David Boyle's Blog, page 62

The big question nobody is asking

I always read Anthony Hilton's finance column in the Evening Standard, and I always learn something from it.  He doesn't regard the duty of a financial columnist, as some do, to cheerlead for the financial sector.

So I was especially pleased to see his column earlier this week, writing about the Institute of Fiscal Studies (IFS) and their report suggesting that people born in the 1960s and 1970s would be less well off than those born in the 1940s and 1950s.

I was born on the glorious cusp: 1958, which makes me sitting marginally pretty - though not as pretty as my friends who went into financial services or IT or who took out risky mortgages.

But the reason I read the column with some relief was that he was asking the right question, and pretty much the same question that I put in my book Broke: Who Killed the Middle Classes? earlier this year:

"What no one has done is question how this can have come about. The older half of this disadvantaged cohort born in the 1960s would have entered the workforce in the Thatcher years of the 1980s. This was the time when the North Sea turned the UK into the world’s fourth-largest oil producer. It was also the time when Thatcher was allegedly transforming the British economy from being the sick man of Europe to being the envy of its rivals... So where did all the money go? If Thatcher really did change the British economy for the better, how come the generation that spent most time working in it is worse off than the generation earlier, which had to make its way in the 1960s and 1970s? That was when taxation was much higher with the top rate of income tax at 83p in the pound, the debt-to-gross domestic product ratio was much higher, inflation ran at up to 26 per cent, and the nation was saddled with all those lame-duck industries which, according to the Thatcher mantra, could no longer pay their way in the world..."

That is such an important question, in fact, that you can see why it isn't being asked in establishment circles - because it would require such serious self-examination that it might be painful.
Asking us to question the Thatcher-to-Brown legacy certainly doesn't mean anyone wants to embrace the 1970s again (though we do seem to be doing so in some ways).  But it does mean that we have to look fearlessly at the legacy of the so-called trickle down effect, because - although so much of our national policy is still based on this idea - it has manifestly failed to trickle.
Broke is coming out in a new, cheaper edition in mid-January, with a new subtitle (How to Survive the Middle Class Crisis), a new chapter and a new cover.  It gives me the chance again to ask that same question in as many ways as I can think of - and to do so, I hope, in such a way that I don't get pigeon-holed as a socialist nostalgic for the Spirit of '45 (I am absolutely, definitely not).
The truth is that this is the very beginning of a shift in public policy that will be painful and exhausting, but is nonetheless overdue - a re-setting of the controls that happens every three or four decades or so (1940 and 1979 were the last ones).
The reason it will happen is that it is becoming increasingly clear that the existing system is not delivering - except under the self-referential measures of success that we cling to so blindly.  
This isn't about the success or failure of austerity.  It isn't about growth figures or leaping free of the recession, or the jobs figures - all of which are pointing in the right  direction.  It is the basic underlying theory behind it.  It isn't working.

Why London has become a bit vampiric

The great vacuous bubble of ambition that is Boris Johnson doesn’t seem to get the point of Vince Cable’s remarks about London – “a giant suction machine draining the life” out of the English regions.

Neither does the Evening Standard. Boris has hit back explaining that London is generating more of Britain’s GDP than ever, without apparently realising that this is exactly the problem.

London is an economic vacuum cleaner, sucking up the available people, investment and ability to earn from everywhere else. That is why the economy still needs re-balancing.

Of course, the ability to earn for the exchequer is hardly unimportant. Somebody has to do it. But taken it to its logical conclusion, as Boris seems to be urging, the tyranny becomes clear: where London earns on everyone else’s behalf and the rest of the nation lives on its largesse and hand-outs, a miserable put-upon, berated semi-slavery.

It isn’t sustainable or economic, and it isn’t humane.

Meanwhile, the Great Vacuum Cleaner continues to suck – airport capacity, financial services, people, talent, knowhow, culture. And this isn’t just a Boris problem either – his predecessor, Ken Livingstone presided over a selfish policy to deliberately increase the population of London.

What he doesn't seem to have thought about was who was going to build the necessary schools.  As a result, we queue to get out of the tube stations just as we queued to get in.  The stress on the system is increasingly obvious.

Vince was articulating an important message, and it is also a traditional Liberal one. This was Lord Rosebery, the former Liberal Prime Minister, speaking about London in 1891:

"Sixty years ago a great Englishman, Cobbett, called it a wen. If it was a wen then, what is it now? A tumour, an elephantiasis sucking into its gorged system half the life and the blood and the bone of the rural districts."
Ebenezer Howard's book Garden Cities of Tomorrow quoted Liberal politicians describing London as a Moloch, gorging itself on the blood of youth.  Ask yourself, as Rosebery did, what is it now?
The truth is that London has become a kind of vampire, sucking in not just the wealth but the ability to create wealth.  Nor is an overheating, overcrowded Londion much fun to live in either.

