Swire’s mate Osborne one of the fattest of fat cats

“George Osborne is close to earning £1m for making speeches since being sacked as chancellor. His latest entry on the MPs’ register of interests shows he is set to be paid more than £150,000 for talks delivered last month.

He had already declared expected earnings of £786,450 for a series of speeches since losing his cabinet job when Theresa May took office.

The latest update shows he is set to receive a payment of £51,842 for a speech to the New York University in Abu Dhabi on 4 March. A further £51,754 is expected from the Hungarian central bank for two speeches, on 1 and 2 March, while £51,540 is expected from asset management firm Insight Investment for a speech on 17 March. These sums take his earnings from speeches up to £941,586.

As well as the speech income, Osborne is set to earn £650,000 a year working as an adviser to the US asset management fund, the BlackRock Investment Institute.

The register shows Osborne expects to be paid £162,500 a quarter for 12 days working as an “adviser on the global economy” and £120,000 this year to be a Kissinger fellow at the McCain Institute in Washington DC.

Osborne is yet to take up his most eye-catching appointment, as editor of the London Evening Standard, so details of his earnings from the role have not been entered in the register.

Despite his other interests, he has vowed to continue as MP for Tatton – a job which pays £74,000.”


Swire much admires his pal having so many irons in the fire. Here are a few comments on George’s jobs from his recent blog post:

“The reality is that in all George’s Osborne’s positions he is being employed as a figure head rather than the man that gets his hands dirty. …

Sometimes we just can’t win! I remember the days when George Osborne (who had never had a job outside politics) was accused of being a member of the political class, a ‘professional politician’ who had no understanding of the real world because he only operated in the Westminster bubble. Ironically now he is a mere backbencher he is being criticized for going out to work! …

If an MP uses his time efficiently he has plenty of room for other interests. I, for example, have some paid outside interests but I’m also Chairman of the Conservative Middle East Council (CMEC) and Deputy Chairman of the Commonwealth Enterprise and Investment Council (CWEIC); both these posts keep my interest in foreign affairs active and enable me to ask informed questions to the executive on foreign matters. …

I fear much of the uproar surrounding Mr Osborne’s new jobs tells us more about salary envy than anything else, and that is not a good basis for an argument. …”


Deprived coastal towns have more depression prescriptions

While this article concentrates on coastal towns in the north of England, the research findings are applicable to many other coastal towns, more than one of which could be said to be in East Devon.

“Doctors in deprived coastal towns in the north and east of England are prescribing almost twice as many antidepressants as those in the rest of the country, analysis of prescription data shows.

Blackpool, Sunderland and East Lindsey, in Skegness, fill the top three spots for the most prescriptions out of England’s 326 districts.

Psychologists said the findings were consistent with links between deprivation and depression, anxiety and other mental health problems. But they added that seaside towns faced a particular set of difficulties that could give rise to mental health issues. …

Dr Jay Watts, a consultant clinical psychologist, said there were established problems with seaside towns that could affect the mental health of their residents. Blackpool, for example, has the lowest life expectancy for men in the country, and last year topped the list for alcohol-related hospital admissions, she said.

“You’ve got high deprivation, high crime, low life expectancy, loads of alcohol problems,” she said. “Also all of these places tend to be, to a certain extent, ghost towns.

“Because of the destruction of local economies by the cheapening of foreign travel, that we’ve known has been happening since the 1960s onwards, one tends to be environmentally surrounded with the ghosts of a better time.”

Peter Kinderman, president of the British Psychological Society and professor of clinical psychology at the University of Liverpool, said the findings were consistent with established theories on what causes depression, anxiety and other mental health problems.

“You’ve got lack of opportunity, lack of a sense of meaning and purpose in life,” he said. “You’ve got the financial consequences on families, consequent pressure on relationships; a toxic mix of how social and economic factors can put pressure on our mental health and psychological wellbeing.”

Pressure on local authorities and civic organisations trying to operate without a well-functioning economy meant there was a lack of services that could help people with mental health problems, he said.

“Incidentally, I don’t blame the GPs or the psychiatrists. What the hell else have they got to offer people?”


“Parish councils: an unlikely urban safety net”

” … Parishes collect just 1.7% of the £26bn raised through council tax overall, so even eye-watering percentages are peanuts compared with the budgets of bigger councils. The average precept in 2016/17 was £54.15 (just over £1 a week), the average rise 6%.

I was part of a group that set up a parish council in Queen’s Park, north-west London, a few years ago, and for the past year have chaired our council. Our neighbourhood of 12,000 people is still the only civil parish in the capital. Residents will see their precept rise by 4.5% this month – under 20p a month on the average bill – but this increase has enabled the community council to provide a grant to our youth centre, which lost all its Westminster City council funding last year.

