In general the idea of the Big Society Bank is not a bad one. Interestingly, the issue about dormant accounts was raised ten years or so ago by a cluster of the bigger voluntary organisations. I seem to remember that they were in constant discussion with the Labour government about this but I think Gordon was too cautious to really put any momentum behind it, which was a real shame.
But there is something odd about the focus with bonds, or social investment bonds as they are becoming known. These work in the following way.
Basically, a service provided shows that they can save the government money in the long term by, for example, preventing offending. A ‘bond’ is established that will see the service develop over say 5 years. After 5 years if the service provider has met their performance/savings targets then the bond backers will receive a cut of the savings to central government.
What often is not appreciated is that the cost of the bond, i.e., the operating costs of the project for the 5 years, are met by someone other than government.
The only real sizeable SIB to be created so far is the one that is being operated in Peterborough Prison and which was pioneered by the St.Giles Trust. Here the ‘bond’ was covered by a consortium of charitable trusts who came together under the Social Finance organisation. The Trusts put up the costs for four years or so and they get their return from government if the project meets the targets that have been set for the lowering of offending rates of prisoners who have been released back into the community.
OK so far?
The problem is that the charitable trusts simply cannot meet the demands (or running costs) of many more bonds. Their funds are finite and anyway they will need to be funding non-governmental work.
So, the Big Society Bank can fill this gap by giving ‘loans’ to meet the operating costs of projects that are part of the Bond system.
But there are a few things to consider.
Firstly, the return on investment has to be paid by government at some point and often the pain falls on a different government department to the one promoting a scheme. Imagine a programme designed to limit crime. Great may say the Home Office. But it’s not the Home Office budgets that will have to ultimately pay, it is the Ministry of Justice.
There are lots of people looking at bond schemes around offending, mainly because the savings are easy to calculate. But the Ministry of Justice is apparently getting jittery. They know that these projects just stack up costs for the future.
Imagine. The Bond programme has been a great success. It comes to an end. But the work needs to carry on. Who funds it now? The original charitable funders were motivated by the desire to show that preventative work is cost effective. Their aim was to show that government should move its spending to preventative work.
I understand with the Peterborough scheme the payout — i.e. the return to the original investors — will be largely met by the Big Lottery. Interestingly, Have not this government committed themselves to taking the Lottery back to its good cause origins and to avoiding using these funds to subsidise mainstream budgets and programmes? But I doubt Big Lottery can keep meeting all of these costs.
Spare a thought for the Ministry of Justice. They have not traditionally funded much of the prevention work but it looks as if they are stacking up long term commitments for this kind of work.
So, while the Big Society Bank may make the initial lone it will have to be the government that pays it back and makes the interest payments! After all, they won’t just be able to let a successful project die when the bond has run out. Or will they?
I’ve been trying to develop a social investment project or one based on ‘calculated savings’. The project I’ve been working on is one which works to support young people who have been judged to be at real risk of becoming involved in gang based criminality.
The project can show that, for those referred, re-offending rates are half the national rates and for those young people who engage positively even less. Further, progress on the project helps those who do reoffend. The project has been able to keep four or five young people out of custody during the last twelve months, in other words progress on the project has encouraged judges and magistrates to avoid a custodial sanction (even when the young person involved may have served a custodial sentence before). The average length of custodial sentences for young offenders is over 11 months. It costs around £70,000 to keep a young person in custody per year. This project’s costs are £200,000 per annum. You can see how this gearing works. Just working on the four young people kept out of custody you have saved the costs of the whole project which might be working with as many as 50 young people. Good eh?
This project has been put together by a partnership of agencies including the local Authority and the Police. It was funded through external government programmes that have come to an end and it is likely that the council will not be able to absorb these costs given the tremendous problems they will face. The work, the experience and skills of the staff might be lost.
So, I’ve been working to see if this Bond type basis could be used to keep the project going. There are a number of problems. We can’t really get access to local or national costs of offending in any detailed way. But worse than that there is nobody in government we can talk to about it! There is nowhere that this argument can be lodged. Government advisers say that they want to be able to follow this approach. We are working along the right lines. But government’s commitment to these programmes will be defined over the next three years. So, this stuff has come too late for us. But surely it will be a good thing for those who follow?
Well, there is something of a basic to understand here. Government may get someone else to meet the cost of the original Bond period, whether that be a consortia of charitable trust or the Big Society Bank. But government will have to meet the returns needed to successful partners. And then government will presumably have to pick up the costs of those schemes that have shown to save them money. And if the performance thresholds have been set too high — and the project is delivering positive outcomes for real people — government may still have to step into the breach.
My point is this. There is no long term substitute for public spending in these key areas. We can get the banks to meet original costs. We can raid Big Lottery to meet the return demands of the original investors, but then we take money away from good causes. But as the principle of this work expands so it will be less likely that the lottery can fit the bill.
