Booker: the looting class prevails
Sunday 16 June 2013
 These were: to improve efficiency in the industry; to promote wider share ownership; to maximise sale proceeds and ensure a healthy aftermarket; to maintain the momentum of the privatisation programme; to privatise within the lifetime of the existing Parliament; and to privatise all ten water authorities together. The official report on the sale, however, did point to the real reasons for what many people think was a privatisation too far. The Heath legacy had left us with orphan water authorities, the component operations expropriated from their largely municipal owners.
Then, more than a decade of under-spending had left an industry needing massive capital investment in order to meet European Community water quality directives. Two years after privatisation, with the new investment not materialisng, the British Government faced the humiliation of being dragged before the European Court of Justice as the "dirty man of Europe". Unwilling to add the cost of implementing EU directives to the public borrowing requirement, the Major government had to act.
Thus, as Booker recounts in his column today, in 1991 the regulatory model was changed. With the arrival of Ofwat, protecting the interests of consumers was kept up in lights but it had to compete with the new requirement of allowing the new water company owners "a reasonable return on capital". With that, the pricing structure that has emerged allows the water companies to base their charging on what is known as the "regulatory capital value" (RCV) which has soared from the original 1989 sale value of £3.6 billion to, currently, about £60 billion. Each year, water companies are allowed to increase their charges by the retail price index, based on this value, plus a mysterious "K" value, set generously so as to encourage investment, with the Government having "stacked the cards" in favour of shareholders over consumers, and thus enhancing the capital accumulation process. With the use of the RCV as a baseline, it has been called "a prime example of corporate welfare". By this means, average domestic water charges have increased threefold since privatisation, and the regulator has effectively been "captured", regurgitating industry propaganda to justify its existence. Thus, in February of this year, we saw Pamela Taylor, Chief Executive of Water UK. the trade body for the British water industry, declare that, but for the "considerable and significant efficiencies" since privatisation, the average annual bill of £390 would be £130 higher. Yet, in fact, we see Scottish Water - traditionally producing water at a higher cost than in England, now undercutting English companies by more than £50, while remaining in public ownership. Shocking, when we approached Ofwat for details of the charging scheme, it volunteered, unbidden, the industry propaganda line, telling us that "Ofwat's challenge means companies are significantly more efficient now than they were at privatisation … Without this challenge (i.e. if companies had carried at the same level of efficiency as in 1989) bills would be more than £120 higher". And now, as Booker points out, in recent years all but seven of what are now 19 companies, each enjoying a local monopoly, have been sold off into the ownership of a multinational array of financial concerns. British consumers, as Corporate Watch reports, have become helpless milch-cows, with almost one third of the money spent on water bills going to banks and investors as interest and dividends. Particularly aggrevating then are the tax dodges which the companies are now employing, and especially the use of the "Eurobond" tax loophole that exempts shareholders from having to pay a 20 per cent withholding tax. This, the Government said it would close, but attempts have been abandoned. All this thus has the hallmarks of a regulatory failure, and the only real hope of ending this state-sanctioned theft to continue must lie in concerted action between the Government and Ofwat. Yet, as Booker concludes, the draft Water Bill shortly to go through Parliament proposes only that the financial constraints imposed on the industry by Ofwat should be further relaxed. The looting class must be served, and the consumer interest continues to take second place. COMMENT THREAD Richard North 16/06/2013 |
Politics: criminalising government waste
Saturday 15 June 2013
 Interestingly, both countries have their campaigning organisations, in the UK the Taxpayers Alliance, and in Germany the Taxpayers Association, both of them beating the same drum. In fact, most countries have similar organisations – there are 29 of them in total in Europe. There is even aTaxpayers Association of Europe although, rather like the Taxpayers Alliance in the UK being a front for the Tories, this one seems rather too close to the EU. Looking at the two organisations in the news, of the two, I think the German Association is preferable. It is more focused and is far more analytical. As regards waste, it notes that while public failure is as common as it is costly, this is not so much an immutable law of nature as a "system of collective irresponsibility". One of its suggestions is that much of the federal spending should be transferred to state level, where there is more scrutiny and accountability – a nostrum we very much endorse in terms of The Harrogate Agenda. Given that you have a functioning and effective system of truly local democracy, the huge epidemic of waste that we see linked with central governments – wherever you go – could be avoided. To