David Boyle's Blog, page 53

The heroism of Steve Webb

Here is a little calculation you can do about what happened to our pensions.  We have been through a generation where the British system of occupational pensions all but disappeared as a reliable prop for retirement, and where the institutions created to make it possible to have that comfortable retirement have all but disappeared too - partly thanks to over-regulation, partly thanks to an outrageous and disastrous political fix.

We have entered a new world where people save less than half as much as they used to for their retirement, and where they are systematically fleeced by the financial sector – providing them with future retirement incomes at least 20 per cent and sometimes 70 per cent lower than they were.

And despite all this, hardly a word has been heard in complaint, and I explained why in my book Broke: How to Survive the Middle Class Crisis. 

What we have instead is 'defined contribution' personal pensions.  Here's the difference (and I'm indebted to Morris and Palmer for their calculations here).  The old defined benefit pensions used to take a mixture of contributions from you, your employer and the government amounting to of about 22 per cent of your salary. For personal pensions, which define your contributions but not what you get out (defined contribution), the average is only 9 per cent – even though you might be paying exactly the same amount into both schemes. Big difference.

It means that if you pay into a personal pension for forty years, you will get out 41 per cent of what you would have got from a defined benefit occupational pension. But then an implacable arithmetic kicks in. For the personal pension, there are entry and exit charges. There are annual management charges and other hidden charges, some explicit, some not. Imagine that the annual charges are around 1.5 per cent a year. It seems like an insignificant amount, but it builds up implacably. For many people, 1.5 per cent a year over forty years will eat up almost half the contributions you make into your pension pot – a whacking £45,000 from payments of £108,000.

Then there is the cost of an annuity - which thanks to the Lib Dem pensions minister Steve Webb, you no longer have to buy - which is 10 to 15 per cent higher for people in personal pensions. The terrifying conclusion is that your pension will be about a quarter of what it was if you had paid into an old-fashioned occupational pension. A quarter. That is a huge difference, and not one that was ever mentioned during that whole debate a generation ago.
Because the debate in 1985, leading to a huge battle in government between Norman Fowler and Nigel Lawson, ended with the 1986 Pensions Act and the advent of personal pensions.  Partly because of the row, the personal pensions project - designed as a kind of Thatcherite antidote to 'socialist' collective pensions where you share risk - excluded some kind of combination of the two: shared risk but also portable.

Unfortunately for the middle classes, they believed that the pensions industry was still a middle-class institution and fundamentally on their side. Nothing could have been further from the truth.

The problem was that, deep down, politicians of both the Labour and the Conservative parties hated the pensions industry. To the Thatcherites of the 1980s it looked like a form of corporate socialism. To the Blairites of the 1990s it looked like a corrupt form of capitalism. The temptation for Gordon Brown as Chancellor in 1997 was too much, and he raided the so-called ‘surplus’ with a £5 billion tax (a precedent set originally by Lawson himself).

In the mid-1960s, just over 8 million people were in company pension schemes, so-called defined benefit schemes, which meant that they were protected by sharing the risk and knew what kind of pay out they would get – usually two thirds of their final salary. Nor would they have to worry about annuities or investments.

For all the good intentions of Norman Fowler, the pensions industry never tried to recreate something along the same lines for a wider mass of people – leaving individuals increasingly at the mercy of the industry.

Far from innovating to reproduce effective and secure pensions for everyone, they provided a means by which individuals could gamble away their savings. Far from providing a choice of charges and competitive rates, the industry colluded within itself to keep charges high and to obscure information about their real costs. 
So when we look back on the coalition years, it seems to me that - very quietly in the background - one of the heroes will be the pensions minister Steve Webb.  It helps of course if the minister happens to be one of the nation's experts on pensions, but don't let's pretend that any of this is easier - especially in a department shaped by those two ideologies.
His work to release people from the grip of the financial services industry over annuities is now being followed by the introduction of 'collective' pensions, which define the contribution like personal pensions, but allow you to share risks and rewards with other members.  It is an absolutely vital reform.

A tale of fundamentalism in economics

My unscripted, if not wholly impromptu, event at Hay on the plight of the middle classes has been bizarrely well reported, if not entirely accurately.

