The Pin Factory Blog

James Arbuthnot MP was our guest at a Power Lunch in Westminster this week. He began by pointing out that Britain's defence forces are something of a victim of their own success. With the Soviet threat gone, and the situation improving in Northern Ireland, British governments decided to scale back the forces and enjoy the peace dividend. But they moved a bit too quickly - and now we have other threats for which the armed forces are stretched to deal with.

A lot of the discussion focused on Gordon Brown's new policy - to concentrate on homeland security even (it appears) if this is at the expense of dealing with threats overseas. It appeals to the vote motive: people are instantly alarmed when bombs explode on London buses, or car bombs are driven into Glasgow Airport, but Iraq and Afghanistan are far away ventures for most of the UK population. 

And yet, there is still plenty of inefficiency to be squeezed out of the ministry of defence, and out of defence proocurement – which seems to move slower than the technology it is procuring. Time, really, for a high-level think-tank of leaders from the public sector, the defence contractors, procurement experts and finance to get together and devise a better system that would be faster and less wasteful.

Is water different? That was the theme of OfWat chairman Philip Fletcher CBE at our Power Lunch in Westminster this week. He suggested that while the regulators wanted to see more competition, there was not a lot of scope for it in the water and sewage sector.

I'm not so sure. OK, the pipes are sort-of-natural monopolies: planning, cost, and common sense are all reasons why we don't have three or four set of pipes and drains coming into and out of our homes. But the whole operation of that infrastructure could, I would guess, be contracted out, with considerable savings. Of course, there is little reason for water-monopoly executives to give up parts of their empire (and their pay) to contractors. But they could be pushed into doing it. Or someone could just buy water companies and do it, cutting costs and pocketing a profit - or they could if the sector wasn't so heavily regulated.

There would be even more pressure for competition if Britain's water legislation wasn't so absurdly restrictive. At present, only the very largest customers, like universities, health trusts and big factories can switch to alternative water suppliers. Why not ordinary householders – who can switch their gas, electricity or phone provider but not their water utility. That must change.

Alistair Buchanan, head of the UK's electricity and gas regulator was our Power Lunch guest this week.

Nice man, and he answered all our questions fully and frankly. But I still think he should pull his finger out. When electricity was privatized, it took a while to build up competition. Then for a while, competition was very active. But is it now? I don't think so, and neither did some of our experts round the table.

Too many political issues I guess. Government's desire to be seen to 'do' something - on insulating ourselves from Putin's gas, carbon reduction, more cuddly windfarms, 'sustainability' - has given us an energy market driven by rules, not competition.

Meanwhile, if you really want to make money in this sector, don't try to generate electricity cheaply. Build a wind farm and pocket the subsidies.

I'm in Sweden giving a couple of talks at Timbro, the free-market think-tank here. It's the sort of place I visit very enviously. They have a couple of dozen staff, housed in modern, well-kept offices right in central Stockholm. When I arrived they were cleaning up from a book launch – two massive refrigerators groan with drink, and there's a full kitchen for coffee-making, lunch preparation and so on. Plus a big library, sitting around areas, you name it.

A number of related organizations have rooms on the same floor, like Neo, a political/literary magazine like a sound version of Prospect or a glossy version of The Spectator. And there's a group of former lefties who seem to be running a very robust campaign to remind people what communism was really like behind the iron curtain (and is like now in other parts of the world). And Timbro takes in students on an annual seminar programme, so the place has a young feel to it.

My evening seminar was a talk on Adam Smith to students, so Timbro was handing out copies of my monograph Adam Smith - A Primer. ('Monograph' makes it sound boring, but in fact it's a right rivetting read: all you need to know about Adam Smith in 60 pages.) Timbro has also just translated P J O'Rourke's new book On The Wealth of Nations into Swedish, which is another thing they have to be congratulated on. I don't know how they translated the jokes, and I see they sensibly left some of the puns in English, but I'm glad to see this excellent book made available to Swedish speakers.

In Stockholm, where I have been doing events at Timbro, the excellent local liberal think-tank, lunch with a selection of professors and politicians – including current MPs and former party leaders – was interesting.

In particular, everyone was very interested in the UK experience of privatization. The government here are trying to sell a few companies, but it's proving hard work. I think they are trying to sell the idea on the grounds of efficiency - but that's not something the pubic really relates to. And it's hard to measure even if you're successful: UK companies changed so much after privatization that you're really comparing chalk with cheese when you try to measure their performance. They become just different kinds of company.

Also, the government has a list of companies it wants to privatize. I see the merit of having a programme well thought out, but again, I'm not sure of the wisdom of this. It enables doubters – who invariably include the management an workforce of all the companies on your list – to combine together into a big opposition movement. Better to take on difficult challenges like privatizaiton one at a time.

But in reality there's no need for governments to make such mistakes in privatization, and I left Timbro with lots of links to our website where we have discussed these issues over many years.

Coming home after a successful short trip to Sweden. I'd have brought you a bottle of Glögg, the local Yuletide mulled wine, which is served everywhere outside in December. But of course EU regulation thwarted me.

While the shop at Stockholm's Arlanda airport has a very extensive selection of drinks of all kinds, including about a dozen different varieties of excellent-looking Glögg, I wasn't allowed to buy it. A discreet sign points out that it's only available to people flying outside the EU. Why?

Well, the EU wanted to show how integrated it is, so scrapped the duty-free alcohol and tobacco allowances for 'internal' travellers. So the duty-free shop can sell it to people going to Russia or America, but not to me.
I pointed out that I'd be perfectly happy to pay the tax on it - but no dice. There's obviously some regulation stopping me from doing that, too.

