Realpolitik

This story on the BBC about the Russians selling arms to Syria made me smile: http://www.bbc.co.uk/news/world-europe-18642032

The Russians are canny political operators and yet their position on Syria is drawing widespread condemnation. They learnt a brutal form of politics during Soviet times and although their democracy may appear messy and corrupt at times (we can't claim any moral high ground here) they have learnt painful lessons about democratic politics, can afford good PR people and they know the art of political manipulation. I would speculate that the Russian government is actually playing a double game when it comes to Syria's arms. Syria is no doubt a milestone around their neck that they would be happy to do without, yet they must protect their interests. Realpolitik is much more of a driving force than human rights concerns and they stand to lose a lot more than most countries if Assad's government falls.

Their argument that they do not want terrorists taking control of Syria is a credible one. Their point about the Western nations practising double standards by arming the rebels in Syria and Libya is a hard hitting point. Yet there is also an unspoken, yet very strong economic case for their position, this is their arms export industry. Decimated following the collapse of the Soviet Union, Russia has spent many years rebuilding it and competing on a very competitive international stage. It is a significant revenue earner as well a means of gaining political influence abroad. So why is it important to them to continue to supply Syria despite the international political issues that this creates?

I would argue that we should look further internationally for the answer, specifically Asia, Africa and Latin America. The arms export industry for  Russia and China is very strong in those defence markets that Western democracies are reluctant to get involved with. Where there is a civil war or a corrupt regime, Russian or Chinese arms are usually to be found. Their big selling point is that they do not ask questions about how their arms are used and while their arms are not as cutting edge as Western made arms, they are rugged, cheaper and work well. This is a huge market with not only a large amount of money involved, but also the ability to influence those countries sitting on untapped mineral wealth such as oil or rare metals. China is aggressively expanding its influence and so Russian defence companies must maintain their reputation as reliable suppliers to compete.

So what is Russia to do with those outstanding Syrian defence contracts? They don't want to reduce their international standing in the world, but they don't want to lose ground in their defence export market either. The answer could be to ship the goods as required, but then to find a way of stopping them from arriving. Enter stage left some cargo ships which get stopped and turned back in British waters because their insurance is refused. How did the insurance company find out about the arms on those ships? Were they informed by an intelligence agency and if so which one, Russian or Western? And why did the Russians ship these controversial goods through the North Sea rather than through the Black Sea where they were less likely to have been stopped? I can only speculate as I have no intimate knowledge of what happened, but it would not surprise me if the Russians deliberately sabotaged the shipping. They will still try and get the goods to Syria, but quite likely by then it will be too late for the arms to make any difference. In the meantime, the Russians maintain their reputation for sticking to their contracts. Who knows, maybe they will get lucky and manage to sell the same goods twice?

How very Machiavellian! How very Russian too with a nice bit of maskirovka.

False promises, the PFI mess

The recent news that some London Health Trusts are in financial difficulty does not come as a surprise to me for two reasons: I read Private Eye and I have seen or been involved with a number of PFI (Private Finance Initiative) deals. With every single PFI I have looked at, I have never thought that any of them delivered genuine value for money for the taxpayer. But as there was no other money available and as the political instructions were very clear that they should be used, I like many other civil servants, simply had no choice but to get on with it. The sad truth is that many spending promises made by Government in the last 12 years were false promises, using money it did not really have and signing up to deals that were simply licences to the private sector and the banks to rob the UK taxpayer. Thus Labour (and no doubt the Coalition will too) put the public finances into debt in order to buy votes and thanks to the financial/banking crisis the chickens are now coming home to roost.

Maybe I should provide a brief explanation of how a typical PFI arrangement works so that people can understand how ludicrous PFI is. Bear with me as I try to simplify a very complicated area of government business.

