Sunday, October 28, 2012

ConHome wants Lynton Crosby – will Dave resist?

Peter Oborne's delicious dismissal of the Tory Right Wing's clamour for the employment of the Voldemort-like Lynton Crosby by the Tories actually hides a different and important Agenda.

There is a case to be made for Dave. On the evidence so far (half term report) he's a decent enough cove - highly articulate and probably, deep down, the first Tory leader who is not a complete shit since Heath. Well maybe MacMillan. Or Disraeli. Anyway whatever we may think of Cameron the opposition don't like him. The opposition is not the Labour Party but the Conservative Party at its roots. That is the Lord Ashcroft financed ConHome and its fellow travellers.

Peter Oborne seems not to like ConHome - and who can blame him? They have occupied the media ground of the Party. It's not difficult to do - providing you have funds. And the tax-avoiding Ashcroft has that in spades. So Conservative thought is being driven not by those who battle with the daily realities of governing but by those who are removed from power - but would like to find a way of capturing it.
Some on the Left believe the Coalition government is strongly ideologically of the Right. I would dispute this - many of the initiatives they have taken could well have been introduced by Labour. The ConHome mob would agree with me and then say that the next Tory election manifesto should be a restatement of Conservative values - untainted by the pink dye that the LibDems bring to the Coalition. If Cameron does appoint Crosby this will be a sign that he's fallen for this. I doubt that he'll do it because he will see that it would be electoral suicide to follow the ConHome line. We shall see!

Monday, October 22, 2012

Back to the Future at the “West London Free School”


Compulsory Latin, suspension for a skinhead haircut and prizes for coming first! It's not Eton or Harrow, but it may just be the strictest state school in Britain

In an article in the Daily Mail under the above headline Jonathan Petre describes his visit to the “West London Free School” (WLFS) – one of the jewels in the crown of the Coalition Government’s education policy led by Education Minister Michael Gove.




For me the values of this school, and the assumptions which lie behind them, are truly appalling. The WLFS seems to be taking Education back 50 years to the 1950s . The idea of compulsory Latin is absurd but instructive because it reveals the attitudes and mind-set of those conducting this offensive social experiment. It is almost as if the modernisation of education that has occurred since I was a child in the 1950s had never happened.

We have always had an extraordinary diversity of educational standards and practices in Britain. The Independent sector, affordable for less than 7% of parents, generally provides exceptional education – as it should given that it can cream off some of the best teachers by offering higher salaries and far better facilities and working conditions. Then there is the plethora of Faith School which overtly and deliberately confuse the inculcation of religious practices and norms with education. Many of these Faith schools are State funded. Then we have the grey area of Schools which are not logical members of the majority State norm – the Comprehensive schools – but are nevertheless in the State system. New Labour’s Academies and the Coalition’s similar Free Schools fall into this category.

What this diversity and inconsistency means is that parents can either pay for their children’s education if they can afford to, or play the Postcode game – trying to get themselves resident in an area which has the better State Schools, including, if that is how they perceive them, the Academies and the Free Schools. There is absolutely no equality of opportunity (a foundation of any civilised society) in this. A child's education depends on the wealth of their parents and/or their skill in finessing things so that they are in the right place at the right time! The poor parent who is ill-equipped to play the game and may not even see the value of education in the first place will have ill-educated children going to poor schools – the “bog standard comprehensives” as Alastair Campbell once infamously called them.

The WLFS seems to ape the traditions of the Grammar Schools of the Post War era – and remember that these schools themselves were to some extent imitations of the style of the elite “Public Schools”. The uniforms, the discipline, the compulsory Latin remind me of my days at Dulwich College in the 1950s. Frankly this school nearly broke me mainly because of the elements of school life there which the WLFS is incorporating into its their daily routines. That some pupils will respond positively in these conditions I don't doubt – but that does not make it right. That some will fail because they find the discipline too strong, the uniforms a parody of Tom Brown’s Schooldays, the compulsory teaching of a dead language indefensible seems likely as well. Hopefully these children will leave and find a more congenial environment – as I did when I slunk away from Dulwich at the age of 12!

That Latin can be an option on the curriculum is fair enough in any school that has the competence to teach it. That it should be compulsory is grotesque. Indeed it is arguable that only the obvious core subjects which inculcate essential life skills should be compulsory. Latin is not one of these.

The discipline of the School and the conformity required by its silly uniforms  creates a sub culture that is not matched in modern Society. It resembles a religiously bigoted institution where imposed behavioural standards are unlike anything in the real world and as a result create school leavers utterly unprepared for the challenges of early adulthood. It is a shameful and indulgent experiment

Friday, October 19, 2012

Caroline Flint and Labour are far too timid in their “solution” for theproblem of Gas prices

