Britain

Blighty

  • The Economist/Ipsos-MORI issues index

    A small island with a big problem

    Jan 23rd 2012, 13:02 by A.G. | LONDON

    Chart showing Britain's concerns about the euroA SUSTAINED gloom has descended on Britain, according to a series of polls conducted for The Economist by Ipsos-MORI. Economic woes may have ebbed slightly over the past month but the economy remains the dominant concern, as it has been for the past three-and-a-half years. Worries about unemployment are also prominent. Now a related source of anguish has surfaced in the polls: the euro crisis.

    Although Britain is not part of the euro, some 53% of British exports in 2010 were to Europe, according to figures from the Office of National Statistics. Indeed, Europe bought £230 billion worth of British goods that year. Because much of this trade was done in euros, Britain is exposed to the risk of its failure. As Conservative MP Douglas Carswell so memorably put it, Britain has "shackled [itself] to a corpse". And its people appear to have woken up to the problem: the poll conducted between January 6th and 12th showed that 9% of adults named the European Union or the euro as one of their most pressing concerns, the highest level for six-and-a-half years.

    That is squeezing out anxieties about two other concerns that appear to be in long-term decline: crime (mentioned by 21% of people, down from 55% four years ago); and race relations and immigration (cited by 20% of people, down from 46% four years ago). Health, education, transport and the environment have also slipped down the agenda over the past few years.

  • Leveson’s inquiry

    The Desmond defence

    Jan 12th 2012, 17:31 by J.B.

    DesmondMOST of the newspaper folk who have testified to the Leveson inquiry into the British press, set up in the wake of the phone-hacking scandal, have been rather supportive of the inquiry’s aims. Although they have strongly defended free speech, they have tended to concede that some form of stricter newspaper regulation is in order. A few have the zeal of converts to the regulatory cause. And then there’s Richard Desmond.

    Mr Desmond, who owns the Daily Express and the Daily Star newspapers, testified this afternoon. The effect was akin to one of those strings of small explosives that, when your correspondent was a child, friends would occasionally smuggle into the country from France. His competitors are “idiots”, he explained. He attacked the Daily Mail, calling it the “Daily Malicious”. He called the inquiry “the worst thing that’s ever happened to newspapers” and suggested he would very much like to be rid of it. He complained bitterly about the former chairman of the Press Complaints Commission, whose name nonetheless slipped his mind.

    There was a particularly splendid moment when Mr Desmond was reminded that Kate and Gerry McCann, whose daughter Madeleine disappeared in 2007, had objected to fully 38 stories published in one of his newspapers over a four-month period. Mr Desmond apologised for that. But he went on to calculate that (since the newspaper was running roughly one story a day) it had probably published something like 65 stories in those four months that were not objectionable. That’s more than half of the total.

    Mr Desmond also explained why he has so little time for the Press Complaints Commission, which regulates newspapers and is now, in the wake of the phone-hacking revelations, broadly regarded as toothless. It had “scapegoated” his newspapers, explained Mr Desmond. He spoke of the PCC as a particularly useless variety of trade association. Why had his papers withdrawn from the PCC? For the same reason that he might, in theory, one day decide to leave Britain—because he did not respect its laws and institutions.

    Unlike Paul Dacre, the editor of Mr Desmond’s least favourite newspaper, the owner of the Express and the Star did not come to the Leveson Inquiry with a fully worked-out defence of the industry, or even of his own publications. He could not come up with a convincing explanation of how they ought to be regulated. Much of what he said was unimpressive. But Mr Desmond can run a newspaper profitably (something that is beyond some of those who have testified to the inquiry) and he is a crucial figure precisely because of his contempt for regulators. If the Leveson inquiry cannot come up with a form of regulation that Mr Desmond either wants to submit to or is forced to submit to, it will fail.

  • High-speed trains

    The Concorde of the rail industry

    Jan 11th 2012, 19:07 by R.B |

    It is easy to be beguiled by the vision of modernity that high speed trains offer. The thought of zipping across the country at more than 250mph is tremendously appealing, nipping up to Leeds, Newcastle, even Edinburgh for the day. If it is technically possible to go faster, surely every effort should be made to do so?

    This is the notion at the centre of the £32.7 billion high speed rail project which was given the go-ahead by Justine Greening, secretary of state for transport, on January 10th. Britain’s second high speed rail link is known as HS2, a far longer, more controversial and more expensive project than the country’s first speedy link, which runs from London to the channel tunnel.

    This scheme is not Ms Greening’s own creation - transport ministers on both sides of the chamber have backed it. Britain is following a path that Japan first pioneered in the 1960s. France, Germany, Spain and more recently Italy and China have also invested very large sums of money in bullet trains, which travel at more than 250mph.

    Presenting the latest stage of Britain’s plan in parliament on Tuesday, Ms Greening referred to this as a “transformational scheme” which will “deliver prosperity” and “regenerate the regions”. This is a project “fitting for the 21st century”, says the minister. Many question the economics of this line, but in isolation, the space-age vision of it is exciting. And Ms Greening is keen that if others can do it, so should Britain.

    In fact, the secretary of state for transport is more sensible than this, and has looked into all the reasons and need for a line. The department makes clear that it believes an expected capacity crunch on the west-coast route means that some kind of new line will have to be built within the next decade or so - and a high-speed one is not so much more expensive than a traditional line.

    I have questioned some of those capacity calculations and the economic basis for for the line elsewhere. But the idealistic ambitions around such schemes merit further consideration.

    Think of China, which is currently determined to put people on the moon, not because of any demonstrated utility in doing so, just to show that it can. Britain’s bullet-train ambitions also remind me of Concorde, which for more than 25 years shot through the sky from London to New York in three-and-a-half hours, half the time of a regular flight.

    Many things did for Concorde: the price of tickets (around £8,000 apiece), the cost of maintenance, terrorism, recession, a decline in business travel and objections to the noise of its supersonic engines, not to mention a tragic fatal crash. When engineers first found a way to make a plane fly that fast, though, it must have seemed inconceivable that a niche for such a service would not be found. But that’s exactly what happened.

    Despite Concorde’s withdrawal in 2003, the beautiful dream of supersonic flight lives on. Several companies are developing technologies for private supersonic jets, according to an article by one of my colleagues in September. They haven’t had much take up yet, but that could yet change.

    Like Concorde, high speed rail involves incredible feats of engineering, and I still hope and believe it will have its day. The geography of some countries is better suited to it than others: population centres in America could be brought far closer by speedier train services, for example. Britain, by contrast, is a small island whose cities are fairly close together, relatively few internal flights and is already well-served by a dense network. Its non-high-speed trains are also already faster than many of its European counterparts — and on some lines could go faster still if signalling technology were improved.

    Speed is something the human race aspires to. From the 100-metre sprint to the fast cars of the Formula One circuit, there is a basic assumption that speed is a boundary that should be pushed and pushed. But being technically possible does not necessarily make it commercially viable. I admire the vision that wants to transform a country, bridge regional divides and improve services. I just don’t think that high speed rail has made its case for doing those things just yet.

  • NHS reform

    Under the knife: Paying for priority

    Dec 29th 2011, 11:38 by Under the knife

    Under the knife logoIn this series of blog posts, an administrator at a Greater London hospital reports on what life is really like inside the National Health Service

     THE health secretary’s recent proposal to lift the cap on private patient income for NHS foundation trusts worries me. It is not the economic arguments which I find concerning: a nifty source of extra income for cash-strapped hospitals would be useful, though some seem to think it would cause the death of the National Health Service. Rather I worry that it would lead to NHS patients being seen less promptly in hospitals that took large numbers of paying customers.

    Private patients have long been treated alongside NHS ones: my own department sees a few private patients every week, and the care it offers to NHS patients does not suffer as a result. But if the proportion of private patients substantially increased, that could change. 

    The basic problem is that private patients are treated differently (in every sense) to those on the NHS. It doesn’t matter how stringent the rules are about care being assigned according to need and people not being allowed to jump the queue just because they have money, it doesn’t work out like that. 

    My department’s official policy, for example, is simply to see patients as soon as possible, with the most clinically urgent cases given priority. There are some spare appointments to fit in anyone who needs to be seen at short notice (inpatients, for example), and if a doctor wants a private patient seen then we will squeeze them in if we can, but we won’t bump anyone else down the list so the private patient gets seen quicker. Simple, relatively efficient and fair.

    At least, that is the theory. And most of the time, that is what we actually do as well. But when they are treating a private patient doctors are more pushy than they are when treating an NHS patient. I would estimate that consultants are perhaps two or three times more likely to chase up whether a private patient has been given an appointment than if the patient is being treated on the NHS.

    Sometimes, if my department is busy and the waiting time is longer than normal, a consultant will pop into the office and casually mention that they believe we might have a private patient of theirs on our list and they would appreciate it ever so much if we could find a way to get them seen promptly. Only rarely will a doctor overtly say they want a patient to be seen faster because he is a paying customer, but that is the direction I am being nudged in.