Let us say that you are in charge of a project such as building a hospital or school or even to supply the Royal Air Force with air to air refuelling tankers. All this has been done under PFI. You need a big chunk of money to do so, for simplicity’s sake, we will use a nice round number of £1 billion. You are told, that your Department does not have the money and Treasury will not give it to you. But to maintain the current service, the operating budget is £50 million a year and this can be increased to £100 million a year (don’t ask how they manage this, it is a mystery!). As a good project manager, you need to think through-life for your project, thus you combine the cost of buying your hospital/school/tankers and the cost of running it. You need to put a time frame on it so you say 20 years. This neatly means you need £2 billion all in for a 20 year project (£1bn to buy and £50m x 20 = £1bn to support). Lo and behold, the £100 million a year operating budget over 20 years the Department is willing to give you also comes to £2 billion. Result! (Warning: most PFI do not work out this simply, I can almost guarantee that in most cases the PFI forecast is more expensive over the 20 years rather than breaking even, explanation of why is below)

So you now have a requirement, a budget and a plan and so you compete for a private company or consortia able to build what you need and keep it running for 20 years. This competition process may cost you £2 million (team of lawyers, commercial officers and experts to assess bids etc) and takes, at a minimum, two years to get to contract. Fast forward to you have selected your bidder/consortia and the discussions now turn to raising the money. Needless to say, most companies don’t have £1-2 billion in cash, so they go to the bank. The bank is willing to support the deal, but of course they are going to charge you interest on any money borrowed. Oops, this means you need another £200 million over the 20 year project because of course the £100 million a year estimate did not include commercial interest rates (remember it is £50m a year to support, another £50m a year from capital costs). This is where it gets farcical, the Government can borrow money from the Bank of England for a far lower interest rate, but you are not allowed to do so. PFI is about using private money to fund public projects. Your Department approves this increase in budget because you really badly need the hospital/school/tankers.

Off you go, things get built or made and the service is up and running. A financial crisis hits and the bank raises interest rates. That is another £100 million added to the cost. Don’t forget you have effectively borrowed £2 billion for 20 years, money costs more over time due to interest. Now your project will cost 2.3 billion over the 20 years. Of course if you had fronted up the £1 billion construction money from the beginning you wouldn’t have to pay the interest, but you did not have the money and so that is that. Your private company/consortia is able to get a better deal on the interest payments through refinancing, but the contract does not mean you get any of it. The private entity can also sell your PFI contract to someone else and again you contractually have little power over this. The contract is all about delivering output and availability, how it is delivered is not meant to be your concern as long as you get the service you asked for.

Let’s go back a bit and remember that previously it was costing the Department £50 million a year to deliver a service that was probably ok, but not brilliant. Your private entity has managed to get the costs down to £45 million a year by being ‘efficient’. One would think this is a good thing and the private entity is earning the extra profit through this ‘efficiency’. Ignore the fact that the cleaners are illegal immigrants barely paid the minimum wage, maybe the hospital/school is not as clean as it used to be and maybe a few shortcuts are being taken here and there to save money. There are two big problems. One is inflexibility. It is all about the contract. Don’t really need 100 beds or a 1000 school places any more? Tough, it is what was asked for in the contract, you still have to pay for it until the contract ends even if you don’t use it. Of course you could ask for a contract amendment, but I can promise you that the bill will sting. Why should the private entity play nice? Remember, they want the profit, what is in the public interest is your problem not theirs. The second problem is that almost without exception it is impossible to transfer sufficient risk to the private entity, not least because the cost is astronomical and/or you remain responsible no matter what. In the case of the RAF’s tankers, they may well be technically owned by the banks, not the RAF. Funny enough banks are very averse to letting their assets fly to dangerous places no matter how desperate the need. The RAF could over-rule them, but will have to pay a contractual penalty for doing so or suffer the consequences such as a plane having to divert to an airfield thus not achieving its mission. What if a patient dies in your hospital because the contractor did not clean it properly? It may be the contractor’s fault, but the NHS/Department of Health is still ultimately liable because it is with them that the patient has the ‘contractual’ relationship. You struggle to pass the cost to the contractor because the contract said it should be cleaned daily and that is what they did even if badly.


The example above is actually very conservative and I have not tried to over-egg the maths. In the real world, the figures are often considerably worse. All too often the private entity would have recovered all the cost by year 12-15, but of course the Government is still paying the flat rate as stated in the contract. Thus that private entity would, using the example above, make £50m of pure profit for the last 5 years of the contract. So much for saving the taxpayer any money...

