Saturday 26 September 2020

Another Curate's Egg from Sunak


The Chancellor of the Exchequer's  announcement of further government support for  the economy is to be welcomed, but is somewhat on the stingy side and one part of it is seriously  flawed.

 First the good bits.

 1.  Firms which  have received state-backed business loans in order to survive while the state imposed lockdowns have greatly reduced or even eliminated their incomes but not their outgoings (rent etc.) are to be given a ten year period to pay back on a " pay as you grow" basis.  In other words they are exempt from payments unless and until their  income stream is sufficiently restored.  

This is very similar to the student loan scheme, in which students do not pay back unless and until they reach a decent salary so they are NOT BURDENED WITH DEBT.   (That's in capital letters becasue the media and students themselves still use the phrase in spite of the facts and the repeated explanations from Martin Lewis and this modest blog.) 

However, unlike the students, firms will not have their debt written off at the end of the period of grace, but that's sensible.  If they haven't recovered in ten years than they are unlikely to be viable and it is reasonable to allow them to file for insolvency.

2.  The cut in VAT from the basic rate of 20% to 5% for the hospitality and leisure industries is to continue until 13th January next year.  Not very long but better than nothing.  There is a good case for extending   a tapered furlough scheme for these industries.

The serious flaw is that the wages subsidy scheme, which ought to encourage part-time working so that the economy sustains the maximum number of people in some sort of employment, does nothing of the sort.  

 In the scheme, which is to operate for only six months in the first instance, if a worker's hours are reduced to, say,  a third, (1/3 - I don't know how else to write fractions)  the employer pays for those hours, then both the employer and the state each add  payments for 1/3 of the unworked hours. 

So the worker receives 7/9ths  of her/his normal pay, which is a cut but again better than nothing, and pretty good for working only one third of normal hours.

The flaw is that 5/9ths of this payment  comes from the employer. so an employer seeing to maximise employment who employs 3 people to do the work of one actually pays 15/9ths (or 166%) of what it would cost to retain just one worker in the job.

(I hope you're following at the back).

It is possible that some benevolent small firm, anxious to keep a team together, might do this.  But most employers, and particularly large and impersonal firms, are likely to give the "bottom line" priority and employ just the one person.

Surely the priority, in this pandemic, is for us to share the difficulties, from the imaginary  shortage of lavatory paper to the very real shortage of jobs, equitably.

 The German scheme, Kurtzarbeit,  (short working) on which it was trailed Sunak's scheme is based, is much more generous to both the worker and the employer. There the state pays for  60 % of salary lost through working part-time, rising to 80% if the employee has children, and their scheme lasts to the end of 2021.

Mr Sunak is anxious not to spend state money on jobs which are not in the long-run viable. That makes sense for a proportion those working  in city-centre retail and food outlets, which are unlikely to be restored to their pre-pandemic capacity once normal conditions are restored.

But here are plenty of people with no work at all at the moment (actors, musicians, night -club operators) whose jobs will be viable once the lockdowns end.  For these, for the self-employed  and the precariat on zero-hours contract Sunak has done little. 

 A really imaginative chancellor would take this opportunity to sow the seeds of a Universal Basic Income (UBI).

Dealing sufficiently for all those adversely affected will be expensive, but, just as the pain of coping with the virus should be shared, so should the paying for it in the future - when the time is ripe.

It has been pointed out in an earlier post that a 10% one-off tax on wealth  would pay for everything we need and more.  If that included 10% of my wealth, so be it.

There are plenty of other taxes  - land taxes, capital gains taxes, a robot tax,tax on the incremental value of houses, financial transaction taxes, an effective inheritance tax, a raid on tax havens - all of which would raise the government's income with minimum effect on the vital current demand.

There is no case for current stringency:  for once let's "all be in it together."

Wednesday 23 September 2020

The UK a Kleptocracy?

Traditionally the Conservative Party has been the party of government thrift, and the Labour Party the one of flinging money at problems and hoping for the best.

 Hence the Tory MP who was on the radio a few mornings ago (I didn't catch his name but he was a "Sir" ) was true to form when he explained that he and some 40 other Conservative MPs and Peers objected to taking part in "Unconscious Bias" training because of the huge cost to the public purse of £700 000.

If I heard heard correctly he certainly has a point.  There are 650 MPs and about 800 Peers, so if they all take it the cost per head is £483, which is pretty expensive training. 