There are many good things about the Big Society Bank but it only helps cashflow and puts off the day of public, financial commitment. The Big Society Bank is not magic. It is a bank.
There are likely to be wider implications though. This work will accelerate the ‘Americanisation’ of our public services and drive more work into the hands of the private sector.
I recently met a representative from an international group who manage everything from prisons to old people’s homes. I was quite impressed by their focus in many ways. These kinds of companies, in the US, set up their own corporate responsibility programmes from their own profits. They are likely to move into areas of activity that are traditionally the preserve of the voluntary and community sector, and we should not underestimate the scale the of the programmes that they can create.
But is this what we want? Do we want our social work funded as a bonus to profits that are ultimately derived from the taxpayer? What about accountability? What about the desirability of communities developing their own ideas and accepting responsibility for their own citizens? Will we just see more and more of our public funds sucked into the private sector in the mistaken belief that it provides a better return?
The Big Lottery Bank will be an important source of funding for many voluntary, community and third sector projects. At least it will in the short term.
But we must not be blinded to the ultimate reality that we — the public —ultimately provide the funds that support the Bank — bank contributions should be probably seen as deferred tax.
We can see the whole Big Society project lurch from one unknown to another. It could easily become one huge kind of Arthur Daly style mess.
We need a public debate on public services, the need to pay for them and the need for them to be accountable. And we need to properly model the implications and impact of these schemes.
Remember PFI. Suddenly many of these schemes do not look so hot. Local authorities and health services are lumbered with charges to the private sector that they have to be met because of contracts, meaning that even more of the impact of cuts falls on the rest of their fragile budgets.
There is a lot of work to be done here before we start patting ourselves on the back.
Not only did I spare a thought of two for Richard Leese, Leader of Manchester Council this week, but I felt rather proud of him. Manchester revealed the full extent of the cuts they are to make. No messing around, you could understand where the pain was to be inflicted. There was no sense of hiding either. Consultations with communities, unions and others have been had. And now the leadership was doing what leaderships must. They had taken their decisions and they were standing up to be accountable for them. This is how things should be. Leese was upfront and speaking to both local and national media. In his traditional quiet mannered (yet effective) way he explained how government cuts had fallen disproportionately on this city, one of the most disadvantaged in the land.
Manchester was, of course, attacked but government. They have enough money. They haven’t taken hard enough decisions, especially when it comes to ‘back office’ functions. If we are to seriously deal with the reductions of public expenditure which are, to some extent of another, unavoidable, then this attack from the Tories was cynical and disingenuous. Like all councils Manchester has been delivering its ‘Gershon’ savings for some time now, a formula which sees efficiency savings built into future budgets and programmes. Sudden and swathing cuts like these will take a long time to absorb. You can’t suddenly change the way you run the IT structure of a major organisation, or manage the purchase ledger or any of these things. The government likes to talk about responsibility and everyone being in this together but their treatment of Manchester was one of the lowest and cheapest shots imaginable. However, the treatment of Manchester looks even more remarkable when compared to the absolute chaos in Birmingham, a council run by an alliance of the Tories and the Lib Dems!
In Birmingham there has been no attempt to enter into any kind of serious dialogue with the city and the community. You can sense the desperation and the Chief Executive Stephen Hughes tours community and voluntary sector sharing his concerns that he won’t be able to pay the wage bill.
Hughes faces life with a Leader — Sir Mike Whitby — who refuses to deal with anything other than good news. If there’s a photo opportunity Sir Mike will be there. But bad news? He’s nowhere to be found. There’s no way Sir Mike would appear before the world as did Richard Leese to stand accountable for the decisions that had been taken.
But this lack of responsibility pervades the whole of Birmingham’s political leadership. In the face of dramatic funding cuts many of the Council’s Cabinet members — indeed those who are most right wing — absolutely refuse to mention the ‘C’ word. Cuts are not acknowledged and the refusal to deal with reality is almost at North Korean levels of fantasy.
By all accounts Birmingham’s leading officers have tried hard to get the Council to think about prioritising areas of activity and ending others. Sadly, this is realistic in the current plight. But the response has been to deny that there is any prioritising of cuts or protection of services. This is plain nonsense. We all know some things will have to go. But this administration simply chants its mantra of even-minded ‘efficiency’ savings’.
This means two things that will be devastating to the city. Firstly, communities and citizens, businesses and social care organisations will not be able to have their say in where the axe should fall and where priorities should lie. We might not like to deal with cuts but we know that we have to. Denying a proper debate means that not only does the council not draw on the weight of public opinion but it probably cuts itself off from the imaginative thought that can sometimes make a big difference in some areas. The denial of debate makes a mockery of notions of Big Society. (In Chairman Whitby’s Birmingham nobody must mention Big Society without comments being cleared with him first.) Secondly, the wider community might make the case for the protection of services that cannot be delivered. But we will have had our say and we will have been part of the process. We are more likely to feel like partners rather than victims.
