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Friday, 9 June 2017

By some miracle the electorate got a whiff of Theresa May's biggest secret

The biggest lie in 21st century politics is unravelling, and the lie is that Britain can negotiate a form of brexit that satisfies the Tory right whilst not hugely damaging the British economy.
By some quirk of fate the electorate saw through Theresa May's refusal to lay out her Brexit plan or debate in any meaningful form (on any topic) as perhaps indicative that she doesn't have one; at least a plan that bears public scrutiny.

Or maybe it wasn't a quirk of fate but a natural electoral outcome for a democracy that, despite all its flaws, has evolved over centuries to maintain the balance between the people and their government.

And the people want to see what they're voting for.

The lie is simple. So simple in fact that once you see it you will cringe at being misled. It is embarrassingly simple.

The lie is that a comprehensive deal on withdrawal from the EU that gives Britain any meaningful control over its borders and emancipates it from EU law and the ECJ is somehow possible within the 2-year negotiation limit; at least without unleashing an abrupt disjunct in the economy that will cause untold damage and cost the country many billions in lost growth.

It's simply not possible.

There's only three ways brexit can pan out:
 - UK remains a member of the single market (e.g. EEA or so-called Norway model)
 - UK strikes a comprehensive free trade deal
 - UK leaves the single market and frictionless trade becomes a thing of the past.

The first option requires freedom of movement, but that's not acceptable for a Conservative party that has consistently campaigned on the convenient scapegoat of immigration, immigration, immigration.

It also requires conforming to much of EU law and signing up to the ECJ - something else Tory brexiteers are adamant can't happen.

The second requires time - far more than the 20 months or so we have left. Why so long? Because it needs to deal with everything, from the free movement of truck drivers and transport workers (whilst 'defending our borders'), agriculture, fisheries, financial services, telecommunications, science and engineering joint research, etc.

We've already seen how some areas can be politically sensitive, like the Irish border. It's not possible to have free movement between part of one country (Northern Ireland) into part of the EU (Ireland) whilst restricting movement from Bulgaria to England via Dublin and Belfast without introducing some form of border check on at least one of the borders Northern Ireland shares with either Ireland or the rest of the UK.

It's also not ideal to have free trade between part of the UK and Ireland due to the practicalities preventing those goods then finding their way into Europe, as Irish companies can trade freely with all other EU countries.

It would take way more than 2 years to deal with the basics, and that's without considering the wanton vandalism vindictive brexiteers attempted to inflict by insisting the UK leaves other shared regulatory bodies such as Euratom, EMA, EASA, EMSA, ECA, EUROPOL, EFSA, etc...

Yes we could do all this alone, but it will take time - and effort - at a time we're focused on striking a deal for the basics. What can be gained by creating a new UK medicines regulator?

Plus, if the aim is a comprehensive free trade agreement with Europe, then the UK's regulators will be required to meet similar standards to the EU's own so that UK suppliers are not unfairly advantaged in the market. So why leave these EU bodies in the first place, other than for ideological reasons crafted by isolationists who believe that somehow our nation is stronger alone?

So the second option can only be achieved quickly if the EU bows to all our demands. And why would they do that? They wouldn't - because it's not in their interests.

And so I am absolutely convinced that such a trade deal cannot be achieved in 2 years.

Which leaves only the third option, and with highly integrated economies this will suddenly affect nearly every aspect of business in the UK.

Not just the well-publicised areas like financial services but manufacturing, where the supply chain for all but the most simple products tends to sprawl across Europe. UK firms would be left to pay import duty on components manufactured in the EU for products assembled in the UK, and then see tariffs applied on the finished product whenever it is sold back into the EU.

It's simply not a viable option and will wreck our economy for years. This is why the pound crashed when the UK voted for brexit - the risk of untold economic damage through the "no deal" scenario.

The only viable path open to the UK to deliver brexit will require a period of transition long enough to agree a comprehensive free trade deal that the country needs to survive economically.

Forget the jolly japes of Boris about how the UK's thirst for Prosecco combined with the Indian market for Scotch whisky will save us. This is a smokescreen.

