The future may not be bright but its getting clearer

More clarity is starting to emerge around the savings now. In some respects this is a help, not because the outcome will be pretty but because at least you can do something about it if you know.

What is emerging is that the ability to make £6 billion savings almost overnight will and can only happen one way. We talk about saving 6 billion and it is important to understand what this actually means in practice.

Government budgets will have been set sometime back against a set of needs to deliver a set of outcomes. So the costs of IT, staff, buildings etc. Those budgets would have been agreed. Now 6 billion will need to be removed from the budgets overnight. As you can imagine, the government departments are not sitting on 6 billion in unallocated cash. So to make a saving, they have to stop spending. Obvious right?

So how do you stop spending overnight? Well, its like being asked to realise the equity out of your house overnight. Its almost impossible and if you do manage it the equity realisation will be so expensive that you dont actually get the money you need due to the urgency of the process.

In gov terms they simply cannot get rid of staff to make those kinds of sums for a number of reasons:

1) That staff reductions at the lower pay grade levels would have to be vast to make any impact on the 6 billion. Then you are left with no staff to delivery any services or support the frotn line protected staff.
2) The time needed to get rid of staff and the costs of the process can eat up so much of the savings that any in year (which is what they want in the 6 billion) will be eaten up.
3) Ridding yourself of middle and senior management leaves government with few people with the skills to manage things ongoing or more importantly make the major savings decisions.

So if its not staff where will the savings come from?

Well its going to be the private sector. Yep, government savings will be made at the expense of the private sector. Projects will have to be stopped, consultants fired, pencil orders cancelled.

Now you may not think this is such a bad thing. But this is only because the media has done such a good job af demonising contractors, consultants and major suppliers. But not all government suppliers are poor, not all contractors are bad and expensive. See the link here? For every bad contractor or consultant there is a civil servant overseeing them and hiring them.

So you bin all of these. So who implements the changes needed to deliver the major savings? Not the civil servants, they are the ones who hire the experts in the first place and its not because the civil servants are lazy, its because they do not have the change skills in the quantities or levels required.

So where next? Well the liklihood is that contracts willstart to be binned. Notice periods and termination agreements will not be honoured. They have no choice. Nobody signs contracts that allow one party to walk away half way through delivery free. And that is exactly what gov will have to do.

The effects of all of this will be dire. Businesses will go bust, individuals will lose jobs. The flow down is going to be significant. The argument I have now heard is that the suppliers will roll over and just take it as they see things in the long term and want to do business later when things improve. Thats great if you are one of the major suppliers with deep pockets. But the SMEs will simply not survive. The major suppliers will simply bin their employees to protect costs.

Its an interesting flow.

Government puts too many people into the public sector
Banks take too much risk and put economy into a spin
Government bails out banks to prevent economy meltdown
Failing economy lowers tax revenues gov debt gets out of control
Banks stop lending (take lower risk)
Gov starts to fail (go bust) so stops spending violently
Big gov suppliers take the hit but shed employees
Small go suppliers go bust
Both lead to higher unemployment, higher welfare bills, lower tax revenues
Private sector still suffering from recession cannot absorb Gov fallout
Spending in retail slows and retail suffers
Recession kicks in.

This all from the first £6 billion. The next £156 is going to cause utter carnage.

Brown was right. Taking £6 billion out of the economy is going to be catastrophic.

So what can we all do about this? It all seems a bit negative. Well it is. The bigger worry is that this is going to cause some real social issues. The first is that crime will rise as times get more difficult at a time when government is less equipped to deal with it. The second is that we will see a widening now of the gap between rich and poor both in terms of levels and quantity. There will be even fewer massively rich people and even more poor. More of the middle will head south than north. If you are well off today your life will get better, if not expect it to get worse. The question will be how quickly this will happen. If it happens too quickly and the gap gets too wide then we can expect more problems than just an increase in crime.

If we add in EU issues then we could start to see more inwardly protectionist lines start to emerge and trade slow.