Of course, we know the cuts are coming and we know that they will not be equally spread about. But it will all happen very late in the day with no chance to look creatively at other options and probably not even any chance to think about Big Society type functions. Closures of key services and institutions will be dropped on us all at the last minute. Responsible? Not on your life!
One of our big problems is that both the Tories and the Liberals understand the realities of local government arithmetic. As an out-of-London Metropolitan Borough Birmingham has elections most years (a third of the council up for election every three years out of four). By 2012 they will most probably have lost control of the council and they know it. Which means they don’t have a stake in the future. If he lasts until 2012 Sir Mike will have been Leader of Birmingham for eight years I think. He will know that this hasn’t been a bad innings for someone who is anyway more or less retired.
But it’s not just Tories who play these games.
The Lib Dem Cabinet Member for Leisure, Sport and Culture is the amiable Martin Mullaney. Initially his Department decided they would try and provide some guaranteed protection for arts projects. They would look at their funding to the arts, take tough decisions up front, make the cuts but then guarantee funding for those who survived for five years in order to give them some security.
There was something to this approach but then it began to all go horribly wrong. It became clear that the only organisations to survive into this protection would be the big arts companies whose value is really measured in terms of what they do for the marketing of Birmingham’s image. The community arts projects that touch much more of Birmingham’s community would simply disappear.
This presented a problem to the politicians. Somebody leaked these plans before the council could mount its PR offensive. Cllr Mullaney panicked. He is up again in 2012. He represents a very arty seat. He feared he would be lynched. So, the five year plans were scrapped. Instead arts organisations were asked to re submit their budgets for a single twelve months. Of course, there will still be cuts but they will be carried out using the salami slicing techniques described above. Of course, the arts community knows that this is just the first of three years of cuts. The devastation will come in the end. This tactic though puts off the debate that is needed about how we balance the needs of the big arts organisations and the needs of the smaller, but more egalitarian, community-based projects. Cllr Mullaney’s new tactics mean that this discussion will probably never happen (not least because the community arts teams are all now facing redundancy — probably because there will be nothing for them to manage in the long term). Cllr Mullaney has cobbled together something that might just see him through the re-election in 2012 without him having to have an honest debate with the sector and the electorate.
In reality, this is just one example of many such slights of hand that are going on in Birmingham as an administration lurches towards the end. Maybe, just maybe they think we might be able to keep the lid on things long enough to (personally) see us through.
So Birmingham is in chaos. The biggest council in the UK — and run by the same alliance that runs the country — simply cannot cope with new realities imposed on them by their national colleagues.
Strangely, central government is very quiet about Birmingham. There are no attacks here on the inefficiency of the administration and on the failure of councillors to take honest and open decisions.
Most likely Labour will take control in 2012 when further cuts will have to be made. It is possible that they may even break apart this sad alliance this May. Back in power Labour will have the unenviable job of dealing with national, Tory, cuts. But we have been here before. During the 80′s and 90′s Labour local government was at its most creative simply because it focussed on the needs and the suffering of its people. In moving forward Labour will have to manage the honest public debate about priorities that this bunch have worked so hard to avoid.
If Big Society is at important than David Cameron (today relaunching Big Society in the Observer) should take a look at the leadership offered by his colleagues in Birmingham. From a Birmingham viewpoint the key values used by ConDem politicians include cowardice, indecision , a distrust of civil society and plain ugly arrogance.
It is time for these people to be swept away.
Now, here’s a thought …
This week we have seen a popular campaign of ordinary people overturn a government, using social media tools and mobile phones as the main weapons in their armoury. No, I’m not talking about Egypt I’m thinking about the campaign that led Cameron to suspend and review his ideas of selling off our forests and woodland. This campaign ignited around Facebook and Twitter and is a real reminder not all of those using these services are young! People from the right, left and centre of politics — not to mention those of no politics at all — were raging. This policy was not in any manifesto. It was not what people had voted for. It was wrong and for once an odd consensus asserted itself in record quick time.
You may not think this is, say, in the same league as the Poll Tax campaigns but I’m not so sure. The growth of Twitter and Facebook across all ages is remarkable and it will effect our politics in all kinds of ways we hadn’t expected. I wonder if Blair’s Iraq plans would have been pegged back if he had launched them today?
But while we might revel in the discomfort of the Tories and the Lib Dems the Labour Party in opposition will not be immune to this kind of influencing and campaigning. New media requires new responses. But also new media will give us new opportunities to develop a new and healthy dimension to debate and policy making within the Party.
I’m sure that no Leader wants to waste too much time early on worrying about Party structures. But do we have the structures to make the most of policy debate and reform?
