Wednesday, 27 July 2011

Mystified about the National Planning Framework? Join the club

I admit it. I'm a historian of planning.

Don't click 'back'. Please. I know it's dull. But it's important. Especially now, with Monday's publication of the National Planning Policy Framework that will shape physical land use planning and building for many years to come.

Why? Because the Government is committed to 'supply side reform' to speed up economic growth - and after yesterday's anaemic growth figures, we sure need some sort of boost. This is one of their chosen mechanisms, for both Conservative and Liberal Democrat Ministers think that 'freeing up' the planning system, and allowing more building, is one way of speeding up the progress of the economy. It's another neo-liberal initiative from an extremely neo-liberal government, at least on the economic front. The reasoning? If you let people do what they want, if you let investment capital 'settle' where it may, it's bound to be efficient.

Leave aside the fact that such changes only take effect over a decade or more, as in fact I've argued until I'm blue in the face (my face does get pretty blue these days).

And the fact that it's not at all clear whether more or less restriction on building would be better for economic growth that's got to be increasingly high-tech, top-end, 'green', research-led and low-impact.

The real problem with this document is that it's just so vague.

Sure, there's the usual tussle between National Trust conservationists screaming blue murder about the danger to the countryside and the Green Belt. And builders are licking their lips, ready to rip into chunks of expensive land just beyond the suburbs on which they can shove up loads of boxy starter homes. But that's a pretty stereotypical debate. I could (and will) take you to lots of examples of that argument in 1947, when Labour's first Town and Country Planning Act was passed, or 1953-54, when many of Labour's land taxes were taken off by the Conservatives, or 1965-70, when Labour tried to put them back again and nationalise development rights through a Land Commission.

But there could be lots to cheer or jeer from almost any perspective - even green politics. Who really knows outside of Whitehall? In radically shortening planning guidelines, from many hundreds of pages to just sixty or so, there are so many glosses and hostages to fortune that I don't even know where to start. Local communities are to lose many of the grounds on which they might object to sprawling developments or new houses - but are now going to be able to ask for a so-called 'village green order' to fence off areas they don't want touched at all. The standing policy presumption is now going to be leaning right over to allow building - but only if it's 'sustainable', a term or set of criteria (it's used as both here) that's very windily approached in the draft. I could go on. I probably will.

I can only concur with the Town and Country Planning Association:

While we share the Government's ambition of making planning more accessible to communities, making something shorter does not automatically make it clearer. Planning has to deal with complex problems and sometimes needs detailed policy responses.

If the TCPA isn't clear about what it all means, what hope does anyone else have?

Tuesday, 26 July 2011

We can't go on like this

So as widely predicted, the UK's second quarter growth performance was pretty anaemic. We've seen just about no economic growth since last autumn. It's a gloomy outcome and, although the economy will almost certainly pick up a bit later in the year, there are many more poor numbers to come before we're out of the woods.

Yes, there are reasons for the slowdown between March and the end of June. There were lots of holidays. Nice weather during a barbecue spring. The Japanese tsunami. Financial uncertainty. But it's noticeable that this time, unlike his reaction when the economy began to stall amidst last winter's snowstorms, Chancellor George Osborne (above) has refrained from blaming forces beyond his control. To blame 'events' is (often literally) like blaming the weather for getting wet. One is bound to ask: why didn't you buy an umbrella? Or refrain from going out in the rain? Why didn't you do something different?

In this case the question would become: why did you talk the economy down so much, why did you announce so many cuts to government spending, and why did you raise taxes in the shape of a VAT hike? Why did you leave us so exposed?

Answer: politics. The incoming government has every incentive to say 'Labour's left us in a mess, everything's terrible, we have to cut hard and fast'. And in time for the economy to recover in time for the next election. It was a strategic decision, explaining why No. 10 and the Prime Minister are so desperate to restart the long recovery as soon as possible. The cracks between Nos. 10 and 11 are already starting to show - always a bad sign for any government.

Anyway. We now need a Plan B all the more desperately - as some of us have been saying for many months. Some commentators are talking about quick banking reform to free up credit; rapid infrastructure spending, for instance on high-speed broadband; or perhaps a National Insurance holiday for younger workers, among whom unemployment is now frighteningly high. Others, from Right to liberal Left, have been suggesting tax cuts. Interventionist industrial policy is back on a lot of agendas, and not just among the usual suspects.