We are being sold a fantasy and it's only now, a year on from the referendum, that we're starting to see that fantasy unravel.

Theresa May hoped to have such a thumping majority that she could hide the truth from us until it was too late to do anything about it. "No deal is better than a bad deal".

No, it's not. No deal is terrible - especially given the worst deal currently on the table is pretty much carry on as we are.

We could reverse article 50 if it came to it, although politically that seems pretty much impossible right now, and so the UK will be dependent upon a transitional period and that transition will look very much like the EEA/Norway model.

We don't have a trump card, we can't twist the EU's arm into agreeing to our demands and so we will be forced to accept on a transitional basis: freedom of movement, jurisdiction of the ECJ along with the majority of European law and most probably be required to remain a signatory of the European Convention on (and Court of) Human Rights.

This is the truth that hardcore brexiteers within the Tory party refuse to accept and ministers have been running scared of. This is why the PM set out to gain a 'mandate' for whatever she had to do, without telling us what had to be done.

The truth is that brexit will necessarily be a long process that cannot possibly deliver all that we were promised during the referendum campaign.


Tuesday, 28 June 2016

The compromise option that would make everyone but UKIP happier.. And the EU would be elated

After 4 torrid days I woke up today happier about the whole Brexit situation.

The widely forecast current political and impending economic crisis in the UK was dismissed by a despicable band of most unlikely bedfellows as, if not part of Project Fear, a necessary part of the pain of decoupling from the EU.

Until this morning I had widely discounted the EEA option (as advocated by the Adam Smith Institute, amongst others) as untenable.

The Leavers wouldn't accept retaining nearly all EU law and borderless travel, because sovereignty and immigration was a key plank of their campaign.

And the EU certainly won't be budging on much during exit negotiations, I'm pretty sure of that. Why should they? EU will have a combined GDP of about 7 times the UK (with the UK outside the EU).

We become a mouse negotiating with a lion over shared grazing rights.

Parliamentarians lined up yesterday to stress they will respect the will of the people in this referendum... And that's when it struck me.

What is the will of the 51.9% who voted for Brexit? What are they expecting?

Many might be expecting new hospitals opening all over the country with a £350m-a-week boost to the NHS coffers. Reading the news of xenophobic 'out now' messages others were certainly expecting Poles, Lithuanians and other Eastern Europeans to be sent home.

Only an extreme twist to the current political saga playing out in Westminster would lead to any of these expectations being met, and I'm hopeful and fairly confident the racists won't win the day here.

The mandate from the referendum is for the question asked on the paper: should we leave the EU?

And whilst some would claim taking full EEA membership is splitting hairs, others could rightly claim that a voter, having adequately researched the options, had concluded that should we leave the EU then EEA membership would be a good bet.

Others would point out that 48.1% of the population voted for full EU membership; so the mandate, whilst clear in terms of the question asked, was far from clear when it comes to how far we should distance ourselves from the EU.

No one happy

As a Remainer EEA membership would be a crying shame.  We would throw away a seat at the top table of EU politics for a delusion that the EU somehow stole our sovereignty.

This is madness. It is the language of the oppressed, yet the EU didn't enslave us as a nation. It invited us in to their club and said we could leave at any time - the door was always open.

All the talk of Independence Day is quite frankly utter bullshit.

Leavers won't be happy as the avalanche of European Law won't cease - it will be a condition of access to the EEA market. And interference of the European courts will shift from the European Court of Justice (ECJ) to the EFTA Court, which to quote Wikipedia:
The EFTA Court has essentially been modeled on the template of the European Court of Justice
And UKIP won't be happy as they will have effectively funded Boris Johnson's coup against David Cameron and have little if anything to show for their efforts.

Life is a compromise

But faced with the breakup of the United Kingdom I'd bed even Eurosceptic Tories, having been dangled by the knackers over the chasm of social upheaval and economic ruin, would get in line behind such a compromise.

Above all it gives Government and Parliament an 'out'. It allows them to meet their commitment to respect the will of the people, stabilise the markets and start to calm the disquiet in parts of the UK voting strongly to Remain.

The people voted to leave the EU and we will leave the EU.

