Mrs May has laid out what she wants from Brexit. She has demanded that the agreement with the EU meets five requirements - respecting the referendum; protect jobs and security; be consistent with our values; not weaken Britain's ties; and be durable.
All sensible goals, but it is hard to see how to satisfy all them strictly.
Leaving 'just a little bit' would make things comparatively easy, if the Brextremists would face reality. A faint hope.
A hard Brexit would certainly be durable, but even the Brexit believers agree that jobs will be lost, and let's not get started about the Irish border.
Mrs May also said, "I want the broadest and deepest possible agreement - covering more sectors and co-operating more fully than any Free Trade Agreement anywhere in the world today."
She then contradicted herself by dropping her offer of a "binding commitment" to follow EU rules. The Brextremists watered it down to making "strong commitments".
So the believers in 'cake' are still calling the tune, leading Mrs May to a Brexit that can never satisfy her stated requirements.
Mrs May is a little dog being pulled along on her lead, straining against it but unable to resist. When asked recently if leaving the EU would be worth it for the UK her answer was: "the British people voted for Brexit".
She knows we will be worse off economically, she knows that any new deal would be worse than our current one, she knows that we will have to keep paying into the EU but will have no influence.
Even our shiny new blue passports are going to be printed in France.
Sunday, 25 March 2018
Potholes
One thing I remember vividly from a visit to Chicago some years ago was the awful state of the main highway that followed the shoreline of Lake Michigan. I thought to myself that in the UK we would never let a city road fall into such disrepair, leaving it so full of potholes.
Soon it will be US visitors who will despair at the state of British roads. Right now local roads need £9.3 billion to bring them up to scratch. The number of times the RAC has been called out for vehicle damage due to potholes increased by 11% last year, with 3,565 call-outs in just three months. With the government budgeting just £1.2bn a year towards maintenance things are set to get far worse - as the condition of a road surface worsens the damage builds up faster. Local councils need an extra £0.5bn just to keep things deteriorating further.
And things are deteriorating. 12% of local roads (a total of 24,500 miles) need essential maintenance before the end of this year. 20% will reach the end of their life in the next five years - up from 17% in 2017, and 12% in 2016. On average local roads are only resurfaced every 78 years.
Councils filled 2.7 million potholes in 2015 - last year it was only 1.5 million. Often now they will only repair potholes which are at least 4cm deep. In Bury the council has changed even that rule and only promise to 'investigate' potholes which are 4cm deep or more.
Just last month a cycle race with 550 entrants was cancelled - the organisers decided the risk of injuries due to potholes was just too high.
Roads are a very visible sign of the state of a country. Before EU funding helped Ireland to kick start its economy you would instantly know when you crossed the border from Ulster to Eire. A well-maintained road would suddenly became a crumbling pastiche of potholes. If you visit Bulgaria now you will find that the main roads are kept in good repair, but the B-roads look as though someone told an enthusiastic army of treasure hunters that there was gold under them. Driving on them is only possible at a crawl - and you still risk a puncture or worse.
How long before the UK road network is reduced to the same state?
Soon it will be US visitors who will despair at the state of British roads. Right now local roads need £9.3 billion to bring them up to scratch. The number of times the RAC has been called out for vehicle damage due to potholes increased by 11% last year, with 3,565 call-outs in just three months. With the government budgeting just £1.2bn a year towards maintenance things are set to get far worse - as the condition of a road surface worsens the damage builds up faster. Local councils need an extra £0.5bn just to keep things deteriorating further.
And things are deteriorating. 12% of local roads (a total of 24,500 miles) need essential maintenance before the end of this year. 20% will reach the end of their life in the next five years - up from 17% in 2017, and 12% in 2016. On average local roads are only resurfaced every 78 years.
Councils filled 2.7 million potholes in 2015 - last year it was only 1.5 million. Often now they will only repair potholes which are at least 4cm deep. In Bury the council has changed even that rule and only promise to 'investigate' potholes which are 4cm deep or more.
Just last month a cycle race with 550 entrants was cancelled - the organisers decided the risk of injuries due to potholes was just too high.
Roads are a very visible sign of the state of a country. Before EU funding helped Ireland to kick start its economy you would instantly know when you crossed the border from Ulster to Eire. A well-maintained road would suddenly became a crumbling pastiche of potholes. If you visit Bulgaria now you will find that the main roads are kept in good repair, but the B-roads look as though someone told an enthusiastic army of treasure hunters that there was gold under them. Driving on them is only possible at a crawl - and you still risk a puncture or worse.
How long before the UK road network is reduced to the same state?
Saturday, 17 March 2018
Saving the pennies
A basic expectation in rich countries is law and order. Yet the UK is cutting police funding every year.