But it'll all look like a massive, quick, panicky U-turn. And it'll raise that question again, just a few months after tax rises and spending cuts were all the rage: why did you squeeze so hard, so fast? Why did you do it, George? Politically, it'd be a disaster - a Napoleon-retreats-from-Moscow moment on a par with the Conservatives' U-turn after the 1959 general election, when boom and tax cuts quickly turned to bust and tax rises. That government eventually left office in some disarray, by the way. No wonder Mr Osborne is choosing to tough it out and hold his (and our) feet to the fire.

One thing's becoming increasingly clear: we might all just have to ignore the politics. We can't go on like this.

Monday, 25 July 2011

Economic growth - why is it still so slow?

So tomorrow it's the second quarterly data release for this year's GDP growth. How much did the economy grow between the end of March and the end of June? We'll find out in the morning.

Please do stifle your yawn. For behind the algebraic talk of 'Q2', 'fiscal tightening', 'quantitative easing' and the like, there are a real set of icebergs out there for the British economy.

The growth figure is likely to be low. Very low. Some political commentators are even beginning to speculate that it might even be negative - that there's have been little economic growth at all over the last nine months or so (the end of last year saw the economy grind to a halt in a blizzard-like whiteout).

That's still pretty unlikely. Investment has been strengthening, and exports are still pretty good, even to the Eurozone (the remarkable performance of whose core economic powerhouse, Germany, is of course part of the Euro's problem). Interest rates are likely to remain low for some time.

Still, the figure probably won't be all that good, even if there's a surprise tick upwards. The risks are still on the downside. The monetary boom of our banking bubble continues to boost inflation. House prices probably have further to fall.

The truth is that British domestic demand is too low, and is being artificially repressed by a government determined to shout from the rooftops about their 'terrible' legacy of debt, and to cut, cut and cut again. Even banks and sober business academics are beginning to come round to this case - that there's just a great big hole where British spending and buying might be. You don't have to listen to Ed Balls, Labour's Shadow Chancellor (above) to understand that the Coalition has cut the engines at the wrong time - when even the deficit, as the excellent Ben Chu of The Independent has pointed out, isn't terrifyingly high in its proper historical context. By the way, the actual stock of total debts isn't at all worrying by the same standards, but that's another story.

With a Euro area default or even splintering still very much on the cards, and infantile US politicians still empty-handed as they search for a budget deal by next Tuesday, there are even more shoals to negotiate before we can hit the beaches. And a long, hard slog back to economic health lies ahead, even once we're all back at our desks in September. It's a path sadly but remorselessly made all the more difficult by misguided government policies.

Who can rescue us from the deficit hawks and the growth deniers? Anyone?

Friday, 22 July 2011

How are we doing at avoiding catastrophe?

So at the start of the week things looked pretty grim for the world economy. The Americans were heading towards a debt default that would shake confidence at the heart of the international financial system. The Europeans were sleepwalking towards the breakup of their shared currency, the Euro.

We've had a week of frenetic discussions. So how were politicians and officials doing by the end of the week? Are we any nearer seeing the light at the end of the tunnel?

Well, it's all still a work in progress. It's all just far, far too slow. But there are chinks of light.

Politicians continue to jaw-jaw in Washington, and there might just be a sense that war-war on a nuclear scale is off the table. But I wouldn't count on it. And any deal will be a tiny mouse copmpared to the 'grand bargain' between Democratic tax rises and Republican cuts that the USA really needs. As The Economist's Lexington column put it last week: despite the idea that compromise is inevitable, 'this is a season of dangerous brinkmanship in America. Compromise may still be possible, but there is nothing inevitable about it'. A week on, that's still the place we're in. It's profoundly depressing, but the gridlock of the United States' federal institutions does seem to be a fixed point in a gloomy economic outlook. We'll see. There are just seven business days now left to D-day: default day. No deal? No jobs.

Turning to the European Union, there's a bit more optimism at the end of the week now that Greece is to be allowed a 'soft default' - that is, to stop paying the utterly ludicrous levels of debt repayment and interest that the country's voters had been locked into. You read it here first, folks. About twenty per cent of her debts have been wiped out. Private banks, who are having their backsides covered by European taxpayers yet again, are going to contribute. There's going to be a new Stability Facility to help in future. Stock markets have risen; bond rates have fallen. Angela Merkel and Nicholas Sarkozy, that odd couple of European politics (above), have managed to keep the show on the road one more time. But that's all they've done. Greek debts have only gone back to the implausibly-sustainable levels of the spring. The banks are only sharing a little bit of the pain - rather than being made to realise that their irresponsibility is at the heart of our present crisis. The new Stability Facility will not be enough if a really big country threatens to go down.