    And sometimes, because it is the path of least resistance, the nudging works and a private patient is seen quicker than would been the case had we been left to our own devices. When the number of private patients is relatively small the impact of this on other patients is minimal, but if private patients constituted a substantial proportion of the people being seen in our department, the pressure to bump NHS patients down the list could be considerable. 

    So if the NHS is to take more paying customers, I think we need to introduce stronger measures to ensure that patients are treated according to clinical need rather than ability to pay. At the moment, when money talks, it is hard not to listen.

     

  • The Economist/Ipsos-MORI issues index

    The bleak midwinter

    Dec 20th 2011, 10:33 by A.G. | LONDON

    Chart showing poll results

    THE poor state of the economy continues to dominate British minds, according to a poll taken by Ipsos MORI during December on behalf of The Economist. Economic woes have outstripped other causes for concern ever since Britain first slipped into recession at the end of 2008. Two-thirds of adults reckon it is the biggest or one of the biggest issues facing the nation, up four percentage points since November.

    The poll identified a split between urban and rural areas on the issue: proportionally far fewer city-dwellers fretted about the economy (58%) than did their country-dwelling counterparts (76%). Curiously, the issue also troubles Liberal Democrat supports disproportionally. Some 79% said they were concerned, compared to 70% of Conservative supporters and 63% of Labour supporters.

    Fears about unemployment are also up slightly on November levels: a third of adults rated it worrisome. Concern about joblessness has steadily increased of late and now stands at its highest level since November 1998. Yet despite high levels of unemployment, the proportion of the public concerned about the issue is strikingly lower than it was last time so many went without work. In 1994, when unemployment stood at similar levels to today, some 62% of people said that joblessness worried them, almost twice today's figure.

  • Exam standards

    Pile them high, sell them cheap

    Dec 15th 2011, 16:34 by A.G. | LONDON

    BRITAIN'S excitable press sometimes gets into a flap over odd issues. One recent example is the Daily Telegraph, Britain's best-selling broadsheet. Last Friday, as David Cameron announced that Britain and the euro zone would part ways—normally fertile ground for the right-wing rag—it splashed on the story that an examiner had advised teachers "you don't have to teach a lot" to pass the tests set by the exam board for which she worked. Today, as the same examiner was hauled in front of the Commons select committee on education, its main headline was "Teachers giving students exam questions".

    Concerns about how England's exam system works are long-standing: the Commons committee's ongoing investigation into the administration of examinations was initiated some time back. Nor is the concern limited to the English system, the committee is looking outside England and the Daily Telegraph also recorded an examiner from the WJEC, the Welsh exam board, as saying, "We're cheating." Part of the reason is the inexorable rise in exam passes. Ever since the system was reformed in 1988, school children have been graded by their absolute rather than their relative performance. When the reforms were enacted, roughly 5% got the top grades. Over the past ten years, the proportion gaining the highest marks has doubled from 9.4% to almost 20%.

    A second reason is gripes from university tutors and employers, who reckon that school leavers are not as accomplished as they used to be. Even the most selective universities now provide remedial courses to address the gaps in the knowledge of their newly recruited undergraduates. Meanwhile the Confederation of British Industry frets that poor standards of English and maths among school leavers could hinder economic growth.

    At the select committee today, Steph Warren, a former geography teacher who was filmed implying that the exams set by Edexcel, her employer, were easy, set out to explain her position. She had been quoted out of context, she said. The film was made at the end of an exhausting training day during which she had been berated by teachers for setting an exam that their pupils had found difficult. That was why she had suggested that "you don't have to teach a lot".

    But the scandal has raised some valid questions about who are the customers in the marketised system. During the 1950s, when the O-level and A-level examinations were first devised, they were offered exclusively by universities. That actually made far less sense then than it does now: in 1950 just 3% of young people went to university; today some 45% of youngsters enrol.

    Yet following the 1988 education reforms, the university boards lost out to new competitors. Some merged, some folded. The four main exam boards in England and Wales now comprise a department of the University of Cambridge, a profitable company and two charities.

    In the interests of transparency, I should disclose that the company, Edexcel, is itself owned by a publisher, Pearson, which, through its ownership of the Financial Times, also owns a stake in The Economist. That said, Pearson has never, to my knowledge, tried to influence the editorial content of this newspaper. And The Economist itself has its own educational venture: successful completion of a course will gain you a certificate of achievement signed by John Micklethwait, the editor of The Economist, no less.

    In today's Daily Telegraph, an anomymous examiner is quoted as saying that the "cause of the rot, ultimately, is competition between exam boards". I think there is some truth in that remark. The problem with the existing system, as I see it, is that the exam boards do not see universities as being their customers. Rather, the customers are mostly school teachers. And, naturally enough, teachers want to enter their pupils for exams that they will pass. Instead of harnessing market forces to drive up standards, the system does precisely the opposite. It should be reformed to incentivise a race to the top.

    One way to do this would be to give universities a stronger role in setting school-leaving exams. However universities are not as saintly as they like to pretend: grade inflation is also rife in higher education. According to the Higher Education Statistics Agency, the proportion of students who gained a first-class degree now stands at 14%, up from 10% a decade earlier. In some institutions, the proportion is far higher.

    So my suggestion is that universities should be given a greater say in judging the ability of school leavers, but that employers should also be given a greater say in judging the ability of university graduates.

  • Britain's EU negotiations

    The remorseless logic of Britain's Europe strategy

    Dec 12th 2011, 3:00 by J.G. | LONDON

    WHAT is sometimes lost in the cacophony of any discussion about Europe is that most sensible eurosceptics and europhiles agree on what Britain's strategy within the EU has always been, even if they disagree on its wisdom. Both characterise the strategy thus: negotiate hard, then accept the final deal for the sake of preserving influence in future negotiations. 

    For the sake of clarity, let's spell it out. Faced with a set of EU regulations that are inimical to its interests, Britain will strive to change them in its favour. It will make some inroads, being a big country and all. The package that emerges will still erode British interests, albeit less than before. But the country will sign up so that it is well-positioned for the next round of haggling over regulations.

    This, europhiles can claim, screams pragmatism and good sense. But it does have an obvious implication that they don't always acknowledge: the incremental damage to British interests from each set of negotiations will build up over time. Britain can ensure that regulation A clogs up its labour market a bit, rather than a lot. It can then do the same with regulation B and regulation C. But the end result is still a labour market burdened by regulations A plus B plus C. In other words, whatever the mitigating impact of British bargaining in any one set of negotiations, the secular direction is one of ever more erosion of British interests.

    If this is the case, the conclusion must be that the gradual build-up of harmful (albeit less harmful-than-they-might-have-been) regulations will eventually reach a level that outweighs the other benefits of remaining in the EU, such as access to the single market. Now, of course, this is where a sincere disagreement can take place between the two sides. The most ardent eurosceptics think we have already reached the point of crossover, where the costs of EU membership outweigh the gains, while many milder eurosceptics feel that we are approaching that point. Conversely, europhiles argue that the benefits of access to the world's biggest market are so profound as to outweigh the costs of gradually accumulated regulations for now and for far into the future.  

    Personally, I agree that access to the single market still benefits us more than the slowly swelling burden of red tape wounds us. I can be persuaded that this will remain the case for decades to come. But the point I want to make is that the very nature of Britain's strategy in the EU (as characterised by both eurosceptics and europhiles) implies that this cannot be the case forever. The benefits of access to the single market are colossal but not metaphysically infinite. The marginal damage we tolerate from each new round of regulations must eventually pile up into something that outweighs those benefits. Maybe not for several years, maybe not for another lifetime, but eventually (unless regulations cease to flow from Brussels, at which point the strategy dies).

    That, to use a phrase favoured by George Osborne in other contexts, is the "remorseless logic" of Britain's historic EU strategy. No?

  • Coalition tensions over Europe

    The coming war of attrition

    Dec 12th 2011, 0:12 by J.G. | LONDON

    THE white noise of hysteria provoked by David Cameron's veto at last week's European summit will come to look bizarre and irrelevant if, as is still possible, the single currency does not survive for much longer in its current form. The ultimate purpose of the summit was to shore up the euro in the short term, and to make it durable in the long term. It is hard to find any neutral observer who is confident that either has been achieved. Indeed, much of the reaction to the prime minister's veto could be summarised as, "This is a lousy treaty, Mr Cameron, why didn't you sign it?"

    For the time being, though, the prime minister's decision is causing convulsions at home. Nick Clegg, his Liberal Democrat deputy, has abandoned his initial support for the veto for a splenetic denunciation of it. He is "bitterly disappointed" with the outcome of the summit, which leaves Britain in danger of being "isolated and marginalised", all thanks to a combination of Franco-German intransigence and Mr Cameron's failure to stand up to eurosceptics in his own party. I was asked about the implications of Mr Clegg's remarks for the coalition on BBC Radio 4's Westminster Hour. My testimony was bleak.

    Senior Conservatives, who have come to expect a burst of outrage from their coalition partners every few months (whether over tuition fees, the NHS, voting reform or Europe), think that this outburst can be contained. I doubt that.