The Bedfordshire police force are so up against it that they are asking to be spared further cuts. They have already made cuts of £35 million and are expected to cut another £12.5 million. Suggestions about how to do this include not investigating thefts from cars as the car will be insured - it's your own fault as you shouldn't be leaving things on view. Another possibility is only bothering to investigate shoplifting of goods worth at least £100.
Another basic service developed countries offer is health care - even the USA has a public health service.
Yet our health service, like our police, is being starved of funds. Again, there are some bright ideas. One that is being tried is to pay host families to put up patients in their spare room. At £50 a night there have been a lot of applicants, and it would certainly save a chunk of cash for the NHS. The company, CareRooms, says the hosts will be trained, though it is unclear exactly what they will be trained to do or how post-operative complications will be managed.
What about local services?
Northamptonshire county council has had to ban all new expenditure. The council will continue to fund any current contracts but otherwise they will only fund services they are legally required to provide. No council has had to do this in the last twenty years, and yet already there are warning signs that at least four more councils are in danger of following Northamptonshire into the morass:
It is tempting to poke fun at the cost-saving ideas above, but councils are currently cutting services everywhere they can - reduced bin collections, reduced food safety checks, reduced services for the young, bus subsidies cut by 50%, 10% of libraries closed, housing budgets halved (leading to homeless households increasing by 34%). It will only get worse - the government is slashing funding by another £5 billion next year.
Of course, we really do need to sort out Britain's finances. Mr Hammond's target is a balanced budget and he has now achieved it three years ahead of schedule. With the Brexit effect already chilling economic activity in the UK, and worse to come, we are not going to have a lot of spare cash to throw around.
However, while the government tells councils to pinch pennies they themselves squander millions of pounds on poorly costed infrastructure projects. Projects like HS2 and the Hinckley Point nuclear power station. Meanwhile homes, roads, social care, the NHS and the police are cut savagely.
Mrs May is like a householder who puts down parquet in the best room but scorns to mend the holes in the roof.
The Bedfordshire police force are so up against it that they are asking to be spared further cuts. They have already made cuts of £35 million and are expected to cut another £12.5 million. Suggestions about how to do this include not investigating thefts from cars as the car will be insured - it's your own fault as you shouldn't be leaving things on view. Another possibility is only bothering to investigate shoplifting of goods worth at least £100.
Another basic service developed countries offer is health care - even the USA has a public health service.
Yet our health service, like our police, is being starved of funds. Again, there are some bright ideas. One that is being tried is to pay host families to put up patients in their spare room. At £50 a night there have been a lot of applicants, and it would certainly save a chunk of cash for the NHS. The company, CareRooms, says the hosts will be trained, though it is unclear exactly what they will be trained to do or how post-operative complications will be managed.
What about local services?
Northamptonshire county council has had to ban all new expenditure. The council will continue to fund any current contracts but otherwise they will only fund services they are legally required to provide. No council has had to do this in the last twenty years, and yet already there are warning signs that at least four more councils are in danger of following Northamptonshire into the morass:
- Surrey - £100 million shortfall
- Lancashire - £97 million shortfall
- Somerset - £15 million overspend this year, following overspends in the previous two years (it is now closing two thirds of its children's centres)
- Norfolk - has overspent its budget for the past three years
It is tempting to poke fun at the cost-saving ideas above, but councils are currently cutting services everywhere they can - reduced bin collections, reduced food safety checks, reduced services for the young, bus subsidies cut by 50%, 10% of libraries closed, housing budgets halved (leading to homeless households increasing by 34%). It will only get worse - the government is slashing funding by another £5 billion next year.
Of course, we really do need to sort out Britain's finances. Mr Hammond's target is a balanced budget and he has now achieved it three years ahead of schedule. With the Brexit effect already chilling economic activity in the UK, and worse to come, we are not going to have a lot of spare cash to throw around.
However, while the government tells councils to pinch pennies they themselves squander millions of pounds on poorly costed infrastructure projects. Projects like HS2 and the Hinckley Point nuclear power station. Meanwhile homes, roads, social care, the NHS and the police are cut savagely.
Mrs May is like a householder who puts down parquet in the best room but scorns to mend the holes in the roof.
Tuesday, 13 March 2018
Is democracy working?
"Is democracy working?" asked Mr McDonnell. Clearly he doesn't think so. He continued: "It didn't work if you were a family living on the 20th floor of Grenfell Tower."
Mr McDonnell is a Marxist. His touchstones are: "the fundamental Marxist writers of Marx, Lenin and Trotsky". He openly states that membership of the Labour Party is a tactic to help him to gain political power and thus allow him to subvert the establishment and give the proletariat control. He regards this ('the dictatorship of the proletariat') as 'real democracy'.
Fittingly, it was a democratic plebiscite which focused on sovereignty that may well give him his chance. Ironically it was the arch-capitalists of the Conservative party that backed Leave, even though it was always Labour that was the most suspicious of a European superstate.