Anyone arguing this is a fudge would be met with the same response the Leavers have been dishing out to those arguing for a second referendum: You can't change the rules after the ballot'.

The ballot was clear - the mandate was to leave the European Union - which we will now almost certainly do. Because to undo the result by a Parliamentary procedure would risk bloodshed, and to go to the polls with a second referendum would be too risky.

Ever close union

And the silver lining here, for Europe, and for the UK in some respects, is that the Eurozone countries have been pushing for a closer union-within-the-union for a long time.

Some common fiscal policy would make sense for countries sharing a currency. Pooled armed forces is less contentious amongst central European countries as it is within the UK.

Ironically it has been the UK blocking such moves until now. We didn't want to be a second-tier member of the EU but we didn't want ever closer union.

I'll bet the UK out of the EU solves more problems for the European Union that they're currently letting on. Which is possibly why EU officials seem over-zealous for us to push the button.

We must stand firm till we get the deal we want, because they want us out as much as we want a good trading package.

Which is why I'm now confident we'll get an acceptable deal to join the EEA. Nothing too fancy, just enough to make everyone (bar the racists)... Happier.

And, as this ever-closer union becomes a reality for those left in the EU, even the UKIPpers may start to look on the bright side.


Monday, 27 June 2016

Labour's struggle with Corbyn's mandate is a reminder of the limits on any democratic process

Jeremy Corbyn was elected with a massive mandate in a full vote of Labour members last year.

Yet Labour members last Autumn could only pass a qualified verdict on who should lead their party - qualified because Corbyn was only one of four names on the ballot paper.

They voted for who they believed to be the best option on the paper.

Furthermore a vote is based on the facts known at the time. Yet it's not until someone takes up the reigns that we find out how well they can drive; that we find out the full facts about their ability to lead.

If it should transpire, as seems to be the case, that Corbyn is not functioning well as a leader then this new information is a material change in circumstances that may warrant a further leadership election.

The claim that to oust Jeremy would be an undemocratic move by Labour MPs is blinkered, especially if new candidates not on the paper last August step forwards.

Extending this to the situation regarding a possible second EU referendum, there is no basis to claim any material change since last Thursday.

The electorate was warned about most of what we're seeing now as the fallout continues, and the fact a majority of voters chose to dismiss these warnings is a simple failure of the Remain team to articulate how deeply the EU relationship is woven into our economy, our society and the stability of the union of the United Kingdom.

Remain ran a weak campaign, and lost.

However...  Should Team Brexit now struggle to implement what they promised - a prosperous UK outside the EU - then that surely is a valid democratic reason to return to the population with a second referendum.

It's not a "best of three"; this scenario, where the Leave team fail to deliver on their promises, would represent a failure of leadership.

It would also represent a material change in outlook for the country because, by then, it wouldn't be Project Fear saying this can't be done; it would be their own campaign team admitting that some of the promises made were not actually achievable.

Whilst consequences of Brexit were easy for some to foresee it was a highly subjective assessment that 51.9% of the country didn't share at the time.

Quite simply the consequences were impossible to forecast with accuracy, but once they are firmly established it would be entirely democratic at this point to go back to the people and ask them, "are you sure this is what you want?"


Saturday, 25 June 2016

Finding the way forwards will mean understanding why we're here

Well, what can I say. I wasn't 100% supportive of the EU but that doesn't mean I wasn't anything other than 100% behind our membership and 0% behind Brexit, and nothing has changed in my thinking.

A rational analysis of the alternatives clearly showed, and still does show, the EU is our best option forwards. Not a half-baked "Norway Model" or anything else but full membership.

I see the choice is between 2 imperfect alternatives but that doesn't mean I'm in any way less upset about the result. I think we've set ourselves on a ridiculous path to economic hardship and social upheaval and I'm both devastated and deeply worried about our country's future.

I fear the wounds opened by the first referendum will be hard to close with a second, a petition for which must surely reach 3-6 million signatures by the start of the week... I signed it anyway - and I don't want these to be famous last words - but it can't hurt to try.

