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What the Carillion collapse tells us about the unspoken truths governing public sector contracts

January 18, 2018 Leave a comment

Carillion

Carillion is the big news this week, and is likely to remain on the media radar for some time, given the impact that the collapse of a Company of this size is almost certain to have on commercial relationships that are now an integral part of the public sector.

Moments like this are important for reasons which go way beyond the impact that Monday’s announcement is already having on jobs and the potential closures of many small businesses.

It is providing one of those very rare opportunities to glance inside the incestuous workings of contract delivery on behalf of government and gain an invaluable insight into why private interests working at any level within the public sector is in clear conflict with very ideals of what public service delivery is fundamentally about.

Regrettably, the clear focus of the media and political classes has already fallen upon the question and avoidance of blame. Yet if they were to begin to look just a little further and be open with what have for too long been the unpalatable truths, there would be just the merest hope that questions such as whether there can be a future for the NHS when it remains in a perpetual state of financial crisis could perhaps be genuinely answered.

So why are contracts going to private companies outside the public sector?

The best place to begin thinking about the contracting or privatisation problem is to look at why private business is really even involved in the delivery of government services of any kind, when government exists to operate for, on behalf of and for the benefit of only the public.

Man can only ever have one true master after all, and if money is the true motivator, then public service will at best become an oversight – the unwelcome relative left trailing way behind.

Whilst it may feel counter-intuitive to believe or accept it for many of us, the ‘privatisation solution’ has been in the main part created by Conservative governments in response to the consequences of policies created typically by Labour in order to enhance the rights, working conditions and influence of public sector employees.

Positive discrimination and rights, enhanced working conditions, gold-plated pensions and union indulgence within public sector organisations all cost an ever evolving sum of money in an increasing number of different ways, which usually create even more roles and dilute responsibility further and further still.

The cost of employing people within the public sector on conditions which exceed those of the private sector outside – even when salaries appear to be less, has simply made the delivery of services too expensive for government itself to provide.

Against this backdrop, all areas of he public sector have had to go in search of more cost effective ways to deliver services, and have had to do so in ways which also meet the rigorous requirements of providing services and employing staff as a government based organisations.

This has made the ‘marketplace’ fertile for the entry of private contractors who don’t have the same considerations as these former public sector based service providers.

When you consider that private contractors are providing arguably the same level of service, just without the same levels of bureaucracy – whilst making what in some cases is an outrageous level of profit besides, you can soon begin to see that something is inherently wrong with the way that the government system is now designed.

So how does public sector contracting by private contractors become a problem?

Business loves a contract. Contracts give surety. Contracts themselves can be used as a solid-gold guarantee – and particularly so when they are agreed and signed with government. This gives business confidence which can be misplaced, misused, abused and is almost certain to breed a feeling of complacency.

After completing what should be a rigorous ‘tender process’ – the company will sign a contract with the government organisation which agrees what, when and how the ‘contractor’ will provide a service, whether that just be 1 person to sweep a street or 32 bin lorries to collect your rubbish every fortnight for 5 years. On signing this contract, the company will know exactly what it will be paid, know what it will in turn have to spend, will have worked out its costs and borrowing, should have kept back a little for a rainy day and then know what it will make in profit – from which it will pay bonuses to staff and dividends to shareholders after it has paid any tax requirement.

Good managers know that some things change during the lifetime of a contract – such as fuel prices going up, which would be a real concern for a bus service provider or a private ambulance services. But contractual devices or clauses that allow for some variation in charges are usually built in to any contract to allow for this.

As such, genuinely unforeseen events or those which could not have been predicted by anyone within the contracting company itself are very rare to find.

What government contracts don’t allow for however, are lack of knowledge or understanding of the service delivery area on the part of those designing and agreeing a contract. They don’t make allowance for unmitigated trust on the part of either party. They certainly don’t consider the potential greed or indeed malpractice of a contractor or its decision making staff, which cannot be planned for or predictably defined even within the scope of a government contract process.

When a contractor has only a single contract, transparency is bizarrely much clearer and for the management, much more important and kept clearly in mind.

But when you have many more and perhaps and ever increasing number of contracts, the potential for complacency and overconfidence can lead to otherwise unrealistic opportunities, which in more focused circumstances would have been denied.

