Why we don't believe a word of most pressure group reports

The Food Foundation tells us that so many more families have been plunged into food poverty that we just really must institute free school meals for all on universal credit. State canteens must be lashing out the hash to make up for this dreadful failure of markets and capitalism.

Except, well, it’s tosh, not nosh, under discussion here. As The Guardian tells us:

The number of UK children in food poverty has nearly doubled in the last year to almost 4 million, new data shows, ramping up pressure on ministers to expand the provision of free school meals to struggling families.

According to the Food Foundation thinktank, one in five (22%) of households reported skipping meals, going hungry or not eating for a whole day in January, up from 12% at the equivalent point in 2022.

Except that’s nonsense. That’s not even what The Guardian’s own chart shows, nor what the report says.

What is actually said is that 21.6% are reporting overall food insecurity (note, not skipping meals, going hungry or not eating for a whole day), which is made up of 14.9% relied on low-cost food, 10.5% did not have balanced meals, 3.4% did not have enough to eat and 2.6% skipped meals (some reported more than one).

That 3.4% did not have enough to eat, or 2.6% skipped meals may well be something we’d like to try and do something about. A few more donations to food banks might be that thing of course.

But try this as logic. Food prices go up, people substitute to cheaper food, this is the justification for school meals? Really? A household moves from filet to rump steak and this means more school meals? Switching out the extra-virgin for rape seed oil means taxes must rise? Moving from branded premium to supermarket own brand is a failure of the welfare state?

That is the logic they’re using there. That’s their evidence and they’re sticking to it too.

We agree that we’re being horrible here, why this is almost amounting to mansplaining. But this is a good example of why we don’t believe near anything stemming from pressure group reports.

Seriously, the claim here is that a household moving from organic milk to regular silvertop means that all must have free school meals. The correct reaction here is peals of scornful laughter, isn’t it? That or the Carthaginian Solution.

The case against stealth taxes

The term "stealth tax" generally refers to a tax increase that is not announced or made clear to the public. It can also refer to a tax increase that is disguised or hidden in some way.

The most common one is imposed by failing to move thresholds in line with inflation, so more people are sucked into higher tax brackets, even if they’re no better off. But taxes on such things as air flights and insurance raise prices without people necessarily realizing that government is responsible for the increases.

The UK Treasury team likes them because they conceal the true amount of taxes that people pay. They think that if people realized how much tax they are paying, they would scream blue murder. They might be correct to think so, and this might be no bad thing.

There are several reasons why UK stealth taxes fall into the category of bad things.

Lack of transparency: Stealth taxes involve a lack of transparency in government policy. Taxpayers have a right to know how their money is being spent and what taxes they are paying. When taxes are increased without public knowledge or debate, it is neither fair nor democratic.

Burden on taxpayers: Stealth taxes can add to the burden on taxpayers, particularly those on low incomes.

Unpredictability: Stealth taxes can make it difficult for businesses and individuals to plan for the future. If taxes are increased without warning, it can disrupt budgets and investment plans, potentially harming economic growth and stability.

Lack of accountability: Stealth taxes can be used by governments to avoid taking responsibility for unpopular tax increases. By hiding tax increases or making them difficult to understand, governments can avoid public scrutiny and criticism.

Overall, stealth taxes can erode trust in government and undermine the fairness and transparency of the tax system. While some taxes are needed to address national needs, it is important that they are implemented in a transparent and accountable way.

There is a case for setting out two prices for items, the one it would have been without the taxes, and then the one you have to pay once the tax is included. There does not even need to be a law about this because businesses could start doing this voluntarily, egged on, perhaps, by a pressure group dedicated to bringing this about. The Treasury would scream blue murder, but it would act as a restraint on their rapacity.

The Royal Society's report on aviation fuels

The Guardian says:

Scientists pour cold water on UK aviation’s net zero ambitions

Well, no, not really.

Country would need to devote half its farmland or more than double its renewable electricity supply, says study

Also not wholly true.

The UK would have to devote half its farmland or more than double its total renewable electricity supply to make enough aviation fuel to meet its ambitions for “jet zero”, or net zero flying, scientists have said.

A report published on Tuesday by the Royal Society argues there is no single, clear, sustainable alternative to jet fuel that could support the current level of flying.

This appears to be an adaptation of Arthur C Clarke’s dictum:

If an elderly but distinguished scientist says that something is possible, he is almost certainly right; but if he says that it is impossible, he is very probably wrong.

The adaptation being “If a Guardian article offers an interpretation of a scientific report then The Guardian is wrong.”

