Category Archives: political decision-making

Will this British shipyard retain its skilled workforce, strengthening the local economy?

Last year, news of plans to axe about 40% of the workforce by the end of March 2019, was given to union representatives and workers on October 11th, though Cammell Laird’s Birkenhead shipyard (above) and marine engineering services had won two contracts that month, worth £619 million. The Unite union had demanded to see Cammell Laird’s business case for cuts which would lead to the loss of vital skills and ‘backdoor casualisation’ of the workforce, undermining the shipyard’s ability to fulfil new contracts.

At the UK Chamber of Shipping during London International Shipping Week 2019 plans were launched yesterday for the building of a new £150m disaster relief ship to be built at Cammell Laird (design below), supporting valuable skilled jobs, and equipped with innovative British technology. It will be permanently based in the Caribbean to support disaster relief efforts and provide specialist training berths for the next generation of UK and Commonwealth officer cadets, rating apprentices and trainees in trades associated with aid and reconstruction.

Britannia Maritime Aid, maritime professionals and training experts have joined forces for the project with backing from former First Sea Lords, the Lord West of Spithead and Admiral Sir Nigel Essenhigh. Other supporters include members of the Houses of Lords and Commons, Leadship, the RMT union and Nautilus International, the UK Chamber of Shipping, the Merchant Navy Training Board, the maritime charity London Trinity House and the Government of Barbados, whose Prime Minister will speak at the launch.

As well as supporting humanitarian aid missions in the Caribbean, there will be a focus on the environment and ocean advocacy – including beach and coast clean ups, plastic collection and research.

BMA chairman Captain Kevin P Slade said: “Having a dedicated vessel with a training and aid function is a first of its kind for the UK and would ease the pressure on the limited resources that the Royal Navy and Royal Fleet Auxiliary can provide.

Admiral Lord West added: “Britannia Maritime Aid’s plans will significantly bolster the UK’s maritime capabilities in the long term while saving lives, supporting British shipbuilding and complementing the role of our hard-pressed armed forces. “I fully support the proposals and urged others to give their support to ensure we make these very welcome plans a reality as soon as possible.”

BMA’s vessel – to be operated by a British company – will include a training centre, landing craft, helicopters, drones, rough terrain vehicles, onboard medical facilities, briefing rooms, conference facilities, workshops and full mission bridge and engine simulators for trainees. The ship will be able to carry up to 6,000 tonnes of vehicles and aid supplies – more than 10 times the capacity of current vessels – including field hospitals, field kitchens, tents, fresh water and fuel for devastated areas.

BMA aims to deliver its ship by 2024, and will charter or buy suitable ships to run operations until its purpose-built ship is ready.

London International Shipping Week’s website reports that Maritime Minister Nusrat Ghani yesterday marked the start of London International Shipping Week by announcing a new ship for the General Lighthouse Authority, which is responsible for providing more than 600 aids to navigation around UK waters, including ships, lighthouses and buoys, and helping thousands of mariners every year. The vessel will provide critical navigation aids to ships in some of the most dangerous waters in the world, guiding them into safe channels away from wrecks, thanks to an upgrade in the latest technology.

Boosting innovation, skills, jobs, and productivity across the UK

Earlier this year the Department for Transport launched its Maritime 2050 Strategy to reduce the environmental impacts of shipping and support UK businesses. This follows the strategy outlined in the UK National Shipbuilding Strategy: an independent report (Sir John Parker, 2017) which advocates the transformation of the procurement of naval ships, grow the Royal Navy fleet by the 2030s, boosting innovation, skills, jobs, and productivity across the UK.

Sources:

https://www.thebusinessdesk.com/northwest/news/2047718-shipyard-joins-in-launch-of-plans-for-150m-disaster-relief-ship

https://politicalcleanup.wordpress.com/2018/10/11/can-britain-afford-to-offshore-ship-building/

https://www.thebusinessdesk.com/northwest/news/2027194-cammell-laird-highlights-role-regional-economy-northern-powerhouse-minister

https://londoninternationalshippingweek.com/new-ship-to-boost-safe-navigation-in-uk-seas/

 

 

 

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European Spring alliance will advocate a Green New Deal for Europe

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Yanis Varoufakis co-founder of DiEM25 (Democracy in Europe Movement) and former Greece finance minister, has advocated a Green New Deal for Europe.  Towards the end of an article (Dec.2018) he wrote:

This is what Democracy in Europe Movement 2025 – which I co-founded – and our European Spring alliance will be taking to voters in the European parliament elections next summer. See video here.