Did we set up a parish council to plug such gaps? No. Youth services ought to be statutory, and council tax bills for Queen’s Park residents in band E properties are now £46 higher than elsewhere in our borough. The fact that cuts are forcing parish councils to step into shoes vacated by bigger councils is cause for regret, even rage.

But there is an upside. Precept income has also provided additional funds for our neighbourhood park, where a wildlife area locked for years is now open. We have held on to our summer festival and November fireworks, and are working with partners on a jobs advice project. Our parish council can’t fill all the holes created by cuts to frontline services since 2010. But it is better than nothing.

There is another role for parish councils. The world is widely acknowledged to be in a phase of “democratic recession” – a phrase coined by political scientist Larry Diamond – with the hopes of the Arab spring a distant memory and authoritarians on the rise from Turkey to the US. But at the grassroots level, in much of Britain, there is little to retreat from. Most people find the idea of putting themselves up for election to anything utterly foreign. Even the school curriculum is largely empty of politics. However, parishes – if promoted in imaginative ways, as they have been in places such as Frome, Somerset – can provide new ways into local democracy for people who might never get involved in party politics. Indeed, about half of England’s 10,000 parish councils are not party political.

I am not proposing parish councils as a cure-all. There are issues with any form of voluntarism: time is money, and only some people can afford to give it away (parish councillors’ allowances are tiny, and many are retired). But in our divided and individualistic society, the pooling of resources by people who want to do things together should be supported. Civil parishes offer a model of local organisation that is progressive because it is democratic. And if you believe in public spaces such as playgrounds, libraries and sports pitches, there is no better place to make the argument for them than on the ground.”


Toshiba’s nuclear mistakes – a warning for the UK

“The roots of Toshiba’s admission this week that it has serious doubts over its “ability to continue as a going concern” can be found near two small US towns.

It is the four reactors being built for nuclear power stations outside Waynesboro, in Georgia, and Jenkinsville, South Carolina, by the company’s US subsidiary Westinghouse that have left the Japanese corporation facing an annual loss of £7.37bn.

Construction work on the units has run hugely over budget and over schedule, casting a shadow over two of the biggest new nuclear power station projects in the US for years.

Events came to a head last month when Westinghouse was forced to file for bankruptcy protection to limit Toshiba’s losses.

Experts said the delays and cost problems were due to America’s lack of recent experience in building atomic power plants.

“I don’t think it is necessarily because of an inherent issue of US skills but rather the lack of practice,” said Richard Nephew, a professor at the Centre on Global Energy Policy, Columbia University. “There simply have not been as many new reactor builds in the US and this has reduced the overall pool of skilled labor, no question.”

The absence of a mass production supply chain, due to the small number of the Westinghouse-designed reactors being built, played a part too, he added. Regulatory issues had also delayed construction. …

Richard Morningstar, chairman of the Global Energy Centre at the international affairs thinktank Atlantic Council, said: “What is happening to Westinghouse and Toshiba only emphasises the need to double down on research on new, safe, nuclear technologies, such as small modular reactors. If we do not do so in the US, leadership will be ceded to other countries.” …

One such aspiring atomic leader is the UK, where the government wants to build a new generation of nuclear power stations to help satisfy the country’s power needs for decades to come.

But there are obvious parallels between the two countries on the issues of recent experience and supply chains. The UK has not completed a new nuclear power station since Sizewell B on the Suffolk coast started generating power in 1995.

EDF, the French state-owned company which has started pouring concrete at Hinkley Point in Somerset, where it plans to have two reactors operational by 2025, maintains it has had plenty of recent practice.

The EPR reactor design for Hinkley is the same as that for the reactors it is building in Finland, and at Flamanville, in France, though both of those are running late and over budget.

The other new nuclear projects proposed around the UK, all by foreign companies, look less certain and all are still years from construction starting in earnest.

Toshiba said this week it would consider selling its shares in the consortium behind another plant planned at Moorside, in Cumbria, which would utilise three of the same AP1000 Westinghouse reactors being built for the two crisis-hit US plants.

The South Korean power company Kepco last month expressed an interest in buying into the project, and the business secretary , Greg Clark, went to South Korea last week for talks on collaboration on nuclear power. …

Justin Bowden, GMB national secretary, said: “The big moral of the story is what on earth we are doing as a country, leaving our fundamental energy requirements to foreign companies or foreign governments?”

While the government has argued that it has plans in place to keep the lights on if new nuclear projects do not materialise, others said the deepening crisis at Toshiba this week showed the need for ministers to consider a new energy policy.

“It’s time to come up with a new plan A,” said Paul Dorfman, of the Energy Institute, at University College London, who believes the Moorside project is dead. “It’s time for a viable strategy that talks about grid upgrades, solar, energy efficiency, and energy management.”

