Learning from the BBC

How many senior managers does it take to run the BBC?

Apparently it’s quite a lot less, 18% less to be precise, than previously thought according to the BBC Trust which has agreed to proposals from the Executive to cut the senior management pay bill by around 25% over the next three and a half years.

Other savings will come from freezing pay and bonuses for senior management until 2010 as part of a larger plan to cut a whopping £1.7 billion from costs between now and 2013.

Wow.  18% less senior staff!  Savings of £1.7 billion.  What a veritable feeding trough this must have been in recent years; a perfect illustration of how the interests of senior staff can diverge from that of the organization and its shareholders (the public in this case). 

Actually the salary and bonus savings are likely to be just the tip of the iceberg.   The primary cause of inefficiency is not too many staff and an inflated wage bill, bad as that is, but the organizational constipation they cause as they get in each other’s way.  All those staff have to do something, and when there are too many of them they invent work, creating endless and pointless meetings and paperwork, hoarding information, diffusing responsibility and playing (company) politics.   Trust me, I’ve been there, I’ve got the tee shirt.

But if the BBC is top-heavy and over-managed, what of central government?   I suspect the BBC is positively slimline by comparison.  Think about it; most long-established major industries have in turn experienced an existential crisis which has forced root and branch reform – think shipbuilding, coal, steel, motor manufacturing, telecoms and so on.   Some have failed to make the change, others have gone on to thrive (though often under foreign ownership).  The one obvious holdout, protected until now by the endless generosity of the taxpayer, is government.

Well, this party is about to end.  A country needs a government just as a large and diversified company needs a head office but it must add value and it can only do this if it is small and efficient.  If it gets too large it becomes inefficient and self-serving and subtracts value.  That sadly, is what HMG too often does.

Which is why I have always disagreed with the plan to save $20 billion from government spending.   It’s simply too small; it implies leaving the system basically unchanged and making it just a bit more cost-efficient round the edges.  For heavens sake!  If the BBC can find £1.7 billion after a few months what is the potential across government?  £200 billion is probably nearer the mark because that implies a root and branch change in the way government works.

It’s long overdue.

 

How unfriendly prices can damage your wealth

Quickly now, at your local supermarket which is better value - 4 rolls of paper towels for £2.79 or 6 for £4.29?

Most people take some pride in being careful shoppers but it’s not easy when you have to do sums like that in your head (especially if you have a fretful toddler in tow).   These are what my wife, a chartered accountant, calls ’unfriendly numbers’ meaning ones that don’t lend themselves to mental arithmetic.   

This is no accident;  you’re not supposed to compare them because unfriendly numbers and similar tricks are at the heart of the ‘trick and trap’ sales strategy now universally used by Big Retail.   The objective is to induce customers to overpay by confusing or misleading them about the price of items and, in particular, which about choices are best value.  

Although there are laws against misrepresentation Big Retail has discovered you can comply with the letter of the law while frustrating its purpose by exploiting psychological tricks.  These tricks don’t fool everyone all the time but they don’t have to.   It’s a matter of averages;  as long as they work for some people some of the time they serve their purpose and my guess is that they actually work for most people most of the time. 

Nor is it just supermarkets that resort to price confusion strategies;  it’s endemic in many sectors.  Did the banks selling worthless securitized sub-prime loans really want price transparency whereby their customers would have understood the real value of what they were buying?   Do you really understand your telephone bill?  (Do you think you are supposed to?)   Confusing customers about true value is one of the oldest tricks in the book.  

Just how effective this can be in the case of supermarkets was dramatically illustrated by the BBC’s Watchdog consumer program this last week (video – package begins at about 40 minutes).   They arranged for three couples to buy a list of just six items as cheaply as possible from a mocked-up supermarket stacked with retailing tricks taken from real life.   The cheapest it was possible to buy the list was just £11.96 but the three teams spent £14.52, £21.10 and £21.27 – equivalent to truly eye-watering premiums of 21%, 76% and 78% respectively over the best possible price.   While this obviously wasn’t a properly conducted scientific test it does show the effect of this chicanery is pretty huge.  Moreover, it’s reasonable to infer that it will disproportionately trap those lower down the social (and educational) scale.   

