Thursday 27 June 2013

It just isn't fair.

I cannot think of a suitable title for this post, other than the rather childish bleat above.

Sir Mervyn King, former Governor of the Bank of England, has retired and is to receive a pension said to be "to the north of £5million."  On top of that he now becomes a member of the House of Lords and can receive £300 per day (yes, per day) attendance allowance.  And that's tax free.

Both pension and attendance allowance are, of course, public money, taxpayers' money, our money, part of the expenditure the government is so anxious to cut.

In the same week the government  has decided to save money by stopping  the payment of unemployment benefit (now fancifully called Job Seekers' Allowance, JSA) for the first week of unemployment.  The JSA is £56.80 per week (yes, per week, not per day) if you're under 25, and £71.70 per week if you're over 25.

Most of us have seethed with indignation whilst, for five years or more, the leaders of the bankers and private sector firms have rewarded themselves lavishly for, at best, modest performances and , too often, for failure,  whilst one in five of our families suffer acutely from the "austerity" caused by the financial crisis.  Why, we have asked, does the government let it happen?

It beggars belief that we live in a society in which  the government itself distributes our money in such an obscenely unequal fashion. 

Tuesday 25 June 2013

Hurrah! Keynesian stimulus at last (but not yet)

St Augustine is said to have prayed for the gift of chastity - but not yet. There seems a similar lack in immediacy in the revelation that the coalition is to announce a "multi-billion, six year programme of infrastructure investment," but it is not to start until 2015.  Details are to be announced by Danny Alexander on Thursday, 27th June, in what appears to be a "perception management" attempt to mitigate the effects of the unfavourable press which George Osborne's spending review, published tomorrow, is likely to generate.

Saintly comparisons and news management apart, whilst welcoming this conversion, we Keynesian can ask why it has taken  three years for the lesson of the 1930s to be learned, and why we must wait another two years for it to be implemented.

The next step is to look closely at the projects to be funded and examine whether they are the ones most likely to have the maximum early effect on demand, employment and growth.  It is predicted that the  infrastructure programme will involve spending on road, rail and high-speed internet, including the upgrading of the A14, a new Mersey Gateway bridge, and the first tranche of work on the HS2 high-speed railway.

It is well known that improvements to and the upgrading of existing facilities (eg the Northern Rail Network) are more effective in providing employment and stimulating the local economy than new projects, where most of the early expenditure is eaten up by land purchases and lawyers' and planners' fees.  So we must hope that the bulk of the expenditure is to be on upgrading rather than on expensive, and arguably unnecessary, prestige projects such as HS2.

Monday 24 June 2013

Lies, damned lies and public relations.

In  his splendid chapter on advertising  in   "Cancel the Apocalypse"  Andrew Simms reminds us that the modern public relations industry was born  "out of wartime public information campaigns, or 'propaganda.' "*  So , when we see PR we should think "Dr Goebbels."  Simms also points out that the US Department of Defense now unashamedly speaks of "perception management."**

My friend John Cole has detailed two recent examples here in the UK.

Probity in the Matter of Public Information
“My dictionary defines “probity” as “adherence to the highest principles and ideals; honesty or integrity”.  I would like to think that government ministers set themselves high standards of honesty in reporting into the media.   However, politics being, as Alan Watkins used to put it “a rough old trade”  there is a chance that some ministers might be inclined to put a bit of spin on their announcements.  That being the case, I would nevertheless expect civil servants to be absolutely punctilious in reporting the truth.  A second “however” intrudes: politicians who become ministers tend to take into office with them “Special Advisers” who are not career civil servants, are committed politically to the minister, and just as likely to “spin” as the minister, if not more so.  In recent months I have come across two instances of statistical manipulation by government departments which I have found breathtaking in their dishonesty.

The first instance relates to the degree of success (or failure) of the government to reduce the budget deficit.  Yesterday (June 21st) saw an announcement that, following corrections and updatings, the size of the deficit for 2012-3 was actually slightly higher than the deficit for 2011-2.   Yet Coalition ministers have consistently asserted that “we have reduced the deficit by a third”. 

