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Osborne’s lie hits small businesses for thousands

January 27, 2012 Leave a comment

I’ve been following the National Loan Guarantee Scheme.  Well, someone has to.

In his Autumn Statement, announcing the scheme, Osborne was specific about the reduced costs for businesses:

We expect that it will lead to reductions of 1 percentage point in the rate of interest being charged to these companies so a business facing a 7% interest rate to get a £5 million loan could instead see its rate reduced to 6% and its interest costs fall by up to £50,000.

Paul Myners (Lab) has been following it too in the Lords.  Hence his written question:

To ask Her Majesty’s Government whether they expect their proposed programme of credit easing to lead to a reduction of one percentage point in the rate of interest being charged to companies, as forecast in the Autumn Statement on 29 November 2011, or to lead to a small reduction as indicated in HM Treasury’s publication of 6 December 2011 on the national loan guarantee scheme.

 Commercial Secretary to the Treasury (Lord Sassoon) replied:

The national loan guarantee scheme, as announced in the Chancellor’s Autumn Statement, will lead to a reduction of loan interest rates to smaller businesses by up to 1 percentage point.

Lord Sassoon is lying.  Osborne didn’t say “up to 1 percentage point”.  He said ”1 percentage point.”  That small difference makes thousands of pounds difference to small companies.*

So did Osborne also make a false statement to the Chamber?  Time will tell, but I think he probably did.**

*A quick calculation on the loss of savings to businesses suggests that if the interest rate cut ends up at, say, 0.5% rather than 1% on the £20bn scheme, this will cost businesses £100m, at presumably crucial times in their survival/growth.

** It will be interesting to see if the 1% rate cut forecast by Osborne is actually accounted for in the guarantee part of the scheme, but lowered en route to businesses up as banks charge administration costs etc..

The lie behind Greening’s HS2 decision

January 10, 2012 1 comment

The green light for the  £33bn high speed rail project (HS2) was widely expected, once the level of bribery to Tory constituencies on the route had been negotiated.  £500m on a tunnel under the Chilterns to placate a few dozen well-heeled folk is obviously – if you’re Justine Greening  - better value for money than the £60m it would cost to build a rail link to Skelmersdale’s 40,000 residents.

But this is common or garden skullduggery.  The real scandal lies in the half-truth and lies told in a key document published today to justify Greening’s decision, the Economic Case for HS2: Updated appraisal of transport user benefits and wider economic benefits

The ‘killer’ paragraphs come between 3.5.5 and 3.5.10, in the section on ‘Regional impacts and Wider Economic Impacts’.

Para 3.5.4 states:

There may also be significant local effects; for instance, a new station can act as a magnet for economic activity and drive regeneration in deprived areas (my emphasis.

The clue is in the use of ‘may’. 

You might have thought that for a 32bn scheme some actual investigation into its possible and likely consequences for the areas concerned, but the reality is that there have been no such investigations – simply blind faith that the whole thing will work out for the best.

After a few paragraphs of vague wish lists about what ‘wider economic impacts’ (WEIs) the scheme might bring in the form of business clustering and labour markets, we get this at 3.5.8:

The WEIs guidance  is carefully designed to measure national impacts. However, at a regional and local level the effects of HS2 on the distribution of activity could also be very significant.

Then, finally, we get the clincher (para 3.5.9-10)

[A]lthough there are many examples where growth and regeneration has been delivered around a high speed rail station, there may be balancing effects across the wider area. However, the circumstances in which, and extent to which, this happens is not clear….

These local impacts are considered more fully in the Review of HS2 London to West Midlands Appraisal of Sustainability report (my emphasis).

For “balancing effects”, read “negative effects”.

For “considered more fully”, read “not considered at all”

For what the Appraisal of Sustainability report in question actually says is:

In undertaking this assessment account has been taken of the socio-economic impact of transport schemes including other high speed rail schemes. It is commonly accepted that the main impact on land use, of new stations or improved services, is located within a 10-15 minutes walking distance of the station, which equates to a catchment area of 1km (para. 1.3.1., my emphasis).