Watchdog’s package concludes with a spokesman from the British Retail Consortium (the lobby group for Big Retail) trying very unconvincingly to blame it all on ‘mistakes’.   The fact is that when your sales are in billions making just 1p more in every pound become hugely profitable and the supermarkets have a massive incentive to turn deceit  into a strategy.

Is it possible to estimate, however roughly, the scale of excess revenues garnered by the supermarkets?   Obviously not from Watchdog’s little test of the efficacy of ‘trick and trap’ which is, in any case, only one of many strategies employed.   However, we can get one estimate of how much cheaper supermarkets could be from Aldi and Lidl both of which claim to be around a third cheaper than the established competition.  Combine this with supermarket sales of around $90 billion and you get excess revenues of £30 billion – equivalent to a staggering £500 per annum for every person in the UK.

Is this a reasonable figure?  The supermarkets and their apologists would obviously say not but Im going to stick my neck out and say that, for all that it’s a bit approximate, I suspect it’s about right.   But even if it’s a substantial overestimate, it still dwarfs anything the government has yet come up with to help ordinary folk as opposed to bankers.  

Oligarchs or people: hopefully that will be the choice at the next election.

By the way, the answer to the question at the head of this post is that the 6-pack costs 2.2% more than the 4-pack on a per unit basis.

Stuck in a rut – but we can break free

Mark Thompson asks why we’re not doing better in the polls.   As he observes we are in the worst financial crisis in most people’s living memory, the government is deeply unpopular and out of ideas, politics itself is in crisis and politicians are seen as remote and untrustworthy;  yet for all this the Liberal Democrats are stuck at only around 20%, in the polls.  Clearly, something is very wrong.

The difficulty as I see it is that we have got stuck in a rut, winning a measure of success as a (largely) protest party, but with little idea of how to get out of the rut.  So, where are we going wrong and what do we need to change?  

There is so much one could say on this subject that I will confine myself for now to just two things that we should stop doing.    In a later post (or maybe posts) I will consider things we should do differently.

Firstly, we should stop complaining about the unfairness of the media and the voting system.   Of course they’re unfair (what do you expect?) but if we use that as an excuse it  becomes all too easy to stop right there and never get on with the things we can do.   If we had a coherent understanding of where the the country was at and what we would do about it, we would certainly get reported.  Vince Cable has shown that this works; unfortunately he is seen as a sage distinct from the wider party.  The conclusion is surely that developing a compelling narrative is a top priority; once this is done the ‘media problem’ will solve itself. 

Secondly, we should stop being so complacent.  After the last general election and yet another bad defeat, the Tories debated briefly what their strategy should be.  They all agreed (after debating in very much these terms) that it came down to a straight choice between (a) a radical reform of their platform, and (b) a ‘one more heave’ approach.   Almost without exception Conservatives from all wings of the party understood from the outset that the ‘one more heave’ strategy was, in fact, a hiding to nothing and that they had to change, distasteful as it might be to many.  The issue for the ensuing leadership debate was then what sort of change and, as we now know, that was won by Cameron.   His platform?  An superficially greener, more liberal interpretation of Conservatism based on an accurate perception of a gap in the market created by the weakness of the Liberal Democrats rather than on any ideological conviction.

Contrast this with the response of the Liberal Democrats;  we had no debate but just blithely assumed that, of course, it was back to ‘one more heave’;  it’s what Liberal Democrats do, it’s what we’ve always done.   In doing so we effectively surrendered any chance of winning the forthcoming election preferring instead to reheat and represent policies that voters had just rejected by a large margin.  Only now, belatedly, are we beginning that debate.  (Which makes me think that the election after 2010 might at last be the breakthrough). 

As Mark hypothesizes, this is the best chance we have had in decades.  It’s up to us whether we choose to throw it away or run with it.

