Wednesday, 17 November 2010

The Collapse of the British Tax System

Recently I watched an episode of the long-running BBC television programme 'Panorama'.  The particular programme was entitled 'Are You Paying Too Much Tax'.  It featured a number of case studies of people sent erroneous and often conflicting information by Her Majesty's Revenue & Customs (HMRC) the part of the civil service responsible for assessing and collecting tax.  One couple had been sent 13 different tax codes in the space of a few weeks.  The tax code determines how much PAYE (Pay As You Earn) tax you pay.  PAYE is the way that most people have tax taken from them, only the self-employed tend to avoid it.  Around 40 million people pay tax through PAYE.  The PAYE system is simple, most people do not study their tax code in detail and assume their employer is deducting the correct amount of tax. This year due to problems with new software being introduced 1.4 million people had underpaid by a total of £2 billion (€2.28 billion; US$3.44 billion), but 1.8 million had overpaid by a total of £4.3 billion.  In total 6 million may have been affected by some errors in the past two years and a total of 18 million people if cases from before 2008 are included. 

The key problem was the introduction of the NPS software which was supposed to make tax assessment and collection more accurate and efficient.  However, as anyone who has worked with databases at any scale knows, significant errors creep in when moving over to a new database. A classic case of this was when the 1901 census was put online.  First the database was populated by prisoners who put 'bastard' or some other derogatory phrase beside anyone listed as a police officer or prison warden.  Then it was shipped out to India where in ignorance of British surnames, it was assumed from the lists that 'Ditto' was by far the most common surname in the UK in 1901.  These were extreme examples, but always errors creep in because humans especially low-paid data entry clerks, are fallible.

There is also a long history of government departments suffering greatly from failing software.  Just this year the £12.7 billion NHS (National Health Service) computerised record system was deemed 'close to imploding'.  The project, called the National Programme, has already lasted seven years with failures in software and over-runs in implementation, unsurprisingly numerous companies have pulled out or slashed their bills for the work.  You can find articles going back into the early 2000s around failed IT projects in the NHS for a whole variety of activities, often over-running.  Partners like Fujitsu seem to come back to work for the NHS only to fail and withdraw again.

Air traffic control in the UK has also suffered a great deal from IT and software errors.  Twice in 2000 software 'glitches' shut down British air traffic control for hours.  The move of British air traffic control from West Drayton near London to Swanwick near the south coast was supposed to overcome such problems.  The move did not occur until 2002, six years later than originally planned and even then software problems continued and even in 2008 they were still suffering disruptions due to the software.  It was a similar story at Prestwick which handles Scottish airspace.  In 2009 there was another computer failure at Prestwick, preventing cross-Atlantic flights.   These are just two examples of how important parts of organisations linked to the government (air traffic control was part privatised with the formation of NATS - National Air Traffic Services in 2001), suffered and continue to suffer from computer and software problems.  You could have predicted something similar for the HMRC.

Tax is becoming more complex for individuals because many of us have more than one job at a time or pick up short periods of work which we do not pay PAYE tax on.  Since the early 2000s far more people have had to do their own tax returns in the way that everyone seems to in the USA, but at least if you do that then you have an idea of what figures are going in and you can tell quickly if what you are being asked to pay seems wrong.

Now, in January 2010, even before the October cutbacks were even dreamt of ('nightmared of' may be more accurate), the HMRC had announced the closure of 130-200 offices and redundancy for 25,000 staff .  The amount of unpaid tax that was going to be written off, i.e. tax the HMRC was no longer going to pursue had already risen from 23% in 2006 to 40% in 2009.  It is estimated there is £17 billion owed in unpaid tax and for a sizeable minority of those people, generally rich, self-employed people, they will now not ever be pursued.  The amount of current unpaid tax is equivalent to 2% of all government expenditure in 2009 (£631 billion) and more than double what is spent on international development; welfare (excluding pensions) took £97 billion in 2009; defence £42 billion, so though while it would not dent those figures greatly, it is a significant amount.  In October it was announced that the budget for HMRC would be cut by £990,000 but it was assumed that £7-8 billion would be recouped in going after unpaid tax, though presumably not the £1.5 billion of the bills that arose from the computers which it now seems to be being written off too, due to popular pressure.  If the HMRC recoups less revenue then its funding will effectively fall further.  It has seen a 24% reduction in staff since 2004 even under Labour and a further 14% (around 10-12,000 staff) in the next five years; staffing will be 58-60,000 compared to 105,000 back in the early 2000s.

It seems ironic that when we know that there are billions of pounds of unpaid tax and the computer system is worsening the situation, that the part of the civil service which brings in revenue is being cut even further.  It clearly has been unable to do the job for the last five years (even 23% tax avoidance seems high) and this will worsen in the future.  What is this going to mean to the average tax payer?  Well, as anyone who has tried telephoning a UK tax office knows, you are very unlikely to have your phonecall answered.  The woman in my house tried for 1 hour per day for 3 days without getting a reply.  It is clear that many more of us will get the wrong amount of tax taken off us.  Those people who work in a number of jobs or freelance and quite often get over-taxed as each employer charges you at the full rate, will probably never see their overpayments refunded. 

Of course, in contrast to ordinary people, the government and their allies will be laughing.  The Conservatives have always pushed to reduce tax levels, but it is clear now, that when that is not politically acceptable, they simply let their rich supporters not pay any tax at all or only the amount they wish to pay.  Lord Ashcroft  former treasurer of the Conservative Party, and David Rowland who was offered the post next but withdrew both went into tax exile or failed to pay taxes in the UK.  Ashcroft saved £127 million in taxes by not being resident in the UK. 

'The 'Guardian' quoting Robert Peston gives a wonderful illustration of how much Sir Philip Green, an advisor to the Coalition Government avoided paying on a single dividend  in 2005: ' ...a tax saving to Sir Philip that has been estimated at £300m. That one dividend payment ... was equivalent to what 54,000 people on average earnings would earn in a year, would build around 10 secondary schools capable of educating some 13,000 young people, or, if paid in an unlikely column of pound coins, would tower 2,350 miles about the Earth's surface.'