    As the Spectator's James Forsyth put it to me, this is not a time-limited row. The tuition-fees policy has been implemented, for better or worse. The referendum on the alternative vote has been lost. Those battles are over. Europe, by contrast, is the issue that never dies. In the coming years, Tories will implore Mr Cameron to make good his veto by preventing the new group of 23/26 from using EU institutions, resisting the financial regulations they cook up and sketching out a journey to some kind of a referendum on Europe. Meanwhile, the Lib Dems will, with equal vigour and the backing of many Foreign Office mandarins, pressure Mr Cameron to effectively un-do the veto by making conciliatory concessions to the 23/26 and plotting a path back into their grouping. The scope for friction within the coalition, a kind of war of attrition, is almost unbounded. 

    Also, the behaviour of senior Lib Dems is setting dangerous precedents for the doctrine of collective cabinet responsibility. Vince Cable has been allowed to get away with public criticisms of Tories in the past but Mr Clegg's words today were far more provocative. He was essentially implying that Mr Cameron is a weak leader, cowed by his party (a view not so much implied as mega-phoned to the nation by Lord Ashdown today, who said that even John Major stood up to the "bastards" in his cabinet). Again, some Tories hope that the only precedent being set here is that Lib Dem ministers can, within reason, say things that Conservative ones cannot. But what if the precedent actually being set is that any cabinet member can say almost anything without losing his post? Imagine a cabinet in which eurosceptics such as Iain Duncan Smith and Owen Paterson feel as emboldened to speak out as Mr Clegg and Mr Cable. We are not far away from that now, judging by recent days.

    There is very little sympathy for Mr Clegg among senior Tories. "What did he expect?" asked one I spoke to. "The PM said on Monday that he would use his veto if the deal wasn't good enough." (Of course, Mr Clegg claims that he would have somehow struck a better deal but, say the Tories, he was privy to the government's negotiating strategy and did not complain.) They also find it rich of Mr Clegg to accuse Mr Cameron of placating his own party. They suspect that the Lib Dem leader's hostile rhetoric today is aimed at quelling unease among his MPs, MEPs and Lords. 

    It is customary at this juncture to point out that the Lib Dems, who are struggling to stay ahead of the UK Independence Party in the polls, will not do anything to provoke a general election before 2015. But why do we always assume that it is the Lib Dems who get to decide whether the government lasts? What if the Conservatives themselves decide to pull the plug and go to the country? I am not for a moment predicting that this will happen, or suggesting that it is being contemplated in the upper reaches of the Tory party. Nevertheless, it is a prospect that deserves to be entertained more seriously in the media coverage of the coalition. It will be very, very difficult for Mr Cameron to contain the coming war of attrition between eurosceptic Tories and europhile Lib Dems. Opting for an election, even against a leader of the opposition as weak as Ed Miliband, would be a titanic risk. But what if the alternative is carrying on with a government that is not under the prime minister's grip? I suspect that Mr Cameron, a proud man who watched from close quarters as the previous Conservative prime minister wielded office but not power, would rather take his chances than tolerate that.

    We are not anywhere near that stage yet. Mr Cameron is still a dominant prime minister, sometimes effortlessly so. And, for the record, I still think the coalition will last five years. But, to put a crude number on it, I was 80% sure of that last week. I am now only 60% certain.

  • High speed rail

    Delays on the line

    Dec 7th 2011, 16:36 by R.B.

    YESTERDAY the government confirmed that it has delayed making a decision on whether to build a high speed rail line from London to Birmingham, Manchester and Leeds. An announcement had been expected in the next couple of weeks, but over the weekend news leaked out that the secretary of state for transport, Justine Greening, was likely to postpone it until January.

    A consultation was held earlier this year on HS2, as it is known, which would be Britain’s second high speed link (the other one is from London to the channel tunnel). Ms Greening’s statement to the House of Commons gave little insight into what it is holding her up now: “In order to ensure that my decision is based on a careful consideration of all relevant factors, I have concluded that I should allow myself until early in 2012 to announce my decisions.”

    It is not surprising that Ms Greening is taking her time. She took office only in October, once the consultation had already been completed. And this a huge project, in scale and cost: the super-fast railway is predicted to cost £32 billion, will stretch more than 170 miles north from London, and is scheduled for completion only in 2032-33.

    Despite its many critics, the delay should not be taken as proof that the government is questioning the basis of the project, however. It has cross-party support, and much of the opposition to it from within the House of Commons is over the choice of route rather than the idea of building such a speedy link.

    In November, the Transport Select Committee released its examination of the business case for the line and was broadly in favour. Clearly not all MPS were convinced, though. It’s worth taking a look at the appendix to that report to see that there were some interesting debates going on among the MPs on that committee. Such documents are required to note any suggested changes to the final draft, and there is a rather telling attempt from one MP to replace the summary with a completely different one, which includes the sentence: “HS2 is not commercially viable and it contains huge financial risks: it will require substantial subsidy in both construction and operation, even if all goes to plan.” (This is on page 100 of the document.) His proposed summary was voted down.

    By contrast, the discussion now going on at the Department for Transport seems to be about the finer points of the project, and mitigating some of the worst environmental disruptions in some parts of the line. According to one source some cost-savings have been found through making some technical adjustments, but this money will be put into other things, such as costly tunnels to try and maintain some of the prettiest spots the train will run through. Though tunnelling, incidentally, is not without environmental costs, particularly for the spots close to where the trains come out. It’s also extremely expensive — Brunel built giant tunnels but these are no longer possible, and modern-day shafts require a great deal of planning in terms of the land they go through and putting in ventilation shafts and the like. They are also pricey to maintain.

    It is to be hoped that Ms Greening is also considering some of the other details that are as yet unclear, such as how compensation to those whose homes are affected will be assessed and paid for. Those whose houses or land are directly affected are included in the £32 billion price-tag for the project, but I don’t think all compensation is. This is a tricky area which needs to be thoroughly accounted for, in political and financial terms, as far as is possible.

    It still seems a shame to me that the government isn’t questioning the point of HS2. Any claims that a rail link will be “transformational” seem dubious: this will certainly increase capacity on the west coast route, and it will also hopefully last a long time and be enjoyed by future generations. But no railway building can be transformational now in the way that the first network can. Britain is already well-served by a dense transport network that needs upgrading and improving, but not, in my view, through spending £32 billion on a single route. Hopes that this will bridge the north-south divide are inflated.

    I was speaking to a senior official in the rail industry a few weeks ago who said that his colleagues tends to be in favour of more trains in the way that generals are always in favour of more tanks. But he expressed a concern, widely echoed beyond his industry, that if this project goes ahead, other parts of the network will suffer an investment shortage.

    The government is right to be thinking about the details of any such programme of work: it would be negligent not to. But there is still time to look again at the bigger question of the point of HS2, and the opportunity cost of the project. Ms Greening has given herself a few weeks longer to consider. It is to be hoped that she uses that time wisely.

  • Rising inequality

    A nation divided

    Dec 5th 2011, 13:05 by A.G. | LONDON

    BRITAIN has long been an unequal society, and in recent years the gap between rich and poor has grown ever wider. Today a report published by the OECD, a rich-country think-tank, shows that worldwide the distribution of income—as measured by earnings and investments plus benefits, after tax, and adjusted for household size—is more unequal than ever before. It also claims that in Britain income inequality rose faster between 1975 and 2008 than in any other OECD member country. 

    According to Michael Förster and his colleagues, who conducted the research, the top 10% of high-earners have incomes that are 12 times that of the bottom 10% in Britain, up from eight times in 1985. But it is not just unequal societies that have become more so: even in saintly Sweden, inequality has increased markedly over the past three-and-a-half decades. And the trend has continued through good economic times and bad, seemingly immune to booms and busts.

    Why might this be? Mr Förster points to the rising incomes of extremely high-earners, which in Britain are mostly bankers and some medics. Income from investments does not account for great wealth: the richest are those who have high salaries and big bonuses. And, while they pay proportionately less tax than they did in the 1980s, they still fork out a lot. Paul Johnson of the Institute of Fiscal Studies reckons that more than a quarter of state revenues from income tax come from the top 1% of earners.

    Income inequality has also increased as a result of longer working hours. In Britain, both low- and high-earners are spending more time at work than they did a few decades ago, but the wealthy have extended their working hours by more than lower earners. And about half of the increase in individual earnings inequality is due to more people becoming self-employed on low earnings, according to Mr Förster.

    Does inequality matter? The authors of “The Spirit Level”, which caused a stir when it was published in Britain in 2009, argue that unequal societies are worse for being so. Yet some of the links between inequality and the ills attributed to it that they made were weak: strip out America’s high murder rate (which many would blame on guns, not inequality) or Japan’s longevity (likewise on diet, not inequality), and flatter societies no longer look so much healthier.

    Perhaps the main reason for concern is political. Annual polls taken by the British Social Attitudes survey since 1983 show that about three-quarters of people consistently think that the gap between rich and poor is too wide. And more than half think the state should do something about it.