Solar power nears the tipping point

Is photovoltaic (PV) solar power about to reach a tipping point and come of age?   A couple of announcements yesterday imply that it might be – and not just for niche markets and remote locations but for grid power – although sadly only in rather sunnier climes than Britain!

Arizona based First Solar has announced that it has concluded a memorandum of agreement with the Chinese Government to build a massive 2 gigawatt solar plant near Ordos City on the dry steppe of Inner Mongolia about 300 miles west of Beijing.   Construction will start next year with a 30 megawatt demonstration project and then proceed by stages until completed by 2019.  To put this in context that means that, when completed, this single plant will have a capacity equal to the entire UK fleet of wind farms as of January 2007.

Also yesterday, California based Nanosolar announced the opening of a new factory near Berlin to assemble finished panels from their PV cells.  When production is fully ramped up the highly automated factory will produce a panel every 10 seconds for an annual production of 640 MW.  All are destined for utilities and customer committments totalling $4.1 billion to date are claimed.   Nanosolar modules have been designed from the outset to lower the ‘balance-of-system’ costs – i.e. the costs of mounting, connecting etc. so that the overall installation cost is minimised.  They also revealed that their cells achieve up to verified efficiency off up to 16.4% although the median is a litttle better than 11%.  

Now PV has been around for a long time but its high cost has always ruled its use out except for niche applications.   To be a serious player it has long considered that vendors would have to get the capital cost down to around US$1 per watt and produce electricity at a cost of around 10 cents per KWh and yesterday’s announcements imply that both companies believe these goals to be within sight.

First Solar is relatively happy to discuss costs and claims that by the second quarter of this year its module cost had fallen to just $0.87/watt and it projects further declines to $0.52 – $0.63 by 2014.   At the same time it is working to reduce balance-of-system costs and is targeting a cost of $0.91 – $0.98 /watt, again by 2014.

These projected costs possibly explain the phasing of the Chinese project; half the contemplated capacity will be added in the final phase to start construction only in 2014 – i.e. only when costs are rather lower than currently.   In the meantime the Chinese have guaranteed the project’s revenues by means of a feed-in tariff which First Solar considers vital as they drive their costs towards ‘grid parity’ – where they become fully competitive with conventional sources.

Nanosolar uses a different technology and has developed a method of printing a thin film of semiconductor onto a flexible metal foil which it claims is 100 times faster than conventional high-vacuum deposition and which certainly ought to be highly cost-effective.   The company is coy about costs but claims that its utility panels are ‘profitable in a wide range of geographies and power markets’.   According to Wikipedia cell costs have been reported as only 36 cents /peak watt (which Nanosolar declines to comment on);  if even approximately correct this represents an amazing breakthrough and implies that they are already at the tipping point – or as near as makes no difference.

So what does all this mean for us in the UK? 

Firstly, I don’t believe we are going to get a significant development of solar energy in Britain.   We are simply too far north and too cloudy.   However, on a global scale it does begin to provide alternatives that will very quickly become important once grid parity (or even a reasonable approximation) is achieved. 

Secondly, it highlights that an immense immense amount of R&D is going on into alternative energy sources and that some of that is getting very close to commerciality.   While both these companies happen to work in the field of PV, others are making equally impressive progress in solar-concentrating systems (that use sunlight to create steam to drive a conventional turbine) and in nuclear.  I think it likely that 20 years from now electricity will cost less in real terms than currently. 

Thirdly,  the UK needs to do far more to create a favourable environment for R&D led companies.  Even now, while the Chinese are getting in at the ground floor, DECC is still consulting on a feed-in tariff system with a view to it being introduced only in April 2010.  (To be fair to Ed Balls, the announcement of his support in principle for feed-in tariffs was one of his first acts on becoming Minister – but that does not excuse the government’s prior tardiness).

Fourthly,  maybe we don’t need to worry quite so much about carbon dioxide levels in the atmosphere for the future.   We’re not there quite yet but we appear to be getting close to having technical alternatives to carbon-based technolocgies for generating electricity.  Although the total amount of PV out there is miniscule in comparison with conventional capacity, it will ramp up very fast once the economics favour it.