The fundamental mistake of Cameron and Osborne was to polarise opinion around a problem rather than a solution - particularly at a time when there are a lot of people in the country who don't feel particularly well off, people who feel their social mobility level is positively in reverse.

Amongst this large dissatisfied underbelly those unwilling to pin the blame on any passing immigrant are nevertheless willing to believe vastly inflated sums of money we'd "save" from leaving the EU would be spent on fixing their and their country's problems.

When people who currently have very little are offered a choice to remain as your are or try something different they are going to vote for change.

Yet, having said all this, maybe a second referendum now we're all facing the abyss is actually the way forwards.

Few amongst the electorate can see into the future with enough clarity to realise many of the claims of Project Fear were well founded. Many wanted to push the button out of frustration, to see what would happen.

The shock of the last 36 hours represents a material change in the outlook and things are clearer now for many I'm sure.

If a second referendum managed to pull above 60% of the population behind Remain it might just be enough to close the box, but to get there I'm convinced there'll need to be something material on offer for the large number of people trapped in a society where the rich have got richer, the poor have got poorer and social mobility has been taken back five decades.

And that would mean politicians in the UK and the EU waking up to something they have until now been reluctant to acknowledge.

As a little glimmer, one thing is different this time.

The powerful corporate institutions of the country who have the ear of Government and Parliament are overwhelmingly in favour of EU membership.

The City of London is facing a second shockwave now questions have been raised about its privileged access to European markets for financial services have been raised and a corporate merger between the London Stock Exchange and its German counterpart has been thrown into doubt by the upcoming Brexit.

Oh, and the UK has had its credit rating cut.

If the Government and Parliament get it in time, and the EU is willing, they might just find an 11th hour deal that will bring the country back behind Remain with a second referendum.


Wednesday, 22 June 2016

FWIW a final plea, vote to stay..

We face a simple choice tomorrow. A choice between restoring some certainty in the financial markets and in our global position as the 5th largest economy, or putting all this in jeopardy to enter a period of several year's worth of uncertainty on the whim of a ragtag band lead largely by right wing self-interested small-minded deceivers who have somehow managed to convince millions of ordinary people that their agenda will make them better off DESPITE our current position that is culturally and financially richer than so many countries worldwide.

Vote and vote wisely, my friends.


PS if you're a liberal, leftist or centrist and still think it's worth voting to leave, this is my thinking.

Monday, 20 June 2016

Lexit.. WTF were you thinking?

As many who knows me will attest, this post comes from someone who has seriously flirted with voting Leave; and so the title of this post, the somewhat aggressive question, is aimed squarely at myself.

I'm desperately keen to see EU reform, to see tighter limits on its overreach and more focus in its aims.

But this desperation is the source of my pain. It has woven a tight logical knot within my mind.

A vote to remain endorses the status quo, but I'm not happy with the status quo; I don't want to give the EU a vote of confidence.

In fact I'd go further in saying I will entertain the idea that Britain could do better outside the EU, but there are nevertheless some obstacles to be navigated on that path..

But I digress. Suffice to say I've read and agree with several centrist, liberal and leftist cases for Brexit, but there is no box marked:
□ Brexit, but I'm not fearful of migrants or maintaining close ties with my neighbours and I don't want the children of French, Polish, Spanish and Lithuanian parents in my son's class facing the fear of repatriation in 2 year's time 
We have a binary choice, leading to the seemingly never-ending question in my mind: which of the two options is the least-worst option?

That is until I started to examine what this referendum actually is.

Because in everything but the question itself this referendum isn't a simple choice between stay or go.

The referendum has no legal standing and, as such, it is a test of public opinion.

Parliament and Government have made assurances they will respect the will of the people, so my point above may seem like an irrelevant trivial detail.

However this one miscroscopic technicality gives rise to a line of thinking that unloops my circular reasoning. The result of the referendum isn't itself an outcome; it forms a mandate for the winning camp to implement the vision they have outlined during their campaign.

It is therefore a choice between the 2 visions outlined during the campaign and the only campaign agenda I can possibly endorse is that of Remain.