The structural problems have not gone away. Republicans and Democrats are in their trenches, watching conservative Fox or liberal MSNBC, lionising 'enterprise' or 'public service', idolising Reagan or Roosevelt. Only the Senate has kept its head at all, and that only barely. Across the Atlantic, the difficulties remain: constraining banks across a wide geographical area, with only 'converged' rules and nation-states, and a relatively weak European Central Bank, to guide them. Persuading German, French and Swedish taxpayers to stump up for 'improvident' southerners (even though their own banks are on the line, too). Trying to formulate a way of issuing debt for the whole of Europe, rather than letting vulnerable states blast a great big hole in the Euro's credibility, without just announcing a federal state called 'Europe' on a quiet Friday in July.

The question posed at the top of this post was: how are we doing at avoiding catastrophe?

Answer: we might just manage it. But only 'might'. And only for now.

Tuesday, 19 July 2011

Okay, then, what should we do?

So one of the main reactions to my doom-laden post yesterday was: okay then, mister-smart-academic, what shall we do about the economic crisis? It's all very well warning about what's wrong and what might be about to hit us, with the wisdom of the historian (such as it is). But we need solutions - things to do and say that might help.

So here goes. It's a one-two-three, really, and if it sounds simple, that's because we're now fairly close to the precipice and we need simplicity.

One. A deal is needed on Greek debt, right now. Today's absurb posturing by Germany's Chancellor, Angela Merkel (above), is not helpful. German banks have recklessly exposed themselves to great risks in Greece, and they as much as the Greeks need the aid. To pretend anything else is just crazy. What's the point of aiming to win another German federal election if you've presided over the break-up of Germans' cherished dreams of post-war economic and monetary union? Europe and the Euro need a way to roll over Greek debts, by voluntary agreement with the banks, right now - by the weekend, if possible. European interest rates on borrowing are going up everywhere - in Spain, Italy and Ireland. If they keep going up those states will default and leave the Euro. The currency will have failed. It's that simple.

Two. Congress needs to sort itself out. Time is still running out for an agreement between all parties in Washington to agree to raise the United States' arbitrary and absurd debt ceiling. It needn't be like this. Wiser heads, for instance Republicans in the Senate, have been calling for a budget compromise for some weeks now. But the extended game of chicken now being indulged in by everyone - President, Congressional Democrats, Tea Party absolutists - might still run us all over. Don't cut a deal in the next two weeks? The United States is in debt default. That might not be quite as bad as it sounds, but it's bad enough. A deal that swaps some tax rises for more spending cuts (roughly in a one for two ratio) might do it. Sure, lots of Republicans in the House might vote against. But wiser members should consider this: if the financial system goes down in flames, they, and not the President, will get the blame.

Three. Enough with the austerity, already. Individual national finance ministers need to rid themselves of 'oldthink' - the idea that they have to balance the national books, at all costs, and quickly. Chancellors such as George Osborne should listen to the growing clamour for a Plan B - cutting VAT, slowing spending cuts, announcing a National Insurance holiday, anything - before all of us racing to the bottom drags us all not only onto the pavement, but down into the gutter. National economies such as that of the UK - still one of the top six in the world - have an enormous contribution to make to world growth and financial stability. If we can't get together to convoy our way out of recession, to drag ourselves out of the hole that the financial irresponsibility of the few has thrown us in, chugging out of recession or depression gets that much harder.

In fact, overall, this three-step guide could be summed up as John Maynard Keynes outlined it all those years agao in the 1920s, and actually in the way that world leaders reacted to the financial crisis of 2008: just print money. Borrow. Smile and look confident. Dig a big hole and fill it full of money, just to employ people, if you have to. In the long run, there'll be inflation. But in the long run, of course we are all dead.

The alternative? An economic ice age that'll make the recessions of 1975-76, 1980-81 and 1991-92 look like jelly and ice cream.

If you need an economic historian to tell you this, of course, you really are in trouble. Over the next two weeks members of Congress, the Board of the European Central Bank, European Union Finance Ministers and heads of government have your job, your pension, and your fate, in their hands. That thought does not inspire confidence.