And, of course, you can't take liquids through airport security (because some nutcase once tried to mix explosives in an airplane lavatory and blow himself and all the hated westerners to smithereens) so I couldn't even buy the Glögg outside the airport and bring it through.

So sorry, I can't give you a glass of warming winter Glögg. And they tell us that we're part of the free world.

Friends of the free society need look no further. We have the idea Christmas gift for you and your friends. It's a jazz CD celebrating the right to smoke and drink without puritan officials trying to stop you.

And if you move fast, it's yours FREE!
You Can't Do That! comes from the Boisdale Blue Rhythm Band, containing 18 free society classics such as A Cup of Coffee and a Cigarette (Irby):

When I get up in the morning, 

I'm feeling mighty low

There's just one thing that'll patch me up,

I want you all to know

It happens every morning,

no matter where I'm at

I've got to have a cup of coffee and a cigarette...

Not to mention Smoke Gets in your Eyes (Harbach/Kern), Smoke, Smoke, Smoke that Cigarette (Travis/Williams), Cigareets and Whiskey and Wild, Wild Women (Spencer) and of course a jazz version of Air on the G String (Bach), which was the theme tune of the Hamlet cigar ads.
This hour and ten minutes of pure political incorrectness could be yours. The CD is available here , price £10, from the Boisdale shop.

However, I've sweet-talked Simon Clark of Forest, the Free Society organization, to offer up 50 copies to our UK and European readers free of charge! Log in to this blog tomorrow morning and I'll give you all the details.

Yesterday I told you about You Can't Do That! - a jazz celebration of the right to smoke and drink without officialdom poking its PC nose in, from the Boisdale Blue Rhythm Band.

The eighteen smoke-easy classics are bookended by two new tracks deploring the ban on consensual smoking in public, I'm Going Outside, with musing by BBC Jazz Musician of the Year Alan Barnes, and words by playwright Alan Plater:

I'm going outside, I may be some time

It was good enough for Churchill, but now it’s a crime

The puritans in Whitehall say I’m lower than slime

So I'm going outside and I may be some time 

 

They've issued banning orders to the taprooms and clubs 

You can only have a smoke if you’re in Wormwood Scrubs

The wagging of the fingers and the shaking of heads

Have sent us all a-scurrying to the cycle sheds.

And The Last Smoker has music by Boisdale pianist Simon Wallace and words by the great Fran Landesman:

The last smoker stares hopelessly out in the rain

The last smoker is searching his pockets in vain

The smoke police are closing in, their sniffers never fail

If they detect a whiff of smoke, the culprit goes to jail

 

The new people are clean living god fearing folk

They drink nothing that’s stronger than diet Coke...

It's great fun, and normally costs £10. But I've sweet-talked Simon Clark of Forest, the Free Society organization, to offer up 50 copies to our UK and European readers free of charge! Simon will send a free CD (postage paid) to the first 50 UK and European readers (one CD only per household) who email their full name and address to him at contact@forestonline.org . Simon's only keeping the offer open for 14 days, so move fast!

Barbara Young, Chief Executive of the Environment Agency, was our guest at a Power Lunch in Westminster this week. She's had a difficult few months dealing with the physical and political results of widespread flooding in the UK – two major inundations in just a few months.

By any standard, the floods were unusually bad - maybe a one in a hundred years event. Though the worry is that they might get more frequent due to climate change. But one in a hundred years events do occur (roughly every hundred years or so, in fact) and you can't necessarily say that they herald a change. A hurricane just a few years back devastated New Orleans, and everyone started talking about climate change. But even in the 1960s, forecasters knew that a hurricane of a certain strength and a certain trajectory would do that. There were plenty of hurricanes over the next forty years, but only one got lucky. A sign of climate change? Hardly. And don't forget that a hurricane devastated Galveston a century earlier.

But if things really are changing, we are in a mess. One of the things that made the floods so devastating was that nobody seems able to take charge. The water companies control the pipes and sewers. Local authorities are in charge of logistics. The Environment Agency has other functions. When there is a national emergency, we could use smoother and more co-ordinated systems.

Meanwhile, the 55,000 flooded houses that are being refurbished after the floods are being restored to - their original condition. Why don't the insurers use it as an opportunity to flood-proof them while they're about it? Maybe it's because Barbara Young's government colleagues have regulated them all senseless.

Dr Harry Bush CB, head of economic regulation for the UK aviation industry, was our guest at a Power Lunch in Westminster this week. He spoke to the theme of the impact of the EU on regulatory policy in the UK.

Less than benign, I would say. If we're going to have regulation, then I can see that there are some things done better internationally. It might be better to have a common system of airspace regulation, for example, rather than lots of different countries doing their own, unrelated things. That being said, the 'Single European Sky' policy that has emerged is an over-regulated mess.

The airlines of most European countries started as national 'flag carriers' and public ownership of them is still rife. The whole sector, airports and all, has long been regarded as something that governments should own and run, or at least take charge of. The idea that airlines and airports can run in competition – or even that air traffic control might be contracted-out to competitive providers – or that regulation should be independent of government – ruffles no feathers in the UK any more, but is still thought to be pretty nutty in the corridors of the Berlaymont.

The Treaty of Rome is a surprisingly pro-competitive document, though its execution has largely been the opposite. For some years, with the Irish commissioner Charlie McCreevy in charge of competition, though, even the UK government has been forced to bring competition into its public industries, like mail delivery, so let's be thankful to that. But in sectors like aviation, where governments have been deeply involved for years – and, with terrorism, the climate change agenda and immigration, there are more calls for them to get even more deeply involved – I think the UK could end up with less competition, rather than more.