Month: July 2010

One of the worst features of Labour’s regime was the proliferation of bodies that send out glossy brochures paid for by the taxpayer. The brochures got glossier, more numerous and often more vacuous as the Labour years went on. I still can scarcely get in to my office each morning owing to the weight and volume of glossy brochures people send me.

Usually these brochures are part of a campaign. There may be an Early Day Motion the body is promoting through some MP. The brochure usually tells me what wonderful work the institution is doing, but how it needs to do more of it. They often say they have “mixed funding” which means they apply for government grants from a range of departments, Councils and other quangos. Rarely do they provide good information on their financial performance and results, preferring softer copy , pictures and messages.

Let’s begin today with a minnow close to home. Recently “NHS Innovations South East” sent me their latest Report. It told me “NHS Innovations South East identifies and manages intellectual property in the south east on behalf of the NHS”. There is also an Innovations North West and others for other parts of the compass. There are nine in total in England.

The annual Report is a glossy 24 page brochure. Only one page contains financial information, page 22. They do not run to a balance sheet or a cash flow statement. There is just an unaudited Income and Expenditure Statement, with no reason given as to why the audit is not available in time for the Report. We are told we have paid £ 16,460 for accountancy and auditors.The total income for 2009-10 was £1.262 million. This came mainly from government grants from the Business Department and Health Department. They earned some consultancy fees which came primarily from taxpayer funded Health trusts. It looks as if they spent time and money on gaining their income from the taxpayer from a range of sources.

No prior year figures are supplied, but we are told in the spirit of the times they “introduced cost saving and efficiency programs(sic), including reducing office costs by closing two of its regional offices, reducing headcount and implementing IT systems to support home working”.

So what did they do all year as they sat at their new computer screens at home? They added 152 new ideas to their five year total, and are currently engaged on 111 “live projects”. The section entitled “Review of the company’s performance” produced no figures that help a reader to assess value for money or to form any impression of how worthwhile this work promoting new ideas might be. Is spending £10,000 per “live” idea a good diea? What are we buying for this money? Why can’t the companies and Health trusts who innovate advertise their own ideas and draw royalty or other income from them as appropriate?

The network of regional Innovations companies looks like an easy source of savings.

There’s been a lot of noise for some years about the high cost of public sector pensions. The last government talked a little about it, but tried to ignore it. Indeed, most of their actions led to a large surge in the overall costs, as they added to the public sector payrolls, put the pay up, and finally presided over a surge in UK inflation. BY the time they left office the unfunded liability of public sector pensions was over £1 trillion, or more than the stated public sector debt.

The public sector overall gets better pensions treatment than the private sector. There the ravages of inflation, poor investment returns and greater longevity of pensioners combined with Mr Brown’s tax attack and regulatory strictures to close most final salary schemes or lead to cuts in future benefits in the ones that survived. The more the last government regulated the funds, the fewer stayed open or survived. The funds were literally taxed and regulated to death.

Within the public sector there are very different terms and conditions. At one end of the spectrum lie the contributory schemes with employees paying a sum each month creating a fund to pay the bills – like the MPs scheme. At the other extreme are the pension plans like the civil service one where there have been no funds put aside and no contributions.

The Public Sector Pensions Commission has recently reported on this topic. They claim that the government will pay £18 billion in 2010-11 for pensions, when it should be putting aside £35 billion if all the pensions were properly funded. The huge gap between public and private is summed up in two figures. In 2008 94% of the public sector employees were members of a final salary pension scheme, compared to just 11% in the private sector. The normal pension age in the public sector outside local governemnt is 60 and in the private sector 65.

The Review offers nine different ways of closing the gap – a flexible menu from which a suitable set of policies can be drawn. They are:

1. Higher employee contributions
2. Later age of retirement
3.Lower accrual rate – so people have to contribute more over their lifetime
4.Using a career average salary for the final pension
5.Salary ceiling
6.Lower index linking of pensions in payment
7.Ending the contracting out lower rate of National Insurance
8.Switch to funded defined contribution, ending the final salary promise – people get the value of what they save
9.Notional defined contribution

Different people will have different views of how they would like to see reform. As a future beneficiary of the MPs scheme I prefer 1 and 2 – a full contribution rate to cover the cost coupled with a higher age of retirement. As long as the extra burden is removed from the taxpayer there is much to be said for fashioning flexible choices for public sector employees to gain the maximum consent to changes that will be far from popular with many of them.

You read it here first – we need new banks and more banks. That will serve us better.

It was good to hear yesterday the Governor of the Bank of England admit there is a bank lending problem for small and medium sized enterprises. It is also good to see the Daily Mail launch its campaign to get some action.

In the dying days of the last government there was a flickering of interest in the public sector delivering more for less. Ministers started asking to know how much public money in total was spent in each place. They discovered it was often more than they realised, with great overlap between the spending of different Agencies, departments and Councils.

Some Ministers just wanted the higher figures to be able to make claims over how much they were offering. Others saw that there was scope to cut out the overlap and deliver more for less.