Thus, the report is not by, any stretch of the imagination, an assessment of wider impacts.  Indeed the report acknowledges this when it says:

The next steps in developing the socio-economic appraisal may be to……investigate the wider regional impacts of high speed rail, for example, how the Black Country region would be affected by the introduction of High Speed Rail to Birmingham (para 1.3.5.).

So, the wider regional impact investigation  recommended in the previous report has not been undertaken, but the report published today pretends that the original report did cover those wider impacts.

That, put simply, is a lie.

This is not simply an esoteric point about what is and isn’t in what DfT document. 

This is about the spending of  £33bn on a scheme which has the real capacity to wreak havoc on people in towns and cities – most likely some distance from the new stations but close enough to see economic activity “sucked away”.

As I set out here, such concerns are summed up in a 2009 paper ‘High Speed Rail: Lessons for Policy Makers from Experiences Abroad’, in which the authors study the actual post-construction impact of schemes in Japan, France, Spain and Italy:

[F]or regions and cities whose economic conditions compare unfavorably with those of their neighbors, a connection to the HST line may even result in economic activities being drained away and an overall negative impact……Medium size cities may well be the ones to suffer most from the economic attraction of the more dynamic, bigger cities. Indeed, Haynes (1997) points out that growth is sometimes at the expense of other centers of concentration (my emphasis).

Time will tell whether my concerns are justified, but what we can already be certain of is that 32bn of public money is to be spent on a scheme which has not been properly research, and the justification for which is underpinned by quiet, but important, lie in the small print.

Cameron on nursing: deeply ignorant, deeply disrespectful

January 6, 2012 Leave a comment

Imagine the scene. 

Cameron visits a hospital in, let’s say, Barnsley.  His advisers have been doing their homework and have told him that there’s a new opioid anaesthetic drugs, Remifentanil, which is very promising because it clears from the body very quickly post-anaesthetic, and doesn’t have any adverse effect on the excretory organs like the kidneys.

Cameron, enthused by this, asks to go to the operating theatres, not least because he thinks he’ll look quite dashing in the greens – a bit like George Clooney off ER.  He has small talk with the anaesthetist delegated to show him around, and then asks him, as a supposedly surprise question, what he thinks of Remifentanil.   The anaesthetist replies that it is, in his view, a useful addition to the anaesthetic armoury, especially for people with pre-existing kidney function problems.

Cameron thanks the anaesthetist and moves on. Half an hour later, he hold a press conference, at which he announces that he wants to see Remifentanil used as the anaesthetic drug of choice in future.

Anaesthetists up and down the country are bemused by the new announcement, but Cameron’s PM and he’s given the order. The use of Remifentanil is rolled out across the country, and within a year there’s a surge in people reporting severe post-operative pain because of inadequate pain relief, since other points in the prescribing chain have not caught up with the short-acting nature of Remifentanil.

There is uproar about how badly people are being treated in surgical wards.  Cameron calls for an inquiry into what’s gone on, and says heads will roll…….

It may not be quite as dramatic but this is essentially the disgraceful, disrespectful behaviour Cameron engaged in this morning towards nurses, when he instructed that ‘hourly rounds’ should be introduced to wards. 

Of course, had he made such an announcement about Remifentanil, he’d have been laughed out of town by the medical establishment.   The point is that, because it’s the nursing profession he’ll ordering around, he thinks he can get away with precisely this level of disrespect.

Let’s just be clear about where we stand with ‘nursing rounds’. 

This recent research overview is helpful [subscriber only, but just put “Intentional rounding: its role in supporting essential care” into Google”:

The idea of systematically rounding to ensure patients’ essential care needs are met is not new.

For many years, nurses carried out “back” rounds, where particular attention was paid to patients’ skin to avoid skin breakdown. While aspects of these were evidence based, anecdotally staff believed patients felt more comfortable after the round and it provided an opportunity to build relationships between nurses and patients.

With the advent of the holistic nursing care approach and the requirement for more technical skills, nurses began to move farther away from the bedside and began to view such task-oriented processes as archaic, preferring to focus on the provision of “individualised” care.