The great advantage of our Green New Deal is that we are taking a leaf out of US President Franklin Roosevelt’s original New Deal in the 1930s: our idea is to create €500bn every year in the green transition across Europe, without a euro in new taxes.

Here’s how it would work: the European Investment Bank (EIB) issues bonds of that value with the European Central Bank standing by, ready to purchase as many of them as necessary in the secondary markets. The EIB bonds will undoubtedly sell like hot cakes in a market desperate for a safe asset. Thus, the excess liquidity that keeps interest rates negative, crushing German pension funds, is soaked up and the Green New Deal is fully funded.

Once hope in a Europe of shared, green prosperity is restored, it will be possible to have the necessary debate on new pan-European taxes on C02, the rich, big tech and so on – as well as settling the democratic constitution Europe deserves.

Perhaps our Green New Deal may even create the climate for a second UK referendum, so that the people of Britain can choose to rejoin a better, fairer, greener, democratic EU.

Read the whole article here.

Postscript

On Monday, March 25, DiEM25 and European Spring gathered in Brussels to present the women and men from all corners of Europe who will take our common political programme to the ballot on May 25 – like Génération.s’ Benoît Hamon and LIVRE’s Rui Tavares among others – at the BOZAR theatre. This is where we officially launched our European Spring campaign – embodied in a New Deal for Europe, a set of ambitious economic proposals to save Europe from itself by transforming it.

 

 

 

 

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What is the main solution to the UK’s weak productivity growth?

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Chris Giles (FT) is examining why Britain is suffering from weak productivity growth. As part of his series, he wants to hear what readers think is the main solution to the UK’s weak productivity growth since the financial crisis of 2008. Share thoughts directly with him at ask@ft.com. Some may be published in a follow-up piece.

Prem Sikka, Professor of Accounting at University of Sheffield and Emeritus Professor of Accounting at University of Essex, who tweets here, has already published thoughts on the subject. Briefly:

UK company dividends are high & investment low

This lack of investment and innovation means that the country’s productivity is low. The output per hour worked in the UK is about 16% below the average for the rest of the G7 advanced economies. The UK productivity is around 27% below that of Germany – despite the UK labour force working almost the longest hours in the western world and the country is neither rebuilding its manufacturing base, nor developing new technologies.

He itemises the boardroom dominance of accountants:

Sikka then argues that short-termism, leading to the neglect of the long-term prosperity of companies and the economy, has been accelerated by the boardroom dominance of accountants.

Compared with other developed countries, UK companies are paying out the highest proportion of their earnings in dividends.

According to the Bank of England’s chief economist, in 1970 major UK companies paid £10 in dividends out of each £100 of profits – but by 2015 the amount was between £60 and £70. 

And at the same time as paying this large percentage in dividends many companies were downsizing labour and reducing investment, lagging behind the EU average:

Sikka asserts that the most effective way to disrupt the accounting-think prevalent in boardrooms is by appointing directors who are focused on the long-term – appointing employees and consumers so that they can challenge the obsession with short-term returns and promote investment in productive assets.

Giles quotes Lord Andrew Tyrie, new chair of the Competition and Markets Authority, who told companies in July to stop “ripping people off” or face the full force of the watchdog’s sanctions. His focus is mostly on regulated markets such as banking and energy, where companies are accused of exploiting vulnerable households by extracting a “loyalty penalty” if they do not switch suppliers.

Lord Tyrie told MPs during his confirmation hearing for the CMA in April that retail banking and auditing were parts of the economy that did not work in the interests of the public or productivity.

Scott Corfe, chief economist at the Social Market Foundation, a think-tank, claimed that pro-competition moves had some potential for raising productivity growth rates. He suggested that consumers should be switched between energy suppliers automatically after several years to stop companies exploiting customer inertia.

See this video: https://www.ft.com/content/ae25a5bc-9405-11e8-b747-fb1e803ee64e (possible paywall)

After noting that since the mid-2000s, British industries have become more concentrated, with fewer companies enjoying larger market shares, Giles focusses on this ‘one key question’:

Is inadequate competition contributing to Britain’s feeble growth in output per hour worked? 

 

We look forward to the next article in the series.