Well it is going to have to get worse before it gets better. We have to hit rock bottom and we are a long way from what is going to be a very deep bottom. There is no stopping this process now. But if you understand it you can prepare for it.

So still no positives? Its hard to see them from this view point I have to admit.

What is required to get through this is a fundemental shift in culture and expectation. The days of constant growth and prosperity could never last so what is needed is actually to reset ones mind and expectations. A level of culture change the likes of which we have not seen since the last world war. When people fought for freedom, hardship was a price that everyone agreed was a worthwhile price. People pulled together, community spirit grew and people got by on nothing. Poor and rich alike made sacrafices.

The challenge for the UK is to now find what the rallying cry will be to start that change.

Surviving this next downturn will not be about money, it will not be about business, it will not even be about jobs. It will be about successful culture change. And if the UK can be the first to recognise this and get it under way we will be the first to get back to something like a more stable and sustainable way of life.

Saving integrity

It begins. 6 billion to save. 156 billion to go.

Like the lottery, these numbers are hard to comprehend. I am lucky enough to work in government at one of the most interesting times I can remember. I am lucky enough to be involved in the savings and there are a number of very surprising things that have emerged.

1) The majority of civil servants have no idea about what is about to hit them. This is part of the problem and why we are where we are. They just don't understand.

2) The public have no idea about what is about to hit government and then them.

It seems the reaper has arrived an nobody knows they are dead. THE SALMON MOUSSE!

The politicians knew what was coming. We knew the politicians knew what coming.

But, like the car industry, if you shut a factory or a quango, then all their suppliers and their suppliers and all the staff and all the shops that sell to those people suffer. This is the same as government.

I supply government and I have just had to let 3 of my 4 staff go. They will find other work, they are the lucky ones. The company is unlikely to survive but you never know.

Taking 6 billion out of the economy overnight is going to cause a nightmare. Imagine when we try and take the remaining 156 million.

But it is not a bad thing. Despite the catastrophic losses of everything I am in some ways a happy victim. I am lucky and I was not in debt so I can just (if it comes to it) just walk away. So why am I not devastated?

Well, its simple. This was avoidable. The politicians made poor policy choices and the civil service badly implemented them. They have been trying to make savings over the last 8 years that I have been in government and the civil service has resisted and squirmed and avoided the savings in pure Sir Humphrey ways.

This was avoidable and a long time coming.

My only worry now is that a lot of innocent people will suffer and those who could have prevented this are now still in power and will not suffer as others will. Many good people will have their lives changed because of all of this.

So fingers crossed that this time the savings will do the job and transform the way government services are delivered.

I am skeptical. I hope my losses are not in vain, but somehow I doubt it.

Good buy

Watching one of my favorite programs tonight made me laugh. The antiques roadshow is a great show with lots of interesting objects presented.

One particular lady turns up with a dear horn sewing case. She tells the tale that her (now) husband bought it for her as a present. He paid 35 pounds. He asked her how that sum compared to her weekly wages. She was on 9 pounds per week. So about 1 months salary was the cost of this box.

He them valued it today at about 1000 pounds. She said that it was therefore a good investment.

Not really love. Proportionally its worth less today than it was when you bought it 50 years ago!

Thanks Apple

I am rarely the first to get a piece of technology. Rare as in never. I got out of that race a long time back and I now pick my technology very carefully.

It was about time I got a new phone as my old 950i is really on its last legs after a good 2 years of solid use. It was an AWFUL operating system but it did its job when you got used to it.

I love my MAC book air. I think the UI is fantastic and the hardware is light, relatively strong and fairly reliable. On that basis I opted for the iPhone this time around. The 16Gig S version. I don't own a single MP3 so I am not sure why I would need the 32 Gig (but could not bring myself to buy the 8 Gig, work that one out!).

Setting it up should have been child's play. But here is the issue. You must have internet access to get your phone to work. They don't tell you that on the box. This would not normally be a problem but it was today. I don't yet have broad band in my flat (it gets fitted tomorrow). My laptop uses a USB 3G dongle to get my access. My MAC Book air only has one USB port and that is used for the 3G card.

