Burning our money

Earning Your Pharmacist An Honest Crust

2009-11-21T18:48:00.008Z

May I tick your boxes?

As we may have mentioned before, Tyler is a major league drug user. And not all of them are for recreational purposes: he routinely ingests an amusing cocktail of prescription drugs to keep a lid on his wayward immune system.

So the other day he's visiting his local chemist to pick up the latest crateful, when he's accosted by the pharmacist (see here for previous pharmaceutical encounters). Would Tyler care to enter her consultation room for a quick word?

Consultation room?

"Yes, yes, it's a bit more private in there."

Private? Why private? Is she going to break bad news? Has there been some horrible mix-up? Has Tyler inadvertantly been taking those drugs they use to chemically castrate elephants? No wonder he's been feeling a little lacklustre lately.

"Mr Tyler, we've noticed that you've never had a medicines use review." The keen young pharmacist brandishes the form she's holding. "If I just run though this with you, we can make sure you're getting the right medication."

"But I already have an annual review with my GP, and I'm also under a consultant."

"Ah yes, but they look at you body - we look at your medicines. We can advise you on them."

"Hmm... well, OK."

"Fantastic! Now, these first pills, how do you take them?"

"I... er... swallow them."

"Fantastic!" She ticks a box. "And how often do you take them?"

"Well, once a day, like it says on the instructions."

"Fantastic!" She ticks another box. "And do you have any side effects?"

"No... otherwise I'd have gone back to my consultant."

"Fantastic!" Another box ticked.

I could go on, but you get the idea. By the end of my 3 minutes, she must have ticked a dozen boxes. And what advice did she have for me?

"Well, you seem to be taking all your medicines correctly, and there's nothing I can suggest in terms of lifestyle to help your condition."

So no advice.

Fantastic.

But what was really going on?

The pharmacist was earning herself - or at least her company - £28 from the NHS. Which for 5 minutes work isn't bad (£336 per hour). That's what she gets paid for conducting a Medicines Use Review (MUR) under a scheme set up by the NHS to make sure patients comply - yes, that is the word they use - with the instructions they've been given.

You can sort of understand how the commissars dreamed up the scheme. After all, they spend well over £8bn pa on prescription drugs in England alone, and that bill has doubled in ten years. The last thing they want is for we punters not to be taking them properly.

But is 5 minutes with Sharon ticking boxes in her consultation cupboard really going to help?

Seems unlikely. In fact from what Tyler saw, it looked more like money for old rope.

And what does the whole exercise cost us?

According to the official stats, the number of MURs is soaring. Between 2006-07 and 2007-08 MUR's roughly doubled to over a million. Which at 28 quid a pop comes in at around £30m - a considerable sum in these straightened times. Especially when you remember that pharmacies in England and Wales already earn getting on for £1bn pa from the NHS just for dispensing fees (ie not including the cost of the drugs):

Which is presumably why the commissars have imposed a limit on how many MURs an individual pharmacy can conduct - 400 pa.

But how does that work exactly? Who decides which punters are doing to get MURRED? Sharon told Tyler she could tell immediately he didn't really need a MUR because he wasn't a batty old lady. But she went ahead and did it anyway.

And come to that, isn't the whole shebang open to massive fraud? How can the commissars possibly tell that the MUR has actually taken place? Tyler signed nothing, and Sharon retained the tickbox form.

Oh, guess what - the whole shebang is open to massive fraud. And it turns out there is a massive fraud investigation underway. The NHS's own Counter Fraud Service (oh yes, the NHS needs one of its very own) is on the case, and has already discovered that the payment system was set up by a particularly unworldly four year old:

"Pharmacists declare to NHS Prescription Services how many MURs they have performed during the month when they send their monthly FP10s for processing, and they are paid £28 for each one. They do not submit MUR forms or disclose patient names in support of their declarations, although they do send GPs lists of patients whom they declare have received MURs."

There is no procedure for checking that the claims marry up with what the GPs have been told. Still less is there a procedure for checking whether the MURs have actually taken place. Fraud is almost certainly rife.

Needless to say, the pharmacists are squawking. It seems they don't want to be investigated, and they reckon the case cannot proceed because of "patient confidentiality concerns". So the entire investigation is now on hold while m'learned friend is consulted - no doubt at further considerable taxpayer expense.

Now, just imagine you're a pharmacist. You'd probably be knocking off as many of these £28 "consultations" as you could possibly manage, before the opportunity disappears. You'd also be ticking patient boxes like fury to get some kosher records on file ahead of Inspector Knacker's forthcoming visit.

Let's hope they still have time to make sure Tyler doesn't get any more of those elephant pills.

Project Overruns Getting Worse

2009-11-20T09:29:00.005Z

Gripped by immutable laws

The TaxPayers' Alliance has just updated its analysis of cost overruns on large government projects.

The headline conclusion is that they're getting worse, with an average 38% overrun compared to the 34% identified in 2007. In cash terms the overruns now amount to £19bn, or £750 for every single British household.

The TPA's John O'Connell has waded through the details of 240 projects (well done John), but the top five culprits will be very familiar to BOM readers:

NPfIT - the NHS supercomputer is currently overrunning by £10.4bn (450% of its original budget)
2012 Olympics - £6.9bn overrun (290%)
Astute Class Submarine - £1.3bn (48%)
Type 45 Destroyer - £1.0bn (18%)
Nimrod MRA4 - £0.8bn (28%)

And we might just note that these bald totals - shocking though they are - almost certainly understate the real overruns because of the various tricks routinely deployed by the commissars to limit their blushes.

For example, the 28% programme overrun on Nimrod needs to be adjusted for the fact that we were originally meant to get 21 planes for £2bn - £95m each. But we're now paying £3.6bn for 9 aircraft- £400m each. That's a unit price increase of 321% (see various BOM posts eg here).

[NB - the first version of this post was incorrect, for which many apologies. As commenter Think Defence pointed out, we are no longer getting the 12 aircraft we originally quoted: we are now only getting 9. Which means the unit cost is actually £400m. Thank you Think Defence - we now feel even more depressed].

And as we blogged just last week, the commissars have only been able to restrict their admitted overrun for the 2012 Olympics to £6.9bn, by hiding a further £2.7bn elsewhere. Adding that back in means the overrun is already standing at £8.6bn, or 360%.

It's not all bad news. Many of the projects listed in the TPA report are actually on budget - or at least, they are to the extent we can take the official numbers at face value. But a quick eye-balling of the list suggests they tend to be the small ones (we'll investigate further).

As we've blogged before, experience around the world is that 90% of public projects blow their intial budget.

Why?

It's that old toxic mix of incompetence and salami slicing (ie officials/politicos deliberately understating the initial costs in order to get the go-ahead). Everyone knows it's endemic in public projects, and HM Treasury has even developed a detailed methodology meant to deal with it.

HMT calls it optimism bias. But as this TPA paper underlines, you'd need to be a particularly starry-eyed optimist to believe there's any cure.

Other than dismantling Big Government, that is.

Latest Shopper Triumph

2009-11-19T21:36:00.001Z

Great data... shocking shopping

According to C4 News:

"An NHS trust has hired dozens and possibly hundreds of illegal immigrants through one of its biggest private cleaning contractors.

The company involved is ISS which employs over 40,000 people around the UK through contracts it holds with the NHS and blue chip companies.

The UK Border Agency has uncovered hundreds of fake documents submitted to Kingston Hospital, including security passes, national insurance numbers and passports.

A senior manager of ISS has been arrested on suspicion of skimming money from the illegal immigrants for cleaning and catering staff."

So who's to blame?

Well, according to C4, ISS is in the firing line:

"ISS is being questioned about the status, role and pay of hundreds of its cleaners and catering staff, facing allegations over the issuing of fake passports and national Insurance numbers and facing the possibility of a multi million pound fine."

If those allegations turn out to be true, then ISS must be fired from all its government contracts, and never ever hired again.

But beyond that, this has all the hallmarks of a problem only too familiar to BOM readers - the Simple Shopper.

Our guess is that the Shopper hired ISS to clean Kingston's Hospitals because they looked cheap. And our guess is that once hired, ISS got very little by way of practical day-to-day supervision from the Shopper. In all likelihood, the Trust didn't even want to consider the possibility that its non-English speaking cleaners might be illegal immigrants.

(A quick Google reveals that Kingston Trust has got previous. In 2008 they were suspected of massaging their MRSA data by cutting down on the number of blood tests conducted - don't ask, don't tell.)

The fact is - as we've blogged before - contracting out vital services like hospital cleaning is fraught with difficulty.

Unless the contractors are subject to close supervision - which generally they are not - all kinds of nasties develop. Illegal immigrants are the least of them (see this classic post by the Doc - Joseph Lister and the plastic dog turd).

As we've blogged many times before, when Tyler's Mum was a nurse in a pre-NHS flagship hospital, the ward sister was responsible for keeping the ward clean. Yes, there were cleaners who did the work, but Sister was responsible for the results, and had authority over them.

Which is why hospitals were infused with Dettol rather than MRSA.