Lord Laidlaw a big funder of the Conservative Party and because he was made a lord, a member of the House of Lords, part of the British parliament, stopped funding the party due to questions over the amount of tax he was paying.  He is a resident of Monaco, not the UK.  Of course, these four are only a miniscule fraction of the 6 million British tax exiles.

These men are just the tip of the iceberg.  I think as a sop to people like me, the government says it is going after 'offshore' accounts held by people who owe tax in the UK.  Apparently British people have £125 billion in Swiss banks and in an agreement with Swiss authorities £3 billion of unpaid tax on such money will be repatriated; close to £1 billion is supposed to come back from Liechtenstein and another £1 billion from other tax havens around the world, though not the Cayman Islands which apparently has the largest amount of British money held overseas to avoid tax.  Even with a larger, better funded HMRC these people have been getting away with massive tax avoidance.  How much easier is it going to be for such people now that the HMRC is being shrunk further and its funding reduced?  Of course, these people tend to be Conservative voters and particularly supportive of the hard-line New Right policies Cameron has adopted.
Thus, as with so much of the current government policies, the approach to the HMRC means that ordinary people will suffer more.  We will get confused statements without explanation, may be under or over charged without our knowledge and then be asked for the money back or have to wait for years for our refund, if it ever comes.  I believe I have paid £16,000 too much tax because of confusion over me selling my flat to buy a house (they assumed I owned more than one property at a time, which I never did, I have only owned one property and part of another in my life and never at the same time) but I have no hope that my query will ever be answered.  In the meantime, those who have already saved millions in tax will find it even easier to avoid paying any tax and presumably will be freer to reward their friends in the Conservative Party and to spend their money on boosting the income of Monaco or Belize or some other tax haven rather than contributing to the ailing UK economy.  Every week it seems there is just yet another area in which the ordinary people of the UK are rapidly and vigorously being shafted so that the privileged can benefit even more than before.  Clearly I should set up an IT or software company specifically selling defective systems to government departments, that would keep me in work for 6-7 years and pay me millions even if I produce nothing that works.

Saturday, 13 November 2010

Rioting And Reaction

David Cameron should be proud of himself, it took Margaret Thatcher two years before her government faced rioting and yet his policies to throw us back into some Edwardian-style society and shut off opportunity for all of those people who are not already in the elite he moves in, meant he had his first riot just six months after coming to power.  In addition, it was a political riot, one directed at the policies of the government, rather than, as with many riots in 1981, focused on local friction with police behaviour.  The riot was not extensive, only 56,000 people (150% more than had been expected), primarily students protesting about the raising of fees for the young people reaching university age in the next few years.  It was primarily focused on the Conservative Party headquarters in Millbank in central London.  There were acts of vandalism and rioters got on to the roof of the building.  However, overall 14 people a mix of rioters and police were hospitalised and 35 people arrested, which is very small scale compared to riots in London of the 1980s and 1990s.  However, this may be just the beginning.

Interestingly, in contrast to the G20 protest last year, at which the police went in very forcefully and murdered a passerby, and even when compared to the original round of protests against student loans, famously in 1989 with mounted police riding down student protestors, some of whom later showed the hoof marks on their shins when they had been trampled by the horses and images of students being clubbed by batons, the police response was very low key.  This has angered Conservative Party members as there was no police protection of their headquarters as the focus had been on the nearby headquarters of their coalition partners, the Liberal Democrats.  I imagine this was due to the earlier protests outside the house of the Liberal Democrat leader, Nick Clegg.  Police have been criticised for under-estimating the scale of the disorder and not bringing in a large enough force.  They had, however, protected Whitehall ministerial buildings, which in the past have been a target.

I think there are a number of reasons for the nature of the response.  First, the weather was terrible on the days either side of the riot, Wednesday 10th November.  If it had been as bad that day I doubt we would have seen even 20,000 protestors and it is unlikely rioting would have started.  However, it was sunny and dry.  There is a clear correlation in the UK between good weather and rioting.  The second thing is, after the criticisms the police received after the murder of Ian Tomlinson (a passerby not even a protestor) by a police officer during the G20 protests in April 2009, they are probably a little more careful and the aggressive policy of hunting out the protestors and breaking them up or even 'kettling' them was avoided.  Perhaps the police saw students as being 'different' to the G20 protestors, though the bulk of them were ordinary people, not revolutionaries.  On Wednesday the police reacted rather than being proactive.  However, I think, at the next large scale protest they will being encouraged by Home Secretary Theresa May, who in effect, unlike with other constabularies in the UK, heads the Metropolitan Police, to take a more aggressive line and certainly to put a ring of officers around the Conservative Party headquarters.

There is another more mischievous explanation for the Metropolitan Police's reaction, particularly in leaving Conservative Party headquarters unprotected.  On 20th October the government announced cuts of 20% in the police budget.  I have not seen the figures for the reduction this is likely to mean for the size of the Metropolitan Police, but we can make some estimate from looking at other constabularies.  The Greater Manchester Police employ just over 13,000 staff (this includes all uniformed and plain clothes police and all civilian workers in the constabulary), the West Midlands Police, almost the same.  These two constabularies reckon they will have to shed 3,100 and 2,100 employees respectively, i.e. between 16%-24% of their workforce.  Not all the losses will be uniformed officers, but some will have to be.  If the same ratio of job losses is applied to the Metropolitan Police with a little over 52,000 employees then it means laying off something between 8,300 - 12,500 employees.  Given that it is argued that Britain continues to face potential terrorist attacks which most likely would target London and with the crime rate always rising as unemployment climbs as it is at present, you can see why the Commissioner of the Metropolitan Police, Sir Paul Stephenson, might feel that it is the worst time to be cutting the police service so severely.