add to that, though, the Association has come up with a new campaign. Just complaining about waste, it says, is simply not good enough. It wants to make waste of public money a criminal offence. In their campaign brochure, the case is closely argued, the premise being that personal criminal liability is used to counter the "It's not my money!" mentality of decision-makers. The Association draws a parallel between tax evasion, for which the citizen can be punished, and waste, for which there is no penalty. It sees the two as different sides of the same coin, calling for full civil, criminal and legal responsibility to be applied to public servants for their actions. The mismatch between the prosecution of tax evasion and the lack of action against tax waste, it says, "is now striking". Thus, the Association wants to see a new offence of "Financial Infidelity" in the criminal code, to facilitate the prosecution of civil servants and public officials when tax money is wasted. In addition, a special duty is imposed on those responsible for granting or spending public funds, which permits penalising poor performance. And this should apply through all levels of government, including municipalities and corporations or institutions where public law is applicable. Alongside this, there should be new reporting requirements, to improve scrutiny and to enable possible offences to be detected, and individuals identified. And, to match the increasingly powerful controls acquired by tax collection authorities, public auditing bodies should be given greater investigative powers. Thus, as tax evasion is vigorously addressed, so should be waste of taxpayers' money. Unlike our own Taxpayers Alliance, which seems to devote most of its time and energy to empty stunts, here there is a organisation which is actively pushing for something that could have a real impact on the growing burden of government waste. As importantly, the German Association is addressing the mismatch between citizens and public officials. The one group is held criminally responsible for its actions yet the other is not. Changing that balance is vitally needed to correct the reality of modern government, where there are rules for us, and none for the looting classes. And in this, the Germans are making a start. COMMENT THREAD Richard North 15/06/2013 |
Water: what can they have been thinking?
Saturday 15 June 2013
 This is an establishment totally out of touch, one that is completely divorced from popular sentiment and has not the first idea just quite how devastatingly insulting this gesture is. In the history of the nation, this is a "let them eat cake" moment, when people realise that our ruling classes have lost it, that there is not one redeeming feature to them. COMMENT THREAD Richard North 15/06/2013 |
EU regulation: the Commission never sleeps
Saturday 15 June 2013
 Evidence of that persistence now comes with its eCall system which was first proposed in 2002 and expected to be commissioned in 2009, and is running years late. Undeterred, though, this week the Commission, with its usual hubris, launched its latest attempt to get the system running. We actually started writing about it 2005, shortly after the blog started, and even then it looked suspicious. On the face of it, it is a terrific idea. Cars are fitted with a GPS system and a mobile phone and, in the event of a crash, it automatically generates an emergency mobile phone call to the emergency services. The system informs the services of the vehicle location, thus enabling a rapid response. The big deal is that, once the system is fitted, it can have many purposes. All the elements are there for continuous vehicle tracking, and even behaviour monitoring. Go over the speed limit, or do a U-turn in the wrong place, and the ticket could be in the post. The Commission says the system is in "sleep mode" at all times, unless triggered by crash sensors, or by a dashboard button. And doubtless, when the system goes live in 2015 – as is now intended – that will be the case. All new cars from that date will have to be fitted with the kit, at a cost of about €100, and it will be used as advertised. But governments being what they are, will not be able to resist the temptation to extend the use. Possibly, they will start via the insurance companies, which will offer cheaper deals if you agree to switch on permanently, so that driver behaviour can be monitored. Then it will become so expensive to get insurance without it, that everyone will have to opt in. You can see where it goes from there, especially as the kit is also exactly that needed to make a GPS-driven road toll system work. Give it a few years, with a high proportion of cars fitted, and the revenue-extraction potential becomes so attractive that the members states will be lining up to convert the systems. Oddly enough, the US had a private sector system up and running 17 years ago, on private subscription, so none of these "mission creep" issues arise. But in dirigiste Europe, it has to be a state system, the start of a "spy in the cab" that will eventually have us monitored and controlled during every journey we make, with charging to follow soon thereafter. Typically, these will be a slow-motion developments. In ten years, they will still be rolling this out and talking about it, and everyone will have gone back to sleep. But the thing is, the Commission never sleeps. It may grind slow, but it grinds exceeding thorough. And it never, never gives up. COMMENT THREAD Richard North 15/06/2013 |
Defence: a loss of "professional competence"?