A report published on Thursday highlighted another alternative: a U-turn on the Conservative party’s manifesto commitment to block new onshore windfarms. Analysis for the trade body Scottish Renewables suggested wind turbines on land had become so cheap they could be built for little or no subsidy, compared to the lucrative contract awarded to EDF for Hinkley.

But the prospect of a rethink by the government on wind power looks about as likely as new nuclear power stations being built on time.”


Britain “drifting to elective dictatorship”

A pessimistic but hard-to-argue-with view of “democracy” as it stands. Note this is NOT about the Conservative Party, it embraces every government – New Labour, Coalition, Conservative – since 1997.

“Since 1997, simple parliamentary majorities have been used to radically alter the constitutional make-up of the UK. Devolution and the creation of the Supreme Court have transformed the country’s institutions. Nat le Roux argues that this is evidence of a growing imbalance of power. The executive can change the institutions of state at will – often for politically-motivated, short-term gain. The extent of the democratic mandate has been exaggerated, as the Coalition government shows.

There is a very widespread view in Britain that our political culture is dysfunctional. According to the survey carried out for the Hansard Society’s 2013 Audit of Political Engagement, two out of three citizens believe that the present system of governing Britain is in need of significant improvement. When asked how this might best be achieved, a large majority of respondents favoured action to increase the transparency of politics and the popular accountability of elected representatives.

It is easy to see why many people believe that a disjunction between citizens and elected politicians is the primary problem in an increasingly dysfunctional, and disrespected, political system. However this is at best a partial diagnosis. In reality, British politics are considerably more transparent than a generation ago: proceedings in parliament are televised, it is much easier to access many types of government information, and the public and private activities of the political elite are subject to relentless media scrutiny. From the perspective of the ordinary citizen, Westminster culture may appear introverted and opaque, but this is an inadequate explanation for the current malaise felt towards British politics and government.

Less evident to outsiders, but equally debilitating, is the growing and dangerous imbalance of power between the institutions of the state itself. Lord Hailsham coined the term elective dictatorship in 1976, and it is a more accurate description of the political landscape today than was the case forty years ago.

Two developments have taken us further down that road. The first is the increasing unwillingness of the executive to respect the independent authority of the judiciary, the civil service, local government and parliament itself. The second is the willingness of governments, especially after 1997, to introduce fundamental constitutional changes, many of them effectively irreversible. Perversely, it is the over-representation of democratic legitimacy as the dominant contemporary political virtue which arguably bears a large measure of responsibility for our current predicament. …

The reality of the democratic mandate

It is often argued by the proponents of executive supremacy that a government effectively enjoys a direct democratic mandate because most voters in general elections believe they are voting for a party manifesto and a prime minister at the same time as selecting a constituency MP. Political history suggests that this argument is a very weak one. Two of the last four prime ministers were installed by their parties between general elections, and this has always been an entirely normal route to No 10. Voters in 2010 did not choose to have a Conservative/Lib Dem coalition government (under the current electoral system there is no mechanism which would have allowed them to express such a preference). Many of the policies of that government were foreshadowed in the election manifesto of only one of the coalition partners, and some policies were in neither. The coalition’s policy platform was the coalition agreement, negotiated by the party leaders after the 2010 election and never endorsed by the electorate.

If democratic legitimacy implies substantial popular endorsement, then the democratic mandate of recent British governments rests on weak foundations. In the 2005 general election, Labour secured an absolute majority of parliamentary seats but only 35.2 per cent of the national vote. The turnout was 61.4 per cent of registered electors. Thus the Labour government which was in power between 2005 and 2010 enjoyed the active endorsement of less than one in four potential electors. …

The sovereignty of Parliament

The reality of party politics, in Britain as in other mature democracies, is that a government’s ability to sustain a majority is not based on an ability to convince legislators by reasoned argument of the merits of particular proposals.

Although backbench revolts are more frequent than a generation ago, nearly all divisions are along party lines. Bills are introduced and passed into law irrespective of their objective merit because, tout court, the government commands a majority in the House. Most MPs, most of the time, support their own party leadership for a combination of principled and self-interested reasons.

Despite the Wright reforms of 2010, it is government rather than the Commons itself which largely determines the Parliamentary timetable and enjoys a near-monopolistic control of legislative processes. At best, party loyalty severely muffles effective legislative constraint on executive action, except in those rare cases where a backbench rebellion is large enough to overturn the government’s majority. None of this is especially surprising or – arguably – objectionable in itself: that is how parliamentary democracies work. However, given the realities of parliamentary behaviour, government claims to an untrammelled and generalised authority may ring rather hollow.

Drifting towards instability?