The Telegraph has even written a leader about it.

I believe that those newspapers which reported it were relying on the notes made by one journalist and, inevitably, they didn’t get everything right.

The trouble is that badly articulated answers to questions (badly articulated by me, that is) have been fed through the prism of a number of different reports - until the final version can sometimes be wholly incoherent.

Then the incoherent version goes and rattles the cage where they keep the Adam Smith Institute.

Seeing my link to their great foes at the New Economics Foundation, their bloggers have moved into action and produced this denunciation.

It is based on the idea that I suggested that house prices should be pegged.  Actually, I said no such thing.  What I did say was that there is a disagreement about the many reasons why house prices rise. The true believers at the Adam Smith Institute seem to believe it is primarily because there are not enough homes.

And of course it is, partly.  But I don't see how – with investors pouring in from the Far East - there will ever be enough homes to bring down the prices. The main reason we get house price bubbles is that too much money is pouring into the property market – especially in London where the bonuses are paid and the mortgage terms are lengthening to make borrowing less expensive.

If there is any way to ratchet house prices down, we are going to have to control how much money is going into the property market – as we used to, with varying degrees of effectiveness, until 1980.

Far from suggesting that new homes should keep the same prices, I was actually talking about social housing.

I believe in home ownership, and for everybody, not just for the wealthy - and increasingly it will only be the rich who can afford it. I don't see why the rich should own and the poor should rent. I was proposing that new social housing should be given away not rented, and you might have imagined that the Adam Smith Institute might feel the same way about that.    Apparently not.

What I was suggesting, in a very outline way, was that it might be more cost-effective to build social housing and then to give it away at a nominal sum – and that nominal sum would be in return for a very long lease that could only be exchanged at the same price.

Would that also have the effect of putting a downward pressure on prices?  Would it cost as much as some of the regeneration efforts of the Blair government?  Would it be more effective?  I don't know.  What I do know is that we will destroy the middle classes if we allow house prices to rise in the next 30 years like they did in the last - and it isn't clear what will stop them from doing so.
The real problem is that, as the Adam Smith Institute blog said, prices are information.  They certainly are, but they are clues rather than the definitive truth.  They require interpretation.  They are not obvious  and unvarnished.  They are not holy writ to be bowed down and worshipped.
The problem with the Adam Smith Institute is that they appear to be committed to a kind of fundamentalism as virulent as religious fundamentalism, and based on the same mistake - that truth is revealed simply and that interpretation must be stamped out.  Hence their economic lunacy jibe at me.
I believe in free and open markets, because they underpin other freedoms - but those freedoms are shrinking for us because the worship of prices as divine revelation is undermining the practical and intellectual case for freedom.  Price fundamentalists are their own worst enemies.

More on the house prices issue in my book Broke: How to Survive the Middle Class Crisis.

It was banking policy that frustrated Lord Oakeshott

It is no great secret that one of the policy areas that most frustrated Lord Oakeshott about the coalition was banking.

I can't speak for him, and in any case I'm not sure exactly where he stood, except that I believe he felt - as many of us do - that the big banks were still a threat to economic stability and had failed to change their risk-taking behaviour, just as their bonuses still encourage insane and corrosive speculation.

It is ironic therefore that his great friend, Vince Cable, was partly responsible for financial policy, and we might assume also frustrated by the slow progress an unreformed Treasury was making towards reforming the banks.

I don't know how much the compromise position that has been enacted, which fails short of breaking up the banks, satisfied Oakeshott.  It doesn't really satisfy me, but it is at least action.

Where the coalition has not been effective at all is on the other side of all this - not so much regulating the risk-taking of the big banks but providing us with an effective banking network to support small and medium sized enterprises.  In fact, Oakeshott resigned from the front bench over the wholly ineffective Project Merlin in 2011.

One of the Lib Dem frustrations of the coalition is that, while they can intervene to prevent poor policy going ahead, there is little they can do - without extraordinary skill and energy - actually to initiate major changes.   Banking is one of these area which needs distinctive Liberal Democrat action and never really received it.  I've no idea if, in the end, a solely Lib Dem government would have been more effective on this in 2010, but the coalition certainly hasn't.