We'll probably swerve round the worst of the brick wall. In particular, billionaire financier George Soros has said again today that he thinks politicians in Washington will cut a deal in the end. He thinks they're just grandstanding, and should and will keep borrowing, both for the world's - and their country's - own good.

You'd better hope he's right.

Monday, 18 July 2011

Worried? You should be

While Westminster and Whitehall elites are busy forming a circular firing squad over the phone-hacking and bribery allegations swirling around the police and Rupert Murdoch's News Corp, a terrifying set of clouds are building up on the horizon.

The world economy is facing a great big storm, and no-one in the developed world seems quite to understand just how big the risks really are. European banks' stress-testing seems to have failed, as bank shares continue to slide. The very structure of the US Federal Government seems ill-equipped to meet the challenge of the United States government's spending deficit. Both tax rises and spending cuts are desperately needed, to shore up confidence if nothing else. But both parties in Congress - spurred on by an absolutist but economically illiterate Tea Party - seem set on a collision course. If the US does default on its debts in two weeks' time, by which time its debt ceiling must be raised, members of Congress will bitterly regret their pathetic point-scoring.

Here in the UK, a combination of the Chancellor's doom-mongering, spending cuts, tax rises and lack of a growth strategy look likely radically to slow economic growth. Forecasters are cutting back their projections; some forecasters think next week's growth figures will take us back into negative territory, and tell us that the economy is shrinking again. That still seems unlikely, but growth is likely to power down to a slow and painful crawl.

The risks are huge. Collapse of the Euro as the weaker brethen are peeled off by the bond markets refusing to lend? American default? Renewed recession at home? In this situation our public discourse, about who said what to whom, seems like a bit of a distraction.

It's often forgotten that the world economy actually began fairly rapidly to recover from the shock of the Wall Street Crash in 1929. It was the second wave of banking crises - starting with the Austrian Credit Anstalt (above) in 1931 - that really put the boot in, and led to more than half a decade of horrifying economic pain. It might happen again. The signs are not good.

I don't want to spoil your day or anything, but if I were you I'd start worrying.

Friday, 15 July 2011

European fisheries reform: harsh realities

Reform of the Common Fisheries Policy (CFP) is one of those subjects you mention at your peril.

Should you dare to raise the subject in almost any forum, eyes will roll. Minds will cloud. Fingers will drumb on tables. It's just so boring for most people.

But it's critical for Europe's fish stocks. It's moving towards the top of the European political agenda. And the European Commission has just announced a whole new approach. We Brits, who've been complaining about the CFP for years, are now playing a key role in reshaping a mad, mad system that even saw fishermen throwing thousands and thousands of tons of perfectly good fish overboard before they could bring it to shore. It's known as discard. I'd call it, well, immoral. Like the Common Agricultural Policy. But don't get me started on that one.

Hats off to Hugh Fearnly-Whittingstall (above) and his extremely popular and successful campaign to end discard for ever. Ending discard is now one of the European Commission's highest priorities in this policy area, and not before time. The whole concept of fisheries control is going to move from limiting each boat's catch to limiting catches for whole areas. So if you dredge up loads of cod when you were looking for mackerel, you can 'sell' this to another wholesaler or boat and land it for cash. While still observing a more rational overall target for the area of the sea that you and other EU nationals are fishing. Hopefully this will encourage technological innovation, for instance on more selective nets and efficient area targeting. The UK's already been conducting its own trials along exactly those lines.

But that's only a start. For the truth is that we even if we move to landing all the fish that's caught, and adopt trading agreements to 'buy' and 'sell' quotas, we've just been hauling too much of the wrong types of fish out of the sea for far too long. We just need to reduce the actual total of big demersal, deep-sea fish (such as cod) that we catch and eat. It's that simple. And we've not got there yet. As I've argued until I'm blue in the face, EU scientists have been setting realistic targets for years, only to be ignored by the self-interested politicians on the Council of Ministers. Every new negotiation has been marked by a macabre dance, in which politicians compete to show 'their' populaces (and marginal seaside electorates) that 'they' are being tough in resisting encroachments on 'their' fish. And then just letting maritime industries strip another generation of endangered species out of the ocean. Let's hope that doesn't happen this time. There's plenty of time for another grubby stitch-up to emerge, and then victories on overall quotas and discharges will seen bitterly pyrrhic indeed.