Towards more experimental money

The news that UK banknotes are going to be made of plastic has got more coverage than it really quite deserves.

US dollar bills have been made of plastic for years (when they are worn out, they get made into plastic wheelbarrows). This is not monetary news, especially since notes and coins now only make up about 3 per cent of money in circulation.

But it happens to coincide with a very interesting and thoughtful report by the Bank of England’s bank note department about the likely impact and future regulation of local and complementary currencies.

The officials who wrote it know their stuff. They have read the right things and the report is worth reading.

They are also right that the existence of a few local currencies in the UK – the Bristol pound and Brixton pound are the best known – have not yet made a major impact on local economies.

But things are stirring out there. The European initiative, Community Currencies in Action is now up and running and increasingly bringing together the knowhow across the continent,  The ambitious new currency in Nantes, the brainchild of the French prime minister, will soon be making loans and supporting small business.

And of course there is an urgent need for new mediums of exchange that are disconnected from the euro in the struggling regions of southern Europe.

There is an obvious new approach to monetary politics emerging which is neither clinging to national currencies, nor subsuming national sovereignty into 'optimal currency zones' which actually turn out not to be optimal at all.

It is an approach where parallel currencies circulate alongside each other, keeping people alive in Greece or Portugal, for example, while the euro debts are paid off.

The coming political disaster in Europe will be a subject for this blog next year (and probably rather too much), so I won't bang on about it here – but multiple currencies way to rebuild.

Quick note on bitcoin. Yes, it proves the basic case that other currencies are possible, regionally, locally or internationally.  No, I personally wouldn't use it – I don’t trust it to keep its value.

Which brings me back to the Bank of England. Their main concern is that people will confuse local currencies with national ones and believe they have some kind of regulatory protection. This is an information problem and is solvable.

Their concern, which they admit is theoretical, that local currencies could be inflationary.

This is true. But inflation in a local currency involves a catastrophic loss of belief, which kills it.  It doesn't work like inflation in a national currency.  It does not, even theoretically, spread into the national currency. That is its virtue, and why these tools are potentially useful.

From what I see, after writing about this field for more than two decades, is that there is now the beginning of a body of knowledge, practical and theoretical, and a cadre of people who know what they talk about (I’m not talking about myself either).

What complementary currencies urgently need is a licence to experiment, to push forward the boundaries of monetary possibility.

My fear is that the Bundesbank or some of the other central banks of Europe, which have a more Napoleonic approach to this, would tend to regulate the emerging sector out of existence. The Bank of England may be the only one that really understands the importance of experiment.  
What I hope is that they will now take a lead in bringing together their continental colleagues to find a permissive framework that will keep the regulators happy - but allow experiments to press onwards.

Because, even if multiple currencies don't yet exist on the scale they would need to if they are going to have a real impact on people's lives in struggling local economies – they could do. That's enough for me.

When the media colludes with news management

I have only two comments on the interim findings by Howard Davies about airport capacity in the south east, which was sort of disappointing - because it seems to make no reference either to climate change or to the coalition's promise not to expand Heathrow made when they came to office.

First, just to ask - are there any limits at all to the expansion of air capacity?  Is there any point where we would say that, despite the supposed rewards, the cost - in destruction of homes, lives and well-being - is just too high?  Because if there is, let's say so now and make sure we stick to it.

Second, that I'm not sure this emphasis on noise is really the point.  Yes, the noise stress that Heathrow imposes on West London is huge, but does it really make any difference if we change the climate to do so quietly?

But the really infuriating thing about the debate today has been that it has allowed the banks to avoid discussion about their postcode lending data.  Which is presumably why they announced so recently that it would be published today.

Only one major newspaper seems to have covered the story, and then it was just about the mortgage data - there is more money in outstanding mortgages in London than in the whole of Wales, I gather.

Given the house price bubble, this is hardly surprising - but there is a far more important angle they seem to have mislaid.  Why has the media been so craven in their failure to cover the story?  I'm aware that they are sometimes unable to concentrate on two things at once, but this is important.

What really caught my attention was the figure that London and the South East account for 34 per cent of small business lending.

Now that is important.  The British Bankers Association list these figures very carefully next to the estimated turnover of SMEs in that region, which is broadly similar, but you have to ask what comes first - the chicken of small business turnover or the egg of small business lending.