But the figures released last week should give any party pause for thought.  It appears that despite the recovery, the amount of money being lent to small business is still falling in the UK.  In fact, there are only two nations in Europe where SME lending hasn't recovered to 2008 levels: Hungary and the UK.

It is no longer possible to ignore this.  The big banks no longer want to be involved in the SME market, and it is no longer conceivable that an effective policy might be to wait hopefully for P2P lending to growth to the size it needs to be, or to wait around for the banks to change their minds (respectively the policies of BIS and the Treasury).

I didn't agree with Lord Oakeshott's verdict on the Lib Dem leadership - quite the reverse, I believe that Nick Clegg is one of the most effective leaders the party has ever had, operating in extraordinarily difficult conditions - but he was absolutely right about the banks.

Luckily, I believe the Lib Dems are likely to make effective local banking a key plank in any future policy platform.

I hope they do, because providing the UK with the local banking infrastructure that most countries in Europe already have - and using that as the cornerstone of a policy to support SMEs - seems to me to be the basis for an effective and distinctive Liberal economic policy.

We need to involve people in a whole new way

While the rather depressing election results of the last week poured in, I was having a report published that is intended partly as a contribution to the debate about the Lib Dems missing message about public services – something I hope that the party’s public services commission will also address later in the summer.

My report was published by the thinktank CentreForum – it is called Turbo-charging Volunteering – and it envisages a rather different approach to public service reform and to volunteering: that public services become hubs around which we can build the local networks of mutual support that can reduce demand on hardpressed professionals. I hope they can also provide some services that professionals never can – befriending, home visits, lifts and so on.

Yes, this does sound dangerously like the Big Society, but it has a difference – it has depth, is based on a recognisable tradition of volunteering and public involvement, and it has very specific policy proposals that go with it. It isn’t just a Liberal idea, but my argument is that it is in the mainstream tradition that Beveridge represented – rather than the over-professionalised, over-centralised, under-effective service systems ushered in by the Attlee government.

But what has really surprised me about this has been the response. The article I wrote on the Guardian website generated a long list of replies, some of them – unusually for the Guardian – were constructive and interesting.

Both the blog I wrote on Lib Dem Voice and the one I wrote on Conservative Home generated constructive responses.

Give that is the case, I’m hoping that the basic message got through – that this is about tackling the knotty question of how you make public services effective, which is I believe what the ‘co-production’ agenda is all about.

Because the over professionalisation which Beveridge warned against seems to have widened the basic divide in all public services – between an exhausted, remote professional class and their clients, who are expected to remain passive and easy to process. This is not just disempowering, it can also be corrosive.

The co-production critique follows Beveridge’s third report. It suggests that the reason our current services are so badly equipped to respond to a changing society is that they have largely overlooked the underlying operating system they depend on: the social economy of family and neighbourhood.

Co-production is not a new term – the NHS is formally committed to it – but it is a new idea (the conventional interpretation is an anodyne mix of vague consultation).

The mechanism that can unleash people’s willingness to play an active role in the services they use is beginning to emerge, whether it is in community justice panels or time banks in health services or co-operative nurseries. Or in a slightly different way of approaching professional support, based on coaching and informal solutions, like those used so successfully the Local Area Co-ordination.

But those are happening on a tiny scale compared to what is necessary if we are going to humanise services and make them work more effectively. So here is the question: how can we roll out this kind of infrastructure in every public service on a huge scale?

Where do you start? My report suggests that all service contractors, public and private, need to be asked the following questions:
How do you plan to rebuild social networksHow do you plan to encourage mutual support among usersHow do you plan to reduce the level of need for your service year by year? 

