DUP/SF deliver nothing by Groundhog Day on Community Relations

Sinn Fein accused the “usual naysayers” of opposing their and the DUP’s new “Together Building a United Community” (ex CSI (ex Shared Future)) strategy, or even simply told opponents effectively to shut up (“So what?”) – both of which were revealing, as the “naysayers” are actually right and Sinn Fein and its similarly authoritarian DUP chums know it.

I may want peace walls down by 2023; indeed I may want Northern Ireland to win the World Cup by then; but that isn’t worth anything without a clear plan to achieve it. No such plan exists. Sinn Fein and the DUP know that too.

This is just “Groundhog Day”. There is nothing of any real substance in the document at all. They didn’t show it to anyone else – even their Executive colleagues – in advance because they knew that too.

The other three parties, of course, face a resultant challenge of their own. If the Ulster Unionists are so opposed to care home closures, the SDLP so opposed to Welfare Reform, and the Alliance so opposed to no movement on a Shared Future, what are they doing accepting collective responsibility for them? On the other hand, a supposedly “new” process gives them an opportunity to contribute once more.

Regardless, the fact remains that this Executive is both fundamentally incompetent and fundamentally sectarian. It is not one with which I would be accepting collective responsibility, except if I wished to be complicit in the on-going breakdown of community relations, the on-going ignoring of the Rule of Law, and the on-going decline of the local economy. But so what, eh?

IDS, ₤53/week, and completely missing the point…

I would love to know who runs the Conservative Party’s communications and what they are paid – but they’re certainly not very good.

The demand that Iain Duncan Smith somehow “demonstrate” he can live on ₤53/week completely and utterly misses the point; as does his ridiculous determination to meet what is a false challenge. He himself should know this!

Firstly, let us be clear, this is ₤53/week after housing and most childcare (and of course it won’t be taxed). It is, in fact, not at all rare for people and indeed entire families in work to be clearing less than ₤53/week after housing and childcare (and tax and national insurance). Two years ago, I myself was among that latter number. I and others do not come through it due to artificial interventions to “top up” our income; we come through it because we are educated, networked and skilled so that we can go out and find employment of some sort to raise our income. This is the fundamental point here, that daft online campaigners are utterly missing.

Secondly, let us also be clear – by definition, a third of all mortgaged households in NI are losing net wealth weekly. Far from clearing ₤53/week, people who bought a house in NI in 2007 and are still living in it will, on average, have lost ₤100,000 of wealth in that time – around ₤325/week every week. So they will have had to clear – after childcare, tax and national insurance – nearly ₤400, well above the average wage after tax, just to even it up to the benefits figure now being widely quoted. That’s ₤400 earned each week for a standard of living to match others being given ₤53/week – out of their taxes! No one thinks about that, do they?

If it were suggested that the taxpayer should intervene to help those who bought at the top of the market – in the form of outright payments, not loans – so they could clear ₤53/week after childcare, tax and national insurance, there would be outcry. And rightly so. And that is my point.

For, thirdly, most people in fact picking up the ₤53/week are also the recipients of much higher public spending that those struggling with their mortgages as noted above. They may well have free sports facilities, free health programmes and a spanking new community hall – none of which would be available to our mortgaged, in-work family. So not only is our mortgaged-to-the-hilt/has-to-pay-for-own-childcare/fully-taxed struggling family actually paying the ₤53/week for others, they are actually paying further more for a raft of sports, leisure and health facilities they themselves can only dream about!

The real point – vital, but as ever utterly missed – is that we have a whole host of people in society who have been left, deliberately, dependent on the State and thus incapable of contributing to society to the value of more than ₤53/week. It has to be looked at that way around. Beveridge himself warned, very specifically, against “ignorance” – what we now more politely call “educational underachievement”.

Should the hard-pressed family in negative equity should be contributing even more taxes out of the money they earn just to break even on their home? Of course not, that would be scandalous, since their taxes are already paying others’ housing costs, the very costs which cause them themselves stress and anxiety every week.

So, since the amount of money available for benefits is not going to increase, if someone takes money out of the benefits pot and places it into education and skills – thus ensuring that we do not lose another generation to, ahem, educational underachievement – is that not rather a good thing?