Only widespread fleet scrappages - perhaps on the scale of ten to twenty per cent - can achieve this. That'll really hurt in the highlands of Scotland and in Devon and Cornwall, but otherwise we'll be in the position of the Canadian Grand Banks - no fish, no industry - within a couple of decades.

We can and must declare an end to the era of overfishing. And the post-war era of cheap, meaty, white fish. That's the harsh reality.

Monday, 11 July 2011

Greece must and will default

Greece is going to default on its debts.

There, I've said it. It's a cathartic moment, really - a bit like realising that you finally do have to do something about that long-running but troublesome toothache when it flares up.

Imagine, or remember, how much better you feel after having it removed. That's how the Greeks - and most other Europeans - will feel when this is all over.

But it's a tragic moment as well. For all the shouting, all the rioting (above), all the jobs lost and lives ruined have been for little. This lack of sensitivity and understanding is hardly surprising, when most of our international financial economic and financial mechanisms are so opaque and so undemocratic. It's a classic example of how boring men in nasty suits, talking jargonised nonsense, can crush the smaller players whose lives sound and feel far away. Talking about 'reality', 'retrenchment', 'reform' and 'restructuring' in the European Commission or Washington looks very different when you're a Greek worker who's always played by the rules and paid his or her taxes, only to be told you're a lazy freeloader on the European commonwealth who needs to work for another ten years for a much smaller pension. Or lose their job altogether.

But beyond that democratic deficit of both legitimacy and credibility, there's another reason why the Greeks should stop propping up the rest of Europe's broken budgetary system (for paradoxically, that's what their pain is doing). It's just this: there is just no way that the Greek state can impose the very, very deep austerity cuts it wants in the short time available to it. There is no way that German electors are going to keep on paying for it - though bearing in mind the massive advantages their economy gets out of exporting cheaply to the Euro-zone, and big profits their banks have made lending to the so-called PIGS (Portugal, Ireland, Greece, Spain), they should wake up and realise where their interests really lie. And there is no way that even further cuts would be politically credible or deliverable. So this is the end of Plan A.

Plan B? Look at Argentina's 2002 default, widely credited with putting the country on the road to recovery. Declare national bankruptcy. Use the catharsis. Reform your economy, but keep the process in your own hands and on your own terms. Ignore the crazy economics of slashing everything in sight and hoping that growth will save you.

As an economic historian of these things, I've watched many British governments struggle with a situation that was transparently not sustainable. Talking down the possibilities of devaluation in 1956-57, 1961 and 1964-67 only to bow to the inevitable in the end. Talking up the credit bubble of 1971-72, only to head straight into a secondary banking crisis. Trying to spend their way out of an inflationary spiral in 1974-75, only to call in the International Monetary Fund during 1976. Talking about 'making the pound the new Deutschmark' just weeks before a new devaluation in 1992.

Talking tough and cutting never works. The Greeks should default now, whether 'softly' within the Euro (via French and German banks' loan 'forgiveness') or by freezing everyone's assets and printing their own money again.

John Lanchester's excellent survey in this week's London Review of Books thinks that the former solution is more likely, but the latter is also possible. The Greeks would then have an even greater share of what international financial historians know as the 'strength of the weak', for who could really let Greece collapse? Answer: no-one, least of all the majority of Eurozone currency holders and nations whose assets and credibility would suddenly be on the line.

So watch out for a Greek default in the next few months - and, whatever you do, don't buy a Greek holiday home in sterling.

Friday, 8 July 2011

'Top' universities and social mobility

A good eye-popping statistic is often worth a thousand words. Here's one: five schools or colleges send more students to Oxford and Cambridge than the 'bottom' 2,000 schools put together. And four of those five institutions are expensive private schools.

Good on the Sutton Trust for crunching the numbers - and for revealing just how divided educational provision really is in modern Britain. Or England, we should say - for access to Edinburgh, Glasgow, Cardiff and Queen's in Belfast is nothing like so socially exclusive and institutionally concentrated. The Trust does admirable, conscientious and rigorous work encouraging young people to apply to 'top' universities. It organises summer schools that help to familiarise young people with the idea, and de-mystify some of the Brideshead nonsense that still surrounds English Higher Education.