However, concerns about essential nursing care have refocused attention on the need to ensure fundamental aspects of care are delivered reliably, alongside individualised care.

The research overview provides a positive case for a return to “rounds”, with a particular focus on the certainty and confidence that they bring to patients. 

Even so, the authors acknowledge that there are potential downsides to the reintroduction of ’round’ routines. There is not room here to cover the risks and unintended consequences in detail, but they include the obvious risk that rounding routines soon develop their own bureaucratic logic, such that patient individuality become ignored, and those patients who need to develop the independence in daily activities that they need when they go home are discouraged from doing so; the fostering of independence was precisely the reason for adopting new nursing processes in the 1970s and 1980s.  

In general, nursing academics now encouraging a return to old routines are short-sighted in two ways. 

First, they tend to use, as their baseline for the measurement of improved care, standards of personal care which have already dipped signficantly since the 1970s, principally because of lowered staffing levels.  This gives a false positive when it comes to reviewing the effectiveness of the return to rounds.

Second, they are so ‘stuck’ within nursing literature that they fail to use the wider social insights of, say, Implementation Studies, which show very clearly how the routinisation of tasks leads over time to poor quality of service, whatever the initial success of top-down ordered pilot studies.  In the face of continued staff shortages, it is perfectly possible to imagine scenarios where patients are told that they will “have to wait for the round” before they can be removed from their own shit.

The point of this article, however, is not so much that the nursing profession itself may be on a very slippery slope if it returns to old, trusted ways as a short-term solution to inadequate staffing levels borne of political expediency, and that they would be better off politicising the debate (that was the point of this article).

The point is that Cameron and his flunkies have failed to recognise that the debate about the best way for the profession to meet its aspirations to standards is still very much ongoing.  That is, after all, why the nursing rounds that have been introduced have tended to be on a pilot basis – time is needed to see if they stay as effective as their proponents claim they will be.

In making this, off-the-cuff, prime ministerial order to a profession he knows nothing about - introducing on the basis of scanty evidence at best - nursing methods now deeply alien to many highly trained staff (just see the comments to the research overview), Cameron displays deep disrespect to half a million nursing staff.

It is not something he would have done to doctors, that’s for sure.  But then perhaps he thinks nurses should be treated the same way as he treats women in the House of Commons.

Is the National Loan Guarantee Scheme the new Project Merlin?

January 4, 2012 1 comment

On November 29th, in his Autumn statement, Chancellor Osborne announced a credit easing programme to replace the failed Project Merlin:

We are launching our national loan guarantee scheme…….New loans and overdrafts to businesses with a turnover of less than £50 million will be eligible for the scheme, so that it stays focused on smaller companies. We expect that it will lead to reductions of 1 percentage point in the rate of interest being charged to these companies so a business facing a 7% interest rate to get a £5 million loan could instead see its rate reduced to 6% and its interest costs fall by up to £50,000 (my emphasis).

On 6th December, HM Treasury published some initial details on how the National Loan Guarantee Scheme will work.  These include:

In many cases the scheme will lead to a reduction in the cost of business loans of up to 1 percentage point.

So 0.75%? 0.5%?

That looks a lot like rowing backwards to me, following discussions with the banks on how the scheme is going to be implemented.

As with Project Merlin, the devil will be in the detail, but the initial signs are not good. Watch this space. 

 

 

Categories: Terrible Tories

Christmas message from Bickerrecord

December 24, 2011 Leave a comment

2011, dear reader, was a really shite year. The right won, and life is worse for billions of people around the world.

In 2012, the organised labour movement will, I predict, make a partial comeback, in Britain and elsewhere, and the foundations for a fuller challenge will be laid, not least through productive engagement with newer social movements.  Though Cowards Flinch will help.  A bit. 

End of message. Now go to the pub, if it’s not closed down.

Why has Osborne uprated benefits by 5.2%?

November 29, 2011 3 comments

At first sight, the most surprising statement of Osborne’s Autumn mini-budget is this:

I also want to protect those who are not able to work because of their disabilities and those who, through no fault of their own, have lost jobs and are trying to find work, so I can confirm that we will uprate working-age benefits in line with September’s consumer prices index inflation number of 5.2%.