Emotive headlines hinder fight against inequality

It’s the education, stupid.

The Assembly spent two hours “debating” health inequalities a few weeks ago; a campaign is underway to raise the minimum wage to “tackle poverty”; meanwhile we are told again how bad “child poverty” is.

All of this actually *contributes* to inequality, far from tackling it.

This is because this whole “debate” results in government allocating funds aimed at tackling inequality to those who shout the loudest, rather than in a targeted way which would actually help overcome inequality. Funds are allocated essentially at random, in a way which makes government (and actually a large segment of the middle-class public) “feel good”. But it achieves next to nothing in terms of concrete outcome – poor areas remain poor.

It isn’t in fact up to the Health Department to tackle health inequalities. Health inequalities match precisely social and financial inequalities. The issue, therefore, is social inequality not health inequality. Poorer, less-educated people living in marginalised communities will, of course, not care enough about their health and not know enough about it to do anything about it even if they do. The issue, in the broadest sense, is education.

Raising the minimum wage is also, literally, a false economy. We are in the economic doldrums precisely because too many people are paid a wage which is well beyond the actual social and economic value of their work. Forcing Tesco to pay an attendant more than it already does will only result in Tesco implementing more “automated check outs” (for which the pay rate, for reference, is £0/hour). The issue is not that too many people are paid £6.19/hour; the issue is that too few people are skilled enough to command more than that by providing real value to the economy. So again, the issue, in the broadest sense, is education.

As for “child poverty”, this is a deliberately emotive term for a measurement which refers in fact to “parental/household income inequality”. If you allow household income inequality to grow, inevitably some children will grow up in more advantaged settings than others. Of course, “100,000 children in NI grow up in households with incomes below a certain percentage of the overall median” is not as compelling as suggesting “100,000 children live in poverty” – but it is a lot more accurate. To tackle inequality effectively, you need accurate information on which to build accurate targeting of resources – whereas all an emotive headline does is ensure a 24-hour news hit after which everyone forgets about it and goes on as before. Too many people fall for it. The issue again, in the broadest sense, is education.

If we were serious about tackling inequality – and I’ve long taken the view that we are not, in fact, serious about it – we would focus from an early age on education around health and household; on education towards applicable skills in the workplace capable of commanding £10+/hour; and on education of the general public so that emotive headlines are turned into factual information from which we can more sensibly target resources.

John Lewis, Belfast, and lack of ambition

The debate around the John Lewis Sprucefield development is much more complex than is being presented. It is important that this debate focus on the actual choice the Northern Ireland Executive has, and not on the fake choices some are suggesting it has.

Firstly, the question is whether a huge retail development – including John Lewis but not only John Lewis – should be given planning permission for Sprucefield. The question is NOT where John Lewis should locate in Northern Ireland – John Lewis *always* operates as an anchor store in large developments and the only large development proposed in Northern Ireland is at Sprucefield.

Let us be very clear about why Belfast City Centre is not an option:
- John Lewis has made no offer to invest in Belfast City Centre, presumably because it would not be profitable (it is the job of politicians and officials to judge the value of proposed investments in Northern Ireland, but NOT to determine where an investor can make a profit – that is the investor’s business!);
- Belfast City Centre is already far, far too reliant on retail, with proportionately  more retail premises vacant there than in most comparable cities across the UK; and
- Belfast City Centre is introducing a heavy emphasis on public transport – deliberately designed specifically to restrict vehicles, such as vans and lorries which would be needed for a delivery service (as operated by John Lewis) or private cars necessary for “click and collect” for large items (as sold by John Lewis).
In other words, Belfast City Centre is the last place a store like John Lewis would wish to locate – and is being made deliberately so through its promotion of public transport over private or commercial vehicles. (I personally have no problem at all with that, by the way.)

So, this makes an out-of-town location within Greater Belfast the obvious site for a major development involving John Lewis. Sprucefield, based within that area but also on the Belfast-Dublin corridor, is the obvious place.

