Scrap renewable targets

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New forms of energy are great. I would love to see the day when electric cars run as powerfully and cheaply as petrol-powered ones. But that is very different from jacking up prices to consumers by imposing ridiculous targets for renewables, especially given the growing uncertainty surrounding mainstream climate change predictions. The only answer is to scrap the renewable targets and to find other, more efficient ways of meeting Britain’s energy needs. That will probably mean better gas-powered plants; it might even mean more nuclear. It certainly shouldn’t mean building thousands of expensive wind farms regardless of cost at a time when firms and families across the country are facing years of austerity.

Allister Heath, 'Green rules pushing up energy prices' CityAM

Private equity and Unite

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Unite, the union, argue that private equity should be much more heavily regulated or controlled by central government.

Clearly, the fact that these companies are ‘secretive’ offends the folks at Unite, who were so keen on lambasting British Airways for allegations about the privacy of its staff. We should do well to remember that privacy and secrecy will be the first things to be lost if the socialists have their way, and I am not only referring to the secrecy of the deals at private equity groups.

Private equity, like that other demonized aspect of international finance, short-selling, is very effective at streamlining companies and keeping them efficient. However, because transactions in private equity or short-selling are complex and some people can make large sums of money doing them well, the same tabloids and unions that don’t understand them kick up a big fuss.

However, there is definitely one aspect that I do think needs reform – the profit-making ability created for private equity firms by the complexity of the tax code, and it’s emphasis on debt. Therefore, I propose a deal to those of a socialist persuasion – help us to campaign for a simplified tax regime, with a £12,000 personal allowance and flat rate of income tax at 22% (or even better, no income tax at all), and we will ensure that private equity firms pay their “fair share”.

Re-Evaluate, Re-Evaluate, Re-Evaluate

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Tony Blair's 1997 election slogan was Education, Education, Education. Cameron's should be Re-Evaluate, Re-Evaluate, Re-Evaluate. There are just too many government programmes that have expanded, and lobbied for their own further expansion, and are now costing us a fortune while producing very little that we really need. The statue book is cluttered with regulations that either haven't worked, can't be understood, or contradict each other. It really is time to re-evaluate every single thing that government does, and whittle out the parts we really don't need all that much.

One expert at that is William D Eggers, Director of Deloitte's Public Leadership Institute. His new book, If we can put a man on the moon, examines 75 major government initiatives across several countries, trying to discover what makes them succeed or fail. Most governments, he concludes, do a really bad job of evaluating and re-evaluating their initiatives. Too often, politicians design things that seem fine to them politically, but which become a bureaucratic nightmare at the implementation stage. A bit of forward planning would save a lot of tears. And there is a tendency for governments to try to do everything themselves, on a grand scale – the NHS IT fiasco is an example – instead of simply buying the skills or IT from the cloud of non-government providers that are out there.

Eggars feels that sunset laws are a good way to force everyone into a re-evaluation of programmes and agencies, provided that those who are doing the sunset re-evaluation are genuinely independent, not involved in the implementation process themselves, and insulated from the blandishments of lobbyists. Making public data genuinely public – posting government cheques online, for example, so that everyone can see what is being spent in their name – is another important step. That, indeed, could bring forward a multitude of people who could show that they were able to provide the same or better service in another way and at lower cost. It's amazing that nobody thought of it before.

Gove's underwhelming revolution

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Yesterday, the Shadow Schools Minister Michael Gove MP fielded questions on the website SchoolGate. I asked Mr. Gove if he would allow his proposed free schools to make a profit, seeing as the policy appears to have changed a number of times. Astonishingly, I was the only person in an hour-long session to ask a question about profit. All I got was a cryptic and unsatisfactory

"Dear Anton, Policy has been the same throughout - money spent on education should stay in education".

He is certainly wrong on one count: policy has changed. Before the last Conservative Party conference he very clearly stated that profit would not be allowed. Then he backtracked after the conference by saying that schools would be allowed to charge a "management fee". This was taken to be a signal that he would allow profit after all. The Conservative draft manifesto does not say anything on the subject, although companies and other for-profits are not mentioned as being able to set up a school under the plans. Following this latest answer, it's even less clear what he intends to do. A yes or no would have sufficed.

However, it now seems that Gove has completely abandoned the prospect of allowing for-profits. Publicly funded free schools will therefore experience disappointing take-up and will be nowhere near as revolutionary as had been hoped. Underwhelming take-up has been the principle criticism of the policy so far, and so the Conservatives would be playing right into their opponents' hands.

A further risk is that the policy will be so slow to take effect that a future government could easily reverse it. In Sweden, the Social Democrats, Labour's ideological brothers, have dropped their policy of abandoning the system due to its obvious effectiveness. In America, the very similar Charter Schools programme is likely to be expanded by the Obama administration. Even without profit-making allowed, the policy is significant in breaking open the government monopoly on state-funded education. But without profit, even this small victory risks being jeopardised.

Unite to destroy an airline, and your job prospects

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altIn the High Court this month, Unite lost their attempt to have British Airway’s change in cabin crew staffing levels declared illegal. Unite argued that the reductions in cabin crew numbers were detrimental to workers’ conditions, in breach of their contracts. However, Sir Christopher Holland held that the negotiations and collective agreements were ‘discursive’ rather than ‘contractual’, so were not ‘apt’ for incorporation. In other words, BA cabin crew did not have a contractual right to the existing staffing levels. Furthermore, BA has the right to make ‘reasonable’ alterations to the conditions of newer staff if they give sufficient notice. BA’s ‘less-than-extreme changes’, in light of their financial situation, ‘cannot be condemned as unreasonable’.