It may be as simple as paying senior executives massive, over-inflated salaries. But it has the potential to be much much more in terms of investment, questionable projects and big payouts for shareholders when little in terms of adequate checks and balances has allowed an adequate safety blanket to be retained from payouts and quietly put aside.

The overriding problem with a company which has grown to the size, reach and responsibility of Carillion is there is so much in terms of questionable financial activity that it has the ability to very easily hide.

The responsibility for contract design and management doesn’t just fall on contractors themselves however.

In the background to all this and within the protectionist culture in which contemporary public sector commissioning is currently enshrined, purchasing officers simply don’t have the motivation or willingness to do their jobs as effectively as they should. When the money you are allocating isn’t yours, public service and best value isn’t always the overriding priority. Sometimes it’s all about doing anything which proves to be easier, and who gets what doesn’t always work out exactly as it should.

Whether its building maintenance, bin collections, public transport, prison management, forensic services or interim and temporary staff services that contractors provide, contractors are all making unnecessary profit at the ultimate cost to us as taxpayers.

So what can be done to solve the problem and when will anything happen?

What has been outlined here provides little more than a simple snapshot of a very big and complex problem, which those in power are through their actions are continuing to deny.

For these problems to be addressed, it would first be necessary for politicians to accept that the whole system of government delivery is broken, riddled with management focused upon self interest, making decisions based on theoretical premise, and that there are simply too many people operating within the system who are ultimately being allowed to take us all for a ride.

The ‘too big to fail’ mindset has now permeated through political thinking to a level where contracts are being awarded despite very clear warning signals which would tell even very junior civil service staff that something is not right.

This is no longer a question of let’s bail them out so that they don’t fail like Labour did with the Banks in 2008; this is all about awarding contracts because there is a view that they never will.

Solving this problem is far from simple. It is not just about political thinking. It’s about getting the market’s to think differently. But just as much, it’s about getting employees to see their roles differently; to accept that they have a part to play too.

In simple terms, the free for all has to stop.

This bonanza based on self-interest is no longer sustainable.

The perpetuation of the lie that government genuinely works selflessly for everyone has got to be stopped.

No business can perform effectively on the basis that it prioritises the working conditions and needs of its staff before the priorities upon which it was created to deliver. Yet this is how liberalism and rights culture has manifested itself within all parts of government and the public sector.

Not only has the NHS become hamstrung by lack of staff and inefficiency, it is being cut up by the cost of the staff it hires through contracts – thereby being destroyed by the supposed solution itself; by the very respite that additional money is supposed to provide.

Meanwhile local government has its own substantive bogeyman too, finding itself tied up in knots by the cost of the local government pension scheme – the destination of the better part of our council tax, in many of the Boroughs, Cities and Districts where most of us reside.

Then there are the PFI contracts upon which the last Labour Government so heavily relied. A coarse, deceptive instrument designed to hide public spending, whilst fire hosing cash at private contractors over 30 year terms. Just another financial time bomb legacy like the raid on pension funds by Gordon Brown which we overlook daily on the basis that out of sight is very much out of our minds.

The power rests with government to change all of this, if only they would try.

Regrettably, the will doesn’t even exist to even begin doing so today, even if the Government could begin doing so – something that a hung parliament which could last until 2022 will simply deny.

With a good chance that the next Government will be based upon or built around a militant form of Labour, the chances are that politicians will only continue to try and hide the truth thereafter, because action which doesn’t just look responsible is not a pathway to which they are inclined.

As Jeremy Corbyn made clear in his questioning of Theresa May at Wednesday’s PMQ’s, the answer is just to do everything to return everyone to employment in government jobs. No doubt based upon further borrowing, which to those who don’t understand business or economics is a perceived as a policy which when sold looks bullet proof.

images thanks to independent.co.uk, bbc.co.uk, wiltshiretimes.co.uk

Britain’s Political Crisis: Politicians should remember that glory is little more than a temporary illusion which benefits no-one in the long term. It should be just the happy consequence that it is, rather than the reason for being and doing itself…

November 7, 2014 Leave a comment

Einstein-Quotes-1-2

If you could speak to any of today’s MP’s, back before they entered politics, and asked them why they got involved, would most of them honestly tell you that it was because they wanted to be an MP, or because they wanted to make a difference?