Thus, perhaps next time there is the risk of a riot, the Metropolitan Police will say, 'well we would love to be able to protect Conservative Party headquarters' but unfortunately the cut-backs mean we cannot spare the officers to do so'.  This shows how the government's widespread cuts hitting at all parts of public service, are to a degree politicising sections of that service which normally would never come close to protesting.  The last time the UK had a police strike was in 1918, but it seems we may be on the path to another one.  Firefighters have struck more often, but usually on a localised basis, but already, only six months into Cameron regime we are seeing strikes of the nature that the Labour government of 1974-9 only experienced in its closing months.

Now, looking beyond the immediate issues of the likelihood of more rioting and the challenges for the police in dealing with it, are there bigger political moves behind all this?  Of course, we know from the early 1980s, groups such as the Socialist Workers' Party (and back then Militant Tendency) believe that a revolution will only come about when the bulk of the population, even those who typically cannot tear themselves away from watching 'The X Factor' to even answer the door, are so angry with the government that they strike and riot.  I have always felt this was a delusional policy, the British are far too passive a bunch ever to even protest on the scale we have seen in France over the past two months, let alone something more active.  British society is incredibly divided and people tend to blame others on their level or specific groups like students, the unemployed, single mothers, immigrants, asylum seekers, ethnic minorities, gay people, people from the North/the South/Scotland/Ireland rather than the government.  We have already seen the rumblings of race rioting which was another aspect of the 1970s and 1980s (and the 1950s and the 1910s...). 

What I think is more likely is that there will be a counter-reaction by the state.  A riot on the scale of the Poll Tax Riot of 1990 would play right into David Cameron's hands; it would be what the 11th September 2001 terrorist attacks were for George W. Bush, they gave him carte blanche to strip citizens of so many civil liberties.  Cameron in many ways takes the policies of Margaret Thatcher and drives them in harder and faster.  So, as Thatcher used the rhetoric of 'the enemy within' applied by dictators commonly to Jews, Socialists, Communists, also Catholics and Freemasons, and during the Miners' Strike of 1984-5 allowed police to pick up people driving around London simply on the suspicion that they were going to attend a coal mine rally, I can see this coming with Cameron, but even more harshly.  I have often commented how Tony Blair's govenment steadily eroded civil liberties in the UK.  Blair is the link in the chain between Thatcher and Cameron, advancing their agenda rather than reversing it; Major and Brown were barely hiccoughs in that process.  If Cameron cannot fund a larger police force, then he will use legislation, he will encourage the public to inform on their neighbours (something we have been encouraged to do for a number of years now) and given the restriction on prison spaces, other limits to personal freedom will be introduced.

A sub-headline on 'The Guardian' frontpage of Thursday said 'Both sides warn of 'more to come''.  Already 'sides' are being outlined.  Winter is not the time for rioting, but come April and beyond, especially if there is a hot summer, then I think we will see disturbances that will make 1981 look tranquil in comparison, partly because this government has unsettled not only those usually at odds with the state, but also very quickly, those like the police and firefighters, who generally we loyal to the state but now feel they are being stabbed in the back.  The government reaction, with the ground so well prepared by Blair, will be harsh, and with the cutbacks, will probably have to involve the military.  I do not think Cameron is an idiot, he may be evil, but no fool.  He must know that you cannot destroy the hopes of so many people and expect them to accept it passively.  Thus, I believe, as Thatcher prepared well in advance for the Miners' Strike, he is readying to oppose civil unrest and use the opportunity to suppress civil liberties that little bit further.  He believes he is right, because, as I increasingly believe with every passing day, he is bent on reshaping British society to something resembling the fixed hierarchical model of a hundred years or more in the past.

Friday, 12 November 2010

The Death of Opportunity 2: Cutting Off Chances in Further Education

Now having been unemployed for five months these days I spend most of my time in a 2Km radius of my house with occasional trips out of the town for job interviews.  I interact with very few people: the woman who has been assigned my case at the Job Centre, a couple of staff in the Post Office and a few others in a couple of supermarkets in short walking distance of my house.  Consequently a lot of my input has to come via the internet or the newspaper.  I view the BBC website for news and I buy one or two copies of 'The Guardian' per week, so my media intake is pretty restricted, though giving how alarming so much of it is, I probably could not take much more.  Call me weak, but at the moment I could not stomach any content which told me that people of my kind are lazy and bringing down British society.  Someone offered me a copy of the 'Daily Mail' in a cafe the other day and I turned it down warning her that she would just hear me shouting at it: I would rather gaze out at the people walking by in the wealthy town I had been called for an interview in.

One columnist I read in 'The Guardian' is Polly Toynbee.  I welcome her articles, even if I do not always agree with them all, because she has such a broad scope and each week seems to shine a light into a corner of the socio-political landscape that many others are overlooking.  I disagreed with her when she advised Gordon Brown to step down before the last election, but now see that she was probably right.  It should not have made any difference, but in our society which makes more out of the style rather than the substance of what politicians are saying, it might not have meant Labour winning more seats, but it may have done and it might have strengthened the chance of a Labour-Liberal Democrat coalition rather than the one we ended up with which is busily taking the UK back to the 18th century in terms of social division and making it into a replica of Greece in the 1970s in terms of its economy.

Toynbee's column reminded me that in my recent posting about the rapid destruction of higher education, i.e. universities, in the UK, like many commentators I had missed the greater damage that was being done to further education, i.e. education for pupils 16+ though also often encompassing vocational and skills training for older people.  Whilst higher education has expanded rapidly in the past 15 years, it still impinges on far fewer people than further education.  Toynbee's argument is that damaging this sector, and other elements of education I discuss below, will shut off far greater opportunities for people than even the damage being down to universities.  I find her argument convincing.  Last year I looked at how despite the efforts of the Blair Party to increase social mobility in fact they had pretty much failed:  I had detected a resurgence among the privileged and that has obviously continued far more vigorously now that David Cameron is in power. 