Post-referendum Conservative party membership has fallen below 100,000 - and the remaining rump has an average age of 70. In the Lower House the government is riven by discord, the party divisions over Europe deepened by Brexit and the unappetising choices we face, ministers openly briefing against their own leader as well as each other.
Meanwhile the left wing of the Labour party is tightening its grip, deselecting centrist candidates and enforcing strict party discipline with the aim of presenting a strong and united front at the next general election.
Is the prospect of street-level democracy so bad? Haven't we had enough of elites and market forces, rising house prices and zero-hours contracts? Why vote for party candidates when we can vote directly on the policies that affect us? Why have rich, out-of-touch bosses when we can have workers' collectives deciding on strategies that benefit the whole factory workforce rather than just the shareholders' interests?
If you don't actually think that having capital is in your future, what's the point of anything in a capitalist society?
Some will point to all the failures of Marxism to fulfil its promises when actually attempted. The states either collapse into anarchy or end as a dictatorship - and not a dictatorship of the proletariat either. China has been comparatively successful economically, but it isn't the classless, stateless society Marx was aiming for. The Chinese state directs industry far more than do governments in capitalist economies. Furthermore, the country is run by a unelected elite headed by a man who cannot be removed democratically, even by his own minions.
It may be that it isn't Marxism's fault. After all, Marx stated that the first step "is to raise the proletariat to the position of ruling class, to win the battle for democracy". In countries such as the UK, which have strong democratic institutions, this could be achieved without revolution. Violent revolutions may allow dictators not the people to take control. The revolutions and dictators last century were mostly funded by the Commie-phobic USA, but with Mr Trump and the Russian state in charge they may stop interfering in foreign affairs.
Should we join Mr McDonnell on the barricades? When I consider conditions even in peaceful Marxist countries (such as China and Cuba) - the economic conditions, social conditions and political conditions - and compare them with what we have here... it seems pretty obvious why their citizens flee those countries to settle here rather than vice versa.
So let some other nation have a run at it first. If it works for them then I will be happy to form an industrial collective and march into our communist future. Until then I will do my best to frustrate Mr McDonnell's plans.
Mr McDonnell is a Marxist. His touchstones are: "the fundamental Marxist writers of Marx, Lenin and Trotsky". He openly states that membership of the Labour Party is a tactic to help him to gain political power and thus allow him to subvert the establishment and give the proletariat control. He regards this ('the dictatorship of the proletariat') as 'real democracy'.
Fittingly, it was a democratic plebiscite which focused on sovereignty that may well give him his chance. Ironically it was the arch-capitalists of the Conservative party that backed Leave, even though it was always Labour that was the most suspicious of a European superstate.
Post-referendum Conservative party membership has fallen below 100,000 - and the remaining rump has an average age of 70. In the Lower House the government is riven by discord, the party divisions over Europe deepened by Brexit and the unappetising choices we face, ministers openly briefing against their own leader as well as each other.
Meanwhile the left wing of the Labour party is tightening its grip, deselecting centrist candidates and enforcing strict party discipline with the aim of presenting a strong and united front at the next general election.
Is the prospect of street-level democracy so bad? Haven't we had enough of elites and market forces, rising house prices and zero-hours contracts? Why vote for party candidates when we can vote directly on the policies that affect us? Why have rich, out-of-touch bosses when we can have workers' collectives deciding on strategies that benefit the whole factory workforce rather than just the shareholders' interests?
If you don't actually think that having capital is in your future, what's the point of anything in a capitalist society?
Some will point to all the failures of Marxism to fulfil its promises when actually attempted. The states either collapse into anarchy or end as a dictatorship - and not a dictatorship of the proletariat either. China has been comparatively successful economically, but it isn't the classless, stateless society Marx was aiming for. The Chinese state directs industry far more than do governments in capitalist economies. Furthermore, the country is run by a unelected elite headed by a man who cannot be removed democratically, even by his own minions.
It may be that it isn't Marxism's fault. After all, Marx stated that the first step "is to raise the proletariat to the position of ruling class, to win the battle for democracy". In countries such as the UK, which have strong democratic institutions, this could be achieved without revolution. Violent revolutions may allow dictators not the people to take control. The revolutions and dictators last century were mostly funded by the Commie-phobic USA, but with Mr Trump and the Russian state in charge they may stop interfering in foreign affairs.
Should we join Mr McDonnell on the barricades? When I consider conditions even in peaceful Marxist countries (such as China and Cuba) - the economic conditions, social conditions and political conditions - and compare them with what we have here... it seems pretty obvious why their citizens flee those countries to settle here rather than vice versa.
So let some other nation have a run at it first. If it works for them then I will be happy to form an industrial collective and march into our communist future. Until then I will do my best to frustrate Mr McDonnell's plans.
Sunday, 11 March 2018
Carillion's collapse - who's fault was it really?