But do we want a massive retail development (bigger than Victoria Square) so far away from residential and leisure opportunities? I can see why some people do not. It does promote the idea of “ghost towns”, seemingly soulless places where people congregate to pressurise the credit card still further in national and international chains. This is certainly not the type of investment which will enhance Northern Ireland’s community feel; nor is it one which will encourage export-based wealth creation. The “1500 jobs” quoted are surely an overestimate; and even of those which would arise, most would essentially be “relocated” rather than strictly “created”. On the evidence of the planning case alone, the answer is surely “no”.

Yet this omits a true vision for Belfast. I have long said, on this blog, that Belfast needs to be not a city of 270,000, but of 720,000. Far from arguing whether the City Council should include or exclude Dunmurry, the real question is whether it should include Glengormley, Holywood or, indeed, Sprucefield. For too long, the focus of the city has expanded eastwards, towards Stormont, even with recent developments at Titanic. In fact, the most sensible expansion is southwestwards, along the Belfast-Dublin corridor. A wider “Lagan Gateway” masterplan – including the “Maze Heritage and Learning Centre”, the “Sprucefield Shopping Village” linked by a rates-free “Technology and Innovation Park” and perhaps an expanded “Culcavy Garden Village” aimed at young professionals and young families would make *a lot* of sense in 2030…

It is entirely legitimate to favour or disfavour the idea of a large retail development at Sprucefield; what is not legitimate is to try to guide investors to sites where they obviously cannot make a profit. However, what this really shows is the complete lack of ambition we have for Greater Belfast. It is that which we need to overcome, before our economy simply ceases to function altogether.

Public Affairs: Unison deliberately misleading on public sector pay

Patricia McKeown’s comments at the end of David Elliott’s article in the Belfast Telegraph on the public/private pay gap in Northern Ireland were fundamentally inaccurate, and in need of rebuttal. Campaigners should not fall into the trap of quoting apparently convenient statistics wrongly.

On behalf of Unison, she claims that figures showing public sector workers are paid nearly 45% more than private sector workers here are because the “average is driven up by people like Chief Executives and doctors“. This is factually incorrect and creates fundamentally the wrong impression – and thus takes away from the debate rather than contributing to it.

The figures were in fact the *median*earnings – i.e. the amount earned by someone who has half the workforce above and half below. In other words, whether a doctor or chief executive earns £31,000 or £131,000 would make no difference whatsoever to that figure.

On the contrary, figures consistently show that the reason public sector earnings are higher in Northern Ireland than in Great Britain is because lower level administrative jobs attract a significantly higher salary here. Yet senior civil servants, for example, in fact earn less on average (however determined) than equivalent grades in Great Britain.

The Belfast Telegraph was, therefore, entirely right to highlight the pay levels of some basic administrative posts in the Northern Ireland public sector.  These have been inflated to well beyond a reasonable level. This may be excusable if there were fewer such positions and the burden on the taxpayer were being reduced – but in fact the overall number of such posts has greatly *increased* since 1998 – despite the fact they are not remotely front-line and the fact that IT advances should in fact have reduced the need for them.

Conversely, Unison was entirely wrong to try to deflect attention on to higher pay grades, where in fact wages are comparatively lower than elsewhere in the UK and Ireland.

There is a legitimate debate to be had about how to re-balance wage levels sensibly – rewarding hard work and proven ability, ensuring front-line services are enhanced, and giving the private sector locally reasonable chance at recruiting our best people particularly in exportable industries. That debate must involve business organisations, lawyers and elected representatives. However, it can only succeed if all sides are prepared to engage on the basis of the facts, not misrepresentations designed to place blame where the evidence clearly demonstrates it does not belong

The West will inflate its way out of recession – and punish the poor

Attention on the latest strong offering from the Joseph Rowntree Foundation (JRF) was on its suggestion that the majority of people who are in poverty are in work. Anti-poverty organisations like to seize upon this suggestion as evidence that the current welfare reform agenda is wrong-headed, because its focus on getting people into work may not necessarily get them out of poverty. It is not the welfare reform agenda which is wrong-headed – it is the economic agenda being adhered to right across the Western World.