And why they weren't cleaned by anonymous illegal immigrants.

PS As for the rest of C4 News this pm, I gathered that Europe's High Representative boonies have now been divvied up amongst a bunch of grey commissars nobody has ever heard of (cf the Soviet Union), our Deputy Prime Minister has been charged with serious motoring offences (including the offence of Gross Hypocrisy in respect of using a mobile whilst driving), and a bunch of sharks are moored in Lyme Bay (as cribbed from this morning's Mail). My friends, we are rapidly heading into the darkness.

Meanwhile, Back In The Real World...

2009-11-19T13:42:00.006Z

Sharks can smell blood from miles out

Following yesterday's shameless expoitation of HM the Queen by the ghastly Gordo, we got the latest fix on government finances back in the real world.

As you will know, yesterday Gord promised to halve the government's deficit while simultaneously pledging to increase spending on such things as care for the elderly. We have no idea how would achieve that, and more to the point, neither has he.

Today we learn that government borrowing in the real world has continued to spiral. It now stands at £87bn in the financial year to date, over 150% higher than the comparable figure last year.

This reflects both the collapse in tax revenues - down around £30bn compared to last year - and a surge in spending - up around £20bn. Indeed, as we pointed out last month, things are now so bad, the cumulative current deficit literally disappeared off the ONS official chart sometime during the summer- it could be anywhere by now:

Despite previous official spin, Tyler's trusty back of envelope says HMG is now on track for 2009-10 borrowing well in excess of £200bn (as against the £175bn forecast in the April budget). The envelope says that by end-October last year the government had borrowed just 40% of its 2008-09 total. Applying that same percentage to the £87bn they've borrowed so far this year gives a total for the year of around £217bn.

Meanwhile, elsewhere in the real world, retail sales are booming. Sales are up 3.4% compared to last year, and 5.8% over two years - ie this is not simply a recovery from extreme weakness last year.

What should we read into that?

Well, zero interest rates are stoking up a further unsustainable spending binge (cf the bubbles we've seen in the housing and equity markets). It is the economics of short-term gain and long-term pain.

Unsurprisingly, consumer price inflation is picking up again. And despite the spin that it's all to do with fuel prices "stabilising" after a period last year when they fell, the truth is that the prices of 60% of the items comprising the CPI basket are are already rising at or above the government's 2% target. The CPI is only being held down by sharp falls in clothing and footwear (where sales are also down sharply), and smaller falls in gas and electricity prices.

Despite the consensus view that inflation is dead, plenty of pretty sharp operators are betting UK prices will push on up. This morning the Mail reports:

"Sharks off the British coast: Oil tankers refuse to unload until prices rise... keeping YOUR fuel costs soaring

Laden with fuel, three oil tankers sit idly within sight of the British coastline (pic above), playing a waiting game that is driving up petrol prices for hard-pressed motorists.

They are part of a flotilla of ten vessels refusing to unload their cargo until market speculation has driven up its price to the level they want."

The Mail seems to be suggesting the Navy boards and orders them ashore. But we don't blame the sharks at all. Sharks are an essential part of the economic ecosphere. They're in the risk biz, and they will suffer if they turn out to be wrong about the outlook for petrol prices.

But sharks ain't dumb - everyone knows they can smell blood from miles away.

With Great Love And Respect

2009-11-18T10:02:00.006Z

We'll pass an Act - problem solved

Queen's fairytale day again. And the centrepiece this year is reportedly a Fiscal Responsibility Act, which will impose a legal requirement on government to cut the budget deficit.

So what happens if they don't? Personal fines for backsliding spending ministers? Jail for the Chancellor?

Yes, you guessed it - there are no legal sanctions at all. This shocking bunch of busted shysters reckons we'll believe yet another promise to go straight simply because they've framed it as a law (cf their laws to outlaw child poverty, reverse global warming, ensure universal happiness, etc etc).

What a joke. As BOM's old friend the Prof says:

“Fiscal responsibility acts are instruments of the fiscally irresponsible to con the public.”

The Director of the Institute of Fiscal Studies says:

“It is not obvious why anybody should be more persuaded by this than they ended up being impressed by the Code for Fiscal Stability which was enshrined in statute with much fanfare in 1998.”

When Evan Davis tackled Mandy about this on BBC Today, the old queen was so empty handed he was even driven to a "with great love and respect". All he could offer was a ludicrous claim that, although the intellectual elite might not be impressed - because, you see, they've got their own anti-Labour agenda - the Act was necessary to reassure the public. Apparently we peasants are so dumb we will still believe a Labour promise if it's dressed up as an Act of Parliament.

Look, we strongly favour explicit fiscal rules. The evidence from around the world suggests that governments are much more likely to maintain fiscal discipline if they announce upfront the quantified rules under which they will manage expenditure, taxation, and borrowing (the IMF is about to publish a new research paper on worldwide experience, which we will read and blog).

But to be credible the rules have to be in the hands of a government that demonstrates it will stick to them. And this government long ago demonstrated precisely the opposite.

Labour now has zero credibility. It is morally and intellectually bankrupt, and no amount of new Fiscal Responsibility Acts will change that.

We desperately need a fresh start under a new government with a clean new set of explicit fiscal rules. Yes, they will have to earn their credibility, particularly after Brown's abysmal performance. But credibility cannot be earned simply by passing another Act.

PS The Major wants to know if he's still in the real world, or whether he slipped away peacefully during the night. According to him, the BBC has just appointed Gordon the Gopher as its head of compliance on £110k a year. So the man that used to make a living by pushing his hand up Gordon's bottom is now in charge of taste, decency and balance at our state broadcaster. Come to that, Tyler is beginning to doubt his own presence among us. How do you tell if you exist, again?

Big And Inefficient

2009-11-17T21:27:00.007Z

We all know our public sector wastes squillions, but just how inefficient is it? How does it look against public sectors elsewhere in the world?

There are a number of studies that have attempted to answer such questions. One of the best known was published by the European Central Bank in 2003 - Public Sector Efficiency: An International Comparison, by Afonso, Schuknecht, and Tanzi.

The ECB study seeks to compare the outputs of government with their costs. The costs comprise the share of government expenditure in GDP, which is straightforward. The outputs are more difficult to measure, but include a wide range of indicators, from economic growth and stability, to health and educational outcomes (see paper for more detail).

These calculations are done for 23 industrialised OECD economies, and comparisons made.

Overall, the study finds that the most efficient government sectors are those in the US, Japan, and Switzerland.

The UK is by no means the worst, but lags way behind the leaders. Indeed, if our government could achieve the same level of efficiency as the three leaders, we could save roughly £140bn pa relative to the current level of UK government spending. Which would go a long way towards digging us out of Brown's hole.

And the study gives a very interesting insight into the relationship between efficiency and size. And guess what - it turns out the most efficient governments are also the smallest.

Here's a chart we've put together comparing each government's efficiency score with its cost as a share of GDP (note: the efficiency scores relate to 2000, and the GDP shares are averages for the previous decade):

As we can see, efficiency tends to decline quite markedly as government gets bigger. On average, for every 10 percentage point increase in government's share of GDP, efficiency declines by 15-20% (the estimated parameter says 16.6%, but let's not get too precise, especially since this is a simple linear regression).

The bottom line is that if you want to have big government, you have to accept a high degree of inefficiency (aka waste). In our chart, the very biggest government belonged to Sweden, and its efficiency levels were correspondingly abysmal (interestingly, over recent years Sweden has been slimming down its bloated public sector, partly through those school reforms we hear so much about).

To put this another way, the only countries that can afford Big Government are rich countries that can bear the costs of its inefficiency. The UK can certainly no longer afford that luxury.

Ignoring The People

2009-11-16T13:25:00.006Z

Magnifique!

The EU is one of those issues where the ruling elite systematically ignores the wishes of the British people. As the Major is forever reminding me, our rulers have led us into the clutches of an anti-democratic superstate on the false pretence that it was going to make us richer.

The truth - as we've blogged many times - is that right now, today, we'd be just as well off economically if we withdrew. Indeed, there is considerable evidence that we'd be better off, because we'd escape all the membership costs.

Now the TPA has produced a brilliant cinema ad (above) highlighting the largest of those costs. They include:

£10.3 bn pa on the Common Agricultural Policy (higher prices, state aid, and additional bureaucracy)
£2.8 bn pa on the Common Fisheries Policy
£80bn pa from EU-wide VAT fraud
£1.8m pa for each MEP
£500bn pa from the extra admin burden placed on EU companies

Overall, the annual costs to the UK are put at £2000 pa for each and every one of us.

You don't believe it?

The figures are all documented in a new book by the very excellent Dr Lee Rotherham - Ten Years On: Britain without the EU (normally it will cost you £5.99, but if you're very quick you can get one free - yes, FREE - from those nice people at the TPA. And a jaw-dropping read it is too.

Now, the economic costs are bad enough, but there is also the cost in terms of our freedom. The EU has never been driven by democracy and never will be. It is rule by an unelected commissariat.