Maybe the other regions have such low levels of SME activity is precisely because they are so badly served by the banks.

If that was so, we would know what to do about it: find ways to make sure the big banks pay for a lending infrastructure that is capable of shaping a new generation of SMEs.

But why aren't these things being discussed today?  If the banks had requested media outlets not to cover it, I'm sure they would have refused.  But all they have to do is release the data on Heathrow Airport day and the media gets discombobulated.

It is rather pathetic.  Because this is the urgent debate we need to have about how to genuinely re-balance the economy.  And our futures all depend on it - and far more than the question of whether BAA is able to re-organise its landing slots to include Chinese flights.

This might be the secret to unlock local economics

It is all a matter of cause and effect.  Does lending to small businesses create an SME sector, or does the lending happen because there is a small business sector there already?

That may seem an abstruse angels-on-the-head-of-a-pin question, but it goes to the heart of the issue which looks set to be revealed tomorrow: the long-awaited, little-debated, tremendously creative moment when the UK banks reveal the geographical spread of their lending.

Which, thanks to the efforts of Lib Dems in the House of Lords - Baroness Kramer and Lord Sharkey - will be down to postcode level, about 9,000 of them.

Tuesday will see one of those moments which may prove a turning point in the development of an effective UK banking system.

The position of the big banks was flagged up in the Saturday papers, because they fear the reaction.

It would be a pity of their transparency, even if it was enforced over a barrel, was used as a stick to beat them.  But we must not allow either politicians and bankers to avoid the key issue: it will show - by the huge diversity of lending in different areas - that some areas are not well served by the big banks.

We have to be clear that this is nobody's fault.  The problem is that they are no longer geared to lend to small businesses, except apparently in the south east.  The issue is what we do about that.

And here we get to the nitty-gritty.  This is what the Daily Telegraph wrote, quoting banking 'sources':

"Sources said that the reason much of the money went to support SMEs in the South East was because there were many more businesses in that area."
Maybe that is true, but maybe the causality is the other way around.  Maybe there are so many small businesses in the south east because there is a responsive lending infrastructure there.
Just imagine if that was the case.  It would mean that we had a vital clue to how to rebuild local economies, sustainably and effectively.  It would mean that, as you might expect, people's imagination and entrepreneurial zeal was spread pretty evenly.
All we would need is an effective local lending infrastructure.  That must now be organised, and organised urgently, paid for by the big banks in lieu of the money they are unable to lend themselves.

The trouble with inspection

The NHS blogger Roy Lilley has accelerated his campaign against the Care Quality Commission (CQC), and he is now so influential that he may succeed in winding the old dinosaur up single-handed.

His blog earlier this week, with snippets he has been sent by NHS staff, was pretty devastating. Apparently, a coachload of 130 inspectors turned up to inspect Barking & Dagenham hospital last week.

Yet there were the complaints in other places (not B&D, as far as I know) that, because there had been a tip-off about the arrival of inspectors, staff numbers had been doubled for the day – with managers on the wards handing out biscuits.

As Lilley says, inspection doesn’t drive up quality. Quite the reverse; you can just imagine how much energy has gone into working out when the inspectors would arrive.

But what really caught my attention was the automatic email from CQC, written in response to the complaint about the tip-off:

"Please note that should we not hear back from you within the next 7 working days, we'll assume that you no longer require our assistance. Should this not be the case, we'd request that you resubmit your original email detailing these concerns plus the important details we've requested above, and we'll be happy to assist you."

Now, here, in a nutshell is what happens when government shifts over go digital-by-default. You get the kind of automation dreamed up, if not by someone from McKinsey, then by the McKinseyite demon that stalks the corridors of Whitehall.

It is digital-for-the-convenience-of-the-managers, digital-unrelated-to-the-central-objectives, digital-to-obsess-about-irrelevant detail, digital-to-disempower-the-outside-world.

You do need an NHS watchdog, but there is no point if it just watches and never helps improve. There is no point if it never barks for political reasons.

The real question is this: if targets and inspection shift energy so much in the wrong directions, and away from holistic good care - where are the levers that managers or politicians can use to shift the system.
Friends and Family tests?  Yes, but that isn't the same as quality; though it may be an early warning system.  Minimum standards?  They then tend to act as maximum standards?  
This is the great unanswered question.  How do you roll back from the McKinseyite transformation of public services so uselessly into assembly lines?  I don't know the answer, because it needs to combine the maximum of local creativity and imagination with the maximum of rigour, and it isn't clear how they can be combined.
But although I don't know the answer, I think I know where to look.  It means that transparency assisted by small units and local control, and a powerful leadership for imagination from the centre.  Yes, it is all about culture change - which is difficult, since we have fostered a disempowering culture of compliance.