There have been many Labour campaigns that have focussed on structures. The best of them have been concerned with these because they saw how these impacted on democratic debate. As one young campaigner at Compass residential put it “what is the point of Labour if it is not a democratic party, a really democratic party?” True for some to both the right and the left of the centre the point of structural reform might have been to deny debate, but in the main those campaigning for internal democracy were doing so because we believed it would lead to better policy and more effective governance.
The internal reform debate is still about better policy and better governance but now we also have to consider whether we have the right tools to do our trade. I’m struck by the very different reality inhabited by many of the young people who have joined our Party recently. They have come to politics as a result of a very different kind of communication medium. They have been inspired by the hi-tec campaigning of Obama and saw Ed Milliband’s campaign as an attempt to create a British variation of it. These folks do have energy and enthusiasm but I doubt many of them are really going to get involved in branches, constituencies and ECs. And many of them will want to talk with voters in new ways as well.
Bluntly, our creaking and old fashioned machine might not be up to the job. Consider the current policy review. Apparently the problem is not so much that of getting the ideas in, no the real headache is what do with all of the responses. How do we work with them? How do we debate the merits of different ideas and proposals? Surely we can’t galvanise politics by simply putting out tons of traditional paper?
The new technologies and social media tools probably hold the key here. Our discussion and debate needs energy and dynamism, something I don’t often associate with local meetings.
But, where is the focus on the reform or development of the Party Machine. The skill base of the ‘machine’ is based on the old world and doesn’t really address the new?
It is time for the new leadership to begin to lead this discussion, to show that they understand the need to be different and that they are set to update our machine and our structures. We have Byrne reviewing policy and Hain reviewing structure, but hold on there is something weird happening (or not happening).
At the top our Party General Secretary Ray Collins has been sent to the Lords. But he is still General Secretary and apparently thinks that he can do both jobs. How on earth can the GS cope with battles of legislation in the Lords and still have the drive and energy to reform and develop our Party machine?
By all accounts the Trades Unions are furious but by all accounts their preferred candidate is not all that impressive or energetic himself. But hang on, surely the leadership and governance of our Party is not just an issue for the establishment and the Unions?
I have no doubt that the vast number of Party members would agree that it absurd for the GS to try and continue to combine two very different roles. Equally, it is conceivable that they might want a say in who gets the job next, or at least a view of the kind of person that gets the job next.
Our finances are still in a mess and tensions mount both around Westminster and beyond. Ed Milliband is — I believe — right to want to avoid the patronage of the big donors. He is right to think of a new world of community-based activism that is driven by the micro donations of the many rather than the throw away cheques of the few. But it is time for us to start putting in place a structure for a modern age otherwise we are in danger of falling backwards
Ed can start by getting on with a search for a new General Secretary now with an open brief that meets the realities of the new age.
I’ve never got too worried about the Big Society. OK, it might seem a vacuous notion, but it is not rally that far away from some of Gordon Brown’s ideas on civil society and so on. Before Christmas I wrote here that within a couple of years I doubted whether anyone would ever be using the term. Remember Best Value? Community Empowerment? Labour is not immune to this kind of notion either. A Minister has an idea, they try and deal with big themes in their own way, and then they move on.
Big Society has taken two big hits this week which makes me feel my prediction is safe.
First off, Lord Wei — the government’s champion of Big Society — resigned his non paid post as Big Society thinker in government. He couldn’t afford to work for nothing for three days a week. In other words he couldn’t sustain the volunteering. In his own words he was leaving ” …to get a life”, but which I take it he needs to generate income.
It is easy to deride Wei but he is quite an interesting and sympathetic character. While still young he has developed some first class businesses and he has done so using the philosophy and structure of a social enterprise. we probably need more social entrepreneurs like him.
I’ve seen Wei speak a couple of times since the election. Friends that are more into Big Society than me got quite excited about this; they were interested to know what he was like.
Listening to Wei talk about Big Society was a little painful. His audience quickly gets to know that he and his family live on a Shoreditch estate. Maybe this seems dangerous to those from Notting Hill, but Shoreditch these days is not a southern version of Toxteth or Easterhouse. In his talks Wei liked to ramble on about life in Shoreditch. Did we know that none of his neighbours knew each other? They lived very individual and isolated lives? Wouldn’t it be nice if people came together and supported each other within the immediate community? I suspect readers of this will not be too impressed but he was genuine enough in his concerns. But now he’s gone. Let’s hope that Wei’s next work on Social Enterprise has more clout.
The next blow came from Phil Redmond the Liverpool-based TV producer. Redmond had agreed to be an ambassador for the Big Society. Redmond wasn’t politically motivated, he just thought there was something interesting in the idea and I think he was right. But now Redmond argues that the concept is pointless. The cuts in local services and in the community and voluntary sector are so great as to make it impossible to build any meaningful initiatives in this area. Redmond was not making any particularly insightful comment here, he was simply commenting on what he was observing going on around him.