For the report itself is markedly more equivocal. It makes the same point we have made several times. If we’ve got cheap hydrogen from renewables then reformulation up to jet fuel via Fischer Tropsch works. The only limitations would be that greater renewables generation and some modification in price.

Once we lift the requirement that Britain must produce the electricity to make the jet fuel - we could, say, import the jet fuel from places where they have more or cheaper renewable electricity, as we do already import jet fuel - then it becomes just a matter of how much the price must be higher to pay for it all. Which will, of course, then flow through into how much less jet travel we have because of the higher price of jet fuel.

As the report says, jet fuel is currently around the $1.10 per litre level. Other sources say around $1.40. Porsche says they can make petrol (not too dissimilar from jet fuel) at $2 a litre. So, the problem’s solved.

Note what the Royal Society report actually says. If, then. If cheap green hydrogen then jet fuel at possibly a slightly higher cost than today. At which point the current infrastructure of flying at that slightly greater cost.

Which, by siting the jet fuel plants in places with lots of cheap renewable power (say, windmills in the Roaring Forties) we can have.

That is, far from the Royal Society saying that this is not possible the report indicates exactly the opposite. If, if, then she’ll be fine.

Which leaves only one part of our reformulation of Clarke’s adage to consider. Are we sure that we want to compare the Guardian to a scientist of any type, let alone a distinguished one?

Quick, quick, we need another recession to reduce poverty!

Get the government onto it, stat!

The Joseph Rowntree Foundation tells us of just horrible poverty in the UK. Except, of course, what they are talking about is not poverty at all. It’s inequality.

Now, yes, inequality is something to at least think about, Adam Smith and his linen shirt and all that (not being able to afford a linen shirt does not make you poor. Except, if you live in a society where not being able to afford a linen shirt is regarded as a mark of poverty then in that society if you are linen-shirtless then you are poor in that society). But that is inequality within that society, not poverty in the sense of the absolute poverty still out there in other parts of the world, that $1.90 a day stuff still suffered by some 700 million people.

The distinction is right there in the JRF report:

It might sound very surprising that measured levels of poverty fell in the first year of the pandemic. This is likely due to changes to overall incomes, policy choices and how the pandemic affected population groups differently. A falling average income caused the relative poverty line to drop.

Poverty, in the definition used, is being at less than 60% of median income suitably adjusted for household size, housing costs and so on. If median income drops but low end incomes don’t - given that low end incomes are largely benefits they don’t - then poverty, by this definition, drops in a recession.

We’re all poorer but poverty falls. This isn’t a good way to measure poverty, is it? Because the simplest and most obvious way of reducing poverty by this measure is to have a good and hard recession. Which is, as a policy recommendation, positively insane.

Despite observation of Whitehall and Westminster over the decades we are really still quite sure that positive insanity is not a useful basis for policy. Even if it has been that basis, it’s not useful. Therefore we need to stop using this measure of poverty, don’t we?

Time to rethink a corporation tax increase?

Barring a last-minute change of heart, UK Corporation Tax will rise to 25% on April 1st. Some people think this tax is paid by ‘business,’ but this is not true. At the end of every tax is a purse or wallet of the person who pays it. A business is not a person, and has no purse or wallet. It passes on taxes that are levied upon it.

 UK Corporation Tax is handed over to government by companies, but its incidence is upon their employees, shareholders or customers. The burden of corporation tax affects employees, shareholders and customers in different ways. For example:

Employees: If a company's profits are reduced due to higher corporation tax bills, the company has less money available to invest in employee salaries, bonuses or benefits. Like the misnamed ‘employer contribution’ to National Insurance, it comes out of the wage pool that would otherwise be available for salaries and benefits.

Shareholders: If a company's profits are reduced due to higher corporation tax bills, the company has less money available to pay dividends to shareholders, diminishing their investment returns. Instead of being available for further investment, the money is instead spent by government. It can further hit investors by lowering the value of the company’s shares, and discouraging investment in it.

Customers: If a company's profits are reduced due to higher corporation tax bills, the company may have to increase prices to maintain its margins, which impacts upon the customers who buy its products or services.

Overall, while corporation tax is handed over by the company, its impact is upon its various stakeholders, including employees, shareholders and customers. Estimates of its proportional incidence upon the three groups vary, but many reliable studies suggest that some 60% of Corporation Tax falls upon the employees, with the remaining 40% split between shareholders and customers.

A fourth party impacted by the tax is the nation itself and its wellbeing. The tax discourages firms from investing and expanding in the UK, and encourages others to think in terms of expanding abroad in less onerous tax regimes. Earlier this month, AstraZeneca's chief executive said it wanted to build a new plant in northwest England but "because the tax rate was discouraging" it chose Dublin instead.