Participating on “Newsnight” in a discussion on the subject of Energy prices Labour's Shadow Minister (no less) Caroline Flint said that what the Gas and electricity industries need, in the consumer interest, is more competition. This revealed a staggering lack of knowledge of how the Energy sector works and represents not just a curious ideological position for a Labour politician to take but a wholly erroneous confidence in free markets - in this area at least.
Energy is one of the commodities that we all need and use - and by all I mean not just individuals and families as consumers but industry, commerce and the public and private sectors generally and universally. Our transport sector relies on electricity for motive power (most if not all trains). We heat our homes, our factories, our hospitals etc. mostly with Gas. Virtually everything we do relies on Gas, or Electricity - or both. To say that Energy policy, and especially the provision of affordable and sufficient supplies of Gas and Electricity across the Nation, is crucial to our well-being should not really need saying. It is a statement if the obvious.
So if Energy at a Macro level is one of the key areas of Britain's resource management what does this mean for public policy making? Strategically it is Government's responsibility to assure our Energy future - and to do this in the national interest economically, environmentally, socially and reliably for the long term. This sounds complicated and highly political! It is certainly the latter - especially after the privatisation of the Gas and Electricity (generation and distribution) industries which began in the 1980s under Margaret Thatcher's Governments. But, I would argue, it need not be as complicated as some try to make it.image
In this Blog let's take a look at Gas – broadly speaking the ground rules and modus operandi for Electricity are the same.
Natural Gas, which replaced manufactured (Town) Gas in the 1960s, is a finite resource produced from reservoirs underground in the world's hydrocarbon rich areas - including under the North Sea. It can be converted into some other useful commodities - but its principal value is as a primary energy resource in industry and the home (etc.) and as a fuel for many Power Stations where it is converted into Electricity. We are very substantially a Gas economy - a status that was achieved by constructing an extensive Gas distribution network over the past fifty years or so. There are few homes, except in the more remote rural areas, where Gas is not used for heating and cooking. The Gas infrastructure extends both to its transport and its consumption. Dedicated pipelines carry the Gas around the country to points of consumption - and these points of consumption are, with a few exceptions, wholly reliant on having continuous availability of Gas because there is no real alternative.
By definition there is not, and cannot ever realistically be, competitive physical distribution of Gas. There will only ever be one Gas network so any seller of Gas to end consumers has to use this network. As far as supply into the network is concerned there is a multitude of sources as Gas has, for years, been an internationally traded and distributed commodity. The principal source is the offshore production in the North Sea where, mainly in the British and Norwegian sectors, Gas is produced for UK consumption. The transfer prices at which the "upstream" producers of Gas (like Shell or BG) sell their product to the marketers is broadly based on European traded Gas prices. These prices will vary a little but in the main they are linked to Crude Oil prices. So if Oil prices rise or fall Gas prices move broadly in line – albeit with a time lag in some cases. As well as indigenous Gas production (augmented in time by shale Gas and other local resources) the UK needs to import Gas to cover the gap between local demand and local supply. Gas comes via pipeline from Europe and via ship as LNG (Liquefied National Gas). But whatever the source it all (or most of it) goes into the Gas distribution networks having been processed in privately operated plants to ensure that it meets the UK specification. The Gas distribution network is divided into sub networks, of which there are eight, each of which is owned and operated by a private company: National Grid, Northern Gas Networks, Scotia Gas Networks and Wales & West Utilities - each with a geographical monopoly.
This broad description of Gas supply shows not only that it is a strategic product whose price is subject to international factors of supply and demand but also that there is little significant scope for competition. Trading deals will be done on the margin and whilst the quantities involved are so large that a minor unit saving can be meaningful at a high level the differences at a consumer level will be negligible. Indeed there is a disconnect between price changes on the margin in the acquisition of Gas and changes in consumer prices. Consumer prices, over time, will track internationally traded Gas prices but the price that we pay in our homes is subject to other factors as well. The Gas marketing companies – British Gas (part of Centrica), Eon, EDF, Npower and the rest are primarily Gas retailers acquiring their product at wholesale prices from producers and selling it to end consumers. Their business plans are predicated on receiving income streams which cover their acquisition costs, their marketing expenses, and their operational costs – what they pay the network owners for distribution of Gas to homes (etc.) for example. There is little scope for cost differentiation and as a consequence there is little scope for consumer price differentiation. That is not to say that prices don’t vary because in a competitive market suppliers will always seek to increase their market share and aggressive tactical pricing is a tool that they all commonly use. But the key word here is “tactical” – none of the suppliers has a cost advantage that enables them over time to be more price competitive. Their product costs, distribution costs, marketing costs and other costs are likely, over time, to be broadly the same. As will the fact that as private entities they must seek to provide similar financial returns to their owners/shareholders (dividend payments).
There is no underlying cost advantage that any of the Gas marketers has which makes them a preferable long term supplier for price reasons. For the consumer who gets a kick out of shopping around (and enjoys using the price comparison websites!) there may be some merit in frequently switching suppliers to take advantage of their tactical pricing offers. But over time the customers who stick to one supplier are unlikely to be significantly disadvantaged compared with the serial supplier switcher. And the idea that the consumer could benefit from the introduction of more players into the market is highly improbable. image
All this brings us to one inescapable conclusion and that is that in a commodity sector like Gas or Electricity with structural reasons in place which offer little or no scope for achieving significant cost savings competition will always be either a chimera or will be restricted to very short term special offer type tactics which cannot endure for long. What would surely be in the consumer benefit would be to eliminate marketing costs completely as they are expenses incurred solely in the task of encouraging brand switching. Similarly there is no merit in the duplication of offices and administration that having a plethora of suppliers brings with it. Similarly why should a national asset like the monopoly gas distribution network be a generator of private sector profits? So what Labour should be arguing for is the renationalisation of Gas distribution and supply into one publicly owned monopoly – a “National Gas Service” (NGS) if you like. The NGS would be targeted with managing the long term provision of Gas to all UK consumers using its massive purchasing power to source Gas on world markets at the most competitive prices. Using its network efficiencies to drive down distribution costs. Using its economies of scale to eliminate unnecessary costs such as marketing. Using its generated margins solely to reinvest in the Gas industry rather than having them creamed off in dividend payments. The end result of such a revolution would be transparent pricing, security of supply and the good feeling that what is already largely a National asset (the distribution network) became much more explicitly so.
Paddy Briggs
October 2012