Voting for a liberal case for leaving the EU means putting my cross in the same box as UKIP, BNP and Britain First supporters. It means inadvertently supporting a campaign lead by people I don't agree with fought on an isolationist agenda bordering on outright racism propped up on a bed of triumphant patriotism.

I tried to lift myself above the gutter of the campaign - I mean, it's not as if either camp has refrained from barging the line between spin and outright lie.

But the only rational way to vote in this divisive split is along tribal lines - because the tribe that wins will use the outcome as a mandate to implement the vision they fought on.

And so the vote this Thursday is not the right shoe with which to kick the EU up the backside and destabilise what we have achieved in the UK and in Europe out of fear of where it will eventually lead us.

I am heartened by one thing alone from the last few weeks: after this bruising contest no British politician is under any illusion that Europe is without problems.

In some sense the British people have already spoken.


Friday, 8 May 2015

2 things to keep in perspective post election

The electoral system for MPs is not the biggest affront to democracy in the UK

Whilst retaining first past the post (FPTP) voting seems pretty ridiculous, we do at least get a chance to elect our MPs - which isn't true for the Lords, or the head of state.

Any party wanting to include an electoral reform agenda in their next manifesto should perhaps focus first and foremost on bringing democracy to the Lords before attempting to fix a broken electoral system for the Commons.

Whilst FPTP is probably, on paper at least, the worst system imaginable; the concept of having a single elected representative for each constituency is not as balmy as it might seem to Proportional Representation (PR) zealots.

It certainly offers the strongest level of personal accountability to the electorate, which is something I feel is lost in systems with multi-candidate proportional representation.

It is also something our whole political process has evolved to cope with.

Yes it's bonkers that the DUP get 8 seats for 184,200 votes whilst the Lib Dems get 8 for 2.4 million and UKIP get 1 for their 3.8 million.

But seats in Parliament is only one route to getting an agenda noticed. In fact, adversarial models like the UK political system often make it harder for an opposition MP to get legislation onto the government agenda than a non-governmental body like a campaign group or think tank.

The British Parliamentary system has evolved to cope with the polarisation.

Personally I support Alternative Vote (AV) as a step forward that will offer smaller parties a better chance than the current system which dissuades voters from supporting minnows because a vote for anyone who doesn't stand a chance of winning is, effectively, wasted.

AV at least returns a more accurate representation of views from within a constituency that isn't polluted by tactical voting - voting based on who you least want to get elected.

AV provides some improvement without risking upsetting a Parliamentary system that has provided reasonably stable governments for the UK through wars and other challenging times.

David Cameron's outright majority of 12 is too thin to be bold, and that has to be a good thing

The outpouring of woe and grief on Twitter could easily make the most ardent optimist upend their half-full glass and give up on life.

Whatever your political view the result isn't good enough. Moderate Tories fear their agenda will be held to ransom by unruly backbenchers, after all it takes just a handful of rebels to undo a government majority.

The left is concerned that the Conservatives minus the Lib Dems will embark on an austerity agenda causing untold lasting damage to the country. Scottish Nationalists fear their 56 seats will mean nothing as the options open to those MPs pretty much stop at making noise. 

Liberals fear an end to the European Convention on Human Rights (ECHR) and a swift return to the stalled surveillance agenda of previous Labour and Conservative governments. And UKIPpers are just disillusioned with the whole stitch-up.

Personally I see things very differently. Any bold move, such as leaving the ECHR, can be blocked by less than a dozen concerned Tories. And yes, I believe the numbers just aren't there for scrapping the Human Rights Act and leaving the ECHR.

Austerity will be tougher than Labour supporters want, but that's against a backdrop of 36.9% of the electorate supporting the Conservative agenda, versus 30.4 supporting Labour. The people voted for it, so who am I to argue.

Pretty much every fear I've seen voiced on Twitter today seems overblown. Will Theresa May's mass internet surveillance plans return? Well it is true that both Labour and the Conservatives have historically been aligned in the need for more surveillance powers. But to say the Lib Dems alone blocked this in the last parliament is naive.

Labour could have supported the plans then, they didn't; so why would they now? Especially as Labour wakes up to the fact it needs to listen to voters to get back into power just as fears over mass surveillance starts to become a more mainstream concern.