But there's a problem with their concept of social mobility. It focuses on what we might call extreme movement - to declare an interest, trajectories similar to that of the current writer. But the move from a low-income household to Oxford (above) or Cambridge is highly unusual. Even if it became much more widespread in terms of Oxbridge numbers, it could still represent only a tiny fraction of the 'disadvantaged'. So although the Sutton Trust's aims are entirely laudable, wouldn't we be better throwing the net wider and focusing on the figure for all children from low income backgrounds going through to any sort of HE? Some of the Million+ institutions currently protesting bitterly about the Government's White Paper have done massively important work in this arena which is in danger of being forgotten in debates like those on this morning's Radio 4 Today programme, which invited a representative from the Russell Group to comment on what was going 'wrong'. Perhaps much is going 'right' elsewhere in the university sector?

In fact, it is - but the results are seen most clearly among exactly the set of universities that are about to be squeezed as the government removes numbers caps on the Russell Group and on FE colleges charging less than £7,500 for annual tuition. So there may well be a few more bright young people from less traditional backgrounds going to (say) Leeds, Durham and Southampton. But social mobility via Higher Education is likely overall to remain static at best.

What a shame.

Thursday, 7 July 2011

Some of the real politics behind 'hackgate'

Your correspondent is rarely accused of being naive. If anyone tries, I usually treat them to a chilling blast of cynicism, just to make sure. And this blogger, at least, has been a journalist in a national newsroom. There are few more pressurised or terrifying places. It's a rough-and-tumble world.

But even I've got to say that the phone hacking affair at The News of the World is extraordinary.

Not for the revelation that hacks intercept communications. They've done it all the time, across many titles, for many years. If you're caught in any sort of media storm, I would (for instance) shred everything before it goes in your bins. Otherwise it might well end up in the papers the next day.

Nor for the renewed object lesson that politics is full of lies and half-truths. What a surprise.

No. The really amazing thing is that News of the World journalists thought that their wilder shores of impropriety were a good idea - and that they got away with it for so long. I remember being hauled over the coals by my paper's in-house lawyer when I used a nasty word about a big company. Goodness only knows what she would have said had I informed her that I was illegally bribing police officers to get details of addresses, paying off people in telephone copmanies to get ex-directory numbers, monitoring phone messages and interfering with high-profile murder operations. I think she may well have laid down and died on the spot. Fear of Rupert Murdoch's ire (above) should have kept them more firmly in line than this.

Because the fall-out of being discovered is much, much worse than just having some blander stories with fewer quotes. Your contacts revealed. Massive reputational damage. Big advertisers pulling out. Your bosses' faces all over rival front pages. Potential privacy legislation. The phrase 'disaster' doesn't really cover it. There's too much excrement flying to even see the fan. NI's American-Australian proprietor will not be pleased, that's for sure.

The whole sorry mess also exposes some of the realities behind British politics - its 'hidden wiring', in Peter Hennessy's memorable phrase. The press may lie low for a while. But post-war British history shows us that they'll be back, as red in tooth and claw as ever. Previous governments have tried to take them on. The Vassall spy case of 1962 helped to do for Harold Macmillan when journalists were prosecuted for refusing to reveal their sources. When they got the opportunity the next year (over the Profumo scandal) the press effectively and efficiently wiped out the Prime Minister's whole career and reputation. Harold Wilson slapped 'D-Notices' on the press, preventing them publishing stories on 'security' grounds. His relationship with the press, and his public image, always struggled to recover. David Mellor famously told journalists they were 'drinking in the last chance saloon'. Revenge (mostly self-inflicted) duly followed. The death of Diana, Princess and Wales, was followed by a wave of revulsion against paparazzi photographers hired by newspapers. But did anything really lasting come out of that - anything akin to the public boycott of The Sun on Merseyside following a particularly nasty headline about the Hillsborough stadium disaster? Not really.

TV and radio have been full of talk, these past few days, of 'sea changes' and 'fundamental turning points'. I'm not so sure. The British press is virulent, opinionated, persistent, occasionally brilliant - and very, very powerful.

David Cameron will be treading carefully. He has to make sure that he isn't seen as too close to News International Executives James Murdoch and Rebekah Brooks, lest the public identify him with their perceived wrongdoing. But he knows that if he comes out too strongly against the press, they'll bide their time. Then they'll tear him to shreds.

Wednesday, 6 July 2011

The rise of the precariat

The temptation during the bubble years (say, 1995 to 2007) was to think that the class war was over. Tony Blair, indeed, declared as much.

It isn't.