So imagine my reaction when starting up the iphone it says connect to the laptop to talk to itunes to register phone. BUGGER. I cant have internet on if the iphone is connected and I cannot connect the iphone unless I use the USB port. Check mate.

So off to the local cafe for use of their wireless internet connection. Connected to internet, connected the iphone, itunes connected to the web and hey presto the whole lot springs into life. Very frustrating though because it appears the only reason it forces you to do this is to register and activate the phone. They should just let you use the phone and perhaps, if they have to, force you to do the registration (here's a clever idea) via the iphone's internet connection!

Surely apple should have an app for that!

Timeo Danaos et dona ferentis

The clock ticks on post election. They say a week is a long time in politics. Imagine how long it is at the moment.

What is fascinating at the moment is nothing appears to be what it seems. On the one hand, the Lib Dems appear to be the only party that has a strong probability of being part of a new government. On the one hand they work with the Tories and if that fails they join Labour. One might imagine that this is useful position to be in (if you are a Lib Dem). But the stakes are high and the only bet is 'all in'.

We have already seen Tory positioning. One frightfully gallant chap from the conservatives who was lined up to be Minister for Education has already declared that he would gladly give up his position to a Lib Dem. You can hear the squeaky wheels of the Trojan Horse being wheeled into the Lib Dem camp as we speak. Who the hell, in this great big mess would want education. It is one of those positions that you can only fail at. If the kids succeed, its because exams are getting easier, if the kids fail its because of your policy. The money is going to run out, things are going to get difficult and education issues won't be seen for a decade or more. Its a safe position to give to the Lib Dems. If, by a miracle, they do very little and succeed in Education, the Tories win. If they fail the Lib Dems lose.

Expand that now to the whole of government. The claim has been made that whoever wins will not get back in for a generation (30 years). I think this is nonsense and underestimates the political elite's ability to spread the blame and spin the truth. And nobody has a memory, when it comes to voting for 30 years. Or we would not have that many Tory votes this time around.

The Hung Parliament is probably the best thing that could have happened. hard decisions will be made, perhaps now with the sharp edges rounded off as collaboration and compromise is now required. We will also see, when times are hard, the blame game shifting to one of 'was not us gov, it was the Lib Dems'. With no clear party in control the benefit is that the difficulties this country will face will have a shared blame position. No single party will be held accountable.

Pick a number

I am no sociologist. So this may be utter nonsense. The issue of poverty discussed below and the median measure got me thinking on how there could possibly ever be a fair society. I have written before that the world is aligned to certain human attributes around success and failure.

In the good old days, the fittest and the strongest would survive. But what drives us since we left the caves. It may be that the rich appear to have the power but this seems to me an effect and not a cause. Ignoring the lucky (lotteries etc) and those who inherit (which is luck of birth) then what is the attribute that defines the pecking order these days (is it more than one attribute?).

Hard to tell. Its not just intelligence. There are lots of smart people and that is rarely enough in its own right to lead to riches. But lack of intelligence does seem to be a hindrance (there are few dumb rich people). Risk taking? Yep, must be an attribute of the successful, but there are lots of poor risk takers (and dead ones).

But its not important to find what the attribute is. And this is the key point. Whatever the attribute is in any society and at any point in time there will be a spread in the population from those who have none of that (those) attribute(s) to those who have the perfect amount.

There will always be an imbalance, there will always be a pecking order and their will always be inequality.

Seems a bit of a hopeless situation then? Not really. While success is based upon the individual's human attributes we will always have a range of winners and losers. For the good of society we need to ensure that we are able to find a way to narrow the range of the top to bottom. We see the effects of wealth from the richest to the poorest where it gets out of hand and the few have all the money. Off with their heads! And money is the one thing we focus on. The successful have to give to the less successful. This causes tensions and in fact has negative effects as in extreme it removes the motivation to be successful (why bother if nobody else has to).