With a wafer-thin majority any controversial bill will in all likelihood suffer defeat. In fact the most rational fear I've seen today is that the next government will be paralysed, unable to gain support in the Commons for the agenda it would like to adopt.

This itself can't be good for the UK, can it?

Well, looking at the raft of half-baked legislation enacted in the last quarter of a century I am starting to think that a period of paralysis where only the most pressing bills get passed can't actually be a bad thing for the country right now.

Why the opinion pollsters got it wrong

In the run-up to the 2015 UK election there must have been in the order of 100 opinion polls. Few if any put the gap in the share of the popular vote at over 6%. Nearly all relied mostly on data acquired from sampling voters' opinion over the telephone or the internet.

This morning we know that nearly all national opinion polls conducted recently were way off the mark.

And whilst many will put the discrepancy down to voters lying (no-one admits to voting Tory, right?!) or changing their minds at the last minute (it's a lovely sunny spring day, there's nothing much wrong with the current government!), I put the blame firmly on the pollsters for perpetuating a myth that a hastily polled sample of a thousand or so voters can be corrected to be truly reflective of national opinion.

Today's relentless drive for "content" - online publications dragging out news where there is none, competing for website visitor numbers from a readership with the combined attention span of Katie Hopkins on junk - drove the demand for poll after poll after poll.

Consequently opinion polls were pulled together as cheaply as possible in order to meet the demand from publishers.

But there's one huge problem with cheaply-produced surveys - they rely on the lowest-cost methods of gathering data; which today is over the internet or the telephone.

And these methods simply cannot provide a representative picture of voting intent because there is a large demographic who simply can't be reached by one or the other of these methods.

Yes I have a telephone, but I no longer answer it if I don't recognise the number.

The rise in cold calling from marketeers has made it pretty much impossible to contact anyone over the telephone who doesn't want to spend half their life listening to how they could be owed thousands from mis-sold PPI or get a new boiler for pretty much nothing due to some government scheme or other.

As for online surveys, well they typically reach the clued-up generation; the active participants in an interactive medium willing to lodge their closely-held political beliefs with any computer programme that cares to ask.

My point is that neither of the lower-cost sampling methods is particularly representative.

Additionally I don't believe the two most-popular methods, telephone and internet surveys, complement each other particularly well either - that is if you add a telephone poll to an internet poll there is still a sizeable subset of voters whose views are not represented.

Any truly representative survey would need to employ an appropriate mix of polling methods, from doorstep questions to street surveys together with telephone and internet polls.

This itself isn't controversial, but the opinion polling organisations counter this with their mythical Model.  

"Oh, it doesn't matter that our sample isn't representative because we have the data to correct it for all the classes of people our survey didn't reach.  We just plug the data into our Model and we are statistically accurate to within a percent, two at the most."

But building the model involves in-depth sampling and is consequently costly to build.

Costly in an era where publishers are commissioning opinion polls on a shoe string, forcing polling organisations to focus most of their efforts on turning around cheap polls rather than maintaining the model.

We all know that political opinion shifts, but what I believe pollsters have built in their models is a weighting system that can't keep up with the drift and fluctuation in voting intentions.

They end up plugging today's non-representative data into yesterday's weighting model and selling the result as a true reflection of the public mood.

Models based on voter behaviour up to five years ago can never correct for a shift in opinion.

Maybe one year someone will commission one representative survey instead of 2 dozen throw-away polls; only then will we be able to answer the question of whether the weighting model approach is flawed, or maybe the electorate simply can't be relied on to answer a political question honestly?!


Thursday, 24 July 2014

Department of Dirty: is it parody if it's actually true?

As I reported nearly 3 years ago, a side effect of Vodafone UK's efforts to protect children from adult content was to block access to two popular lingerie retailers Bravissimo and Figleaves.

Vodafone customers had to literally contact their ISP, verify their age and tell them "I want access to adult content" before they could shop for bras.

Despite both retailers and Vodafone refusing my requests for comment at the time, Vodafone corrected this particular problem in just over a week.

