Archive for décembre, 2010

Attack on Aspiration?

Mercredi, décembre 29th, 2010

Bagehot writing in The Economist magazine of the 18th of December, finds it a shocking failure for a Conservative-led government that, in too many families, its plans for increased tuition fees are seen as an attack on aspiration. The government is said to have been too much on the defensive in the tuition fees debate and should have turned the argument around more and better presented its case that e.g. students will also be more empowered to shop around for the best value for their degree courses. This approach could then link increased tuition fees together with more decentralisation and power to local government, a volunteer-based Big Society and the more autonomous Free Schools, within a single, radical and Conservative concept aimed at limiting what should be expected from the State.
The opportunity is there to win such an argument if one considers the results of an opinion poll by ComRes, taken just after the first student protests in November. Although 70% of the public agreed that higher fees will deter poorer young people from applying to university, the same poll found that 64% of the public agreed that students should share the burden of public sector spending cuts.
Some Conservatives believe that higher tuition fees will empower students because the resulting higher, upfront loans, repayable only after the recipients are earning above a certain level, will in practice encourage students to seek out those courses seeming to offer the best value for money in getting a degree. Such competition for students will in turn force colleges to improve their teaching and offer innovations such as shorter, more intensive courses, courses more tailored to meet the needs of prospective employers, thereby making degrees more accessible not less.
As it is, the Independent School sector is already preparing itself for the impact of increased university tuition fees, which could force middle-income parents to think twice about private education in order to save for the university stage of education. There is concern about competition from top state and grammar schools when children could be withdrawn from private school e.g. at the 6th form stage to cut costs before a degree course. The Education secretary is also planning to allow high-achieving comprehensive and grammar schools to expand, which will in turn create more places for those who might otherwise have gone for private education. Although the independent sector is responding e.g. by freezing school fees for next year, there is concern that Independent Schools will instead become much more the domain of the elite, with middle-income parents hardest hit.
In the case of the poorest would-be university students, Professor Eric Thomas, Vice-Chancellor of Bristol University and the next president of Universities UK, thinks that students from families on the lowest incomes should not pay tuition fees, in order to allow university Vice-Chancellors to charge other students the maximum amount. Therefore, he plans to scrap fees for the poorest students in an effort to widen participation, arguing that applicants from disadvantaged backgrounds do not want to get into debt. Indeed there is evidence from Ivy League universities in the US that the most effective way of increasing social mobility is to excuse those in most need from paying for their own tuition. In the case of Bristol University, the Vice-Chancellor proposes not only waiving tuition fees completely for the poorest students but also covering the cost of maintenance for such students. Professor Thomas also thought it apparent that as higher education was expanded in the past, it would not be possible for the taxpayer to carry all the cost, therefore making it inevitable that fees would have to increase.
The Higher Education White Paper is expected to set out rules governing universities that choose to charge fees above £6000 per year; there will have to be proof that the additional income is being used to increase numbers of students from low-income families.

Green Energy Reforms

Mardi, décembre 21st, 2010

Increased penalties for pollution and generous subsidies for off-shore wind and nuclear power, were included in a set of reforms announced by the government last week, to launch an estimated £200 billion, low-carbon upgrade of the electricity generating industry. Mechanisms proposed include:
• A feed-in tariff
• Guaranteed payment per megawatt for higher-cost technologies (such as off-shore wind & nuclear power), in addition to the wholesale price paid.
• A defined, minimum carbon price for European Union pollution permits.
• Extra payments to power companies for new gas-fired power plants required as back-up during windless periods.
• New emission standards with increased penalties for fossil-fuel generators.
Although these reforms, if passed into law, should speed up the phasing out of coal-fired power and favour nuclear and off-shore power generation, the consumer it seems will have to pay much higher electricity bills which, according to Ofgem the regulator, could increase from the average of £1,100 today up to £2,000 per household by 2020. This is a consequence of the government having signed up to binding international targets for reducing carbon emissions. To achieve these targets, 30% of electricity generated in the UK will have to come from low-carbon sources (currently at only 7%) by 2020.
Critics respond that replacing all coal-fired plants by modern, gas-fired ones would achieve the same pollution reductions by 2020 at around 10% of the cost, with enough supplies of gas to meet demand for at least another 250 years from e.g. new shale gas discoveries, although this alternative approach would have to rely on viable carbon-capture technologies becoming available by then. The new localism bill giving councils greater powers to veto projects in their areas of responsibility and put before parliament last week by Eric Pickles, the local government secretary, could at the same time undermine key planning for regional, electricity generating and distribution infrastructure, by local councils vetoing the construction of unsightly and disrupting, on-shore wind farms.
Following a period of consultation, a decision by the government next March on a minimum carbon price and a white paper covering these proposed green energy reforms to be published in the spring of 2011, the above mechanisms could be in force by 2013.