What is noticeable about the JRF figures is not that benefits payments (either before or after reform) appear low – they don’t; it is that the amount of money required merely to support ourselves appears incredibly high – the notion that £18,400 a year is only a living wage for parents is frightening. Conventional thinking on economic policy is causing this – and it is this, not the thinking around welfare reform, which must be challenged and changed.

Let us first of all dismiss the idea that a welfare reform agenda focused on getting people into work is wrong-headed. It may well be true that the majority of people experiencing relative poverty are in work; however, it is equally true that 99% of those out of work experience poverty. So yes, if you have work it does not guarantee you will not still be in poverty; but if you are out of work, it guarantees you will be. Making work central to welfare reform is necessary for various other reasons too – work is a means creating social networks which provide a route out of social exclusion; work is a means of enhancing self-esteem; work is a means of building a career, which may ultimately result in creating work for others (whereas no one out of work can do so); and so on. My own research on the subject showed that very few people do not want to work. In fact, most people will seek work given fair early years services, fair educational provision, and fair public service provision (e.g. child care). It is also entirely reasonable to ensure work pays – very often, under the current system, a parent reliant on housing support actually loses out financially by taking part-time work – the classic poverty trap, as it disables them from starting a career and thus moving towards not just financial stability but also social inclusion. To be clear, therefore, a welfare system focused on support and encouragement for people to find and get to work is an improvement on the current one.

Fundamentally, the poor are going to be punished not as a result of the welfare system, but as a result of inflation. The Western World has two basic options at this juncture: it can face up to the reality that spending (government, business and personal) has become ludicrously inefficient and reduce it by making reasonable decisions about what spending is or is not efficient; or it can inflate its way out, leaving current levels of spending as they are but increasing the cost of living so that the money spent cannot buy as much as it previously did. This is not a matter of left or right; it is a matter of doing the responsible thing or doing the easy thing. Sadly but predictably, we have opted for the latter.

How do we judge “efficiency”? The book Why England Lose explains that the correlation between a Premier League club’s spending on player wages and its final league position is high, at 92% – in other words, money spent on player wages, even if outrageously high to most of us, is efficient; on the other hand, the correlation between a Premier League club’s spending on transfers and its final league position is low, at just 17% – in other words, money spent on buying players is incredibly inefficient. Clubs do the latter because fans want them to – any club losing three games in a row faces instant demands for a new striker or winger. Yet there is little evidence that meeting these demands will do any good; in fact, if anything, they should be demanding higher wages…

Contrary to popular belief, politicians, like football managers, are only human. Faced by demands for big or new spending on things which are perceived to be easy solutions but are in fact wildly inefficient, they are inclined to yield – only the very best politicians (and football managers) don’t. Therefore, as a society right across the Western world, we have failed to enter into a debate about where spending is absolutely necessary on one hand, and where it could reasonably be reduced on the other. Football managers continue to throw money on transfer fees when it would probably be more efficiently spent on player wages; politicians continue to throw money at large hospitals where it would probably be more efficiently spent on local health centres; people continue to throw money at television subscriptions where it would probably be more efficiently spent on books. Football managers buy players they don’t need just because they are out of contract; politicians build roads where they are not required just because the land is available; people buy food they then throw away just because it is on special offer.

Thus, we will simply allow the price of things to rise while keeping spending where it is. This would be fine, if there were no penalty. But there is – and the outrageous thing is that penalty will be paid by the poorest. The consequence of “inflating our way out” of the problem is that politicians will get away relatively unharmed because they are perceived to have maintained wages and benefits at their current levels; yet those wages and benefits will not go as far as they once did. Those already up the career ladder will be able to find ways to earn more money to make up at least part of the difference; but those on fixed incomes, typically the poorest, will not.

It is outrageous that we are meekly letting this happen, rather than seek to deliver more efficient spending programmes at all levels – in government, in business, even in private households. Collectively, we are punishing the poor – and worst of all, through focusing on false arguments about welfare reform and public spending levels, we are pretending otherwise.