Not so.

Even before this week's update, an article by John Lanchester in the January 2013 “London Review of Books” delved a bit more forensically into the Chancellor's claims.   In 2010, in his first budget, George Osborne claimed that the budget deficit was 4.8% of GDP.   In November 2012 this was said to have reduced to 4.3% of GDP.   What Osborne did not add (lying by omission?) was that the reduction was achieved only by adding into the calculation a whole series of one-off positive events.  By definition these windfalls will not repeat.

These one-offs start with £3.5 billion to the Treasury from the auctioning off of the 4G telecom spectrum and the transfer into the governments accounts of the Royal Mail pension fund (worth £28 billion).  Apparently the liabilities of the pension fund are also transferred to the government, but are, for some reasoning described by Lanchester as “rococo”, the increase in liabilities does not enter into the calculation of the deficit.  As and when the Royal Mail is sold off to a private buyer there will be another short-term, one-off boost to the books. (One is reminded of Harold Macmillan and the “selling off of the family silver”).  The interest credit arising from the Bank of England's “Quantitative Easing”, which might be expected to remain with the Bank of England has been snaffled by Osborne to boost the books.

Lanchester points out that if all this creative accounting is stripped out, 0.6 is added to the deficit, taking it up to 4.9% of GDP, which is higher than the figure with which Osborne began.

My second example relates to Ian Duncan Smith, his Special Advisers at the Department of Work and Pensions and their efforts to introduce a cap on benefits.    IDS proudly claimed; “Already we have seen 8,000 people who would have been affected by the cap move into jobs”.  This was challenged by the UK Statistics Authority which reprimanded the minister and his SPADs, commenting that not only did the DWP statistics not show that effect, they could not possibly have shown that.  The UK Statistics Authority has as chair the highly respected Andrew Dilnot.  According to a report in “The Observer” (12th May) , Mr Dilnot is thinking of sending his inspectors into the DWP  “because Duncan Smith is a habitual manipulator”.

Prior to reading the “Observer” piece, I had already formed a very poor impression of Mr Duncan Smith's lack of probity.  This arose from reading a carefully researched report from a group of Non-Conformist churches on poverty and those in receipt of benefits entitled “The Truth and Lies Report”.  Pages 9-12 of that Report is a section headed “Troubled Families and Troubled Statistics – A Case Study in Misrepresenting the Most Vulnerable”. 

The Troubled Families Unit within the DWP produced a report of sixteen case studies “of the kinds of families that will be targeted”.  To select the sixteen cases the report used what it called “dipstick analysis”.  The resulting selection has sixteen families with an average of between four and five children.  However, the average number of children within all the families in the group (of 130 000 or so families that are "benefit dependent") is two. As the “Truth and Lies Report” points out, in 2011 there were only 130 families with 10 children in the whole of Britain on out of work benefits, and only 10 families on such benefits with 12 children.  Yet one of each family type appears within the sixteen selected by dipstick analysis.   As the “Truth and Lies Report”  tartly comments: “This is extremely unlikely using any respectable sampling technique.”   In short, the sixteen families used within the case studies were not a random sample, but carefully selected to allow the minister and his SPADs to spin the story they wanted.

When politicians and their Special Advisers behave in this way it is no wonder that their standing with the general public falls to abysmal levels.  Voters have every right to expect a much higher standard of probity from their elected members – and also from their public servants.

John Cole    22nd  June 2013

*   page 291
** page 292

Wednesday 19 June 2013

Failing OFSTED

Our Office for Standards in Education (OFSTED, or OFSTAPO as it is known by at least one of my ex-teacher friends) has just produced a report which claims that our non-selective state secondary schools are failing  their brightest pupils because 60% of them who did well in primary school, defined as achieving the top grades in their English and mathematics STATS (Standard Attainment Tests) at Stage 2 (the primary leaving year), fail to achieve the top grades five years later when hey take their GCSEs at 16+.