Tuition Fees Increase

Mardi, décembre 14th, 2010

The violent student demonstrations in London last week protesting against the increase in university tuition fees, appeared to be aimed less at Labour which had commissioned the Lord Browne report on university funding or the Conservatives in the Coalition government which proposed the increases, than at the Liberal Democrats. The problem for the Liberal Democrats is that before the election they had not only promised the many young people who eventually voted for them, to oppose any increase in student fees, but also had even signed a pledge to do so, despite the opposition at the time of their leader Nick Clegg. On the positive side for them, Nick Clegg has shown himself to be a serious politician within the Coalition cabinet by voting for the successful Commons motion to increase tuition fees; however, with Simon Hughes their deputy leader having chosen to abstain and some 50% of their MPs voting against the increase, the Liberal Democrat party has now found itself essentially split three ways by its unfeasible pledge. The party, therefore, is currently rated at only 9% popularity in one opinion poll and, having lost the moral high ground somewhat, finds itself appearing to be no more trustworthy than Labour or the Conservatives, the harsh reality of their participation in a governing Coalition under severe budget constraints.
Despite the vote in favour of increasing tuition fees up to £9000 per year for the most sought after university places, taxpayers including many on relatively low incomes and with no chance of higher education, will still be subsidising these students. The demonstrators should remember, therefore, that to succeed they need not only a just cause but also public support, the latter likely to be at a rather low level after the uncontrolled behaviour of last week and the disruption to ordinary, working taxpayers in the Oxford Street area, blocked by students chanting about their rights and even aggressive towards the heir to the throne and his wife.
Nick Clegg having fielded a lot of the political pressure leading up to the vote, now is the time for the Prime Minister and his government to stand firm in the face of aggressive demonstrations against measures which, although we are told will still favour students from poorer backgrounds, need to be more convincingly communicated. For this segment of the future student population, increased funding for educational support and keeping tuition fees low address only part of the overall problem. Such students can find it difficult to succeed alone with no help or support or motivation from within the family, particularly those families with no previous experience or history of higher education. Schools also cannot do all the work although they can help to foster or not, ambition and aspiration in their pupils to offset somewhat the lack of support at home. There is an additional cultural aspect it seems with e.g. families with Asian origins much more successful in general at getting their children into top universities such as Oxbridge compared with their black or white working-class equivalents, with the secret here said to lie in sheer hard work and application, rather than funding or entitlement.

FIFA & the Prime Minister (PM)