STEM subjects must not take away from language learning

BBC Northern Ireland has picked up on a report http://m.bbc.co.uk/news/uk-northern-ireland-20512036 once again demonstrating Northern Ireland’s linguistic deficiencies.

For all the understandable buzz about STEM subjects, we are becoming too inclined to forget about our crisis in language learning. The issue is that we qualify too many lawyers, teachers and bureaucrats – but we qualify too few linguists just as we qualify too few scientists, engineers and entrepreneurs.

One of the reasons, of course, is our obsession with silos. There is still the 20th century notion that we should be qualified as one particular thing. Who on earth wants to be a linguist, whatever that is?!

But the 21st century is the century of the multi-skilled. It is not enough merely to be an accountant, or even an engineer. We need accountants with management skills, engineers with entrepreneurial mindsets, people in general able to cover numerous areas. And, if we are to export and create wealth, we need them all to be linguists!

Let us re-emphasise this: the majority of the world’s population is at least bilingual. Almost two-thirds of the European Union’s population is conversationally proficient in at least two languages. Most people in several different EU countries (notably Scandinavia and Benelux) speak three languages or more. You will have to excuse me, but the last time I visited the Netherlands or Sweden, I didn’t notice that this time taken up learning foreign languages had exactly restricted local engineering skills, scientific knowledge or innovation levels!

There isn’t a lot of point in creating all the most wonderful services and products in the world if we can’t sell them to the countries on our doorstep (the EU) or the rising economies (China, India, Brazil). They all speak English – but only when they’re selling to us! If we want to sell to them…

So no, we don’t need career linguists. We need a population of linguists – just like Scandinavia and Benelux. Learning languages should be fundamental to the education right from the start; they should be taught in a way which enables maximum flexibility to learn new ones; and they should also be managed so as to enhance our skills in our own language (something which, in itself, certainly would not restrict innovation or creativity). And we must forget about the tired old learning techniques involving separating languages unnaturally and then teaching people to memorise bits of a language rather than gain an intuitive feel for all of it.

Forget about an Irish Language Act. We need a Comprehensive Languages  [plural] Act, which fundamentally changes our attitude to languages and our modes of teaching and learning them.

Cuts… the inconvenient truth

The language of the “Commentariat” is clear – essentially, “Northern Ireland cannot deal with more cuts“. Frequently, our economic woes – rising unemployment, rising cost of living and so on, are put down to “Tory cuts“. We hear even how our retail sector is suffering because “cuts have taken money out of the economy“.

There is a slight flaw in all of this – there haven’t actually been any…

In fact, DFP figures show:

• in 2009-10, total public expenditure in Northern Ireland was ₤21.8 billion, rising to ₤22.4 billion in 2010-11;
• in 2009-10, “identifiable” public expenditure in Northern Ireland was ₤18.9 billion, rising to ₤19.2 billion in 2010-11;
• total public expenditure grew by 24.3% in the period 2006/7 to 2010/11, even though revenue only grew 2.8%.

This is incredible stuff. Over a five year period, public expenditure grew by nearly a fifth, even though revenue barely increased at all.

“Cuts“…?!

 

Another reason to de-prioritise Corporation Tax reduction in NI…

This blog very often challenges the “apparently obvious”, given that the media and the broad “Commentariat” are inclined to take a straightforward view or prioritise a single aspect of a highly complex subject.

“Corporation Tax” is no different. I have, on numerous occasions, implored the media and the broader “Commentariat” not to forget about a Corporation Tax reduction altogether, but to stop making it their only (or even main) economic priority. Even if, magically, a “Corporation Tax reduction” specifically for NI were to be delivered, it would not alone make up for NI’s appalling skills gap (e.g. the inability of Bombardier to complete a full recruitment process on its original requirements despite a mass of applications), or its infrastructure deficit (e.g. the on-going lack of funding for public transport), or its inherent social parochialism (e.g. its poor linguistic skills) – all of which are fundamental problems which show not a hint of challenge by the “Commentariat” (and therefore by politicians either). So why are we not discussing skills, infrastructure or export orientation? Good things are happening there, but they require far more focus.