I wonder which lucky company  was given the contract?

However, this is small beer  compared with the money this allegedly Conservative  government is flinging around to combat the coronavirus. In her speech on Monday the Shadow Chancellor Annelliese Dodds quoted the £130m contract for the testing kit that didn't work and £150 million purchase of face masks that weren't suitable for  clinical use.  These agreements were made in a hurry and not subject to the usual scrutiny.

Most of the British are fair-mined people and will sympathise with the excuse that abnormal procedures have to be used in abnormal times.  We will also be tolerant of rules that change as circumstances change.

 So going  back to the office to work seemed a good idea a couple of weeks ago when the virus seemed to be coming under control: work from home if you can is now the good idea as the virus appears to be soaring out of control.

But what cannot, in my view, be excused is the the way the government has used the pandemic to ignore experienced and successful public bodies with the likely expertise to help control the virus in favour of profit-maximising maximising firms. 

So rather than use the well-honed Local Government  Public Health Services and the established virology laboratories across the NHS the contact tracing system is outsourced to Serco and the Lighthouse  testing labs to Deloitte.

That is the same Deloitte that was fined £15m earlier this month for its failure properly to audit the accounts of the software company Autonomy.  Last year a fine of £19.2m was imposed on Serco for fraud and false accounting over its electronic tagging service for the Ministry of Justice.

 These are the most glaring examples of massive outsourcing of public works to private companies of proven incompetence.  Others are detailed in a recent article  in the Guardian by  Aditya Chakrabortty.

In the post war collapse of empires many newly independent countries have, after promising starts, degenerated into Kleptocracies in which  their leaders grabbed national resources for themselves and their friends.

Sadly the mature United Kingdom appears to be travelling down the same path.  

If a marginally left-of-centre government were acting in any way similarly there would be outrage.  As and when the reckoning comes I hope something like outrage will be expressed towards the present clique in charge of our country.

Friday 18 September 2020

Our economy: what to do next.


Tucked away in a long article by Gordon Brown in the Guardian on Tuesday 15th September were short and long term suggestions for sustaining and then reforming our economy.

Although he doesn't actually say it I'm pretty sure I'm not putting words into his mouth by suggesting that he believes we should take appropriate action now and worry about paying for it later.

 In the short run he states that we should:

1. a.  maintain  furlough payments for key sectors

    b.  along with a pay-subsidy for part-time work

    c.  and offering retraining opportunities during absence from work.

2. For those forced to isolate, a serious increase in the £90 a week allowance. (My own suggestion would be at least to the Retirement Pension rate of £134 a week, or perhaps even the "new" rate of £175 a week).

3.  An expansion of the youth employment programme which presently covers only 350 000 young people, to cater for the 3.5 million under 25s not presently in full-time education or training.  He cites Labour's 2009 "Future Jobs" programme as an example to follow. 

In the longer term Mr Brown refers to the international action he coordinated following the 2008 crash and deplores the fact that no such international co-operation has as yet been organised to combat the effects of the pandemic.  He advocates:

1.  The Bank of England's remit (and those of other Central Banks?) should be expanded  to include maintaining high levels of employment as well as controlling inflation.

2.  International agreement to abandon the now discredited Washington Consensus with its focus on balanced budgets, deregulation, liberalisation and privatisation.

3.  Replacing  this with a consensus that prioritises:

  a.  Fair trade

  b.  Limits to destabilising capital flows.

  c.  Challenges to monopolistic behaviour.

  d.  Support for  science and innovation.

4.  Urgent international action to combat climate change and global heating.

5.  Urgent action to combat unacceptable levels of inequality both within and between economies.

It all sounds good to me. I hope Rishi Sunak, or at least someone in the Treasury Team,  reads the Guardian.

Tuesday 15 September 2020

Two views of one event

 Yesterday the Commons debated the Government's bill to allow the UK to break the law, though only in "a very special and limited way."

 Here's the Guardian's Sketch-writer's report on the opining of the debate: 

 This was Boris [Johnson] at his very worst. Normally Johnson has little trouble in dealing in bullshit and lies: in fact he has made a career out of it. Yet right from the very start, he appeared nervous and defensive, even though a near empty chamber saved him from having to take too many embarrassing interventions from both the opposition and Conservative benches. Instead, what we got was total incoherence.


