Connected Research

Union policy research in the 21st century

Archive for June 2009

Select Committee inquiry into broadband

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Following the publication of the Digital Britain report, the Business and Enterprise Select Committee has launched an inquiry into broadband speeds in the UK.

Topics for the inquiry, according to the accompanying Press Release are:

– whether the target for universal access to broadband at a speed of 2Mbps by 2012 is sufficiently ambitious

– whether the government is right to propose a levy on copper lines to fund next generation access

– will the government’s plans for next generation access work

– are companies providing the speed of access which they promise to consumers

– the extent to which current regulation strikes the right balance between ensuring fair competition and encouraging investment in next generation networks.

Evidence to the inquiry will take the form of written submissions which must be with the Committee by 25 September.

Connect, which has supported the publication of the Digital Britain report and which last week passed a motion at its biennial conference committing the union to step up its campaign on high-speed broadband and to urge the government for a rapid implementation of the proposals, will take the opportunity of the inquiry to repeat the themes we have previously raised with the Digital Britain team concerning the 2 Mbps:

– that 2 Mbps must be a minimum speed delivered at the point of access by the consumer

– that a mechanism must be established by which that speed can be regularly reviewed to ensure that it maintains relevance

– that upload speeds ought to be based on the same minimum definitions, and subject to the same regular reviews, as the 2 Mbps download speed.

We will also, in the meantime, undertake further work on the issue of the 50p levy, part of which will encompass the response of Connect members to this blog post.

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Written by Calvin

30/06/2009 at 3:46 pm

Scottish Widows pension survey

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Pensions and investment provider Scottish Widows has produced a report on pensions saving which contains some interesting facts and figures.

The report (link is to Press Release) – the fifth year that it has been produced – is based on an online YouGov survey of the level of pensions savings of a representative sample of 5,000 UK adults. At the headline level, the news isn’t bad: both Scottish Widows’ measures of savings adequacy have risen, and for the third year in a row. The company’s Pensions Index records that some 54% of UK adults aged over 30 and earning more than £10,000 per year are saving adequately for their retirement (which it defines as likely to achieve an income replacement ratio on the basis of a sliding scale of 90% of pre-retirement income for those earning £10,000 per year, reducing to 40% for those earning £50,000. Based on its assumptions, saving 12% of gross income between 30 and 65, or relying mainly on a defined benefit scheme, will provide such a level of income replacement). This is an increase on the 51% recorded in the 2008 survey.

Its second measure, the Average Savings Ratio, is based on the same assumptions but excludes those who will be relying mainly on defined benefit provision for their retirement income. This measure assesses the level of retirement savings as a percentage of gross earnings; in 2009, the Average Savings Ratio stood at 9.3% – this is a sizable increase on the 8.7% recorded in 2008 (and a high for the five years of the survey) but still lower than the 12% required to achieve Scottish Widows’s definition of an adequate income replacement ratio.

Unfortunately, away from the headlines, the news is less good. In particular,

– 54% of people saving adequately for retirement means, therefore, that 46% are not (of whom some two-fifths are saving nothing at all). Whether this is a glass half-full or half-empty is clearly a matter of personal reflection – but at least the figure on the half-full side is increasing. At the same time, the survey excludes those earning less than £10,000 per year where the likelihood of being able to save for retirement may well be lower.

– the increase in the Average Savings Ratio hides that fewer people are actually saving for their retirement but those who are saving are saving more

– savings for retirement amongst women over 50 are down, with 22% saving nothing for their retirement – a large increase on the 14% recorded last year. This suggests that many have concluded it is too late to save

– it is arguable whether a savings level of 12% of gross earnings over a 35-year working life will deliver an ‘adequate’ pension in retirement. This is lower than other figures suggesting that a higher rate over a longer period is required, and may thus be a little optimistic.

At the same time, and more positively, the report suggests that average contributions to defined contribution schemes are rising, and that lower earners are putting increasing amounts into personal pensions where they have no access to workplace schemes, which could bode well for the system of personal accounts from 2012.

The report highlights a number of policy areas which it indicates need to be addressed:

– pensions preparedness has not moved forwards since 2005 and, in particular, there has been little change in the amount of people saving nothing for their retirement, suggesting that the UK may have hit what the report calls its ‘natural rate’ of savings

– the gender pensions gap persists, with 59% of men, compared to 47% of women, saving adequately – a rise in the gap of three percentage points in the last year

– employer contributions play a critical role in retirement preparation and support needs to be provided during the downturn

– encouraging access to a wider range of savings products and to financial advice will make a major contribution to preparedness for retirement

– there is a continued low awareness of personal accounts amongst the target market and work here needs to be stepped up.