OFSTED was established over 20 years ago, in 1992, by the Major government, ostensibly to improve standards in education.  I wonder if if ever occurs to this bunch of pundits, mostly I suspect heartily glad to have escaped the chalk face in order to swan around in smart suits and tell other people what to do, to look into their own effectiveness.   (Matthew 7 verse 3 springs to mind.*) 

If after more than 20 years of their operations things are so dire should they not be wondering whether  or not they are "fit for purpose."?   My own solution would be to abolish the organisation with, instead of redundancy payments, guaranteed positions in inner city comprehensives for the displaced staff.  If that is too much to hope for (though it is analogous  with, though possibly even more draconian than,  the proposal announced this morning to imprison failed bankers) then OFSTED should be reduced in size, along with central government prescriptions and excessive testing, and a co-operative and supportive ethos be adopted to replace the present threatening approach of judging,  blaming and shaming.

In fact I suspect that before long someone  needing to publish a peer-reviewed  paper will show that the evidence on which the latest criticism is based is flawed.  Whatever it is that is measured by STATS Stage 2 at 11+ is probably not the same as what is measured in GCSE at 16+.  and in any case, as every practising teacher knows, and parents with more than one child know even better, different children develop, physically, intellectually and emotionally, at vastly different rates. "Late developers" can do a lot of catching up in five years, and those who shone at 11 can have peaked early.

It is in fact already well known that examinations of whatever sort are not good predictors of future performance.  For years it has been noted that those with the best A-levels do not necessarily get the best degrees.

*And why beholdest thou  the mote that is in thy brother's eye, but considerest not the beam that is in thine own eye? KJV

Monday 17 June 2013

16+ examination revamp no big deal.

I can't get too excited one way or the other about Michael Gove's further meddling with our national 16+ examination. This has changed its form several times in my lifetime but normally without all the hype that tinkering with the education system presently receives.

When I entered secondary school in 1949 the 16+ cohort was still taking what was then called the School Certificate.  To obtain one of these it was necessary to pass in at least five subjects, which had to include English and Mathematics.  By the time my turn came this had been "reformed" into the General Certificate of Education at Ordinary Level - commonly known as "O-levels."

The big change was that candidates could sit for any number of subjects  (no longer a minimum of five) and a certificate would be granted even if  the pass mark were reached in only one. This caused holders of the School Certificate to regard the O-level system as "dumbed down,"  though I doubt if the term had then been invented. The new generation riposted that, whereas the School Certificate pass mark was only 30%, they had  to reach 40%.

In the earliest days specific marks were revealed: say 57% or 39%, but in he year I took it, 1954, marks were rounded to the nearest five, and the pass mark was raised to 45 (much to the chagrin of one of my friends, who achieved 40% in at least three subjects, along with those he actually passed, under the new "tougher" regime.  Nevertheless, he flourished and became very rich,  I believe,  by running car boot sales.)  Later these rounded marks were changed to grades of which  1 - 6 were passes,1 being the highest, and 7, 8 and 9 were fails.

O-levesl  were designed to cater for the "academic elite, bless us, (those going on to higher education or into the professions,) and in the mid-60s a national examination for the less academic, called the Certificate of Secondary Education, or CSE, was introduced. It was I think at this stage that more diverse methods of assessment, such as coursework and ratings by teacher, were introduced to supplement the traditional "end of course, all or nothing" examination.  Most teachers welcomed this, but many,  including myself, argued that it was an error to give the examination a different name, thus separating pupils into sheep and goats almost as badly as the old 11+ selection examination had done.

