Mike Shevdon

In the furore of the upcoming election you will almost certainly have missed a small press announcement concerning the Highways Agency (https://www.gov.uk/government/news/driving-forward-a-new-era-for-englands-major-roads). The Highways Agency doesn’t exist anymore. Highways England is a new state-owned company which directly replaces the Highways Agency.

Many would argue that the highways Agency hasn’t done a good job in the last few years and that the roads are in a poor state with pot-holes and worn-out road-markings, and they are. That’s not because the Highways Agency has done a bad job, though. It’s because it’s been starved of funding and told to only fix things that have actually failed. According to the government we all have to tighten our belts and while it’s okay to spend £42.6Bn on a railway to get people into London 20 minutes faster (Railways: HS2 Phase 1 – Parliament) there is no money to repair the roads.

So let’s ask an interesting question. If there’s no money to repair the roads, why spend money transferring from a executive government agency to a separate company?

The answer may lie in what happened after 1994 when the railways were privatised by the Conservative Government of John Major and the maintenance of the infrastructure was handed to a newly-spawned company called Railtrack (http://en.wikipedia.org/wiki/Railtrack).

Railtrack allowed the government to take an expensive maintenance budget, turn it into a listed company and float it on the stock exchange. Railtrack was given a five-year funding plan to maintain the railway infrastructure, but quickly realised there wasn’t enough money because the infrastructure was already run down and under-maintained, so they switched from doing planned maintenance to break-and-fix.

Does this sound familiar?

After privatisation there were a series of major incidents involving large scale injuries and fatalities, (Southall, Ladbroke Grove, Hatfield)  which led to the company going into voluntary liquidation and the assets being transferred back into the state-controlled NetworkRail. Meanwhile, Railtrack investors claimed they were misled and were compensated by the government at tax-payers expense.

You won’t get everything you want, but you can probably avoid some things you really don’t want.

If a Conservative government is elected then we can expect to see Highways England auctioned off and run as a separate concern; not because it saves money, not because private industry is more efficient or effective (see Railtrack, above), and not because it’s better, but because it allows them to take the spending off the books and look like they are reducing government spending while actually shifting it elsewhere. It’s a bait-and-switch, which worked so well with Tuition Fees (https://shevdon.com/education-bait-switch).

Like the railways and the banks, the roads are too important to allow them to fail. Some things are necessary for the good of us all as a society, an economy, and a country. They are in the national interest – something the government is keen to trot out when it suits them and to ignore when it’s inconvenient. They won’t be allowed to fail because if we don’t have a working road infrastructure it would ruin our economy. For better or worse, at least for the medium term, the flow of goods and services is dependent on roads.

We will have to pay for the roads to be maintained, one way or another. We can share the cost and pay for a shared resource through general taxation, maintaining them to a standard that ensures safety, reliability, and availability, or we can hive it off to a private company which is responsible to shareholders, investors and owners, and let them decide what needs to be done – just like Railtrack.

Surely history has taught us that some things should not be sold.

Much of the political debate has been about who the next leader should be, with criticism of many of the personalities involved, but a government is not a person. It’s a body of people who agree on an approach and a philosophy to how we will do things as a country. None of the solutions on offer are perfect, but some of them are surely worse than others.

If you live in the UK, this is the philosophical decision you will have to make in the next few weeks. You can choose not to vote, and you will have that decision made for you. Or you can vote for an approach that aligns with your beliefs and your values. You won’t get everything you want, but you can probably avoid some things that you really don’t want.

How you choose will determine what you get. Please vote. Make a difference.

We need to talk.

I know that since the financial crisis, things have been tough. Hard decisions have had to be made and we all have to work harder because there is no money. Actually, that’s not quite true; there’s lots of money, but isn’t worth as much (see Quantitative Easing). I know everyone in blaming each other – the banks, the political parties, the technocrats, but that doesn’t help. The money has been lost in a gamble that sub-prime mortgages would continue to have value despite having no chance of ever being paid off. The gamblers lost, and so did everyone else.

