the money more heavily when it is taken out in salaries, dividends and share options should theoretically enable businesses to invest more, and is, in principle, something that I support.
The proposition is not without caveats however.  If the investment simply flows abroad to lower wage economies, then the businesses will still benefit, but the benefit to the rest of the UK economy is rather less clear.  And I’m not at all sure that a relatively small cut of 1p hasn’t been massively over-hyped in terms of its potential effect.
It will certainly benefit the larger businesses paying £millions in CT, but it won’t make that large a difference to the smaller and medium sized companies which are the real engine of growth in employment opportunities.  And many of those larger companies are currently sitting on large cash piles anyway – it’s not lack of cash which is holding back investment so much as lack of worthwhile investment opportunities.
Then there’s the second part of their ‘business-friendly’ agenda – the reduction of the top rate of tax from 50p to 45p.  The argument is that this reduction in tax for those earning over £150,000 will help and encourage entrepreneurs.  I’m unconvinced.
Whilst there certainly are some entrepreneurs on very high salaries, £150,000 is a salary of which most entrepreneurs can only dream; the level of tax which they’d pay on it is tomorrow’s problem, not today’s.  In fact, the majority of people in the UK economy earning that level of salary aren’t entrepreneurs at all, they’re rent-seeking managers.  Increasing their take-home pay doesn’t have any obvious connection with boosting growth.
That perhaps underlines my issue with the way that the UK Government is using the term ‘business-friendly’.  Creating a climate where businesses can grow and thrive, providing jobs as well as goods and services, isn’t at all the same thing as increasing the net rewards of the people running those businesses.  It’s more than a little disingenuous to conflate the two in the way that the government are doing.

Thursday 22 March 2012

Controlling lobbyists

Monday’s Western Mail contained this robust defence of lobbying and lobbyists from – as it happens – a lobbyist.  The article issued a dire warning that democracy itself is endangered by any attempt by government to control lobbying.  A little over the top, methinks.
Lobbying is, as the author says, a long-standing part of our democratic process, and I share his concern that a government proposal which applies only to ‘third party’ lobbyists “will not fulfil its main purpose of increasing transparency”.  That strikes me, however, as an argument for extending the scope of the proposal rather than opposing it.
I understand the concern he expresses about whether a comprehensive proposal might lead to a situation where no group, organisation, or individual could put any case to ministers without having first registered as a lobbyist, and posing the question in that way underlines the complexity of the issue.  But the fact that an issue is complex is not an excuse for ignoring it, which seems to be the desired outcome of the article.
It’s worth getting back to the nature of the concern many of us have about lobbying and lobbyists.  That concern is not about whether individuals, groups, or companies can talk to ministers about their concerns, and seek to promote particular approaches and solutions.  In itself, that is simply a normal part of democracy.  The concern is about fairness and transparency.
Do those who have enough money to spend on receptions, hospitality, and professional PR merchants, and even to employ former politicians and civil servants, enjoy an unfair advantage in gaining access to politicians and therefore in putting their case over and above ordinary members of the public?  And is there a danger that, as a result, policy decisions may be taken which favour those groups rather than the interests of society as a whole?
Politicians do not have to be corrupt to be swayed by regular contact (even if in a social environment with no mention of the policies which the hosts wish to change) to lean in a particular direction.  The whole process is simply relying on the social nature of people.  The government’s current proposals may well be deficient in getting to grips with the issues, but surely there can be little disagreement about their existence.
What threatens democracy is not an attempt to control and regulate lobbying, but the continuation of a situation where it appears that influence over policy can be bought.

Wednesday 21 March 2012

Regional pay - will he, or won't he?

