23 december 2011, cut pay or headcount ?

The pay of the seven million or so people that work in the public sector is a big issue in the uk, as elsewhere, but it is not just pensions that represent an effective uplift (worth perhaps 15%) but also time worked (up to 25%) and, until recently at least, job security (and redundancy brings generous compensation). Length of service as a basis of pay rather than performance also hobbles outcomes. It was once the case that these less visible benefits counterbalanced salaries lower than in the private sector, but no more: equivalent public sector wages are now some 12% higher than private ones, although the question of formal qualifications needed, which private employers tend to be more flexible about, can obscure this. Nor is the gap entirely in higher grades: workers 4% less well paid than their private sector equivalents 15 years ago (nhs versus private healthcare nurses, for example) are now 25% better paid. A key question that arises from all this (now being asked by the government in its autumn statement) is whether the current system of national pay setting is optimal either for those workers in higher-cost areas (like the south east) who are effectively paid considerably less (given a higher cost of living) or for those lower cost areas who in a liberalised market ought to attract many more of those jobs. There is of course fiendish politics in this, but there may be a way to sell the unhooking of public pay in a local labour market with a simultaneous announcement of the 10, 000 new jobs that would arrive with the relocation of say parts of the department for business, whose central purpose today is after all supposed to be "rebalancing the economy" by creating more jobs outside london. Cutting public sector jobs is at the moment the only way being pursued to balance the books, but varying pay, which would do more to sustain and even create jobs where they are most needed, must surely appear on the radar at some point.

18 december 2011, every loser bins

Brits have something of an obsession with bins, a symbol of schizophrenia between localism and rule by stalinist decree. When I moved to germany ten years ago, I was stunned both by the efficiency of domestic recycling, and that everybody, rich or poor, divided absolutely everything into the allotted four bins. Back in stockport, things have moved on. We also now have 3 recycling bins, and a black one, half the size, for everything else. The latter, to whitehall consternation, only gets emptied fortnightly. Central government's sensitivity to bins dates back to the winter of discontent in 1979, with its iconic images of the unburied dead and unemptied bins that did in what was left of the labour government, and spurred margaret thatcher's era-defining election. Unnoticed by the mass media, there were echoes of those scenes on the streets of heald green this week. By unhappy coincidence the recent national public sector strike fell on black bin day. So a week later, the black bins, full at the best of times, were overflowing, and a great many people presumed the rota would be changed and put them out with the rest. It wasn't, and that night was very windy, and so the week after that saw the desolate scenes, of bins in the road, rubbish swirling and litter the likes I haven't seen for years piling up in corners and against kerbs. It was though, an amazing contrast. I live on a pristine cul-de-sac of mainly well-to-do bungalows. At the end of the road is a narrow cut-through (I think they call it a ginnel), at the other end of which is what was a council estate. Before 1974 our side was cheshire, the other was manchester. It's now a few low-rise tenements and ex-council houses, done up over time with new porches, doors and drives. On this side, the bins were wheeled back in on the wednesday night, to patiently wait another week; where an animal (a cat, or maybe a fox) had ripped an overflowing black bag, it was neatly tidied up. It was on the other side, that I cycle through every day, I saw the echoes of desolation and concert aftermath. In fairness, it peaked after a few days, and when the bins were finally emptied it quickly got back to its also-pristine norm, but I did find those few days telling, something I think about personal responsibility diluted both by reliance on public services and sharing amenities. My children don't notice any difference at all between the two ends of the alley, but I do wonder if they will one day soon.

10 december 2011, exit, stage right ?

