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Posts Tagged ‘cost of living crisis’

Rethinking the Railways: no Public Service should be in private hands, nor should it be under union influence either

January 3, 2019 Leave a comment

It’s January and once again, we are witnessing inflation-busting rises in Rail Fares with the same old media coverage, the same old political responses from all sides and the same old reality that it is the same people being financially worked-over as a result of the ineptitude of the Politicians who were Elected to help them.

As usual, the blame game is well and truly afoot, providing ever useful cover for those choosing not to be responsible as we focus on the beneficial myths which are privatisation of public services, public ownership, building completely new railways and the inherent suggestion that people can always afford to pay more.

Whilst championed by the various sides as Westminster takes a momentary breath from Brexit, the reality is that none of these approaches can solve the fundamental problems that exist within the railways, public transport or wider public sector services.

Switching from one of these methods to another to solve just one problem, will simply create many more.

As with most issues that now surround the ineptitude and incompetency of Government, the real solutions to these problems – that’s the one that tackle the actual causes – are simply too unpalatable for the spin doctors and marketing whizzes to contemplate on behalf of the Politicians who would have us believe that they are in control.

The Politicians themselves do not have the foresight to see that by taking the tough and difficult decisions that they are supposed to, the results and impact of that action will soon speak much louder than any sound bite, as the reality of doing things properly becomes manifest and finds a very loud voice of its own.

The problem with the options that we are told are available

It’s very important to understand that one of the key principles of the Public Sector and the way that it operates is involuntarily and often deliberately overlooked:

Public Services are not and never will be a commercial business.

The purpose of Public Services is to provide uniformity of service and/or access to the wider community, which is simply contradictory to the motivation for running private business.

The simple reason being that the universal nature of the requirement for Public Services necessitates that unless you cherry pick and introduce different levels or tiers of service or remove the provision of that service from some areas altogether, the guarantee of profitability from all those parts operated, if not all of the service itself would always be denied.

This is why even in private hands, the Railways are heavily subsidised by the Government.

The Railways today

Today the Railways are effectively operated by profit-making private sector contractors or operating companies. Contractors who are often large PLC’s that make substantial sums of money by operating large-scale services and employing the economies of scale to reduce costs, usually on an ongoing basis.

Operating under the auspices of being a regulated public service as the nature of the public ownership of the railway infrastructure itself dictates, the contractors do not have the flexibility to raise prices and change service structures at will.

This effectively means that to increase profits, the contractors have to reverse engineer the profit-making-process by reducing overheads and making more money from the cost centres which have been accounted for in their Contract with the Government.

In effect, they are adhering to the terms of their agreement with the Government in principle rather than spirit. The outcome being the shitty end of the stick that we all experience each and every time we get on a sweaty train and realise that we have to stand for at least significant chunks of a very long journey, unless we want to get out and run.

Because the margins the operating companies accept to gain a contract or franchise are often very tight, expectation versus the ability to back engineer those all-important profit margins can easily prove impossible to align. And when they do, this is when we experience ‘franchises’ being passed back to public hands.

No private company will pay for the privilege of operating a Public Service, and nor should  the Government expect them to do so. But on the same count, neither should they be able to milk profit by taking all the value out.

The only thing that literally keeps the train wheels spinning is the RPI linked rise in Rail Fares which comes into operation each January.

It’s a dubious way of calculating an annual rise to say the least. But without it, the current operating model simply wouldn’t work.

Return to Public Ownership

Jeremy Corbyn and his shotgun John McDonnell advocate a wholesale return of Public Services to Public Ownership. For obvious reasons which only a fool would overlook or dismiss, this is a principle that the Public would all too easily embrace.

What it doesn’t do is answer the big questions surrounding why the idea of privatisation gained momentum in the first place. Perhaps the biggest reason being one of the left’s own making; the power of the Unions and Employment Rights too.

The simple question for anyone who understands the reasons why Public Services are put out to contract and therefore placed in profit-making hands is this: ‘Why is it more cost effective to employ a profit making company to run an identical service to the one we could or have provided ourselves?

The answer isn’t one that the left likes.