Of course there is the irony that thanks to the financial crisis the taxpayers now own most of the banks holding the PFI contracts. So effectively the Bank of England is now loaning/giving the money to the banks who put commercial interest rates onto it and lend it to the PFI contracts who add their cut which is paid for by the Government. No wonder the whole thing is so complicated! Maybe life would be so much easier if Government departments borrowed the money directly from the Bank of England to pay a contractor to build the hospital/school/tankers (thus owning these assets), then paid for the support of these assets to other contractors on a rolling basis. They could even do clever things like break the support contract into small chunks and choose a local small firm thus ploughing money into a deprived local economy. Perhaps such a thing is rather old fashioned, but it does mean the taxpayer is not paying a huge interest bill and inviting the private sector to find ingenious and less than moral ways of making more profit (funnelling payments off-shore to avoid tax, employing illegal immigrants etc). Don’t get me wrong, I am not saying there is no role for the private sector and that they should not be invited to bring their own assets to make a public service work better, but PFI has to be the most convoluted and flawed way possible to achieve this. It has effectively saddled the Government with a huge annual mortgage bill that it is very hard to get out of. There are some PFI success stories, but the astronomical cost and mis-management completely outweighs them.

This Government has set the goal of deficit reduction its number 1 priority. How will it achieve this unless it rips up those billions of PFI deals? Aha, there is a better way – let the contracting authorities such as the London Health Authorities go bust and the PFI investors lose their shirts. Possibly a number of people will be made redundant. Sorry NHS, as the doctor might say, “it will sting a bit, but this treatment is necessary.” But who will treat those patients desperately in need of care? Step up Andrew Lansley’s new commissioning bodies and ‘any willing providers’. Probably the same people who shafted the UK taxpayer on the original PFI deals. Mind the dead bodies as you go please…

To educate or not...

First a question: what should the Secretary of State for Education not do when discussing potential Government policy? Answer: Sound like an elitist old fart reminiscing for the old days where a good education was too often a privilege reserved for the few. I do, of course, refer to Michael Gove's incredibly stupid idea to call his proposed reform of the GSCE system as bringing back O-levels.

I have some sympathy for him because my personal opinion is that GCSEs are no longer a reliable benchmark for assessing young people. The problems are very evident when students reach university and/or are being recruited by business. The common complaints are that it is increasingly difficult to differentiate between candidates (they all have As and Bs for example), too often basic skills or knowledge is lacking and there is a real disconnect between what pupils learn and what will help them later on in life such as when in work. I also find it incredibly naive that people think pupils should not be streamed according to ability with movement between the streams able to happen at nearly any point. How in the world is a talented pupil meant to get good grades in a class of 30 when the teacher has to teach at the pace dictated by the slowest? By the same token, if that slow pupil makes fantastic progress in a year, they should be moved upwards to the faster stream. Also of critical importance, those of a lower stream should not be made to feel like second class citizens.

The fact that GCSEs and education as a whole is in a woeful state is very much a shared responsibility.The teaching profession as a whole at fault for dumbing down educational standards, the exam boards have competed in a race to the bottom, the parents of pupils who do not show a positive interest in their education and the politicians for tinkering with the system and letting ideology override good sense. This decline has been in progress for decades and meanwhile the statistics themselves have just become more worrying and downright shocking.

Here is a little snippet for the GSCE results for 2011:

Results by school type, 2011

Click heading to sort - Download this data

Type of school	Grade A*	Grade A	Grade B	Grade C	Grade D	Grade E
SOURCE: JCQ
Comprehensive	5.3	18.8	40.4	66.9	83.3	91.9
Academy	8.6	25.4	47.9	72.2	86.5	93.5
Secondary Modern	2.2	10.8	29.4	57.7	78.1	89.4
FE/6th Form College	2.3	7.3	18	55.5	83.4	92.6
Maintained Selective	22.4	55.3	82.2	95	98.5	99.4
Independent	24.1	51.7	75.3	90.4	96.4	98.5

The lesson from this table is obvious and very depressing. If you want your children to do well, you must find one of the few comprehensives gaining the higher grades or send your kids to private school. When politicians talk about choice in education, what they really mean is that the system has failed and they are trying to present an illusionary solution to the ordinary parent. The answer, as it always has been, is to drive up standards at the lower middle to bottom of the education system through increased quality. Politicians should stop obsessing about academies and private schools and simply try to deliver as close as possible a guarantee that no matter how poor or rich the pupil, they will get the chance to get fair grades in core subjects. Above all, the system must be credible and must be able to honestly state that for some pupils academia is not for them, but then provide them with alternatives that they can excel at. A good plumber or electrician can earn more than a university lecturer or office manager, they do not need a degree to do so and this diversity of options needs to be acknowledged and encouraged. The most stupid goal I have ever heard out of government is for 50% of the UK to get degrees. It is inappropriate and counter-productive and any politician that champions this goal is forcing too many people towards academia where they do not belong or indeed, even want to go. It is already happening that businesses are not respecting the degree results thus devaluing it and so more of this is not the answer.