However many readers contacted me with similar stories: an outdoor web store selling, amongst other things,  hunting knives and hip flasks; a teenage discussion forum; etc, etc.

As the Open Rights Group reports:
... a whole load of sites get blocked by mistake - from churches (they mention wine!) to political blogs that have been miscategorised as hate speech. And a lot of sites that children should have access to - such as sites on sexual health - are also blocked. Once your website is on a blocked list, there’s no easy way to get off it.
With online retailers potentially missing out on revenue (many might be embarrassed or won't find the time to change the default web block - far easier to buy knickers from a different shop) and obvious concerns about censorship it's encouraging to see the Open Rights Group bolster their campaign against "default on" web filtering with the launch of their "Department of Dirty" publicity drive.

Ultimately I'd like to see website owners who find themselves unfairly blocked by such "default on" ISP filters fight back for their lost revenue with legal action against the ISPs blocking them.

When the ISPs who voluntarily kowtow to political demands face the prospect of hefty compensation claims then just maybe they will apply proper scrutiny to the sites they choose to block.


Friday, 18 July 2014

Emergency Data Retention Legislation DRIP v Europe - now this could get interesting..

Quick one (I don't have much time for blogging at the moment). Late last night I received notification from Europe's TRIS system that UK emergency data retention legislation DRIP rushed through parliament this week was notified to the Council of Europe as a technical measure under common market trade and industry rules.

The UK government must notify Brussels under the 'Authorisation Directive' (98/34/EC) of upcoming changes to 'technical standards' that might affect cross-border trade, e.g. in the provision of telecommunications services. For more information on EC notification see my blog on the 2 remaining pieces of legislation required for the file sharing clamp-down under the Digital Economy Act.

If you're not quite following I don't blame you; what it does mean is that things could get very interesting. The UK has to ask EC for permission to re-enact an EU law the ECHR struck down as incompatible with our Human Rights.

It also means at least a 90-day window before it can become law.

Interesting times - and also interesting to note the parallel debate from parts of the establishment pushing to distance ourselves from Europe and leave the European Convention on Human Rights.


Tuesday, 22 October 2013

The BBC Worldwide online content that British license payers aren't allowed to see

I imagine it takes a very special type of BBC executive to arrive at a decision like this - you know, the kind of executive raking in a 6-figure salary with a large golden handshake awaiting them when they finally run out of sideways promotions after messing things up just one too many times...
Foreigners Only!

BBC Worldwide content is available free to worldwide audiences, funded by advertising; therefore it follows that BBC license payers back in the UK must not be allowed to access this ad-funded content because they haven't "paid" to see it by being subjected to adverts.

As the BBC help page I was redirected to after being sent this story by a friend overseas states:
"We're sorry but this site is not accessible from the UK as it is part of our international service and is not funded by the licence fee. It is run commercially by BBC Worldwide, a wholly-owned subsidiary of the BBC, the profits made from it go back to BBC programme-makers to help fund great new BBC programmes. "
Yes, it makes perfect sense.  If UK license-fee payers were allowed to see this content for free then Great Programmes wouldn't be made and the world would end.

No mention of the complex cross-funding deals that allow BBC Worldwide to sell license-fee funded programmes whilst returning a meagre 10% of its turnover to the Beeb Proper, or the £687,333 redundancy payment made to a BBC executive leaving the BBC to join... BBC Worldwide, its wholly-owned subsidiary.


Good value? Where's the data behind "the most transparent deal ever made"?

Here's a thing - I'm actually quite good at modelling costs.

So when the Energy Secretary yesterday announced an effective tax on electricity bills to support the building of a £16bn nuclear power station at Hinkley Point I naturally started to pick apart the details of the deal.

But I came unstuck.  Whilst Ed Davey trumpeted the investment in nuclear power as good value for British energy consumers and "the most transparent deal ever made", I struggled to find any substantial data to explain the inflation-linked "Strike Price", a consumer-subsidised rate of £92.50 per megawatt hour that the private consortium building the plant will receive for electricity until 2058.

Yes, the government's website is flush with press releases and infographics trumpeting job creation and low-carbon energy production, but what I really want is the business plan that justifies the public subsidy.