But it is also the reason that wholesale return of public services to public ownership without reform would cripple this Country in no uncertain terms: The Public Sector wage and benefits bill is out of control, as are the regulations and rights that support them, and the Union’s will bring everything to a standstill under the guidance of their barons who will employ the very same self-interest employed by big bankers and pension funds who milk public services today, simply served up in a different and even more malevolent form.

Building new Railways

Building new Railways will not solve the problems of franchising to profit-led contractors or operating them in unreformed Public hands.

It will cost money that the Country doesn’t have and would be unnecessary for us to spend too, if the Government was prepared to make the decisions that it should do.

The existing Infrastructure

One of the biggest errors of Government in ‘recent’ times, was the dismantling of the Railways undertaken by Dr Beeching in the 1960’s.

There was a complete lack of foresight and understanding by yet another Government which was reacting to the effects of problems it was facing, rather than getting on and tackling the causes as any good government should.

The result was that much of the indirect capacity which had until that time existed, was removed and with it, a ticking time bomb created for the effectiveness of the reformed railway network which would soon be as restricted as the diminished number of lines.

Today, there are simply not enough platforms at key and terminus or hub stations to increase capacity on the network in the most simple and effective way:

Increase the number of trains.

Using the Public as a cash cow

Whilst the Government heads off a simmering crisis each year by putting up the Rail Fares in what can only be argued as an unrealistic form, it relies on what is in effect taxing the same people over and over again for using a substandard service. One that only appears sustainable because over many commuters the Rail Operators hold a monopoly – something public services were NEVER created for.

Solving the problem and not creating others instead

It occurred to me as I was thinking about writing this blog, that the whole idea of public-private sector partnerships is actually oxymoronic.

Man can only have one master, and if that master is money, the service will not be about providing a good experience to the public.

Whilst I like the idea of public services being fully in public hands, this idea itself is no longer possible.

The standing influence that institutional and regulatory bias towards employees and unions has, has already priced out this operating model in many ways. It is itself the elephant in the room that it remains dangerous to identify when the collapse of public services – particularly at local level – is ever discussed.

In respect of these two options alone, the complexity of solving the Rail Fare crisis is identified and as part of the wider cost-of-public-services is concerned, certainly comes into its own.

The only way that railways and all forms of public transport can be returned to a format of universal, uniform quality and experience is to do away with the current and previous forms of operation and accept that there has to be a new operating model, focused on public service but adapted to deliver for all against the flow of self-interested times.

We need more platforms and if necessary stations in key locations, but we don’t need to build completely new lines.

The technology now exists to run and manage many more Trains on the same lines at the same times and we should be both embracing and furthering this massive opportunity for the benefits to the public, rather than just the profitability that it was developed for.

Existing line-beds and heritage Railways should be put back into commercial use and we should be making the very best of the infrastructure that we already have.

The cost of doing so and the time it will take to deliver will be substantially less and with much less disruption than any white elephant project like HS2 would ever have.

 

image thanks to unknown

 

 

 

 

Change is what we need; not revolution. And it’s all about getting the basics right…

November 13, 2014 Leave a comment

images-13For all politicians, the opportunity genuinely exists to revise and create new polices which will work for the benefit of all. It’s not an option which is restricted to Ed Milliband and Nigel Farage who both hope to have very different roles in power from May; but one which even the Coalition Government could begin to embrace right now.

Sounds quite a stretch when you think about it though. Tribal politics and the media chasing political circus that Westminster has become, has, after all created a cynical and disenfranchised electorate; one which in the majority experiences little each day, to make it feel that the system actually relates to any of us in any way.

Perhaps without even knowing they do it much of the time, even the most modest members of the political classes somehow succeed in exploiting this very real perception to their benefit, using the media and disingenuous rhetoric they employ to leave individuals and families feeling as if they are themselves alone in going through what for many has become a very trying experience.

It wouldn’t be so bad. But being left feeling guilty because you cannot afford to buy food; to pay bills; to buy clothes; to pay for transport or because you are having some other form of negative experience of life which you really shouldn’t be have in 21st Century democratic Britain is certainly in no way fair.

It is certainly not what you would call right in an age when equality has for a long time been sold to us as a given.

Its not what you expect when successive political generations have told us all that they, and only they, possess the holy grail to putting everyone first.

When you have Government after Government run by people whose only true priority is to gain or retain power, it stands to reason that many people do not see or feel that the electoral system is working for them.