It's not what you say, it's where you say it

I had just arrived at my office this morning when I ran into one of my colleagues.  “Hello, David,” she said.   “I’ve just been reading about you in the Daily Mail.”
My heart stopped for a moment.  I may not have that much to be ashamed of, but still – you never quite know.
What I had failed to expect was the way that speaking in public at the Hay Festival can make what you say unexpectedly interesting to the newspapers.
I had, after all, been plugging away at my book Broke: How to Survive the Middle Class Crisis for some time, certainly since the publication of a cheaper edition in January.  There was quite a lot of coverage at the time.  The Mail even reviewed it twice.
So I was unprepared for the interest this morning, and not just in the Mail – which published the usual rather windswept picture of me – but also in the Telegraph and the Independent .  It was gratifying to see them taking my argument seriously, but mildly annoying that they didn't mention that there is a book, or that the book is not as bleak as their headlines imply.  There is a way out, and I've suggested that there may be more than one...
Since getting home this evening, I see that the Huffington Post has also covered the story, and in a little more breadth.
I've also had a chance to look at some of the comments below the Telegraph article, many of which are supportive - I'm not the only one to see the trends - but one of which says that, because I used the term'proletariat', I must be a Marxist, and therefore... etc etc.
The whole experience is a little strange - nice that my thesis is getting some coverage, but strange that something I said on the BBC originally back in March last year, and which passed most of the media by in January when the new edition came out, should get such wide coverage now just because I said it at the Hay Festival.
Strange, but perhaps less of a surprise, that it is the frightening aspect of the message of the book - and not the hopeful, hopefully exhilarating bit - that gets all the attention.
Because there is hope.  That's why I wrote the book.

We still need Clegg - but we need to release him from Prison Whitehall

"We're British people, with all their qualities and faults, with feelings and emotions, and not denationalised, impersonal polyglot cynics with the generous emotions of a fish, intimidated by fears that what we feel like saying will be 'bad propaganda'..."

That was what the BBC European Service daily directive said in February 1942 when Singapore fell. It seems to me an appropriate thought for today, not just because of the Lib Dem results but because a party which forces Moslem schoolchildren to eat pork has won the support of a quarter of all French voters.

But, as the directive said, we have to be authentic at times like this. The excision of emotions by spin and bureaucracy is partly responsible for our plight.

The BBC European Service at the time was actually independent of the BBC and run by a maverick propagandist, and Liberal, called Noel Newsome. He was kicked out by the BBC at the end of the war, which has lived off his reputation for telling the truth ever since. Newsome stood for the Liberal Party in 1945 in Cockermouth and very narrowly lost.

He also believed that his wartime wireless service, operating across three networks, for 36 hours a day and in 20 languages – still the biggest broadcasting operation of its kind – would be the foundation stone of a new Europe. The British government vetoed the idea. Needless to say.

It is worth, today of all days, taking that story a little further, because it provides another background to today. Newsome was involved in the reorganisation of the Liberal Party in 1946, and ten years later that party had become a force capable of building up slowly – and these things have to build slowly, as Nigel Farage will discover – to turn the UK government upside down.

Jo Grimond’s Liberal Party provided an intellectual critique of technocracy. That was what gave the Liberal Revival electoral power. It is what enabled it to turn local government inside out in the 1980s and 90s. And, speaking personally, it absolutely captured my imagination.

As a new graduate in 1980, I remember having a wager with my grandparents that the Liberals would get 50 seats at the next election. In the event, the rise and fall of the SDP put paid to that, but we achieved it in 2001, long after my grandparents had died.

What kept me going during those years as an activist, and kept the electorate committed, was the continuing relevance of the Liberal critique. It was populist, but not by pandering to temporary emotions, but because it was based on an intellectual critique and an intellectual tradition. It had real ideas at its heart,

As I trudged the pavements, and canvassed myself hoarse in my twenties, during the early Thatcher years – I canvassed the night the Sheffield sank, and everything changed – it was a set of ideas I believed I was representing: that people had needs and capabilities that the technocratic systems were ignoring. That people mattered.

What I feel most strongly today is that this will have to remain true. The Lib Dems will not survive unless they develop these ideas and that critique – unless there is a depth and a purpose behind their existence that answers people’s needs, fears and aspirations.

If the ideas are allowed to corrode, we will go back to what we were in the 1930s, desperately seeking a compass, committed to the worn-out compromises of a generation before.

It also matters very much whose side we are on – and Ukip have portrayed themselves as being on people’s side, the ‘peasant’s revolt’, as Boris Johnson put it.