 

 

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In condemnation of privatisation – the naked pursuit of wealth

The ideology of competition and superiority permeates our culture, and the cult of privatisation is at the root of sub-standard, expensive railways, electricity, gas and water; miserable prisons; inadequate care; decreasing legal aid; and failing mental health services.

Personal success and the creation of wealth are goals in a wilderness of private interests. ‘Success’ has widely come to be defined in terms of superiority over others.

Our system of knighthoods and damehoods – the invidious use of ‘Lord’ and ‘Lady’ – symbolise a power structure where outsiders are tolerated, and often quietly absorbed into a corrupt environment.

People motivated by greed, like the authors of devastated pension funds, suddenly and mysteriously reappear in positions of authority. It is as if history has ceased to exist. Those with the courage to expose them are vilified.

Recent media expositions relating to the House of Saud and the huge-scale laundering of the ill-gotten gains of oligarchs and dictators through the City of London, for example, portray the corruption. Empty luxury flats are more desirable than homes for people.

Armaments, for some, are more important to our wellbeing than the lives of underprivileged Yemeni families.

This presents a challenge. Condemnation is not the way to tackle the cult of success. We need successful artists, business people, musicians, actors, social workers, doctors, scientists and engineers – and we must find ways of stimulating and supporting them.

A redefined concept of success will lie in focusing on the huge potential of every single member of our society and not just those with the existing resources – physical, mental, economic – to realise themselves. 

Edited from an article by Roger Iredale in the Friend, 23 February 2018

 

 

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Should Labour put an end to PFI schemes and outsourcing?

George Parker of the Financial Times reported on the content of a video by Labour leader Jeremy Corbyn, watched almost 300,000 times in 24 hours on Facebook.

Corbyn sees the collapse of Carillion, the company responsible for everything from building hospitals to providing school meals, as a “watershed” moment that proves that the private sector should not be running swathes of Britain’s public services. More here.

The revolution in outsourcing public services was started by Margaret Thatcher and continued by New Labour under Tony Blair. Since 1980 public services — from providing school meals to refuelling RAF aircraft — have been outsourced to the private sector. Questions have been about whether the taxpayer is getting best value for money from some contracts, listed here. There is more on unsafe PFI hospitals and collapsing PFI schools here.

Should PFI schemes and outsourcing be ended under Labour? There is a substantial body of opinion that, though much of the criticism of PFI is justified, and relevant to the debate on outsourcing, this would be a mistake.  

The FT points put that the big driver of PFI has long been the desire to keep debt off the government’s balance sheet. A correspondent agrees with this: “Certainly, otherwise Tony Blair and Gordon Brown would have been accused of profligacy, whereas using PFI allowed them to be popular in the short term whilst transferring the problem to future generations”.

The civil service, according to the FT, is often very bad at specifying what it wants and managing contracts – our correspondent adds: “Because they change their minds part way through!!” 

Both agree that the processes for assessing the value of PFI projects, monitoring projects and evaluating PFI’s overall performance must become more rigorous.

Reports from the National Audit Office and the Public Accounts Select Committee indicate that successive governments have indeed been accepting unrealistically low bids, leading to inadequate levels of staffing. The Times this week quoted from a report issued by Balfour Beatty that in future it needs to move away from the position where fixed-price contracts, risk transfer and lowest-cost tendering are the norm.

Should hospitals, schools, prisons etc be built with cheap and flexible funding from the Public Works Loan Board? This arm of the Treasury has been helping to finance capital spending by local government since 1793. Its interest rates, linked to those in the gilt-edged market, have been at exceptionally low levels since the financial crisis of 2007-08.

Our correspondent responds: “Very good idea – but still needs a proper project managing organisation”.

 

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Rebuild the local economy: prioritise labour-intensive sectors, difficult to automate, impossible to relocate abroad

Colin Hines, convenor of the UK Green New Deal Group, comments on the Guardian’s recent editorial on productivity and robots which ‘repeated the cliché that automation does cost jobs, but more are created’.

He says that the problem with this is that the new jobs are frequently in different places from where they are lost and require very different skills, hence exacerbating the problems for the “left behind”.

Also unmentioned was that just as automation is starting to really bite, the world faces a strong possibility of another serious credit-induced economic downturn, from China to the UK and a perfect storm of domestic unemployment soaring and export markets falling, as happened after the 2008 economic slump.

The answer to these problems has to be a shift of emphasis to rebuilding the local economy by prioritising labour-intensive sectors that are difficult to automate and impossible to relocate abroad.

