Archive for the ‘Politics’ Category

dr richard beeching, british railways board, reshaping of british railways, railway line closures

Dr Richard Beeching, former ICI director and first Chairman of the British Railways Board, holding his 1963 report The Reshaping of British Railways. Beeching had not been asked to look into the social and economic value of the railways, but to find the means to make the railways pay.

In March 1963, a report The Reshaping of British Railways written by Dr Richard Beeching, Chairman of British Rail, was published by the then British Railways Board. The report identified 2,363 stations and 5,000 miles (8,000 km) of railway line for closure, that is 55% of stations and 30% of route miles, with the objective of stemming the large losses being incurred during a period of increasing competition from road transport.

This was at a time when roads and cars were the future; rails and trains were the past. And it didn’t help that the Transport Minister in the Tory administration at the time, who had opened the first section of the M1 motorway in November 1959, and who appointed Beeching, was Ernest Marples. Marples was a businessman with rather too many fingers in an ever-meatier road construction pie, being previously managing director of the road construction firm Marples Ridgway. By the bye, even though his department was awarding road building contracts to his ‘old’ firm, he still held shares in the company until he was forced to sell them, but he sold them, in secret, to his wife. His political career came to a bizarre end in 1975 when pursued by the taxman, Marples did a flit to Monaco by the Night Ferry owing the Inland Revenue £10 million.

The cuts in the network were driven by a mistaken hypothesis: that cutting the network sufficiently would yield a ‘profitable railway’. But British Railways had little real information as to where its costs were actually being incurred; a large share of which were interest charges and a sizeable bureaucracy. Further, the branch lines that were closed had been feeder routes for the remaining main lines, and traffic on these lines fell disastrously. In the four years following the Beeching report, the route mileage of the railways fell from 14,000, to 11,000 in 1967 (though since 1950 about 3,100 miles had already been closed), but the cuts failed to achieve their objective, and BR’s losses continued to increase.

british railway network, dr richard beeching, railway line closures

This is what the BR network would have looked like by the 1980s, had a second phase of Beeching’s closures gone ahead. The faint lines are major through routes that would have closed. Creative Commons Licence/Cronholm144

Fresh thinking was urgently needed: how do you put the UK’s road and rail infrastructure on an equal financial footing and get long distance heavy freight traffic off the roads? However there was an anti-railway and pro-road culture amongst senior civil servants in the Department of Transport, which was headed by David Serpell, the Permanent Secretary. Reducing the costs of the railways by further cuts to the railway network were seen as the only answer. It was Serpell who much later in 1983 was to write an infamous report on railway finances for Margaret Thatcher, which included an infamous Option A, which would have cut the railway network to a mere 1,630 miles.

In 1968, Dr Stewart Joy, an Australian economist, was recruited to advise Barbara Castle, the Transport Minister in the Labour administration, on implementing a pro-rail policy of subsidising unprofitable railway lines. The Cambrian Coast Line which ran from Machynlleth in mid-Wales to Pwllheli in the north, and which had survived the Beeching cuts, had been selected as the first line to be looked at in a cost-benefit study of these unprofitable lines.

This is where Reginald Dawson, who in 1960 had been appointed a principal civil servant in the Ministry of Transport at the age of 38, comes into the story.

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What does Hoy No Circula in Mexico and Cane Toads in Australia have in common? The law of unintended consequences. This says that the actions of people – and especially of government – often have effects that are unanticipated or not intended. Unintended consequences are usually seen as being negative such as when an intended solution perversely makes a problem worse, or when although the solution produces the desired result, there are also detrimental side effects. However they can have a positive, unexpected benefit, and because of this they are often seen as the result of luck or serendipity.

murphy's law, train wreck, montparnasse, paris, france

An extreme case of Murphy’s Law. In 1895, an express train overran a buffer stop in Montparnasse Station in Paris, France due to a faulty brake. It careened across the station concourse, crashed through a thick wall, shot across a terrace and plummeted onto the Place de Rennes below.

Unfortunately although the law of unintended consequences should be seen as a warning to tread carefully when it comes to intervening in complex issues, politicians and popular opinion often don’t seem to learn this. The adage that ‘anything that can go wrong, will go wrong’, known as Murphy’s law, should remind us against believing that we can fully control events.