The real question of the latest "make or break" euro summit is whether it was enough; to which paul krugman's answer is no; while mine is, yes - until the next step is needed. All the news though in the uk is about david cameron's "thatcher moment", although even the iron lady never actually wielded her veto, although she bitterly regretted it after signing the single european act of 1986. Years ago, when I started this website, I wrote that the uk's "sustained ability to punch above its weight, economically and diplomatically, is finally ebbing." This weekend may well turn out to be a step in that direction, as however much we invoke some magical realism about the special relationship with washington, or why asians invest here, or why london is an international banking centre, today that is all directly leveraged from our role as bridge to the heart of europe. It is a remarkable feat of diplomacy that we have maintained that despite not joining the euro, but that stretched elastic may just have snapped. It was foolish of merkozy to ever have imagined a cameron absent from the centre right caucus in marseilles (having pulled out of the european people's party), was ever going to agree to the deal cooked up there; or maybe they didn't. It was equally foolish of cameron to ever think he could successfully blackmail them with a switch on the politically-toxic topic of financial regulation from majority voting to unanimity; or maybe he didn't. None of the trio are foolish, and so the more likely explanation is weariness, above all from a european mainstream that had been prepared to allow a semi-detached britain access all areas, as long it seemed to be bending over backwards to play the game. Cameron needed to avoid at all cost any treaty at all, as despite any legal niceties that could be cooked up, the momentum towards a referendum would have become irresistible. The save our financial markets manoeuvre was just a cause to go down fighting for, but despite the oddity of risking all to save probably the most unpopular group of people and institutions in the land, the battle of britain pose is a domestic political plus. There will though be many more scenes before the epilogue is actually written. Talk of a treaty by march may be the line, but the last treaty took ten years from start to finish. Fiscal rules may sound wonkish, but tax and spend is the heart of government and neither narrow nor technocratic, and so it may be the right thing to do, but it isn't going to get done without a whole lot of debate. A referendum in ireland has never been avoided before, and it's not going to be avoided now; and they'll be twenty other battles too in the long months ahead. All that gives time for the uk to reflect, and perhaps even find a way to help, because ironically nothing is actually being asked of london at all, just to let the others move ahead. If we deny them that, they'll never forgive us - and nor would we deserve it.

8 december 2011, and then there were eight

I spent the day in leeds today speaking not once but twice at a conference, in the illustrious company of the deputy prime minister nick clegg (14 september 2011; 5 february 2011), greg clarke, the almost-cabinet minister for decentralisation and planning (22 january 2011) and chuka umunna, a major league up & coming mp who is trying to fight off the "english obama" tag, though he's rather good. The conference, on northern cities, was another launch pad for another stage of another government drive for devolution, or "localism", or control shift perhaps, this time for the core cities, which of course includes manchester. Unfortunately, only the yorkshire post seems to have noticed. Many more noticed the night's football results, which rather doomed my opening line about no other city in the whole of europe having two teams in the european cup. I was quite challenging, as my few years here have taught me talk is cheap, and its not for nothing the uk is the most centralised state in the western world: 19% of public spend is determined by central government in germany, 32% in france, and no less that 72% in the uk, and change really does mean a major shift of control, and this all still feels rather too much like stakeholder management than policy implementation, but we live in hope.

Attached File: clegg conference.pdf

3 december 2011, the european province of belgium

It's almost 18 months since belgium had a government (19 september 2010), but it finally looks like negotiations are about to conclude. Somewhat remarkably given that the elections saw immigrants cast in a rather negative light, the prime minister looks set to be a half-orphan of poor italian workers: the american dream in belgium. He's also openly gay (not the first pm, a distinction that went to iceland's johanna sigurdardottir) and even more remarkable, a french speaker, the first since 1974. That's a bit of a blow for the richer flanders half of the country, which still looks ever closer to becoming an independent state, kosovo being the model. If brits think scotland is on the verge of independence, it's worth reflecting belgium already has separate newspapers, tv stations and even foreign aid budgets. The markets will no doubt be positive about a government's formation, especially as the agreement has a commitment to a 2.8% deficit, but the ups and down on belgian bond yields can hardly be said to track the coalition negotaiations. For all the talk about the enormity of the steps to fiscal union angela merkel has begun to explicitly talk about now, belgian is a case study of how far down the line the euro area already is in terms of the whole endeavour carrying its component countries, or at least the smaller ones. As a sign of how far down the line many things already are, it is surely possible to see a positive in that perhaps there's a bit less massive upheaval to get to the nirvana of stability and normality than everyone expects.

27 november 2011, merkozy

I wrote my second-ever new europe column on germany, and seven years ago it was quite insightful to flag that "everything about the eu rests on germany". Then, it was still understated: no-one coined the "kohl consensus". Gerhard shroeder ended that culture of restraint, bringing a rather more muscular germany, its capital now berlin, its whole economy yoked to the deep sacrifice of rebuilding east germany, which brought lower wages and sent jobs abroad, lowering germany's unit labour costs by some 20%, one of the causes of the euro's current problems (15 october 2011). It also brought angela merkel to power. And in that time too it turned around its trade: in 1999 german exports to portugal, ireland, spain and greece were €30bn, 5x the €6bn to china; by 2010, it exported €53bn to china, more than the pigs combined. Now germany is bigger and better by quite a way than anyone else, especially france, which has lost the battle central to its whole european policy of maintaining parity with germany. Having built the eu and played its first decades brilliantly, france has long since seen it slip beyond control, the main reason for the 2005 "no" referendum vote. Competition, english and new member states were not made in paris. Whilst brussels was built on the french civil service model, the newer ecb is thoroughly bundesbank. Thus, as the economist said (excellent article), france needs germany now because it's so weak, and germany needs france because it is so strong. Merkozy, despite the fact that they really don't like each other, very much has the wheel of the 17, and by default the 27, even if the new italian premier was ceremoniously invited along to the last "g2" summit. Behind that though, it is clearer than ever that it is germany more than ever that is the new european superpower, finally no longer economic giant but political dwarf. That mantle instead seems to have been inherited by europe itself.