Given such information I will be able to give a better view on whether the deal really does represent a good deal for the taxpayer.

After all, capital costs of £16bn seem rather high, even for a nuclear power station. And given the nature of the deal - what amounts to a Wonga-funded hire purchase with investors expecting a 10% annual return on their investment (FT subscription required), it's all a bit incestuous; the supplier also gains through the provision of finance, tempering the market forces that should otherwise be driving down construction costs.

The government seems to be taking all the risks: fixing prices, providing guarantees against cost overruns; why its even committed to underwriting 65% of the capital costs as public debt - are the investors hoping to make a 10% return on the government's own money, too?!

Yes we know it costs a lot to build a nuclear power station, and its widely accepted that the capital costs are by far the largest contributor to the price of nuclear power, but estimates on the actual operating costs (excluding capital) of a nuclear power station vary widely: from just over a cent per kilowatt hour to 2.6p averaged over the UK fleet in 2009 to many times higher.  For a wider discussion try Wikipedia.

With no solid data in the public domain its impossible to judge whether we're being sold up the river.

And here's a thing. Building a model with the data that is available (an inflation estimate of 2%, a strike price of £92.50, construction costs of £16bn and a best-estimate of operating costs of 2.8p per kWh - adjusting the 2009 UK fleet average data for inflation) the investors won't be getting the equivalent of a 10% average annual return.  It will be more like 9%, after adjusting for the absence of dividends over the construction period.

However should inflation average 2.5% they will see a return of around 9.5%

But as I mentioned I can't find details behind the government debt underwriting 65% of the initial outlay.  If investors are only providing 35% of the funds then either the government stands to make a hidden return on underwriting the deal (UK 30-year gilts currently yield around 3.6% -  far less than the 9% return my model indicates), or the private consortium stands to make a far higher return on their 35% contribution than they have so far admitted.

Of course my calculations all hinge on inflation-linked best-guess operating costs of 2.8p per kWh.  This includes everything from fuel and staff costs to waste processing and storage and setting-aside the required decommissioning costs under a Funded Decommissioning Programme.

It's not inconceivable that EDF believes it can run the plant more cheaply than the average for the UK fleet.  After all this will be a modern high-output plant with associated economies of scale.  Some US studies claim operating costs as low as around one cent per kWh.

If EDF can get the operating costs down to around 1.8p/kWh they should easily make a return of 10% on the £16bn capital outlay, even if inflation hovers around 2%.

But here's the kicker.  If the government actually funded the whole project with public borrowing, assuming it was capable of delivering on time and on budget, the cost of borrowing would fall to around 3.6% - the price the government pays on its long-term debt.

Now with debt at this price and inflation-linked operating costs of 2.8p per kWh the strike price could be as low as £54.00 per megawatt hour - not far off the current wholesale price of electricity.

Additionally if operating costs of a modern plant can fall to around 1.8p/kWh the plant could be undercutting current power generators with a unit price of £48.50 per megawatt hour once capital costs are included. Bearing in mind capital costs and interest in this model are amortised over the first 35 years of the plant's planned 60-year life, costs should fall substantially in the second half of its life.

So has the government got it wrong? In its eagerness to involve private finance it has been forced to rig the market, sacrificing one free market ideal for another.

This market rigging tempers incentives to innovate to reduce construction and operating costs whilst providing a bad deal for customers; driving-up the overall cost of electricity and skewing the wholesale market for all generators.  Britain will be paying twice as much for electricity in real terms by 2050.

Whilst it seems to go against the ideology of a right wing government, a better option may well have been to leave the price to the market and fund the construction as a government project.


PS George Monbiot has a wonderful critique on the "farce" of investing in ageing nuclear technology.

PPS assumptions in my model:  the power station capacity is 3,200 megawatt, reactors are likely to be offline for around 40 days every 18 months for refuelling, electricity will be sold at £92.50 per megawatt hour and government sources are talking a lot about CPI inflation of 2% in relation to this deal, so we can assume that might be the figure EDF used in its own economic modelling. We also know investors expect a return of around 10% and the initial outlay is £16bn.