This week has also been the week in which the devastation of the cuts in the voluntary and community sector are becoming apparent. The Citizen’s Advice Bureau have led the charge. Scores of CAB’s will close denying those in real need critical advice and guidance during the most vulnerable times of their lives. And many skilled advice workers will loose their jobs. Many CAB volunteers — themselves skilled and effectively trained — will have nowhere to volunteer from.
There will be a lot of noise over the next few months from voluntary and community agencies that are dying. But the noise will die down and they will be gone.
But their staff won’t have gone. Their trustees and management committee members won’t be gone. And those who have depended on them won’t have gone.
Faced with such devastation these people will dig in. They will put there minds to campaigning and political campaigning at that. Such anger and hostility will build over the next couple of years to such an extent that the Big Society might come to mean something very different, and very more threatening to the Coalition parties.
Labour has not only to harness this energy and to support these voices. Labour has to offer these people an alternative vision of how the ‘good society’ will work in practice.
I think I’ll devote some time — here on the pages — to thinking about how we might do this.
I write two blog. Must be This Way is by far the more popular and prolific and is a blog for hill walkers and hikers/backpackers. Political Futures is, as it suggests, a blog on politics. Sometimes common themes roll across the two of these blogs, but this is the first time that I’ve ever cross posted to both with the same entry.
My topic is, of course, the coalition government’s plans to sell off a great chunk of our woodland and forest that is currently owned by the Forestry Commission. Many political commentators seem a little surprised that this issue has aroused such passion from all sections of our community. But this is an issue that goes to the very core of our identity as a nation and of our values of public realm and public access.
Forests and woodland have a place deep in the psyche of all Europeans and the English Wood is something that has a special place in the nation’s consciousness. We might not think about forests and woodlands that often but as Simon Schama argued in his classic ‘Landscape and Memory’ our forests and woodlands have shaped out culture and our imaginations and he points out how our response to these has shaped our landscape.
So, our woodlands and forests are dear to our hearts. Some of us use them more than other. For me the great conifer forests of our nation are quite frightening places, not least because these are the only places that I get really lost. More natural woodlands and forests, on the other hand, are magical places. Us hillwalkers climb through them on the way to the uplands. Day ramblers use them as a the focus of a day’s walk. And I know this seems a bit crass, but for many inner city young people the trip to the wood or a forest is an experience that stays with them for the rest of their lives.
The government’s long awaited consultation document has today being called “madcap” a “confidence trick” and “a betrayal of our great assets” and it seems to me that all of these claims are right.
We will get into a real argument about what this will do and what can be done. Can voluntary agencies play a bigger role in the management and the diversification of our forests and woodlands? Well, perhaps they can except the current ones don’t seem confident. This looks to me just another scheme that hands over assets to the private sector for them to be stripped, exploited and devastated.
But forget the technical arguments for a while because this move tells us much, much more about this government’s approach to our world.
I haven’t yet met a single person that doesn’t think this is a mad idea. They don’t talk about technical arguments, the just think that it is wrong. Great natural assets such as these should be in the hands of the state and not private industry.
In objecting to this extreme policy people are effectively endorsing the view that the government does not so much own these assets but is a trustee of them on behalf of the British public. There are, of course, many other great environmental and cultural assets that government also holds in trust for the nation.
It is this notion of trusteeship that should make government politicians stop and think. Are they wanting just to save money or are they just divesting themselves of their responsibilities?
Protestations of increased efficiency are likely to cut no ice with a public that just knows this is wrong. And on a more political note, we can look across the public sector and see no clear benefit for whole range of policies that have ended up shoving public assets into the private sector. Personally I have no problems with the notion of a mixed economy of public services — our public services have grown up in such a way. But I am very suspicious as even Parliamentary Select Committee can see no real financial or efficiency advantage in massive PFI schemes. At the heart of the issue is the profit motive, the need to get not just a return on investment but to screw as much financial return as is possible from a contract against other social need.
Some on the right — slightly bewildered by the response — seem happy to bash on with the confidence that this kind of alignment and pubic coalition only comes along once in a generation. True, this policy may unite Telegraph readers and Guardian readers, inner city people and rural squires, those who just know the woodland is there and those who use it regularly, but they comfort themselves with the view that this is a one off.
My suspicion is that this is not a one off. This is not an issue of right or left. It is a reflection of a wide spread pubic view that this is unfair and plane wrong.
Our notions of landscape may be as deeply routed in our imagination as Schama suggests. Our understanding of the need for government to hold assets and to run services on trust for us the people is more deeply rooted than the cynical minds of this government realise.