26 november 2011, who killed mark duggan ?

Encyclopedias have been written about the summer's riots (9 august 2011), but less about the event that triggered them - the death of mark duggan. Quick and strong justice was rightly brought to bear on many rioters and looters, but the wheels seem astoundingly slower for what is potentially a much worse crime. 4 months on, no-one has even been arrested, let alone charged, tried or sentenced. It is not outlandish to expect that this could have been a murder inquiry, yet somehow, justice seems to have been postponed pending the work of a rather obscure and lowly-regarded quango (the ippc) that investigates complaints against the police. Yet the ippc may have lost its credibility before it even started its investigation into the death by initially parroting the line that duggan had fired a bullet at a policeman, which it later said was wrong. Without getting into the he said, he said arguments, the ipcc does seem to be rather accident-prone and have the appearance of amateurism, which has led to the build up of a perception of non-seriousness and urgency in their work compared to what may otherwise have been. The ipcc's plea for everyone to await their release of the evidence before rushing to judgement must be respected, but the incongruity of the different time that passes in these circumstances compared to any matter where the police are not involved means that the system just can't be right, and everyone can surely understand the very strong opinion at community level on this. Justice must be done, and be seen to be done, and at the same speed and intensity for all, and that just doesn't seem to be happening.

23 november 2011, angelordevil

As ever, it was quite a sight to see the mall decked out with the pomp of a state visit yesterday, with the turkish president in town, a country I know well from hosting a wonderful group of young lawyers and then in turn being taken around the antechambers of ankara and istanbul, making friendships I still have today (the photo is me with the last turkish president). By the time I was working for europe, accession talks were many years in, but by 2007 they were stalled, mainly over the cyprus issue, and they've now pretty much ground to a halt, even as others like croatia (25 may 2011) are nearing completion. There's a bitter flavour in turkey now, with the desire to join rapidly receding and spilling into a broader narrative about the retreat of the whole eu project, which the last ambassador just called a "spent force". Opposition to Turkish accession was an important part of sarkozy's election campaign, and crystallised broader feelings that "european kinship" didn't cross the bosphorus. I did though, many times, and loved it. I welcome turkey's rise and only hope that if accession isn't going to happen (which is clearly the case) then an accommodation can be found that finds not just begrudging acceptance but wholehearted enthusiasm on both sides, though I'm sure that's many years, many frameworks and many formulations away.

Attached File: turkey1.pdf

Attached File: turkey2.pdf

19 november 2011, nothing left

Once spanish elections tomorrow deliver a strong centre-right government, not one single large european country will have a government of the centre left; indeed of the 27 it's just denmark, cyprus and slovenia (austria's a left-right coalition), just over 2% of the population. And this at a time when it is supposedly the evils of capitalism, free markets gone mad and greedy profit-taking bonus-paying banks that have miserably failed, calling massively on statist support and plunging everything into recession and oblivion. So why have europeans turned so markedly to the traditional centre-right home of capital ? Part of the answer lies in a traditional wave effect, throwing the bums out and seeking change, and part is in sending nixon to china: were the left left to sort out this mess, it would seem like class war, with no hope of consensus. Also though, for all the political cross-dressing, the right at core means less public spending, the left more, and very unhappily voters have proved themselves astute enough to understand that if things are ever going to come right, the next period must be one of belt-tightening. Until the left get this, and adjust accordingly, their continuing retreat to the backbenches of europe is not going to slow.

17 november 2011, he’s back, jack

There are a few characters in my family (goodbye ralph, 15 february 2010), and one is my great uncle jack white, who was I think the second jew to be awarded britain's highest military honour, the victoria cross. He got it at gallipoli, when his boat came under attack, and as the only man not injured, he jumped into the water and, under heavy fire, tied telephone wire to the boat, took it in his teeth, and towed everyone to safety. I mustn't have been going to enough family barmitzvahs lately, as I saw a sign above my cousin's law firm today that led me to this amazing website and the discovery that jack's factory, which he returned from the war to be an apprentice at and went on to manage, is still there, and is in fact back in family ownership and booming. With its ingredients of wonderful style, design, textiles in salford, made in manchester, commerce, culture and narrative, all underpinned by such an amazing story, it's simply overwhelming for me, as it's my own family. I'll be making some calls over the weekend...

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