The report is a worthwhile contribution to the debate about pensions saving and contains some interesting pointers both to what is happening in general as well as to what needs to be done in policy terms to achieve the break throughs in the range of areas necessary to preserve the role of occupational pensions savings in the UK’s retirement savings culture. What we do still lack, however, as I have blogged previously, is a greater understanding not so much of the ‘whats’ but of the ‘hows’ in advancing that system – and that requires a much greater level of dialogue between all stakeholders, including both industry, trade unions and government.

Written by Calvin

30/06/2009 at 1:58 pm

Posted in Pensions

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More T-Mobile speculation

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Today’s media is again full of speculation about the future of T-Mobile, coming hot on the heels of T-Mobile’s own denials just ten days ago (blogged here) that it was looking to sell the unit. This time, it is Vodafone that is apparently considering a purchase offer. The story’s reference to a firm of consultants being engaged to provide advice on ‘strategic options’ is usually a precursor to sale and, if true, would seem to make a lie of Deutsche Telekom’s previous assurances on this issue. It declined to comment on the FT’s story, as did Vodafone.

The story itself looks to be more than just speculative, but it does include some data which may be: 3’s mobile share, quoted by the BBC story linked above, which seems to have been drawn from the original story in the Financial Times (registration required), is not in the public domain since Ofcom does not publish statistics for 3.

As the reporting indicates, Vodafone would find it difficult to gain regulatory approval for such a merger since it would, inherently, be anti-competitive given the dominance it would give one operator. It might, therefore, reasonably be wondered why such speculation has (again) emerged, not least since it would seem to serve the purpose only of destabilising T-Mobile and its workforce.

The history of the UK mobile market has been about establishing equivalence between service providers, with the result that we have four major operators (and 3, a newly-established 3G only operator) all with roughly equivalent market shares, if Ofcom’s data on subscriber numbers is to be believed: Ofcom’s figures for the fourth quarter of 2008 (part 3, Table 4) show that Vodafone had a subscriber market share of 24%, while O2’s was 28%, T-Mobile’s 23% and Orange’s 24% (numbers exclude virtual operators). To create one operator with 47% of subscribers would involve Ofcom in taking a decision that would clearly distort the market, and O2 and Orange (and 3) would have every right to complain.

That said, any debate about the future of any one of the four major operators does raise interesting regulatory policy issues:

1. As the reporting says, other countries have markets in which one operator dominates. What it doesn’t say is that these are usually the mobile operations of ex-incumbent operators benefiting from looser regulatory regimes during the creation of a new market: the UK is different in this respect since the incumbent operator (BT) doesn’t have a mobile operation while telecoms regulatory policy in the UK has been, since before the beginning of the mobile market segment, been wholly geared towards the establishment of competition. Probably none of the models operating elsewhere in Europe has resulted from the merger of existing operators. Raising a debate about whether the UK needs now to move to a market based on one dominant operator rather than the model it currently has (and, if so, which one operator that should be) may well, of course, be Vodafone’s aims if indeed it is responsible for this speculation.

2. Given the latter point, Ofcom would be in an interesting position, as it were, should any such bid for any one of the operators come about. If the conclusions of Digital Britain in this area are to be implemented, Ofcom’s remit is about to be changed from one solely based on competition to one that also encompasses the impact of its decision-making on investment. Connect has welcomed this as it should seek to encourage the establishment of a more responsible regulatory framework in the interests of the nation. However, its effects would be rather less welcome were the implications of this to be extended to situations where, for example, one operator were to claim that it was no longer able to finance the network investment required by its continued participation in the market, as has recently happened in the merger between Vodafone and 3 in Australia (blogged about here). The decision here, involving two junior participants in the market, ought to be distinguishable from that facing the regulator in which participation in the market is much more established, and investment much more entrenched, as is the case in the UK. Ofcom has also in the past refused to engage in ‘picking winners’ which any such merger proposal between two of the four major operators would seem necessarily to engage it in doing.