If money is the effect of a natural range of attributes then surely we should be looking at what these are and how the gap can be lessened. We cannot go on only focusing on the money. Education is bound to be part of this but there is no major link between a good education and an excellent education (again, a bad education is a hindrance).

More thinking must be put into this area. No matter what the attributes are, finding a way to link success and reward to performance (which provide motivation) coupled with opportunity (so anyone can make it) and balanced with a narrow range from top to bottom will go a long way to producing a fairer society. Fairer, but not equal. Equal is impossible and detrimental. We will always need competition.

Poverty rules

I have touched on the subject of poverty before. There are rules for what poverty means. One definition is anyone who earns less that 60% of the median income of household headed by someone of working age.

So the question that crossed my mind was would there always be poverty and what did that mean.

Well firstly, its a relative issue. If the lowest earner in the UK was a millionaire and the median was a billionaire then the millionaire would be deemed to be in poverty. So what we generally consider to be poor and the term poverty are two different things. But poverty is also a cultural issue. What one person considers poor may not be the same as another culture. If poor means lack of money then certain cultures will be deemed poor but this is not the same as we think about it. Poor must be set in context. Someone who lives in a tribal community in a rain forest may have no cash but they are happy and healthy but have no money. So poverty must only have relevance where money itself has meaning. Obvious right? To be poor must mean that you have no way to access finances needed to achieve a lifestyle relative to the culture you live in.

This is why when we think of poor people in the UK they seem to have money, food, free health care etc. Then we look at starving Africans and consider them poor. And yet there is a huge gap in access to everything poor have in the UK.

But back to the maths. So if you earn 60% or less of the median income you are considered to be in poverty. The stats say that this is 23% of the working population. The interesting thing about the median is that it is not skewed by the billionaires. The median will be the middle earning if we lined up all the earnings in a row. This is where imaging this gets tough. What is it to have nobody in poverty. What it will mean is that majority of the people have to earn a very similar amount. The tighter the grouping the less will fall into poverty.

Its an interesting by product in that if everyone earned the same then there would be no poverty technically. But if we all earned two pounds per hour then we would consider ourselves poor.

The reality seems to be that the measure is one simply used to compare countries and not one that is of practical use to determine quality of life which I would have thought is the most important. Quality of life has meaning and could encompass a wider set of values than just money. Culture, education, health, money and relationships must all contribute to a good life. A one dimensional view does not seem to cut the mustard as they say

Elect for a new approach

As its election time I thought I would have a go at coming up with a different approach to the first past the post system. The main issue at stake (as I understand it) is that the party in government may actually have less votes than the party in opposition. This seem ludicrous. By the time you take the % of people who can vote and then the % of people who do vote, then the % of the people who actually voted for Labour you end up with a government who only gained 22% of the votes. In this election this situation may become worse.

So what could we do about it?

The first thing I would do is to have the party in government the only who gains the most votes. We would still have constituencies. Here's how it would work.

We would have approximately 300 evenly sized constituencies. It actually does not matter if they are even by population or area. Its not that important.

People would make 2 votes at election time. The first vote would be for the party you want to govern. Simple. Which ever party gets the votes gets the job. The winning party would then put in place 300 MPs. One into each constituency. The voters would have no say in these. But there would be one representing you.

The second vote is for a person (although their party alliance can be publicly known). That person (there would be 300 of them) would be the opposition (you would need to do a preference order in case your first choice ended up being in power).

So you would have an MP representative of government in your constituency guaranteed. This is unlike today. If your MP of choice does not make it into government then you do not actually have a voice IN government, only in opposition.

This method would leave you with an opposition MP in each constituency and the opposition would be at a local level on local issues as well as in parliament.

When the government wants to pass a bill then they will nearly always have a majority but never have control of more than 300 MPs (50% of them). So they will have to compromise somewhat.

It is a balance of both true majority vote government as well as effective opposition.