Ignoring elections, or throwing support in the direction of a new Party which is at the very least attempting to sound like it is in touch with the issues that people are facing, then for many becomes an attractive proposition indeed.

Regrettably, such a political environment like the one we are experiencing today provides a wholly fertile seedbed for popular voices advocating seismic change of a kind that would be more akin to opening the Pandora’s box which accompanies public unrest, rather than heralding the arrival of some new and golden age. However well intended, Russell Brand’s recent political outbursts and the publication of his book Revolution are in reality little more than an aspirational touch paper of anarchy – based on the views and interpretations of many other Writers – promoting the release of one terrible genie that any sensible person – however frustrated with the system they might be – really does not want to see let out of it’s bottle.

images-12Overnight change – which is essentially what revolution is, doesn’t usually end well. It is more likely to lead to a situation far worse than most will have experienced before, and one which will probably be a lot harder to change.

We have to work to make what we have better, rather than breaking up the workable framework that already exists; throwing it all in the air and then leaving it all to pure chance to see – and then experience where the unconnected pieces will then all fall.

It is top to bottom reform and change that are essential across public services and all areas of Government Policy, before people are in any way likely to feel they are being treated fairly.

This will not come about by continuing to base arguments and disquiet on wealth or demographic class, and whilst advocates of wealth redistribution may find an audience which is very receptive to the idea that either taxing or simply stripping wealth from the rich, and sharing it out equally amongst the poor may give them all a much better life; this idea is indeed as illusory as the money is itself.

Non-earned wealth will in most cases disappear just as quickly as it arrives – if not through private spending, then through the exponential and inflationary economic changes which would almost certainly accompany the instantaneous arrival of so much personal wealth.

The aim of solving the problems of breadline Britain or the cost of living crisis will no better be served by penalising the potential of high earnings, than it will be by enacting an unsustainable rate for the Minimum or Living Wage.

Such solutions may provide a temporary fix, and give a moment of perceived justice to many. But those with money will soon move away or lose the incentive to keep earning – whether they are companies or individuals; whilst those who have found themselves with more money in the bank at the end of one month, will soon lose it the next when employers and the suppliers of all the goods and services that they think they can now afford put their prices up to support the rises in wages that they have themselves had to pay.

No. Dealing with problems in isolation simply does not and will not work, because by attempting to solve one problem in this way, the process soon leads to the creation of many more – if it doesn’t just make the original one a whole lot worse for those who are experiencing it.

To build a better life for all, getting the basics right is the very first step. It is about reviving, living and promoting a sense of ethical balance and consideration for all.

This will most likely be achieved by ensuring that at the most fundamental level, adults can afford to feed, clothe, and house themselves – and any dependents that they may have – to a minimum and workable standard. A benchmark level which cannot be subjected to the influence of any third party.

Working to address the many issues that require policy changes will not be simple. But Politicians are elected with the expectation that they can deal with complexities on behalf of the people they represent, and if they have taken their election that seriously, this is exactly what they should now do.

The possibilities for solutions are probably endless. But solutions are indeed possible if the needs, benefits and consequences for everyone are considered properly.

If politicians genuinely want to help and provide a level-playing field where there is opportunity for all, why are they not looking at policy areas that have the potential to make an immediate difference. Examples might be:

Releasing the restrictions placed on employers AND employees through Legislation such as the European Working Time Directive: The days when legitimate business thrived on the unbridled exploitation of the working classes have long since passed and we today have some of the most restrictive working practices on the planet. If everyone in the workplace was completely happy, furthering and maintaining the cause of such horrific levels of bureaucracy would make sense. But many people want the opportunity to work beyond the requirements of their contracts of employment, whilst employers would benefit greatly from increased input and flexibility from existing – and often more experienced staff. The real key to ensuring fairness is simply allow workers to do additional work when THEY want to, or just as they have formally agreed. Employers have to be trusted not to embrace unsafe working practices and the nanny state has gone too far in basing industry-wide restrictions on the behaviour of the unscrupulous few, or upon idealistic views of bureaucrats of how business actually works. Imposing business-breaking fines – and being seen to do so, would be a far more effective way of encouraging good working practices and management, rather than allowing officials with no business experience to attempt to direct industry professionals on how they can staff their business.