My reading of the tea leaves, for what it is worth, is that the Lib Dems will win 46 seats at the general election and Ukip will win no more than three. But for that to happen, the Lib Dems will need to have a reasonable claim to be a peasant’s revolt too. Because, if the only political force declared against technocracy – as Jean-Marie le Pen used to put it – is the far right, then they will garner the votes.

In that respect, the disaster of 2014 is partly the political fall-out from the banking collapse of 2008, delayed, potent and ferocious. In the UK, it is partly also about the failure of the Lib Dems to demonstrate unambiguously that their ultimate purpose is to represent the peasants, so to speak. Not to look after their interests, in a distant, paternalist way. Not to support the unsupportable because it will be good for them in the end. But to give them power and trust them with it.

Given that, the great failure of the party has been partly to trust to positioning rather than passion, and partly their failure during the decade before going into government to develop that intellectual critique.

Yes, we were right to go into government, but we were foolhardy to do so without having hammered out an agenda for the economy and public services beforehand. Of course we lacked enough of a recognisably distinctive agenda once the doors of Whitehall had closed behind us, at least on those to crucial policy areas.

There lie the seeds of the party’s difficulties today, and they are the fault of ten wasted years and not the fault of the leader. Neither on the right nor on the left of the party were the years of preparation spent developing our intellectual critique – and especially not in economics.

Everyone appears to be searching for someone to blame. Personally, I blame the euro: I always said it would risk fascism in Europe and so it has proved. I blame the failure to tackle the banks. But I blame the Lib Dem result on ten fallow years when the party seemed to believe that everything could be achieved through an ecstasy of clever positioning.

So, no, I don’t share the opinion that the Lib Dems need a new leader, and not just because dropping the pilot at this stage throws out the party’s best hope of a convincing narrative – that we acted to save the nation, and suffered for it.

Nor because my admiration for Nick Clegg has grown steadily over the years, as he has dealt with skill and humour with the vilification thrown and him, and the exhausting effort to force anything through a complex, constipated system of government. 
Nor because I believe history will vindicate his difficult decisions, if not every decision - by any means - taken by the coalition.

It is because the party’s losses have been the result of a collective intellectual failure by the party, lulling itself into an intellectual cul-de-sac where they believed they were some kind of giant Royal Commission, weighing up evidence, and where they lost the passion for that intellectual crusade which had begun to gather steam back in 1946, out of the seeds of defeat.

It is because Nick Clegg is the only potential leader who seems to me to be able to provide that edge we need – a crusading idea, to claw back the tentacles of technocracy, to break those tired old compromises – that will allow us to claw back, at the same time, the dozing liberalism of the nation.

He can do it. If he has channelled the disapproval of the left, he has done so on behalf of the party and the mistakes and omissions we all made – and it can only dig us deeper in the hole to drop him now.

I’m a bit wary of offering him advice, partly because he won’t see it, partly because he gets too much of it already. But it is this: get out of the Whitehall prison, and grasp your destiny – which is to articulate the new intellectual crusade to put people first.

It sounds portentous to say so, but I have come to believe that the future of Europe now depends on him doing so.