  Miliband [Ed, the former labour leader, leading for the Opposition] didn’t put a foot wrong, both goading the prime minister for his failure to understand key aspects of the Northern Ireland protocol and inquiring how he expected other countries to take us at our word if we were so willing to break international treaties, before taking him down point by point.

By contrast, here's how the Daily Mail reported the debate:

Boris laid out his stall calmly. The Bill, he said, should be supported by anyone who cared about ‘the sovereignty and integrity of our United Kingdom’. Without the Bill, we could end up with a situation where the EU refused to list any of our agricultural products for sale anywhere in the EU.

. . . 

 [Ed Milliband] lacks the authority that comes naturally to orators, causing him to keep repeating phrases until he’s sure everyone has heard them.

He spent most of his speech speaking directly at the PM. 

‘For a man who said he wants to get Brexit done this gets Brexit undone!’ he yelled. In a rather hokey piece of grandstanding, he goaded Boris to intervene and challenge him. Boris simply stared down at his lap shaking his head.

 On and on Ed honked, his quivering lips giving the despatch box a liberal soaking as he belted out lachrymose statements about Britain’s proud place in the world. ‘Magna carta… mother of all parliaments… rule of law'

I confess that I very rarely read anything from the Daily Mail.  I merely picked up these contrasting views from a BBC review of the day's papers.

The Daily Mail readers live in their own bubble: I live in my own, smaller, Guardian  bubble.

No wonder we think, and vote, so differently.

As Alexander Pope (1688 -1744) put it in his Essay on Man (if I recall my student days correctly):


'Tis with our judgements as our watches, none

Go just alike, yet each believes his own. 


Actually, today watches do go pretty well "just alike" but human nature hasn't changed. Even in an age when information is more freely and easily available than ever most of us  still allow ourselves to be exposed only to the information that supports our prejudices.

We used to be able to rely on The Times, which called itself a Journal of Record,  for a more impartial take on events, but I suspect it's now not much better than the Daily Mail.

Hence the importance of preserving  the BBC, which I believe does make a genuine attempt to "hold the ring" impartially.  Its influence and value will be further reduced  if its wings are clipped as the present government intends, and when it is exposed to rivalry from the Fox-style "opinionated" sources which are now in the pipeline.

Post-script, added 19th September.

A friend has sent me this link to Ed Milliband's speech:

 Please use it and see for yourself whether the  Daily Mail or the  Guardian  description is the more accurate. 


Post Script added 23rd  September. The speech seems to have been "taken down" from that site.  I wonder why?  I'm told it can now be accessed here,

but "come in" after 1hr 47 minutes


Saturday 12 September 2020

Our Failed NHS


According to yesterday's press there appear to be at least two million people who are even now, two months after the lockdown was eased, required to wait for at least another 18 weeks for their treatment on the NHS.  

 Full disclosure: I am one of them.  Indeed I might be three of them - it depends on what is being counted.  If the figure is of  the number of referrals, three are mine: for my failing sight, may failing hearing, and repair of  a hernia developed at the start of the lockdown.  In addition dental and  and chiropody appointments made well before the lockdown were postponed for ages, but have now taken place.

 If you think these demands on the NHS are excessive, just you wait until you are in your 80s: such needs are sadly par for the course.  Indeed I feel fortunate that there is so little wrong with me.

 The government likes to claim, even boast, that its policies in dealing with coronavirus have been  successful becasue the NHS has not been "overwhelmed."  

 The truth is that the NHS has not so far been overwhelmed only because, at the height of the lockdown, it became a covid-19 service only: apart from emergencies the rest of us were shunted off on to waiting lists, where far too may of us still remain.

I still cannot understand why most if not all the coronavirus sufferers were not treated in the the Nightingale Hospitals, built so quickly with such acclaim but barely used,  leaving the usual  hospital service to carry on much as normal, though obviously with depleted staff.

Be that as it may, it is clear that the current backlog results not only from the way the pandemic has been handled but also a serious lack of capacity through underfunding, especially since 2010.

The following figures are taken from pages 223/4 of John Kampfner's very readable book: "Why the Germans do it Better " (Atlantic Books 2020).

Of hospital beds per 1000 population Germany has 8.2, France 7.2, the EU average is 5.2 and the UK a "lamentable  2. 7" 

Of Doctors per 1000 population Germany has 4.1, The EU average is 3.5 and the UK has 2.8.

Of Nurses per 1000 population Germany has 13.8 and the UK 8.2.

