The Pin Factory Blog

An article in Monday's Guardian and a subsequent column by Geoffrey Wheatcroft on Tuesday revealed that the BBC " has been using a distant sun-kissed villa as a base for entertaining.....at a cost to date of £90,530". Now to be fair, apparently it has been used to entertain television executives to persuade them to invest in future projects, reducing the net cost to us license-payers of programmes: reportedly £80m a year in investment is secured through such activities.

Whatever the truth behind this specific example though, and regardless of whether the entertaining was justified and represented good value for money, it raises further questions about the role and strategy of the BBC in an increasingly segmented and non-linear media marketplace. The problem is that if it makes popular (and generally populist!) programmes, it is quite rightly argued that these are produced effectively by the commercial sector. If it focuses more on traditional public service broadcasting, with an emphasis on factual, cultural and news programming, then it loses audience share and is attacked for failing to provide the service that most license-fee payers want.

Over the weekend, Ed Vaizey suggested that BBC's youth orientated Radio 1 should be sold off, claiming that it was failing to reach its target 15-24 demographic. This channel's output arguably encapsulates the modern BBC: the daytime programming is fairly mainstream, and is very similar to the output of a multitude of national and local commercial stations, whilst the nighttime shows promote new music and more diverse genres, something generally not offered by most other stations.

What I suggest then is that the mainstream populist output of the BBC (with which I have no problem and often enjoy) should be spun out into a commercial entity, funded by adverts. In the absence of the BBC, I believe that factual, cultural and niche programming would continue to exist on commercial channels, and in fact increase to fill the gap left. Already, broadcasters including ITV and Channel Four provide some excellent factual content. In the unlikely event that there was strong demand for a type of programming that the mainstream media (including an independent commercial BBC) was not providing, then people who wished to have such content would be served by niche channels, made possible by the increasing channel capacity of home TV services and the proliferation of web-based media. The fact is that the dramatic development of technology in the decades since the formation of the Beeb have rendered it an outmoded institution with an uncertain role, bloated by the regressive license fee.

The widespread response to Barclays' announcement of £3 billion profits for the first half of the year has been broadly predictable: dismay about suggestions that bonuses might be offered, frustration that many small businesses still have serious difficulties obtaining credit, and a sort of  retributive anger that bankers, vilified justifiably as a factor in the current recession, seem to be back on their feet whilst many struggle during these hard times.

Yet Barclays' did not request support for the government, even if Robert Peston correctly points out that they may have benefitted to a degree from various governmental guarantees and safety nets. Instead, as the global downturn was really starting to bite last summer, they raised £4.5 billion in a rights issue from overseas investors, predominantly in Qatar, China and Singapore. Strong, independent banks will be a vital element in the economic recovery.

On the charge of not providing enough cheap credit, the banks are caught between a rock and a hard place in being urged by government to keep greater capital reserves and be more cautious with lending, whilst also being told to ensure that businesses can get the funding they need to ride out the recession. Furthermore, the high cost of lending is determined by the interest rate of wholesale lending between financial institutions, rather than merely the theoretical Bank of England base rate. Significantly, it is not retail banking from which Barclays is predominantly getting its current profits: profit from this fell 61% to £268m, whilst the amount of written off credit card borrowing soared 92% to £915m. Instead, it is profits at its investment banking division, Barclays Capital, that roughly doubled to £1.05 billion that was a key factor in their positive figures, helped by a gaining former customers of Lehman Brothers.

However, most importantly, we should be glad that a bank is making a profit. Firstly, it provides another possible indication that the recession may have bottomed out, gives investors greater confidence in financial markets and shows other banks that profitability is possible with the right strategy even in the current situation. Secondly, it is vital for Britain to have large multinationals making large profits, creating employment and wealth and contributing to the economy. The more companies get in profit sooner, the better off we will all be: Barclays' results should be greeted with relief more than cynicism or resentment.

It has become politically impossible for Barclays' to return to the system of bonuses for short-term performance that was de rigeur a couple of years ago, as Chief Executive John Varley put it "The year is not over - there are five months to go. We will make our decisions about variable compensation at the end of the year. When we do so..... we will behave responsibly." Providing the bonus system is designed to moderately reward cautious, long term growth rather than reckless risk taking, we should all be happy that a degree of prosperity is returning to a corner of the services sector, still Britain's economic powerhouse. Incentivising the creation of wealth, providing it is done responsibly, is exactly what we need.

I am delighted to have the opportunity to be able to experience a think tank as prestigious as the Adam Smith Institute for two weeks. I have completed A Levels in History, Maths and English Literature and have an offer from Brasenose College, Oxford to study Philosophy, Politics and Economics next year. Whilst I have not formally studied any of the three disciplines yet,  I have enjoyed reading about British Political History, Constitutional Theory and of course Competition and Free Markets!

I am particularly interested in how free-market theories can be applied practically to facilitate an effective recovery from the current recession, and improve the currently inefficient provision of public services. Something I feel  particularly strongly is that educational reforms under the current government have failed to advance opportunity or decrease inequality sufficiently. Furthermore, there are serious implications to the fact that, regardless of the reality, qualifications are constantly being devalued in the minds of the public and employers. The constant creeping infringement of civil liberties is something that also concerns me. Thankfully ID cards have for the moment been undermined and will not be compulsory, but the advent of  increasingly complex technology means that we must be vigilant about the nature of information stored about us and how it is used.

In my spare time, I enjoy casual games of tennis and golf, and travel whenever possible.

