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Friday 10 January 2020

Tarquin's and Jemima's Euro-freebies

You'll have noticed that petulance yesterday hit 9 on the Coogan Scale at the Commons rejection of an amendment that linked the Erasmus scheme to the WA Bill. Soyboys and snowflakes across the land swooned in grief as the great middle-class freebie was left at the future discretion of the government. Let's take a quick look.

The following table was published by the EU back in November -

Erasmus has a budget of about €16.45bn for the 2014-2020 programme period, of which the UK currently pays around 11% or €1.81bn. From the EU's table above, we get just 3% of Erasmus awards, worth around €0.49bn. We're therefore currently paying around €1.32bn to give the children of other nations a nice freebie - and it's clear that both France and Germany are the nations that benefit most.

Erasmus is the sort of scheme that most benefits kids from ABC1 homes, university top-streamers, those with comfortable parental incomes, kids who can easily master a second European language, with parents with the time and inclination to drop their offspring and their huge rucks at airports, collect them again as required and fill their accounts with spending money. Gap year kids. The privileged offspring of our privileged metropolitan elites.

You might consider this to be both criminal waste and squander and a not very fair use uf UK tax resources. Certainly we should encourage and assist our young people to travel and learn in Europe. We should also ensure we give UK taxpayers value, and we should ensure that young people from all backgrounds, including apprentices and those at tech and vocational schools as well as universities, can fairly and equitably access any grants.

So I'd encourage the government to steel itself to resist the sharp elbows of the middle classes, the petulant whining at the red end of the Coogan Scale and to introduce proposals for participation on fair terms.

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Thursday 9 January 2020

The real news today isn't about a vacuous B-list actress

Sajid Javid will have his work cut out at the Treasury if he is to use government economic intervention to 'even up' the UK. Believe me, I've done my fair share of Treasury funded regeneration schemes; every significant regeneration scheme needs one not only to jump through microeconomic hoops but to provide stuff unheard of in private investment analysis. No Treasury case is complete without adjusting for Optimism Bias in the prescribed fashion and backing one's construction cost estimates with a Monte Carlo analysis of likely contractor bid values. It's all about additionality - sustainable improvements to the UK economy as a whole, and not just Keynsian helicopter money stimulating temporary demand in the economy. So here's what they'll be looking at
This is what would happen anyway, without government intervention. Not as easy to quantify as it appears because it is dynamic; Brexit will release a wave of pent up foreign direct investment, the certainty of a government with a majority will increase business confidence and even the government's policy strategy to intervene to even-up will affect regional investment. Brexit will also catalyse disinvestment decisions from the global corporates, the world's business gypsies, who even now are eying up Serbia for their next plant. Without having a good grasp of the baseline position - the deadweight - you cannot estimate the additionality that economic intervention creates.

Up until now wisdom has been that public money is wasted if it just moves the same economic activity from one place to another. What, for example, are the additional economic benefits to the UK of the BBC moving operations from London to Salford? Here is a typical case of a business move motivated by lower factor costs - land, labour, housing and contractors are all cheaper in Manchester than in London, producing real gains for the BBC. If you can get the taxpayer to pay for the new factory, offices, studios or warehouses and enjoy the commercial benefits, brill. Except for the taxpayer, obv, who gains nothing. Sometimes called pork-barrel intervention; building a new plant in Joe Potato's constituency means a plant closing elsewhere.

This will be a critical consideration at the Treasury. Creating growth in the NE, NW, SW and elsewhere that just moves economic activity out of London and the SE is not evening-up but evening-down. And comes perilously close to gerrymandering.

Sort of like displacement but within regions, localities or sectors. It's about exchanging economic factor inputs with no additional economic effects. Buying rice rather than potatoes from your local Sainsbury's alters your dinner menu but leaves your carbohydrate consumption unchanged. Employing unemployed workers who come with a government grant only to release an equivalent number of existing staff through redundancy / early retirement may refresh the firm's workforce (or lose scores of years of accumulated experience, depending how you look at it) but creates no additional economic activity. 
The Treasury do recognise that outcomes may be social and environmental as well as primarily economic, but when it comes down to demonstrating additionality, the costs and benefits must always be quantified economically. This is now what Andy Burnham and his colleagues elsewhere in the regions must now set their minds to do; the political rhetoric of the election is over, the hard graft now begins.

And that is the real news, not the vacuous posturing of a publicity obsessed B-movie actress that seems to dominate the press today.

Wednesday 8 January 2020

Bangs for our transport bucks

With a £10bn budget this year, Transport for London is a big transport player. In fact the entire budget of the Department of Transport, covering the whole of the UK, is just £25bn. OK, half of TfL's budget is from fare income, but TfL is big. I've seen it go from joining up London buses and underground to an integrated transport service co with state of the art smart ticketing, and a network that includes road, rail, light rail, underground and river services and responsibility for much of the associated infrastructure and road charging. It's actually done pretty well. Most recently, TfL's competence in running the East London Line overground has drummed up a chorus of public calls for the organisation to take over the running of all of London's suburban commuter rail services. The oystercard, and better trains, staffing and stations than the franchised operators mean commuters as far out as Dartford or Gravesend want to be part of the TfL network.