Carillion has been put into compulsory liquidation, leaving debts of over £1 billion and a pensions deficit of £1 billion. 20,000 people may lose their jobs directly, and tens of thousands will be put at risk indirectly as suppliers write off millions of pounds.
How did the darling of PFI, with millions of pounds of government projects on the books, fail so spectacularly? The select committee who took evidence call the directors "a series of delusional characters maintain[ing] that everything was hunky dory until it all went suddenly and unforeseeably wrong." They said, "Everything we have seen points the fingers...to the people who built a giant company on sand in a desperate dash for cash."
The directors must have known something was up. Until last year their bonuses could be clawed back - in 2017 they changed the rules to make that almost impossible. They also stopped paying into the company pension fund. This was the year that they and the auditors, KPMG, signed off the company with a clean bill of health, despite knowing of £180 million in unpaid bills and that £1.57 billion of the companies total assets was 'goodwill'. Astonishingly, even though Enron took its auditors with it (Arthur Andersen, one of the 'big five' global accountancy firms), KPMG (one of the four now left) seem to have learned nothing - they are now being investigated.
How could this collapse happen? In part it is due to the government's obsession with PFI. When large contracts are put out to tender the bids will include an internal bid. However figures are skewed to favour the contractors - often the assumed risk is adjusted until the external bid comes in under the internal one. If this wasn't done then the public sector bid would always win, as the government can borrow at a much lower rate than private companies.
For example, one evaluation projected risks of £105 million if the public sector took the contract, but only £18 million for PFI - handily making the PFI option £0.6 million cheaper than the public alternative. In another contract the PFI bid was given a 15 percent "optimism bias" adjustment, which handily took it a sliver (0.03%) under the public sector bid.
In part Carillion's collapse is due to the company's culture, seemingly unable to take lessons from Enron's collapse. Believing that simply moving money around is the same as earning it, using the income from one contract to pay the bills outstanding from the previous contract - and the directors creaming off a nice chunk for themselves.
The government has clearly been complicit in allowing this to happen. To ministers' credit, when the collapse came they stood aside and didn't try to rescue the company. Carillion's directors had put together a last-minute 'rescue plan', demanding a bailout of £160 million from tax-payers' pockets, they were rebuffed.
Will ministers be able to tough it out again if Virgin Care goes belly up? Virgin Care has most of the NHS PFI contracts (worth £1 billion last year), but is running at a loss and most of its assets are 'intangibles' (e.g. software).
What about the outsourcing specialist, Capita, which has 50,000 employees and 292 public service contracts? It has expanded in exactly the same way as Carillion, with its own increasing pension deficit - even as dividends and bonuses are being handed out. Capita has just lost 48% of its value after announcing a second profit warning, its capitalisation is down by 75% since 2013 (a loss of £5.7 billion).
Of equal concern are the knock-on effects of Carillion's meltdown. Someone will have to take over Carillion's contracts, the UK economy will have to absorb a debt write-down of £1 billion, and Carillion's ex-employees will need to adjust to losing their pensions. All this and Brexit is only months away with no trade agreement in sight.
How did the darling of PFI, with millions of pounds of government projects on the books, fail so spectacularly? The select committee who took evidence call the directors "a series of delusional characters maintain[ing] that everything was hunky dory until it all went suddenly and unforeseeably wrong." They said, "Everything we have seen points the fingers...to the people who built a giant company on sand in a desperate dash for cash."
The directors must have known something was up. Until last year their bonuses could be clawed back - in 2017 they changed the rules to make that almost impossible. They also stopped paying into the company pension fund. This was the year that they and the auditors, KPMG, signed off the company with a clean bill of health, despite knowing of £180 million in unpaid bills and that £1.57 billion of the companies total assets was 'goodwill'. Astonishingly, even though Enron took its auditors with it (Arthur Andersen, one of the 'big five' global accountancy firms), KPMG (one of the four now left) seem to have learned nothing - they are now being investigated.
How could this collapse happen? In part it is due to the government's obsession with PFI. When large contracts are put out to tender the bids will include an internal bid. However figures are skewed to favour the contractors - often the assumed risk is adjusted until the external bid comes in under the internal one. If this wasn't done then the public sector bid would always win, as the government can borrow at a much lower rate than private companies.
For example, one evaluation projected risks of £105 million if the public sector took the contract, but only £18 million for PFI - handily making the PFI option £0.6 million cheaper than the public alternative. In another contract the PFI bid was given a 15 percent "optimism bias" adjustment, which handily took it a sliver (0.03%) under the public sector bid.
In part Carillion's collapse is due to the company's culture, seemingly unable to take lessons from Enron's collapse. Believing that simply moving money around is the same as earning it, using the income from one contract to pay the bills outstanding from the previous contract - and the directors creaming off a nice chunk for themselves.