Unsurprisingly, Unite used safety concerns to dramatise their cause. However the levels proposed by BA are well above Federal Aviation Authority recommendations (American guidelines are applicable because the jets being flown are of American design). Furthermore, Unite ‘unwillingly’ agreed in November to work to these standards voluntarily, pending the outcome of February’s litigation. So just how dangerous have the last four months been? Was my safety put at risk when I flew BA in December? Although having an extra trained person on hand will marginally improve safety, Sir Christopher understood that the difference can ‘t justify the cost when the airline is suffering financially.

After the judgment, Len McCluskey, the assistant general secretary at Unite, was adamant that further industrial action was on the table. True to his word, earlier this week, 80.7% of BA cabin crew, on a 78.7% turnout, balloted to strike. This time, there will be no prospect of the High Court declaring it illegal. Of course, being neither a shareholder nor an employee at British Airways, there is hardly any pressure on Mr McCluskey to call off the disastrous action he is forcing on BA – his job and salary at Unite are about as safe as they come.

Unite seem to want to stop BA’s managers from managing the company. Their website “details” proposals they made to heal the financial woes at BA, but the “plans” simply wont save enough money. Moreover, according to Friday’s judgment, a large cause of the breakdown in negotiations has been the infighting within Unite. The cabin crew contingent in Unite’s membership has come from both the TGWU and Amicus, and the divisions that drew the factions apart twenty years ago have engendered ‘mutual rivalry, hostility and mistrust’.

Unite accuses BA of creating a ‘two-tier workforce’, in which new recruits are offered ‘bargain-basement wages’ (known to you and I as ‘10% above market rate’), as well as merit-based, not seniority-based, promotion structures. These are sensible moves being made by management in an effort to manage the company. They are being blocked by a Union that can’t even manage its own affairs.

Defence procurement – A dismal record

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Torpedoes – don’t mention them to MOD Procurement. Like so many other defence projects, the history of torpedo procurement has been an embarrassing litany of massive cost and time overruns.

This sorry record was analysed recently by the incisive Gray Report, which put forward a raft of recommendations for improvement. Indeed, this Report concluded that the average cost overrun for major projects was an astonishing 40%, whilst the average time overrun amounted to a staggering five years. With the next government inevitably seeking cost savings, MOD Procurement will be a prime target, especially since many major projects are currently overrunning.

Within the aircraft purchasing programme, the Typhoon F2 multi-role fighter has been desperately expensive, with future off-take orders likely to be pared back: the F-35 Joint Combat Aircraft (JCA) order book may suffer similarly. The Airbus-derived A400M troop transporter programme is still facing serious financing problems, as has been acknowledged recently by EADS. And the Future Strategic Tanker Aircraft project is also experiencing formidable cost pressures.

Naval procurement programmes have fared little better. The six Type 45 destroyers have faced lengthy delays. The first of the six, HMS Daring – HMS Despairing if you are an MOD accountant – was two years late and £1.5 billion over cost. As for the Army, the £16 billion Future Rapids Effects System (FRES) programme has hardly been free from pronounced cost increases and delays.

The next Government – irrespective of its political hue – needs to get a firm grip on MOD Procurement. Implementing the key recommendations of the Gray Report would be a sensible starting-point. And Ministers need to be ruthlessly focussed when placing large orders, especially those relating to EU-wide defence projects where financial discipline is notably lacking.

Of course, MPs seeking defence-related jobs, ever-changing specifications and technical advances do make matters very complicated. Even so, is this record anything but dismal?

Spending for old age

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The recent furore over the funding and reform of social care for the elderly seems to have abated for now, but the problems persist. Currently, the government only provides free care for those with assets under £23,000, who are also judged to be worthy of care by their local authority. This is grossly unfair - not only does the access to state-funded care vary significantly by area as local authorities will fund anything from those with moderate to critical needs, but those just above the threshold are forced to fund their care entirely, often necessitating the sale of their home, and penalising those who saved for old age.

With such perverse incentives, the already burdensome demand for state-funded social care can only grow as more people opt to spend their wealth and qualify for free care. Replacing an all-or-nothing threshold with a more tapered form of funding may go some way to help.

However, many still believe that social care services would be free based on need alone rather than wealth. Those ignorant of the system may underestimate the extent to which they must save up for old age (or in the case of the perverse incentive, spend for old age!) and consequently suffer. Public information may be justified in this case by making it clear that saving up for private forms of insurance may be necessary. This could further reduce the cost of state-funded care.

Another grave problem is with the quality of care. It varies widely by council, and choice is minimal. Personal budgets, allowing users of state-funded care to choose their providers have been trialled in some areas, but not extended. This is a shame, as they also counter a further problem with the current system: the ambiguity of funding streams.

Local authorities could also counter problems with quality by breaking open the monopoly on state-funded care homes or services. The contracts issued allow providers to exercise a monopoly on state-funded care for the duration of that contract. There could be perpetual competition between social care providers if they were instead paid per person eligible for free social care.