If the UK goes ahead with the planned Corporation Tax increase, there will be a talent and investment drain from the UK, alongside a fall in the talent and investment coming in from abroad. Combined with the adverse impact on employees, shareholders and customers, it might be time for a rethink.

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(Note that the graphic at the top is from a 2017 Conservative advert with statistics from HMRC and IFS. Maybe they should revisit it).

The absolutely free, no cost, semiconductor investment plan

Apparently Brits are rather good at the cutting edge of the semiconductor industry. OK. But there are problems in being able to translate that being good into output and actually shipping chips. So, obviously, we need an investment plan to enable all of this to happen. At which point, the absolutely free, no cost, semiconductor investment plan:

Paragraf is the sort of gold dust company that Britain vitally needs if it is to sustain an advanced semiconductor industry, and if it is to avoid getting crushed in the arms race for global chip ascendancy.

A spinoff from the Materials Science Department at Cambridge, Paragraf is the world’s first and only manufacturer of 2D graphene chips for sensors. These chips are one-atom thick. They are a thousand times faster than silicon wafers used today, and they use 10,000 times less energy to do the job.

That all sounds terribly exciting and of course it’ll be putting those chips out into the market that really tests whether they are so terribly exciting. So, what are the problems in rolling out Brit expertise, in Britain?

Paragraf has a plant in Huntingdon. Demand is so intense that it is now searching for a much bigger site with the infrastructure and skills pool for the big league. Speed is of the essence. “Right now I’m afraid we’re going to have to go elsewhere,” said Simon Thomas, the company’s chief executive.

Why’s that then?

Dr Thomas described the British political class as technologically primitive, with scant understanding of how semiconductors underpin the 21st Century economy or what it takes to nurture the ecosystem behind it.

Given that the ruling class all did PPE not anything with even a smattering of even maths, let alone real technology, we can understand that.

It took six months for Paragraf to obtain a work visa for a German specialist, and nine months for an Indian. “You want to cry: these are highly-skilled people. There are never enough visas, and it is expensive for us, and expensive for them. The Government is throttling how quickly we can grow.” he said.

He has had to build an electricity sub-station because the public infrastructure is inadequate. Don’t get him started on the stone-age planning system.

“I am passionate about trying to grow the business in the UK. If we invested in the next generation of graphene, silicon carbide, and diamond technologies, we could own the world market in fifteen years. We have the IP, and nobody else in the world has it. But we can’t expand without the necessary support,” he said.

What isn’t being said is that a plan is required. Nor money even. Most certainly not a plan using government money to enable the PPE classes to direct the industry. What is actually required is better general governance. Or even, as here, less governance. Simply get out of the way and enable people to hire foreigners, build factories and thus enable business to get on with being worldbeating.

Oh, and that substation? That’s because the plan we do have for electricity is heavy on unreliables - just what you don’t need when making chips.

So, that’s the plan. Let’s have less government to enable not just the fructifying in pockets by not having to tax to pay for current levels of it, let’s have less government so that those who know what they’re doing can get on with doing it.

Who knows, maybe Britain’s also good at other things than chip making and we’d see a perking up of other parts of the economy if government just got out of the way? Worth a try, no?

Hail the gloriousness of state investment

There’s an idea floating around out there that the State invests better than private industry does. That bureaucrats - or, if we prefer, elected politicians, those encapsulations of the will of the demos - will do better than capitalists at planning for and creating the vision of the future through such investments. You know the spiel, diverting societal resources from the chasing of fripperies to that of creating real and lasting societal value.

It’s also true that governments can borrow at lower interest rates than anyone other than Warren Buffett (one secret of his success really is that he’s been able to finance his holdings at lower rates than the US Treasury) therefore profits should be higher.

Well, OK, it’s a theory, like all such theories it should be tested against reality. Which has been done by Croydon council:

How scandal-hit Croydon council went bust with £1.6bn debt

Failure after failure is highlighted by a review that suggests police investigate possible misconduct in public office

Oh.

The thing that most struck us was this:

One of the biggest disasters of her tenure was the establishment of a council-funded developer called Brick by Brick, which was supposed to make profits for the authority by building homes on council-owned sites.

Negrini’s regime ploughed £200 million into the company, and Colm Lacey, her director of development, was appointed chief executive, despite having no experience running a commercial developer, let alone one with a £200 million budget.