What are the causes of harmful unintended consequences? They have been categorised: perverse incentives, human stupidity, self-deception, incorrect analysis of a problem, immediacy of interest (ie. someone wants the intended consequence of an action so much that they purposefully choose to ignore any unintended effects), failure to account for human nature, and the world’s inherent complexity.

Economics

The French economic journalist Frédéric Bastiat understood the fact of unintended consequences when he wrote in 1850:

“There is only one difference between a bad economist and a good one: the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen.”

But even with foresight, economics seems beset with unintended consequences. Raise taxes, and more will find ways to avoid it. Guarantee bail outs and banks will take more risks (this is called a moral hazard). Reduce taxes for fuel-efficient cars and there will be slide in tax revenue as more cars will be made that use less fuel. Is this why it is said that if you ask five economists the same question you will get five different answers?

Examples of unintended consequences are found in every sphere of human endeavour. Here are some of them. 

Social Behaviour

In 1830, Wellington’s government passed the Beerhouse Act, which abolished the beer tax and allowed any ratepayer to sell beer on payment of an annual fee of two guineas (£2.05). The idea was to encourage the drinking of beer, and stimulate the depressed and potentially subversive agricultural sector, at the expense of spirits, most commonly associated with excessive consumption in the disreputable ‘gin palaces’. However beer house numbers exploded with more than 33,000 vendors having paid their two guineas by 1832. Sometimes called ‘Tom and Jerry’ shops or ‘tiddlywinks’, they sprang up in alleyways and cellars and were impossible to police. Many beerhouses became the haunt of criminals, prostitutes and some even became brothels. It was only with the Wine and Beer House Act of 1869 that the law was changed to bring licensing back under the control of the local justices.

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PointofViewIs competition always a pre-requisite for efficient and economic delivery, or is it sometimes just a blind dogma?

In the UK we have a mixed economy with both public and private services. Currently, most if not all retail outlets are in private hands as are most industrial and financial services. Alongside these we have a range of public services funded from taxation which are provided to us, arguably designed to enable us to live a decent and productive life, such as the National Health Service, education, highways, waste collection and disposal, plus personal care services.

Since the 1980s this convenient distinction between public and private has become blurred by a process of privatising public services. Today, for example we have the utility services of energy (gas and electricity) and water provided by private companies. In recognition that such services still have a significant economic and social impact, government has created public regulators to oversee the operation of these utility companies. These are essentially there to protect the ‘public interest’.

There has been a growing pressure since these privatisations to diminish the power of the regulators in favour of introducing more competition within the utility markets. The argument has been made that where competition can take root then the inherent trading practices will progressively make those services more efficient and the retail prices would fall as a result. Thus the regulators would not be needed.

Clearly where competition can be seen to flourish such as in food, clothes and cars, the consumer is faced with a huge range of options to consider. They stretch from cheap budget goods and services to luxury brands that spare little in the craftsmanship and quality of the materials used. Retailers also compete on price for the same branded goods in search for a customer. Therefore the consumer is able to exercise a rational choice, not just of the supplier but also on price and more importantly, for example, of the model of car, the colour and cut of a shirt, or the type of cereals to eat for breakfast.

margaret thatcher, privatisation, britain, electricity, edf, big six, shareholder, france, state-owned

Margaret Thatcher spoke of privatisation giving ‘power back to the people’ and freeing British enterprise to lead the world. Now in 2013, small shareholders have no influence, and EDF, one of the ‘big six’ UK energy suppliers, and owner of a large portfolio of our power stations, is a French state-owned company.

When the utility services were privatised, the previous publicly owned national utilities were broken up into a number of independent companies. In both the gas and electricity utilities, retail companies were set up to compete with each other for customers. The government deliberately engineered this arrangement in the belief that competition would work its magic and customers would benefit from cheaper energy and could choose which supplier they wanted largely based on price. (Currently the UK market is dominated by six energy providers). Government has also encouraged the creation of ‘swapping’ websites that make it easier for customers to seek out an apparently better deal and to swap from their existing supplier to a new one.