(Later when I worked in Papua New Guinea I discovered that the New South Wales state government had a splendid system which reduced if it did not entirely avoid this division: different subjects in which was still the School Certificate could be taken  at any of "Advanced," " Credit,"  " Ordinary," " Modified" or the rather charmingly named "Activity" levels.  Candidates were still required to pass in at least five subjects, but I doubt if it was possible to fail "Activity" if you stayed the course. Britain has a lot to learn from other countries but refuses to take notice)

Some 20 years later, in 1987, this error was recognised and the two systems were merged into one, the General Certificate of Secondary Education, or GCSE.  The ratings nomenclature changed and letters rather than numbers were given for the levels of achievement, with A (later A*) being the highest. Sadly only passes at levels  A - E were regarded as acceptable - lower ones were generally considered failures.

Gove's current meddling involves changing yet again the nomenclature of the grades (8 becomes the top and presumably 1 the bottom - just to confuse things?), discontinues  the modular system and the possibility of endless resits, and cuts out course work and teacher assessment for all except science subjects, where the need for practical work is recognised.

I think most teachers, and certainty those responsible for constructing examination timetables, will welcome the reduction in resits .  (Leeds University had a good system, I thought.: you were allowed one resit in any one subject, but however well you performed you were restricted to the pass mark of 40%.  This, in addition to the whopping cost, provided a strong incentive to prepare properly the first time.)

However, the other changes are highly debatable and depend very much on the personal preferences of both the teachers and pupils.  As a teacher I disliked the modular system and preferred to teach economics in whatever order I liked rather than have my subject wrapped into little bundles by an external authority.  On the other hand most universities now teach and examine under a modular system, and my experience as a recent student (mature, of French, as a retirement hobby), suggests that this leads to a higher level of understanding than that engendered by the structure of the economics degree I took in the 60s, which required study of eight  subjects for two years and then an exhausting couple of weeks of fielding "ask me anything you like" questions about anything from all of them.  (That was just Part 1: Part 2 was easier with just five subjects after one year).

Similarly as a teacher I avoided course work when there was an alternative, put off by observing the desperate attempts of my colleagues to get pupils to submit their work on time. But some pupils, especially those with nervous dispositions, strongly prefer it

What Mr Gove should realise is that there is not one way, certainly not one "best way," to teach or examine anything.  He should leave it to the teachers, and examination boards if necessary, to decide what should be taught, how it should be taught, and how pupils should be assessed, and stop interfering.

The irony is that, when the "big boys" of my school days took their School Certificate it was for most of them  genuinely a leaving certificate.  Many very able people left school at 16 to enter professions such as law, accountancy, local government, journalism, the civil service, as well as business and apprenticeships.

 Today the school leaving age is effectively 18 and it is hard to see the need  for a nationally monitored examination at 16.  Maybe it's just another instrument with which to bully the teachers.

Saturday 15 June 2013

The economy, the truth.

As claimed  in the post below, , the neo-con propaganda machine has been so successful that even the Labour Party, in a desperate bid for credibility,  seems now to have acknowledged that they made a mess of the economy when in office.

The truth is very different and is spelled out with more authority than I have in this blog by Simon Wren-Lewis, an economics professor at Oxford:.

If you have an hour to spare , then this lecture by Mark Blyth is a scathing indictment of the neo-con myth, and covers the world economy, rather than just Britain.

It's brilliantly delivered, apparently without notes (though with too many "colloquialisms" for my prudish liking.) There weren't a lot in the audience, which is a shame.

 Blyth also written a book: "Austerity: the history of a dangerous idea," for those who need more time to absorb the details.

PS (Added 17/06/13)  This article by William Keegan in yesterdays Observer gives further and better partiulars of the British case.  It begins:

Has the Labour party thrown in the towel? Are rightwing commentators correct in claiming that recent speeches by Ed Miliband and Ed Balls amount to surrender? Given the strength of Balls's compelling case against the coalition's austerity programme – from that prescient Bloomberg lecture in August 2010 onwards – the news that Labour intends to stick to the coalition's spending plans for 2015-16, essentially acquiescing in a policy it had successfully ridiculed, is disturbing, to put it mildly.

Tuesday 11 June 2013

Labour and the Economy

The speeches last week by Ed Balls and Ed Milliband on what Labour's economic policy will be if they win the 2015 election have been something of a damp squib and will probably do their prospects of victory more harm than good.