We will very shortly know whether the Chancellor will or will not propose the introduction of Regional Pay as part of his budget.  The mood music has been confusing and changeable over recent days; the current balance of opinion seems to be that it will not be introduced after all.
If that turns out to be true, no doubt some will heave a great sigh of relief.  That looks premature to me, however.  Given the regularity with which the idea has been floated, by Labour and Conservative-Lib Dem governments alike, I think we can take it as read that our real masters – the senior civil service – are committed to the idea and will continue to press whoever happens to be in government at the time to introduce the concept.  History suggests that they’ll probably get their way eventually; this is not an issue which is simply going to go away.
There are good reasons to oppose it, of course.  Not only is it a direct – and almost certainly deliberate – weakening of hard-won rights to collective bargaining and equality of treatment of employees, it is also a mechanism for reversing the fiscal transfers which are inherent in the current unified approach.  It is, in short, a mechanism by which GVA and wealth are removed from the poorest areas and transferred to the richest.
It does however leave those of us who support independence with something of a dilemma, because it is inherent in our position that wage levels in the public sector should be set in Wales rather than for the UK as a whole, and it is easy to see why opponents suggest something of an inconsistency here.  Whilst there might be a difference in the underlying principle between the introduction of regional pay set at a UK level and the devolution of pay rates to Cardiff, the potential impact on individual pay packets may not look that different.
In the short term, devolution of power to set wages would almost certainly offer better protection for public sector employees in Wales than would be available for those in the poorer areas of England; it seems certain that the Welsh Government would use such powers to maintain a level of parity.
Longer term, though, there can be less certainty. 
There are two not inconsiderable practical issues.  Firstly, if wage rates across England start to diverge, with what level of wages would the Welsh Government seek to maintain parity?  London rates?  The England average?  Some sort of notional starting point enhanced by inflation?  The second is the question of impact on budget.  I don’t doubt that the UK Government would ‘adjust’ the Barnett formula based on what pay rates would be if they were set in London; maintaining higher pay rates than that would inevitably impact on other budget areas.
Then there’s the question of principle.  Why would an independent Wales – or even a devolved Wales with the right to set public sector salaries – always do so by reference to salary levels set elsewhere, rather than in line with local circumstances and needs?  As far as I’m aware, Dutch civil servants’ salary isn’t set by comparison with what is paid in Germany – why would the relationship between England and Wales be any different?
The context is different, of course.  Opposing the introduction of regional pay, and proposing the devolution of power over the issue are, in my view, the right things to do for Wales, even if they appear contradictory.  But we do need more clarity of thinking over the longer term consequences of the latter.  And the issue underlines the danger of looking at pay rates in isolation – devolving pay rates as a stand-alone matter may create as many difficulties as are resolved.

Tuesday 20 March 2012

For England, see Wales

The theological objections to same-sex marriage voiced by some religious movements are far from being as black and white as their proponents claim.  After all, other denominations worship the same god and follow the same religious scriptures without raising the same objections. 
But I see no reason why the churches should not be entitled to their view on the issue, and be exempted on religious grounds from any compulsion to carry out marriage services in the case of same sex couples, which is basically what the government is proposing.  Indeed, as I understand it, they’re under no compulsion to carry out mixed-sex marriages, if the individuals concerned do not belong to, and follow the teachings of, the church concerned.  There seems to be no reason to treat same-sex couples any differently under the law.
But what some of the bishops and hierarchy seem to be saying goes rather beyond that.  They are not simply arguing that adherents of their own denominations should not be allowed to marry under their rites, they are arguing that parliament should not legislate to allow civil marriages either, and the basis of that argument appears to be that the religious objections of their churches should also apply to those of other religions or of no religion.
Insisting that rules laid down by their voluntary non-state organisations must also be followed by everyone else is a step too far, and the UK Government is, in my view, right to over-ride such objections and proceed with their proposals to give same-sex couples the same rights as heterosexual couples.
Perhaps it’s also time for England to follow Wales in breaking the link between church and state.