Most consumers today see this artificially created energy market as dysfunctional and not operating in the public interest. Competition has not worked and most consumers have little faith in the swapping process to help them find a cheaper energy provider. Why is this?

gas, supplier, distribution network, britain, wholesale price, demand and supply

All UK gas suppliers use this same distribution network, and the wholesale price of gas is determined by global supply and demand. And the gas that comes out the pipe, is the same for all.

This is a classic case of the ’emperor has no clothes’, especially if you are an industry insider where your thoughts are ruled by what I would describe as some kind of internal fantasy. Take energy as an example. From the consumer’s point of view the product is exactly the same no matter who the supplier is. As there is only one distribution infrastructure, every supplier has to use it to deliver the energy to your home or business, and most suppliers also use the same energy generators to source their product. Similarly from the provider’s viewpoint, in addition to being dependent on the same infrastructure they also face the same cost pressures. The price of wholesale fuel is fixed by international mechanisms which impact on all domestic generators equally.

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You may know that the First Republic in France resulted from the French Revolution. But France has had five republics. And there were two empires and four revolutions. Why so many? Here is a brief guide, with some events omitted.

A republic is a political order whose head of state is not a monarch, a monarch being an absolute or ceremonial head of a state government: a king or queen, a prince or princess, an emperor or empress. It also describes a state in which power lies in the body of citizens who are entitled to vote for representatives responsible to them.

First Republic (1792-1804)

france, french revolution, national convention, robespierre, reign of terror

The National Convention. The Convention created the Committee of Public Safety to maintain public order and Maximilien Robespierre became its leader, effectively controlling France. During the Reign of Terror that followed, over 40,000 ‘enemies of the revolution’ were executed, until Robespierre’s own execution in July 1974.

The First Republic was proclaimed on 21 September 1792 by the newly established National Convention. This was in the third year of the ten years of the French Revolution which had started in 1789. The Revolution overthrew the Ancien Régime, the monarchic dynasties that had ruled France since the 15th century up until the last Bourbon king,  Louis XVI (‘L’état, c’est moi’ – I am the state).

By the late 1780s, France was in desperate financial trouble and Louis XVI, who believed he ruled by divine right, brought together the Estates General to try to solve France’s problems. The Estates-General, which met only rarely, was made up of assemblies of the First Estate, the clergy, the Second Estate, the nobility, and the Third Estate, the commoners, though in practice they represented the bourgeoisie. However many members of the Third Estate (who were to call themselves the Communes or Commons), met on their own and demanded a new constitution. The communes re-formed themselves into a National Assembly on 17 June 1789. Events followed quickly.

First the Tennis Court Oath (link) on 20 June, when all but one of the assembly believing themselves to be locked out of the meeting of the Estates-General, pledged not to separate until a new constitution was agreed. This was the first time that French citizens had formally stood in opposition to the king. When King Louis XVI refused the Assembly’s request to remove troops from Paris, public outrage precipitated the storming of the Bastille (which was seen as a symbol of the abuses of the monarchy) on 14 July, marking the beginning of the Revolution. The draft Declaration of the Rights of Man and of the Citizen followed in August.

‘The aim of every political association is the preservation of the natural and imprescriptible rights of man. These rights are liberty, property, security and resistance to oppression’ – National Assembly

The epic march to the Palace of Versailles in October by women protesting over the high price and scarcity of bread, forced the king and his family to return to Paris, effectively ending the independent authority of the king. The assembly, which had reconstituted itself as the National Constituent Assembly, became the effective government of France, and King Louis XVI was forced to recognise its authority.

The First Republic saw the execution of King Louis XVI in January 1793 (‘Louis must die that the country may live‘ – Robespierre), and the infamous Reign of Terror (link) from September 1793 to July 1794, the period of violence incited by conflict between rival revolutionary political factions.