The measures taken by the current government in an attempt to minimise the severity and length of the current downturn are simply unprecedented in scope or scale. Their reach into markets, particularly financial, has many serious implications. For example, the state-sanctioned merger of Lloyds and HBOS created a titan of the consumer finance sector, with 28% of the UK mortgage market and 35% of savings accounts. However, the government ignored this oligopolistic evidence and overruled the concerns of the Office of Fair Trading that this would cause a "substantial lessening of competition", making the argument that the survival of all the major banking institutions was essential to avoid a 1930s style depression.

However, government intervention is now becoming more prevalent across other sectors which are surely not vital to Britain’s economy. For example, Britain lost comparative advantage in mass production of cars many years ago: the presence of plants such as Nissan’s and Honda’s is simply due to existing tax breaks and subsidies. Yet, the Government appears to be unwilling to face up to the harsh new market realities, offering the industry up to £2.3 billion of loans. Widespread governmental intervention, in providing financial assistance and circumventing competition laws, distorts the free market, meaning that we, the consumer, ultimately suffer. It negates our fundamental free-market liberty to decide through our purchasing power which companies thrive and which fail, and which products and services are offered.

Unprecedented state borrowing also creates a more long-term implication for our liberty. This year the government will borrow £175 billion, and national debt will rise to 79% of GDP by 2013-14. This debt ‘time bomb’ led Matthew Elliott of the Taxpayers' Alliance, to say that "This commits taxpayers to a terrifying amount of debt that will burden ordinary families for decades to come." Public service spending will be squeezed hard, but tax rises in both progressive and regressive taxes are inevitable. These diminish our liberties, as they decide how a large proportion of our income will be spent, and therefore leave us less money which is ours to spend as we choose. Therefore, the compulsion to pay for the government’s reckless spending and failure to predict the downturn is particularly unpalatable, and the scale of the inevitable tax rises represents a serious long-term threat to our freedoms as economic agents.

This article is written by James Freeland, winner of The Young Writer on Liberty 2009.

One of the curious implications of the current downturn has been to decrease slightly the prominence of environmental issues on the political agenda and in the media. Nonetheless, Climate Change is still widely seen as humanity’s greatest threat, and further legislation to address this is inevitable. Beneath the hyperbole and hysteria, the scientific consensus that emerges is hardly apocalyptic. Even the Intergovernmental Panel on Climate Change itself predicts a fairly modest 1.8 to 4°C rise in global average temperatures this century. Of course, this is not insignificant, but the action taken in response must be proportional and effective. There is a real risk at the moment that governments use the issue of climate change in a pseudo-Orwellian way as something we need to fight collectively, and therefore use it as an excuse to pass legislation that severely curtails our liberties.

For example, introducing limits on the amount of flying or driving we could do each year are potential future policy responses. Not only would these infringe our rights to lead our everyday lives, but in enforcing measures like these, vast amounts of data on our movements and activities would need to be collected, stored and analysed to assess our ‘carbon footprint’, eroding our right to privacy. Draconian measures such as these are not just undesirable threats to our liberty, they are also impractical and unnecessary. Fossil fuels are finite resources, a fact reflected in their cost. We have already seen that as oil prices rise because of a simple supply-demand relationship, companies and individuals pro-actively seek out alternatives, whether that may be reducing their use of a type of transport or equipment, increasing the efficiency of existing technology or investing in new technology. Furthermore, public recognition of the need to reduce fossil fuel use is a powerful incentive for corporations to do so: many companies already attach great prominence to environmental credentials to help differentiate them from their competitors.

Therefore, a free-market based solution is by far the most effective way of making the transformation from fossil fuels to cleaner, renewable energy sources. We must then remain vigilant against attempts to infringe our liberties under the premise of environmental issues. The really inconvenient truth for governments is that the most effective solution relies on individuals and corporations acting not as a result of compulsion, but in the logical pursuit of their own self-interest.

A very inconvenient truth is written by James Freeland, winner of The Young Writer on Liberty 2009.

Paradoxically, some of the greatest forces for liberty often provide the opportunity for substantial infringements of our rights. Nowhere is this more apparent than in the case of the ubiquitous internet. The ‘web’ is recognised as the most powerful and comprehensive source of information, the most varied source of entertainment and the most versatile means of communication. This year, Wikipedia has over 2.8 million articles; all submitted and edited by the general public. Google has around 30 billion webpages indexed. What is unique about the internet then is the amount of information it makes available, instantaneously and for free. Whilst critics have pointed out that much of the material on the internet is misleading, surely the internet is the ultimate example of John Stuart Mill’s marketplace of ideas: the multiplicity of information ensures that a consensus emerges around what is correct and objective.

However, it is the volume and nature of this data, particularly that generated from communication, that provides the opportunity for our right to privacy to be infringed. Whilst we can exercise our consumer sovereignty to force private companies to take reasonable steps to protect our privacy, we have no choice but to accept the intrusion into our privacy of the ‘dead hand’ of the Government. This crucial difference is exemplified by the fact that Facebook was recently forced to back-down over its new Terms of Service, as many users felt that they did not provide sufficient safeguards for their content, with particular concerns about it being stored indefinitely even after the user had left the service. Meanwhile, the Government is sticking to its draconian plans to store all emails and text messages under the remit of GCHQ, despite widespread public opposition. Ostensibly, the purpose is to help identify and convict terrorists and other criminals, but this dystopian scheme is too great a price to pay. Furthermore, it seems impractical to trawl through the vast amount of data we would collectively generate.

In conclusion, the more governments portray the Internet as a modern-day “Wild West", the more they will seek to regulate and scrutinise our use of it. Whilst I fully accept that some monitoring of specific users to prevent and solve criminal activity is inevitable, any blanket method that gathers user data indiscriminately is a huge infringement of our civil liberties, and one that seems to contravene the principle of “innocent till proven guilty".

The Internet is written by James Freeland, winner of The Young Writer on Liberty 2009.