It is interesting to note that if they had lived under the regime Cameron is imposing, previous Conservative prime ministers Edward Heath, Margaret Thatcher and especially John Major would never have got the opportunities that they did and would never have got close to the top of the Conservative Party let alone becoming prime minister.  Cameron is vigorously pursuing a social counter-revolution, not only seeking to turn back equality gains of the 1960s but even, it seems, of the 1910s.  There is an assumption by many that the current public expenditure cuts are only temporary measures and sometime after 2015, presumably with the deficit reduced, things will ease.  This is an utter mistake.  Cameron would have pursued his New Right destruction of the state even if there had been no deficit.  Cameron has no intention of ever restoring the welfare state and other branches of government to anything close to the level he has found them in.  People's lives are being wrecked right now in order to fund the huge salaries and bonuses that Cameron's friends in the City are receiving and to supply all business with a low waged and compliant workforce that it lusts after, so as to make even larger profits.

What Cameron and his cronies are doing now will damage the UK long after Cameron has died of old age.  In the 1990s, as in the 1960s, it was recognised by all the leading political parties that the UK was falling behind not just European but global competitors because it had a poorly educated and trained population.  You only had to work in the civil service in the 1990s to see how many Spanish and Danish people were in senior positions to know the UK was not generating enough intelligent people to hold those positions; we sent fewer than half the civil servants we were entitled to, to the European Commission and had to make up our quota using people from states like Sweden and Austria at the time outside the EU.  That is just a tiny example.  You can look at the fact that so few UK utility companies are now owned by British companies.  Now, I am not prejudiced, I would not say: no foreign ownership of companies in the UK (something interestingly even the BNP and UKIP have not argued), if they are better than UK companies, then it is a factor of capitalist market competition that they should win.  It is just that the UK hampers the chances of its citizens by offering so few of them the chances to be educated and trained to the level needed to run successful companies.  I know people say that successful business people are born and not made, but on that basis why are MBAs so popular to study?

The recognition of this need led to the expansion of higher education.  However, no business is simply run by the high level executives, it needs educated, trained and skilled people at all levels and this is something, which even in my recent writing, I have failed to really emphasise in the way Toynbee did so well last weekend.  The Labour government's attitude to boosting training at all levels has been almost covert, and, at times, ambivalent.  Notable is the sharp cutbacks in the mid-2000s funding to 'lifelong learning', i.e. training for people who were adult learners, often seeking to retrain or raise their skills.  The funds were shifted to 16-19 training provision.  There was an attempt yet again to resolve the problem of the British looking down on vocational training, but yet again, pretty much as it did at regular intervals in the 19th and 20th centuries, the vocational diploma is seen as a failure.  Vocational training always fails due to snobbery, parents 'want better' for their children than to be trained to be skilled rather than academic.  This is because, unlike, say, Germany, which I think all of us would acknowledge as still very successful in industry, there are never technicians, engineers, let alone workers on the boards of companies, rather people who studied Classics at Oxford.  In addition, UK companies always want the state to simply train students to be able to work in their particular company, as if they should be designated like citizens of 'Brave New World' (trained for one specific purpose and discarded when no longer wanted).  This is incredibly short-sighted.  Unlike, say, German employers, who see that a pool of skilled workers is better to be able to draw from and induct into your way of working, rather than a pool of untrained workers who you then have to train up to basic levels before even getting them to engage with your company.  In the UK this obsession that a worker must be locked into your company for as long as you need them and no other method is acceptable, has really hampered the development of an educated workforce at all levels.

Even with the governments of Blair and Brown which seemed sympathetic to greater opportunities, not only for the high flyers but also the middle-ranking people who fill up so much of any company, there were challenges in raising the training levels of British workers.  Now that is going entirely out the window.  This is going to impinge on not only the quality of British companies, but also, as with all of these things, the prospects for millions of people.  Toynbee noted things that too many have forgotten, that Further Education (FE) colleges already received lower payments for students compared to schools with 6th Form years (i.e. years 12 and 13) attached: £4,631 compared to £5,650 per student.  FE colleges are the places where students who are taking a little longer to get their basic qualifications catch up and they are the places where the core of vocational training goes on.  Even for people on apprenticeships or company training courses, a lot of the actual teaching, and this is not simply in the classroom but in college workshops, goes on in the local college.  Out of FE colleges come people trained in a vast range of activities such as caring, agriculture, hairdressing, mechanics, catering and office work. 

FE colleges are what now produces the skilled working class as opposed to the unskilled, with the machine minders of the past now call centre workers.  Having skills of a nationally recognised standard (and you only have to think back eating in restaurants and cafes in the 1990s to see the improvement through things like NVQs)  not only means that companies have more skilled workers, but also that these people have more opportunities and through better pay inject more money into our consumer-driven economy.  No economy can run on simply having the unskilled alone.  The likelihood is that skilled workers from across the EU will come and fill the gap that, through its cutbacks (because FE colleges are funded by local authorities), the government will quickly open up.  The other element which damages opportunities is the shutting off of the Education Maintenance Allowance (EMA).  This was something that until a few months ago, you heard advertised regularly.  The EMA was only £30 (€34; US$48) per student per week and was only paid to families with a combined income below the national average salary.  The total bill was £500 million, just over a third of the cost of (building, let alone maintaining) the two aircraft carriers not to be in service until 2014 and 2016.  The thing is EMA, introduced in 2004, made the difference for many young people between being able to stay on at FE college and be trained and being compelled to go to work immediately, by definition in a lower paid job, or now as unemployment rises, be unemployed.  It is a double loss to the state as they will have to receive some benefits in order to live and in some families it will mean teenagers being pushed out on to the streets into crime.  As Toynbee notes, the supposed concessions in the cuts, such as £150 million in university bursaries and the 'pupil premimum' will benefit wealthier middle class families rather than the poorer ones who gained from EMA, not just in the immediate term but longer because their children could go into better jobs.