Stopping the escalation of property prices:The UK is culturally obsessed with property and its financial value in a way that few other Countries are. Prices have continued to inflate at dangerous levels which keeps borrowing artificially high, and makes rental prices equally excessive for entrants to the markets who have to rent, but desperately want the opportunity to own. Government could and arguably should step in to regulate the property industry and introduce policies which keep prices as they realistically can. The potential need for a resetting of property values is very real, and whilst Government behaves as if the answer to all problems is to build, build, build, while prices keep on going up (When do you ever see new developments come on to the market with prices that are lower than the local comparative market?), Politicians are never going to solve the housing problem or the massive drain that property prices has become for young people entering the market. Putting this problem off until tomorrow has long been the way; but tomorrow may already be here!

Working with Utility companies to keep prices manageable: The term ‘utility company’ has been a misnomer since privatisation, when the priority switched from the supply of services that are essentially supposed to be for the public good, to shareholders who will almost always be looking for a profit. No man can serve two masters, and the monopolistic strength of these companies has equipped them with the ability to write their own ticket, whilst ensuring their profits are secure. In the absence of Government regaining ownership, it should nonetheless step in to cap profits, or at the very least buy supplies direct for those who qualify at rates which reflect the wholesale purchasing power that the Government could and arguably should have on our behalf.

Buying services and goods direct from suppliers for those on benefits and low incomes or using smart card technology to deliver just the same: A massive opportunity exists for Government to step in and buy products and services on behalf of those on low-incomes and on benefits. Without the need to provide subsidies, Government could easily realise all the benefits of procuring food, fuel and essential goods as a significant bulk-buyer, just as big companies like supermarkets already do. The immediate concern that would be raised by the implementation processes such as administration, distribution and monitoring could be easily overcome through the use of IT, and whilst we hear horror stories about the stupendous cost of government-wide software implementation projects, the technology already exists to provide such a system through the use of personal smart cards, without big business profiteering, or the end user having to collect goods from anywhere other than the stores that they already use.

Creating a ‘retail’ arm to the Bank of England: Provide full current account services and not-for-profit based lending for pay-day-loans and to support small business – just seeking to return the operating costs for the benefit of everyone.

Lining up what are just a handful of suggestions makes it sound simple. But nobody would have unrealistic expectations for delivery from a Government that communicates with the public using openness, honesty and respect.

People do know that they deserve something better than what they currently have, and the time has come for a kind of Government which actually gets the basics right, rather than just talking about it before the usual grandstanding begins.

Whether income for those on low incomes comes from earnings or in-kind from benefits, there exists a cultural expectation for British Government to ensure a Basic Standard of Living.

Whatever the Political Party in Government might be, it is time for the philosophies, protectionist policies and ideas which benefit only the few to be binned and replaced with delivering something better as the priority for all.

When Government has these basics right, the many dominoes which stand beyond will very quickly begin to fall.

 

 top image – imgarcade.com

The Energy Rip-Off: Profit for most businesses is a benefit and neither a right nor the result of monopolistic guarantee. Energy Companies should be no different to other businesses and fixing prices or imposing a windfall tax is not the first step to help those where help is needed most

October 22, 2013 Leave a comment

images (42)John Major’s intervention on energy price rises certainly shows just how much of an issue the Political Parties now realise it is. But a windfall tax won’t help the people who really need that help the most and could in fact make things a whole lot worse if politicians don’t start to become a little more imaginative and thoughtful about what they now do.

N-Power were the latest of the Energy giants to announce their next jaw-dropping price hike yesterday and at 10.4%, it’s the biggest one of this season so far. But such price rises aren’t new and whilst its perfectly feasible that prices will now be loaded at every opportunity over the next 18 months to counter Ed Milliband’s very plausible threat of an anachronistic reemergence of socialist Government, the real problem is that the Energy giants collaboratively control a monopoly which politicians either fail to understand or otherwise have no desire to address.

These are after all Companies who have grown used to using excuses such as green levies, wholesale energy prices and the costs of infrastructure replacement to justify these continually upward and exponential rises, whilst their profits remain strangely, yet comfortably in tact – a situation that almost any business which offers a product which is bought only by choice could simply never hope to achieve as their market simply wouldn’t sustain it.