It is supremely ironic that the 20th anniversary of the Berlin Wall coming down has been marked by huge celebrations on the BBC, St Bonio himself presiding over festivities in Berlin. Yet as Pravda points out, rule by EU is chillingly similar to Soviet rule:

"As recently as 2006, a most eloquent and insightful warning was given by former Soviet dissident Vladimir Bukovsky. Traumatized by the experience of living in the Soviet Union, Bukovsky noted the deeply disturbing similarities between the old Soviet Union and the blueprints for the EU super state. The European Commission, he noted, was the exact equivalent of the old Soviet Politbureau, in terms of the secretive way power was exercised, the recruitment and personalities of its members and the scope and reach of its decisions. The “European Parliament” today (and under the terms of the Lisbon Treaty) is a mere rubber stamp institution, just like the “Supreme Soviet” of the old USSR.

As a matter of fact, there are so many similarities between the old Soviet Union and the EU that mere coincidence is unlikely. Bukovsky argues the EU was designed to be like the old USSR. The architects of the EU? Mostly social democrats, whom Stalin quite aptly called “Social Fascists.”

And on Not Born Yesterday, John Ward makes a similar point:

"The people of East Germany (and those of other former Soviet satellites who have joined the EU) are, I do not doubt, happier than they were under the USSR. But looked at objectively, their change of sides will, I fear, be seen in time as exchanging one rigid oligarchy for another."

Is it surprising that so many of us want to stop this right now? Even after nearly four decades in the EU, two-thirds of us favour either a looser relationship based on trade, or complete withdrawal.

But how do we get our ruling elite to listen?

How do we force them to act?

A referendum is the obvious step. But with Mr Cam now having ruled it out, how do we get one?

There are alas, no easy answers. It will be a long hard slog to persude our politicos it would be in their own best interests to listen to the people.

But in the short term we should at least all contact our MPs and make sure they are under no illusions as to where we stand.

And on that front, a new campaign has just started - The Albion Alliance - that is campaigning for a referendum. We suggest you pop over and join, as we've just done.

There are no easy answers, but every little bit will help.

PS Talking of issues where the ruling elite completely ignore our views, over the weekend there was an interesting poll in the Times. Despite all the expensive propaganda from the BBC and the government, 60% of us still do not believe man is primarily responsible for climate change. And yet the Copenhagen circus continues on its pointless way, and all the chief climate commissar could say was: “The overwhelming body of scientific information is stacked up against the deniers and shows us that climate change is man-made and is happening now. We know that we still have a way to go in informing people about climate change and that is why we make no apologies about pushing forward with our new Act on CO2 campaign.” So it doesn't matter that their published "evidence" is wafer thin, mainly comprising the output of various dodgy forecasting models. Somehow we're just meant to take the word of big government politicos and their terminally conflicted climate change bureaucrats.WTF would we do that?

Fag-End Fascists Take One Last Swing At Guildford

2009-11-15T20:52:00.009Z

A city targeted for significant change

Throughout the long dark night of socialist hegemony, the plucky folk of Guildford have stood tall. Their worldly goods may have been pillaged to fund the fatherland, their schools and hospitals may have been run down and closed, they may have been threatened with the installation of giant toxic waste incinerators, and their council may have been subjugated to direct Gauleiter rule. Yet despite all these grievous trials, they have never buckled.

But now, just when it seemed deliverance was at hand, they find themselves face to face with the ultimate Vengeance Weapon: the destruction of vast swathes of green belt land to accommodate the forced construction of thousands of new homes, and the designation of Guildford as a zone of "significant change".

Today the story has even made the national press:

"If the Government's regional plan has its way, the town of Guildford will extend another mile out into the Green Belt countryside. What is currently farm and woodland, laced with grazing cows, public footpaths, old oak and ash trees, will be transformed into a two -to-four thousand-home suburb with new access roads from the A3.

The small country station of Clandon will become a transport interchange. The 18th-century National Trust property of Clandon Park, noted for its white marble hall and its attractive gardens with parterre and grotto, will look out over the new sprawl of Greater Guildford. Guildford itself will be that little bit closer to joining up with Woking, and thus with a near-continuous line of development all the way up to London."

Now, let's be absolutely clear - the locals do not want this (well, they don't if we exclude the developers who've bought farmland in the expectation of cleaning up). The local council has launched a legal challenge to stop it, the local MP is opposing it, and local residents groups are up in arms.

The only reason the plan is even on the agenda at all is because Labour's entirely unelected regional planning quango says it has to happen.

Why does it have to happen?

Well, because there aren't enough houses.

And why aren't there enough houses?

Well, because some idiot allowed 3 million immigrants into the country in the last 12 years, and 75% of them have settled in London and the South East.

It's NIMBY to object?

Well, yes, it is... and your point? It's called my back yard because it is my back yard. It doesn't belong to some commissar to do with as he wishes. New housing development and planning generally should be under the control of locally elected councillors not quangocrats. Just like it always used to be.

True, the plan for Greater Guildford isn't actually going to happen. The Scots fascists will be out soon enough, and Guildford will live to breathe another day.

But we need to see Mr Cam actually delivering on those promises of localism pdq. We need to see him dismantling the instruments of state control, and handing real power back to local councils. Local communities should not be forced to accept huge irreversible changes to their lives just because of some fascistic masterplan dictated by Whitehall.

Relax - They're Only Murderers

2009-11-14T19:19:00.007Z

So let's get this straight. For some reason the Major and I haven't quite been able to fathom, Mr Barrowclough decided to let out convicted murderer Patricia Gillette to go shopping in Bromley. Amazingly, she legged it, and is now on the loose among us.

Well, maybe it's not so bad. Maybe she's one of those unlucky moment-of-madness type murderers, rather than a full-on hardcore headcase.

No. Det Supt Gary Gornell has issued the following urgent warning to the public:

"This individual is dangerous and we need to apprehend her as soon as possible. If anyone sees her, please don't approach her, but call police immediately."

Still, hopefully you won't be the one who'll encounter Ms Gillette up that dark alley. So everything will be fine.

Although come to think of it, you may encounter convicted murderer Brian Clayton. Despite the fact that he'd already absconded once before, Mr Barrowclough decided to let him out to go shopping in Solihull last month. Amazingly, Clayton legged it, and is now on the loose among us.

Police say he is also dangerous and anyone seeing him should dial 999 immediately.

Of course, convicted murderers don't have to escape in order to come back among us. Loads of them just get let out on parole.

Yesterday we heard how convicted murderer Mark Shirley was released last year, and within months was attempting to re-enact the horrific murder for which he had been jailed.

"Giving evidence, the victim fought back tears as she relived the "disgusting" attack. She said Shirley repeatedly alluded to his murder victim, but she had no idea what he was talking about.

She said: "He said he once knew a lady, a sweet lady and her name was Mary. He kept saying I was a trustable and sweet lady like her." She told the court that he said he was going to “cut me to make me smell as sweet as Mary.”

The woman said Shirley raped and sexually assaulted her on her own kitchen table. The attack stopped only when the woman’s son returned home, and Shirley fled."

It is absolutely outrageous. The only reason this poor woman had to go through this is because the hand wringing liberals who preside over our criminal "justice" system quite deliberately released a convicted murderer into our midst. A murderer. Not a pick-pocket or a TV licence dodger, but a convicted MURDERER.

And what do these arrogant humbugs have to say for themselves?

"Mr Shirley's case has been referred to the Parole Board review committee. The review committee will consider and identify what lessons can be learnt from this case in order to help prevent further such incidents."

We can save them the time.

There is only one lesson, and it is this: convicted murderers should never ever be allowed out.

Either on parole or on shopping trips.

Is that so hard to understand?

Cost Of Aid Admin

2009-11-14T15:35:00.000Z

Big overheads

We've blogged the waste and misdirection in the government's £7bn pa international aid programme many times (see all previous posts gathered here).

Now, Ben Farrugia of the TaxPayers' Alliance has taken a closer look at how much of the Department for International Development's (DfID) budget gets Lost Along the Way, before it ever reaches the people we're supposed to be helping.

His key finding is that around 14% is lost to administrative and other non-front line costs at DfID and the various external agencies through which it funnels the bulk of its aid - ie multilateral organisations such as the UN and the EU, and Non-Governmental Organisations such as Oxfam and the Red Cross.

That's a shocking overhead, which by next year will be costing us over £1bn pa.

But even more shocking to Tyler is the the fact that it's the NGOs which are the worst offenders.

After all, we expect the UN and the EU to be bloated, inefficient, and self-serving - that's what tax-funded big government is all about. But most of these NGOs still purport to be charities. And charities are surely meant to be run on a shoestring by passionate enthusiasts working for a pittance. The TPA's summary table tells a rather different story:

So when the government channels our tax pounds through Oxfam, the Red Cross, and Christian Aid, it seems less than two-thirds reaches the frontline. The rest is overhead.

As it happens, Tyler has a particular and personal reason to be upset about Oxfam. Because many moons ago, it was while engaged on a fund raising project for Oxfam that he first set his eyes on sweet Mrs T.