Sadly, we all probably know the answer to this question very well. In it lies much of the truth behind not only the problems that this Country now faces, but also the uncomfortable reality that sits behind Westminster’s façade. The British political establishment is morally inept, and there is nobody offering anything even remotely like the leadership that the Country needs in order to bring balance and to deliver a system of Government which genuinely is fair and fitting for all.

People are awakening to the complexities of our political system, albeit for many, they are simply on the receiving end or rather the effects of a comprehensive range of policies that have usually been cobbled together for no better reason than that of political expedience, usually because their precursor was failing to work just the same.

It was once said that the simplest solutions are the most intelligent. Indeed one of the most pertinent and indeed relevant quotes which relates to the way that Government operates would be Albert Einstein, when he said ‘If you can’t explain it simply, you don’t understand it well enough’.

Some may question the validity of quotations from a world renowned scientist. But Government is and has been run by generations of politicians who are doing little more than testing out theories and face-saving solutions on an electorate that they have arguably treated little better than lab rats or guinea pigs.

People across the demographical boundaries of British society feel that this is exactly how they have and are being treated, and the reality is that political philosophy and the other tools used to progress the interests of one group of people over another, continually fails to deliver anything balanced, or which does not have negative implications for somebody, somewhere else.

We live in times when the disparity between the lifestyles of those on low incomes and those who might be considered to be financially rich, are almost permanently in the media spotlight, encouraging feelings of distance and difference which would probably best be summed up in the sense of the ‘them and us’ cultures you often find present between the tiers of managers and staff within different organisations.

But rather than seek and use the many opportunities available to work with the reality that perception is everything, a seemingly continual flow of politicians gain elevation to their seats and immediately forget that they were elected to be the channels of communication and influence on behalf of the areas they represent.

Often by default, they then become the slaves and ‘yes men’ to someone else’s set of political ideals – all of which usually represent very little that we would recognise as being akin to a way of working and the delivery of solutions which consider the implications and impact upon us all.

Those who have direct experience of operating within the political world will know only too well that democracy today only works for those who are in charge.

Hearing other politicians agree with what you say when you speak out and say something is wrong, is often followed by the contrary and white flagged acknowledgement that ‘you can’t change it as this is just the way things are’. This kind of statement certainly shouldn’t resonate with anyone who entered politics because they genuinely believe in delivering something better for all. However, the fact that so many MP’s are still seen to be sticking with the status quo says much about their motivations for being there.

Whilst change has to start somewhere and many will admire Douglas Carswell and Mark Reckless for the steps they have taken, UKIP is so far untested beyond its ability to win by-elections for Westminster and seats within a European Institution which other than being little more than the glorified committee stage of a bureaucratic law making machine, would itself fail to exist for them if they were to ultimately achieve their publicised aims.

At a time when the UK is effectively bankrupt, cuts and economies are being ineptly focused upon the bottom line of expenditure, rather than the transformation and institutional change which would help us ensure the future of services such as the NHS, those provided by local government and many not-for-profit organisations, rather than on the continually increasing risk which will come to us all as a result of their destruction. We desperately need a new start in politics which reflects the responsibility to the public that politicians have, rather than the retention of their seats at the next election which they want.

Cynical as it may sound, we are now experiencing a form of government which begins its next election campaign the very next day after the votes were counted from the last, and you may well wonder what would have happened to us all since May 2010 if the modus operandi of having a whole 5 years to get reelected had been replaced with the battle cry ‘we have only 5 years to get something done’.

The argument and justification for change becomes flawed when personalities are brought into the mix, and however we might feel about the personal ideologies or backgrounds of David Cameron, Ed Milliband, Nick Clegg, Nigel Farage or anyone else who is in the political sphere, to simply concentrate on ‘playing the man, rather than the ball’ just takes us straight back into the problem that all of them – together – are continuing to create and maintain.

Likewise, jumping on the bandwagon of anarchy, propagated by probably well-meaning public figures like Russell Brand, will also yield very little long-term fruit for a population which is desperate for wholesale change for the better.

Change of the kind that will serve us all well can only come from transformation of the system that we already have.

Destruction of that system – however unfair it might seem to be right now – would lead to a level of uncertainty which would leave people grappling for any alternative which would quickly answer the many questions that widespread lawlessness would almost certainly bring.