Lundi, décembre 6th, 2010

One wonders what the Prime Minister (and indeed Prince William our future King) had in mind last week in Zurich when fronting the final presentation and last minute lobbying efforts towards FIFA, in an effort to secure hosting for England of the FIFA Football World Cup in 2018. Perhaps he was trying to emulate Tony Blair who, when Prime Minister, was his usual high profile self in the final successful attempt to snatch from the favourite Paris, hosting of the 2012 Olympic Games in London. It could be said that Prince William as Honorary President of the Football Association (FA) had no choice but to be there in what now seems in retrospect to have already been a lost cause (or already decided in the favour of the absent Russian Prime Minister), their efforts having more impact on the media (with David Beckham also up-front) than the key FIFA decision makers who remained unconvinced, despite making suitably polite noises of encouragement.
It is not in the job description of either the PM or Prince William to be commercially astute or masters of the art of successful lobbying and they appear ill-served and tarnished by those responsible for this bid. Certainly earlier allegations of corruption within the opaque decision-making process of FIFA carried by the Sunday Times and the BBC Panorama television programme, will not have helped but they do not explain why England only secured 2 votes out of 22 delegates and were, therefore, eliminated in the first round of votes cast. Rather it would appear that the England bid team had very few sources of effective influence and feedback on their relative chances of success due to the very limited representation by the FA within the FIFA organisation. FIFA had certainly acknowledged previously that the England bid was the safe option, given that all the stadiums were already built, matches would be well attended, football could save disaffected youths in our inner cities and the sale of the overall television rights would be guaranteed money spinners. However, other European bids were not that dissimilar (apart from that of Russia it appears) with Spain for example having not only bigger stadiums available but also better weather and food, when FIFA were looking for something more. It wasn’t then sufficient to have offered what is said by England to have been the best technical bid.
The final decision in favour of Russia, however it was arrived at, also has merit. This will be the first time that Russia, a major European power and football nation, will host the FIFA World Cup. Of course a significant number of new stadiums will have to be built as in South Africa for the last World Cup. However, these can be easily financed by the revenues from the major Russian oil and gas resources and will expand the influence of international football and open up a vast, remote continent to the outside world, still only some 20 years after the collapse of the old Soviet Union.
Having thrown his weight behind the England bid shortly after becoming Prime Minister, David Cameron had put himself into what now appears to have become a no-win situation. Whatever he might have been advised on the relative England chances of success, not to have gone would have left him open to the criticism that, in the final effort when top political support might have been critical to secure success, he was not there. However, in the harsh commercial world, the top politician (and/or royal) is normally only seen at the final signature stage of such high profile negotiations, to provide not only the important prestige and media interest in the event for the customer but also benefit to the politician, particularly when jobs back home will be created as a result of the business secured. Hence, Mr Putin the Russian Prime Minister arrived only after the final decision had been announced by FIFA in favour of Russia.

Slow Recovery (OBR)

Mercredi, décembre 1st, 2010

The Office for Budget Responsibility (OBR) formed in May, 2010 to provide an independent assessment of the public finances and the economy for each Budget & Pre-Budget Report, has increased its growth forecast for 2010 from 1.2% to 1.8% of GDP but cut its forecast for 2011 from 2.3% down to 2.1% and the estimate for 2012 down from 2.8% to 2.6%. The stronger growth in the middle of 2010 is attributed to temporary factors such as unsustainable activity in construction and companies rebuilding stocks. The recovery then would be the weakest for any downturn in the UK since World War II, taking a projected four (instead of the three of the two previous recessions) years overall.
On the more positive side, the OBR reduced its forecast of 490,000 job cuts in the public sector, down to an estimated 330,000 job losses with private sector job creation likely to offset these public sector losses over the next few years. The OBR also said that the Coalition government had a greater than 50% chance of achieving its deficit reduction goals. It added that it would be unprecedented in the post-war period for economic growth to not exceed 3% of GDP in a calendar year over the recovery phase of the economic cycle and warned of the considerable uncertainty around its main forecasts, particularly on levels of government spending and revenue. Overall, the deficit at 10.0% of GDP in 2010 is seen as falling to 1.9% in 2014-2015.
George Osborne the Chancellor in his own autumn report to the Commons, seized on the projected fall in public sector job losses as justifying his cuts to the Welfare Benefits System, which in turn had made more budget money available for other government departments to protect jobs. The Labour opposition, however, criticised the OBR for being too optimistic in its forecasts, although these would appear to be in line with the expectations of the financial markets. The pick-up in tax revenue from the increased growth in 2010 has still to come through and, in the key export markets of the Euro-zone, growth is continuing at the core.
That said, last week George Osborne put aside his much-advertised white paper on growth (with the associated prospects for job creation) and there remains the need for a narrative on economic recovery for those facing austerity. Otherwise, the view of the Institute for Fiscal Studies that the poorest are bearing more than their fair share of the cuts programme, will only add credibility to the accusation made by opposition Labour leader Ed. Milliband that the government is reducing economic policy to deficit reduction. The Social Market Foundation Think Tank also sees it as inevitable that the costs for the new Universal Credit System for Welfare Benefits, will end up as being much higher than many now expect and significantly outweighing the savings after 2014/15 when the system is fully up and running, with its associated universality and simplicity much less impressive than billed.