Gove's big mistake was not only to use the word 'O-levels' but also his inability to articulate a vision where the vast majority of pupils can be taught to a common and good standard (English, Maths, History and basic Science for example) and can then choose a credible path to develop their preferred skills further with there being no taboo or barrier to doing so. In short, Gove and the education establishment as a whole need to bring the bottom and middle up to a standard that is taken for granted by independent schools and then allow pupils to choose to develop through a route appropriate to them whether it be through academia or vocational. Anything else is just pointless, political deception, ideologically driven or quite simply a pile of drivel!

Assange the mad!

If anyone is looking for examples that the lawyers are getting excessively rich in this country then the ongoing Assange saga must surely be a case study for future students? What should have been a simple case of extradition to answer a charge has turned into a complete media and legal circus. I have no views on whether Assange is guilty of the charges that Sweden say he needs to answer, but I find him increasingly objectionable (he was never a saint to start with) and thus it becomes harder to dispassionately defend his rights. For those who put forward the money for his bail, the old saying is relevant here, “A fool and their money are easily parted…” Personally, I just wish he would bugger off to Sweden , get it over with, stop making the lawyers rich and stop using up copious amount of UK taxpayers' money.

I find it incredible that some people are willing to buy his argument of political persecution. It appears obvious that the UK courts (and probably the EU too) do not believe him. Sweden is a country with a proud history in terms of social justice and human rights. The idea that they would knowingly front for the US and through a circuitous route get Assange extradited to the US is laughable and yet people still seem to believe it. Personally I think Assange is safer in Sweden than in the UK. If nothing else, it means the US would have to gain the consent of three governments ( Australia , UK and Sweden ) to extradite him. Of course, he is not safe from Swedish justice and that is probably his biggest fear. His complete unwillingness to clear this issue up on the basis of trumped up conspiracy theories does not imply innocence or rational thinking on his part.

So what is the Ecuadorian Government going to do now? Regardless of rumoured links between Assange and the Ecuadorian president, this is a problem no sane government would welcome. Should Ecuador agree to give Assange asylum, they would not only create a legal and logistical nightmare for themselves, they would also be publicly stating that the UK , Swedish and EU justice systems are sub-standard. This sort of message might go down well in Latin America, but is no route to winning friends on the international stage and showing that the country stands up for those who matter or deserve protection. Assange is rapidly losing friends and he is inviting Ecuador to do the same. If they refuse his asylum claim, they will probably get criticised anyway. I do not envy Ecuador having to deal with this poisoned chalice.

On a final point, I do not think much of Assange. The one good thing he did was invigorate the issue of investigative journalism which was completely failing to get to the truth behind government policies and backing this with evidence. Yet the way Assange went about this through the Wikileaks site was truly reprehensible. He exposed and thus sacrificed his sources (such as Bradley Manning) in his quest for personal glory, he just dumped a lot of classified material for the whole world to see without even filtering it properly and thus risking lives and he didn't even seek to explain the material like a proper investigative journalist is meant to. In short, he is a self centred, egotistical and irresponsible man with a truly unpleasant personality. He could have done so much better, but he has let his vanity and thirst for glory overcome him.

Religion versus state, the gay argument

I will make an early declaration that I waver between atheism and agnosticism depending upon my mood. Despite my mood swings, I am not fanatical on this issue. As much as I might dislike many aspects of religion, I am certainly not in the Richard Dawkins school of thought as I can see a role for religion, even in today’s Britain . Yet with the recent way in which various religious leaders and organisations have tied themselves into knots about gay marriage, it is looking increasingly like they are not sitting comfortably in the role that the UK as whole expects from them.