It really should come as no great surprise for politicians at any level that imposing a windfall tax will do little more than supply yet another opportunity for these unharnessed Companies to raise prices and inadvertently maintain profit levels in a situation that no privately owned company with this kind of responsibility to the public should ever be able or allowed to guarantee for private shareholders.

The lack of real-world understanding within the political classes is most evident when they repeatedly fail to address the lack of empathy and social responsibility that such parts of the corporate and financial worlds possess and which is increasingly manifesting itself through the price rises and blatant profiteering they undertake. Let’s make no mistake; it cries out for a level of intervention that Government seems strangely unwilling to take – or in Labour’s case, seems completely devoid of any reality when it comes to reigning in the activities of operational and service providing businesses.

Further taxation will not help people who are struggling to make ends meet in any way. People on increasingly squeezed incomes actually need prices to fall if wages are not going to go up and whilst a freeze in prices might sound good, these very same people really don’t need to experience the drop in temperature that will come if the energy supplies are turned off as a result of Red Ed seeing this quixotic plan through to fruition.

Before anything, the Energy companies need to be given the opportunity to change their approach and stop treating the UK Energy Market as a cash cow. It isn’t, and they will struggle to find anyone amongst us who believes that repetitive price rises of around 8-10% are both genuine and also peculiar to services which people simply must have when in today’s economic climate every other area of business basically has to justify each and every penny of a notable price rise.

If the Energy Companies won’t respond to such an opportunity, Government must then seek to regulate the profit margins which these Companies can achieve, whilst ensuring that every ‘hidden’ route to obtaining profit through re-routing costs and finance by such methods as creative accounting, overseas holdings and charges to ‘other businesses’ are stopped. It might take a lot of work, but this is what politicians have been elected to do on our behalf and what we have every right to expect of them.

There is of course an argument made by some for re-nationalisation of previously privatised industry too. But this also has to be put in context with an acceptance that the UK purse has already been stretched way beyond irresponsible terms and that the dream of a return to an age of unionised control and stagnation within vital services would be little more than the replacement of one small set of people benefitting from one form of misery for the masses with another.

Competition in its truest form is however another thing and with an emphasis on social enterprise as a way of tackling the Energy price problem, there is absolutely no reason why the Government or even the more Localised forms of it couldn’t set up, run or sponsor the development of non-profit making energy companies which are run on commercial lines and open up the market in a much more diverse and genuinely free-market-based way. The results could be quite surprising.

Whatever the politicians come up with it must work for the public and industry at large; not just for the Energy companies and shareholders, and certainly not just for the politicians themselves as they look for their next result in 2015.

We now need a new and gutsy kind of politics which addresses all the needs that we have by tackling them all head on and with proper regard of the implications for all along with all other areas of Policy.

It’s time that politicians started to think about changing the rules, rather than continually romanticising over possible poll results. Throwing sound bites at the media that will never really deliver for people who need help the most is not the place to start.

image thanks to http://www.telegraph.co.uk

The Cost of Living crisis: – It’s those money men, stupid

August 15, 2013 Leave a comment

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Hypocrisy has become an artform for many of today’s Political class, and talking up politically expedient issues, spinning away inconvenient truths or criticising others for doing no more than they would do themselves has become the apparent norm.

After a media splurge targeting their inactivity in the sun whilst Cameron has been busy making hay under his, Labour have returned to the stage this week focussing their less than lacklustre performance on the ‘cost of living crisis’, giving every indication that this is the ‘issue’ that will steward their return to majority Government in 2015.

If tackling every issue were seen to be as simple as giving it its own branding or strap-line like this and waiting for it to go viral, we would have a marketing man in Number 10 already – which of course we actually do.

Sadly, the ‘cost of living crisis’ is probably the most dangerous issue that any of our Politicians could ‘play’ with, in the run up to the 2015 General Election, and we should perhaps all be concerned by its apparent adoption by the political left in order for it to be manipulated as a vote-winner. After all, the future of most of us is tied up with it, and its genesis reaches far deeper into the fabric of our society than any of our leading Politicians seem willing to contemplate or have the moral capacity and determination to deal with – even if they have apparently now acknowledged it for their own political ends.