  • The politics of austerity

    A battalion of troubles

    Dec 2nd 2011, 20:21 by The Economist online

    IN THE wake of a dismal economic forecast and strikes over public-sector pensions, our correspondents round-up a challenging week for Britain's politicians

  • Crossrail

    The other side of the track

    Dec 2nd 2011, 9:39 by R.B. | LONDON

    Last week I went to see one of the construction sites where the new Crossrail route will run, a commuter service that will flow east-west through London, from Maidenhead to Shenfield. It is due to open in 2018 and is an extremely ambitious project. It aims to increase the rail capacity of London by 10%, and to bring a further 1.5m people within 45 minutes of the centre of the capital.

    The biggest construction project currently going on in Europe has a price tag to match: £14.5bn. In fact, £1 billion was taken off the cost when the coalition took power: it negotiated a later completion date in order to save that money. But it is still an extraordinary sum.

    I saw some of the reasons for this when I visited Royal Oak in west London. This is the spot where the train will go down a ramp and underground, across the capital. The ramp has already been built, and you can see the “eye” of the tunnel: the circle where the tunnel boring machines will carve out a 6.2m-wide hole. That is due to start in spring 2012. In advance of that, the ground is being prepared so that when the giant drill gets started, none of the other structures in the area will move.

    This is a tricky spot for construction work. The Westway flyover is right next to the site, so its foundations are very close to where the tunnel will be. On the other side run mainland trains and also the Hammersmith and City tube line. And that’s just the obvious stuff. The construction team are also diverting a sewer that runs in this area, and they have to make sure gas mains and cables are not disturbed by the works.

    Boring tunnels underground is a huge feat of engineering. But it also requires an astonishing amount of preparation. It’s a big job even if there aren’t other things to take care of. But when you’re burrowing underneath a very densely populated city, complete with its densely populated communications and utility network, not to mention worrying about housing foundations, noise and local communities, a lot of work, effort — and yes, money — are taken up with such things.

    Crossrail is just one example of what such work requires. On such a densely-populated island, most infrastructure projects are on brownfield sites, rather than starting in pastures new. That’s usually the right thing to do: infrastructure is already in that place for a reason, and there’s little point using a greenfield site unless a very definite business case can be made for it. But it means that any project, however simple, is likely to stumble over a lot of other networks on the way.

    That is not the only reason such programmes are so pricey, of course. Infrastructure UK, a body within the Treasury charged which is helping private sector companies invest, says that project costs in Britain are “excessively high”. In a government-commissioned study of the rail industry which came out in May, Sir Roy McNulty found that costs in Britain were 40% more than elsewhere in Europe. Some of the reasons for this in the rail industry are quite distinct: incentives are misaligned and elements of the franchising system does not encourage efficiency, for example. Sir Roy reckoned that tackling the many “barriers to efficiency” could bring down costs by 20-30%.

    A separate report by Infrastructure UK in December 2010 suggested came up with further suggestions for what raises costs for other sorts of infrastructure works in Britain. Labour and commodity prices are high, but comparable to other parts of Europe. But some projects are started before the design was complete, says Infrastructure UK, many schemes are over-specified and too many bespoke designs are used. On this last, in Madrid, for example, subway stations all look the same, whereas Britain tends to use distinctive architecture for each one. That is more fun, but is a lot more pricey. There were other interesting notes: British construction companies tend to be smaller than their European counterparts, for example, so a scheme of work may involve several teams at different stages, rather than a single company which can project-manage more efficiently over a longer time.

    One of the main causes pinpointed was the stop-start nature of investment programmes and the lack of a clear programme of future work – on November 29th the Treasury issued a National Infrastructure Plan with a £250 billion shopping-list of projects, which aims to address precisely this point. The government hopes that tackling some of these problems will bring costs down: it is aiming for £2-3 billion a year. Having seen the Crossrail construction site, though, I suspect a comparable hastening of projects may be too much to hope for.

  • The row over public-sector pensions

    Under the knife: Why I am on strike

    Nov 30th 2011, 11:52 by Under the knife

    Under the knife logoIn this series of blog posts, an administrator at a Greater London hospital reports on what life is really like inside the National Health Service

    BY THE time you read this, part of me will be wishing that I were sitting at my desk, filing referral letters quietly in the warm and getting paid for the privilege. But that is not where I shall be. Instead, I will be on a picket line outside the entrance to the hospital where I work, trying to keep my spirits up while various sensitive parts of my anatomy slowly reach freezing point.

    In short, along with hundreds of thousands of other public sector workers across the country, I am going to be on strike. I am fairly nervous about this—it is not something I have ever done before, and I am not entirely sure what to expect—but I think it is the right thing to do.

    The reason I believe this is not, funnily enough, that I am an unreconstructed Trotskyist who is bent on causing economic and social upheaval. I doubt there are many people in the hospital to whom that description applies: we would all rather avoid disrupting the running of the hospital if there were an alternative. No, I am striking because I think the work that I and everyone else in the National Health Service and the rest of the public sector does deserves decent pay, benefits and working conditions, and I am worried that without strike action all of those will be taken away.

    I realise that coming out as a striker and trade union member in an article for The Economist is unlikely to be a popular move, but even if you are convinced that what I and my colleagues are doing today is completely wrong-headed, some explanation about why we are walking out might at least be interesting.

    As you are probably aware, this strike is over pensions—specifically, the government’s plans to reform them for public-sector workers, increasing employee contributions, raising the retirement age and reducing the payout at the end for many. You are probably also aware that, in general, pensions are far more generous in the public sector than the private, and you have probably heard that the cost of providing these pensions is set to spiral as we are all living so much longer. So it is understandable why you might not feel that sympathetic to me or anyone else who will be on strike today.

    The thing is, in the immortal words of Mr Gershwin, it ain’t necessarily so. The pension system has already been reformed once, back in 2008. As a result, the cost of public-sector pensions under the current system is projected to be roughly steady as a proportion of government spending for at least the next 50 years. It is simply not true to say that they are unaffordable.

    Whether or not the proposed changes to public-sector pensions are fair is less clear. Personally, I would probably (whisper it) be more or less content to work until my late 60s before I got my pension if I had to. If I am going to live—and stay healthy and active—for significantly longer than people did back when the scheme was set up, it doesn’t seem that unreasonable to expect me to work longer, too. 

    But then, it is easy for me to say that: I have a desk job, where the hardest physical activity I am likely to do is to fetch a new ream of paper for the printer. Is it really fair to demand the same of a porter, who has to spend his days ferrying patients and medical equipment around the hospital? Or a cleaner who spends her days scrubbing floors and emptying bins? I am not convinced that a raised retirement age across the board is a good idea. And all considerations of fairness aside, would you really be comfortable with the idea of 67-year-old paramedics? I am not sure I would.

    As for the terrible state of pensions in the private sector, it is undeniable that pensions are on the whole a lot better if you are employed by the state, especially if you are in a low-paid job, but surely that shouldn’t be an argument for getting rid of the few decent pension plans which remain. (It is worth remembering that for most people who receive them—myself included, unless I get dramatically promoted at some point—public-sector pensions are a long way from being "gold-plated".)

    I am acutely aware that, despite being relatively low-paid, in many ways I am quite lucky. I can still more or less make ends meet, because I don’t have children or other dependent. But many of those who do are really struggling. Most of us in the public sector have had our pay frozen for the past two years and are getting only a 1% increase for the next couple of years—a real-terms pay cut, in effect. I have heard more than one colleague say that they can barely afford pension contributions at the levels they are at now; if contributions go up and pay goes down, there is a real chance they could drop out of the pension scheme completely. And if too many people do that, the scheme will collapse completely.

    I know things are hard the moment, so I am not claiming that my colleagues and I have it any worse than many others elsewhere. But what we are facing is bad, and if the strike fails it is only going to get worse. I wish there were an alternative to a strike, but I don’t think there is. I hope that at least some people reading this can sympathise with that.

  • University applications

    Down but not out

    Nov 28th 2011, 12:36 by A.G. | LONDON

    ALARMING as it might seem, today's announcement that the number of university applicants is in steep decline is no cause for panic. The figures, published by the Universities and Colleges Admissions Service (UCAS), are admittedly shocking: the number of people seeking a full-time place starting in 2012 is down by 13% compared with this time last year. But there are good reasons why this might be so and, despite claims to the contrary from the teaching unions, it has precious little to do with students from poor families being deterred by the prospect of increased student debt.

    When Tony Blair's government first introduced annual tuition fees of £1,000, soon after winning election in 1997, there was a flurry of activity as potential students cancelled gap years to get into university while it was still free. Applications surged, then fell back a little when fees were applied in 1998. But thereafter their numbers recovered strongly.

    Then Mr Blair allowed universities to treble the maximum annual fee to £3,000 in 2005 (all but one did so). The same pattern was repeated: the number of applications rose prior to the fee hike, then fell back slightly the following year, before rising again.