If you need to gain some kind of perspective on this, it might be worth considering the situation in Syria and North Iraq which precipitated the arrival of Islamic State – the true impact of which we still as yet do not know.

Everything we do is now based upon mitigating the existence of fear. The most public and consequential proponents of this are the political classes themselves and until they all – as individuals – begin to acknowledge the personal fears that they have, and then rise above them and embrace the level of responsibility they have to us all; work with the risks, and then make decisions that are truly in the best interests of all, nothing is going to change.

Political parties offer a refuge for those who feel they have no choice but to work with others just to get things done. But political parties are now one of the biggest elements of the problem itself and political philosophies are little more than a trap for those who do not have faith in anyone’s ideas, other than their own.

Whoever you vote for in 2015, without change on the level that politicians all now need to embrace, we are simply heading for a lot more of the same, and probably in way which will be far worse and more painful than anything we have witnessed or experienced before.

Thinking about others and how our actions will impact upon them isn’t just some kind of selfless sport or charitable notion for those who have spare time and money on their hands. By considering others, we ultimately consider ourselves.

Politicians on all sides and at all levels would do well to bear this in mind and remember that by concentrating on the real issues that face them today, the electoral results for tomorrow will in turn take care of themselves.

Glory is little more than a temporary illusion which benefits no-one in the long term. It should be just the happy consequence that it is, rather than the reason for being and doing itself.

image: wonderfulengineering.com

Building on the Greenbelt could be avoided if Politicians were prepared to tackle the causes of Housing Crisis head on. Their failure to do so may leave many of these new homes empty and not just immigrants living in modern-day slums which are currently known as ‘beds in sheds’…

December 19, 2013 Leave a comment

On a day that the reality of modern day, back-garden ‘beds-in-sheds’ or rather the slums springing up across the UK to house immigrants hit the pages, we also see the news that more than half of Councils plan to build on our green belt.

You may be forgiven for thinking that there is an obvious link. But the only real relationship between these two issues, neither of which should arguably have ever have become fact, is that they provide a very telling story not only about the excessive cost of housing, but also the very painful reality that members of our communities from one end to the other are being overlooked by Government Policy.

In a recent blog, I discussed the issues that sit rather uncomfortably behind the incessant drive on the part of Politicians to build more and more houses as a method of stimulating the economy and solving the UK’s housing crisis, whilst actually doing anything but.

As they do so, they are overlooking the permanent damage that will be inflicted upon Towns and Villages up and down the Country, whilst failing to demonstrate either an understanding of the factors which are causing the problems for so many people, or indeed how many more issues that this form of recklessness sold to us as responsibility will cause.

why_do_we_behave_like_lemmings_4677351My own concerns about the foolishness which is leading the development of these Policies throughout the Local Authority Network and specifically at local level – where many Councillors behaviour can most politely be described as being very similar to that of Lemmings going off a cliff, is well known.

My inbox regularly has mail which has been written by local people from right across the area that Tewkesbury Borough Council covers who are rightly and quite simply horrified by the Plans which are now well on the way to being put in place. In many cases these very Plans are being very effectively picked apart by these impassioned members of the public who have very little experience of how the Planning System actually works. Will it make any difference? Probably not.

I recognise the value in the arguments they make. Somehow things really don’t add up when questions about the impact on such essential matters as future infrastructure, the merging of historically separate Towns and both fluvial AND pluvial flooding issues seem to go unanswered.

I also appreciate that I may be doing a disservice to the multitude of other very localised issues which face other communities across the Country which are just as important to the people that live there, but which I have overlooked just because I don’t have first-hand knowledge of them and most respectfully have no reason to do so.

The problem is that the Policy frameworks and guidance on which all local ‘Strategies’ are being set have been stewarded into being by Westminster-based Politicians who should not only know and understand these things, they seem oblivious to the fact that their own knowledge and outlook is actually so limited and are just as immune to hearing or seeing the very clear messages that are out there to tell them all about it.

With Politicians drunk and dependent upon the power and retention of their own positions, and whilst they bound around oblivious to the issues that are facing everyone else, there are sadly no forms of breathalyser out there which will demonstrate just how out of control the drivers of this vehicle may be for the unknown period it will take before it crashes and causes us all some significant damage.

The one thing that is certain is that concreting over the green belt to build houses that nobody can actually be sure we will need won’t solve the housing crisis on its own.