I have also written about the political impossibility of delivering a corporation tax reduction specifically to this part of the UK and EU; about the financial improbability of the Executive accepting the full loss in public spending; and about the practical unlikelihood of it appearing high enough up anyone’s agenda in the first place.

There was always another problem which no one really answered – how would you ensure firms locating in NI actually paid the corporation tax they were due to? It turns out, in fact, that this is a problem right across the UK. We were already aware that various financial institutions had become masters of creativity when it came to their own corporation taxes; it turns out some of the largest and best companies in the world – Google, Amazon and Starbucks – also have various deals in place in other countries which mean they pay almost no corporation tax in the UK.

Google is particularly interesting, because it is often quoted as the type of company which may have been attracted to Belfast but ended up in Dublin due to its low corporation taxes. Of course, this is deemed entirely true – its representatives at Parliamentary Committee were perfectly content to claim it. However, the obvious problem is this – why would the UK Government allow one part of the UK to host companies which, by choosing to locate themselves there, could thereby specifically avoid paying corporation tax for its operations in the UK as a whole? Politically and practically, it is just stupid. (Leaving aside the fact that Google essentially doesn’t pay Corporation Tax at all, so in fact the Corporation Tax rate cannot be decisive in its choice of location…)

In other words, the more time goes on, the more the case for a reduction in corporation tax specifically in Northern Ireland unravels – and I say that as someone instinctively supportive of it, on the grounds that it would at least give us a clearly unique offering of some sort to potential investors.

Fixing our economy, and thus enabling job creation here in Northern Ireland, is a complex and difficult task. Some suggest the economy should somehow be “kept out of politics”. On the contrary, economy and society are not distinct things; the type of economy we have impacts on the type of society we have and vice-versa. Thus, the task of sorting out our economy needs to be woven directly into every political and social decision we make.

NI private sector needs to pay more

It has been mentioned before that Northern Ireland’s public sector pays 43% more on average than the private sector. Whatever about “like for like” employment, the simple fact is that this makes the public sector more tempting for our best educated people than the private sector.

In sensible economies, this is the other way around. In return for the job security and pensions that come with the public sector, pay is slightly lower; some of the best people are tempted by this, but others are tempted by the higher pay potentially available in the private sector, despite the fact that it is a more risky career route (and typically does not come with generous pensions and such like attached).

Although some quibble about the precise figure, few dispute the general point that there is an imbalance here. What is interesting, however, is that there are two general responses: first, that it’s a legacy issue and although we should do something about it, “now is not the time”; or second, that we should cut public sector pay (and pensions and everything else) to equalize it with the private sector. There is a third response which rarely rears its head – we should generally raise private sector pay.

This third option seems counter-intuitive at best and ridiculous at worst. How does business help itself by knocking money off its bottom line (by raising it a few lines into its wage bill)? Yet, herein lies the real problem with the economic debate in NI – even asking such a question is a very “public sector” way of looking at the world – yes, in a world of set budgets, raising wages reduces the remainder. However, in a world of wealth creation, raising wages may in fact also raise the overall budget by attracting better people to work for the organization and thus enable it to create wealth faster.

It was notable that the automatic response to Bombardier’s warning that it could not expand in NI without lower corporation tax was that perhaps it should pay lower wages or even reduce staff. Could it be, however, that absolutely the contrary is the case? If companies paid higher wages – yes, much higher wages – they may be able more easily to attract the best NI has to offer (and indeed attract the best to NI) and thus make their investment in NI still more profitable.

Indeed, one of the prime reasons the Corporation Tax Reduction argument has been lost is precisely that businesses refused to say what they would do with the extra money. If they had pledged to re-allocate it to staff wages and training, the political and indeed economic case would have been a lot easier to make. The implicit suggestion that, rather, they would maintain wages at their current ludicrously low levels and hand the rest of share holders (often not based in NI) was the reason the idea never gained any real traction – “all-party support” is not the same as “all-party absolute prioritisation”.

Politicians do need to do their part to better understand the economy and better assist local and investing businesses. However, the blunt truth is that businesses need to do more too – and they themselves should not fall prey to the all-pervasive “public sector culture” which is the precise reason economic re-balancing is so necessary.