Why would the government be so keen to protect those on benefit when they are content to batter the ‘squeezed middle’ by freezing most elements of Working Tax Credit?

I think the answer may lie on the Tory backbenchers. Here’s Harriet Baldwin MP.

The economics of being on benefits varies across the UK. With median weekly earnings of £432 in Jarrow and median earnings of £733 in Chelsea, the benefits of working relative to one national rate of benefit is much clearer in Chelsea. Localising Universal Credit to a labour market’s median average wage could be a sensible next step.

But Baldwin is just the messenger, and is behind the times anyway.

As I set out in some detail here, the recent coming into law of the Localism Act now provides the perfect platform for the localisation of benefit rates and eligibility.  By localisation, I mean driving down.  This is something the right of the Tory party has been committed to since at least 2009, when the leader of Kent County Council was canvassing support in eight regions on England.  Patrick Wintour said at the time:

Similar proposals to take responsibility for setting benefit rates from the Department for Work and Pensions have been made by Essex County Council….. In a paper tabled this week, the council proposed that councils be given powers to set eligibility criteria and payment rates for all working-age benefits within the county, including income support, jobseeker’s allowance and employment support allowance.”

I have no proof of what’s afoot yet, but there’s plenty of circumstantial evidence that Tory councils are planning to drive down benefit rates and restrict eligibility just as soon as they can.

I suspect this is all part of a Tory-wide plot to create further destitution, while enabling Osborne and co to distance themselves from the scene of the crime.

Be wary.  Local benefit cuts could be hitting your area sometime very soon, whatever Osborne says about “protecting” people.  I suspect he can afford to play the compassionate Conservative today  because he knows the savage cuts are due to come from elsewhere in his party.

“Farage Fever” – a Labour opportunity in disguise?

November 28, 2011 12 comments

The Tories have always had Labour on the argument about the EU.

Knowing which side of the fence a good majority of Tories sit on, regarding the European Union, they are able to draw political capital both from crises within the eurozone, but also look like the fighting party on getting a referendum put to parliament (and because the majority of the British public want a referendum and support leaving the European Union this doesn’t play havoc with the Tories one bit).

According to YouGov polls in October (pdf), if there were to be a referendum the next day 71% of those who voted Conservative in 2010 would have voted for the United Kingdom to leave the EU (compared with 41% in Labour). Further, 69% of those who intend to vote Conservative in the next election would vote the same (compared to 39% Labour).

There is a lot resting on the Tories to provide the right line on Europe to those who intend to vote for it next time – but this will come after a European election in 2014 where, let’s be honest, Ukip are going to do quite well.

This has sent Farage’s babes round the twist with excitement. One such member, Michael Heaver, wrote during one blog post:

According to the latest YouGov poll, some 11 percent of 2010 Tory voters now intend to switch to UKIP. And that’s only since last year. A smattering of highly credible 2010 Tory candidates such as Janice Atkinson-Small and Andrew Charalambous have switched sides as has Lord Hesketh, former Tory Treasurer and perhaps the biggest defection to UKIP in the young Party’s history.

For people like him, 2015 is set to be marked by “Farage Fever” – that is where the Liberal Democrats and their 7% polling “boom” will seem timid in comparison.

Yesterday, I was reading through Jon Worth’s article on LabourList, where he praised his Ukip interlocuteurs for, basically, not being mad and actually bringing some good information to the fore. This got me thinking.

Ukip are able to have a go at the Tories because they look lightweight on Europe and left-leaning in comparison with the political make-up of the general public as gleaned from polls. To Labour, the Tories will always be right wing, but more so because of their fiscal conservative rhetoric. So, Labour have the opportunity to do the unthinkable: split the right by saying something like “Ukip are wrong, but they look even more reasonable than the Tories these days” – or something to that effect.

Expect more backhanded complements to the Ukip now that they are actually a threat the Conservative party, but remember that they are at best unreconstructed Thatcherites (i.e. blind to the causes of today’s crises).