Why testing seven-year-olds will backfire

A generation ago, the former Bank of England director Sir Charles Goodhart developed what is now known as ‘Goodhart’s Law’.
It was originally a principle in macro-economics, but it is now more usually used about the distortions of public service targets.  The principle is that numerical measurements will always be inaccurate if they are used to control people.
The reason is that, however incompetent staff may be, they will always be skillful enough to make targets work for them rather than against them. 
Take for example, the original response – more than a decade ago now – to the rule that patients shouldn’t be kept on hospital trolleys for more than four hours.  In practice, some hospitals got round it by putting them in chairs.  Others bought more expensive kinds of trolleys and re-designated them as ‘mobile beds’.
What I don’t think those of us who were talking about the impact of Goodhart’s Law understood, even then, was how deep the effects would be – and how devastatingly wasteful.
I got a clue a few years ago watching a documentary about airport security staff.  It was quite clear that most of their energy, by a long way, was dedicated – not to seeking out terrorists - but trying to spot the inspectors posing as members of the public.
Now imagine that same situation, turbo-charged by targets and payment-by-results contracts, in nearly every corner of public services, and you begin to see why they have become so ineffective – and so expensive.
It is, I believe, the great disaster of our services, and it may still bring about their demise. Let’s hope not.
So when the chief inspector at Ofsted, Michael Wilshaw, says he wants to bring back exams at the age of seven, we ought to separate out the laudable intention – to bring rigour to the crucial first few years of primary school – but we also need to look at the likely effects.
Goodhart’s Law says nothing about testing in itself.  The problems come when the results of that testing are used to control the behaviour of teachers.
Then I think we know enough to be able to predict.  Primary education will become dryer, more narrow, more suited to the results of the test.  It will become more alienating.
That is not to say that schools don’t need rigour or that teachers shouldn’t be held to account – or that they shouldn’t pinpoint the children who are being left behind (a symptom of a dysfunctional system where the schools and classes are too big).  Nor that these side-effects will happen in the best schools, as Wilshaw said.
The question is this.  How can you do that without hollowing out the system which is supposed to be inspiring children with the idea of knowledge and reading and the possibilities of life?
What we do know is that, so far, testing as a means of controlling the teachers leads to a technocratic approach that tends to leave some children behind.  The cure may well be worse than the disease.
And I also know this.  We desperately need to get beyond the current stand-off in education.  It turns children into pawns in a greater battle and future generations are likely to curse us for failing to notice the only possible solution – closer personal attention, more investment in people and relationships, and using the pupil premium for than, not more generous dollops of iPads.

What schools do to poetry sometimes

Did I like poetry when I was nine, I was asked yesterday?  I was asked, in fact, by my nine-year-old son.  I thought about it and could barely remember.  Then suddenly, a painful vision of myself aged nine reciting a terrible poem about a camel, flashed into my mind.

I was interested and pleased that the school is pushing poems at them, though my son is not.

Why not? I asked  What's wrong with them?

Because they only give us poems by Michael Rosen, he said.

Now there I could understand.  Actually, I have huge respect for Michael Rosen as a tireless populariser of good writing to children.  His work is fun and often funny, but he has spawned so many poor competitors that I could begin to see the problem.

Don't you like any poems, I asked?

Yes, he said: he liked the line: "In the land of Mordor where the shadows lie..." 

Now I am writing as a fully paid up Liberal.  I believe in education, but my kind of Liberal has to be pretty clear what that education is for.  It isn't to turn our children into cogs that fit more neatly into the system.  Nor is it to turn them into the shock troops going over the top in the battle of statistics with the Far East, or just to get their school to the top of the narrow league tables.

There are other kinds of utilitarian liberal who might say otherwise.  Not me.

None of those are bad things, but they are absolutely pointless if education doesn't move, inspire, shape and create imagination.  If it doesn't foster creativity.  If it doesn't help humanity evolve a little beyond the assembly line.

I know why the curriculum specifies poems-as-jokes, and fights shy of inspiration at the age of nine. I know why it fears anything more than talking down to the children. Yet my nine-year-old could be inspired with the right brand of Tolkein-esque romanticism.

It won't work for everyone, but then nothing will.  The alternative is the lowest common denominator screed of words that might capture their attention and make them smile for a moment.