    So it would be reasonable to expect the same thing to happen when the coalition government raised the maximum permitted annual fee to £9,000 from 2012. In fact, circumstances conspired to drive up demand for a university place to unprecedented levels in 2011. The economic downturn increased the appetite for higher education, as people sought to sit out the doldrums in college rather than on the dole. Population growth combined with rising exam pass rates added to the pressure. And a backlog of candidates clamouring for university places emerged.

    Delve deeper into today's statistics and you can see that it is this backlog that has lost interest in university: those aged 20 and over. Indeed the three oldest age groups profiled each record drops of more than 20%. And it is older applicants, who typically already hold the qualifications that they hope will win them a university place, who are most likely to apply early in the applications cycle: the deadline for applications for entry in September 2012 is still six weeks away.

    The picture for school pupils is completely different. The number of 17-year-olds who have applied is down by less than 1%. And while the number of 18-year-olds shows a more significant decline, it may well be that they are taking more care over their applications than in previous years, particularly as the cost is about to escalate. Take into account, too, that the number of school-leavers is falling, and will do so for years to come.

    Indeed bright young things who seek an education at the universities of Oxford or Cambridge, or to study medicine, dentistry or veterinary science, had an earlier application deadline of October 15th. Data released soon afterwards showed their numbers were down less than 1% on the previous year. 

    On Saturday, I spent a couple of hours at an undergraduate open day held at London South Bank University. None of the potential students I spoke to was in the least bit deterred by the increased fees. Each intended to make a decision on where to study based on the content of the course provided, rather than its cost. And the university is not noted for attracting only the well-heeled: 98% of its undergraduates come from state schools, compared to 89% for Britain as a whole.

    Another reason to doubt that increased tuition fees are to blame for a slump in demand is that the number of Scottish students seeking a university place in Scotland (and who will not be charged fees, thanks to the vagaries of the higher-education funding system) has fallen by 16%. A similar patten is seen in the number of students from Wales wanting to study in the principality, and the number of students from Northern Ireland wanting to study in the province. 

    Scroll to the charts near the bottom of the data sheet, and you can see that interest in a university place for 2012 is within a hair's breadth of where it was in 2010. And there is still time for demand to recover: Mary Curnock Cook, chief executive of UCAS, says the organisation is "gearing up for a possible late surge close to the January 15th deadline where applicants have taken more time to research their applications".

  • Migration statistics

    Higher still and higher

    Nov 24th 2011, 15:25 by M.S. | LONDON

    IT HAS been clear for some time that Britain’s Conservative-led government has its work cut out to fulfill its pledge to reduce net immigration from around 200,000 a year to the “tens of thousands”. This is not just because European Union nationals have the right to come to Britain regardless of such pledges; it is also that emigration, a key to reaching the net target, is uncontrollable too. Net migration was higher than ever at 252,000 in 2010, final estimated figures today from the Office of National Statistics show. Immigration held steady at 591,000, whereas emigration fell to 339,000, its lowest since 2001. Provisional figures for the 12 months to March 2011, also published today, show a similar pattern. 

    But just who is failing to emigrate now? Is it British pensioners longing for a bit of cut-price café culture in Spain and France who can no longer afford to move? Their offspring, seeking work in Australia? Not really. The number of British citizens who emigrated barely changed from 2009 to 2010; it is non-British citizens who are choosing to stick around: 211,000 of them emigrated from Britain in 2009, but only 185,000 in 2010. (Again, preliminary figures for the year to March 2011 confirm this trend.) European Union citizens in particular proved less footloose than before—102,000 of them emigrated from Britain in 2009 but only 91,000 a year later—and so did Commonwealth citizens, whose emigrant numbers fell from 63,000 to 46,000. "Others", including Americans, saw little change. 

    There are various theories as to why this is so. Times are tough all over; the number of people emigrating to find work has fallen sharply, and those moving for definite jobs are down as well. Communities of earlier migrants are becoming established in Britain, as old families join primary breadwinners and new families are formed. Poles made up the largest group within the 25% of new mothers in 2010 who were foreign born. And then there is the government’s repeated commitment to cutting immigration: some already here may fear that their chances of getting back in are slim. But until Britain has far better migration statistics, the real picture will never be clear.

  • The Economist/Ipsos-MORI issues index

    It is bleak out there

    Nov 24th 2011, 11:02 by A.G. | LONDON

     

    A CHILL wind sweeps the land: Britain is set for another recession. Growth targets look certain to be downgraded as Britain's strong banking and trade links with its neighbours see it sucked into a Europe-wide downturn. The nation looks likely to enter a long period of malaise.

    If people seem relatively unconcerned about the nation's economic prospects, according to the latest The Economist/Ipsos-MORI poll, it is only because it was conducted between November 11th and 17th, before the extent to which the country's entanglement in the unfolding euro-disaster became apparent. And the results are hardly upbeat: although concerns about the state of the economy were down six percentage points, the issue remained the nation's primary concern and has topped the worry list for the past three years, ever since Britain last slid into recession at the end of 2008. Almost two-thirds of those polled rated it as being one of their main concerns.

    Meanwhile fears about unemployment have risen two percentage points to their highest in 13 years. The poll was taken just weeks after youth unemployment passed the one million mark, and it identifies how unemployment is a greater concern for young people than it is for oldsters: 43% of 18- to 24-year-olds mentioned it as one of their most prominent worries, compared to 27% of those who had reach retirement age. Overall a third of adults were troubled by it. Unease about unemployment looks set to continue because joblessness tends to outlast economic recessions.

    And anguish about the euro has resurfaced—rightly—as a top-ten worry for the first time since June 2005. 

    It is all rather gloomy. To quote the 19th-century English poet Thomas Hood: 

    No warmth, no cheerfulness, no healthful ease, 

    No comfortable feel in any member—

    No shade, no shine, no butterflies, no bees, 

    No fruits, no flowers, no leaves, no birds—

    November!

    Alas, that which ails Britain will not pass with the month.

     

  • Schools reform

    Cry freedom

    Nov 18th 2011, 16:13 by A.G. | LONDON

    THE liberation of England's schools from the cold, clammy hand of local-authority dominance has been the coalition government's most high-profile and successful public-sector reform to date. Indeed, it has been so successful that it is creating both opportunities and problems of its own. 

    Since May 2010 more than 1,000 successful schools and 200 failing ones have won the right to stray from the national curriculum, to vary the length of the school day and to pay staff what they think fit by becoming "academies". That is an astonishingly high figure, given than only 200 did so in the nine years before.

    Now a study published today by Haroon Chowdry and Luke Sibieta of the Institute for Fiscal Studies illuminates how removing the role of local authorities also offers a chance to reform the way in which state schools are funded.

    At the moment, the system is a dog's breakfast. Schools receive strikingly different sums to educate their pupils. The only state school within the square mile of the City of London, for example, receives £9,370 for every child it educates, while schools in Leicestershire get an average of £4,430, according to data from the Department of Education.

    Part of the reason is that schools with hard-to-teach children get extra money. Another reason is that some local authorities keep their sticky fingers on more of the money than do others: 10% of local authorities retain less than 9%, and 10% retain more than 17% of their schools budget, according to Messrs Chowdry and Subieta.

    The pair conclude: 

    The school funding system is in need of reform. However, the nature of this reform depends on what the ideal school funding system looks like in principle. If one believes that a single national funding formula represents  an ideal system, then there was a strong case for reform in 2005 and this case has grown stronger over time. If, on the other hand, one believes that local authorities should have the freedom to prioritise different factors, then there is simply a need to rebase local authority allocations on more recent measures of educational need.

    Because academies are not funded by local authorities, a national formula is needed. That is the conclusion of not one but two consultations on schools funding held by the Department of Education over the past few months. The second sets out its plans to introduce a formula which would include a basic sum per pupil plus top-ups to support pupils from poor families, small schools and areas with high labour costs.

    Establishing a transparent formula would be welcome because it could help head teachers to change their behaviour. Getting extra cash for pupils whose household incomes are so low that they qualify for free school meals might encourage more schools to actively recruit them. Similarly getting funds to spend on pay might boost a school's ability to recruit staff. 

    Such encouragement is necessary because schools so far seem reluctant to embrace their new-found freedoms, as I report in this week's print edition here. Freedom seems to be a necessary but insufficient condition for innovation; any mechanism that could promote it should be welcomed.

  • Fuel duty

    A drive for change

    Nov 17th 2011, 16:27 by R.B | LONDON

    THERE has been a lot in the news this week about petrol prices. That is partly because they are very high—currently £1.34 a litre, not far off their May peak. It is also because a frenzy of anger is being whipped up about them, in the hope that when George Osborne, the chancellor, makes his autumn statement on November 29th he will announce a freeze in fuel duty, or even a cut.

    It is unlikely that will happen. Fuel duty is a very good way for the government to make money—it accounted for 5% of the government’s total tax take in 2009/10. And the chancellor has already put off one set of price rises: in March, he cut duty by a penny a litre, and delayed the next inflation-linked rise until January.

    Amid the hoo-ha about petrol, price and how hard up everyone is right now, it is easy to miss the benefits of the tax: as an environmental tax, it works impressively well. The behaviour of car drivers has changed a lot in the past few years, and that has much to do with the high prices and other government incentives. 