The government has clearly been complicit in allowing this to happen. To ministers' credit, when the collapse came they stood aside and didn't try to rescue the company. Carillion's directors had put together a last-minute 'rescue plan', demanding a bailout of £160 million from tax-payers' pockets, they were rebuffed.
Will ministers be able to tough it out again if Virgin Care goes belly up? Virgin Care has most of the NHS PFI contracts (worth £1 billion last year), but is running at a loss and most of its assets are 'intangibles' (e.g. software).
What about the outsourcing specialist, Capita, which has 50,000 employees and 292 public service contracts? It has expanded in exactly the same way as Carillion, with its own increasing pension deficit - even as dividends and bonuses are being handed out. Capita has just lost 48% of its value after announcing a second profit warning, its capitalisation is down by 75% since 2013 (a loss of £5.7 billion).
Of equal concern are the knock-on effects of Carillion's meltdown. Someone will have to take over Carillion's contracts, the UK economy will have to absorb a debt write-down of £1 billion, and Carillion's ex-employees will need to adjust to losing their pensions. All this and Brexit is only months away with no trade agreement in sight.
Friday, 9 March 2018
Food security
At the same time that Britain is gearing up to leave the single market we are also steadily increasing our food imports. Already, half of what we eat is imported - and the imports even include crops that we grow ourselves. In 1984 our home-grown crops met almost the entire domestic demand for them - 95% were grown here and only 5% had to be imported. Today the split is 76% / 24%.
Our food trade deficit is a record £22.4 billion, and it can only get worse. The slump in the value of the pound has already pushed up import prices - every percentage devaluation of the pound means another quarter of a billion pounds on the food bill. Even the Brexit lobby admits that food is going to be more expensive post-Brexit.
However, the pound's fall is just the first shock to food prices. Already farmers are reporting that they cannot get picking and harvesting crews, so crops are left to rot in the fields. The crews are mostly made up of eastern Europeans who are willing to work hard for low pay in all weathers. The crash in the pound's value, the rise in racist behaviour by UK locals and the uncertainties around the status of EU workers in the UK makes Britain more and more unattractive to such people. Of course, if we leave the EU then the workers won't be able to come even if they wanted to.
This is already pushing food prices up in two ways: wages will have to go up to tempt local workers, and we will need to import more food to replace the crops left to rot - and those imports will cost more than the local produce.
If we fail to get a trade deal with the EU and have to fall back on WTO rules then food prices would be pushed even higher. Agricultural goods attract high tariffs under WTO rules.
Of course, WTO rules don't have to be imposed by an importer, we don't have to charge the tariffs if we don't wish to, meaning that we could keep food prices down. However if we eliminate food tariffs then other countries will undercut our farmers, driving them out of business, so instead of growing merely 50% of our own food we could end up relying almost entirely on imported food.
Even keeping the tariffs in place won't necessarily protect our farmers. They will be hit by the tariffs imposed by other countries (under WTO rules), which will make their exports uncompetitive. Further falls in the pound could counteract this, but then of course the price of imported food goes up.
The best case scenario is to retain as good a trade deal with the EU (our main market) as we possibly can. British farmers are still going to hurt, but we may be able to slow the slide into complete reliance on food grown in other countries.
The Gove scenario, on the other hand, seems to be to pay farmers to give up growing food, with him suggesting they "plant woodland" or turn their fields into "wildflower meadows or other more natural states".
Of course, his very generous salary means that he won't ever have to worry about putting food on his own table.
Our food trade deficit is a record £22.4 billion, and it can only get worse. The slump in the value of the pound has already pushed up import prices - every percentage devaluation of the pound means another quarter of a billion pounds on the food bill. Even the Brexit lobby admits that food is going to be more expensive post-Brexit.
However, the pound's fall is just the first shock to food prices. Already farmers are reporting that they cannot get picking and harvesting crews, so crops are left to rot in the fields. The crews are mostly made up of eastern Europeans who are willing to work hard for low pay in all weathers. The crash in the pound's value, the rise in racist behaviour by UK locals and the uncertainties around the status of EU workers in the UK makes Britain more and more unattractive to such people. Of course, if we leave the EU then the workers won't be able to come even if they wanted to.
This is already pushing food prices up in two ways: wages will have to go up to tempt local workers, and we will need to import more food to replace the crops left to rot - and those imports will cost more than the local produce.
If we fail to get a trade deal with the EU and have to fall back on WTO rules then food prices would be pushed even higher. Agricultural goods attract high tariffs under WTO rules.
Of course, WTO rules don't have to be imposed by an importer, we don't have to charge the tariffs if we don't wish to, meaning that we could keep food prices down. However if we eliminate food tariffs then other countries will undercut our farmers, driving them out of business, so instead of growing merely 50% of our own food we could end up relying almost entirely on imported food.