In fact, without dealing with the real issues that sit behind the housing problem and tackling them head on, many more people will find themselves unable to afford to live in them anyway and may have to face the unenviable horror of joining those who are living in what should by now have been consigned to long-term history in the form of anachronistic slums.

Image thanks to unknown source

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

Public Funding of Political Parties: Yet another nail in the coffin of British Democracy and a giant leap away from listening to the voices that must now be heard?

September 6, 2013 2 comments

Political Party funding has once again become a regular topic of discussion in the media and many will today find themselves asking why the Public may now be required to pay to promote an exclusive list of what are membership-based organisations, when many more worthy causes that bring much better value to our communities could never even dream of securing this kind of help.

Following Ed Milliband’s now seemingly disastrous attempt to re-package a few multi-million Pound Union donations into many more smaller and politically expedient ones from union members who should apparently have been just as willing to choose to ‘opt-in’ as pay through the historical non-voluntary default, it seems that we are again faced with the dubious meanderings of a few politicians who will do anything that they can to make the system work just for them and for the parties that they represent.

Talk of a £5000 cap on donations to political parties would have worked extremely well for Labour if they had managed to manipulate 2 or 3 donations to qualify as the same sum given by a sudden deluge of fee-paying Labour supporters. It is after all rather unlikely that the Conservatives could find a way to do the same.

But Ed missed one vital calculation in this plan and one that no considerate and fully cognizant politician should ever miss – that people will only voluntarily pay for things that they actually want.

The penny of impending political disaster having now dropped almost as far as the current Labour Leader’s jaw, we now find ourselves looking public funding for political parties in the eye as the Westminster set again swans around under the misguided belief that the existence and perpetuity of their ideals and their impractical application should be assured by right and statute, rather than by the will and best interests of the majority of people – which isn’t after all what politics is actually supposed to be all about?

Just this week within the Council where I am an Elected Member, a whole Borough has witnessed the down side of party politics when a bad decision which may have profound effects on many lives for years to come is compounded and enforced by the use of the Party Whip to guarantee that the aspirations and agendas of the few will overcome the needs and potential benefits from alternative and better paths for the many.

De facto funding for Political Parties that even their Members no longer want to financially support will make such outcomes even more likely than they are right now and those politicians who are already awake to these perils will be well aware of the potential cost of this approach to us all.

With the common ground between Conservatives, Liberal Democrats and Labour being that the Leadership of all 3 have lost sight that doing what’s right for all, rather than what’s right for the Party or the idea’s that they specifically hold dear; all of the main Parties now fail to gain the lifeblood funding and support that they need from everyday voters, simply because they aren’t considering the realities and practicalities of what it takes to live, work and survive in our everyday world.

The message should therefore be simple. Large donors will always want to influence decisions and processes for their own benefit and adequate membership level financial support will only ever be assured when those members feel that they are likely to benefit – ultimately just the same.

If any political party is unable to secure that support, its leadership and executive should surely ask the question why it cannot do so and then be thinking about changing the way that it operates so that it can – if it can do so.

Those of us outside the Westminster ‘bubble’ should perhaps be asking ourselves whether the funding crisis that Political Parties are now facing is the best illustration yet that Politicians are out of touch and failing to connect with the critical mass of the population.

If their approach to governing our lives cannot be sustained or promoted without State intervention within a democracy, do political parties really have the right to say that they represent anyone but themselves?

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

Until Bankers and those within in the City regain some sense of what is right and wrong, Government must intervene so that the many in the world outside do not continue to suffer because of the profit hungry few left within

March 21, 2013 Leave a comment

images (52)The Banking Sector has become an object of hate for many. The accepted perception is that it equates to a world of greed; that it represents all of the bad things that we associate with money in its worst form and that the Sector is immune from the impact of its own actions; a fact demonstrated only too well when private Banks are bailed out with Public Money and bankers get bonuses even when the businesses under their control are failing.

Recent headlines and the role of bankers in the financial crisis and Libor scandal demonstrate a clear need for real and meaningful reform, even before the impact from the domino-effect of unethical practices is considered upon our lives elsewhere.

With Finance and the role that Banks play being so important within our lives, bankers can no longer consider banking services to be ‘products’, as it has never been a ‘product’ that they are providing.