At the time, Oxfam told us that virtually all the dosh was going to help real people starving in Africa and India. And wide-eyed young innocents that we were, we believed them.

Of course, back then Oxfam was probably more reliant on private donations rather than tax-funding . So maybe it was more careful with its costs. But these days, like many other "charities", Oxfam gets a fair chunk of its money from the taxpayer - just under one-third of its net income. And that can be a very corrosive arrangement, changing the entire ethos of a charity, and turning it into little more than another branch of government (see previous blogs, eg here and here).

Unfortunately, this problem looks set to get a whole lot worse. If Mr Cam is serious about replacing Big Government with The Big Society,we're going to making a lot more use of charities and "social entrepreneurs" in the field of welfare here at home. Which will mean yet more bodies pushing to get their snouts in the public trough.

All we can say is that Cam at least recognises the problem. A little commented-on paragraph from his poverty speech reads:

"If we are to break the culture of charities and social bodies being dependent on the state for hand-outs we need to look at how government can use loans alongside grants to help make them more sustainable and effective."

We're not at all clear how that would work in practice, but he should certainly implement a similar critical approach to the money we hand over to the aid NGOs.

A Perspective From History

2009-11-13T12:47:00.002Z

No time for a proper blog today, but Tyler is a sucker for long-term charts. So we must just pass on a chart from the IMF's latest World Economic Outlook. It shows the growth of world GDP since 1870, plotted against the ten major financial crises that cropped up over the period.

Some obvious points jump out:

Despite serious setbacks that seemed terminal at the time, we have always pulled through in the end: against the long-term upward trend - largely driven by technological advance - even the biggest crises now look like mere ripples.
The Great Depression was very painful, but the world economy actually recovered long before WW2 and all that enforced government spending
The three decades following WW2 really were a golden age
The crises seem to be getting more frequent, yet their impact on world GDP seems to be less

So what should we conclude?

First, we will come through our current difficulties. Inventiveness and enterprise will ultimately drive us forward once again.

Second, financial crises are part and parcel of the way we progress. They don't mean the market system is bust, and they don't mean the end of capitalism.

A Time For Not Having Much Of A Choice

2009-11-12T23:04:00.004Z

Ah, but we were so much older then

This evening Tyler inbibed a beer or two with a very sound, and very well informed, think-tank cove from across the silver sea.

This particular cove knows our sceptr'd isle very well; indeed, Tyler realised he's a bit of an anglophile on the QT. For example, he reckons our relatively small contribution to the the war in Afghanistan is absolutely essential to the entire effort - and from a military, not a political standpoint. Viewed from Washington, it seems our guys really are The Best (well ex-US, obviously).

Naturally, we fell to discussing next year's UK election.

Is Cam going to win?

Sure.

But is he going to do the biz?

Hmm... maybe not. He looks more like SuperMac Mk II - he's even got the guy's photo hanging in his office, for Gawd's sake.

Yeah... hmm... depressing... how would SuperMac have coped with the need to cut public spending by 10-15%?

Right... but what about the US? HTF is St Obama going to cope with the US problems?

Hmm... yes... hmmm...

Hmm.....

Isn't there someone out there, who maybe we don't yet know, who's going to get a grip? Who's going to provide some leadership?

Well, there's Bobby Jindal.

Say what?

Bobby Jindal - he's the Indian Governor of Louisiana... brilliant... except... he can't do big speeches.

Hmmm....

What we really need is someone like Reagan.

Yeah! Right!

A time for choosing... 1964... have you seen that?

No... no, I haven't.

Well, you should.

So I have. And you should too (vid above). It really is a slice of that Old Time Religion.

If only we had such a choice now.

Even if it did take Reagan another 16 years before he made the White House.

Thursday Morning Blood Boil

2009-11-12T12:33:00.013Z

Mind how you go

Is this government the worst we have ever had? Surely it must be. Yes, OK, they introduced gay marriages, and they stopped us going into the Euro. But apart from that, we can't think of anything they've done that hasn't turned into a disaster. And this morning we're treated to a rash of reminders.

1. Immigration

Labour has lost control of our borders. We all know that. In just 12 years, they have permitted more than 3 million foreign born migrants to enter, 5% of our entire population (eg see this blog). Some of these migrants have undoubtedly made us richer, but most have not (eg see this blog). It has produced dangerous social tensions, boosted now by mass unemployment, and there is absolutely no way of stuffing the genie back into the bottle.

Things are now so desperate, that even the arrogant clowns who rule over us realise there's a crisis. Unfortunately the crisis they see is not the one we're all so worried about. The one they're concerned about is that the immigration issue might lose them the next election.

So they've decided they'll admit to a few mistakes.

Today, Brown himself stood up to "admit ‘mistakes’ on immigration after BNP TV furore". Well, that's what the newspaper headlines said he was going to do before his speech. But when you actually read the speech itself, you don't find any such admission. All you find is a statement about how he now "gets it", and how it isn't his fault anyway because previous governments left him a shambolic immigration system that he is now valiantly fighting to sort out.

And the migrants he actually picks on for his ~~draconian~~ fuzzy new controls are not the low-skill alien culture type migrants everyone worries so much about. Instead, he says "we no longer need to recruit civil engineers, hospital consultants, aircraft engineers and ships officers from abroad - and so these and other jobs are being taken off the list." It's a classic shimmy - these highly skilled workers are not the people we're worried about. Most of us want people like that to be able to come in.

He tells us we can't have a fixed annual limit like Australia's because it would be too inflexible. Too inflexible for whom? We all know that employers want unlimited immigration because it depresses wages. But the rest of us want a clear limit because of all the social and public spending pressures mass immigration brings with it (see previous blogs).

And as for his argument that imposing a limit would "overturn our obligations to our EU neighbours", why not just have a limit applying to non-EU citizens? It's non-EU citizens who have made up more than 80% of the inward migration over the last decade (eg see this blog).

Brown still seems to think we're all stupid.

Gah!

2. Cost of Nanny

On one level, Labour's nanny state is a source of harmless national amusement. But as soon as you realise it's costing us a ton of money, the joke falls kinda flat.

Here's the latest episode from the Sun:

"POLICE chiefs faced ridicule last night over plans to give cops guides on how to ride a bicycle.

The potty pamphlets, running to 93 pages in TWO volumes, tell cops how to balance so they do not fall off.

The official Police Cycle Training Doctrine - the cost of which is estimated at thousands of pounds - gives full instructions on how to stop and get off a bike safely.

Officers will be taught how to brake and avoid obstacles such as kerbs and rocks. They are warned not to tackle suspects while they are still "engaged with the cycle"...

Officers are advised to wear padded shorts for "in-saddle comfort" and reminded to eat enough food and drink "adequate liquids" - because cyclists get hungry and thirsty.

Undercover cops are told they may need to go without a helmet to avoid being rumbled. But the guide warns: "This lack of protection must be noted and a full risk assessment of the required role to be undertaken."

No, no, stop it. I'm starting to get asthmatic.

3. Bonuses for catastrophic failure

We've blogged the issue of bonuses for public sector staff many times (eg see here). And today we hear about the latest bonuses being paid to the buffoons who run the catastrophically awful MoD. Despite all the equipment shortages and all the procurement cock-ups we read so much about, £47m has been paid out so far this year:

It makes you want to spit.

"The bonus figure covers just the first seven months of the financial year. The MoD said yesterday that the bonuses would average less than £1,000, but a senior civil servant could pick up £8,000. Last year, the department had 95 employees who were on a salary of more than £100,000. A private in the Army can be paid as little as £16,681 a year"

As we've said before, bonuses in the public sector are a farce. Unlike the private sector, the public sector is not targeting profit, or any such clearcut objective. There is no bonus pool driven directly by the money available. Indeed, there is no transparent and robust linkage back to any real world objective. Just another pile of box ticking commissariat wibble. The practice should be stopped.

And as for the BBC paying for its execs to stay in glitzy £647 per night Las Vegas hotels, I can't even bear to read the story.

4. Too posh to wash

The government is about to insist that all nurses now have a degree.

Why?

The health minister says:

“By bringing in degree-level registration we can ensure new nurses have the best possible start to meet the challenges of tomorrow. This is the right direction of travel if we are to fulfil our ambition to provide higher quality care for all.”

The minister obviously lives on an entirely different planet to those of us who've visited real NHS hospitals.

The Doc long ago tore out his few remaining wisps of hair over the fact that many essential nursing jobs like washing patients no longer get done by nurses. They are too posh to wash or to ensure patients are eating and drinking properly: upgraded beyond such menial tasks they instead now spend their time studying patient protocols and pathways. A fact not unconnected with the huge upsurge in hospital acquired plagues.

As we've said before, just make sure you keep up your BUPA payments.

And try to forget that state healthcare now costs each and every household nearly £5 grand pa.

I think I need to lie down.

She Canna Take Much More Of This Captain

2009-11-11T19:25:00.006Z

Tyler has learned that the Bank of England is following a revolutionary new approach to monetary policy. According to a top secret Bank report, it works by exploiting "the expansion of space-time as a consequence of the vacuum ground-state of higher dimensional graviton fluctuations" (see key formula above).