In London’s suburbia by far the two largest costs in housebuilding are the land itself and the planning permissions. The land they already owned, the planning permission was something they themselves granted. They were also able to borrow at lower than commercial rates given access to Treasury funding. Yet in a rising property market they still managed to lose money on the deal.

How excellent. We’ve tested a theory and found it wanting. Despite the logic of the initial suppositions it doesn’t work. In fact we’ve tested the model to destruction. Reality differs from the prediction therefore this is a line of thought to be abandoned. To misquote Richard Feynman, in battles between theory and reality it is reality that wins.

So, no, using people good at that kissing of babies in order to get elected to perform that necessary and useful task of investing society’s resources doesn’t work. So, let’s not do that then.

This will, of course, be a disappointment to Professor Mazzucato but it’ll make the rest of us richer.

The TUC's gross error about the gender pay gap

It’s possible to wonder why we even bother to have government experts if no one is going to pay the blindest bit of attention to what government experts tell us. At which point the TUC tells us that:

Women work two months for free, reveals TUC analysis

New research reveals a 15% pay gap that widens dramatically after women have children

The more ancient among us might remember that episode between that proof of nominative determinism, Sir Michael Scholar, and Harriet Harman:

The note explains that the figure of 23 per cent quoted in the GEO press release relates to

the median hourly earnings of all employees (full-time and part-time combined)

…

Indeed, it is the Statistics Authority’s view that use of the 23% on its own, without qualification, risks giving a misleading quantification of the gender pay gap.

To translate out of bureaucratic politesse, don’t do that, it’s misleading at best and more accurately could be described as lying with numbers.

So, how has the TUC, this 14 years later, calculated the numbers?

The overall gender pay gap is calculated using all median hourly pay, excluding overtime, for all male and female employees

Therefore they’re wrong - either being misleading or possibly lying with numbers, use whichever according to taste and or opinion. As we’ve noted several times before, everyone’s been told not to do it this way yet still they persist. Why do they wish to mislead in such a manner?

Using the same data source as the TUC it’s possible to correct the numbers as we’re supposed to. The gender pay gap for full timers is more like 6%. Among part timers only it is in favour of women. By age shows a similar difference from the numbers the TUC uses. When compared properly across countries this puts the UK gender pay gap among the lower. The importance of this being that all the usual policies advanced to reduce it further don’t seem to do so. The Scandinavians with generous maternity and paternity leaves have gaps little different and sometimes higher than we do. Those places with substantially lower tend to remove women with children from the workforce altogether for cultural reasons. Sure, we could follow those policies but we think it’s not quite what people mean by either equity or the economic freedom and liberty of women.

There is one qualified ray of light in this.

Joeli Brearley, founder of the campaign group Pregnant Then Screwed, said: “This is a motherhood penalty. Women face maternity discrimination because they are seen as distracted and uncommitted to their jobs when they have children, whereas men actually get paid more after they have children.”

Qualified, of course, but the nub of the truth is there. It’s not that women are seen as, it’s that on average and across all women behaviour changes upon the arrival of children. Men do not “get paid more” when or because they are fathers, male behaviour - on average and across the population - changes upon the arrival of children so that men earn more.

That is, we do not have a gender pay gap in any meaningful sense. We have a parental pay gap. It’s possible to repeat the observed numbers from two simple facts. Mothers earn less than non-mothers, all else equal, fathers earn more than non-fathers equally ceteris paribus. Nothing else is required to explain all of the observed differences in pay across gender (or perhaps these days we should say sex if we’re allowed to assume a binary any more), age and everything else. Parental status.

We’re not sure why anyone thinks this is a surprise in a mammalian, viviparous, species. We see gendered differences to the arrival of offspring all around us. And given that this simplicity is all that is required to explain the observed differences then Occam’s Shaving Kit suggests that this is the explanation we should accept.

We might also observe that the standard human economic unit is the household - because of those decades long child raising processes - and so any economic analysis which tries to evaluate individual incomes without incorporating household formation and the reasons for it is going to be more than a little misleading.

But there’s more than just statistical manipulation to consider here in that policy sense. Assume we are right, as we are. Differences in individual pay across gender are explained, wholly, by different reactions to the arrival of descendants. Given that the Good Society is the one which is the result of the millions of individual choices we are at liberty to take then why would we actually want to change this outcome?

Explanations on a postcard to the TUC.

The Glorious State Planning Of Medical Training

How glorious it is to have the State in charge of a sector of the economy. For only the State can take a long-term view of matters. The private sector would just muddle along without taking those necessary decisions to ensure the achievement of the better society through proper planning:

Medical school places will double and thousands of apprentice doctors will be trained on the job under NHS plans to deal with chronic staff shortages.