I have just received a glossy brochure from the Local Government Group celebrating “Total Place”. Within its 36 sheets it includes the following statement from the “Chair of the Total Place High level Officials group”:

“The time has come to dramatically reduce the number of …targets, indicators,inspection arrangements and ring fenced budgets….
We have too many vulnerable people, households and communities receiving services from countless agencies which fail to meet their needs at great cost to the public purse….
We spend £220billion on purchasing goods and materials across the public sector but we sitll have no convincing purchasing strategy for common goods….”

This commonsense approach is not reflected throughout the brochure. In a Section entitled “regional Improvement and Efficiency Partnerhsips” we are told:

“In local government, we have been familiar for some time with the need to develop a holistic, customer focussed services (sic) through partnership. In some ways Total Place is not new, but the renewed momentum behind the breadth of our focus on transforming services for residents and codesigning with Whitehall certainly gives me cause for optimism”.

The brochure ends with a Next Step that sounds very different from the tone of the “Chair’s” opening statement:

” We propose a new improvement framework with streamlined departmental and inspection stuctures alongside stringent local self-regulation. This would include peer reviews at least every three years”

So is Total Place trick or treat? Would it cut costs and concentrate the money on the people and problems that matter, or will it spawn its own all new language and bureaucracy?

Yesterday in the Commons the Home Secretary told us she wished to opt into part of the EU plans for criminal justice, as the Uk is entitled to do under Lisbon. She presented the European Investigatory Orders Directive as a necessary tidying up or simplification of current arrangements to deal with cross border cases with no extra power passing to the EU.

I proposed to her that she should negotiate into the draft Directive a simple clause giving the Uk the right to leave the arrangement again should it not prove to be as good as she plans. The truth is you cease to be sovereign in a particular area if your future actions require the consent of a majority of other member states to make changes. Other Conservative MPs pressed her on what powers the EU and police from other member states would gain over us. She promised to avoid accretions of power in these sensitive areas in the subsequent negotiations. Labour was quick to give her their full backing.

These matters are currently handled through legal agreements which could themselves be simplified and improved without involving more centralised EU powers.

Yesterday Conservative MPs held the first Economic affairs backbench committee meeting which I have been elected to chair. As early twilight descended on a Westminster preoccupied by the start of the summer recess we discussed the future economic agenda. We decided to concentrate immediately on a response to the government’s consultation paper on banks and the financing of recovery. There were also requests subsequently to examine the roles of lower taxes and less but more effective regulation in achieving higher levels of economic growth.

Bloggers may wish from time to time to make suggestions on suitable items for our attention. The Committee’s remit extends beyond Treasury matters to include the work of other economic departments.

It is good news that this Parliament will resume in September as there is plenty to do.

Yesterday in the Commons we witnessed the new unholy alliance between Labour and the one Green MP to try to limit the freedom. The discussion was about the rights of schools and Headteachers under the new Academies legislation. It was intriguing to see Caroline Lucas in action again – she favours state control and state solutions over giving individuals, professionals, even state employees more opportuntiy to make their own minds up and to differentiate what they do and offer. It makes her a natural ally of Labour as they dump their Blairite baggage and revert to the “state knows best” litany. At one stage she got so worked up she completely forgot the point she wanted to make in an intervention.

One of the ironies of their position is they think Governors and Heads of state financed schools would operate against the public interest or against the wishes of the parents and pupils they serve if they are allowed more freedom from Council control. These advocates of public services have so little trust in the main suppliers of such services that they wish to keep them enchained to Councils and to Whitehall.

As we kept explaining, the legislation was enabling, not mandatory. If Heads and Governors share the socialist view that they would misbehave or be unable to survive with more freedom, they are quite entitled under the new legislation to stick with the Council and what they have. They can put themselves under any amount of central and local regulation they like if that makes them happier. If a school opts for freedom and then does a bad job it will lose the support of pupils and parents and have to change. When did Councils last force timely change in enough poorly performing schools?

There is all the difference in the world between socialist legislation which mandates certain behaviour, requires a service to be delivered in a certain way, and imposes penalties on innovation or choice, and legislation which tries to free things up a little. Let’s have some more of this enabling legislaiton. The public sector is too driven by top down controls and expected to conform to the same broken Labour way of doing things.

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I am told there will soon be a Green paper on the banks. The government wishes to tackle the question of financing the recovery.

I welcome that, and welcome the fact that reading the papers it appears Parliament will be the first to know what is in it.

Readers of this site will know that I would like it to contain steps to put more competition into High Street UK banking. I would also like the banking regulators to say they have done enough for the time being, to allow the banks leeway to lend more to good businesses and against good projects.

It was good to hear the US Ambassdor on the radio yesterday use BP’s proper name, say it is a multinational Group and point out it has 38% of its assets in the USA. He did so in response to some words from a past posting on this website which were put to him. These were the simple points I was making, to try to ensure a proper perspective on the tragedy. I fully understand that this bad accident has upset many people in the affected area whose lives have been badly affected and who deserve compensation and assistance.

I hope the change of CEO will make it easier for BP and the US administration to work together on the final resolution of the bad oil spill. I also look forward to a full account of this disaster, which gets to the bottom of the roles and responsibilities of all involved in the oil drilling, oil service, and oil prospecting companies and amongst the regulators.