    A survey by British Car Auctions, a lobby group, this week issued a press release about a survey they had done, saying that half of respondents felt that at some point rising fuel prices would “force” them to change to a more efficient car or alter their driving habits. They made it sound like a bad thing. Job done, I’d say—people should be more discerning about which journeys it is really necessary to do by car and whether there are alternatives. 

    The statistics on buying new cars bear out the idea that people really are making different choices. In the year to date, cars in the lowest three emissions brackets (out of 13) made up 28% of all new cars, according to figures from the Society of Motor Manufacturers and Traders. That compares to 20% of sales in 2009, and 11% in 2008. It is an encouraging trend.

    There are a number of different incentives to increase fuel efficiency, not all as good as each other. The previous, Labour government-sponsored car scrappage scheme in 2009/10 was a bit barmy: it was a good idea to get rid of some old belchers, but ridiculous to encourage people to buy new cars when a second-hand car might still have been a big improvement. But the vehicle excise duty is a good idea—it’s an annual tax on cars, but the rate paid depends on the efficiency of the engine. That, along with high fuel prices, seems like an appropriate dovetailing of incentives to get a better car next time.

    The problem with these statistics, like all data, is that people don’t have to pay for the average, they have to pay for what they have. So if someone has an old, inefficient car but can’t afford to replace it, or doesn’t want to because building a new car actually involves a lot of carbon too (often more than extending the life of a gas-guzzling vehicle), then they are stuck with paying very high prices for a car that gets through a lot of fuel. 

    That is why I am encouraged by the fact that people are also changing how they drive, as well as what they drive. Every year since 2007, people have been driving less by car and van.  

    I hope that trend will continue. I don’t deny that many people have to use a car a lot of the time—to get to work, to ferry their children around, to do the shopping or to visit family. But 23% of car trips are less than two miles, so some of those could surely be avoided.

    The number of people driving their children to school has increased, according to the Department for Transport. Cars taking children to school now account for 16% of the morning peak hour traffic (8-9am), up from 10% in 1995/7. That’s partly because people live slightly further from school than they did a decade ago—but only slightly further. It should come as no surprise that Britons are also fatter now than they were a decade ago. There is a correlation.

    The debate on fuel duty in the House of Commons this week droned on for hours and hours. That is because high petrol and diesel prices affect every constituency and so every MP. So many turned to up show that they were making representations from their local members. That’s fair enough. But even if Mr Osborne does delay January’s planned price rise of 3p a litre, fuel will still be very pricey. Oil prices and petrol taxes are likely to stay high for the foreseeable future and not much can be done about that. So if people want to pay less for fuel, something else will have to change.

  • Carbon capture and storage

    What's in store

    Nov 10th 2011, 14:16 by R.B |

    Three weeks ago the government scrapped plans to build the country’s first carbon capture and storage (CCS) facility at Longannet power station in Fife in Scotland. That was a blow in the fight against climate change: if carbon dioxide can be stripped out of power plant emissions and other factories and stored safely underground, fossil fuels could be used without such damage to the planet. The government has promised to pay £1 billion for a pilot project. Since the Longannet work was going to cost more to build than that, it was abandoned.

    Even as that project was being ditched, government officials were quietly murmuring about a proposal for CCS at a gas-fired power station at Petershead, Aberdeenshire. Sure enough, a few weeks on another piece of good news has dribbled out: SSE, which runs the Petershead plant, has teamed up with Shell on the project it is proposing. SSE had already applied for European funding for CCS at Petershead. But the tie-up with the oil and gas major is new. 

    It’s certainly a good idea. This should give SSE extra cash to help fund a detailed engineering design. As importantly, it means that, if the project goes ahead, the gas will be transported to the Shell-operated Goldeneye gas field in the North Sea. The idea is to use existing infrastructure as far as possible.

    Shell is clearly keen to get involved in CCS — it was also a partner of Scottish Power in the Longannet project (National Grid was involved too). That makes sense. If this technology can be made to work, there could be a fabulous commercial business for Britain and for the companies involved. The International Energy Agency estimates that 850 projects will be needed globally by 2030. And since many countries in Europe do not have easy or obvious places to store their CO2 emissions, there may be an opportunity for companies like Shell to make a lot of money importing other people’s waste.


    There’s an added reason why CCS may be a good business bet. There’s a suggestion that pumping CO2 into a former oil field could help force out some of the remaining reserves which are ordinarily hard to get at, a process known as enhanced oil recovery. That makes CCS more cost-effective, because one of the by-products has a high value and should mean a plant needs less financial support. It also makes it a particularly appealing prospect for a company such as Shell that has been extracting oil and gas from the North Sea for decades and has already used up many of the easiest fields.

    But it’s far too early for any talk of a bonanza for SSE and Shell, or for Britain. The two companies are clearly waiting for ministers to throw them some money before they do anything at all. The government gave around £30m towards the Longannet project plan. They also hope to receive money from Europe for the pilot. Even if the money comes through, the firms won’t be in a position to begin a full engineering design until the second half of next year. So this week’s news is good — but Britain’s first carbon capture and storage plant remains a very long way off.

  • The phone-hacking scandal

    James Murdoch comes up empty, again

    Nov 10th 2011, 14:16 by A. McE | LONDON

    THE days are long gone when the sight of a member of the powerful member of the Murdoch family being grilled in front of the Commons media select committee seemed surprising. Today James Murdoch, as the heir apparent to News Corporation, was subjected to a sustained battering by parliamentarians about his knowledge—or lack of it—of key events in the phone-hacking scandal.

    Apart from proving that he did not contravene the law in his own handling of the matter, Mr Murdoch’s own future prospects in the News Corp empire also depend on his ability to fend off allegations of culpability and incompetence. One challenge is legal, the other is strictly business, though none the less important for that. At issue remains the handling of the incriminating “for Neville” e-mail, which made clear that hacking was being ordered by the News of the World.

    Tom Watson, the committee’s most persistent questioner, revealed that the reporter in question, Neville Thurlbeck, had recently revealed to him that the News of the World’s lawyer had told him Mr Murdoch was to be apprised of the existence of the e-mail. Mr Murdoch still denies that this ever happened—and repeated today that his only knowledge of the case pertained to approving a hefty payout to Gordon Taylor, a former football boss, for what he took to be a one-off affair. There was no single moment today at which Mr Murdoch blundered or departed from the line he has previously held on this point.

    There is, however, every sign that senior News International figures are beginning to contradict one another. Previously tight-knit corporate ties are fraying: not least in Mr Murdoch’s assertion that he had assumed that his predecessor as chief executive, Les Hinton, had sorted out the matter of what he assumed to be limited hacking—though they had held no conversation about this. (Mr Murdoch is referred to here as executive chairman, but accepted that he had executive responsibility for the British papers, after Mr Hinton departed to run Dow Jones and before Rebekah Brooks was appointed to the role. If it sounds like trying to follow several series of "Dallas" in one go, that’s because it is.)

    On a further pay-out of £1m to Max Clifford, a celebrity interview-fixer, Mr Murdoch described this decision as the responsibility of Ms Brooks. It will not reassure those shareholders who are concerned about the company’s governance that large sums were apparently signed off by individual management fiefdoms, without the knowledge of others at the top of the company.

    Mr Murdoch was mostly calm though occasionally irritated when committee members presumed to ask about the nature of his conversations with his father—or when he was compared by the bullish committee member Tom Watson to a mafia boss. He deemed this “offensive”. It was meant to be.

    But one of the problems with material as various and sprawling as the hacking allegations (some 5,800 alleged cases are being looked into) is that investigations tend to bifurcate between those who want to dig into allegations directly related to the hacking and those pursuing a broader agenda about the influence and networks of the Murdochs and their editors. Mr Murdoch agreed that, say, having investigators spy on lawyers acting for litigants should not happen—a recent revelation—but, however unpleasant, that is not the point at issue.

    In a lengthy session, we wandered down several such byways. Philip Davies, a Conservative member, contrasted the allegedly lax financial controls of the Murdochs in paying out money to avoid reputational damage with the financial management of the Asda supermarket group. This may be an interesting contrast in business practice, but hardly adds up to proof of very much.

    Earlier, it had been revealed that Michael Silverleaf, the QC advising News International, had warned that there was a “powerful case that there is—or was—a culture of illegal information access" at the News of the World. The question remains how much Mr Murdoch knew of this, or should have known as a top executive.

    Mr Murdoch admitted that things ought to have been handled better, though not necessarily by him. Earlier Louise Mensch, a Tory committee member, had drily noted that Mr Murdoch has so far, at least, kept “coming up empty”. This is largely true: though the man himself may well feel that such a conclusion was preferable to putting his foot in it. The session resumes later today.

  • The death of Philip Gould

    Tribune of the strivers

    Nov 8th 2011, 0:25 by J.G. | LONDON

    THE first political book I ever read remains the best. "Unfinished Revolution" chronicled the Labour Party's journey along the rocky road back to sanity in the 1980s and 1990s. More than that, it championed the end product, New Labour, with moving fervour. It is the most enduring of all the many, many books about the Blair years, an unlikely achievement for an author who had never written for a living. 