Imagine the poorest areas could survive using their own resources

Imagine.  Imagine it might be possible to set aside the great lie of economic strategy (trickle down patently doesn’t trickle; it hoovers up).  Imagine the poorest areas could ride out a world recession.  Imagine they were not forced to go cap in hand to big business or big bureaucracy to survive.
It is hard to over-estimate the impact on the world, and certainly on the UK, if we could find the techniques we need – to help neighbourhoods survive using their own resources.
It will clearly not make them rich, but it may keep them from being poor – and the difference that will make, if it works, in regional power dynamics would be profound
But is it possible?  It would mean using the money better which is already flowing through the community.  It would mean using the wasted people, land and buildings, the waste material – putting them altogether and - well, not wealth exactly, but enough economic activity to claw back some of their economic destinies.
The difficulty is that these economic techniques exist but, in the UK at least, they are in their earliest stages – usually based on community banking or community energy generation.
We can catch glimpses of what is possible in the efforts of local authorities like Enfield or Preston, looking at different ways of doing procurement.  We can see it in the development of linked local food businesses in Vermont, or the community currencies for women entrepreneurs being rolled out by the Brazilian central bank
We need to develop these ideas, and I set out how in my report Ultra-Micro Economics , published today by Co-operatives UK.  But there are three important blockages.
First, our institutions of regeneration, from the energy intermediaries to the high street banks, are designed for big institutions and find it hard to connect with small players. Try helping your village generate its own energy and things get difficult.
Second, there is a blind spot about economic regeneration in most local authorities.  They don’t see it as their business, and this kind of learned helplessness – passive in the face of whatever disasters the global economy might throw at them – has been carefully nurtured by the Treasury for a generation, terrified of the spectre of the Bank-of-Our-Friends-in-the-North.
Third, there is a kind of snobbery among economic policy-makers about it, as if ultra-micro was all a bit too small to matter. Economic strategy has kudos and status; looking at money flows on the ground and how to make money connect more locally isn’t what they imagined doing.  Money flows? It’s too much like plumbing for comfort.
But the real lesson is that small-scale matters.  The ultra-micro approach transcends conventional right and left, just as it goes beyond the conventional distinction between free and controlled markets. But the real argument is about scale, if enough people and places are doing this, then - as they say in America - small plus small plus small plus small equals big.
It is up to our political thinkers (you know who you are!) to name this and run with it...

Why time banks imply a different kind of public service

Ever since I invited the time banks pioneer Edgar Cahn over to the UK in 1997, I have been fascinated by the growth of the idea across Europe.
Then, last year, I had the huge opportunity of writing a report about their growth and potential for the European Commission, which has just been published.
What I found was a hugely diverse movement, from the Scandinavian time banks (more about local barter, which is why it is being taxed) to the Spanish banca del tiempo (an offshoot of the feminist movement, developed increasingly by local government).
The Italian banca de tempo claim descent from the UK ones, but actually predate them by at least five years, modelled more closely on LETS currencies.
The UK movement is probably closest to the time banks in the USA, and are increasingly about reforming public services by encouraging people who are usually volunteered unto to find ways of supporting each other.
The basic effectiveness of time banks in building supportive neighbourhoods, especially for older people, people with health difficulties and in poorer or immigrant communities, seems to be confirmed in a range of different projects.  So is their ability to save money, both for their members and for their partners in the public services, by increasing the effectiveness of services (though not necessarily by allowing them to cut services). 
Their big challenge is how to use these successes for time banks to build a sustainable future for themselves, perhaps partly inside a range of different host organisations – which require mutual social networks around them if they are going to be more effective.  The future of time banks may be as a technique for institutions, more than as standalone projects, though this debate continues across Europe and the outcome is not yet clear.
In any case, to achieve that, public service professionals need to understand more about the potential of time banking.  There also needs to be more understanding of how best to balance the technological needs and the need for a human being at the heart of time banks if they are to reach their target markets.  Those issues remain unresolved. 
What I said in the report is that these key ideas also stand out: Time banks and complementary currencies are a growing phenomenon, not only in number of experiences but also in their variety. The diversity of welfare system not only implies different welfare rules but also different social needs as well as work and time use patterns that influence the objectives,  membership and use of time banks.Time bank and complementary currencies have potential to improve well-being and mental health, to enhance the effectiveness of public services, and to promote entrepreneurship and self-employed business ventures.The high rate of women promoting and participating in these initiatives is an opportunity, but also a question: do they really make the most of this participation?
This reflects the Radio 4 discussion I took part in last month.  But the report also talks about the fascinating border area between social exchange (time banks) and new kinds of money (local currencies), and both ends of this innovation are powering ahead.  There’s still a long way to go, but – if you want to see how time banking can take a major role in social care in the UK – just have a look at the time bank that’s now at the heart of the Visiting Nurse Service of New York, probably the biggest social care organisation of its kind.
What makes this revolutionary is not just that it is cost effective, and begins to put right one of the major flaws in the Beveridge welfare state – the gulf between exhausted professionals and the service users who are supposed to stay passive to make them easier to process.  It is also about making the most vulnerable services users more powerful and effective in the system.

