Private and public debt

I’m catching up late with this, but this is indeed an excellent post (and, indeed, blog) on the Office for Budgetary Responsibility’s revision of its forecasts on what is going to happen to private debt over the next few years. As public debt is being reduced, private debt is now likely to expand.

Inevitably, government cuts to public services will lead to people paying for them separately, thus squeezing household finances further and driving up household debt; while an economy actively flirting with depression will cause further problems to household debts as people lose their jobs, on top of the impact of the falling value of real incomes, as people seek to maintain living standards as far as possible. That’s not rocket science – except, it would seem, to a government intent on blazing a path back to the 80s.

This may well spell bad news for the 2012 pensions reforms: rising private debt, on top of household savings apparently resuming pre-recession trends, is likely to cause further pressures on peoples’ ability to save (more) for their retirement. At the same time, rising debt is likely to increase pressures for people to have access to their pension pots early. This has already been the subject of a Treasury consultation. Evidently, pensions are not savings per se – rainy days are what savings are for; pensions are for your retirement – but seeking to encourage people to save more while engaging in policies that are driving up their debts is an unhealthy and short-sighted combination.

At the wider, political level, we may well here be sowing the seeds of a future financial crash – but it is clear that the intentional driving up of private debt, despite the lessons of what the economy has been through in the past few years, itself underlines the sharply ideological nature of this government’s intensifying onslaught.

[Edit 1 April: And for living proof that, if you sit an infinite number of bloggers down in front of an infinite number of keyboards, you will get, if not the works of Shakespeare then more or less similar posts, within almost literally seconds of posting this, I discovered that Duncan Weldon over at False Economy had made most of the same points, and better, and with more links, too. Damn!]


Ofcom becomes Off-com

Ofcom today confirmed plans for a 28%+ cut in its budget over the next four years – with the vast bulk being front-loaded: 22.5% of that cut will come in 2011/2012, with a cut of £27m, taking the overall budget to £116m.

We need to see Ofcom’s forthcoming Annual Plan – due out ‘shortly’ – to see what this means in practice (although the confirmation of the dimensions of the cut seem to indicate that this draft is likely to be substantially unchanged), but (on the back of the experience of year-on-year budget cuts) Ofcom believes it can nevertheless maintain its ‘capability and effectiveness’ in delivering ‘effective and targeted regulation’ and, as if to prove ‘business as usual’, it chose today to launch a new consultation on Openreach’s wholesale pricing. Though this tells us little other than that the regulator is on-message.

Ofcom is already in the process of finalising cuts to 170 jobs – 19.5% of its workforce as at 31 March 2010 (see Table 6) – and it’s difficult to believe that this will not have an impact on regulation in the sector. Cuts to Ofcom’s governance structure and the closure of its Consumer Panel have already been made, while I note that those employees remaining in the companies defined benefit pension plans are faced with the loss of future accrual on top of a two-year pay freeze. We are also likely to see the loss of Ofcom’s role in encouraging digital participation and rationalisation of its research programme.

Time will tell. The earlier removal from last year’s Digital Economy Act of a greater role for Ofcom in promoting investment in the industry is already a critical loss since this would have counter-balanced the existing statutory duty to promote competition which is proving problematic to the shape and direction of the industry. The impact of a smaller – perhaps more focused – regulator on the dynamism of the industry is yet to be seen, as will be its ability to compel the government to see through its ambitious plans for the communications industry (about which this blog has previously been critical – see, for instance, here). The signs are clearly not hopeful – but the ideological gap between what I’ve just said about the role of the regulator in driving the industry forward and the practical reality of the government’s market-driven approach is immense.

Marching on together

There are probably as many reasons to march tomorrow as there are cuts. Of all the reasons set out in the megabytes of bandwidth devoted to this, I liked Accidental Academic‘s perhaps the best.

The TUC’s largest mobilisation for decades will see hundreds of thousands on the streets of London demonstrating opposition to the government’s ideologically-driven cuts programme and in support of a better economic alternative. Sadly, I’ll not be among them – for reasons which include a certain indolence in getting myself organised in time; and weekends being sacrosanct, combined with a lot of travel at the minute from my Perthshire eyrie. Both reasons which are insufficient in themselves, and outweighed by the number of reasons why I should be out there. Though I will be there in the spirit (or, otherwise, in the Armchair Army (First Chairbourne Division)).

The False Economy and March for the Alternative websites have done a terrific job in the mobilisation in providing reasons for people to get out there, and the use of Twitter (@March26March) has been terrific in adding a steady drip feed of messages to stiffen resolve and provide backbone. The TUC has dealt well with the organisational and logistical difficulties in rallying this number of people in one place – as have thousands of ordinary trade unionists up and down the land.

Above all, probably, is the simple message that taking billions out of an economy faced with recession – and this week’s OBR report provides more proof that this economy is on the slide, compared to where it was six months ago – is neither sensible nor a strategy. ‘Marching for the alternative’ sounds to me  a campaign theme that it’s been pitched exactly right and it’s clear what the TUC is marching FOR, as opposed to what it is marching AGAINST.

And the campaign theme? Well, James’s Sit Down for me (obviously!); for everyone else: Marley’s Get Up, Stand Up (equally clearly). But for everyone, whether in the armchair army or the mobile marching one, how about dusting off Billy’s Between the Wars? The call for ‘sweet moderation’, when confronted with an ideological onslaught of the simplest, most caustic public-sector-bad, private-sector-good type being exhibited by the Tories and their yellow Tory mates, remains a strongly relevant call to arms for middle Britain.

For those going tomorrow, have a great day: and have a sing out for me! And make it massive (hat-tip: @kmflett).

CPI indexation: a saving or a cut?