The government would be wise to give themselves to stop and take stock. These are not assets for them to dispose of as they fit. We the public understand that government has a real duty of care to our environmental assets. The government will really take a pounding if it doesn’t begin to consider this notion of trusteeship properly. They will be in deep shit as we hillwalkers would put it.
You might like to read the Woodland Trust take on all of this, which is here — Save England’s Ancient Forests. They also have a petition for you to sign.
Interesting to see how the right wing press are now beginning to realise the truth about Big Society and the government’s cuts! The voluntary sector has traditionally been a major provider of public services in what has always been a mixed economy. But voluntary effort needs professional support, Volunteers need training and mentoring. They need support services to ensure quality. Volunteers do not work in a vacuum, or it they do they soon stop volunteering.
It would appear that the new Ministers did not recognise how important their funding was to the voluntary sector. And they certainly have no idea of the mayhem that we are going to see at Easter.
Most left wing commentators and bloggers have written about the drastic effect of cuts on public agencies and public institutions. But the cuts will have an even more disastrous impact on the voluntary sector.
As I sit in Birmingham I can see our infrastructure disappearing at a rate of knots. I see the same thing happening in other parts of the country. Not only will services suffer but communities themselves will think they are being short-changed. There are going to be even more angry people out there when they realise that even their cheap services — or voluntary effort — is destined for the scrap heap.
I don’t like making political predictions. But I reckon — within two years — we’ll be seeing Heseltine hit the cities again with yet another regeneration programme. But this time around he will have even more to do than last time.
The appointment of Alan Johnson as Shadow Chancellor was always going to be controversial. I thought it an interesting move at the time, as Ed Milliband sought to establish the biggest possible contrast between Opposition leads and their Ministerial counterparts. The private issues faced by Johnson are cause for sadness. Here is a man who has a lot to offer but who has felt the need to stand down under such pressure and I think we all have to respect that.
But what to make of Ed Balls? This is, of course, the role that he has spent his whole career aiming for.
The weekend newspapers have been full of analysis about Balls and they have covered all of the issues. In the short term Balls’ combative style is going to give Osborne a run for his money. He will capture the news headlines in a way that Johnson never could. He will eek out every bit of juice from any downturn in the economy.
Of course, the Tories and the Lib Dems will attack the historical record, and they have a point. We may cringe whenever we hear clips from Gordon’s last Mansion House speech, or when we read about the speech he made to welcome the new London HQ of Lehman Brothers. The coalition parties will know that where Brown went Balls went first. There must be lots of exciting speeches, quotes and soundbites for them to concentrate on. Presumably, it was concern about this that was one of the factors that saw Balls be overlooked in favour of Johnson.
But, to be honest, this is the history that Labour always did have to confront sooner or later. And maybe it’s better that we are confronting it sooner. I suspect that — as Balls begins to land his blows — the protestations of Ministers will be increasingly overlooked. You can see already — and almost everywhere — that the sting is rapidly going out of the blame the last government tactic.
For me though there are some things that Ed should ponder as he begins to not only take on the government but to shape a future economic policy for a future government. Brown (and I suppose Balls) were far too focussed on the gimmick and the sleight of hand and I hope they have learnt from that. There are no real short cuts to building economic wellbeing and to creating a sounder foundation for the UK economy. Our future policy needs to work across the piece. It needs to focus on manufacturing and regional development. It needs to place financial services in proper regulatory framework.
For those concentrating on short term campaigning I would point out one chilling prospect. The nation, and the economy, that we inherit after the next election will probably be in a worse state that the one we inherited in 1997. Our inherited economy will be more uneven, more unfair and quite possible more dysfunctional.
I wish Ed Balls well. But I want to see that the love of a good gimmick has gone forever. Of course, there is space for a good gimmick as a political cheap shot. But there is no space for gimmicks in long term financial policy.
I’ll leave you with one area that really needs some thought and that might well be a disaster that — if not created by Brown and Balls — was certainly added to by them. I refer to the Private Finance Initiative. Up and down the country local councils and public agencies are now locked into long term contracts that they no will probably not be flexible enough to meet the changing needs of communities. Yet they will also know that these same contacts take priority over every other expenditure head when they are planning their budgets over the next three years or so.
I would hope we have heard the last about this, or at least we have heard the last about private finance in this guise.
In case you think I am being a little dramatic, listen to this Guardian podcast on the state and future of PFI. See why all of us are likely to be that much poorer as a result of PFI
As I’ve said before, it is hard not to feel a great deal of empathy for the people of Ireland at the moment. As the Eurozone crumbles away at the edge Ireland is in the firing line and in a course of just a few days we have gone from a government claiming it was not seeking help to an Irish Central Bank Governor saying this morning that he expected the state to accept an aid package “worth tens of billions” of Euros.