    Philip Gould, who lost his struggle with cancer on November 7th, was a senior adviser and pollster in the Labour Party. He was the least famous of the five men who built New Labour. Tony Blair, Gordon Brown, Peter Mandelson and Alastair Campbell drew the attention (and, as time went on, the fire). But Lord Gould (he was ennobled in 2004) was perhaps the most passionate. His restless, whirring mind was fixed on one mission: to help Labour win elections so that it could help its people.

    Those people were not, in Lord Gould's mind, only the very poor. At the heart of his politics was a reverence for the people he grew up with: the aspirational lower middle-class. Or, more simply, the middle class. In the British (though not American) media, that term has been distorted beyond all usefulness to refer to well-off people who just happen not to be posh or plutocratic; one newspaper columnist a few years ago wrote casually that a middle-class annual household income was in the region of £100,000. 

    The early passages of "Unfinished Revolution" lovingly laud the real middle-class, the tribe of people who are actually somewhere near the middle of the income scale. They do unglamorous work, often in the clerical or skilled manual sectors. They live in unfashionable suburbs or commuter towns. (Woking, where Lord Gould grew up, is typical.) They are determined to "improve their homes and their lives; to get gradually better cars, washing machines and televisions; to go on holiday in Spain rather than Bournemouth."

    He writes about how the father of one of his schoolfriends would use any spare cash to make additions and improvements to his nondescript house. It would never look quite right but that was not the point. He was striving.

    In Lord Gould's mind, these strivers voted for Margaret Thatcher in their droves because Labour had abandoned them in favour of liberal-left dogma. The party had come to sneer at these people's economic aspirations, their no-nonsense attitudes to crime and welfare, their fierce love of country. New Labour's mission was to find a rapprochement with the strivers. Three election victories attest to the success of that mission.

    The lessons of "Unfinished Revolution" have been largely lost on the current generation of Labour and Conservative politicians. Mrs Thatcher and Mr Blair shared an almost supernatural feel for the hopes and grievances of the striving classes (it's too often forgotten that Mr Blair, despite the ostensible privilege of his upbringing, was raised by parents who had worked their way out of real hardship). Their successors are tin-eared by comparison.

    Ed Miliband, the Labour leader, spent the weekend avowing his support for the anti-capitalist protesters camped outside St Paul's cathedral in London. As a way of connecting with a junior manager in a Reading retail park who earns £27,000 a year (exactly the kind of voter Labour are losing a grip on) it is, well, innovative. And rather representative of his leadership so far.

    The Tories, if anything, have less of an excuse. Many of the party's modernisers idolise Mr Blair and New Labour. "Unfinished Revolution" is revered; George Osborne, the chancellor of the exchequer, keeps a copy at hand. But they sometimes give the impression of having never opened the book. 

    Looking back, the early modernising drive under David Cameron seemed to assume that the average swing voter was a Prius-driving metropolitan. There was an obsession with the environment. An "A list" of parliamentary candidates was drawn up to promote women and people from ethnic minorities, but not hopefuls from ordinary social backgrounds. Modernisers would talk privately about the politics of aspiration being over. This would have been pretty esoteric stuff from any political party; coming from such a gilded bunch as the contemporary Tories, it was (or at least now seems) almost entertainingly misjudged. When the crash came, and kitchen table concerns about jobs and incomes made everything else seem frivolous, the Tories looked and sounded lost for many months.

    In defence of the current political class, it is harder than in previous political epochs to know what the strivers want. In 1979, they wanted a burdensome state and an out-of-control union movement off their backs. In 1997, they craved well-funded public services. In 2011, their yearnings are a mosaic of left and right: they resent the welfare scrounger on their street but cherish their own tax credit, they detest the waste of their money by government but are wary of spending cuts, they are more liberal on matters of race and sexuality but worry about immigration and social malaise more than ever.

    The strivers determine elections. In 2007 half the population belonged to the socioeconomic categories C1 (lower-end white-collar workers) and C2 (skilled manual workers). The top two categories, A and B, accounted for 26%; the poorest two, D and E, just 24%. And the people in the middle are swing voters. For all the talk of the end of class politics, most rich people vote Conservative and most poor people vote Labour. Middle-earners shop around. They are not deeply impressed by either party, which helps to explain the indecisive result of the last general election.

    Perhaps the problem is that most current politicians, at least those at the top, come from backgrounds so far removed from the strivers. The era of self-made prime ministers (Harold Wilson, Ted Heath, James Callaghan, Mrs Thatcher, John Major) has given way to a political scene dominated by privileged insiders. 

    This biographical determinism sounds crudely reductive, I know. But covering Westminster in recent years has convinced me that, for all the guile and smoothness of this generation of politicians, the raw hunger to get on in life, to get that pay rise, to move from a terraced house to a semi-detached one, to basically be seen as respectable, is lost on them. Even if they understand it intellectually, they don't feel it viscerally. 

    Lord Gould did feel it. For all that he was renowned for polls and focus groups, he did not have to study the strivers scientifically to grasp what they thought. He understood because he was one of them.

  • Schools admissions codes

    Teacher's apple is rotten to the core

    Nov 3rd 2011, 14:23 by A.G. | LONDON

    ACROSS England hundreds of thousands of parents are in the process of choosing a state school for their child. They inspect premises on open days, quiz head teachers and staff, and, at some of the better establishments, they may also be shown round by a well-groomed star pupil who will regale them with tales of derring do. As they decide which schools to place in order of preference on the application form, they will weigh the chances of their child getting into each one. The matter is far from straightforward.

    England's state schools have an absurdly complex rule book for how they may and may not choose their pupils. Apart from the 164 remaining grammar schools, none is allowed to select pupils on the basis of their outstanding academic prowess. Some schools instead select on musical ability, which is supposed to be identified using tests that potential pupils cannot be coached to pass, but which many suspect pick up those lucky ones whose parents forked out for piano lessons. Others chose pupils to represent the full spectrum of academic ability, still others do it by lottery. Professed parental piety will help win a place at a high-performing church school. In any event, paying a premium to live as close as possible to the school of your choice will improve the chances of your child being admitted.

    Navigating these rules takes guile and money, which segregates England's schools into those full of children whose parents have both and those full of children whose parents have neither. In May Michael Gove, the education secretary, announced that he wanted to reform the schools admissions code to make it simpler and shorter. On November 2nd he unveiled the seventh code in 12 years. Alas, though some reforms could ease social segregation, others will work to reinforce it.

    There are some great ideas in the new code. For example, children who are in care have long been afforded first dibs on a school place, which some suspect may be a factor in the inordinate amount of time it takes for needy children to be adopted: if the child is of school age, potential adopters may delay the formal process until after a school place has been secured. The rule is to change so adopted children will enjoy the same priority as those still in care.

    Another interesting innovation will be to allow schools to give priority to pupils whose families have a household income of £16,000 or less, and so qualify for free school meals. Schools will also be given extra funding for these children, which will provide an incentive for them to admit them. If schools make widespread use of this new freedom, it could strongly promote social mobility.

    But other amendments are ill judged. Priority is to be given to the children of staff employed at the school, a retrograde step given that the abolition of this rule in 2003 led to a broadening of the social composition of secondary schools, according to research published by the Department of Education itself. Mr Gove reckons the reform will make it easier for schools to attract and retain teachers in shortage subjects. Phooey. It will help schools with high standards but do nothing to boost the low-ranking schools that are most in need of improvement.

    Allowing the children of middle-class teachers to jump the queue will also infuriate other parents. When it was last allowed, it led to game-playing: there were reports that some mothers took jobs as dinner ladies purely to smooth their child's path into a sought-after school. And it places teachers in the unenviable position of having to chose between what is right for their careers and what is right for their children. Giving priority to the children of school staff is rotten to the core.

  • Gas extraction

    Shale shocked

    Nov 2nd 2011, 14:40 by R.B. | LONDON

    IN SEPTEMBER, Cuadrilla Resources, the first company to drill for shale gas in Britain, estimated that 200 trillion cubic feet of gas lie in an area of Lancashire near Blackpool, in northwest England. On the basis of two well points in the area, it predicted that there were nearly 40 times the previous projections of all of Britain’s shale resources. It is likely that, even if accurate, only a small proportion of such reserves might actually be recoverable.

    So far, so good. But there was a problem. In May, the company had to stop drilling because two tiny tremors were recorded in the region. These were so small—2.3 and 1.5 magnitude—that they would barely have been felt. Nonetheless, exploration was halted over concerns that the seismic activity had been caused by deep drilling and hydraulic fracturing or “fracking”, the process by which huge volumes of water are blasted through rock at high pressure in order to extract the gas. The company commissioned a report by a team of independent seismic experts.

    That report, Geomechanical Study of Bowland Shale Seismicity, came out today, and found that it was “highly probable” that Cuadrilla’s activity did cause the shocks. It reckons they were caused by an “unusual combination of geology at the well site coupled with the pressure exerted by fracking”.