A couple of days after Liberal Conspiracy disclosed the – denied – revelation that BBC journalists are being instructed to use ‘savings’ rather than ‘cuts’ in their coverage of government announcements, it came as something of a surprise that call me Dave spoke to his party conference promising ‘less debt, more saving’: it seems to me that less debt, more cuts is exactly what the ConDems are all about.

But – taking the promise at face value – if we can look forward to a government that seeks to encourage saving, then perhaps we can look forward to this government, after all, turning away from the proposed switch to indexation of pensions in payment by the Consumer Price Index rather than the Retail Price Index. The sleight of hand switch to a lower value indexation for future pensions increases in defined benefit schemes announced last July is no less than a government-inspired theft of workers’ occupational pensions. It will rob pensioners of thousands of pounds, with the loss rising with every year of retirement, leaving them more dependent on means-tested state benefits and taking crucial spending power out of the economy. And if the government can do that, to those who are pensioners already as well as to future ones, and in the face of pensioners’ expectations as to what they have been paying into all their working lives and frequently in spite of private scheme-based agreements on how indexation will be dealt with, why should they bother with a pension?

A DWP consultation on this issue as regards private sector occupational schemes closed last week: if the government is serious about encouraging more saving, it will have the courage to do away with this proposal and respect pensioners’ continuing rights to a pension indexed in line with RPI.

World Book Night: why libraries are important

I celebrated the first World Book Night – the slightly but entirely forgivably hyperbolic name for the initiative to give one million books away in Britain and Ireland to people who might not otherwise read them – at Perth’s AK Bell library.

Celebrating the night with me were authors Geoff Holder, who presented on Perth’s grave-robbing history before gruesome dramatic monologues were provided by members of a local drama group dressed in costume as a medical student – in the name of whom most bodies were stolen owing to the law applying to medical students – as well as a grave robber, his wife, and an executioner; and also Christopher Brookmyre, the ‘Tartan Noir’ satirical novelist whose forthcoming work is to be called ‘Where the Bodies Are Buried’. The evening also provided the opportunity to talk to some of the 20,000 people who have championed the books on offer under World Book Night and in whose names the books have first been given (sharing books is very much the theme, and you can record, and then track the progress of, each book you pass on of the 25 titles included in the programme).

Reading may well be a private, individual activity but it has collective dimensions too – libraries are, after all, places where people come together to share information (this motivation for the government’s attacks on libraries is a blog post waiting to be written) – and it’s good not only to be reminded of those dimensions but also to celebrate them.

Altogether, a very well put together theme for World Book Night, and all for the princely sum of a combined £3.50. At a time when libraries are threatened by government cuts, what better way to demonstrate their continued importance to our cultural lives: bringing books, as well as the authors who write them, closer to the people.

Even The Dogs

Dying alone, un-noticed and un-cared for is, I guess, a common fear – and that is the opening of Jon McGregor’s third novel. Thereafter, the novel takes us on an unrelentingly bleak trip through addictions, homelessness, squalor and human inadequacies as they try but surely fail to deal with the world around them, and as Robert’s story and the desire to establish the reason (or reasons) for his death unfolds in parallel to the journey his body takes to mortuary, the pathologist’s slab and finally to the crematory fire.

Robert’s journey is accompanied by a somewhat ethereal chorus of observers drawn from the disenfranchised among us and – as with the nature of addiction – the telling of the fragments of his life and death is made by witnesses who may well not be reliable, as well as being loose, episodic and fractured. Indeed, the novel appears frequently to be little more than fragments from the writer’s notebook.

At its best – for example, in a memorable passage focusing on Afghanistan – the novel succeeds brilliantly. Its scenes of drug use and the work of both pathologist and coroner are well-observed and researched, the latter both delivering a neat, precise counterpoint to the disjointed, unfocused remainder (as well as a welcome element of light). A few targets – people like Robert getting better care in their death than they do in their life, the failures of the rehabilitation industry and the ex-soldier’s lament of the lack of desire for Queen and country to serve him as much as he had served them – are squarely hit. The political tone of the novel is clear and, with the cuts this government is intent on making to public services, it is also worryingly, chillingly prophetic. Unfortunately, the successes are rare. I want the novel to succeed – McGregor is courageously taking immense risks with language and form in this novel and that is laudable – but ultimately novels work best when they engage the reader and McGregor makes few concessions in this direction. The casual reader is unlikely to make it much beyond a particularly difficult and over-long (and deliberately unsettling) second section. There is a good story here and a powerful message that needs to emerge, but it remains rather too deeply buried.

Are successful novels only those which are ‘popular’? No – of course not, but novels must engage their audience if writers are to get their ideas across and I suspect that this one is mired too heavily in troublesome punctuation and a writing style based on streams of (barely)consciousness to be ‘popular’. A creditable effort – but ‘less is more’ is more than just a minimalist touchstone.

ODA money spent in Britain

The Commons International Development select committee today questioned why £1.85m was taken from DFID funds to cover some of the £10m costs of the Pope’s visit to Britain back in September last year. The money was handed to the Foreign Office, and the Committee has asked for answers as to what the money was spent on and why it was imagined that this was compliant with the rules on overseas development aid.

DFID has pointed out that the money is separate to the overseas aid budget – so will have come from departmental running costs, i.e. the bits of DFID that is not ring-fenced from the cuts. (Although it is interesting that Harriet Harman has warned today that the government’s ‘fragile’ commitment to spending 0.7% of GNP on overseas aid by 2013 means it may not be realised.)

Perhaps the comment by a member of the Pope’s entourage that arriving in Britain was like landing in a third world country led to DFID being caught up by this view and thinking that the spending of the money in this country was legitimate …