Noting this, shows up how prejudiced the government's policies are in terms of social class.  As recent revelations about the state subsidy of the pensions of teachers teaching at the UK's most elite schools, Harrow and Eton and the fact that the head of Lloyds bank which is 40% publicly-owned is being paid £8 million per year shows that the elites are not 'sharing' the pain of the supposedly deficit-imposed cuts.  Further down the social hierarchy, whilst the middle classes feel they too are being unfairly punished (to a degree I think Cameron under-estimated, but that is the 'me first' society Thatcher and her inheritors created - deal with it Cameron) they will gain some sops by having money taken from those people already in lower social categories, increasingly being locked into those categories and being both disparaged and pressured in terms of cuts, because they are not only more dependent on state assistance but other things such as public transport which is going to suffer too.  We see a regressive spending policy which seems bent on hardening social division and robbing the poor to give yet more to the rich.

Toynbee highlights a further example, which is Sure Start which was begun in 1998 and even I have generally overlooked it as one stand out achievement (along with the minimum wage) of the Blair governments.  We all know that children from different social backgrounds with equal intelligence when they start school will find two years later that the poorer child is already falling behind the wealthier one.  In many ways we are already in the 'Brave New World' model that because of opportunities, internet access at home, a mother not compelled to go out and work and a father employed by family-friendly company not compelled to work long hours, is always going to help, especially as IT now plays such a role in education even in pre-school years.  Sure Start was a useful gateway which brings us back to the FE colleges, because the 'one stop shop' approach meant not only assistance with pre-school learning and also parenting skills that many feel parents need training in, but also connected parents to training and retraining at local colleges.  This is now all going with its government funding frozen (so falling in real terms) and again local authorities further pressed for the cash they would have put into Sure Start.

I am grateful for Polly Toynbee for continuing to scratch behind the headlines, dominated by higher education, to show how extensive this government's damage to opportunities is.  If they believed in a successful private sector with skilled, trained staff, then they would not be ending EMA.  Though no-one has stated it, and too many continue to divorce the financial aspects of the spending cuts from their social impact, it is clear we are heading towards a society in which you will have no chance to get yourself out of the social category into which you are born, even through study and hard work.  You will be condemned from birth by this government's attitudes.  I guess they think middle class people no longer able to aspire to higher education will take over the vocational places and give up hope of 'threatening' to come close to the 'natural' elite that Cameron and his ilk clearly see themselves as being.  I see a bleak future for FE colleges, always in a challening situation in terms of their funding; some, I have noticed are rebranding themselves as FE/HE colleges, seeking to capture the kind of 'community college' market, a cheap university, as in the USA.  However, I believe that the government have made a severe miscalculation and very quickly the UK will be lacking skilled workers even skilled middle management and this will have to be supplemented with people from other parts of the EU where you can still get training in these necessary aspects of work.  Many of the opportunities left are being closed off right now in your street and right across your town, for the benefit of the wealthy.

P.P. After I wrote the first draft of this posting I heard on the BBC news that the School Sports Partnership which now involves 6.5 million children, has introduced 1 million children to doing competitive sport in the past year alone and costs £150 million is to be axed.  The government says it wants to encourage more 'competitive sport' and leave choices up to school heads.  Yet again they show their upper class prejudices, that somehow, state-backed sport is not about encouraging competition and this scheme replaced rather than augmented school provision.  Given the challenge of childhood obesity in the UK, the cost of this step will not only be on opportunities but additional burden on the health system in the years to come.  It is apparent that again, with the apparent carte blanche provided by the deficit, the government is social engineering once again.  Sport has often been a 'way out' for a few individuals from ordinary and poor backgrounds, but now such opportunities are being choked off.  It is very likely that the British teams competing in the 2016 and 2020 Olympics will have have the same social profile as those competing for the UK in 1920 or 1924.  Sport will become an elite activity once more not an opportunity for people from ordinary backgrounds to shine.

Sunday, 7 November 2010

The University Market

Back before the election in May 2010, I commented how it appeared that the Conservative Party had very little stated policy.  Wrongly I thought that this was because basically they were not far in policy terms from the Labour Party, especially in its Blair Party incarnation up to 2008.  I was wrong in this.  It is now clear that the Conservatives were planning an extreme New Right version of Thatcherism and knew that if they were open about that fact it would lose them votes.  Given that they did not win a majority anyway, in terms of electoral strategy they were right in terms of making electoral gains to keep quiet about their real intentions.  What I, and other commentators tended to overlook, was that there was policy out there being stated not only in the right-wing media but even in more liberal output.  None of the speculations were as harsh as the policy that has in fact been introduced, but if you look back at what was being discussed while Gordon Brown was prime minister, you see the desires of commentators, and, by implication, influential people behind them, that encouraged the kind of policies were are now seeing enacted.

Two trends I did pick up on and comment on, though did not really understand how they would form the basis of future government policy, certainly in the way we have seen it were: the desire for the return of the 'whip of unemployment' - and also the desire to have a far greater demarcation in university education, so that the privileges the already privileged are gaining were not lost among the fact that more people from ordinary backgrounds were getting degrees -  That second posting was prompted by comments in 'The Guardian' which though it gave its support to the Liberal Democrats during the election was hardly a supporter of the harsh monetarist, small state policies that the coaliton involving the Liberal Democrats has introduced.

Universities have always been a challenging issue for political parties.  Higher education until the 1990s remained the preserve of an elite, with in the 1980s, only 6% of 18-year olds getting to it.  Before 1992 there were two classes in higher education: universities which were funded by the central state and polytechnics, in the UK more vocationally focused and funded by local authorities; these were seen as 'second class' despite the good courses many of them ran, many of which contributed far more to the economy than university degrees.  Even with this small percentage with the population rise and the desire to cut public spending the grants to students were reduced and removed and loans were introduced in 1990, though at this stage they were not to pay fees which were still paid for by the state, they were to give money to live on.  Universities were expanding but not at a massive rate and so generally could balance income and expenditure.