Organised religion, at its heart, is all about controlling people. The way they think (morals), the way they act (with conscience) and the way they interact with other people (civic society) whether they are of the same faith or not. Like anything else in life, this control can be used for both good and bad purposes. For me, the fundamental purpose for any organised religion should be that it should always be striving, no matter how misguided it may do so, to be attempting to make things better and to advance human beings in some way. For those who like to consider themselves civilised, this means by making people more tolerant to others, more fair in their dealings and conscientious about the needs of others especially the vulnerable. So how does insisting that gay people should not be treated the same as anyone else fit in with this goal?

Europe as a whole, with many countries around the world feeling the same way, believe strongly in the separation of religion and the state. It makes sense as each party can be a brake to the excesses of the other. Yet we are now in a position in the UK where the state is the progressive actor, striving to make people better and more tolerant and religion is the block. This has been the case for a long time. For organised religion to survive in any meaningful way, the UK population has to feel that it adds value to their lives. In the personal sense this may remain the case for some, but in the broader political sense this is not so. Whether it be through gay bashing, covering up child abuse cases or otherwise acting in a very discriminatory way (access to faith schools), there is a definite sense that religion in the UK is on a downwards spiral.

I do dislike organised religion (irrelevant to the issue of my lack of belief in a deity) and yet as someone with a strong interest in political theory, I feel that there is a big gap opening in the UK ’s civic society. There is a desperate need for credible and big organisations to challenge the government and to stand up for what is right, particularly for those incapable of defending themselves. This means fighting against the excesses of the wealthy, the belittling and denigration of the poor by the politicians and for everyone to be treated equally, and yes this includes the gays. When they go down the path of saying a particular group of people should be differently, particularly in a less equal way, then religion is no longer standing up for what is right and thus sliding down a slippery moral slope. What the ancient scriptures say is no defence, worse still making rulings and decisions that make people’s lives worse (the Catholic church’s attitude to use of condoms, particularly in the third world) is not only morally bankrupt, it should also be seen as criminal in the way that ‘incitement to terrorism’ is now criminal. We should all be responsible for what we do and say, it is time religious leaders faced their responsibilities to society at large. It is way past time religion began to properly look forwards, not backwards.

Dealing with the enemy, the media

This is a post I have wanted to write for a while. When I was given training on how to handle the media many years ago, the message was very much that they were usually the enemy and so needed to be handled with caution and suspicion. Sadly, the reason for this is not because the media keep exposing things that government does not want exposed. Civil servants are just as eager as the person in the street for the media to properly expose all that is wrong in Government. No, the reason for treating the media as the enemy is because they are not the fourth estate as they claim to be, with the notable exception of the specialist press and those who still have a very strong investigative journalism element such as the Private Eye. At their worst, the mainstream media are corrupt, dishonest and very political. They now exist to do two things: sell newspapers and promote certain political/social messages or themes. Only by coincidence do these goals align with holding powerful people to account in the public interest and only occasionally can they be judged to be a neutral party, free from political/financial interest and eager to do the right thing. The Leveson enquiry is exposing this reality in a truly landmark way, shattering the myths and showing the ugly underbelly of British democracy. This has been nicely captured in an article in The Guardian by John Harris: http://www.guardian.co.uk/commentisfree/2012/jun/10/leveson-elite-shames-new-politics

For any civil servant who has had experience of answering media enquiries, it becomes rapidly apparent that something is consistently wrong. Whenever I read a media article to which I have contributed information to, I can always spot a large number of basic and fundamental errors. Many of these errors are distortion of facts, deliberately done to make a political point, and many others are just as a result of poor research and limited knowledge of the subject matter. This happens so often that it can only be concluded that journalism is no longer about quality writing when it comes to the content of their material, the message itself is far more important. One critical result is that the reader ends up not well informed about that issue and merely reacts to any such articles emotionally rather than intellectually. For someone trained to believe that they should never put anything out in the public domain that is not as factually accurate as possible, even including some spin, this is a complete travesty. It also raises the obvious question asked by many civil servants, “If what they write about topics I know about is complete rubbish, why should I believe anything else written in the rest of the newspaper?” I am sorry to say, I consider very few journalists to be truly ‘professional’ at their craft. The newspaper that is easily the worst for all these issues is the Daily Mail, but then everyone already knows this. Despite that, they remain successful.