Even keeping the tariffs in place won't necessarily protect our farmers. They will be hit by the tariffs imposed by other countries (under WTO rules), which will make their exports uncompetitive. Further falls in the pound could counteract this, but then of course the price of imported food goes up.
The best case scenario is to retain as good a trade deal with the EU (our main market) as we possibly can. British farmers are still going to hurt, but we may be able to slow the slide into complete reliance on food grown in other countries.
The Gove scenario, on the other hand, seems to be to pay farmers to give up growing food, with him suggesting they "plant woodland" or turn their fields into "wildflower meadows or other more natural states".
Of course, his very generous salary means that he won't ever have to worry about putting food on his own table.
Thursday, 8 March 2018
Keep calm and move to Berlin
After the Brexit referendum a van toured London with a billboard saying, "Dear start-ups, Keep calm and move to Berlin."
Right now UK start-ups are investors' darlings. They attracted £3 billion in investment last year - double what they received in 2016, and four times what French and German start-ups received.
There are worrying signs though. The number of funding rounds has decreased by 20% a year for the past two years, and rounds average about $1 million - half the size of French and German rounds. Our funding rounds focus on seed-corn funding for experimental start-ups, with generous tax breaks for investors, while on the Continent the money tends to go to businesses that have already proved their business model.
It is arguable which method is better - fund a lot of nascent start-ups and hope a few make it big, or help successful start-ups to grow into real businesses. It is unarguable that both strategies require a talent pool of skilled workers.
Germany now has more developers than the UK. The number of science, technology, engineering and maths graduates is rising rapidly in the Germany and France while the UK has a shortfall of 40,000.
Only a couple of years ago we could have shrugged our shoulders - if we need them they will come. Talent from all over the EU would fill the jobs, boosting our GDP and paying taxes without costing us a penny in training. Investors would want to join the gravy train, and funding would keep going up.
Instead, post-referendum the UK government - and Mrs May in particular - is intending to clamp down on immigration. We will no longer be able to make up our staffing shortfalls - in nursing, in agriculture, in technology firms - by poaching from overseas.
The immediate irony is that we have nearly full employment, so this is a political policy rather than a practical or economic one. However, if we don't want foreigners coming over here and taking our jobs, then we need to do them ourselves. That is all very well if we can find 40,000 people with the necessary technical skills, otherwise those start-ups will have to go where the talent is.
Keep calm and move to Berlin - who says the Germans don't have a sense of humour?
Right now UK start-ups are investors' darlings. They attracted £3 billion in investment last year - double what they received in 2016, and four times what French and German start-ups received.
There are worrying signs though. The number of funding rounds has decreased by 20% a year for the past two years, and rounds average about $1 million - half the size of French and German rounds. Our funding rounds focus on seed-corn funding for experimental start-ups, with generous tax breaks for investors, while on the Continent the money tends to go to businesses that have already proved their business model.
It is arguable which method is better - fund a lot of nascent start-ups and hope a few make it big, or help successful start-ups to grow into real businesses. It is unarguable that both strategies require a talent pool of skilled workers.
Germany now has more developers than the UK. The number of science, technology, engineering and maths graduates is rising rapidly in the Germany and France while the UK has a shortfall of 40,000.
Only a couple of years ago we could have shrugged our shoulders - if we need them they will come. Talent from all over the EU would fill the jobs, boosting our GDP and paying taxes without costing us a penny in training. Investors would want to join the gravy train, and funding would keep going up.
Instead, post-referendum the UK government - and Mrs May in particular - is intending to clamp down on immigration. We will no longer be able to make up our staffing shortfalls - in nursing, in agriculture, in technology firms - by poaching from overseas.
The immediate irony is that we have nearly full employment, so this is a political policy rather than a practical or economic one. However, if we don't want foreigners coming over here and taking our jobs, then we need to do them ourselves. That is all very well if we can find 40,000 people with the necessary technical skills, otherwise those start-ups will have to go where the talent is.
Keep calm and move to Berlin - who says the Germans don't have a sense of humour?
Wednesday, 7 March 2018
Regulations and red tape
One of the biggest problems facing us if we leave the EU is regulation or, as Brexiteers would say, "red tape". Those red tape bonfires we were promised are receding into those fabled sunny uplands as Brexit becomes a veritable tape machine.
The Irish border is the biggest headache. The Good Friday agreement has given us peace in Northern Ireland, but it depends upon free movement of goods and people. Brexiteers wish to prevent the free movement of people and - by dropping EU regulations - will also prevent free movement of goods.
Mrs May has attempted to fudge this, hoping that she can get a Brexit deal first and then sort out the border afterwards. If only she could - Border Force and Customs both need a lot longer than a few months to get in shape to deal with what is coming. However, the Republic wants to know right now what we intend so they can plan themselves. Fudge is no good for them.