Monday 19 March 2012

Not so much difference

With a budget on the horizon, there’s increasing speculation about tax changes, and with the UK Government being a coalition, the differences of opinion between the two partners are increasingly being played out publicly.  The Chancellor is being egged on by some in his own party to reduce the burden on the higher-paid in the interests of job creation, whilst the junior partners in the coalition are keen to be seen to be pushing the interests of lower earners.
The Lib Dems are pushing hard for an increase in the threshold at which income tax kicks in, arguing that it will help some of the lowest earners.  It will, of course; but the biggest benefit in terms of a reduced tax bill from that change alone will go to the highest earners, who will save 50p on every extra pound below any new limit, whilst the lowest earners will only save 20p on every such pound.  I don’t disagree with the Lib Dems’ call in principle, but it makes most sense if backed up by a reduction in the other tax thresholds and/or a tax increase for the higher paid. 
Some Tories, on the other hand, are urging the Chancellor to reduce taxes for the higher paid, gernerally using the non-selfish argument that it will help to promote entrepreneurship and jobs, rather than the selfish one that it will benefit themselves.  The fact that they would just happen to be beneficiaries seems to be largely ignored.  The question as to whether lower taxation on higher earners does or does not generate enterprise and jobs is an interesting one in itself; the causal link is far from proven.  But that’s a subject for another day.
Part of the Tories’ argument is that the highest 1% of earners, they say, pay 27.7% of all income tax, and the highest 5% pay 46% of all income tax.  But Government figures suggest that people with an income over £1million per year actually pay an effective rate of income tax of around 34.8%, even with the top rate of tax set at 50p - that doesn’t look excessive to me.  Those with disproportionately high income pay disproportionately high tax in total, but it's still related to their income; where’s the problem?
For the Chancellor, the problem is this: most of us like government expenditure, whilst few of us like paying tax; but we can’t have one without the other.  What both the parties are suggesting is really little more than tinkering at the fringes; the amount raised by income tax is unlikely to change much.  They’re attempting to appeal to different constituencies with the way that they present what they are advocating – but in reality, both parties’ proposals would give more benefit to the high paid than to the low paid.  There’s not as much difference between them on income tax as at first appears.

Friday 16 March 2012

New leader, new start?

The election of a straight-talking leader, who is a committed nationalist, socialist, and republican marks, in every one of those aspects, the most decisive break with the last 12 years which Plaid Cymru could have made, and I’ll admit that the clarity of that decision came as something of a surprise to me.  In electing Leanne, the party has chosen the candidate who was furthest away from Ieuan Wyn Jones in her thinking. 
I was surprised to see Elin described during the campaign as the ‘continuity candidate’.  If there was a continuity candidate (i.e. someone likely to continue along the route set by Ieuan) in the race, it was surely Dafydd Elis-Thomas.  I rather suspect that Elin’s inability to articulate successfully the extent of the difference between her position and that of her predecessor owes more to a natural sense of loyalty than to any intention to simply carry on along the same route.
I have no doubt that Leanne will be courageous and honest in putting forward a clear alternative vision for Wales, and in attempting to lead rather than follow public opinion.  And I have long been convinced that that is the proper role for a nationalist party in Wales.  
Leanne does face a number of problems however.  Not the least of them is a raised, and probably unrealistic, level of expectation.  The idea that some seem to have that merely setting out a route forward and articulating her party’s objectives with a great deal more clarity will be enough to grow support for those objectives is over simplistic.  And the idea that there is a great groundswell of radical left-leaning voters in industrial South Wales just waiting for the right leader owes more to a romantic view of the past than to any analysis of harsh reality.
In that context, one of the most important things that the party needs to do is to define what ‘success’ means.  And it needs to self-define that, rather than have it defined for it by others, because others will define it solely in terms of electoral progress, whereas the real measure of success for a national party is in terms of progress towards its objectives.  Sometimes the two coincide; but they don’t necessarily do so at all times.  Conflating the two - or rather allowing success to be defined solely in terms of the one - has been a part of the problem.

Thursday 15 March 2012

Wrong priorities

The announcements by the UK Government last week about rail finances serve only to confirm a lack of real commitment to public transport.  Faced with a demand which exceeds the supply at peak hours, their response seems to be the classic piece of economics – increase the price until the demand drops to match the supply.
There is scope, of course, to stagger the peak hours more effectively by encouraging companies to work more flexibly, and that would make better overall use of resources.  I doubt, however, whether upping the price of peak hour public transport is going to be the most effective or efficient mechanism to achieve that.
Pricing people off the railways will only increase roads congestion, and lead to yet more calls for more road-building.  What is actually needed is a plan to increase rail capacity, in order to reward and encourage the growing trend to the use of public transport, but they seem unwilling even to consider that.
Comparisons with the cost levels of railways in other countries may be interesting; but in themselves, I’m not convinced that they tell us much, since the circumstances are so different.  In any large organisation, there will always be some degree of inefficiency and therefore scope for doing things better, but it seems like the wrong thing to be putting centre stage at a time when we really need a cohesive plan for investment and improvement.
So, certainly there are smarter ways of handling ticketing in an increasingly computerised system, and it would seem sensible to pursue those; but we shouldn’t be waiting to drive out cost before we look at how we expand and improve the service.