As any half-decent economic historian or sociologist will tell you, one facet of life is the competition for resources under scarcity. That's a highly structured, hierarchical and above all historical process that happens under conditions of unequal access to interest, property, inheritance and connection. It's to some immutable in human society.

The form is takes right now might well be the rise of the 'precariat'. It's a phrase coined by the sociologist Guy Standing of the University of Bath, and it's highly relevant in a world where secure, well-paid, pensioned jobs are becoming, and will become, an ever rarer species.

What does it mean? Well, imagine you're 17. What have you got ahead of you if you're relatively academically able, moderately dynamic, quite self-starting? Probably university - and a big tuition fee debt if you're not from a low-income household. Then years of internships (possibly working for free or on expenses), short-term contracts and then maybe, just maybe, you'll get a permanent professional job by the time you turn thirty. Then it'll be time to pay off your (say) £40,000 to £50,000 debt. Your employer might provide you with a pension. But even then it won't be one of those final salary deals, where you disappear into the sunset with a proportion of your annual pay when you leave at 60 or 65. Oh no. It'll be a money purchase deal, where you basically get out what you put in, topped up by your employer and by interest. You'll probably be about half as well off as your parents when you're a more senior citizen. And all the while you'll be living in a small terraced house that across large swathes of the South cost you say four to six times your income at £200,000 to £300,000 (if you're lucky) while your non-graduate and apparently relatively low-earning parents live in a massive four or five bedroom semi or detached pile. Intergenerational warfare? You bet.

That's the middle class picture - not so rosey. But still liveable. If you're from a low income background, a less-than dynamic part of the UK, you're not inclined to take on £50,000 in student loan debts, or your skills lie away from the white-collar arena, then things look even less bright. You're going to earn, well, not very much; move from rented home to rented home (while rents rise quite steeply); and you're going to be patronised all the time for being feckless and weak while you're about it. The struggling middle classes won't be in any mood to let the ladder down, and they simply won't be able or wish to believe how little you earn when they can hardly set around Sainsbury's (or fill up at a petrol pump) without running out of money. Focus group evidence already suggests that the wealthy simply cannot or will not believe how low average earnings are. Expect this to escalate as the squeeze tightens.

What makes these two groups similar is their precarious grip on economic life - on respectability, on self-esteem, on their place in the social hierarchy. Slip just a little, whether it's from your contract job in advertising during your late twenties or your building traineeship in your late teens, and it's a long, long way down - psychologically as much as anything.

Ed Miliband had one of his rare political and intellectual successes when he talked about the 'squeezed middle'. He was pretty much describing people in the first of the groups I've described. His speechwriters' insight is going to get a lot more apposite in the years to come. But as Standing has argued, he needs to widen his analysis to the 'squeezed bottom' as well. The rise of the precariat, with all their fears, insecurities, struggles and interests, might well be the social story of the next twenty years. Linking the struggles of managers and workers might provide a way to forge a genuinely 'new' political ideal.

Can progressive politics speak to the precariat, as it seems to be doing in Japan? Or will they be captured by a rhetoric and a politics of fear and desperation? The answer to that question will be momentous indeed.

Monday, 4 July 2011

Universities White Paper: the chaos of unintended consequences

So I'm back from an extended break. Regular readers will have noticed the silence. Apologies, but even historians have to take a break sometimes.

Back to news of the Higher Education White Paper which was issued while I slogged up a mountain somewhere, far from mobile phone and internet access. Which was rather handy, actually - at least for my stress levels.

For rarely can a government document have been so much of a hotch-potch of the not-too-bad, interesting but half-baked, and downright bad policy. Higher Education Minister David Willetts (above) has had a tough year to say the least fending off intellectual attack, and it isn't going to get any better on this evidence. There have been three other policy debacles in my adult lifetime - the Poll Tax, the ERM and the Iraq War - and although universities policy won't do quite so much damage as those famous governmental balls-ups, it will certainly add to the sense that Whitehall and Westminster can't be trusted with sensitive, ordered, rational and incremental policy.

In my day job, I'm a historian of unintended consequences and complexity, and three spring to mind right away. Hopefully these will be a bit different from the general commentary.