Even worse, part of Mrs May's fudge has been to promise contradictory things to different people. She promised the DUP regulatory alignment with the rest of the UK, promised her own Brextremists regulatory divergence from the EU... and promised the Republic that Northern Ireland will retain full regulatory alignment with the EU.
Her get-out clause was that EU regulatory alignment would be temporary. When we work out how to police the border without physical border controls then divergence could begin.
One hope is that the rest of the EU will put pressure on the Republic to accept a hard border so that Brexit is not a complete shambles. However, France in particular strongly supports the Republic's position as they too want to know what the UK is aiming for. Forcing clarity over Ireland will force the UK government to lay out their real plans.
If they have any.
The Irish border is the biggest headache. The Good Friday agreement has given us peace in Northern Ireland, but it depends upon free movement of goods and people. Brexiteers wish to prevent the free movement of people and - by dropping EU regulations - will also prevent free movement of goods.
Mrs May has attempted to fudge this, hoping that she can get a Brexit deal first and then sort out the border afterwards. If only she could - Border Force and Customs both need a lot longer than a few months to get in shape to deal with what is coming. However, the Republic wants to know right now what we intend so they can plan themselves. Fudge is no good for them.
Even worse, part of Mrs May's fudge has been to promise contradictory things to different people. She promised the DUP regulatory alignment with the rest of the UK, promised her own Brextremists regulatory divergence from the EU... and promised the Republic that Northern Ireland will retain full regulatory alignment with the EU.
Her get-out clause was that EU regulatory alignment would be temporary. When we work out how to police the border without physical border controls then divergence could begin.
One hope is that the rest of the EU will put pressure on the Republic to accept a hard border so that Brexit is not a complete shambles. However, France in particular strongly supports the Republic's position as they too want to know what the UK is aiming for. Forcing clarity over Ireland will force the UK government to lay out their real plans.
If they have any.
Sunday, 4 March 2018
Free and frictionless
The Government has stated that it is seeking a “deep and comprehensive” free trade agreement with the EU which will allow for “the freest and most frictionless trade possible in goods between the UK and the EU”, whilst allowing the UK to negotiate its own trade agreements with third countries. The EU’s position is that frictionless trade with a country outside the Single Market and the customs union is not possible - the European Parliament’s coordinator on Brexit, Guy Verhofstadt, went as far as to say that it was “a fantasy”
The Institute for Government - a UK-based independent think tank - points out that “there is no pre-existing model of relationship with the EU which would completely mitigate disruption and the need for border checks”. The agreements which the EU has with most of the its major trading partners, including Canada, Japan and the USA, seek to facilitate customs arrangements but they do not remove “friction”.
Beyond all that, any new arrangements put in place at UK ports will need to be replicated at the Channel ports in France and Belgium, and the UK would have to pay for the changes.
One point that may allow us to negotiate better terms in some areas is that without our budgetary contribution the EU will be a bit short. With that in mind some EU members would be happy for the EU to sell us access to certain sectors of the single market, such as financial services, as long as we adhered to EU regulations. Not all members like that idea, for example Germany and France would like to have our share of the EU financial services industry - France is cutting taxes explicitly to lure banks from the UK to Paris with 10,000 jobs as the goal: "We want to make sure that Paris can profit from Brexit." This isn't about punishing the UK, this is an attempt to attract the banks to Paris rather than letting them go to Frankfurt, Dublin or Amsterdam. It seems unlikely that those countries will vote to allow financial services easy access to the EU market. Why would they?
So the UK is seeking an agreement with the EU which is different from anything previously achieved, one which the EU itself does not want, and which will be worse for us than the current deal while costing us more.
Thanks Boris.
The Institute for Government - a UK-based independent think tank - points out that “there is no pre-existing model of relationship with the EU which would completely mitigate disruption and the need for border checks”. The agreements which the EU has with most of the its major trading partners, including Canada, Japan and the USA, seek to facilitate customs arrangements but they do not remove “friction”.
Beyond all that, any new arrangements put in place at UK ports will need to be replicated at the Channel ports in France and Belgium, and the UK would have to pay for the changes.
Thanks Boris.
Thursday, 1 March 2018
Carry on nursing
One in ten EU nurses quit the NHS last year. The number of new EU nurses arriving is down 96%. Just as worrying is the fact that British nurses are quitting too, with a 50% rise in the number leaving. 33,000 packed it in last year, and there are now more leavers each year than joiners. There are 40,000 nursing vacancies in England alone. Nationally only one nurse is appointed for every seven vacancies advertised - in some places it is one for every four hundred vacancies.
One wheeze being tried is to encourage overseas applicants by making the required English-language test easier or even waiving it altogether. Instead of using a general test the new test is specific to the job, checking that the applicant can at least understand the vocabulary needed even if their general English is poor.
Another idea being tried is asking medical students to help out on overstretched wards - the head of one medical school emailed the students, saying, "Do volunteer to help in any way possible, providing it's within your competence".
