Local Government and the squishy fish

Mrs Cobden has spent much of the week in Harrogate, trying to lobby Councillors at the LGA Conference. She arrived back on Thursday evening with bagfuls of goodies for the kids – we’ll probably be spending the weekend throwing out some of the old toys to make way for the new.

We’ve got squishy morph like creatures, boxes of sweets and a ‘Finding Nero’ style, squishy orange fish with the words “Peterborough City Council: Business Transformation” on the side. By all accounts, there were loads of bespoke exhibition stands where local authorities were promoting themselves to the thousands of Councillors and Council Officers that attend this event.

You do wonder what it’s all for. I get cross enough when my Council waste money on sending me marketing crap about themselves. Why a local council should be paying to give a Councillor from another council a squishy fish seems utterly incomprehensible.

Mrs Cobden was perplexed by this too so asked the question to one of those people manning the stands. She was told that ‘we get a budget from Government, because we are a beacon council, to promote good practice to other local authorities.’ So the squishy fish are part of the Government’s strategy to improve public services across the country.

I can’t complain too much. Mrs Cobden also brought home some golf balls and a nice leather score card from Cheshire East Council. Inside the score card are lots of facts about the Council such as its population and that it has 81 councillors and 14,000 staff. It also tells me that it has a budget of £235 million. Not suffice with wasting taxpayers’ money, they want to rub in the scale of what they squander.

No doubt, Gordon Brown sees all this as part of his fiscal stimulus package. I say it’s time to strangle the squishy fish and take an axe to these practices.

Public incompetence: private entrepreneurship

A story arrives from the Bristol Evening Post:

Outside Bristol Zoo is the car park, with spaces for 150 cars and 8 coaches. It has been manned 6 days a week for 23 years by the same charming and very polite car park attendant with the ticket machine. The charges are £1. per car and £5. per coach.

On Monday 1 June, he did not turn up for work. Bristol Zoo management phoned Bristol City Council to ask them to send a replacement parking attendant.

The Council said "That car park is your responsibility." The Zoo said "The attendant was employed by the City Council... wasn't he?" The Council said "What attendant?"

Gone missing from his home is a man who has been taking daily the car park fees amounting to about £400. per day for the last 23 years...!

That's £125k per year...not taxed. Genius!

Tories to kill off private equity funds

There is an interesting (and well briefed) article in today’s Daily Mail, on Tory plans for ‘the most far reaching changes to the economy in a generation.’

One of the ideas being floated by the Tories is to slash corporation tax, which will be paid for by preventing companies from off-setting corporate tax against debt interest. It is precisely this ‘tax loophole’ that private equity funds use to dodge this business tax.

Private equity funds use borrowing to acquire very profitable businesses (that were paying high levels of corporation tax.) But as the new owners are able to offset these profits against that borrowing, they can structure the business so they don’t pay any corporation tax at all.

It gives private equity companies a competitive advantage over other business models that are more prudent and not as reliant on borrowing and debt. The Tories are now talking to the City about their ideas.

Many Labour politicians, driven by their hatred of private capital, would love to kill off private equity funds. Wouldn’t it be ironic if the Tories ended up killing off the private equity fund model as part of their legitimate drive to reduce corporate debt levels?

Recession will widen north south divide

Eighteen months ago, we were being told that the credit crunch was a southern phenomenon, something which will hit the investment bankers in London but not necessarily the rest of the country. Not anymore.

According to the Centre for Cities think tank, the north is being hardest hit with what they call the marginal cities (such as Sunderland and Hull) suffering far more than the core cities (like Manchester and Leeds). Monthly unemployment figures seem to be confirming this trend.

This is one of the most bizarre and unexplainable trends of this recession.

So far, almost all the pain has been in the private sector – the public sector has been relatively insulated from the downturn. Yet, the public sector accounts for around two-thirds of economic activity in regions such as Wales and the North East. So logic would suggest that those areas should have suffered least. But this does not seem to be the case. The only explanation for this is that privately run companies in the marginal cities of the north are failing at much higher rates and laying off staff in much greater numbers than their counterparts in the south.

Over the next few years, the north will face another hammering – the inevitable squeeze in public spending – which will hit northern areas disproportionately more than the south. So the north faces a double whammy of private and public sector contraction.

In reality, the situation is far more complicated than a simple north south analysis. As the Centre for Cities allude, cities such as Manchester and Leeds have prospered in recent years and there is no reason why they will not continue to grow as the UK emerges from recession. Yet, it is difficult to see places like Grimsby or Merthyr Tydfil prospering.