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It’s a company that supplies equipment to 45 of the world’s 50 largest telecoms operators and ships its products to 140 countries. It has 140,000 employees worldwide, and it has research and development centres in 20 countries including the United States, Russia, Germany, the United Kingdom, and India. It’s turnover in 2012 was 220 billion yuan (roughly £22bn) and it’s profits were 15 billion yuan (roughly £1.5bn). In 2008, it was the largest applicant for patents in the world, and by 2011, it had filed 49,000 patents globally and had been granted 17,765.

huawei, headquarters, reading

Huawei’s new UK headquarters at 300 South Oak Way, Green Park, Reading

In the UK, it has 15 offices and 690 employees, with new headquarters in Green Park, Reading in Berkshire. Its customers include BT, Everything Everywhere, Sky, O2, Orange, TalkTalk, and Virgin Media. In September 2012, it announced that it was investing £1.3bn in expanding its UK operations in reply to which Prime Minister David Cameron said the investment demonstrated that the UK is ‘open for business’.

huawei, telecommunication

Huawei, the world’s largest telecommunications equipment manufacturer, which signed a £10bn deal with BT in 2005

You may not see its logo plastered over handsets, but its products and services support the infrastructure of the world’s best-known mobile phone service providers through which phone calls and data flow around the world. It is the largest telecommunications equipment manufacturer in the world, having overtaken Ericsson in 2012.

It is the world’s biggest company that most people in the West have never heard of, and its headquarters is in Shenzhen, Guangdong in China. But Huawei (pronounced WAH-way) is at the centre of a debate about cyber security, and about how far western countries are willing to engage with the Chinese company.

The US Congress has done its best to keep Huawei out of the US infrastructure, the House Intelligence Committee describing it as a threat to ‘core national security interests’. In 2012, Huawei, along with ZTE (another telecommunications equipment supplier based in China, and the world’s 4th largest mobile phone manufacturer) faced allegations that some of their equipment had been installed with codes to relay sensitive information back to China. The US’s attitude though may mask the real reasons for their concern. They know from their own experience how imported electronics can be turned into a weapon of espionage and sabotage by the supplier, one notable example being their creation of the Stuxnet worm that was used to damage the Iranian nuclear research program. In any case this official hand-wringing neglects the fact that most electronic components, with the exception of certain high-grade chips, are manufactured in China.

However in the UK back in 2005, BT after consulting the government signed a deal worth £10 billion to purchase Huawei equipment as part of an infrastructure upgrade, a deal that saved the British company millions of pounds. Checks were put in place by BT and government to make sure there was no risk that the Chinese company would act on behalf of the Chinese state by installing back-doors. But in June this year, the House of Commons Intelligence and Security Committee in their report Foreign Involvement in the Critical National Infrastructure said it was ‘shocked that officials chose not to inform, let alone consult, ministers’ about BT’s use of Huawei equipment until a year after the contract had been signed, a deal in which security issues ‘risked being overlooked’. It also said that the self-policing arrangements by Huawei were ‘highly unlikely to provide the required levels of security assurance’.

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david attenborough, naturalist, overpopulation

Sir David Attenborough, Naturalist (b1926)
‘The human population can no longer be allowed to grow in the same old uncontrolled way. If we do not take charge of our population size, then nature will do it for us.’

Governments seem unable or unwilling to face up to the alarming consequences of an ever-increasing world population – projected by the United Nations to increase from 7.2 billion today to 9.6 million by 2050 (source) – and ever-increasing consumption. Climate change due to the burning of fossil fuels; water and food shortages; the destruction of forests, species extinction and loss of biodiversity; competition for dwindling mineral resources, as well as the inevitability of increasing human conflict. Is this because voters in developed  (democratic) countries usually vote their governments in or out on the basis of whether they are able to deliver economic growth. Growth that has to be achieved at almost any price, and which at present relies on the exploitation of unsustainable resources?

So what chance is there that the governments of developing countries, with 5.9 billion people who like us will want cars and will want to fly to distant places, what chance is there that their governments will be able to act differently? For us as individuals, is it a case of out of sight out of mind? Are we expecting that technology will come to the rescue, that something will turn up?