Supermarket cuckoos

Tracy Corrigan, who writes for the Telegraph on banking and the like,  is excited.   While walking her dog on Sunday she discovered that a Tesco Express is about to open, not 50 yards from her house.   She foresees a future liberated from the boredom of ordering the same items week after week online because she can’t think what else to buy.  Shopping in-store she will find all sorts of goodies.

She thinks her position is, “actually rather radical” and goes on to explain that there are numerous websites dedicated to the “negative impacts of supermarket power” (none are mentioned, but see Tescopoly) and declares she is mounting a counter-insurgency following up with the quite remarkable (and wholly unsubstantiated) assertion that, “The small number of large chains in this country makes competition more intense.”

Yet what is most interesting about this piece is the comments.   If you analyse them into pro on the one hand and anti or neutral on the other then, on a rough count, they divide nearly 2:1 against Tesco.  If you exclude the neutrals and overseas comments, then the antis have it by over 4:1.   Does this mean that things are about to change in Tescoland? 

I think it might.   Since the supermarkets first arrived here in the sixties they have benefited from a favourable political and commercial environment – albeit one that has evolved and changed greatly since then – and this has underpinned their success.   However, nothing stays the same for ever and the economic case for supermarkets in their present form evaporated some time ago.  Good PR on the part of the supermarkets, a widespread belief that the market is always right (or at least much righter than anything else) and the dreadful habit of UK politicians of all parties to follow rather than lead have protected the supermarkets from any political fallout from loosing the economic case.    While the comments on Tracy Corrigan’s piece don’t prove that public opinion has definitively changed any more than the first swallow proves that spring has finally arrived it is, nevertheless, a clue;  two years ago the balance of pros and antis would have been very different.    

To understand how and why things have changed consider the stages that have got them from then to now.

Stage 1.   Government policy was changed in the sixties to favour the growth of ‘big retail’.    The hope was that powerful retailers would force suppliers to deliver better prices and quality (at the time they had a deserved reputation for supplying shoddy goods).   A particular aim was (and is) ’cheap food’ – a policy that presumably dates back to the Corn Laws.   Thus, when the first supermarkets arrived from the USA in the mid sixties (remember the supermarket scene in The Ipcress File in which an early specimen is clearly the height of contemporary cool) they were welcome as a way of galvanising both the retail sector and also the rest of the supply chain.

Stage 2.  The supermarkets became established and a few pulled ahead of the pack, gaining additional market power with size and thus started delivering on their early promise as they used their market power to bear down on dozy suppliers and extract better prices.   Rapidly rising car ownership boosted this process mightily by enabling supermarkets to concentrate on fewer, larger stores as did the emergence of IT systems to manage on a larger scale.   The scale of each store is such that they could sell at prices approximating to wholesale although it is more profitable to trouser most of the benefit and give customers only enough to maintain a small price advantage.   Nevertheless, the gap between supermarkets and traditional shops becomes very obvious.

In other words, the supermarkets had the huge advantage of a lower-cost business model, enabled by rising car ownership, computerised stock control etc. and backed by supportive government policy.

Stage 3.  Government welcomes the rise of supermarkets as a vindication of its policy and comes to see supermarkets very much as a ‘Good Thing’, especially so since so much of the rest of the economy was in near meltdown (it turned out that big retail, instead of knocking domestic producers into shape, simply sourced from overseas).  Supermarkets stand out as one bright spark in the pervading gloom.  Meanwhile, the winners among them grow rapidly by a combination of organic growth and acquisition because it turns out that the most important factor for success is size (because of the increased buying power and therefore lower buying prices).   The contrast between supermarkets and surviving corner shops becomes extreme.