In 1992 polytechnics and many other institutions were allowed to become 'new' universities.  This upset many people (it still does) who felt that the elitist nature of universities was being watered down.  Coming from a smaller scale, more industry-focused background many former polytechnics were actually better equipped to deal with the growing 'market place' of higher education than the more established universities that had been used to students automatically turning up.  Many of the new universities moved quickly into research which is what had distinguished universities previously, and in certain areas became very leading in this respect.  However, they were more alert to the fact that the students were effectively their 'customers' and whilst they may have had less space than universities they actually paid attention to what students wanted in a way that the older universities had often been neglectful of.

The big change came in 1997 with the government of Tony Blair coming to power with the slogan 'Education, education. education'.  The goal of that government was that 50% of 18-year olds would go to university.  One driver for this was how low our level of graduates was compared to other states in the EU and competitors across the world.  The high level of pupils leaving school with no qualifications was another factor but received less attention.  The post-1992 universities had grown and now grew even faster as many of the students from 'non-traditional' backgrounds often went to their local university and on to courses that could offer them a better chance of a job than studying English at a traditional university.  The increase was incredible and I now find that universities that friends of mine went to in the 1980s now take four or five times as many students than they did 25 years ago, though often jammed into much the same space.  Expanding universities so quickly, with all the new demands for computer facilities and students not tolerating the kind of accommodation we put up with, meant that universities found it hard to sustain the growth.  It seems most of it was funded not through taking more UK students (or even students from elsewhere in the EU who by law could not be charged more than British students) but taking students from Asia and to a lesser extent the Americas and Africa.  The big supplier of students is China.  Students from outside the EU pay fees three times higher than what English students pay.  Here it is important to note 'English' students because when tuition fees were introduced for students in 2006/7 they did not come to Scotland for Scottish students studying there and there were reduced rates in Wales and Northern Ireland, already a differentiated 'market' was appearing.

The market in 'international students' as they are called is not infinite and with China building more universities and other EU universities teaching courses in English, plus continued competition from the USA and Australia, only briefly dented by their difficulty with foreigners following the 11th September 2001 attacks, UK universities can no longer rely on these students as a 'cash cow'.  Also these students only want to study particular courses, especially in business rather than the full extent of the curriculum.  Talking to one lecturer they said that on some business and management courses the classes are 90-95% Chinese students now.  Universities have expanded faster than their revenue base has done.  Some have balanced this well, some badly, and, of course, the current sharp cuts in public spending, cutting the grant universities get for teaching by 40%.  Apparently from 2012 only science, engineering, mathematics and foreign language degree courses will receive funding, other subject areas will have to generate their own income.

Up until last week universities were limited in what they could charge UK students.  This limit has been raised to £9000 (€10,600; US$14,400) per year, i.e. £27,000 for a three year course. Effectively this brings the charge to UK students in line with what international students were charged.  In fact some so-called 'premium' courses especially in business have had exemptions and been charging such high fees already for everyone.  Students will be loaned this money and will only have to pay it when they start earning £21,000 per year.  Given that unemployment of recent graduates is around 25% at present, many of them are not going to be repaying for many years to come.  The so-called graduate 'premium' of earning more because you have a degree only really applies to sectors like banking in which most people can become rich.  Remember these days that nurses have to have degrees and yet the starting salary for them is just on £21,000, which is around £10,000 lower than the national average salary.   Now, with the current fees, most universities charge the maximum, they need the money.  However, there is an expectation that with the £9000 some universities will charge less, the implication being that those 'lesser' universities so perceived last year will become cheaper universities; they will attract poorer people to do cheaper courses and leave the 'proper' universities to the wealthy and privileged it is clear that a lot of commentators feel should be the only people to go to university.  As Margaret Thatcher said about studying Anglo-Saxon in the 1980s, I believe at the University of Oxford, 'what a luxury'.  A 'good' degree from an 'elite' university is now going to become something the wealthy can indulge in.  By the back door, the polytechnic segregation has been re-introduced.

We cannot avoid the fact that if we want universities as large as we have them now money must come from somewhere.  This current government is unwilling to provide it.  I favour a graduate tax, but this was ruled out a couple of months ago by the government, one which is averse to anything called a tax.  In many ways, however, the tax is effectively a private one as students will pay back the money with 'real' interest rates.  Up until August 2010, student loans were repaid at a nominal interest rate, which with recent low rates had actually fallen to a negative interest rate of -0.4% on loans taken out before 1998, which meant that even if you made no repayments your loan decreased.  Now, however if you took the loan out before 1998 you pay 4.4% and if later, 1.5% unless the bank base rate rises which if it does the interest rate will rise to a maximum of 4.4%.  Before August the rate for these later loans was 0% which meant students just paid back the capital.  Now, even before the cap on fees was taken off and even before a more market-orientated interest rate was introduced the average undergraduate was leaving university with debts of £25,000.  There is a whole issue about how high rents, food and utilities are in the UK anyway, which obviously contributes a lot of what students spend.  Many supplement their state loans with bank loans, at commercial rates of interest.  Even if fees had not been permitted to rise, student debt levels would have risen.  Student debt has meant that people from social categories 4-7 (i.e. the old working class categories) going to university has not risen at all since 2002, the ongoing rise has been in middle class people and even they now are feeling the squeeze. 