This brings to mind the oft-quoted lines:

Who is in charge of the clattering train?
The axles creak, and the couplings strain.
For the pace is hot, and the points are near,
And Sleep hath deadened the driver’s ear:
And signals flash through the night in vain.
Death is in charge of the clattering train!

winston churchill, gathering storm, second world war, house of commons, nazi

The Gathering Storm, the first of six volumes by Winston Churchill on The Second World War in which he recalls warning the House of Commons in 1935, to little avail, of the growing threat from Nazi Germany

This short poem was quoted by Winston Churchill in the first volume, The Gathering Storm, published in 1948, of his six-volume history, The Second World War. On page 110, he recalls a debate in the House of Commons on 19 March 1935 on the air estimates (ie. money to pay for the production of aircraft) when as a back bencher he challenged the government’s assurances that the budget was adequate to meet the growing threat from Nazi Germany, who had reached parity with Britain in the number of aircraft. He wrote ‘Although the House listened to me with close attention, I felt a sensation of despair. To be so entirely convinced and vindicated in a matter of life and death to one’s country, and not to be able to make Parliament and the nation heed the warning … was an experience most painful’.

Reflecting on the debate, he said ‘there lay in my memory at this time some lines from an unknown author about a railway accident, I had learnt from a volume of Punch cartoons which I used to pore over when I was eight or nine years old at school at Brighton’. He then quotes the lines above, and ends ‘However, I did not repeat them’. In this clip from the 2002 TV film, The Gathering Storm, which stars Albert Finney as Churchill, and Vanessa Redgrave as Clemmie, his wife, Churchill angrily quotes the lines following his warnings being ignored by the government.

The poem was in fact taken from a much longer poem titled Death and His Brother Sleep which appeared in Volume 99 of Punch magazine published on 4 October 1890 and which was attributed to ‘Queen Mab’. The poem was written by Edwin James Milliken (1839 -1897) who, as well as being a poet, was an editor of Punch, a journalist and satirical humorist. The shorter poem is made up of the first two lines and last four lines of Death and His Brother Sleep, but how Churchill came to use only these lines is not known, though they do have a dramatic effect.

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PointofViewHe who neglects what is done for what ought to be done sooner effects his ruin than his preservation.’  Machiavelli – The Prince – 1532

In response to the demands of the Scottish Parliament (controlled by the majority Scottish Nationalist Party) the UK Government has agreed to hold a referendum in Scotland on the question of Scotland’s independence from the UK. This is due to be held in 2014. Already the ‘NO’ camp and the ‘YES’ camp have been set up fronted by prominent politicians and personalities to campaign for their case in the lead up to the vote in 2014.

Map of the United Kingdom of Great Britain & Northern Ireland

Map of the United Kingdom of Great Britain & Northern Ireland

However, the debate around Scottish independence has been increasingly bothering me. It’s not that I have strong feelings either way about Scottish independence but it’s the way we’re going about it that bugs me.

Whether we live in England, Scotland, Wales or Northern Ireland, we are all citizens of the United Kingdom, our nation state. As such we all elect our members of parliament from local constituencies throughout the UK and we all travel with UK passports when we venture beyond our island shores. We know that the UK is made up of four distinct nations, three of which have devolved government with their own parliament or assemblies composed of their own elected members, with the exception of England which kind of gets by without any of these legislatures.

Flag of Scotland, also known as the Saltire or the St Andrew's Cross

This road sign on the A1 road near Lamberton marks the border between England and Scotland. The sign’s design comes from the Flag of Scotland or the Saltire, a diagonal white cross on a blue background. The saltire stems from Parliament of Scotland having decreed in 1385 that Scottish soldiers shall wear a white Saint Andrew’s Cross on their person.

This network of governance seems to me to be at least some kind of bond that unites us all as part of the UK. Now I could mention the Crown and the Royal family but really that’s an entirely separate issue of interest and, for me, great concern and I shall leave that for another time.The point that troubles me here is that while I can accept the people of one or more of our existing nations can decide that they would like to break away from the UK and become independent, it surely doesn’t stop there. Don’t we all have a right to have a say on the continuing status and perhaps existence of the UK? Don’t we all have a stake in the sanctity of our nation state?

In my mind there should be a clear process to follow that respects the views of all UK citizens, or at least the majority of them. Simply speaking such a process would look something like this.

Stage 1.  The people of an existing nation and their elected representatives campaign for and get a majority in favour of independence.

Stage 2. A ballot is held of all peoples in the nation concerned to test the degree of support for independence.   If a majority votes in favour then,

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