Stage 4.   The winning supermarkets are now an oligopoly, dominating their market and dictating terms to both suppliers and customers.  Suppliers notice this (of course!) but customers don’t as the supermarkets carefully maintain the illusion of good value helped by supporters who continue to benchmark them against surviving corner stores although this is patently nonsense.  They start moving into other sectors helped by their vast cash flow and footfall.  Voices start to be raised against them and their practices but these are mainly couched in nostalgic terms (e.g. they are horrid, are mean to suppliers, devastate the High Street, etc.).   Many of these are good points but none cut  much ice with a government (as distinct from many MPs) still wedded to the idea of a cheap food policy and naively convinced they are delivering it.   The supermarkets actively foster the ‘we are cheap, we are on the hard-pressed customers’ side’  meme by constantly advertising price reductions, BOGOF offers etc.

Stage 5.   Abuses of market power become the norm.   The much publicised unfair contracts with suppliers are the inevitable result of the concentration of buyers; with so few supermarkets growers confront an oligopsony.   On the selling side, BOGOF and other offers are used to confuse shoppers about what constitutes a fair price; absent resale price maintenance, marked prices purporting to be RRP (recommended retail price) are often no more than Aunt Sallys - deliberately intended to deceive.  This can only mean that consumers are paying substantially more than they should.   Moreover there is evidence of outright price-fixing (also here and here) which is almost inevitable when the number of competitors becomes too small.   Also on the selling side, predatory pricing is used to crush competitors as the All Party Parliamentary Small Shops Group has reported (pdf – see page 25).   The tactics are utterly disgraceful but they get away with it. 

In other words, the supermarkets commercial advantage now derives from exploiting their excessive market power and they have become oligarchs.   A Conservative friend (also a councillor and on his planning committee) concedes that they are above the law.   The fluffy fledgelings of yesteryear have turned out to be cuckoos to the bewilderment of their poor parents.

Stage 6.  Most people still believe the supermarkets’ claim to be benefactors which provides ‘high cover’ for them in that government will not act if it thinks they are still well-regarded by the public.   In any case, government and opposition have been captured by a market fundamentalist philosophy that persuades it that ‘the market is always right’.   In theory they should understand that oligopolies frustrate the workings of a market but in practice this view leads to them cheer-leading for any private sector firm, however abusive.   Calls for reform fall at the first hurdle because they typically propose administrative solutions  (for instance the creation of a regulator, ombudsman or Code of Practice) despite the incredibly poor record of such approaches.

Stage 7.  Regulators like the Competition Commission and the OFT (Office of Fair Trading) that might go after them for abuse of market power in fact shelter them, even acting as enablers on occasion – for example by allowing Tesco to make convenience store acquisitions that, given its high market share should be ruled out, on the spurious grounds that ‘convenience’ shoping is different from ‘one-stop’ shopping so Tesco doesn’t really have a very high market share at all!   

This is partly because, like the government, they are influenced by market fundamentalists and naturally assume that everything must be just dandy and in part because, as good bureaucrats, they believe that, whatever the law might say, the reality is that the Government approves of the supermarkets and doesn’t want to spoil the party.  (This are, of course, essentially the same reasons that the FSA/Bank of England/Treasury troika utterly failed to regulate the City!)   To be fair, the regulators are belatedly getting a little tougher, but only marginally.

So, we have arrived at a point where a Good Thing from a few decades ago has evolved into a Bad Thing today.   It suits the supermarkets mightily but it’s bad for the nation as a whole - producers are being ground into the mud and consumers are being overcharged.    The comments on Tracy Corrigan’s piece suggest a growing public appetite to do something – even if exactly what remains unclear. 

Time for a change I think.

After school – the black hole that swallows hope

The A-level results came out last week leaving many wondering about the significance of the 27th year running in which grades have increased and whether or not they still represent the ‘gold standard’ in school education etc.

These are perhaps interesting questions, but … are we missing the elephant in the room?  I think so.

The long-standing primary purpose of A-levels has been to act as university entrance exams common across the whole country.   Once upon a time that meant that they were designed to be attempted only by the 20%-25% most academically-gifted of the school-leaving cohort and ‘passed’ (in the sense of leading to university or polytechnic) by a tiny minority.   Thirty years ago this was around 10% but  it has risen erratically ever since.  When Tony Blair became Prime Minister he famously introduced a target of 50% and it now stands at about 43% with the government increasingly constrained by funding difficulties.