1. The squeezed middle won't be so squeezed. The 'upper middle' and the 'lower middle' will be, in a kind of weird policy jam sandwich. Most comment on the White Paper has focused on 'lifting the cap' for courses with an AAB entry requirement from A-Levels, and among those colleges charging less than £7,500. No doubt Whitehall mandarins are patting themselves on the back for this wizard wheeze, which punishes 'middling' institutions for charging more than the Government wanted them to. The Russell Group and FE Colleges can expand within the existing (extremely tight) numbers. Everyone else can suffer. Well, it seems unlikely that most research-heavy universities such as Exeter will want to expand, firstly because they perceive their mission as producing 'new knowledge' (not teaching undergraduates all the time) and partly because they'll want to preserve the exclusivity of their brand. And it seems unlikely that students and parents will want to give up the prestige of 'going to university' and stampede local colleges with demands for places. So Ministers and civil servants may find themselves disappointed on this front. What will in fact happen is massive competition around the margins of the absurd distinctions and ridiculous lines they've drawn in the sand. So universities just 'below' the top twenty will be hurt in the scramble for a marginal amount of the 'best' students, and universities at the apparent 'bottom' of the the supposed traditional sector, charging more than FE and HE colleges, will be made to mud-wrestle for survival. They'll fight like rats in a sack to present themselves (not always reliably) as the best place outside a mix of Harvard, the Sorbonne and Cambridge. Not that it's a bad thing to publish more data and tell students just how many times they'll be seeing their tutor. Far from it. But some universities will fail - in marginal constituencies. Many courses certainly will. In the meantime, academics and administrators will be making bold claims about lifestyle as well as courses. There'll be a lot of emphasis on bars as well as bursaries. Get used to it.

2. There'll be entry hell for 18 year olds. Lifting the cap off AAB numbers will mean that some - but only some - of the prestigious Russell Group universities may well 'go for growth'. There'll be huge pressure to get those AABs - and no places just below in the so-called 'squeezed middle'. So you'll have your offer for (say) Durham - of AAA. And a reserve at (say) the University of East Anglia, of ABB. So far so good. But if you don't get them, you're going to have to reapply the next year, or be willing to take a place far, far down the established 'pecking order' that perhaps charges less than £7,500. Perhaps your local FE college. Think students and parents are going to be happy with this? Er, no. Think this will add to feelings of stress, desperation and helplessness while you're doing your A-Levels? And potential grade inflation? Er, yes.

3. There'll be many more small colleges - and more 'churn'. This isn't really an unintended consequence, of course, because the Government would love new providers to come in and sell more courses, either for profit or as charities. Royal Holloway has already announced that they'll be getting together with Pearson to validate the publisher's business degree. Expect much more of this in the future. Some existing smaller universities may go private themselves, to get away from the sorry mess the Government has made of the sector. But what Ministers perhaps haven't quite taken on board will be the scale on which new entrants will enter the new 'market'. They'll be of all shapes and sizes, perhaps damaging the image of UK Higher Education as a reliable, tried-and-tested 'product'. Grave doubts must exist about quality control even when money follows the student - for can you really move once you've taken a year somewhere you've come to regard as selling an inferior 'product'? The White Paper imagines more light-touch but unannounced interventions. Expect many more mergers and closures, as in cash-strapped Wales at the moment. But where will the students go if tiny new institutions on a par with 'free schools' have to be shut down? Will HEFCE ensure that modules and credits are transferable? Can the quango really be that sensitive and flexible?

So it'll be a more fragmented, less predictable, more moment-by-moment, seat-of-the-pants sector. In which tiny differences with near 'competitors' make a big difference - and destroy and create new courses all the time. Forget about the bigger picture when universities bunch so much into 'groups'.

The result? A feeling of chaos. The Times Higher put it like this, and it's hard to disagree:

In the space of what will be a harrowingly short year, the sector faces the potential for market chaos, ballooning bureaucracy, consumer confusion and whole new orders of uncertainty. We are being pushed into a massive experiment. It is a gamble with the future of one of the world's most successful higher education sectors. And for what? Where is the grand vision? What about the rest of the UK, international students, postgraduate provision, globalisation?
Ministers of course believe that this will involve 'creative destruction' and, while a few eggs might get broken, a nice and tasty policy omelette will eventually emerge. Let's revisit this in two or three years when the strain on numbers is growing intolerable, specific parts of the sector at 'top' and 'bottom' are at war with one another, and voters are in revolt about private colleges, big state sector university failures and high fees at universities stacked with nice halls, swimming pools and glossy brochures.

Then we'll see.