Wednesday 14 March 2012

Lord Who?

I suppose the SNP would be half-expecting some wild statements to be made during the period between now and their referendum.  And I’m sure that they’ll have people beavering away somewhere preparing answers and rebuttals to all the obvious ones.
I doubt, though, that anything will have prepared them for this one.  The suggestion by a Conservative peer that an independent Scotland would become a target for invasion and that England’s inevitable response to such an invasion would be to “bomb the hell out of Glasgow airport and Edinburgh airport” is one of the daftest statements I’ve seen in a long time.
He is, apparently, a QC and not without political experience, according to his official website.  And it’s a few weeks yet until April 1st.
I assume that he isn’t speaking officially for his party; I can’t believe that there are many others who even think like this, let alone say it out loud.  Trying to scare the Scots into voting the ‘right’ way doesn’t sound to me like a good game plan.

Tuesday 13 March 2012

Taxation à la carte

Last week, a director of the company running Cardiff Airport told a committee of AMs that he wants the setting of the rate of Air Passenger Duty to be devolved in order to boost Cardiff Airport.  There is, of course, a very large assumption being made there – that the Welsh Government, if given the power, would choose to lower the level of this tax.
It’s hard to say whether that’s a valid assumption or not.  I can see the advantages for the company running the airport (a private business, let us not forget, whose interests the Director is promoting).  If such a cut were to lead to more scheduled flights to major European business centres, then I can see the possibility that it might bring some economic benefit, although neither the ‘if’ nor the ‘might’ imply any great degree of certainty.
On the other hand, any government has to consider taxation as a whole; varying one tax downwards could well mean that another tax has to move in the opposite direction if expenditure levels are to be maintained.  It’s probably too much to expect that those pursuing the financial interests of themselves and their businesses will spell out what other taxes should increase – other than that they’ll be ones which somebody else pays.
There’s also a more general point here.  There is an increasing tendency for people to seek the decision-making on any particular tax to be done at a level which produces the most desirable result for them.  But taking power over the easy and popular decisions isn’t really taking responsibility.
Devolving real responsibility means not treating taxation powers as an à la carte menu, but having substantial powers to vary a range of taxes.  It is very much a double-edged sword, but it is the sort of responsibility which any government and parliament worthy of the name should have.  No-one should then expect that all the decisions taken would be to their liking.

Monday 12 March 2012

Expensive roads

I was concerned at the time the previous Welsh Government ditched the M4 relief road plans that, by taking the decision solely on cost grounds, there was a danger that the beast would be resurrected.  And that has duly come to pass, according to this report from the BBC last week. 
Strangely, the cost seems to have more or less halved from the £1 billion it was going to cost in 2009 to a ‘mere’ £550 million now.  It’s far from clear why the alternative scheme now proposed wasn’t part of the consideration in 2009; but either way, it’s still an enormous cost for a fairly short section of road.
Last week, Carwyn Jones seemed to be using the scheme as some sort of a stick with which to demand borrowing powers for the Assembly.  It could only go ahead, he said, if the Government was granted such powers.  In short, the government isn’t against the scheme as such; it merely cannot afford to build it.  That is not, as the Tory spokesperson claimed, a U-turn from the decision taken in 2009, merely a re-affirmation of the thinking behind that decision by the One Wales minister, who never actually claimed to be against increasing the M4 capacity as such.
Those who thought they had won the battle will now have to engage in the debate afresh when the scheme really could and should have been ruled out more comprehensively at the time.  There really are better ways of using these amounts of capital, if it were to become available, which will have more economic impact and less environmental impact.