So, A-levels are still doing their primary job, albeit in a context changed almost out of recognition.   In doing so they provide a large MINORITY of school students with a clear goal for their school work.  Even though in one sense this applies only to those in the sixth form in reality the benefit of this clear goal riffles down into the middle school and even perhaps to primary.   I can still remember being distinctly bored by school aged around 14 but equally knowing that this was something I just had to get through because – well – because that was what one did on the way to getting A-levels, then to university and, in due course, getting a job. 

But … that leaves the MAJORITY of school students with no clear target for their school days.  It is a smaller majority than 30 years ago to be sure, but still a very substantial one.  For them there is a black hole instead of the comparative simplicity of A-levels.  What for them is the point of school?  It’s not entirely clear although (or perhaps because) generations of initiatives have left a bewildering array of options.  It’s a system that’s grown like topsy over the years; insiders may perhaps understand it but for ordinary mortals it’s far too complicated.

On last Thursday’s BBC R4 ‘Today’ program (the relevant bit starts 5 minutes in) Evan Davis put this very point to Higher Education Minister David Lammy, “It’s quite a complicated [system] isn’t it now.  We have A-levels and we have all these other things – everything from HNDs, NVQs, BTEC, City & Guilds….  When you got to the Department did anyone sit down and try and explain it all to you… ?”  and a little later, “…we seem to introduce one [a new qualification] every Parliament and never get rid of the old ones…”

The Minister did the normal political thing of answering another question so Evan came back with the thought behind his earlier question (at 7 mins in), “But you’re comfortable with the system?   It doesn’t need tidying up or anything?   It’s a logical and neat system?“  Again, the answer was to a different question leaving Evan to wrap-up by joking that, “We could introduce an exam in the different qualifications“

At this point I must declare an interest – or perhaps a prejudice – that dates back to my first job.  Head office imposed on our manual staff a bonus system of byzantine complexity that had been developed in another Division.   With our very different circumstances it was quite mad and led to perverse and illogical results, but worst of all, it was understood by almost no-one, and certainly not by the staff it applied to.   With the link between effort and reward no longer clear and transparent output slumped and cost soared.  Since then I have been a devotee of the KISS principle so I think Evan was right on the money when he implied that it’s not a logical and neat system and suggested that a tidy up is needed.  Make that a total overhaul.   The ’system’  for those not aspiring to go to university is not, in fact, a coherent system at all, but merely the residue of failed initiatives accumulated over many years.   

Both the individuals concerned and the wider economy suffer terrible damage from this wholly unsatisfactory approach.

Although I’m sure all the civil servants and ministers at the DCSF would hotly deny it, the reality is that young people are treated as statistical objects, gaming counters to be manoeuvred into desirable outcomes.   It is, of course, the archetypal producer-push approach that invariably fails in other sectors as it is failing here.   Moreover, the education establishment in Whitehall (and the education industry in the country) has a one-eyed view of education that sees ’academic’ as good and anything else as ‘failure’.   The ‘failures’ are treated just like the sports ‘left-overs’ at my old school - the not-very-sporty ones who would never play for the school football team.  Staff went through the motions because it was timetabled and they were paid but that was it; no passion, no energy, no inventiveness and certainly no attempt to discover the hidden talents that certainly abounded outside of  football. 

For the individuals concerned the damage was highlighted this report last week of the youth drop-out rate hitting new highs.  It seems that a shocking 1 in 6 or 835,000  18 to 24 year-olds are now NEETS (Not in Education, Employment or Training) after rising by 100,000 over the last year.   At this rate it will soon be 1 in 3 of those not likely to go to university.   But there is worse – recent research looking back at those who were NEETS 10 years ago discovered that 15% had already died.   Even if that figure proves to be very much less going forward, the human cost will still be incalculable.

Is it possible to overstate just how obscene this is?   I don’t think so, and that’s even before considering the economic costs to the nation which is immense as  young people who should be contributing socially and financially are reduced to dysfunctional overheads.