This isn’t about empowerment – a weasel word if ever there was one – but it can have the effect of giving people more confidence in the system.  

Marketing brands: they can't help themselves

Just when you thought you were safe from French Connection UK (known for some years now as fcuk), there is a trend identified by the New York Times of using swearwords in brand names - Eggslut restaurant, Holy Crap cereal, Fat Bastard wine, you know the kind of thing.

It seems to me that this may be the beginning of the end of the great branding phenomenon, which so excited the marketing world in the 1990s.  We were told we would all love our brands, when the truth is we usually find them infuriating.

This is what I think is happening, as I explained on the Guardian's Comment is Free site today.

The delusions of the first decade of the century

The news that HMRC is preparing to sell our anonymised tax data has made me wonder a little at how we will remember this decade when it is over.

The reason I wonder is that, despite the launch of the Turing Institute - at least as a gleam in the Treasury's eye (and I'm sure my e-biography of Alan Turing was deeply influential here, especially now it reached #1 in one Amazon category last weekend!) - I'm not completely convinced that Big Data will really prove as important as we currently believe.

The reason is that it suffers from precisely the same weaknesses as any data.  It gives the impression of hard numbers, evidence-based hardheadedness, objectivity and all that, but the numbers are also chained to definitions, and these are endlessly malleable.

The pursuit of Big Data is not going to be pointless, but it will be stuffed full of delusions - which won't be apparent until the decade of Big Data is well and truly over.

This thought has led me to have a think about the previous 'noughty' decade - the first decade of the twenty-first century - and the little delusions we used to tell ourselves.  I've boiled these down in my head into three, and here they are:

Delusion #1.  There is no need to make anything.  The odd thing is that all our mainstream political parties bought into this delusion to some extent, that manufacturing was somehow below us in the UK - that we had somehow progressed beyond it.  This was central tenet of the Treasury under Gordon Brown and Ed Balls, that financial services was the way we were going to specalise in the global marketplace - without realising that financial services was also the cuckoo in the nest: it eventually drives out everything else.  Thanks to Vince Cable and others, UK manufacturing is slowly being clawed back.  So that little delusion is, I think, over - even if we still haven't understood some of the practical implications for the kind of financial services we need.  The current financial sector is wholly ineffective when it comes to providing for the capital needs of manufacturing.

Delusion #2.  There is no such thing as geography.  This was a delusion foisted on us by the internet and AI pioneers of the US West Coast.  You couldn't be in any kind of policy meeting without someone saying something fatuous about 'online communities' being the future of community.  A decade later, I think most of us realise that, if we believe our Facebook friend are our real friends, we are likely to face a lonely future.  The truth is that geographical communities, awkward and authentic as they are, are the only effective ones, for most of us - though of course an occasional exchange online can't be a bad thing.

Delusion #3.  Everything can be measured.  This was the greatest delusion of them all - the quotation is taken from the ubiquitous management consultancy McKinsey - when the truth is that the really important things, from love to happiness, are wholly unmeasurable.  This delusion still has many of us in its grip, and especially as we hurtle into the decade of Big Data, which suffers from the same kind of drawbacks.

Of course, in practice, these were also the delusions that were written into the New Labour years like the writing through a stick of rock, and this is where it matters that we are still in the grip of delusion #3.  In practice, we subjected our services and voluntary sector funding to incisive questioning over their impact, asked them for evidence, and then handed the money over to institutions that were able to provide it.

It would be quite reasonable, were it not for two problems.  A huge percentage of the time, energy, creativity and effort was shifted from making things happen to producing data, which was flawed.  Of course it was flawed: people's jobs and livelihoods depended on it being good.

The second problem was that we handed services increasingly over the new outsourcing giants, because they were able to produce reliable data about their impact, and then sat back and breathed a sigh of relief.

It is slowly becoming clear, unfortunately, that the production of data was the only thing they could do.  It was the sole purpose of those great outsourcing monsters, the central purpose of their design.  It seems likely that they can produce the data, but can't actually have an impact - and this very distinction was what was being denied.

So we remain in the grip of at least one delusion of the previous decade.  Here's to its speedy unmasking...