As you will know, this is the approach long envisaged in sci-fi, most famously in the warp drive that powered the Starship Enterprise. But never before has a central bank had the sheer dilithium balls to fire it up for real. The Bank is boldly going.

So how's it working out?

Today we got an update. According to the Bank, we're rapidly winding up to warp speed, and from its current slump, GDP is about to make the jump to hyperspace:

Growth will be so strong, that we'll have recovered our entire output fall within two years. It will be the fastest strongest recovery we have ever had from any slump.

And it's all thanks to the warp drive's combination of zero interest rates and a roaring printing press.

Unfortunately, at this speed, the old ship is beginning to vibrate rather alarmingly.

For one thing, the exchange rate is down 25% since we first hit the asteroid belt back in 2007 (ERI = Exchange Rate Index - sterling's value against a basket of currencies):

That's one helluva fall, and it's made us all poorer because it has increased the price of imports. Which also means upward pressure on inflation.

And surprise surprise, the Bank is now warning that inflation itself is set to increase:

"Inflation is likely to rise sharply to above the 2% target in the near term, reflecting higher petrol price inflation and the reversal of last year’s reduction in VAT."

Which sounds pretty worrying. Although the Bank reckons it's nothing to worry about, and inflation will subsequently come right back down again later:

Do you believe that? Do you believe it any more than you believed all those dire forecasts of falling prices/deflation?

Er, no.

The fact is that this warp drive technology remains highly experimental and very scary. The various captains up on the bridge may believe they can control it. But down here in the crew quarters we're not at all convinced the ship can take it.

We do not want to perish in an inflationary black hole. And now that the Bank reckons we're back on track for growth, we think it's time to disengage the warp drive, and go back to good old fashioned propellor power.

Turning A False Corner

2009-11-10T19:34:00.004Z

Not a corner to hurry round

Extraordinary news from the Times this morning:

Poll shows Britons see good times around the corner

People are more optimistic about the economy than at any time for the past 18 months, according to a Populus poll for The Times today.

Its findings come as the best October high street sales for seven years have fuelled hopes that a pre-Christmas surge in spending could confirm the country’s emergence from recession.

Sales rose at an annual rate of 3.8 per cent last month, up from 2.8 per cent in September. Overall sales values rose at their fastest rate since April."

Duh? Do we not have eyes to see the tidings of doom carried elsewhere in the same paper? Another 5000 jobs axed by Lloyds, 700 cut by Ericsson - along with the closure of their UK research base - a ballooning trade deficit driven by all the cars imported under the government's crazed cash for clunkers scheme, etc etc etc.

And that's before we even get round the corner. Once we see what's waiting for us there, we'll look back on this last Christmas spending splurge with a fond nostalgia. And wonder why we didn't stuff the cash under the mattress.

Last week the IMF gave us its own view of what's round the corner, racily entitled The State of Public Finances Cross-Country Fiscal Monitor. It spells out in horrific detail just what a fiscal mess we're in, and just how far our belts are going to be tightened over the next 10-20 years.

The IMF says that by 2014, the world's major economies (the advanced G20 economies) will have racked up government debt equivalent to about 120% of GDP. By all historic standards that is unsustainable, and will make the world economy extremely vulnerable to an uncontainable further crisis.

Indebtedness on that scale will also generate a significant increase in the interest costs of government debt (ie the yield on government bonds). For every one percentage point increase in government borrowing as a percentage of GDP, the IMF estimates that government bond yields are likely to increase by between 0.2% and 0.6%. Which means we have to pay more and more tax just to pay the interest bill.

So far, that bond yield increase has been headed off by the extreme weakness of the global economy and highly expansionary measures implemented by our central banks (eg the Bank of England's purchases of gilts - see here). But just wait until those measure go into reverse.

Action has to be taken. The IMF recommends getting debt back down to a maximum of 60% of GDP by 2030 - ie relative to the world economy, debt has to be halved. Which is an enormous undertaking.

And for the UK, the IMF's analysis is even bleaker. Because our fiscal deficit is so much worse than most other countries, we will need to make just about the biggest cuts in borrowing anywhere in the developed world - only Japan will need to do (slighty) more.

To put some numbers on it, the IMF says that over the ten years from 2010 to 2020, our government will need to improve its so-called "primary balance" (ie its current spending, before interest payments, less its tax and other current revenues) by a staggering 13% of GDP. In cash terms, that's getting on for £200bn.

Now, let's just make sure we all understand what that would mean.

As things stand, it means that public spending on day-to-day needs like teachers and nurses and welfare benefits, would have to be cut by getting on for one-third. Which is an awful lot of bigger classes and longer NHS waiting lists.

Alternatively, taxes would need to be jacked up to the kinds of levels that really do cause revolutions. For example, doubling the standard rate of income tax, doubling VAT, and doubling fuel duty - all at the same time - would still not raise enough (see HMT Ready Reckoner here).

Of course, the hope is that we will be bailed out by economic growth. If the economy grows enough, then some of the extra tax revenue we need will be generated "painlessly", without the need to rack up tax rates.

But just ask yourself how likely that is.

Interest rates cannot be held at their current low levels indefinitely. And when they rise back to more normal levels, indebted households are going to find life very difficult. Christmas and flash new motors will be a thing of the past. Meanwhile, government will be cutting its own spending, further weakening demand in the economy. We are looking at a decade of very weak 70s-style growth. Certainly not the kind of thing to get us out of jail free.

As we've blogged many times, Labour has flown our public finances into the mountainside - again. And once again, we are looking at a pretty grim decade ahead.

Of course, you can't expect normal people to spend their time perusing IMF Staff papers. And maybe it's better they don't know.

But we do expect our Chancellors and Shadow Chancellors to read, inwardly digest, and produce sensible plans for dealing with what we actually face.

Alarmingly, we've still to be convinced that George understands what's really round that corner.

PS The IMF is about to publish another research paper we'll be blogging, on the design and use of fiscal rules. As regular BOM readers will know, we've long argued for the third fiscal rule - a limit on public expenditure. It has been specifically rejected by both Labour and Tories, largely we think because politicos don't like to be restricted in that way. It will be fascinating to see what the IMF say.

Update The credit rating agency Fitch has warned that of all the leading sovereign borrowers, the UK's AAA credit rating is most at risk. That's because we have to make "the largest budget adjustment" - just like the IMF and the OECD say. Fitch says "our stable rating outlook [for the UK] reflected our expectation that the UK Government will articulate a stronger fiscal consolidation programme next year." Translation - we expect George to make some serious spending cuts straight off the bat, and to spell out a quantified plan for getting the UK's debt back below 60% of GDP soonest.

Oink

2009-11-09T21:48:00.011Z

With a cheep-cheep here, an oink-oink there, and a total confusion everywhere

For reasons we needn't go into, Tyler is what the NHS describes as immunocompromised. No, it's not what you think, but it does mean he received a call today from Sharon at his GP group practice.

Sharon informed Tyler he was in an at-risk group, and therefore needed to come in for the Swine Flu jab.

"Wha!" said Tyler. "The new experimental quatermass vaccine... but, but... is it safe?"

"Oh, yes," said Sharon, "it's under the government vaccination programme. It's all been tested and it's perfectly fine. And actually I see you haven't had the normal seasonal flu jab - we'd better do that at the same time."

So what to do?

Clearly, you'd be mad to say yes just because the government wants you to.

For one thing they're a bunch of serial incompetents, and for another, they are proven liars.

Why would they lie about the safety of swine flu vaccine? Well, because this is one of those public health issues: the more people they can get vaccinated, the less likely it is that we'll have an epidemic. And as we've blogged before, when it comes to public health, governments follow traditional Stalinist principles: "one death is a tragedy, a million is a statistic". In other words, they're not bothered if a few dozen Tylers go down under the needle, as long as the herd gains immunity.

This calls for an urgent consultation with Dr Google.

Now let me see... "swine flu vaccine"... yikes! Google immediately suggests "swine flu vaccine deaths" with 13.1 million results.

So... "Swine flu jab link to killer nerve disease: Leaked letter reveals concern of neurologists over 25 deaths in America... The letter from the Health Protection Agency, the official body that oversees public health... tells neurologists that they must be alert for an increase in a brain disorder called Guillain-Barre Syndrome (GBS), which could be triggered by the vaccine. GBS attacks the lining of the nerves, causing paralysis and inability to breathe, and can be fatal." (Daily Mail)

Gulp.

In Sweden there have been four vaccine-related deaths. Or is it six? Accounts seem to vary. And come to that, how do we know the deaths don't run into hundreds, and there's been a cover-up? The bodies could easily be stored in a cordoned-off frozen fish factory - they must have loads of them up there. Obviously they'd keep that pretty quiet, so how are we supposed to find out?

Or what about this in Time Magazine - Time Magazine! - "...the vaccine is tainted with antifreeze or Agent Orange, causes Gulf War syndrome, has killed U.S. Navy sailors... the vaccine is an "evil depopulation scheme."