There is a darker side to this debate too. Think of any major news story in recent years. As an example I will choose the Soham murders in Cambridgeshire. The press descended upon that story like a swarm of locusts. So what did the local police and local council have to do? They had to put people into handling that media scrum. Now I know giving information to the press is important, but when you are in the middle of desperately looking for two missing girls, people in the office handling press enquiries are not people outside helping in the search. This is a familiar pattern for any major news story there is. Government departments are mocked for having so many press officers and yet no one questions why they are needed. The press is a rapacious beast, it does not care who it tramples over or how many people it takes to handle it. This is taxpayer’s money and one day it could be someone’s life. I can only speculate that this may have been the case for Madeleine McCann, there is a reason why the British police ask the press not to run any stories of a kidnapping victim in the early stages. I hasten to add that this is speculation, the truth of what happened has not come out, but I can only say that the press coverage has sickened me as much as the kidnapping itself. This case has only shown that there are few depth to which the mainstream media will not sink and from the bowels of government they are seen as a hindrance to doing one’s job.

On a more routine note, journalists are the biggest users of the Freedom of Information laws. Granted, this is about government being accountable and so a good thing, but the point I want to make here is that a significant amount of taxpayers’ money is devoted to handling these enquiries by journalists who are willing to ‘distort’ the facts and then try to make money off the resulting story. I wish to emphasise the fact that all too often they are using taxpayer funded resources to make the newspaper money rather than holding the government to account. Some people may consider this a good thing, to which all I can say is look at what the Leveson enquiry is exposing, do you want your tax money keeping these people in business? Again another caveat, I am not advocating the abolition of FOI, I only point out that there is not enough intelligent use of these laws to get at the truth rather than to manufacture a story.

In conclusion, I believe the media has too much power with too little responsibility. There is an obvious and critical need for an independent press in a democratic society. The sad reality is that the UK press is not independent, it is nearly wholly owned by a small number of very rich white men. I hope the Levenson enquiry results in significant changes to the fourth estate and how it operates. Apart from all the harm done by the lack of professionalism by journalism as a whole and the blatant political bias of various news organisations, a situation where the government is not able to tell the truth because it will be turned into lies and journalists report the government’s lies as truths is not one that is democratically healthy.

Don’t give Atos

I foresee that Atos Healthcare may well become the next welfare scandal to hit the government following the current furore about corrupt practices at A4E. All the ingredients are here: Atos are being given around £100 million to manage all the Department of Health’s disability claimants; they have a target of reducing claims; and there are worrying signs of lack of accountability. Disability groups and charities are vehemently opposed to Atos, openly criticising their procedures and lack of competent medical judgement and highlighting many cases where Atos has found seriously ill people fit for work. Private Eye and The Guardian have also been extensively reporting on the horror stories coming out from people who have had to deal with Atos and has even gone so far as to say the legal system is now openly complaining due to the sheer volume of appeal cases being generated. Apparently around 40% of Atos cases are successfully overturned upon appeal. Of course, this takes many months and so seriously disabled/ill people are having their welfare cut until these cases are resolved. No doubt this is happening at a further cost to their health. Many MPs are aware of this issue and Parliamentary committees are starting to ask awkward questions.

So with horror stories about Atos’ awful treatment of disabled people in abundance and with a growing evidence of poor performance, why does the Government, through the Department of Health, seem unwilling to tackle this? The unpleasant suspicion has to be voiced that Atos are just implementing government policy – reducing welfare claims and if this means making the system unbearably difficult for some of the most vulnerable in society then so be it. Or in other words, the Government has outsourced the dirty work to a private company, not bound by Freedom of Information laws, motivated by perverse incentives, not answerable to Parliament and, more worrying still, not too concerned about the moral issues surrounding the treatment of the vulnerable in society. This is not Whitehall ’s proudest moment to let Atos get away with this.

I have read a couple of stories that some people have committed suicide due to their treatment by Atos and the Department of Health. Certainly a number have died during the processing of their appeals, possibly accelerated by their bad treatment. I can also imagine that court cases may well be pending if not coming soon and only then will concerted action be taken and even then slowly. What a tragedy this is when this is what it takes to change the flawed implementation of government policy. It also does not say good things about the UK as a society that is willing to condone or to avert its eyes to this shameful state of affairs.