Over the last sixty years, Governments of both parties have spent a huge amount of money on ‘regional policy’ – of encouraging and subsidising businesses to relocate to places like Grimsby and Merthyr. It has been a dismal and costly failure. One of the good things that could emerge from this recession is the realisation that such policies are in vain and provide no sustainable futures for such areas.

Instead, we could adopt a new approach where it is recognised that London, the corridors into London such as the M11 and the Thames Valley, and the core cities such as Manchester, Birmingham, Cardiff and Leeds are the UK’s economic powerhouses of the future. These need the capacity to grow with more homes, business space, bigger airports and improved transport infrastructure.

And what of those ‘marginal’ and fringe areas? They could become places where people go to get away from the hustle and bustle of modern life – to take a weekend break, buy a second home, drop out and live alternative lifestyles or retire. It doesn’t seem to have done Cornwall too much harm.

Strange by-election timings

The writ for the Norwich North by-election has been moved – and the by-election will be held on Thursday 23 July.

Interestingly, the writ for the Glasgow North East by-election has not been moved and if it is not moved today, that by-election will not take place on the 23 July. Given that it is unlikely that the by-election can be held later in the summer break, it looks increasingly likely that the Glasgow by-election will now take place in September.

This seems a bizarre strategy on Labour’s part. You would have thought that they’d want to get the bad news out of the way on the same day before the summer break. Instead, Labour faces a double whammy of bad news – as MPs leave for the summer break and again when they come back. Very odd.

What have politicians got against home ownership?

This year marks the thirtieth anniversary of the election of Margaret Thatcher and the legislation that epitomised her premiership, the Right to Buy (RTB). Enabling tenants to buy their own home brought to an end the post war and disastrous social democratic consensus that had allowed local councils to build and manage the huge housing estates that continue to blight our towns and cities today.

With the introduction of Mortgage Interest Tax Relief at Source (MIRAS), millions of people who had previously been trapped in badly managed estates were helped into home ownership and in doing so, people took a direct stake in the homes and estates in which they lived. The number of homes in owner occupation increased from 11 million to 17 million (increasing the share of owner occupiers from 54 per cent in 1981 to 67 per cent ten years later).

RTB is probably the single most important reform of the post war years to improve social mobility. Enabling people to acquire a capital asset helped them to escape the clutches of state dependence into the ranks of the middle classes. It has certainly been more successful than the education reforms (such as the abolition of the grammar schools and increased university numbers) which were specifically introduced to encourage social mobility.

Yet since the mid 1990’s there has been virtually no increase in the proportion of home ownership and in recent years the figure has even fallen as excessive house prices have priced first time buyers out of the market. Speak to anyone in their late 20’s, and they are likely to tell you a familiar tale – I would love to buy but can’t afford it. In many parts of the UK, it is virtually impossible for a young person to buy a home unless they have parents prepared to pump in equity. From the position we had a few years ago when home ownership was a ticket to prosperity and economic freedom, today it once again reinforces class division.

You would have thought that our politicians would be concerned about this but they don’t appear to be. Virtually no politician of significance makes a noise about the matter. Government, Tory and Lib Dem policies talk warmly about giving tenant’s part ownership in housing, which is welcome but won’t bring about the transformation that is needed. Indeed, most housing associations (and even private developers) have products that do this in any case.

With house prices falling again, there is another opportunity to make home ownership more affordable and accessible. Two things are desperately needed.

The most immediate need is that people must be able to access mortgages again. While we don’t want a return to the reckless lending of the boom years, the pendulum has swung too far in the opposite direction meaning that first time buyers with small but reasonable deposits are unable to access competitive mortgage rates. You won’t normally read this blog calling for Government intervention, but addressing this issue should become a priority for the nationalised banks (in the same way that Roosevelt incentivised mortgages – through the establishment of Fannie Mae and Freddie Mac - as a vehicle out of the Great Depression).

Secondly, we need to build more homes. We don’t need government intervention to do this – we need less. The biggest obstacle to private investment in housing in the medium to long term is the restrictive planning system. Labour’s centrally imposed housing targets have failed to address the issue but the Tory’s localist plans will be a charter for NIMBY’s to say no. De-regulation of the planning system, with greater freedoms for developers and landowners, is desperately needed. We should explore Planning Free Zones, where developers can build what they want, as they did at Canary Wharf in London Docklands (which ironically is the best planned urban area in the capital and which boasts the lowest car use).

It is this reason why politicians are too scared to champion home ownership in the modern age. While Margaret Thatcher had to take on the vested interests of local councils, the modern day champion of home ownership will have to take on the vested interests of the NIMBY, and no politician seems willing to do this.

Does Rupert Murdoch get value for money from Michael Gove?

I like Michael Gove and unlike many, have no problem with him or any other politician having paid interests outside Parliament.