Jeepers! That's it! No way is Tyler getting pumped full of Agent Orange.

Oh, wait. Time goes on to say "these claims are nearly pure bunk", and that "the crop of falsehoods about the H1N1 vaccine... are potentially... dangerous, since they encourage the credulous to avoid vaccination at all costs."

Hmm.

OK, so what does the NHS itself say about vaccine safety?

"The swine flu prototype vaccines have been clinically tested and shown to produce good immune system responses, and have an acceptable safety profile. The insertion of the H1N1 strain into the vaccine should not substantially affect the safety of the vaccine in the same way that annual modifications to the seasonal flu vaccine do not."

There they go again. What exactly is an "acceptable safety profile"? Acceptable to whom? Stalin's Commissar for Collectivised Health?

In a complete muck-sweat, Tyler finally turned to the one man he could trust to cut through the doublespeak - the good Dr Crippen. What should Tyler do?

Unfortunately, the Doc is himself now under heavy medication, having gone down with a nasty bout of H1NHS gravis.

Apparently he was exposed to a whole series of confusing and largely incomprehensible circulars from the Chief Medical Officer at the Department of Health, believed to have been triggered by the recent outbreak of swine flu vaccination fever.

So at the Doc's suggestion, and suitably masked up, Tyler examined the latest of these circulars, the one that gave the order for Sharon to ring Tyler. Under the Stalinesque identifier of Gateway 12870, it orders NHS operatives like the Doc "to maximise the level of uptake of the vaccine amongst the priority groups". Operatives are further instructed to access further vital campaign plans at Gateways 12241 and 12781.

Unfortunately, when you actually try to access those vital further Gateways, all you get is this:

"Error page

We are sorry but the page you are looking for cannot be found. It may have been removed, had its name changed or be temporarily unavailable."

Is it any wonder the Doc is a wreck. After months of trying to follow this kind of gibberish, the poor fellow's immune system is shot. Jabwise, he has no more idea what the Commissars are asking him to do than you or I. Only Sharon seems sure.

Although, now we come to think of it, what about Sharon? Is she going to have the jab herself? According to recent polls, roughly half of nurses (and GPs) are going to refuse. They obviously know something the rest of us haven't been told.

Which leaves Tyler in a quandary.

You see, although now immunocompromised, Tyler is old enough to have picked up some of the natural immunity oldies seem to have to this swine flu. For example, he got very ill in the 1957 Asian flu epidemic.

So is it worth risking a shot of Agent Orange now?

Tricky.

But one thing's for sure: all the guff so expensively pumped out by the Department of Health is not going to help him decide one jot.

PS What will the vaccine cost the NHS? Needless to say, the government refuses to tell us, but according to the World Health Organisation, the cost per dose is $20. So if, as the government apparently expects, three-quarters of us get the jab, it will cost $900m, or around £0.5bn.

Three Old Favourites In The Weekend Press

2009-11-08T17:51:00.010Z

1. 2012 Olympics - costs hit £12bn

According to the Telegraph, the real cost of the 2012 Games is actually £2.7bn more than the official £9.3bn budget. From "obscure documents" and FOI requests, the Telegraph has uncovered the following hidden costs:

£1.15 billion spent by Boris Johnson's London Development Agency (LDA) to buy and clean up the Olympic site
At least a further £359 million not publicly announced by the LDA, including £269 million in interest payments and £90 million in Olympic grants
£389 million for "Games-specific" transport improvements by Transport for London and Network Rail
About £60 million costs for Whitehall departments working on Games preparations and legacy planning
£240 million spent, or bid for, by local councils
A contribution of £110 million by the Homes and Communities Agency quango to the Olympic village
£280 million on Olympic-related grassroots and elite sport projects
Almost £100 million in directly Games-related spending by a range of other public bodies, from the Lea Valley Regional Park Authority to the Arts Council and the NHS..

As regular BOM readers may recall, we've blogged several of these items before, but this is an extremely useful summary of where we now are.

Whatever the government may say, there is no way the cost will be contained to the current official budget of £9.3bn - let alone the preposterous £2.1bn they originally plucked out of the air (or somewhere) in 2004. Our estimate of the final all-in costs has always been £20bn (eg see here). We see no reason to depart from that.

2. Prison - it's still cheaper to bang 'em up

The Sunday Times has the useful graphic above which summarises the relative costs of leaving criminals free to roam our streets:

"The average number of offences committed by a single criminal is 140 per year, according to a Home Office survey.

Civitas, the think tank, estimates the cost to society of one active criminal committing 140 crimes is £280,000 a year, while the cost of reprocessing him or her through the criminal justice system and back into prison is put at £65,000."

And once they're inside, the average cost of a prison place is put at £26,000 pa.

Now you don't need to be a calculating machine to work out that it's a lot cheaper to lock up bad guys than to leave them out here.

So WTF don't our useless politicos JUST DO IT?

3. Buying votes with welfare

The Tories have published an analysis of which Parliamentary constituencies get the most in welfare benefits (reproduced in the MoS which has the full set of tables).

Top of the table is the Liverpool constituency of Labour MP Peter Kilfoyle, where nearly 30% of the working age population are living on benefits - either incapacity benefits, lone parent benefits, or Jobseeker's Allowance.

And of the 200 constituencies with the highest proportion on welfare, no fewer than 189 are represented by Labour MPs. 13 of them are cabinet members, including Brown himself.

So it's no wonder Labour have spent so much on these benefits. And it's no wonder they've failed to deliver on all their promises to get tough with people who won't take paid employment to support themselves.

They're using our money to buy their votes.

And condemning millions of their own supporters to welfare dependency in the process.

It really is the politics of damnation.

Private Sector Cops

2009-11-06T20:42:00.006Z

£3.50 per week - cheap at the price

Back in 2006 we blogged how the well-heeled residents of leafy Primrose Hill in London had got so fed up with the Met's non-policing of their streets, that they'd clubbed together to hire private security patrols. For £1,000 pa per household, they were getting high visibility 24/7 patrols, and a "meet and greet" service if they came home late.

At the time it was a novelty, but with the public sector police having pretty well given up on our streets, we predicted a rosy future for private sector suppliers.

Since then the business seems to have spread far and wide, expanding from the poncy areas of London to as far afield as problem estates up North. Here's a report today from Darlington:

"For longer than they can remember, the law-abiding residents of Skerne Park have been plagued by teenage thugs. But in recent years the problem has become much worse. In the last 12 months alone, antisocial behaviour in their area of Darlington soared by 20 per cent.

Now the residents are hitting back by employing a 'private police force' (pic above)... They are paying £3.50 a week each for patrolling teams of wardens equipped with head cameras and wearing high-visibility uniforms. They will react to calls as well as monitoring the estate by car. So far more than 300 residents have backed the scheme."

In Southampton, a private security firm has recently offered the same service to local residents for just £3.15 per week. Their uniformed officers are equipped with handcuffs and stab vests, and the service includes "dedicated patrols of eight officers up to 60 times every 24 hours in every community that signs up, special patrols outside schools, escorts to shops and banks, emergency response to alarms and other incidents, and dog handlers to disperse street gangs."

No, I promise I'm not making this up. The business does seem to be booming (eg see here and here).

And it isn't just local residents who are hiring these companies. Commercial businesses have also been driven to club together in order to make their areas safe - as in this example from Bognor Regis (Bognor Regis, for goodness sake).

Right now, the biggest growth potential seems to be with councils hiring them in a deperate attempt to head off residents' anger at having been abandoned by the regular police.

In Tameside, Greater Manchester, the Labour Council has already hired a firm to patrol with dogs in one trouble spot. Billericay Council is seeking a firm to patrol the yob-plagued area around its town park. And Ramsden Bellhouse Parish Council has hired a private firm to patrol the parish at a reported 50% saving compared to the official police.

All of which is entirely understandable.

But it's also deeply troubling.

For one thing, who exactly are these private security people? The industry has a somewhat chequered past, and one of the key players has recently been charged with impersonating a police officer. Prospective buyers most certainly need to beware.

More fundamentally, WTF should we have to do this at all? WTF can't the real police do the job we pay them for?

We're currently spending around £19bn pa on the police. That's around £750 pa per household, or just under £15 per week. Yet the police are so inefficient and/or misdirected that they can't even provide these desperately needed local street patrols, which we now know would cost us £3.50 or less on the open market.

Roll on elected sheriffs. We need to re-establish some local power over our local police.

Their priorities should be our priorities - not those of Whitehall or some unelected quangocrat.

It's Very Simple - We're Skint

2009-11-05T21:08:00.010Z

Just like the ones the Bank of England has installed

On a day when the Bank of England announced it was printing another £25bn to tide the government over the next couple of months, eminent monetary expert Sir Stuart Rose explained our central problem from a technical perspective:

“We are skint."

Yes, indeed. Sir Stuart has put his finger on the Big Issue. He continued:

“This Government and the future Government have got to make some hard decisions about refilling the coffers”.

Spot on.