It turns out that money-for-nothing gives you nothing. Who knew?

So it’s been tough, but you’ve not been pulling your weight. We know this because productivity is down. It’s down 16% compared to pre-financial crash figures (source: Bank of England) – i.e. ten years ago. We should be more productive, but we’re not. The puzzle is, why not?

This is a puzzle so serious that the Bank of England is doing research (pause for irony). It is partly explained by a lack of business investment, caused by a dearth in lending after the banks found out that lending money is a bad idea, so they almost stopped doing it. That isn’t enough to explain the difference, though. It’s a relatively small factor that leaves a big unexplained gap in productivity. With encouragement, lending has recovered to an extent, but productivity hasn’t.

The big factor is the weakness in labour productivity. That’s you and me. Apparently government is puzzled by the fact that we are, overall, less productive by about 16% in the last ten years. That’s taking into account those of us who don’t have a job to work at, by the way.

It’s not like we’ve been shirking. Most of us work longer hours, feel more stressed, and have a worse time at work. We don’t find it as rewarding in any sense, and if you’ve had a real-terms pay rise in the last five years then you are an exception. Many have had a pay-cut. Management has exhorted us to work harder, or in some cases smarter, and we’ve been under pressure so long that it’s come to feel like that’s normal.

I would like to be presumptuous and tell the Bank of England that a bunch of Economists are the wrong people to have looking at this. It’s not about money, wealth, or possessions. It’s about life.

When you go to work, you make a deal. The deal is that you give up your time and you will endeavour to do something, and in return you are compensated. That may be directly as in a window-cleaner (I clean your windows, you pay me) or indirectly (I process your insurance claim, and the insurer pays me). That’s not the end of it, though. I also want your respect and appreciation. I’m doing a job and I want recognition from you and from my peers for the job I’m doing.

In the last ten years that last part has been undermined by a philosophy that says, in a recession, there are always more people that want a job, and if someone doesn’t want to work then they will be replaced by someone who does. I don’t have to respect you, or appreciate you, or value you. I can just replace you. it goes back to the model of organisation as machine. Workers are cogs that fit into the machine and churn out work – or as we might call it, Productivity.

Not only that, but if you don’t want to work then you will be made to, and probably for less money than it takes to live. Zero hours contracts, minimum wage jobs that incur expenses that are not accounted for in the wage calculations, extra hours that are unpaid and unappreciated. That’s not a government statistic, it’s a fact of life. If you don’t work (and the reason really doesn’t matter) then you will be humiliated and starved until you do.

This is the logical outcome of an economy based on market forces, which was started in the 1980s and has carried on unchallenged. It was mostly fine when the economy was booming on personal lending and bonuses paid on reckless gambling because the chickens never came home to roost, but as soon as that stopped, everything changed. The market giveth and the market taketh away. It taketh away your dignity, your self-respect, and your right to be valued as a contributor to the national wealth. You are no longer a person, you’re an economic unit and you’ll be treated as such.

You can go to a job and endeavour to do your best, and be treated as a person who is contributing to the work at hand, the organisation concerned, and the nation as a whole. Most people want to do a good job. It’s human nature to work towards a satisfactory outcome.

Or you can be at your workplace. Presence is not productivity. People who work under threat of job cuts are less productive. People who do not have a commitment from their employer are constantly worrying about what comes next, not what’s in front of them. People who do not receive respect do not return that respect. Those who are badly treated worry about their treatment, not about their work. It undermines confidence, security, and well-being. It makes people sick and tired. Meanwhile the rich get richer and the super-wealthy become more insulated from the rest of us. Gated community, anyone?

If you treat people badly, they are less productive – 16% less productive.

So maybe it’s time to ask (with apologies to John F Kennedy) not, what can you do for your country, but what can your country do for you? Can it make your work more enjoyable, less stressful, less threatening, more constructive, and ultimately more productive. Can it support you when times are hard and help you achieve your best when times are good? Can it make your life better?