Friday 9 March 2012

City Regions

The concept of the ‘city region’, and the possibility of the area around Cardiff being treated and developed as one, is something which has received a lot of attention of late.  The concept is an interesting one and seems to promise much for the area itself, but I’m sure that those of us from a little further afield can be forgiven for viewing it with a rather more wary eye.
In that context, I certainly welcome the way in which the report published earlier this week by the City Regions Task and Finish Group (available here)  hasn’t constrained itself to the Cardiff area, and has asked whether there are other potential areas which could be considered as city regions.
It’s not that I’m against development and growth in the South East; it’s more the case that I don’t want to see economic Wales mirroring economic UK – an economically successful south east into which the rest of us feed talent and youth whilst we in turn grow older and depend on what are politely called ‘fiscal transfers’.  The whole point, in economic terms, of devolution for me is to build a different and more decentralised economy in Wales rather than just replicate the errors of the past on a smaller scale.
The report doesn’t do a lot to quell my fears.  Certainly, it states that “We found no specific evidence to suggest that a city region’s existence had a negative impact on the areas outside it: indeed, they tend to benefit.”  But absence of the negative isn’t the same as presence of the positive, and the ‘tendency’ to benefit comes with caveats, not least in relation to distance and whether all investment is channelled into the region..
My concern about the issue isn’t helped by the wording of the task allocated to the group, namely “to decide, on the basis of objective evidence, whether a city region approach to economic development will deliver an increase in jobs and prosperity for Wales as a whole”.  There is a significant difference between “Wales as a whole” and “the whole of Wales”.  After all, “the UK as a whole” could be said to benefit from the concentration of economic activity and wealth in the South East; it’s a good deal less clear that the “whole of the UK” benefits.
One thing that I welcome in the report is the recognition that city regions are not a panacea.  Indeed, they’re not all successful.  I’ve been concerned that that was not being understood in some of the reports and articles I’ve read; correlation between size success is not the same as a causal link.  That’s the same point that I and others made in relation to the Flotilla Effect.  Larger cities are no more certain to succeed than are smaller states; it all depends on the detail.  All we can truly say is that they're not certain to fail either.
The city region concept has been presented to date as a radical change in approach which will start to address Wales’ relatively poor economic performance.  But I wonder whether it is really radical enough.  The argument is based on what has happened elsewhere in the past and on what is still happening today – but is it what will happen tomorrow?
The report itself draws attention to the fact that digital connectivity is likely to become more important than physical connectivity; does that tell us we should be looking to do something different rather than copying what others have done?
One final quote from the report which struck me – “In Wales, our cities generate only 33% of our wealth, the lowest proportion of all UK nations and regions”.  As presented, it’s a problem; something we need to change if we want to catch up.  But what if it’s actually a huge advantage, and something on which we can build a different type of economy?

Thursday 8 March 2012

Red tape holding us back?

‘Red Tape’ is one of everybody’s favourite bêtes noirs.  It’s something which prevents people doing whatever it is that they want to do and think that they should be allowed to do; ties up resources in unnecessary activity; and is generally a ‘bad thing’. 
Businesses in particular hate the stuff.  Apparently it stops them hiring people because they can’t simply sack them when they want to, stops them from keeping their employees at work for however many hours they need them to work, and forces them to abide by all sorts of rules and regulations, such as health and safety and environmental protection, without which they could get on with making their profits.
And that’s the rub.  Whilst it’s easy to agree with the general (unnecessary regulation is a bad thing), it’s a lot harder to agree on the specifics (which regulation is really unnecessary).  Tuesday’s Western Mail contained an article about economic activity in the Haven, and the headline was that experts and businesses were complaining that the future of the area was being put under threat by too much red tape.
It was a lengthy article, quoting various people complaining about the extent to which their activity is regulated; but it was remarkably short when it came down to detailing which regulations were causing the concern and why.  The closest that it came was in talking about "the increasing burden of environmental regulation, regulatory pressure and issues surrounding the planning procedures for new developments”.
Now I don’t doubt for a moment that relaxing controls on environmental pollution and doing away with planning controls would make it easier for some organisations to make money.  It might even lead to more material prosperity for a larger number of people.  But at what cost?
There is always scope for debate about whether particular rules and regulations are entirely necessary or can be amended or tweaked with no detrimental impact.  But, and not for the first time, I‘m left with a feeling that an attack on red tape is really a backdoor request to be allowed to do greater damage to the physical environment in pursuit of private profit.