In very simple terms the Irish government made a fatal mistake. They believed what their major banks told them about levels of debt. The government were perhaps a bit too bold and hasty in guaranteeing their bank debt but you can understand why this was important to them. The problem was that the banks themselves seem not to have understood what obligations they actually had. Sounds familiar?
I must admit to being a little surprised at how this has become a surprise. I’ve been in Ireland quite a bit over the last eighteen months and everyone has talked about the problems of Anglo Irish but few thought there was any great problem with Allied Irish. Yet you didn’t have to look too far to see them. I know two organisations well who banked with Allied Irish who have had terrible problems over the last couple of years. One is a national Charity that has had to change banks and re-negotiate loans and overdrafts and to do this they’ve had to work through an extremely hard two years. The other is a national company that provides workspace for the creative sector. The company has a long term development programme that will benefit many but they too have had real problems as Allied Irish have sought to deal with their crisis.
So, I wonder whether we couldn’t have been clearer, sooner, about Allied Irish’s problems. It is only over the last few months that the true problems have become clear prompting the Irish government to make new, huge, investments in the bank.
Allied Irish is having to carry huge amounts of toxic debt, much of it incurred through loans to property developers. A walk around central Birmingham at the moment is quite revealing. Much of the ‘Irish Quarter’ to developed with celtic tiger investment lies empty with little prospect of development any time soon. At the bottom of Snow Hill a new office block is going up — you can see the concrete lift shaft and central core in place. But there has been no work here in months. The scheme is underpinned by Allied Irish.
Just a couple of examples here of how connected the UK and Irish economies are. This is a real practical problem for both us and the Irish. Ireland’s tigers invested a lot in the UK and in risky areas that took a big dive, buy-to-let as well as project development. In turn the UK banks are massively involved in Irish banks through those complicated financial products that non of us can understand. And, of course, big and small UK companies trade heavily across Ireland and their prospects — and profits — here can take a hammering.
When you hear the dinosaurs like Cash ranting about any help of the Irish, or of wider Europe for that matter, you realise how mad they really are.
So, Osborne has little choice but to support Irish institutions and the Irish economy quite because of one main thing. He is terrified because the cause of the problems over there are not too dissimilar to those over this side of the Irish Sea. He must have nightmares at night about domino effects. We’ve seen during the ERM debacle how rough and tough the Germans can be. If the UK gets into trouble — and of course he isn’t immune from this stuff simply because we are not in the Euro — then the Germans will be just as hard on us.
But this week’s revelations from Ireland should really make us stop and think.
Conor Foley — Chief Exec of a company called Worldspreads — has calculated that the Irish government are underestimating the banks’ exposure to toxic debt by as much as €30 million.
This is new debt. It has been caused by new debt largely bought about by defaults as a result of the Irish government’s austerity measures. Foley claims that one in eight home owners were at least three months behind with their mortgages. The Irish government has imposed a 12 month moratorium on repossessions but after there is little chance that employment and wage levels will be on the rise again. So, Foley is right in a way. The Irish government will have to carry this extra cost of debt because the implications of not doing so are almost unthinkable.
We are not so far away from a similar. The drastic cuts being planned by the Tories and the Lib Dems will simply add to their problems as the economy stalls and they — like the Irish — have to pick up the tab of greater indebtedness. Cameron, Osborne, Clegg, Cable and the rest of them are playing a lose-lose game.
Of course, to contradict my comments above, Osborne does have choices but his political dogma and lack of creative thought simply closes off strategies that could well make a real difference to real people.
And here is the challenge for Ed Milliband. Can he and his team to creative enough — and determined enough — to run against the failed orthodoxies of the City?
I’m fascinated by new models of journalism and by the debate that rages between traditionalists and modern free thinkers such as New York’s Jeff Jarvis (Director of Journalism at New York’s Graduate School of Journalism).
Of course, the real issue at the heart of this is how we recognise quality journalism and how new models of work can financially support skilled journalists.
An email update this morning reminded me that the left — and union journalists — have just has much to say on this kind of subject that the Murdoch’s do!
newmodeljournalism.com is run by Alex Klaushofer and Tim Dawson. It is useful source of information on how this debate is playing out in the UK, particularly in the regional media. The site was founded out of a conference hosted by the National Union of Journalists.
As Alex and Tim put it:
With its traditional revenue model failing, the hunt is on for new models to sustain quality journalism. There’s a lot going on – new media technologies and platforms are developing fast, while enterprising individuals and communities are launching media start-ups and experimenting with different forms of journalism.
Yet opinions diverge widely about the merits of these emerging models, and how far they provide an answer to the key question of how to finance journalism. This site offers a space for the scrutiny of new developments, and a forum to debate their implications. We aim to follow the latest thinking and practice through reports, case studies and reviews. Please feel free to comment on posts, or to get in touch with us directly to share your news and views.