The Tories’ two political bailouts

November 28, 2011 Leave a comment

The government has announced two schemes in the last 72 hours.

First, 16 Work Programme providers who were failing to meet their targets have been offered a lifeline in the form of the employment subsidy element of the Youth Contract. 

The providers will now be able to claim payment under their current contract if they have any involvement in a young person taking up one of the 160,000 six month posts.  The current payment schedule is up to £3,800 per job outcome.  In effect, the providers are being offered the same money for less work, because these subsidised posts mean employers will have an incentive to take people on.

Second, the government is to underwrite up to £20bn in bank loans to businesses.  This is being done because the banks have been failing in their primary purpose, with loans to businesses falling through the year. 

This move by Osborne – necessarily an admission that banks are not lending enough to small businesses - comes just three weeks after Cameron incorrectly boasted in the Commons that lending to small businesses was increasing and that everything was fine.  I hope Ed Balls/Chuka Ummuna will make that point this week.

Both new schemes have a common thread.

They are political bailouts, with taxpayer money used to subsidise growth and labour market strategies which have clearly not delivered to date, but which are deemed politically too big to fail.

Categories: Terrible Tories

Why did the BBC lie about Clegg’s Youth Contract?

November 26, 2011 3 comments

I was listening Radio 5 last night (Friday), to see how Sunny Hundal was getting on with a phone-in debate about the pension strikes, and heard the 11.30pm news bulletin.  As a result, I have written this letter of complaint to the BBC.

Dear Sir/Madam

I write to complain about your Radio 5 news bulletin broadcast at 11.30pm on Friday 25th November, during the Stephen Nolan show, in which the newsreader said the following (from 1hr 34mins 06 secs):

Employers are to be offered subsidies worth a billion pounds over three years to take on more 18 to 24 year olds. Companies will be paid more than 2,000 pounds every time they take on someone new.

This is a false statement.

Earlier on Friday 25th November the Department of Work and Pensions had issued  a press release setting out five elements to the Youth Contract, with a total budget of £1bn.  The five elements are:

1) “160,000 job subsidies available worth up to £2,275 each for businesses who take on an 18-24 year-old from the Work Programme”;

2) “An extra 250,000 Work Experience places over the next three years”;

3) “At least 20,000 extra incentive payments worth £1500 each for employers to take on young people as apprentices”;

4) “Extra support through Jobcentre Plus in the form of weekly, rather than fortnightly, signing-on meetings, more time to talk to an adviser and a National Careers Service interview”.  The cost for this is identifed as £50m in the press release notes;

5)  A ”new £150m programme to provide support to some of our most vulnerable 16-17 year olds NEET (Not in Employment, Education or Training) from 2012.

The DWP press release is misleading, giving no budget for the 250,000 Work Experience places (200, 000 of which are backloaded to 2013/14 and 2014/15).  

However, what is clear is that the current Work Experience programme (No.2) does not involve an employer subsidy (see the DWP employer guidance on Work Experience).  Nor do the Jobcentre support (No.4) the NEET programme (No.5) elements of the programme involve any subsidy.

Thus, the only employer subsidies are for 160,000 jobs under the Work Programme  (No.1) and for the 20,000 apprentice incentives (No. 3), though the latter is not referred to as a subsidy and of course is for people outside the 18-24 age range indicated in your news bulletin. 

The combined budget for these elements is (160,000 x £2,275) + (20,000 x £1,500) =  £394 million

This is just 39.4% of the overall £1bn youth contract budget.  To say therefore that “Employers are to be offered subsidies worth a billion pounds” is simply incorrect.

It is not acceptable for the BBC to mislead the public in this way.  It seems likely that the overall budget of £1bn has been chosen by the government in order to mirror the last government’s £1bn Future Jobs Fund, and in providing false information like this the BBC is showing clear political bias.

I accept that journalists and presenters may occasionally misinterpret press releases in the course of programme commentary and discussion, especially when they are presented with information from government which actively seeks to obfuscate, as in this case.  However, there can surely be no excuse for the delivery of false information in regular news bulletins.   The press release had been available all day, and it is very poor journalism by the BBC not to have reviewed it in sufficient detail as to see what the actual subsidy amounts announced are.