Wednesday 7 March 2012

Taxing speculation

I was pleased to see that First Minister Carwyn Jones has backed the idea of a tax on financial transactions.  The Tories, of course, immediately responded by opposing it.  The cynic might suggest a relationship between that and their main source of funding, but the arguments actually advanced are worth considering.
They are absolutely right, of course, to suggest that a tax in only some of the world’s markets would damage the industry in those markets, and probably drive some of the business elsewhere.  The question, though, is whether that’s a good thing or a bad thing.  They assume that it’s bad – I’m far from convinced.  Anything which reduces the volume of speculative trading and gambling seems to me to be a good thing rather than a bad one.  And sending the worst offenders elsewhere to do their business doesn’t exactly worry me a great deal either.
It’s also true that a reduction in speculative activity in the City would hit tax revenues.  The Tories refer to the large contribution made by financial services to the Exchequer.  As ever, however, things aren’t quite as black and white as that.  It has been claimed that financial services accounts for around 8% of the UK economy, but contributes 25% of corporate taxation to the Treasury.  As far as it goes, that’s true.  But because the sector employs so few people relative to the turnovers involved, the total taxation from the sector – adding together both company taxes and personal taxes paid by employees – comes to more like 7% of the total, marginally less than its ‘fair share’, purely on GDP comparisons, and significantly less than one might expect looking at the overall profitability of the sector.
So, in relation to the proportion of GDP which financial services represent, they actually pay less tax in total than other equivalent sectors; one of the reasons that they are good at making profits for their owners is that they’re also good at minimising tax payments.
And anyway, is the fact that an activity which is inherently undesirable generates a lot of tax a good reason for wanting the activity to continue?  I’m not convinced.  Over and above that, there’s the opportunity cost.  How much better off might we all be if all those clever people devising ever more complicated ways of making pennies at the margin in large enough volumes to be worthwhile applied their skills to more socially beneficial activities?
As for the line about not acting in Europe until the whole world is ready to act – that’s a recipe for no-one doing anything ever.  It’s not that dissimilar to the anti-wind farm argument that the UK can make no difference because we only produce 2% of the world’s emissions.  The longest journey starts with the smallest step; and if we believe that a financial transactions tax is the right thing to do, it doesn’t become the wrong thing just because not everyone is yet convinced.