The establishment’s inability to comprehend the importance of vocational skills and do something about it is a traditional failing of the British political system - there has been a black hole at the centre of our economy since the industrial revolution.   As early as 1835 Richard Cobden wrote after a visit to America that “our only chance of national prosperity lies in the timely re-modelling of our system, so as to put it as nearly as possible on an equality with the improved management of the Americans.”   Then again just after the Great Exhibition of 1851 the scientist and Liberal politician Lyon Playfair observed that  European industry was bound to overtake Britain if she failed to alter her outlook and methods.  In 1882-84 the Samuelson Royal Commission on Technical Instruction visited many continental countries and reported, inter alia,  that “The one point in which Germany is overwhelmingly superior to England is its schools, and in the education of all classes of its people … the dense ignorance so common among workmen in England is unknown …”  (my emphasis).   In 1942 the Permanent Secretary to the English Board of Education noted that over a wide range of German industries there was  100% vocational training as against 10% for the UK.   (Sourced from Corelli Barnett’s ‘Audit of War’ ).

The educational establishment may be all at sea over non-academic alternatives but parents are not.  As the BBC reported only last week, “The majority of parents (90%) believe schools should teach vocational and practical courses, as well as academic subjects ...” and that, “…78% thought schools did not equip young people adequately for the world of work“.  Wow!   That’s way off the usual scale of political consensus.   The difficulty here is not parents or employers but the political establishment;  the Westminster Village (and I mean ALL parties) just DOES NOT GET IT any more now than it ever did.   Time and again unflattering comparisons have been drawn (the above are only a small selection) and yet invariably the establishment response has been either to ignore the evidence or, at best, to tinker round the edges.  When panics periodically erupt in response to the manifest system failure, the Westminster Village responds in the only ways it knows – by stretching traditional definitions of  ’academic’ to breaking point, by loudly announcing  ’initiatives’ and by throwing money at the problem in the hope that some will stick and that public disquiet will be appeased by evidence of action.

Sadly, the Liberal Democrats are not immune from this sort of failed thinking.  For instance in Policy Paper 92 “Thriving in a Globalised World - A Strategy for Britain” (pdf) (circulated recently with the Conference agenda) the section on “Improving skills” kicks off by waffling about the changes globalisation has brought to cross-border working patterns (paragraph 2.1.1 et seq.), goes on to discuss statistical changes to demand for unskilled labour and the difficulty of competing on wages with workers from the new EU accession states before making a raft of detailed policy proposals.  Some (not all) are fine, but taken as a whole they reflect a top-down approach, amount to yet more tinkering round the edges and simply don’t do the business.  

This needs to change.  Specifically Liberal Democrats should make a total rethink a top priority with a view to making a proper system a major plank of our platform at the next election.  After all, it might prove popular with the 90% of parents who already agree with this view!   And that’s not to mention employers and the rest who understand perfectly well that the existing system is badly broken.

Which just leaves one final thought:  a ‘proper’ system of practical and vocational training would probably be far cheaper and would definitely be far more cost-effective than what we have now so the financial case points us in the same direction.

How to earn a living

Jeff Immelt, boss of GE, the World’s largest manufacturing company, has been talking at the London Business School.

He is convinced that in the US  “a 30-year transition from a manufacturing export-led economy to an importing service-based one typified by the growth of Wall Street is over and has left America damaged“.

He believes that the workings of the world economy have been “reset” and are moving onto a new pendulum swing which will see the future dominated by new levels of government intervention, new markets and new technologies based on good old research and development.

I think he’s right and that’s a problem for UK plc.   We are good at inventing new things (at least we think we are!) but commercialising those inventions is something that Britain has been poor at (with honourable exceptions) for 100 years and more.

So how will we earn our living in the future now that banking and finance isn’t looking like such a good bet?

NuLabour buries toxic waste under Jackson tributes

The sudden and premature death of Michael Jackson has a silver lining for a NuLabour government that has more toxic waste than the banking sector.   It is a once-in-a-decade opportunity to bury bad news, really bad news, when the news agenda is otherwise engaged.  So who gets the prize for quick thinking in charge of a disaster?