I did quite well personally from London's superb public transport network; expansion (i.e. better travel time distances to central London) put £50k+ on my house, just as Crossrail will do for homeowners along its entire 73 mile length. Businesses of course also benefit greatly; not only from enhanced customer access, but more importantly from enhanced access to staff, who can use multi-mode transport for their work journey. It works. OK, so TfL is good. So what?

Well, if you're reading this from Manchester, or Nottingham, or Peterborough, you'd have got the point already. This is from a Commons library report, now a little old

If you add London and the South-East together, this bit of our geography gets 38% of the national spend on transport. No wonder it's quite good.

It does also call into question as to who will benefit if HS2 goes ahead. Will these improved north - south travel time distances benefit folk in Birmingham as much as they do folk in London? And what of those who want to travel east-west outside of London? From Liverpool to Leeds, say?

With interest rates close to zero, there is no better time for government infrastructure investment. The problem is in ensuring it's the right investment.

Tuesday 7 January 2020

Labour leadership - the gift that keeps on giving

Back in 2015, before I rejoined the Conservative Party I should add, I paid £3 as a 'registered supporter' to vote for Jeremy Corbyn as the new Labour leader. It was probably the best £3 I have ever spent; I helped to make Labour unelectable, helped them lose three elections in a row and helped to destroy a party that posed the biggest challenge to Brexit. Job done.

My loathing for the Blair-Brown cabal and the damage they had caused to our democracy overshadowed any concerns I had about Corbyn. We are only now in a position to unwind some of Blair's damage and to start repairing the place. I will not be paying £25 this time around to play with Labour again; it is pointless.

Two-thirds of the public have never heard of any of the Labour candidates; a has-been depressive with a face as long as a snake's arse, a purse-mouthed mekon, the fat lady, the cleaning woman, the plank. Not one of them with the charisma to lead a darts team. Behind them a pool of fools more interested in viciously fighting eachother for power than championing the British people; Lansman, Seamus Milne, the little Owen boy, Cohen, the militants, Trots, Fabians and prosecco classes.

One of these lefty rags published over the weekend the sort of throwback article of the sort favoured by Socialist Worker; Tory cuts, Tory destruction of the workers,Tory hatred of the North. It was illustrated by this photograph, captioned 'Ten years of Tory cuts';

With thanks to my new-found picture searching skills, I identified it as of Alfreton Road in Nottingham, a solid Labour council for generations. BTL comments from Nottingham residents had much criticism of the Labour city council's mismanagement of the commercial centre, lack of support for business and innovation, and suffocating municipal socialism. In other words of Labour cuts, Labour destruction of the workers, Labour hatred of the North. They should have captioned it 'Ten years of Labour neglect'.

We've destroyed Labour in parliament. Now we should remove their scourge from the town halls, and truly liberate the British people; those shops should be hipster start-ups, pop up restaurants, print-makers' galleries or the scores of other businesses that bloom and flourish under good local economic management. The waste of good buildings with life left in them is criminal - and Labour are the criminals. Let's turf them out altogether.

Monday 6 January 2020

Crane-hangers and Head-choppers. Again.

The events of the Falklands war are now exactly equidistant between the present and the second world war. For many of you, as for me, for whom the Sun's front pages, the news of the sinking of Sheffield announced by Ian McDonald in sombre tones, the taking of Stanley, are as fresh as yesterday's breakfast, that will come as a shock. Sir Henry Leach, our Falklands First Sea Lord, actually saw active service in WWII. The current FSL, Tony Radakin, wasn't even commissioned until 1990, eight years after the Falklands.

I throw that in to demonstrate how rapidly the civilian experience of war passes; the jingoism, flag waving, anxious dedication to news output, simple emotions and sense of loss at every setback, shared grief for our inevitable losses. Somehow the 2003 Gulf war didn't count- perhaps it was too easy, or over too quickly, or had too little public support or absent innate rightness to count. So we have whole generations now on social media who not only missed the Falklands experience but who would be hard pushed to point to Iran on a map first-try. It's not much consolation that our domestic ignorance is likely a little less than the ignorance of Americans in this respect; No, that's Colombia. That's Nigeria. Whoa, now not even the right hemisphere. My generation will not only be largely able to stick a finger on the land of the crane-hangers first time but to name the seven nations it borders, or at least four of them.

Not only are we civilians as a whole less capable of expertise and of balanced judgement, more ignorant of geography and of geopolitics, but everyone now feels utterly entitled to call themselves an expert; the Tik Tok (I bet you haven't even heard of it) generation, who are also convinced the planet has caught fire and will burn up by next Thursday, have now convinced themselves that WW3 is here*, and war will destroy us all before climate change. By Wednesday, say. There is nothing that can be said to them to convince them otherwise.

Well, the proxy war between the crane-hangers and the head-choppers in which we and the US have been caught in the middle has taken a new turn; the Donald may actually now succeed in pulling US forces out of Iraq and Syria, assisted by the Iraqi parliament, allowing them to assault eachother directly. Let them get on with it. Saudi oil is less important for the US; as soon as it reaches $60bbl the US frackers come on stream.

So no great pronouncements from me today. Let's watch this one. Calmly, as we do.

*As does the Daily Express - which I always imagined anyway was written for teenagers.