Tuesday 6 March 2012

Look what the wind's blown in

Yesterday’s publication of a report on the comparative cost of different electricity generation scenarios by AF Consult (available by following the link from here) was well-trailed in advance.  It was also well-knocked in advance, as the government and renewables industries got in their pre-emptive first strike. 
The headline from the report is a suggestion that the UK’s binding carbon reduction targets can be met more cheaply by building gas and nuclear power stations rather than wind turbines.  It will be like manna for those opposed to wind turbines, of course.  But then, if it really is possible to meet the UK’s targets by a cheaper means than governments are currently pursuing, why wouldn’t we want to do that?
As ever, it isn’t quite that simple, and although ‘if’ is a small word, in this case it represents a large caveat – or rather, series of caveats.
The first, and most obvious, is that it assumes that the targets set for the proportion of electricity which must come from renewable sources can simply be ignored.  Breaking an international obligation – the target is a binding one – is not exactly a minor issue.  For sure, if the target is the wrong one, then one can argue that it should be renegotiated; but simply to assume that it can be ignored is not a safe assumption to make.
And it is assumptions which go to the heart of the problem with this report.  It’s based on a complex mathematical model.  There’s nothing wrong with that; lots of things are based on mathematical models.  But models are only ever going to be as good as the assumptions with which they start; and in this case, my main argument with the conclusions isn’t the methodology or the calculations performed, it’s the assumptions which act as the starting point.  And if the assumptions are wrong, it's hardly likely that the conclusions will be very robust.
Not all the assumptions are explicitly stated; nor would I expect them to be.  But four in particular are worth more attention.
The first is the question of future fuel prices, and the comparison between fuel prices.  They have used the central estimates from a DECC study.  That’s an entirely reasonable thing for the report authors to do; they have to start somewhere.  The question, though, is whether the DECC have got it right, and on that point, I’m sceptical. 
One of the big advantages of renewables is precisely that they are not vulnerable to fuel price shocks during their operational life (although, obviously, variations in fuel price can affect construction costs, this is a small factor in the overall cost comparison).  Gas prices, on the other hand, can be much more volatile.  The volatility is generally upward as world demand increases, although I’d accept that shale gas – if we decide to exploit it – could change that equation.  But to what extent do we want to gamble on the price – or, potentially worse, put ourselves in a position where we are dependent on fracking?
The second big assumption concerns the cost of decommissioning nuclear plant and nuclear waste management.  Again, the report’s authors have, entirely reasonably, used the assumptions to which the UK Government is working, and which were detailed in a DECC report from Parsons Brinckerhoff in 2011.  They had to start somewhere; my problem with that, however, is that since no-one is yet entirely certain how waste will be managed for the long term, there is a high degree of uncertainty about the costs involved.  Experience suggests that they are more likely to increase than to decrease.
The third big assumption is that at least some of the new gas plants can be fitted with CCS technology.  This assumption is key to achieving the required reduction in carbon emissions, but as the report itself conceded, the technology is to date unproven on the large scale required.
And the fourth is that we do not expand the production on electricity to increase its use in heating and transportation.  If we do make such an increase, then the carbon reduction targets cannot be achieved with the fuel split used in their scenarios.  We would have to use renewables.
I agree with the UK Government assessment that this paper is badly flawed.  The tragedy is that it will, nevertheless, be recycled regularly in the local and national press by anti-wind campaigners who will claim that it ‘proves’ that we shouldn’t be building new wind turbines.  It actually proves no such thing (and didn’t even set out to prove that, merely to compare the costs of alternative approaches of meeting a target).

Monday 5 March 2012

Established thought

The declaration by a court of law that holding prayers at the start of a council meeting was illegal shouldn’t really have surprised anyone.  As I understand it, the court did not actually outlaw the saying or prayers before the start of a meeting, if that’s what councillors want to do; it merely said that prayers cannot be part of the formal agenda of a meeting to which councillors are summoned and which they are expected to attend.
The judgement seemed eminently reasonable to me; if councillors want to turn up five minutes early and pray together there is absolutely nothing preventing them from doing so.  It’s a judgement which seems to have sparked quite a response from others though. 
Communities Secretary Eric Pickles has vowed to reverse the decision.  I’m not quite sure that he can do that – the last time I checked, ministers in the UK couldn’t simply over-ride the judgement of a court.  What he's actually trying to do is to change the law, of course; but even after getting parliamentary consent, I suspect that they will find that it isn’t that easy in this day and age to tell councillors that prayers are compulsory, which is effectively what including them on the agenda implies.  Such an attempt is still likely to fall foul of the judges.
Baroness Warsi waded in to defend the established church, as did Her Britannic Majesty herself, in a rare direct statement on a political issue.  The queen actually referred to the “significant position of the Church of England in our national life”, with that sleight of hand which so deftly conceals the confusion over which ‘nation’ is being referred to here.
There is, of course, no established church in this nation and has not been for almost a century now.  That’s something of which I’m sure the queen is well aware, even if the baroness is not.  That lack has not, however, affected the privileged position of those English bishops who sit as Lords Spiritual in the upper house and are permitted to influence laws affecting our nation.  It’s a long-standing anomaly; a sort of reverse West Lothian question.
For all the attention it’s generated, prayers at the start of Bideford Council isn’t exactly an issue of great moment for most of us.  It has, though, highlighted an issue about the relationship between religion and politics which doesn’t often get discussed by politicians.  I suspect that’s because most of them are afraid of the question.
The line taken by those seeking to defend the special place of the Church of England in society was an interesting one.  It seems to have been based on the idea that we have a shared set of values, that those values are rooted in those of the established church, and that therefore that church should have a special place allocated to it by the state.  Whilst the third of those points certainly flows naturally from the first two, both of the first two are open to debate, to say the least.
Whilst it may have been true in the past that there was a shared set of values, and whilst many may well wish it were still so, I’m far from convinced that it actually is so today, to anything like the extent implied.  Whether that’s a good thing or a bad thing depends on perspective, but attempting to ignore the change which has happened is foolish.
And, even insofar as there is a shared set of values, can anyone really claim that they are rooted in religion at all, yet alone in a single denomination of a single religion?  They may happen to be, to some extent at least, the same values as those espoused by the church, but that doesn’t mean that all those who hold them draw those values from that perspective, and it’s rather presumptuous to claim that they do.  At the very least, there’s a suggestion that ‘if you agree with me on the values, then they must have come from the same place as mine’, and put in that form, the flaw in the argument is obvious.
Christianity has contributed much to what we are today, and it still fulfils a very important function for many.  But the days when a single monolithic denomination could be considered to be the sole font of values and morality for everyone in society have long since gone.  Attempts by prominent politicians and royals to pretend that we can go back to that look more like an attempt to impose a more conformist and deferential set of attitudes than an attempt to look to the future.