The reality for most of us outside Westminster is that we don’t need posturing Politicians and media hype to remind us of the fact that wages are effectively standing still whilst the cost of paying our bills just seems to keep on going up and up, month after month, year after year without any sign that it will ever relent. Many hard working people simply struggle to keep themselves afloat even before they start to consider some of the luxuries that those very same politicians and newsmen probably take for granted.

Real people living in the real world already know firsthand what it is they are experiencing when the letters hit the mat; the e-mails arrive, the phone rings and when they go and shop. When the pay rises, tax breaks and bonuses that they desperately need aren’t coming to middle England and those hovering either above or below Britains poverty line– simply because the Government’s Pot is already exhausted and the Nation simply cannot afford it – these same people need politicians to drop talking up the effects of the problem and start tackling the cause head on.

This task is not one that will lend great comfort to any politician who values their place in history more than they do the lives of the people who elected them and this is problem enough with British Politics today in itself.

Facing the reality that the free market has surpassed its point of balance and therefore the good for which it was intended is not a thought that many in power will want even to contemplate. Therefore accepting that increasing freedom within the markets to pursue infinite profit, whilst that very same action is effectively enslaving great swathes of the normal population within fiscal misery is not a pill that many of today’s Politicians will swallow willingly. But it is there in front of all of them just the same.

Through the creation of the virtual monopolies which are the utility and energy companies; private businessmen, shareholders and pension funds have been given seemingly insurmountable power over the lives of everyone by being able to dictate their own paydays, whilst they go unhindered by Government and Regulators – who have nothing really but the interests of their Industry at heart.

Likewise, ever growing convoluted supply chains, often reaching the length and breadth of the Country or even across Continents allow many different traders, dealers and agents to add their cut to the margins which you would normally expect to see only from producers and retailers, then inflating prices way beyond what they should realistically be.

Further still, those businesses without control or a sizable share of their markets are also having their margins forcefully squeezed by the companies and organisations who do and many of these businesses are the same ones that cannot afford to recruit or pay more than negligible wage rises to the very same people who are now being affected financially from almost every angle you could imagine.

Whilst no reasonable person would argue that businesses exist to make a profit, it is simply beyond logic to add layer after layer of profit onto the most basic and essential of items or services and then expect end users to keep picking up and meeting these overinflated bills without any real additional income of their own to cover these exponential and wholly unrealistic rises.

Companies, traders, financiers and all manner of individuals and entities are in effect ‘vacuum profiteering’, making money ex nihilo or basically creating something from nothing in a manner which could be akin to having the midas touch, were it not for the misery that it is increasingly inflicting upon those who are wrongly being expected to pay for it.

Without those who hold this power over our economy taking steps to regulate and restrict the way that they make profit, they are through their very actions writing an agenda for Government over many years to come – whatever its Political make-up may be, that has the potential to create social and financial problems of a size and scale across our Nation that Government itself won’t be able to afford to put right – simply because the Taxpayer has no money left to fund it.

Such levels of responsibility over the health and wealth of a Nation should never have been placed in the hands of money men in the first place without sufficient safeguards in place to protect the many who could be affected by the unscrupulous profiteering of a few. But it has.

No Political Party should be seeking to take the moral or politically philosophical high ground on this issue as it is a problem which can only be tackled one way. That is by Government stepping back into the free market and taking an actively pro-market or even interventionist approach to regulating market behaviour – should it be so required. The UK needs to retain capitalism but it must also maintain it in a responsible and considerate way that doesn’t destroy the ability of consumers to consume in the process.

By taking just the key players such as the utility, energy and finance companies to task, Government could go a considerable way to putting safeguards in place that would ensure a basic standard of living can be maintained against the minimum wage, and that the minimum wage would then itself reflect a living wage and one that should keep many more people safe from harm and therefore from being a potential burden to the State.

Regrettably, action of this kind does not reflect the creed of contemporary Politicians and the point continues to be missed that wealth creation only works effectively when there are benefits – in whatever form they may be – for all.

Conservatives, Liberal Democrats and Labour don’t want to embrace the answer and neither does UKIP, which is riding high on the tide of discontentment and disenfranchisement that the lack of connection with reality amongst the other Political monoliths has created within the Electorate itself.

It’s time for Politicians to wake up and smell our overpriced coffee before it’s all too late.

image thanks to http://www.telegraph.co.uk

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