The only way out of our economic situation so that we do not need austerity or cuts is for productivity to rise. Otherwise we are simply talking about who gets more of the pain.

Who is brave enough to make the change?

The current education system is in crisis, primarily because it no longer knows what it’s for.

That’s not a quotation, it’s a conclusion. Education in this country and many others is about preparing people for the workplace by socialising them into compliant and willing participants in an economic system designed to perpetuate economic growth at the expense of everything else. You might have thought it was to prepare people for adult life, or to nurture their ambitions, but any analysis of the education system shows just how far from that we have come.

A dispassionate observer would conclude that the purpose of education is selection. Children are brought into a system where gradually they are filtered, first by compliance and behaviour, then by tests of one sort or another. In the UK, GCSEs select people of academic ability, A-Levels determine university entrance, and universities determine fitness to go on and join the organisations which this system was established to perpetuate.

Our politicians say that they want more people to succeed while simultaneously raising the bar to ensure that more people fail. And if you think exams have got easier since you did them, then you’ve swallowed another lie. Go and try one. The past papers are available, and you can see for yourself how much easier they are. Try GCSE Biology, for instance. It has as much vocabulary to learn as GCSE French.

But it’s worse than that. Education has become an economic end in itself. The government is effectively borrowing from the populace against future tax revenue and using education as the incentive in a bait-and-switch of such enormous proportions that it’s difficult to comprehend.

This is easily evidenced by the current tuition fee policy of the government. Anyone with a reasonable grasp of arithmetic can deduce that a student paying £9,000 a year for tuition fees on a three-year course will be in debt to the government for £27,000 by the time they are at the end of a three-year course. The actual average figures are greater than this because of living expenses, rents and other fees..

There are about 400,000 university places each year. Let’s assume for simplicity that all of those places are for only a three-year course. Each student incurs a debt of £27,000 simply for their tuition fees, excluding living expenses, rent, and everything else.

400,000 x £27,000 equals an additional £10.8Bn of personal debt each year

But some of that money is paid off. For an above average UK earner being paid £30,000 per year the repayment is than £1,176 per year, potentially less.

400,000 x £1,176 equals £470.4M in repayments, which including the 1.5% interest takes 28 years to pay off that debt, so that by the time the first tranche of students have eliminated their debt to be replaced by the last tranche entering we have accumulated something like £290Bn in personal debt that is simply recycling. It never reduces because there are always new students taking on new debt. To put this in perspective the UK budget for the entirety of education, from joining primary school to post-graduate is annually about £90Bn.

So why is the government doing this? The key is that this is personal debt, not government debt.

The government doesn’t have to account for it in their figures because the money isn’t owed by them, it’s a personal loan to the students. With almost £300Bn off the books and hidden away in the loans of past students, they can claim that the deficit (the difference between what they spend and what they receive) is falling and that they are managing the economy well. What they are actually doing is concealing the problem and re-badging a graduate-tax as a loan so that they can take the money now and pay it back later.

But that’s only if things are perfect and all those student loans are paid off, whereas the actuality is that some of those students will get ill, some will move abroad, some will never earn the money to reach the threshold, some will become stay-at-home Mums and Dads, or not get jobs for one reason or another. The debt then has to be written off and falls back on the taxpayer, not now, but in 30 years time when it finally becomes due.

All of this is a direct contradiction of everything the government has said about managing the deficit, reducing borrowing and living within our means. It’s spending today against jam tomorrow in a way that’s almost certain to precipitate a financial crisis when the gamble doesn’t pay off. Taxpayers are the ones that will end up funding that crisis in the same way that it was taxpayers that bailed out the banks when they lost all our money gambling on fictitious mortgages.

We are holding out the offer of success and simultaneously hobbling our young people with debt into their late middle age so that we can support a con-trick. It’s not just morally repugnant, it’s bad economics and almost certain to fail. The important thing is it will fail later, not sooner.

So when a Conservative or Liberal Democrat supporter tells you that they are the party of good economics and financial management, you will know that what they actually mean.