An NHS workforce plan due to be published next month warns the health service will be short of more than half a million staff without the biggest boost in training for a generation and radical changes to how it recruits frontline professionals.

As we’ve been pointing out for near a generation now the increased feminisation of the profession has implications. The feminisation is a joy, of course, it’s part of the economic liberation of women, that wondrous event of the past century. But it does have implications, years off to have children, years of part-time working when the ickles are young and so on. Any planning system worth its salt would have increased the number of training places to match that - for any rational planner would have noted that more heads need to be trained when fewer lifetime hours of labour are gained from each head trained.

Medical training in Britain is a state-planned area of the economy. That rise in training did not take place and that’s all we need to know about the efficiency of State planning - it isn’t.

So, let’s not use State planning given the evidence of how well it doesn’t work then.

There is also a more minor point to relish here:

One in eight new doctors will qualify through apprenticeships by the 2030s as the NHS creates a new path into the medical profession for people who do not come through the traditional A level route.

Sensible enough.

A pilot is due to begin soon of training courses that allow nurses, paramedics or others working in the health service to train on the job for five years before taking the same exam as other medical students to become a doctor.

Why not?

The plan envisions thousands of such apprentices qualifying every year in the mid-2030s.

Apprentice nurses will see an even bigger expansion with a quarter of new students qualifying this by under plans to offer a better career path to healthcare assistants and other staff.

Ah, yes, that was the bit we were looking for. For it is only a decade and a bit more back that the decision to insist all nursing training should include a degree was taken. That’s now being walked back upon in favour of the older system of learning by doing.

Why not just go the whole hog and rescind that error of making nursing a graduate entry profession and go back to training nurses as we’re going to be training them anyway, by getting out there and doing nursing?

For we have already proven that State planning isn’t efficient, is capable of error, the most important thing about errors being willing to admit to them as that first step to reversing them.

Fixing UK school education

Not very many people think that the school system in the UK is adequate. Too many leave without the qualifications needed to see them into higher education or good quality jobs. Universities seeking more state school students are having to lower their standards to admit them.

We have Academies, state-funded schools that operate independently of the local authority. They have more freedom over their curriculum, budget, and staffing than traditional state schools. They are often sponsored by businesses, charities, or other organizations, and are required to meet certain performance targets in exchange for their autonomy.

We also have Free Schools that are similar to Academies in that they are publicly funded but operate independently. They are usually set up by parents, teachers, or community groups who want to provide a different type of education to what is currently available in their area.

Then there are Grammar Schools which are state-funded secondary schools that select their students based on academic ability. They are often seen as providing a higher-quality education than other state schools, but there are very few of them left and they account for only 5% of state school pupils.

The majority in secondary schools are in comprehensive schools, some of which are of high quality, but many are in the category described by Alastair Campbell as “bog-standard comprehensive.”

Competition and choice could improve schooling in the UK if we followed the Swedish system for schools, one which is very popular indeed with parents.

In Sweden, parents have the right to choose which school their child attends, including both public and private schools. This is made possible through the Swedish government's school choice system, under which each pupil is allocated a certain amount of funding from the government, which can be used to pay for education at any public or private school of the parents' choosing. This means that schools receive funding based on the number of pupils they have enrolled, rather than the location or district in which they are situated.

Parents can choose any school that is eligible to receive government funding, and are not limited by geographic location or residential address. The only requirement is that the chosen school must be able to provide education in accordance with the Swedish curriculum. The Swedish government also allows private schools to receive government funding, provided that they meet the same curriculum requirement.

Overall, the school choice system in Sweden gives parents a high degree of flexibility and control over their children's education, and has led to a diverse range of educational options being available across the country.

They include for-profit schools, also known as "independent schools," which are privately owned and operated educational institutions that receive government funding. The for-profit schools in Sweden operate as independent institutions that receive government funding, but they must meet the same standards and follow the same regulations as public schools.

The great value in the for-profit schools is that many are owned and run by companies that take their expertise acquired in running a school and transfer it to others in the chain. A Free School in the UK has to go through the procedures and teething troubles one by one, but the Swedish for-profit schools have already experienced them and learned how to deal with them.

The standard of school education in Sweden is very high, and parents whose children attend the private (state-funded) schools report a higher level of satisfaction than do those whose children attend state-run schools. Because free schooling is open to all, with free choice of school, no child is held back from access to high quality education.

There is a good case for the UK to put the ideological divide that has stymied school excellence behind it, and follow the Swedish model of giving parents a wide choice of different types of institution provided that they meet the quality standards required.