A pessimist could easily believe that we are drifting towards institutional instability. Governments have become increasingly willing to alter very long-standing constitutional settlements for reasons which often appear short-term and politically self- interested. It seems likely that, even if the Scots vote No, the independence referendum will accelerate the breakup of the United Kingdom. A serious clash between government and the senior judges over the extent of the courts’ powers of judicial review seems increasingly likely. The constitutional position of the civil service is being challenged by the current government in a way which would have been unthinkable a generation ago. Government ministers are increasingly bold in asserting their democratic mandate – or rather an over-representation of it – to trump all opposition. All of this is taking place against a background of the general breakdown of public confidence in the political elite. Not so long ago, Britain was widely admired across much of the world as a model of strong constitutional democracy. It is hard to believe that is the case today.”


“Revolution in council lending could tackle irresponsible borrowing”

“Most coverage of local government finances falls into two categories of story. The first concerns the egregious rewards paid to “town hall fat cats” for often mediocre performance. The other concerns “savage cuts” being made to this or that service due to a reduction in central government grants.
There is truth in both of these. What has not gone reported so much is that a genuine revolution in local government finance is under way.

The traditional model of financing, in which grants are doled out by central government, is gradually being replaced by a system in which councils, collectively, are self-funding and individual councils bear more risk as a result of their own spending and revenue-raising decisions.

Some of these reforms have already attracted attention, chiefly the changes to business rates, over which individual councils will have greater, but still limited, autonomy in future.

Another big change coming has attracted surprisingly little attention. The UK Municipal Bonds Agency (UKMBA) was launched in 2014 with the aim of helping councils to finance their spending. The agency, a public limited company owned by 57 local authorities and the Local Government Association, aims to issue bonds with maturities of between ten and twenty years. Because it is backed by a number of councils who have pooled their borrowing requirements, the theory is that it should be able to create “benchmark” size issues for which there should be greater demand from institutional investors. And because more than one party is responsible for repayment of the bond and servicing the interest payable on it, a “joint and several guarantee” in the jargon, in theory the bonds should be less risky to investors. That should also, in theory, lower borrowing costs for councils.

The idea is common elsewhere. Kommune Kredit has been operating in Denmark for more than a century, while BNG in the Netherlands has been going since 1914. Kommunalbanken has been funding local authorities in Norway for 90 years; other such funding agencies exist in Canada, New Zealand and Switzerland, among others.

One of the key aims of UKMBA is to allow local authorities to borrow more cheaply than the existing lender of choice, the Public Works Loan Board (PWLB), a 224-year-old body that currently accounts for about three quarters of local authority borrowing. Traditionally, the board has charged 20 basis points above the prevailing gilt rate but in October 2010, in an attempt to discourage borrowing by local authorities, the coalition government raised this to a 100 basis points premium.

The board now, in most cases, lends to local authorities at 80 basis points over the gilt rate. It was when the cost of borrowing from the board was increased that leading figures in the local government world began to talk about an alternative finance provider.

Aidan Brady, the former Deutsche Bank chief operating officer who is chief executive of the UKMBA, is on record as saying: “Clearly, we have to beat the Public Works Loan Board [in terms of offering a cheaper rate], that’s as simple as it gets.”

The irony is that just as the new agency is about to offer some proper competition to the board disquiet is growing about the extent to which local authorities have been borrowing from the latter.

The Sunday Times reported last weekend that a number of local authorities had gone on a “£1.3 billion binge” of buying commercial property with the aim of using rental incomes from those assets to supplement spending or reduce the extent of budget cuts they would otherwise be making. The danger is that these authorities have exposed themselves and future generations of council tax payers to swings in the commercial property market. Traditional property market buyers have been astonished at the prices paid for assets such as some sub-prime shopping centres, grumbling that local authorities are distorting the market.

This has been made possible over recent years because by linking the PWLB loan rate to the gilt rate and allowing the latter to be depressed by the Bank of England’s asset purchase scheme the government has created a “carry trade” opportunity for local authorities in which they can borrow at about 2 per cent and invest the proceeds in an asset yielding between 6 per cent and 8 per cent.

None of this has made the job of the fledgling UKMBA any easier. The agency was reported as long ago as June last year to have signed up nine local authorities to participate in the first debt issue, which was expected by the end of 2016, with a panel of eight banks, including three to act as “lead runners”, in place to run it. But no issues have yet taken place. Market sources suggest that this is because the agency is still waiting on one more council to sign off on its participation.

This ramp-up in local authority activity could be because the PWLB, which is currently an arm of the Debt Management Office — the Treasury agency that issues gilts and manages the national debt, is about to be absorbed into the Treasury, which may lead to more control being exerted on its future lending. That was certainly suggested in a government statement last year noting that transferring the PWLB back into the Treasury would “secure greater accountability to ministers and enhance the efficiency and effectiveness of central government lending to local authorities”.

In other words, local authorities are borrowing now, while they can. The sooner they are subjected to either greater Treasury scrutiny on the one hand or the superior credit checks being promised by the UKMBA on the other, the better.

The Times Comment (paywall)