    Mike Stephenson of the British Geological Survey says he is not surprised at the report’s conclusion that these shocks were connected to Cuadrilla’s activities—BGS’s analysis already showed that the shape of the seismic traces the two earthquakes made were similar to each other, suggesting that they had the same trigger.

    One of Mr Stephenson's colleagues, Brian Baptie, also of the British Geological Survey, notes that magnitude does not always tell us everything that needs to be known. A shallow tremor of 2.6, for example, may cause quite strong and perceptible shaking indoors and out. He also points out that coal-mining caused a lot of small tremors in the 1970s and 1980s. These were monitored, but did not cause great problems. 

    Nevertheless, the findings about Cuadrilla's activity will certainly contribute to a prevailing anxiety about fracking. Poland is gung-ho about it and is happily exploring its own shale reserves. But France and two American states have temporarily halted fracking because of fears that chemicals used in the process may pollute water sources. Numerous studies have found that fracking is safe. But many groups are still anxious, and some oil and gas companies have been unhelpfully closed about exactly what chemicals they use.

    The threat of seismic activity is distinct from these concerns. But it will, of course, add to concerns about exploiting shale gas. Unsurprisingly, WWF and Friends of the Earth, two environmental lobbies, have already used this report as a chance to repeat calls to leave shale gas in the ground while further studies are done of the potential risks. Both organisations also think money and effort should be put into developing renewable sources of energy, not searching for more carbon-emitting fossil fuels.

    So this is certainly a set back for the shale publicity machine. Beyond that, there are real questions here for Cuadrilla. Compared to drilling for conventional natural gas, shale extraction requires digging many more wells to get at the gas. Cuadrilla has already said it wants to drill at 400 sites in Lancashire. If fracking at one well can cause two small shocks, that must raise concerns about what fracking at 400 points would do. The shale reserves in this area are also much deeper than equivalent areas in America, the company reckons, though Mr  Baptie says this doesn't neccessarily affect any likelihood of seismic activity.

    Today’s report says the combination of geological factors was “extremely rare and would be unlikely to occur together again at future well sites”. The British Geological Survey's Mr Baptie points out, though, that the geology in the area around the first well is likely to be quite similar. A 2.3 magnitude tremor can be triggered on a fault 100 metres in diameter which moves by just 1cm, he says — and that sort of geology "might be difficult to identify".

    It’s interesting to note that in the Netherlands, large, on-land gas reservoirs have been exploited since 1960. This extraction has also caused repeated small magnitude (less than 3.5), shallow shocks which caused light damage—but much concern—to the regional population. Nevertheless, that seismic activity did not stop the extraction, or any other activity, in that area.

    Another example, less useful to Cuadrilla, was seen in the geothermal industry in Basel in Switzerland in 2006. A warning system was put in place to monitor seismic activity, just as Cuadrilla is likely to install. When a number of events of magnitudes greater than two were recorded, the projects stopped. Yet they weren't halted soon enough—a larger tremor of magnitude 3.5 was recorded, after other operations had ceased.

    It would be more than unfortunate to turn Britain into an earthquake zone. But these quakes really are extremely small. Does it matter if a small shudder, equivalent to a tube train running underground, runs through the earth? The question is whether a broad area of deep drilling and fracking might cause any bigger earthquakes. If fracking is allowed to go ahead in this area, Cuadrilla is sure to be asked to note not just how many tremors are felt, but how often and whether they are getting bigger. Exploration companies have been pulling oil and gas from the bowels of the earth for decades. There have certainly been catastrophic disasters—but not seismic ones.

    Whether shale gas extraction is now allowed to go to the next stage of exploration in Britain will depend on the Department for Energy and Climate Change. For advocates, shale gas is the "wonder gas" of the future. But some questions remain to be answered.

  • University admissions

    Plus ca change, plus c'est la meme chose

    Nov 1st 2011, 11:31 by A.G. | LONDON

    THE oldest and most successful elements of England's education system predate the modern state. Small wonder, then, that they are slow to change, even in response to demands from central government. When the call comes from bodies with little clout, you can be certain the proposals will be crushed.

    On October 31st the new head of the Universities and Colleges Admissions Service (UCAS), through which prospective students apply for university places, launched a consultation on whether to switch to a system in which students chose those institutions to which they wish to apply only after receiving the results of their university-entrance exams, which are typically A-levels sat at the age of 18.

    There would be several advantages to such a scheme. In theory, it could advance social mobility. One of the more frightfully unfair aspects to university admissions is that teachers at high-achieving schools consistently predict higher grades for their poorly-performing pupils than do teachers at low-achieving schools for their highly-performing pupils. That gives a dunce from a posh school an edge over a whizz from a poor one under the current system. Such an advantage would be mostly removed by a shift to post-qualification admissions.

    Yet there are many good reasons why the current system, which has functioned for the past five decades, represents the least worst solution. It offers prospective students sufficient time to investigate their choice of course and institution. It allows schools as much time as possible to get their pupils up to the required grades. It also allows those universities that are most in demand time to discriminate between applicants.

    The reaction from within the university sector has been telling. Wendy Piatt, who speaks for the influential elite universities, issued a statement which read, "It is far from clear that a new post-qualification system would be fairer or improve access to leading universities. Indeed, we would need to be persuaded that changes to the system will not hamper our efforts to attract students from disadvantaged backgrounds, for example, by limiting the time we have to run special schemes and build relationships with those students."

    And that's without involving the schools: the UCAS plan involves universities making no alterations at all to the academic year, while schools would be required to hold exams a month or so earlier, and somehow keep school-leavers entertained until the start of the summer holidays. Post-qualifications admissions have been mooted before, then quietly dropped. Expect the same result this time.

  • Homelessness

    The rise in rough sleeping

    Oct 31st 2011, 18:02 by M.S. | LONDON

     

    MORE people are dossing down in doorways and stairwells and stations all around England these days. Given the state of the economy and budget cuts to social services, that is hardly surprising. But a new survey by St Mungo’s, a homeless charity, puts facts and faces to a grim picture.

    Three-fifths of outreach workers from St Mungo's and other agencies around the country, drawing on their contacts with the homeless, say rough sleeping has increased this year compared with last. Almost three-quarters of them reckon there is not enough emergency accommodation for the homeless in their areas. And well over half think the number of rough sleepers with mental-health problems has increased over the past five years.

    "Battered, broken, bereft—why people still end up rough sleeping" includes findings from the first-ever survey of outreach workers across England as well as statistics from St Mungo’s survey of its 1,500 clients. It is said to be the largest survey of homeless people of its kind.

    The breakdown of a relationship is the main reason why over two-fifths of men hit the street, support workers say: James, for example, ended up sleeping in a dried-up pond after he lost his wife and his job. It is domestic violence that pushes over a third of the women sleeping rough out of their homes: Maria talks of surviving stab wounds that required 43 stitches, as well as a broken knee, before she left her partner. More worrying still, 57% of rough sleepers in this study have mental-health issues, and the fact that most of them booze or do drugs too means that they are often treated effectively for neither condition. Matty’s failure in two residential detox courses was blamed by those running the facilities on his "dementia", for example, yet when two applications were made to social services for mental-health support, the authorities insisted he was simply an alcoholic and did not need their help. And it is not necessarily minor cognitive malfunctions that affect rough sleepers: 16% of those with whom St Mungo’s comes into contact have been diagnosed with schizophrenia, whereas among the general population the figure is 1%. 

    St Mungo’s findings are in line with other sources. According to the Department of Communities and Local Government, the number of people officially accepted as homeless in the three months to June 2011—11,820 people—was 17% higher than in the same quarter of 2010. The latest figures from CHAIN, the Combined Homeless and Information Network managed by the charity Broadway, show that 2,069 people were seen sleeping rough in London between July and September, 216 more than in the three previous months and 520 more than in the same quarter a year earlier. (East Europeans accounted for 30% of the total.)

    The point of all this is to underline that the fiscal squeeze, however necessary for shoring up the national finances, is affecting real people, and it may increase costs in the long run. Homeless Link, another charity, estimates that 1,169 beds in homelessness services were lost in the 12 months to March 2011. Some psychologists working in state-funded mental health say they now have only enough resources to deal with the most severe problems. Earlier this year Denise Marshall, the chief executive of Eaves, an organisation that supports women who have experienced violence, handed back the OBE she had received for providing services to disadvantaged women on the grounds that budget cuts meant she could no longer do so. There is widespread fear among homeless charities that new tighter rules on housing benefit for people under 35, which take effect from January 2012, will push more young people onto the streets, just as most youth organisations are having to reduce services after losing funding.

    Problems don’t go away just because government money to deal with them does: they go underground, out of doors or out of town, and have a way of reappearing, much magnified, years later.

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On this blog, our correspondents ponder political, cultural, business and scientific developments in Britain, the spiritual and geographical home of The Economist. It takes its name from a fond but faintly derogatory name for the mother country often used among British expats.

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