Services are themselves measured by the direct and indirect impact of customer ‘experience’ and the physical risk to all others, and the Banks must now begin considering this in the same way that any other service industry is by its nature required to do so.

There is nothing truer than the phrase ‘money talks’. But the Banks and Financial Sector have failed to take a long view of their actions and now Government must legislate to provide a Regulatory Framework which allows profitability, but does not do so without consideration of unnecessary impacts and the unacknowledged consequences for businesses and individuals within the wider economy.

Here are a few thoughts:

RBS (Royal Bank of Scotland)

In response to the Banking Collapse, the Government at the time provided money to a number of the well-known Banks to prevent their closure, primarily because of the risk to the money that we all have invested in them.

One of the Banks which was ‘bailed out’ was RBS and this Bank is now effectively ‘public owned’.

Recent talk in the media suggests that the Government is now looking to sell off the Bank. However, with a significant need for a Bank which is not profit, but rather service-led, and can therefore take a more altruistic approach to lending and the provision of the banking services that it provides, Government should now take the opportunity it has to provide a ‘peoples bank’.

By doing so, they can provide the options for everyone that other Banks and Financiers are not prepared to provide such as ‘payday loans’ and higher risk start-up lending without unreasonable levels of interest or surety being required.

This will surely help the economy to progress forward by providing lending and support to small business in a way that other Government-backed schemes simply fail to provide.

A publicly-owned, people-centric bank would provide a cornerstone to people, to business and to Public Services alike when run only with the end-user and sustainability in mind. This is what Britain needs.

Credit Rating Agencies

In a recent blog, I talked about the unrealistic level of influence that Credit Rating Agencies now have upon us all.

Ironically, the UK had its Triple A Rating downgraded soon afterwards and Politicians really must now consider the influence that 3rd parties have in dictating the levels of interest that people pay to borrow from lenders, or indeed if they will be considered ‘credit worthy’ in the first place.

Government lending aside, nobody would sensibly deny that different levels of lending risk exist depending upon the financial history of an individual or business.

But it is often poorly managed lending which contributes to higher risks in the first place and improved regulation must therefore be used to restrict this process.

Through the Bank of England, the Government currently defers the setting of the base interest rate in a way which reflects needs in the wider market. All lending should reflect this rate; be realistic; be proportional and Government should drive Regulation to support this.

Pension Fund Management

Pension Funds are significant Shareholders of well known PLC’s across the Globe.

In the UK, their influence is felt by many of us each and every day through the profits we provide to Companies such as the big Supermarkets and Utility Companies, which is reflected in what few would disagree is a continual and disproportionate rise in the Cost of Living.

Businesses are of course created and managed for profit. But it is not normal for profit to be guaranteed within any business, and neither should the circumstances exist where any business can manipulate a market in order that it can be so.

It is therefore essential that Government Legislate to limit the influence of Pension Funds (owners) on the Management of Businesses which provide essential goods and/or services.

Prices of such goods and services should reflect their true value and not a level of profit that businesses of smaller size and with less influence through market share would not be able to reasonably sustain.

Futures

Buying, selling or speculating on products which do not exist would sound like madness to anyone but those who are actually doing it.

Gambling in its most basic form, futures offer a guaranteed level of income for producers, and the promise of significant profits for those who are prepared to invest in what is little more than thin air over a period of time.

However, they also extend the number of links in each ‘virtual’ supply chain along with the number of businesses or agents looking for a profit. Basic prices for commodities and food are inflated way beyond their true market value as a result and the end-using customer suffers most.

Government must legislate against the misuse of Futures in goods which are essential to daily life such as crops which have not even yet been grown, or energy which has yet even to be created.

Doing so will remove speculation of this type, which always has an adverse affect upon the end users who inevitably pay the most. It will also protect producers and the markets from unforeseen circumstances that nobody can control.

***

As with many other industries, the Finance and Banking Sector has simply lost its way. Growing distance from the customer leaves decision makers without any true master other than profit, and this situation can only get worse if it is left unchecked.

Bankers must ultimately be left to make their own decisions. But until they regain ethics; a sense of what is right and wrong and the responsibility not to abuse their position, Government must lead by example and intervene where necessary so that the many in the world outside Banking do not continue to suffer because of the profit hungry few within.

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

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