Of course their views are filtered through a violently pro-Conservative press, but the main  impressions that  remain are  that they will:

  • stick to George Osborne's spending plans
  • place a cap on welfare benefits
  • end the principle of universality.
All this is in a bid to gain respectability with a Tory-dominated media, and give the impression that they are responsible and competent. 

For Keynesian it is a depressing picture.  As even some Labour supporters have pointed out, now that all three major parties are, incredibly, locked into this neo-conserviative con regarding our problems and their solution, where is the meaningful voice for the voter seeking an alternative?

Sticking to the Tory spending cuts means that Labour has accepted the incredible distortion that our current economic problems stem from government overspending rather than the collapse of the deregulated financial markets which were introduced and so much lauded by the Tories themselves.  (It was sad to hear Peter Hain, not one of my heroes, shouted down and virtually told to shut up by Jonathan Dimbleby on last week's radio "Any Questions".)  Or Labour has simply accepted that the Tories have won the propaganda battle on this had haven't the guts to fight back. 

The next government, in which I hope and expect Liberal Democrats will participate, needs to follow a policy of government-induced Keynesian stimulation and those who take that view, which should include all we "social" Liberals,  need to have the courage to make the case, and so does Labour.

The cap on welfare benefits is a craven surrender to tabloid populism.  Welfare benefits should be paid on the basis of need.  The idea that we cannot afford this is ludicrous.  The per capita income (of every man, woman and child) of the UK is around £23 500 a year.  That means the if it were evenly shared out every family of four would be receiving.just short of £94 000 per year.  Of course it isn't evenly shared out, and I'm not advocating that it should be: just pointing out that with wealth like that we can afford to protect the most vulnerable members of our society.

I do, however, have some sympathy for Labour's proposal, already Liberal Democrat policy, to discontinue the winter fuel allowance to pensioners in the higher income tax band, and would, indeed, extend it to the less wealthy, such as myself, just paying the standard rate.  I understand Old Labour's aversion to means-testing, but by simply  excluding taxpayers rather than  means-testing the poor removes the perceived humiliation of having to apply.

 The one benefit where this device would not be appropriate is our free bus passes since, if these were issued only to non income tax payers, those who possessed them  would be identifying themselves as "poor."  (cf  free school meals).  For bus passes, then, I advocate universality, but would find it acceptable for a token payment, say 30p or 50p for each  ride, to reduce the cost.

In the economic sphere what is needed for 2015 is a party which advocates:
  • Keynesian expansion, particularly on infrastructure development (housing, local transport networks) and boosting research and development, including proper financing of our universities ( financed by scrapping HS2 and the like-for-like replacement of Trident)
  • taxation reform: cutting tax relief for pension contributions  over and above those required to provide a pension equivalent to the median wage; serious tackling of tax avoidance and evasion; land taxation and a financial transactions tax
  • reform of the banking system by splitting merchant from retail banking; retention of RBS and LLoyds TSB as publicly owned banks, split into regional banks charged with providing long term finance at modest interest rates to local enterprises
  • taking the heat out of welfare by introducing a citizen's income
  • the introduction of democracy into work places, including the fair sharing of profits and the control of excessive payments to directors and a managers.
There's plenty there for Liberal Democrat apparatchiks to be getting their teeth into, and two years before 2015 to get it right.

Thursday 6 June 2013

Power to the workers.

I have tried below (Ten Reasons to be  pleased) to indicate  some of the features of Britain's democracy which have been maintained or improved by the presence of Liberal Democrats in the government.  Of these the most significant, though fragile, is the fixed term parliament.  We have failed miserably to achieve those twin pillars  Liberalism, electoral reform and the creation of a democratic  second chamber.

A third pillar of of Liberalism is, or used to be, the extension of democracy to the workplace.  When I first campaigned as a Liberal in the 1960s and 70s we had detailed schemes for achieving this, which was then called "industrial democracy."  They are now either mouldering on the shelves, or, it seems, have been forgotten.