Which is why the Bank of England's decision to extend its Quantitative Easing (QE) programme yet further is so very worrying. It is allowing the government to put off all those hard decisions in the short term, at the cost of making them even harder to take when they eventually become unavoidable.

We've blogged our central concern about QE many times: that it is a huge experimantal gamble with our future inflation prospects; nobody has a clue how the Bank will manage to put the printing press into reverse when the time comes, or even how we'll recognise that time; and all of history tells us they won't manage it (eg see here).

But QE has another equally worrying dimension. It has allowed the government to fund itself by printing money rather than issuing gilts*, thereby avoiding facing up to the discipline of the international bond markets.

As we know, QE was initiated to "get credit flowing again". The idea was that the banking collapse had broken the normal credit pipeline. Banks were no longer prepared to lend even to viable businesses, let alone private customers, and the economy was dying of thirst. So the Bank of England would step in to flood the financial sector with cash, thereby hoping to get things moving again.

But in practice, the Bank has done its flooding not by investing in the debt of cash-strapped companies, but principally by purchasing government gilts in the open market. Here's its own summary (to end-September):

So since March the Bank has printed around £175bn of this extra cash, and virtually all of it has gone to buy government debt.

Now, by some spooky coincidence, £175bn just happens to be exactly what the government projected in its April Budget as being its total borrowing this year. And by an even spookier coincidence, today's announced £25bn increase in QE for the rest of the year just happens to be the borrowing overrun the government will announce in its forthcoming Pre-Budget Report (don't believe me? just watch).

Yes, we really have got a government financing the largest budget deficit in the developed world by running the printing press.

And even if we somehow manage to put the whole process into reverse before inflation takes off, the Bank will then be attempting to sell back all the gilts it's now buying at a time when the government is still issuing shedloads. Which is a surefire recipe for a huge hike in gilt yields (long-term interest rates), and an explosion in government debt interest costs.

And you know the really odd thing? Virtually the entire economics establishment seems to think it's fine. Indeed, Tyler has just listened to the New Statesman's economics correspondent telling BBC R5 listeners that it's a "no-brainer". Even though there's virtually no evidence QE is supporting the economy as intended, and even though he couldn't explain how the Bank would ever know when to stop.

Very scary.

Extraordinary measures like QE may have been justified while it looked like we were tipping into the Second Great Depression. But we are through that now. What we are looking at from here is a miserable decade of slow grinding recovery. It may even turn out to be a Japanese-style "lost decade".

But it is a dangerous delusion to think we can get ourselves back on a growth path by running high budget deficits financed with a supercharged printing press. That is the age-old recipe for inflation, crises, and decline.

Instead, we need to listen to Sir Stu. We really are skint, and we really do need to take some hard decisions to refill the coffers. And just so we know, here they are:

Public spending must be cut by around 15% (ie £100bn pa)
Taxes on enterprise and employment must be slashed - we have to earn our way back to prosperity

Nobody's saying it will be easy. It won't.

But continuing to print money in the vague hope that we can somehow get the economy back to sustainable growth is going to make our longer term problems a whole lot worse.

*Footnote Yes, OK, the government has continued to issue gilts. But since the Bank has been buying them back at the same time, in effect, net issuance has been close to zero.

Pathetic Autistic Castrates

2009-11-05T12:35:00.005Z

I will wipe you off le radar

The Major was round at 8.30 this morning, steam blowing from all orifices.

"Have you seen this?! Another slimey little Frog threatening us with national extinction!" His Daily Telegraph was crumpled and torn - it looked like he'd already used it to strike out at someone.

"Just listen to this." With some difficulty he uncrumpled the page and began reading. 'Pathetic and autistic... castrated... Britain will disappear from the radar'... Disappear from the radar!" He looked up, his face flushed an alarming shade of purple. "I tell you, it's just as well we've still got our nukes!"

Before I could respond, he was off again. "It's this bit that really gets my goat. This little Napoleon says we should obey his orders because otherwise we'll be powerless in the world. Listen - 'It is a time of tumultuous waters all around us. Wars, terrorism, proliferation, Afghanistan, energy with Russia, massive immigration, economic crisis. It is time when the destiny of Europe is being defined – whether or not we will exist as a third of the world's GDP capable of fighting it out on climate, on trade, on every Goddamn issue on the surface of the Earth."

He looked up again. "Well, what do you think of that?! How dare he! I mean, forgive me if I'm wrong, but the EU has done absolutely bugger all of any use in any of those areas. When it comes to wars and terrorism, it's us and the yanks - always is - our so-called European partners are pretty well nowhere to be seen. The EU are incapable of gripping any of the real problems in the outside world - like Iran's nukes. Instead they employ thousands of bureaucrats with the sole aim of making our lives here an utter misery - like with all their sausage regulations and the dustbin police. And don't get me started on immigration! Go on! Just tell me - what have they ever done for us?"

I pondered for a moment. "Well, Major, in all fairness, there's loads of stuff. Like, for example... well... umm... there's the EU passport - much handier than our old fashioned big passports." The Major choked. "Well, OK... ahh... ummm... there has to be something... the Eurovision Song Contest?"

*****

The old ones are always the best, and Monsieur Lellouche's (great name) extraordinary outburst on British shortcomings is in the mainstream tradition of Louis XIV, Napoleon, and Le General. But he made one point we really can't let pass without correction.

As well as his highly offensive references to autism and castration, he told the Grun:

"If we get a [British] government that is ferociously anti European that will vote down this kind of legislation then I think the relationship is going to be very difficult. As we enter the next phase one of the issues we have to discuss midterm is of course finances. France is a net contributor to the tune of €5bn a year, of which €1.5bn is the same as British rebate. That should tell you quite a bit huh?"

We presume he's threatening us with the loss of Mrs T's rebate. Except - as BOM readers will vividly recall - we already lost most of that back in 2005, when Tone gave away the shop during his previous stint as EU President.

The facts are that even before the loss of the rebate, were were already the second largest net contributor to the EU budget after Germany. France - which has always had an outstandingly good deal - was fourth after the Dutch. Here are the figures for 2007 (in Euros):

And our contributions are now set to increase substantially. According to HMT's latest forecast, our net contribution next year will be £6.5bn - call it 7bn in Euros.

As we've noted before, budgetwise, UK withdrawal would hurt them a lot more than it would hurt us.

M. Louche might want to reflect on that as he nibbles his Camembert.

Update On Welfare Fraud

2009-11-04T20:55:00.004Z

The same old picture

The Department for Work and Pensions has just slipped out its annual estimate of welfare fraud (summary table above). Overall, it reckons overpayment due to fraud and error is now running at around £3bn pa, or 2.2% of benefits paid - an increase on last year's 2%.

That's bad enough, but as we've blogged before, some benefits are much more prone to fraud than the overall total suggests.

For example, Housing Benefit (annual cost £17bn) has a fraud and error rate of around 5%. And despite constant assurances of a crack-down, there has been virtually no improvement over time:

When we last had a good look at Housing Benefit, we discovered a highly expensive shambles, with the Simple Shopper paying way over the odds to canny private landlords.

And this week's revelation that in some areas an extraordinary 40% of households are now in receipt of housing benefit makes us even more concerned. When taxpayers are subsidising that much of the private rental market, rents are inevitably being inflated way beyond their true level. No wonder it's costing us so much.

Given our dire financial straits, the entire welfare system is heading for a serious pruning. A big reduction in fraud losses should be one of the benefits.

Cam's Euro Crisis

2009-11-04T12:25:00.005Z

No need for national flags any more

Archbishop Snow and the BBC are scarcely able to contain their chortling delight. Now that the superstate constitution is in place, the Tories will be ripped apart. Happy Days are here again. Hurrah!

Except of course, the Tories won't be ripped apart. Out here, we all understand that the overwhelming priority is winning next May. Everything else is for another day.

The EU is one of those issues like crime and immigration where the political elite believe they have a high moral duty to ignore the ignorant peasantry. With a few honourable exceptions, the elite have continued to propel us towards ever-closer union, even though virtually every poll shows we don't actually want it.

Even the European Commission's own poll this year shows only around one-third of Brits have a positive view of the EU. The poll is here, and the key results are:

So after four decades, only 37% of us are enthusiasts. Moreover, when we're offered the polling option of a looser relationship with the EU restricted to free trade rather than political intregation, around two-thirds of us choose either the looser relationship or complete withdrawal (see here).

So how can the political elite justify not listening to us?

One key factor was blurted out by Mr Flip-Flop Portillo on BBC R4 Today this morning. He said that as long as our EU "partners" see Britain as ringleader in the EU awkward squad, British politicos are unable to "enjoy" their meetings with EU counterparts. Poor dears.

More fundamentally, the elite really have convinced themselves that in general we peasants are too ignorant to have a useful opinion.

We can see this quite clearly in another European Commission opinion survey carried out in 2001. It comprised a series of focus groups carried out with groups of ignorant peasants from each EU member state (I'm sorry, but that really is the kind of thing Prog Con Nazis might have been doing in the mid-60s, a couple of decades after establishing the superstate). Here's a sample of what it says about the British peasantrys' attitudes to the EU:

"On the whole, the British have a very negative - and often caricatural - image of the European Union about which they know very little...