Because, actually, I do remember my own terrible recitation experience.  My own poem I've forgotten completely, except for the word 'camel', but I remember every word of the poem that was recited after mine - Rudyard Kipling's 'The Way Through the Woods'.

This may be a character flaw of mine, but I was moved and inspired.  As a Liberal, opening that possibility has to be the kind of education I aspire to.

What's wrong with the special shop for poor people?

I remember hearing the visionary co-production pioneer Edgar Cahn talk about the defence of his National Legal Services Programme, the service that helped organisations to sue the government to enforce their rights.

He had urged the programme over the years to ask the people they were helping to give something back, but they never quite got round to doing so. Then suddenly, in 1994, there was a Republican landslide, determined to reduce the federal budget deficit, and a young maverick called Newt Gingrich was in the House of Representatives, looking for ways of saving money.

The Republicans had never much liked the Legal Services Programme anyway, so the scene was set for the inevitable congressional hearings before it was shut down.

Only the California Rural Legal Assistance Programme agreed to his giving back plan, and the programme was duly cut by a third and hamstrung in other ways. 
The hearings were held in Congress. But out of the three million people a year which the programme had helped for 33 years – that’s about 100 million households – not one client turned up at the hearings to defend it. 
A year or so later, Cahn’s own law school was also under threat. This was the District of Columbia School of Law, which was modelled on a teaching hospital. Students follow the proposals that Cahn put forward. They go out into the community and give legal help, but they don’t just give it. They ask for something back through one of the time banks in a Baptist church or in local housing complexes. 
It was a difficult campaign to win, given that Washington already had six law schools and a massive budget deficit. Even the Washington Post was calling for it to be closed. But hearings organised by the District of Columbia Council didn’t go the same way as the ones in Congress. 
Those who had been helped, and paid back, came out in droves to support the law school and it stayed open. Giving something back for the help they had received had made people defend the law school. Perhaps because it was more equal. It wasn’t charity any more.

Cahn describes this as the power of ‘reciprocity’. It provides an accelerating energy for organisations and businesses. Without those ties of obligation, and that sense of a relationship, the energy dips and dissipates; with it, the energy carries on. 
When there are these reciprocal links between people, the organisations seem to get a kind of stickiness about them: they generate a power to keep people involved.  More about this in my book The Human Element.
I thought of that when the Daily Mail reported yesterday the emergence of a new kind of community shop which has just opened in Barnsley.  It is just for people on benefits, and only 500 can join.  It sells food rejected by the big supermarkets because of minor packaging mistakes, and which would otherwise go in the anaerobic digester, and it sells it at 70 per cent less than the supermarkets.
The shop has come in for criticism in some circles, as you might expect for a special shop for poor people.  I don't share their concern, except in one respect: there is no reciprocity.
That is why it seems uncomfortable.  Without giving back, perhaps by working in the shop as co-owners, perhaps in some other way, the shop would provide some dignity and standing for those using it.  It would build energy and become a community; without that, the energy will dissipate.
Without any reciprocal involvement it is just charity, and charity - as Mary Douglas put it - tends to wound.  If you just accept charity and give nothing back, it undermines your dignity and  sense of self.  In short, there may be an opportunity missed here.
The Barnsley community shop is a template for another 20 branches due to open around the country.  It is a good idea, enlightened and important, but it is missing something that could make it transformative.

Turning the PR industry on its head at long last

Lord Leverhulme famously said this about advertising: "Half the money I spend on advertising is wasted, and the problem is I do not know which half".

If that was true of advertising, then how much more true of it in public relations. You would be lucky just to waste half your money, certainly if you add up the retainer, the vast amount of wasted stuff pushed into envelopes, the sheer irritation of PR as conventionally delivered.

I speak as someone who has been too often on the wrong end of PR. I remember, in the days when I was editor of Town & Country Planning in the late 1980s, I came to learn which envelopes should go straight in the bin. Among them were the wads of press releases published by the British Standards Institution, and delivered to me and thousands of others, at vast expense.

All of this mild rant is a way of explaining why I was excited to see a new model emerge, and I need a bit of transparency here - the co-founder, Kate Vick, is a friend. But I think she and her business partner Alie Griffiths have hit on a big idea when they launched One Day a Month.

PR is so much more complicated than it was when I used to open envelopes and get press releases. Who in their right mind uses press releases these days, except as a way of controlling what their spokespeople say? Social media opens the whole thing up.

The reason I was interested in this is that it is a potential game-changer in the PR industry, opening it up far more widely - and to people who would never accept, and can't afford, the usual way of doing things.

And it doesn't rely on IT. This is a new model the old-fashioned way: a new conception of how business can be organised. It can work...