It’s our unabashed assumption that the changing fortunes of journalism are about much more than business models or the opportunities of the digital age. The future shape of the media will determine how far it is able to continue its traditional functions of scrutinising the powerful, offering a window on the world and promoting the debate vital to a democratic society.
This is one for all political bloggers to have a look at.
My guess —a month or so back — that it would be the Housing Benefit changes that would cause most problems seem to be coming true.
There’s no doubt that there are going to be tremendous repercussions from these changes but I’m not sure we properly understand what is going to happen and to that extent local authorities, in particular, need some clearer thought.
London is the focus for much of the debate. Many feel — and Mayor Steve Bullock in Lewisham was specific last week — that in the posh bits these changes will be like a kind of legal Shirley Porter policy, i.e., used as a way of getting the riff-raff out of central London. This week the Chartered Institute for Housing have added to the debate, although maybe not in the most helpful way.
The Institute this week warned of a line across England, from Bristol and the Severn in the West to the Wash in the East. Below this line there would be no social housing and above it loads!
Is this really helpful? This is a re-hash of the work done by Geographer Danny Dorling a couple of years ago in which he described a nation divided by a similar line. Dorling’s work on the influence of London and the geography of poverty is fascinating stuff and worth taking time to appreciate. But thinking like the Institute’s paraphrases Dorling in an unhelpful manner and I think takes attention away from what should be the real focus on housing in London.
It may be true that Westminster will rid itself of bothersome private sector housing but that certainly won’t be the case outside of the inner ring. London’s poor communities are large and solidly rooted. Of course, gentrification will continue and the poor will keep being pushed East. But I doubt the poor of Hackney, Waltham Forest, Tower Hamlets and Newham will be disappearing anytime soon (although we will see continuing patterns of movement to Thurrock and other places east).
Many housing benefit claimants will continue to live where they are. This is where extended families are based, where there Churches and Mosques are located and where local services are best at supporting newly arrived communities. These communities will, in the main, stay where they are.
But Housing Benefit changes will have impact here. As rentals are driven downwards so the quality of property will deteriorate. Maintenance simply won’t be done and we we’ll see more of the quality of private rented accommodation that we’d hoped we’d left behind for ever. The first casualty will be the ‘Decent Homes Standard’. Local authorities have been striving to meet this standard and have been working positively with partners such as the Homes and Communities Agency. In theory PFI would be used to encourage extra private sector investment in housing stock. Well, PFI is a mess and now the Housing Benefit changes will make a massive dent in this. Government policy did see a continual transfer of housing stock to Registered providers of social housing — many of whom used to be Registered social Landlords.
What all this means is that government policy used to recognise the importance of the private rented sector and of the need to ratchet up quality. Politicians in London are very aware of what might happen. Boris is known to be very worried. Ken would agree that landlords have risen rents dramatically and he would prefer a legal peg on rental values and not just a weird manipulation of housing benefit. And Ken would want to see continued programmes that would support the development of the quality of private rented housing. Within a few years time we will be hearing the dreaded term ‘Rachman Landlord’ more than we have used in years.
So, we need less of the grandstanding offered by the Chartered Institute of Housing and a more informed analysis of real housing needs and outlook. The poor will remain in London, they always do. Just be the middle class are still fixated with the values of their homes it doesn’t mean that the whole of London is.
As benefits are cut social conditions will deteriorate quickly. Look around much of the boroughs I listed above. We see a lot of people struggling to get by and their struggle is about to get a whole lot worse.
Everything is dependent on the creation of these new private sector jobs. But does anyone really believe that the private sector will take up the flack in these parts of London? Work done by the Olympic Boroughs shows how critical skill development is to their long term economic futures. Simply put, they show that new jobs created in Stratford and elsewhere may not benefit the local jobless as there is a massive mis-match between existing skills and the demands of the financial and other services that are going to be based there. And yet the Colleges and private education providers who are key to this skill transformation are being subjected to massive cuts.
Life for the poor in London is going to get a whole lot worse. Our understanding needs to be based more on fanciful lines across the country. We can’t afford to forget those who will fall under the line and below the radar.
It will be up to local councils in London to be imaginative both in supporting their communities and in campaigning for them. And there’s a big role to be played by those councils north of the institute’s line.
In times like these it is inevitably local government in the north that is the most vocal and receives the most support. They often prefer to forget London, not least because they find themselves competing for resources. It is in nobody’s interest to acknowledge the real claims of others!
Local government needs to develop its campaigns with a real commitment to solidarity with London and the rest of the poor south. There’s no doubt that we will seen see attempts to change the formula that funds local government and local schools. It would be disastrous to see the poor north and the poor south working in opposition to each other.
Keep your eyes on London. Life for those north of ‘the line’ is going to be no picnic. But all of us must ensure that London’s poor simply do not fade from view.