I ask that the BBC now publicly retract the statement it put out in the 11.30pm bulletin, and any other bulletin in which it was broadcast, and make a public apology for misleading the public. 

Further, I ask that the BBC uses its journalistic resources to enquire of the DWP why it did not, in its press release provide a budget figure for its Work Experience placements, and broadcast the DWP response on the Stephen Nolan show.  If the other budget elements of the Youth Contract are accurate, the 250,000 placements, taking up the remainder of the £1bn budget, will cost (£406 million/250,000) £1, 624 each.  This seems very high for an eight week placement, when compared to the £2,275 figure given for each 6 month job subsidy.

Yours faithfully

 

 

Project Merlin: the plots thickens

November 23, 2011 3 comments

As I reported here, Paul Myners, a Labour Lord, is on the case about  the government’s and the Bank of England’s mismanagement of Project Merlin.

On 3rd November he got a reply from Lord Sassoon, Commercial Secretary to the Treasury, to this written question:

To ask Her Majesty’s Government whether data reported in the most recent Bank of England report Trends in Lending have contributed to their assessment of Project Merlin’s performance.

Sassoon gave an entirely evasive response to what is essentially a yes/no question, apparently because he did not want to admit openly that the Bank of England had made absolutely no use of its own readily available data in Trends in Lending, but had relied solely on the five participating banks’ own data.

Myners clearly sensed something was amiss, so followed up with this written question:

To ask Her Majesty’s Government whether bank lending data under Project Merlin, as published by the Bank of England, is collected and produced according to the Bank’s Statistical Code of Practice; and, if not, what are the implications of this for the reliance that can be placed on the data.

On Monday 21st November, Sassoon gave this extraordinary response:

As the Bank of England make clear, the Project Merlin data that it collects are not gathered under the Bank’s Statistical Code of Practice.  However, the Governor stated that the Bank would perform a “light plausibility check” on the data (my italics).

The whole idea that the Bank of England, post-2008, should simply take the banks’ word for it is staggering enough, but that’s not the half of it….

It turns out that the term “light plausibility check” emanates from a letter from Mervyn King himself to Chuka Umunna, then shadow small business minister, and to Chris Leslie, shadow financial secretary to the Treasury.  King’s letter, according to the FT, seems to show that he had major doubts, even at that stage, about Project Merlin, and about the reliability of the data being used to monitor it.

This raises two issues.

First, it raises further doubts about the probity of the Prime Minister, who stated categorically at PMQs on 2nd November that:

the Merlin scheme… is actually seeing an increase in lending to small businesses. 

Either Cameron didn’t know that the Governor of the Bank of England had major doubts about the data being used, or he was content to ignore them. 

Second, if the opposition knew so early that Cameron was effectively lying at PMQs, why have they never raised the matter?  Did Chuka Umunna’s subsequent promotion lead to a loss of transfer or information, or is Labour simply biding its time?

In any event, Paul Myners is not letting up.  Today he asked further written questions of the embattled Sassoon (reply due by 6th December):

To ask Her Majesty’s Government what are the figures for bank lending to small and medium-sized enterprises, after eliminating the simple roll-over of existing credit facilities and netting-off loan repayments by qualifying companies; and what impact those figures demonstrate Project Merlin is having.  

To ask Her Majesty’s Government what action they propose to take in the light of the Bank of England’s Trends in Lending report for October 2011, indicating a continuing decline in business loans, including to small and medium-sized enterprises.   

To ask Her Majesty’s Government why lending reported by banks under Project Merlin differs from that reported by the Bank of England in its Trends in Lending; and whether they will ask the Bank of England to produce a reconciliation.  

The plot thickens, but from Sassoon’s answers to date, and from what we known of Mervyn King’s letter to Labour, it does look increasingly as though the government is trying to blame its skullduggery, and Cameron’s lie to the House, on the Bank of England, but that the Bank of England may be having none of it.

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