But it did interest me that whereas Gove bills The Times £1,250 an hour for his insightful copy, the Scotland on Sunday pays him just £250 an hour.

The publication of outside interests has come a bit too late though for the Editor of the Times to re-negotiate the contract – all Shadow Cabinet members have been told to wind up their outside interests by the end of the year.

A full copy of Shadow Cabinet members outside interests can be found here.

Death can do wonders for your reputation

WARNING: DO NOT READ THIS BLOG IF YOU ARE A MICHAEL JACKSON FAN

Were it not for his untimely death, Michael Jackson would have been in London in a couple of week’s time playing a series of sell-out gigs at the O2 (or Millennium Dome to give it its untrendy name).

I can’t help think that the media response to the visit would have been a mix of the following: ‘freak’, ‘oddball’, ‘weirdo’. And that’s if he’d shown up and done the shows. God knows what the response would have been in the the very likely event that they never went ahead.

Instead, today, people are mourning his passing and the News 24 programmes are showing back to back tributes of the great man and entertainer – the Mozart of his generation, whose music will be remembered in the centuries to come. I’m waiting for Gordon to come out of No.10 with a mug and an I-pod, with a tribute to the ‘people’s king of pop’; or has Cameron already beaten him to it?

Once again, it’s another example that in Rock and Roll, it’s better to die young (or at least not as an old man). Jackson will now follow Elvis, Lennon and Hendrix into Rock (and Pop’s) departed hall of fame.

His death will also trigger the conspiracy theories that his death wasn’t a natural one. Nearly forty years after Hendrix’s death, there was a story the other day that he’d been murdered by his manager who wanted to cash in on the life insurance. Given that Jackson was highly unlikely to make the London gigs, there will no doubt be some that will make the similar claims around Jackson.

And of course, the email jokes have started to circulate:

• Reports of Michael Jackson having a heart attack in hospital are incorrect. He was actually found in the children’s ward having a stroke
• Apparently his London dates have now been cancelled...they were called Tom (9) and Petey (8)
• McDonalds have announced the MJ memorial burger.... 50 year old meat in 12 year old buns
• It's to be a sea burial..... at his request to be strapped to two buoys
• Similarity between MJ and a Playstation 2 ? Both used to be black and were turned on by excited small boys....
• Some of these jokes are just Bad...
• Doctors say that One Bad Apple caused his death.....Gwyneth Paltrow is unavailable for comment
• Apparently while trying to revive him, one doctor turned to the other and said "So you wanna be starting something, so you wanna be starting something !"
• MJ died of food poisoning, it was the 13 year old nuts
• MJ is being cremated.....he is being melted down and made into plastic toys, its the first time kids can actually play with him for a change
• I bet the last time he was this stiff was when Mackauly Culkin stayed over...
• Farah Fawcett was at the Pearly Gates yesterday, God told her "You have one wish before you enter the Kingdom of Heaven"....Fawcett said "I wish all the children of the World could be safe".....
• LAPD have confirmed they have found Class A drugs in the kitchen, Class B drugs in the lounge and Class 3C in the bedroom…
• What’s the difference between MJ and Alex Ferguson? Ferguson will still be playing Giggs in August.

I’m off to see Springsteen on Sunday night. Bruce, please don’t open with ‘abc’.

BBC go one better than MPs

A brilliant piece of BBC spin in this morning’s newspapers. They briefed the media that in the interest of transparency they would be publishing the salaries and expenses of their key figures, although it wouldn’t be anything like the MPs scandal, because there would be nothing like second homes. In fact, they were also facing Freedom of Information requests.

Well there may not be second home allowances, but I have to say the published information is even worse:

- Fifty of the highest paid executives on £160,000 plus, with most on more than £200,000 – all paid more than the Prime Minister
- Over £2,000 for flying back the Director General and his family from holiday
- Claims from executives for bottles of champagne and flowers to be sent to the stars
- And to cap it all, a refusal to publish the salaries of their main presenters, who are earning up to £6 million a year each! - they've redacted the lot!

I would have no problem if the BBC paid these types of salaries if they had earned their revenue in a competitive market. But it really is unacceptable that these incomes are being paid when their revenue is being drawn from a poll tax (the licence fee) which we all have to pay regardless of our income or how much BBC programming we actually watch.

Mr & Mrs Expenses’ main residence

For those who don’t live in London, you may have missed the photograph that the Evening Standard published tonight of the main home of Labour MP’s Mr and Mrs Keen. Neighbours say that the house, which is in Mrs Keen’s Brentford constituency and well within commuting distance of Westminster, has not been lived in for a year – it looks like a squat.

But by declaring it as their main residence has enabled them to claim £140,000 over four years towards their £750,000 riverside flat in London’s South Bank.