Friday 14 June 2013
 That, at least, is the headline claim. Sir Peter actually puts it differently, suggesting that the Army has got to the point in a number of parts of its set-up where, "we can't go any further without seriously damaging our professional competence and our chances of success on the battlefields of the future". The most obvious response to this is to remark that, since the Army (or Armed Forces, of which the Army was the lead service in theatre) has lost the last two war it has fought – the Iraqi counterinsurgency and Afghanistan – what else is new? To cut Army funding further simply gives us the opportunity of losing our wars slightly more economically. Exploring Gen Wall's remarks further, his reference to "seriously damaging our professional competence" is an odd one. In the context, one normally talks about "capacity" or "capabilities", as the word "competence" – outside of the Brussels usage – tends to refer to intellectual prowess, as with its antonym, "incompetence". The difference is important in the sense that, while capacity – or broad capabilities in the physical sense – are very much related to funding (although not as closely as the Army would assert), "competence" as an intellectual property is to an extent an independent variable. In this particular context, it is too late for Wall to argue that that Army stands at risk of having its "professional competence" damaged. It was precisely because it already has been, with the High Command displaying both tactical and strategic incompetence in Iraq and Afghanistan, that it has so egregiously failed in both theatres. At the height of operational intensity, when Iraq and Afghanistan were on the stocks simultaneous, I was aware at a very high level of acute frustration of the lacklustre performance of the High Command (of which, incidentally, Gen, Wall was part), and a growing awareness that command failings were as much responsible for operational failings, as any political input. When, against a background of spiralling costs and a mounting death toll, senior military officials started briefing against their own ministers, diverting blame for their own poor performance into the military arena, it left a legacy of mistrust that has carried over into the current administration. And, given that the military has shown no great skill in recovering the position in Afghanistan, despite the estimated expenditure of £20 billion, ministers have indeed come to the conclusion that, if they are to preside over failure – for which they are to take the blame – then it might as well be done more economically, to limit the political fallout back home. What the Army has lost sight of – and Gen. Well in particular – is that, while success brings success, failure brings its own penalties. In short, the Army lost its ability to fight counterinsurgencies, failed also to learn lessons from its experiences and forgot also how to apply old lessons, learned from past campaigns. Add to this and extraordinary capacity for wasting money, while an overstaffed and over-privileged High Command live high on the hog, Wall himself earning substantially more than the Prime Minister, and you have the elements of a perfect storm. More prosaically, the military have not delivered the goods and have expended every last bit of sympathy from their political masters that they might otherwise have relied upon. They have sown the seeds of incompetence, and have reaped a whirlwind of cuts. COMMENT THREAD Richard North 14/06/2013 |
UK politics: the cult of personality
Friday 14 June 2013
 Oborne's comments on Twitter (aka "blogging for morons") are absolutely priceless as he concludes that "there is no room at all, within the constraints of just 140 characters, to make complex or thoughtful arguments". With insight like that, you begin to realise quite how valuable The Daily Telegraph has become. But the main thrust of Oborne's piece is to attack Lord Ashcroft, who "uses his Twitter account to bring to a wider audience material that diminishes the Prime Minister or brings his judgment into question". Ashcroft's main input, though, is through his blog and his attendant polls, where he indulges in what is increasingly being regarded as unacceptable behaviour – political analysis of one's own "side". This is very much redolent of the discussions we are having on the forum and via e-mails, on the analytical exercise we conducted on Farage. Oborne, in a stance similar to that taken by some of our readers, demands absolute loyalty to the object of his affection, which must extend to a complete block on publishing anything critical. We saw a similar stance on Conservative Home in the days when Tiny Tim was in similar "gush mode" over The Great Leader, and any critics were banished to outer darkness, their blog links excised from the record, never again to be seen in polite company. Autonomous Mind thinks we are seeing Oborne "tilting to the cult of personality, irrespective of Cameron's ability or performance", noting that it is "impossible to miss the welling-up of cult-like adoration that Oborne feels for Cameron". And it is that reference to the "cult" that strikes a chord. In a very unhealthy way, party politics in the UK is beginning to develop a feel not dissimilar to that of North Korea where, amongst the faithful, only expressions of the most abject adoration are permitted. Sadly, though, with the cult of the leader also comes the cult of the follower. The lumpen masses, mindless and inert, demand leadership before they can begin to exert themselves. Gone is the initiative, independence and assertiveness that once made our nation great. We whinge and whine that we have no leaders, and then demand absolute fealty to our anointed ones, whom we are expected to follow over the edge of a cliff if demanded.
In this, AM remarks, Oborne thinks he is serving his readership. But what is probably the most dangerous of all is the number of people who think as Oborne does, and agree with him: The Great Leader must be revered. There are no neutrals in the cult of personality.
Richard North 14/06/2013 |
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