Of Intensive care unit beds, at the onset of the pandemic Germany has 28 000 and the UK 4100.              

 Going to the doorway  at 7pm on Thursdays and applauding the NHS is very nice but not sufficient.  As an electorate  we must learn to scorn the stupid promises that we can have Scandinavian (or German) levels of service with US tax rates.

 Come the next election I hope at least some the parties will be honest and promise realistic funding for what is so clearly our national treasure.

 And I hope all those clappers will rush out to vote  for the parties with the most realistic proposals.


Wednesday 9 September 2020

Plumbing old depths.

 Apparently the phrase "perfidious Albion" in its current usage goes back at least to the French Revolution, so in reneging on an international treaty which he signed less than a year ago Prime Minister is doing nothing new.

Nevertheless our government seems to do, not do, say or lie about something or other at least twice a week which, until two years ago, would have been regarded as outrageous oud and totally beyond the pale.

We are bound to wonder what their real motive is. 

 Are they stuck in the No 10 bunker chortling furiously and having competitions to see what is the most outrageous thing they can get away with next?  (Manoeuvring the Queen into giving a party-political broadcast for them, illegally proroguing parliament, condoning Cummings's  60 mile round trip to test his eyesight, now risking a hard border in Ireland, to name but some).

It is bizarre that the two alleged sticking points in achieving  a trade deal (the one that we were assured during the election campaign was  "oven ready" ) concern  fishing and state-aid to industry.

Fishing rights are doubtless important to the small number engaged in the UK fishing industry, though they constitute less than 0.1% of the workforce. They do produce 0.12% of our GDP so are very productive. 

However, the English fishermen can't be all that worried about retaining their industry because they sell 60% or their quota to foreign vessels.  The Welsh sell about half of theirs and the Northern Irish a staggering 90%+ of theirs.  The Scots, bless them, outsource only 2% or theirs, but it seems odd that this government should go out on such a dangerous limb to defend a Scottish interest. 

Details can be found here

and here 


As for state subsidies to industry, it has been Conservative dogma for 50 years that governments are not good at "picking winners," industries should stand on their  own feet and the weakest should go to the wall.  It wasn't called creative destruction then but it is now and is still part of the Tory package.

 It was way back in the early 70s that "U-turn," which until then meant something that you were not allowed to do on a motorway, became part of the political vocabulary when Conservative Prime Minister Edward Heath did a volte face and, having fought  an election on the above mantra, poured in government money to rescue Rolls Royce. 

 However,  his successor,  Mrs Thatcher  was  a "lady not for turning" and a good  chunk of British industry, not least the mining sector, went to the wall in thrall to the mantra in the 1980s.

 So what's going on today?

 It is hard to avoid the conclusion that all this is theatre designed to embellish an illusion of European intransigence, the anticipation of a no-deal exit and then, cliffhanger ending, the wonderful Johnson pulls a deal out of the hat.  Hurrah.

Of course, the deal, whatever it is, will be phoney.  Like the Withdrawal Agreement it will be achieved  by conceding  issues  hitherto regarded as unacceptable, but dressed up up with a few superficial concessions and applauded as a stroke of Johnson genius by the sycophantic press.

It will be nowhere near as good as the deal  we would have retained had we remained in the Union, but that fact will be brushed aside as "old hat."

Monday 7 September 2020

Pictures telling a thousand words



This graph is from an Australian source and relates to the situation  as at August 2020.  It was sent to me by a friend who now works out there.  You will see that Australia is proudly in the top right-hand corner, in terms of deaths per million, outstripped by only Japan and Korea, and by minimal economic shrink only by South Korea.

In the bottom left hand corner, with the most deaths per million of population, is the UK.  We also have the largest percentage fall in economic activity.

Of course this graph shows only ten countries (plus the over-all picture for the EU.)  In case you feel the countries have been chosen rather selectively, here's another picture comparing the  performance of a few more economies.


 China 's economy  is still growing,  Vietnam and Taiwan only marginally affected, Australia still looking good.  This time the UK is not quite at the bottom.  At lest one economy, Spain's, is more badly affected than ours.

Still think this is selective?

Here are the performances of about 40 countries, if your eyesight is good enough to read which they are.

And yet day after day UK ministers on the media use phrases like "World Beating, "our success," guard out shores "against infection the hand of war" (Shakespeare made that last one up.)

We should recall the information in these graphs when we hear the government complaining the the BBC is given a biassed picture of its performance.