Step forward Ed Balls, Secretary of State for Children, Schools and Families.  He has ‘let it be known’  that the government is to abandon what the Guardian describes as “Tony Blair’s Flagship schools reform” and “the most significant education reform of the New Labour era“, namely the Stalinist national strategies for literacy and numeracy in primary schools.  The changes will end the centralised prescription of teaching methods whereby Ministers tell teachers how to do their jobs.

As Jenni Russell, also in the Guardian, points out results have been disastrous. 

Teachers feel helpless when they are in front of classes that aren’t grasping the points at the speed the national timetable lays down. There is no flexibility. The national plan compels a teacher to move on, no matter how many children are being left behind. Frantic booster classes at ages seven and 11 teach children the short-term tricks they must know to get them through Sats tests.

Results did improve in the first few years of the National Strategies but only because teachers were learning to teach to the test; once they had done so results predictably stagnated and it soon became clear that children were being turned off education by their stultifying experience of it.

However, it’s not just educationally that the National Strategies have been such a disaster.  Delivering them has involved massive expenditures on consultants; abandoning them could save £100 million per annum on the governments contract with outsourcing firm Capita plc.   In other words, NuLabour’s centralised command and control approach is not only a technical failure but also a financial failure.  

This is, of course, not a one-off failure confined to education only.  The development of a centrally-directed system that Stalin would have approved of is very much at the heart of the new NuLabour project and much of the excessive growth of government in recent years is attributable to it although, in fairness, one should point out that, as with so much else, Labour’s claim to fame is not that it originated this approach – that credit goes to the Thatcher-era Conservatives - but that it developed it to the current obscene level.

Meanwhile what of Ed Balls?   His news management strategy is working well so far.  Last night’s News at Ten on BBC1 slipped in only a brief mention of his change of plan just before the end of the bulletin and Newsnight made no mention of it at all.  Accordingly he has, in the time-honoured way of finessing a catastrophic defeat, declared victory and moved on. 

His latest wheeze is to redirect the money saved to schools to help them build networks with neighbouring schools thus driving up standards and exam results.   How wonderfully cuddly and, well, Internet-friendly  those ‘networks’ sound – it must seem to the poor souls like a shoo-in.   It won’t work of course, but hopefully NuLabour will be long gone before too much more damage has been done.

Lessons from London

According to the Wall Street Journal the US House of Representatives is to start posting expense reports online at the behest of Speaker Nancy Pelosi after the WSJ began publishing stories based on combing through the existing paper records.

It is not proposed that records from earlier years will be published online.  My guess is that quite a few congressmen have been reading reports from London and are keeping their fingers crossed that no-one digs into past expenses.

What a difference it would have made if Speaker Martin had opted for disclosure at an early stage.

However, it seems that the Senate still doesn’t ‘get it’ even though their expenses typically cost millions of dollars per year so there could still be fireworks from Washington.

The Dark Arts of Sith Lord Cheney

Disturbing  and shocking revelations about the Iraq War just keep coming. 

The latest is a piece in the Washington Note by Col Lawrence B Wilkerson, former chief of staff to Colin Powell when he was Bush’s Secretary of State.  A Republican, Wilkerson clearly detests Dick Cheney whose been touring the media extolling the virtues of torture in keeping America safe.

Summarising an MSNBC package he comments, ”Let’s just say that five minutes of the Sith Lord was stunningly inaccurate”.

The real reason for torture was nothing to do with keeping America safe; as Wilkerson explains (with my emphasis):

Likewise, what I have learned is that as the administration authorized harsh interrogation in April and May of 2002–well before the Justice Department had rendered any legal opinion–its principal priority for intelligence was not aimed at pre-empting another terrorist attack on the U.S. but discovering a smoking gun linking Iraq and al-Qa’ida.

So now we see the real reason for torture.  In the absence of any evidence from the UN survey teams, the Iraq/al-Qa’ida link had to be manufactured wholesale – dodgy dossiers, torture – whatever it took with Bush and Blair playing off each other.