The government is saying that universities charging more than £6000 per year on a course must put in steps to assist working class students to attend.  In fact they were compelled to do this from when fees were first introduced and most have a sliding scale of help, though this then annoys the middle class students just out of the support band and allegations of parents splitting up so their children can get funding.  There is no evidence that since 2002 such assistance has raised working class participation in universities, but perhaps the level has not fallen in the way it would have done if such university grants were in place.  One factor that is constantly overlooked is how people are actually averse to getting into such vast debt even if help is offered.  This tends to affect people from working class backgrounds more than other social groups and men more than women which is one reason why there are no 6 women studying at UK universities for every 4 men.  Knowing that you will have £27,000 of debt just for fees, let alone the debt for living costs which we can estimate is around £16,000 for three years (obviously depending where you are studying, which is why so many students stay at home with their parents now), you are looking at £43,000 of debt, which even on the magic £21,000 is more than two years' salary.  With the interest rate of just 1.5% and taking 10 years to clear the debt, just for the fees, you will pay £31,334 by the end, that is a lot to clear in 10 years, so we will most likely see people stretching it out over 25 years like a mortgage (perhaps meaning they cannot get a mortgage as well, taking the best educated people out of the market for buying houses) and this would cost you £39,175.  If the rate is 4.4% then it is over £41,000 over 10 years, again, note, just for the fees.  It will be very easy for students to rack up more than £100,000 of debt by the time they have paid it off, with even currently very low interest rates.

People are going to be very critical of what they get for their money.  I have heard students on public transport pricing up individual lectures, and complaining while the snow was closing roads, that they needed a refund for the lectures cancelled when staff and students could not get in.  They will demand courses that will give them jobs.  This is what the government want.  They want ordinary people only to study a narrow range of vocational courses and places seen as 'cheap' or 'second rate' and leave the rest to the already wealthy.  It is clear universities will have to close many humanities subjects let alone things like art and even pure sciences such as astronomy.  If there is no clear occupation at the end of the degree it is going to be off the curriculum.  In addition, you will find the only people who become researchers in social sciences or astronomers are people from very rich backgrounds, just as was the case in the 18th century, the kind of society it seems apparent David Cameron wants to engineer.  Even in the Conservative Party he is turning back the clock from the culture of the days of Heath, Thatcher and Major in which hard working people from ordinary if not poor backgrounds could get on in the party, now you have to already be from the elite.

Some universities, probably led by the London School of Economics and the University of Cambridge, will become private.  It makes no sense for them to chase after the measly sums the state is giving them, with what they might see as restrictions when they might as well charge their students the same fees and get to have it all on their own terms.  Some UK universities are already struggling, in some towns lay offs have been in their hundreds.  People do not seem to realise that universities employing 5000 or more people are like large factories and when they close it ripples out through the local economy as expenditure in local shops, on rent and public transport, as well as a cheap supply of labour disappears.  Closing a university will take thousands of previously well-off people out of the local economy, plus all the tens of thousands (most universities now have over 20,000 students) of students.  I know many towns loathe students but they will miss the money they bring especially during this recession (or is it bad enough yet to call it a depression?)

These institutions will be absorbed by others or private companies or may simply collapse.  I imagine we will see mergers and ironically, those post-1992 universities who have had a more robust market model actually buying up parts of more established universities who have had a not as tight an economic model during the boom years.  At many universities students from outside the UK will become the majority as they already are in some subjects.  As unfunded courses are dropped and the focus is purely on the most profitable, those courses which already attract lots of foreign money will become dominant.  UK students will become a minority on many campuses.  There will also be lots of redundant academics swilling around in the economy, especially from arts, humanities, social sciences and pure sciences.  Given the commercial sector's aversion to anyone from an academic background, it is very likely you will have a lot of unemployable but highly educated people and what they will do as they fall into poverty is an interesting question, especially as the public sector where they might have previously found work also contracts. 

I envisage some imaginative students will leave the UK.  Apparently the University of Maastricht is happy to take students at equivalent to £1500 per year fees at present and teach them in English (knowing that most British people have no grasp of any language bar their own) and with lower living costs than the UK.  British university students are perhaps going to move into the position that Chinese and Indian students have held coming to Europe and the USA in the past.  Clever American universities would also tap into this market, if they need to.

In David Cameron's shockingly vigorous drive to make the UK a far more divided and elitist society, universities which, since the 1960s, have been seen as a way for ordinary people to advance themselves, are clearly going to come under attack.  The thing is, our competitors are still turning out more graduates than the UK and right across the subject spectrum not just in very limited areas.  It seems likely that in the future the government will find it difficult to find any British people qualified to advise it on the economy or social development let alone cultural issues, it will have to rely on Chinese people.  Students often stay around the university town they go to, Sheffield in particular has benefited from this.  The UK now will be exporting intelligent people to the Netherlands and other EU states many of whom will not come back.  I imagine many more will flee the UK to escape the huge debt burden on their heads.  As with so much of the current government's policy, this is being done for extreme ideological reasons, to smash meritocracy and return British society to the control of the privileged.  All the stuff about the deficit is just a front to cover such ardent ideology. 

I lived through a period of growing opportunity, with higher education a core element of that.  It is being killed off very quickly.  Before the next election we will see a fall in university students, the closure of some universities and a new elite, high-priced band of institutions, some of them private, and even these teaching a far narrower range of subjects than before.  Other institutions will be offering what are perceived as second or third rate degrees, still necessary to get a job whilst being disparaged, and coming at a huge financial cost to individuals who as a result will be unable to contribute to the economy.  The choice will be to join private business and scrape enough together to buy a house or study and rent for the rest of your life.  Both models favour the kind of society that the government wants: one in which landlords and banks make vast profits, even beyond their previous excesses, for the crumbs they provide to ordinary people.  It will be a society in which study will be reserved for the rich not the intelligent.  This will naturally mean that talent will go abroad and the UK economy will be weak compared to its rivals, but if the city merchant bankers can still make their profits, the government's view is that the rest of us should be humble and grateful for what we can scrape and have no right to protest about the lack of opportunity and penury the rising generation face.