Friday 2 March 2012

News, headlines and tax

Yesterday’s reports on the latest Welsh opinion polls gave the Western Mail its headline with not too much effort either needed or expended, although the first three words (“No to Independence”) are hardly what I’d call news.  Their supplementary headline on an inside page was also noteworthy for getting it wrong – “Poll confirms independence not in national interest”, it screamed.
Well, no, actually the poll didn’t confirm that at all.  It certainly confirmed that the people of Wales are far from being convinced that it’s in Wales’ national interest, but that’s a rather different question.  An opinion poll can only tell us what people think of a proposition, not whether the proposition is true or not.  I wouldn’t conclude anything about the shape of the earth on the basis of an opinion poll, even if the majority agree with me that it isn’t flat.
The paper’s editorial wasn’t much better.  It seemed to be telling us almost gleefully that we simply can’t afford independence for the foreseeable future because we are totally dependent on fiscal transfers from England to pay our benefits bills.  I suppose it depends on how far one can see into the future – never one of the Western Mail’s strongest abilities.  It was, though, a dismal, depressing, and defeatist message to give to the nation on St David’s Day.  Keep taking the handouts.
The paper’s attempt – on the basis of a poll of only 1,000 people across the whole of Wales – to tell us which constituency was most in favour of tax raising powers is best ignored.  It would give my old statistics lecturer a fit, I’m sure.
The positive part of the survey, from my perspective at least, was the high level of support for taxation powers to be devolved to the National Assembly and Welsh Government.  It’s a finding which puts public opinion ahead of the politicians in Wales.  Ahead of all four parties in fact. 
Plaid’s recently reported submission to the Silk Commission, spelling out which taxes it wants devolved and which it doesn’t, now looks timid and unambitious against a background of 28% supporting the devolution of all taxation, and another 36% supporting the devolution of some taxation powers.
And if almost a third of the public can be ahead of the politicians without anyone even putting the case for devolution of all taxation, what might the polls show if the case were to be put?

Thursday 1 March 2012

The little things

It is customary on this day in particular to repeat the injunction left to us by Dewi, “Gwnewch y pethau bychain” – “Do the little things”.  And the little things are certainly important in politics.  It’s often the little things which can make the greatest and most immediate difference to people’s daily lives.  Certainly, when I was a councillor many years ago, it was a lesson which I kept in mind; most of the impact that I had didn’t come from speaking or voting in the chamber, but from acting as an advocate for the people I represented, often on issues which might look very minor.
But concentrating only on the little things means ignoring the big things; the little things need to be put into the broader context, which only the big things can provide.  Any politician, from any party, can attend to the drains and the streetlamps.  Any politician from any party can seek and obtain power on a platform of minor change today.  But pursuing such a programme means putting off the more fundamental changes indefinitely.
It’s not enough just to remember the little things today; let us also remember the bigger task which faces us, of bringing real and lasting change to the economic and political structures.