Meanwhile the NHS is planning to put recovering patients in people's spare rooms. Not a bad idea - the home owner can replace those missing nurses, though clearly there are some concerns about putting vulnerable people into the hands of a stranger.
It isn't only nurses - we are short of 5,000 GPs too. The government has decided to attempt to recruit 2,000 from overseas to make up some of the shortfall. The chief executive of NHS England called this an "industrial-scale international recruitment programme", as it is quadruple the previous target of 500 overseas GPs. Again only one doctor is appointed for every fifteen vacancies advertised.
Weirdly - though unsurprisingly given the shambles our government is in - overseas doctors who have accepted jobs are meanwhile being refused entry to the UK as there aren't enough visas to go around. Three doctors about to join Addenbrooke's hospital in Cambridge were told they couldn't start as they weren't in 'shortage areas'. Birmingham has had 16 doctors turned away. Inexplicably, the visa system gives priority to people being paid more than £55,000 or with PhDs rather than doctors.
The NHS is short of beds as well. 30 years ago England has 299,000 beds, we now have only 142,000. Meanwhile the population has grown, and has grown older, with more care required. Is it any wonder that patients are being treated on trolleys parked in corridors?
Quite apart from the staffing crisis and the bed crisis, it is also suffering a funding crisis. To keep going as it is the NHS will need an extra £4 billion a year. The chancellor, Mr Hammond, has promised only £1.6 billion as a one-off rather than on-going increased funding - and is demanding improved services and reduced waiting lists. How this is to be achieved he doesn't say.
Mr Stevens, chief executive of NHS England, has made a start by telling doctors to stop giving prescriptions for ailments that patients can treat themselves with over-the-counter medicines. He has also rejected the government's waiting list demands. This is only the start, though, as much bigger savings will need to be made.
Another cost saving measure is to make patients pay for 'poor-value' treatments. Essentially rationing what is available. Treatments that may be no longer available on the NHS are shoulder surgery and hormone tests. Already homeopathy and expensive painkillers are off the list.
We Britons are justly proud of our NHS. However, to keep it functioning effectively it needs 100,000 more clinical staff, 20,000 more beds and £4 billion in extra annual funding. It is becoming increasingly unclear how we are going to find the staff or the funding, and increasingly clear that the government's strategy is not to improve the service but to keep cutting it.
One wheeze being tried is to encourage overseas applicants by making the required English-language test easier or even waiving it altogether. Instead of using a general test the new test is specific to the job, checking that the applicant can at least understand the vocabulary needed even if their general English is poor.
Another idea being tried is asking medical students to help out on overstretched wards - the head of one medical school emailed the students, saying, "Do volunteer to help in any way possible, providing it's within your competence".
Meanwhile the NHS is planning to put recovering patients in people's spare rooms. Not a bad idea - the home owner can replace those missing nurses, though clearly there are some concerns about putting vulnerable people into the hands of a stranger.
It isn't only nurses - we are short of 5,000 GPs too. The government has decided to attempt to recruit 2,000 from overseas to make up some of the shortfall. The chief executive of NHS England called this an "industrial-scale international recruitment programme", as it is quadruple the previous target of 500 overseas GPs. Again only one doctor is appointed for every fifteen vacancies advertised.
Weirdly - though unsurprisingly given the shambles our government is in - overseas doctors who have accepted jobs are meanwhile being refused entry to the UK as there aren't enough visas to go around. Three doctors about to join Addenbrooke's hospital in Cambridge were told they couldn't start as they weren't in 'shortage areas'. Birmingham has had 16 doctors turned away. Inexplicably, the visa system gives priority to people being paid more than £55,000 or with PhDs rather than doctors.
The NHS is short of beds as well. 30 years ago England has 299,000 beds, we now have only 142,000. Meanwhile the population has grown, and has grown older, with more care required. Is it any wonder that patients are being treated on trolleys parked in corridors?
Quite apart from the staffing crisis and the bed crisis, it is also suffering a funding crisis. To keep going as it is the NHS will need an extra £4 billion a year. The chancellor, Mr Hammond, has promised only £1.6 billion as a one-off rather than on-going increased funding - and is demanding improved services and reduced waiting lists. How this is to be achieved he doesn't say.
Mr Stevens, chief executive of NHS England, has made a start by telling doctors to stop giving prescriptions for ailments that patients can treat themselves with over-the-counter medicines. He has also rejected the government's waiting list demands. This is only the start, though, as much bigger savings will need to be made.
We Britons are justly proud of our NHS. However, to keep it functioning effectively it needs 100,000 more clinical staff, 20,000 more beds and £4 billion in extra annual funding. It is becoming increasingly unclear how we are going to find the staff or the funding, and increasingly clear that the government's strategy is not to improve the service but to keep cutting it.
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