Wednesday, 3 November 2010

New Bad Driving Habits

Driving from interview to interview (my record is having covered 240Km between two interviews on the same day) I have been encountering new elements of bad driving.  Of course, we still have the general fact of people feeling they have a right to speed (exacerbated by the fact that they think/know that the speed cameras have been turned off) and that there is no need to signal when changing lanes or going around a roundabout, but I have now spotted three new trends that I thought it worthwhile highlighting.  Driving habits are always of interest to me partly because I am incredulous at how so many people get away with appalling driving and never seemed to get caught by the police.

The first new habit is the least severe.  It stems from how the signal of flashing your headlights to other drivers has been mutated by aggressive drivers on British roads.  In the past, flashing your headlights a couple of times meant 'I'll wait, you come on' and was usually used when in a narrow road to indicate to the person that they should come through the slot.  I also use it to allow people to turn right in front of me, across my carriageway, when I see that a long queue is building up behind them.  However, many British drivers now use the headlight signal in the opposite way, i.e. 'Wait, I am coming through'.  This is the way it is officially used in France, but over in the UK it stems from the very aggressive ways in which people seem not to feel they must drive.  An example is when they come up behind you in the middle or the fast lane of the motorway and flash their lights and sometimes sound their horn too.  They are saying 'Get out of the way, I am faster and you and am coming through', no matter whether that means they break the speed limit or not.  I have had this done to me when overtaking a lorry in the slow lane briefly bringing me into the middle lane of a motorway, but clearly too long for someone racing up behind me who could not be bothered to move over to the third lane.  What has become apparent over the last few weeks is that people, usually, though not exclusively men, but certainly ones driving expensive Audi and BMW cars simply keep their headlights on permanently.  I have wondered if this was a technical element of the car like the Volvos which used to permanently have their side lights on.  However, unless someone can draw my attention to it, I have not become aware that suddenly these cars have headlights permanently on as a feature (I know motorcyclists opposed such a step as it meant they stood out even less in the traffic).  In my view, they are doing it especially on motorways to say, 'Look, I have a big, powerful, expensive car, don't even think of pulling into the lane in front of me, keep out of my way'.  Of course, seeing such behaviour encourages me to pull out in front of them and slow down, but I know that is hazardous, but indicates the kind of problem such posturing can provoke.

The next bad habit is again about bullying.  At a roundabout in the UK you are supposed to give right to traffic coming from the right.  Vehicles in side roads are supposed to give way to vehicles on the main road, there are specific markings on the road to show who has the right of way (if you do not understand these markings, please read your Highway Code).  Now, however, it is a question of judgement: 'ah yes, that car is ten years older than mine/has an engine capacity of 500cc less than mine/is driven by someone old enough to be my mother' and on that basis the driver pulls out on to the roundabout or the main road.  As they roar away, or quite often due to the heaviness of the traffic roar and then brake sharply, they are oblivious to the chaos of sudden stops and shunts they have left in their wake.  At roundabouts I think some of this stems from the fact that often you have no idea which exit people are aiming for and so people think they should jump out and take the chance.  Sat navs do not help with their reference to 'third exit' often not making it clear which they are counting (often leaving off minor road exits) and they certainly cannot cope with junctions when you have to go basically straight but jig a little to left or right (usually comes out as 'turn left, turn right'), they need terminology which more accurately reflects the erratic pattern of UK roads (try using a sat nav to get around Swindon's so-called 'Magic Roundabout' system!).  A lot of it, though simply stems from impatience and arrogance.  It is clear if you do any driving on British roads, let alone the distances I cover, that many people think they have a right to be able to behave differently to the law, let alone custom and practice on the roads.

This combination of arrogance and impatience brings me to the third bad habit which I first spotted comparatively recently, but now seem to see all the time.  This is overtaking people when they are trying to turn right.  I will clarify what I mean, (and if you live outside the UK, Japan and Australia, substitute 'right' for 'left' and vice versa in what I am saying to understand what I mean in your context) of course, when people want to turn right on an average road they move into the centre of the road.  These days they often have to sit there for a long time before someone coming the opposite way lets them turn.  In these circumstances, if there is space, then it is permissible to pass the car on the inside, i.e. in the UK, to the left hand side of it, the one nearest the pavement (though when this occurs between lanes on a motorway it is termed 'undertaking' and is illegal).  What happens now, however, is that people overake the car trying to turn, i.e. they go round it on the right-hand side.  This is madness.  If the person (whose attention is usually focused on the oncoming traffic rather the traffic behind) had decided to turn right at that moment then they plough into the driver overtaking them.  It also reduces their chance even further of getting to turn right so freeing up the highway quicker.  The driver overtaking has to go fully over into the oncoming lane so potentially exposing that car to being hit by oncoming traffic typically charging up the road.  It is no wonder so many accidents happen in low speed limit areas in towns.  However, if you have ever known anybody who has suffered the years of pain that comes with a whiplash injury, you know how bad such accidents can be.

Driving is a job.  It is often boring and needs a lot of patience.  It is not a place to get angry or be arrogant.  When you get in your car you are no longer an individual traveller but instantly a cog in a machine.  If you try to break out of the set patterns of that machine it will break quickly and people will be injured, including youself (your beloved vehicle is liable to be damaged with you to blame as well).  The ignorance of the basic rules of the road in the UK make it hard for the bulk of people whether from Britain or visitors, to drive safely without facing reckless, unexpected, unpredictable behaviour.  We need to stop bullying by drivers, we need to stop them simply focusing on how bored they are or how they want to show off and instead remember their duty to the public as a whole.  They would be furious if someone mowed down their partner or child or parent and yet they behave in a way which risks the health and lives of other people's loved ones.  We need to restore basic manners and consideration to driving and have harsher penalties for those who cannot adhere to those things.  Removing speed cameras was a step in the wrong direction and I can only see the next few years witnessing an increase in death and maiming because of arrogant, selfish driving.