There is near-total ignorance concerning the origins of the European Union... The respondents believe that the objective behind the founding of the European Union was to develop trade among the Member States. Very few respondents are aware of the idea of creating a sort of “United States of Europe” that would join forces to create a political and commercial power that would be stronger than the sum of its parts and could rival the superpowers...

The respondents’ knowledge of the institutional functioning of the Union is just as mediocre."

Do they mean us? We clearly need an intensive programme of re-education.

The reality - as BOM readers will know only too well - is that we joined the EU on the basis that we were joining a large free trade area. Yes, we should have read the original Treaty of Rome and all those other EU superstate documents, but we were ignorant peasants so we didn't. We trusted our Tory government and concluded that if Red Robbo and Commissar Benn were opposed to the EU, it must be a good thing.

And when it came to the vote in '75, virtually the entire economics establishment told us we'd be mad to leave - couldn't we understand the vital importance of our companies having access to a large "domestic market"? Tyler was a government economist at the time, and having grown up in an era of seemingly unmitigated economic decline and the Austin Allegro, he was fully signed up to that argument.

But things look very different now.

Not only have we found out about the sinister and unwanted superstate project, but the economics have changed. One of BOM's very first posts highlighted the fact that we now derive no net economic benefit from EU membership.

Every serious analysis (eg the classic IEA paper by Brian Hindley and Martin Howe) shows the economic costs and benefits are now pretty well a wash. And while we might suffer some disadvantage from being outside the EU tariff wall, world tariffs are much lower than when we joined.

Moreover, as Global Vision argues, we'd almost certainly be able to negotiate withdrawal from the EU's political union while retaining the free trade arrangement (eg see this blog). We’d thereby escape the budget contributions, the CAP with all those inflated food prices, the social chapter/human rights/eco wibble costs, and of course the Euro.

It isn't Cam who has a crisis: it's our political elite. The people whose mediocre knowledge of contemporary economic realities, and whose wilful disregard of our wishes is forcing us to become a province of Greater Europe. Without even a shot being fired.

PS Just listening to PMQs. It seems Labour have decided that Cam's Euro Crisis is their killer argument. Brown himself - the man who lied so despicably and obviously over giving us a referendum on the superstate constitution - tells us he keeps his promises whereas Cam breaks his. He should get out more to meet some real people - may we suggest a stroll round Bracknell town centre.

Bank Job - Are Taxpayers Better Off?

2009-11-03T21:13:00.010Z

On a day that has been spun as the most momentous in British banking history (that's what they said on the BBC anyway), A Darling proclaims his latest bank job:

"What we have here is a better deal for the taxpayer."

Riiiighttt.

Sounds a little unlikely.

As we understand it, the key points are:

Taxpayers are buying another £25.5bn of RBS shares (taking our total equity stake to 84%), with a further £8bn earmarked for ~~possible~~ probable further purchases
Taxpayers are buying another £5.7bn (net) of Lloyds shares, maintaining our current 43% stake post Lloyds' planned capital raising
Altogether, this is an additional £31.2bn going into bank equity immediately, probably going up to around £39bn in due course.
The amount of toxic assets taxpayers are insuring under the APS (Asset Protection Scheme) is being cut by £300bn
Lloyds is withdrawing its £260bn of toxic assets from the APS altogether
RBS has cut the total assets it is insuring in the APS by £40bn to £282bn, and also increased its excess (ie it will now pay the first £60bn of losses); for that it will pay us an annual insurance premium of £700m (one-quarter of one percent)

So does that lot add up to a better deal for taxpayers?

Well, the fact that we're now insuring less of that toxic debt must be a good thing. So we can give that a tick.

But not quite a full tick, because although we now have less direct exposure to toxic losses, we have also lost the future insurance premia Lloyds had agreed to pay us. They totalled £15.6bn, and all we'll now get is a one-off £2.5bn penalty exit fee. Which isn't quite fair, given that we wrote that insurance when it looked like the sucker really was going down. It's like a traveller on a crippled airliner taking out life insurance, and then cancelling it once the plane has landed safely.

So net net no more than a semi-tick on the toxic debt front.

As for our £39bn additional equity injections, it's difficult to see how that makes taxpayers better off at all. Because the money will have to come from incurring yet more government debt. And we've got more than enough of that already.

Oh yes, the government claims we will eventually make an excellent return on our investment. But how do they know? If the prospects were that good, RBS and Lloyds would be able to raise all the extra money from private investors.

And if we taxpayers wanted to borrow to invest in bank equity (which is what HMG is doing here), then we could do it off our own bat. Under Darling's plan, we're being forced to subscribe to a mega-hedge fund specialising in financial "recovery" stocks and managed by the Simple Shopper. We all know how that ends.

So dealwise, Darling's new bank equity purchases get a big red cross.

What Darling did not do today was to grasp the giant elephant that is still rampaging around the banking hall - to wit, the question of splitting the megabanks between their retail and wholesale components (the new Glass-Steagall). Compared to that issue, the promise to spin off a few bank branches and Direct Line is so much loose change.

As long as we taxpayers remain locked into guaranteeing the combined balance sheets of all our megabanks, adjusting the Asset Protection Scheme is really not much comfort. We might be less exposed to losses via the APS, but we are now exposed to a further £30-40bn of potential losses on our increased equity stakes. And we remain fully on the hook for all losses over and above the banks' equity capital base.

George, you're going to have to do better than this.

Worst In The World

2009-11-03T10:15:00.002Z

There won't be time for a proper blog today, but we must just record an eye-popping chart recently published by the OECD. It shows their estimate of the fiscal deficit each of their members will clock up this year (as a percentage of GDP). And as we can see, we are at the very bottom of the league.

THE VERY WORST GOVERNMENT DEFICIT IN THE DEVELOPED WORLD.

You should remember this chart next time you hear Brown/Darling or one of their media apologists telling us we are helpless victims of an international problem. The reality is that we are worse placed than anyone else - including basket cases like Ireland and Iceland.

Once again, Labour have flown our public finances into the mountainside.

Thieving Parents

2009-11-02T21:48:00.007Z

The planned school gate sign

The State Commissar for School Place Enforcement has branded parents who flout his authority as "thieves" and enemies of the people. He says:

'The majority of parents are honest, if the dishonest few deprive the honest majority of their rightful places, that is a form of theft.'

He's outraged that parents are prepared to put their children's education before adherence to his rules. How dare bourgeois elements pretend to be living with relatives in order to get a place at a good school! For the sake of social order and the greater good, all citizens must accept the school places allocated to them by State Allocation Directorate!

As we know, the Directorate's preferred method of allocating places is the State Lottery (see many previous blogs, eg here). It's the only fair way to spread the misery of shockingly poor state schools, and to make sure that the few good schools don't start attracting all the best pupils.

The alternative approach of course is that old choice and competition thing. You let the customers choose, just like they do in the independent sector, and you let poor schools go to the wall. And by allowing new entrants to start new schools, you rapidly concentrate management minds in schools that start losing pupils. It works a treat, just like they've already discovered in Sweden and parts of the US.

So why can't we do that?

The official line is that poor schools would soon have loads of surplus places, which is terribly wasteful and we simply can't afford it. Far better to improve all schools by... well, by jolly well improving them... somehow.

Unfortunately, we've been hearing that refrain for the last decade or more. And it doesn't wash any more. As we've seen throughout the public services, top-down improvement programmes are great at imposing Stalinist terror on the workforce, but terrible at improving the service. The iron fist of the state planner has never been an adequate substitute for the subtle self-reinforcing power of the market (cf the collapse of communism 20 years ago today).

Actually, the Commissars themselves now realise their old line is utterly discredited, so today we've been treated to a new one. Usual suspect Labour spokesmen Matthew Taylor and John O'Farrell have both told interviewers that, although parents may think School A is better than School B, that's an illusion: in reality state schools are all ~~bog standard~~ more or less equally as good. Or to put it another way, parents can't be trusted to decide for themselves.

So let's remind ourselves and them of some key facts.

To start with, Labour has massively increased spending on state schools. Spending in England alone will be £46bn this year, which is £6190 per pupil. That's an extraordinary real terms increase since 1997-98 of 109%.

Yet depite all that extra cash, on the most widely used international comparison of pupil attainment (the OECD's PISA study) English pupils have plummeted down the league tables. We blogged the latest (2006) PISA report here, but just as a reminder, our children crashed in all three areas examined:

Reading - down from 7th in 2000 to 17th in 2006
Maths - down from 8th to 24th
Science - down from 4th to 14th

So cost up - huge - and performance down - huge.

Our advice to thieving parents?

If you can't afford private education here in the UK, rent a flat in Helsinki and apply for a place at Helsinki Juniors. Finland spends less on education than we do, yet creams us in the PISA tables.

Alternatively, sit tight, arm yourself with a Big Stick, and force Gove to go through with those school choice reforms he's promised.