Yet the time is ripe for a reform of company law.  There is general disgust, not only with the bankers, but by the way that companies, through over-concentration of short-term share value,  asset stripping and the like, are used to feather the nests of directors and managers, regardless of the effects on their employees, customers and the communities they serve.

A major obstacle in the past  to worker participation in the decision making structures of companies has been the attitude of the Labour Party and their paymasters, the unions.  Both have preferred confrontation rather than co-operation, and resisted employees becoming involved in decision making  and therefore sharing responsibility,.

This may mow be changing.  A few weeks ago the present General Secretary  of the Trades Union Congress, Frances O'Grady, wrote:

Unions must learn ...from the mistakes of the Attlee period.  This was when we made our key strategic error in not going down the route of industrial democracy.  We opted for the important but limited role of securing better terms and conditions instead of pressing  for workers to have positions  on the board and taking up every chance to democratise economic relationships.

The coalition still has  two years of life.  I believe it is urgently necessary  for Liberal Democrats to take those old schemes down from the shelves, bring them up to date so that they relate to modern conditions (more commerce as well as what's left of industry, the public sector,  the increasing prevalence of international companies) and, in co-operation with our government partners, and if possible the Labour Party and Greens, achieve the transformation in our industrial and commercial lives that we have  failed to achieve in the political sphere.

If it is too much to hope that the Tories will co-operate in introducing  such legislation in this parliament, then we need schemes in readiness for the coalition negotiations for the next.

Tuesday 4 June 2013

A cheer for David Cameron

Against vigorous opposition from a substantial section of his party,  David Cameron has stuck to his undertaking that Britain will keep and soon achieve  its promise (made in the 1960s!) of devoting 0.7% of our GDP to aid to the poorest countries. The aid agencies, of which I am an enthusiastic supporter, have not been all that effusive in publicly  applauding  him for this.

Now there are further reasons for applause.  Last week Cameron co-chaired, with President Yudhoyono of Indonesia and President Sirleaf of Libera, a UN panel which aims to set the pattern for post-2015 development in the poorest countries.

The Millennium Development Goals, established  by the world community as a more substantial way of celebrating the year 2000 than domes and fireworks, set targets for 2015.  These are:

  • to halve the numbers living in absolute poverty (defined now as living on less than  the equivalent of $1.25 per day)
  • to achieve universal primary education
  • to achieve equality in education for girls with boys at both primary and secondary levels (this to be reached by 2006)
  • to reduce under 5 infant mortality rates by two thirds
  • to reduce by three quarters the proportion  of women dying in childbirth
  • access to contraception for all women and men who want it
  • to adopt measures for sustainable "green" growth
There was at the time much criticism of the value of setting targets, but at least their existence both highlights the problems and provides a crude method of measuring  progress.  I look forward to  world concern  for these issues being aroused  again when 2015 is reached and they are highlighted  once again.

The purpose  of the present initiative, in which Cameron is taking a lead, is to plot progress   for the next 15 years.  The target is ambitious: not just to halve, but to eradicate absolute poverty by 2030.  At the moment the assumption, outlined in the Guardian by Larry Elliott,  is that this can be achieved by:
  • governments in the  developed world fulfilling their aid obligations
  • governments and companies being more transparent about their activities;
  • clamping down on corporate tax evasion
  • steps being taken to prevent farmers from being forced off their land.
As with the 2015 goals, these are subject to criticism. In  particular, and here the fault appears to lie at Cameron's door, there is no mention of  a reduction in inequality.  The 1.2billion poorest people in the world account for only 1% of world consumption  while the billion richest consume 72%, but, rather than do a bit of sharing, we are to rely on growth, and the dubious notion that the rising tide will lift all boats, to give the poorest the chance of a decent standard of living.

Nevertheless, Cameron deserves credit for lifting his gaze above  the current squabbles arising from our domestic so called austerity, which two thirds of the world's population would see as luxury, and associating himself prominently with world humanitarian goals.