Two sectors are key:

  • face-to-face caring from medicine, education and elderly care
  • carbon-reducing national infrastructural renewal.

This should range from making the UK’s 30m buildings energy efficient, constructing new low-carbon dwellings and rebuilding local public transport links.

Funding could come from fairer taxes, local authority bonds in which all could invest, green ISAs and a massive new green infrastructure QE programme.

This approach should become central to all political parties, set out in their next election manifestos because “jobs in absolutely every constituency” is the crucial vote-winning mantra.

 

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Green quantitative easing – good sense

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Richard Murphy and Colin Hines published the Green QE report, which is summarised below.

In March 2009 the Bank of England began a programme of quantitative easing in the UK – in effect, the Bank of England granted the Treasury an overdraft but to keep the European Union happy had to do so by buying Government gilts issued by the Treasury from UK commercial banks, pension funds and other financial institutions.

There were three reasons for doing this:

  1. To keep interest rates low;
  2. To provide banks with the money they needed to lend to business and others to keep the economy going.
  3. To make sure there was enough money in the economy to prevent deflation happening

No one was sure whether quantitative easing would work, and as we note, no one is sure for certain whether it has worked.

We do however suggest in this report that several things did happen:

  • The banks profited enormously from the programme, which is why they bounced back into profit so soon after the crash– and bankers’ bonuses never went away;
  • The entire government deficit in 2009/10 of £155 billion was basically paid for by the quantitative easing programme. If you wanted to know how the government met its costs, now you do; There was a shortage of gilts available for investment purposes as a result of the Bank of England buying so many in the market. Large quantities of funds were invested instead in other financial assets including the stock market and commodities such as food stuffs and metals.
  • The USA also undertook quantitative easing at the same time as the UK, which meant that despite near recessionary conditions commodity prices for coffee and basic metals such as copper have risen enormously. This has impacted on inflation, which has stayed above the Bank of England target rate;
  • Deflation has been avoided, although the relative role of quantitative easing in this versus the previous government’s reflation policies is unclear;
  • Interest rates have remained low.

However, one thing has not happened, and that is that the funds made available have not resulted in new bank lending. In fact bank lending has declined almost steadily since the quantitative easing programme began.

there is an urgent need for action to stimulate the economy by investing in the new jobs, infrastructure, products and services we need in this country and there is no sign that this will happen without government intervention.

For that reason we propose a new round of quantitative easing –or Green QE2 as we call it.

Green QE2 would do three things. First it would deliver the Green New Deal – the innovative programme for investment in the new economy the UK needs as outlined by the Green New Deal group in its reports for the New Economics Foundation. This would require three actions:

  1. The government would need to invest directly in new infrastructure for the UK.
  2. The government needs to invest in the UK economy, in conjunction with the private sector, working through a new National Investment Bank;
  3. The government must liberate local authorities to partner with the private sector to green their local economies for the benefit of their own communities, and it can do this by providing a capital fund for them to use in the form of equity that bears the residual risks in such projects.

A second round of quantitative easing should involve direct expenditure on new infrastructure projects in the UK.

For example there is a desperate need for new energy efficient social housing in this country, for adequate investment in railways, not to mention a reinstatement of the schools rebuilding programme. Undertaking these activities would give the economy and immediate shot in the arm as well as providing infrastructure of lasting use which would more than repay any debt incurred in the course of its creation.

This is the result of the ‘Keynesian multiplier’ effect. This is the phenomenon that occurs when government borrowing to fund investment takes place during a time of unemployment.

That borrowing directly funds employment.

That new employment does four things.

First it reduces the obligation to pay benefits.

Second, it means that the person in that new employment pays tax.

Third, it means their employer pays tax on profits they make.

And finally the person in employment can then save, which means that they help fund the government borrowing which has created their own employment.

As Martin Wolf, the eminent Financial Times columnist has said in this FT video: “Borrowing is no sin, provided we use the funds to ensure that we bequeath a better infrastructure to the future”.

This is what we believe the programme we recommend would do and this is precisely why it is appropriate to do it now when the cost of government borrowing is so low, a point Wolf and Skidelsky also make.

Borrowing now to spend into the economy is the basis for the first stage of Green QE2 – and of the Green New Deal.

Read the whole report here: http://openaccess.city.ac.uk/16569/1/GreenQuEasing.pdf

 

 

 

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