3. Clearly company priorities do change and their permanent participation in the markets in which they currently operate cannot be guaranteed, especially in situations of globalised brands competing in many different markets, to different degrees of success. Competition in the UK between the big four operators in a saturated market is a costly business, since acquiring subscribers from each other is expensive and resource-hungry, and one which has very few long-term results in terms of customer loyalty. Clearly, that’s not attractive to a company – however attractive it is to consumers – although that would appear to be the rules of the game. Where cartels are not permitted to develop, dealing with corporate demands for exit from such a situation poses, again, interesting questions for a regulator whose policy up to now has been aimed at creating just such a perfect market.

4. Of course, the sale of any one operator doesn’t have to be made to one of the existing operators – a new entrant is possible although that would seem to raise certain spectres by itself if it encompasses, for example, any private equity involvement.

Should the speculation turn out to be true, rather than just a piece of kite-flying on the part of one or other of the operators, Ofcom has an interesting time ahead of it while observers of the scene may be about to see the questioning of some of the touchstones of regulatory policy up to now.

Written by Calvin

29/06/2009 at 4:33 pm

TUC’s 8th Recession Report

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The TUC’s eighth Recession Report was published this week – an extended edition in view of the recession now being one year old as well as in support of the TUC’s imminent lunchtime seminar on Tuesday next week. The report includes the regular analysis of the most recent unemployment data and the impact of unemployment on various groups and sectors, as well as a comparison of this recession with the ones of the 1980s and 1990s. The TUC concludes that, even though ‘Historical comparisons do not provide a basis for accurate predictions,’ this recession will, ‘Whenever it ends… continue to impact on our labour market for many years to come.’

Written by Calvin

26/06/2009 at 6:30 pm

Posted in Economic trends

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PWC survey predicts ‘acceleration in pensions shake-up’

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Accountants PriceWaterhouseCoopers produced on Tuesday this week an alarming survey of firms’ intentions as regards their pension schemes.

The future is, according to the survey, an apocalyptic one for the UK’s occupational pension landscape, with employers now looking to extend the changes they have already made to defined benefit provision to future service in such schemes; a large minority of employers looking to do no more than the bare minimum in respect of personal accounts when introduced in 2012; and a growing number of private sector employers believing the public sector has an ‘unfair advantage’ in terms of being able to offer quality defined benefit schemes.

The publication of the survey (based on 157 responses out of the 1,000 companies questioned) led to a thundering leader in the Telegraph, which has been well deconstructed in terms of its arguments by Tom over at labour and capital.

For the TUC, Brendan Barber pointed out that companies were using the recession as an excuse to cut pensions benefits, and that ‘Too many attacks on pensions are no more than companies walking away from a long term commitment to their staff, and are part of the same short-term profit seeking that gave us the financial crash.’

The survey is just that – a survey (and a relatively small one at that) and, although I’m not about to dispute the direction of its findings (the herd mentality of employers in this respect is well-documented), its overall vision of imminent apocalypse is one that, perhaps, serves the particular ends of its organisation very well. At the same time, as Connect’s conference heard on Thursday this week in response to the O2 South motion on protecting final salary provision, it is clear that the issue is one of the most significant facing trade unions presently, and is also one of the key objectives for the union’s incoming Executive Council.

It seems to me that, if the trade union movement is to be able to react effectively to this, we need at least two things:

(1) some greater factual information about the situation of public sector schemes which both deals with the myths and presents the proper facts, since public sector provision is likely to come under increasing attack; and

(2) some real ideas about what can be done to support what remains of final salary provision. Here, I don’t mean a general reference to ‘tax breaks’, what I mean is some specific arguments about, in this example, precisely what tax concessions can be used and how and what the effect on schemes would be. More simply, what might work and what probably wouldn’t. If we’re to be able to get anywhere in this critical next year or so, we do need to have a clear understanding at the policy level not just of the need to defend schemes in practice, negotiating with employers proposing particular changes – which every trade union accepts – but also of what actually can be done at the policy-making level which would have potentially have a real impact on keeping schemes open. That requires some good, hard thinking and, no doubt, a greater desire to work with the pensions industry on issues where we can reach agreement.

Written by Calvin

26/06/2009 at 6:14 pm

Pipex’s latest procrastinations…

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I’ve blogged before about my friend and colleague Roger Darlington’s struggles with Pipex, currently his ISP.

Roger has updated this experience and the latest objectionable attempt by Pipex at procrastinating his complaint is well worth reading. At least, Roger, you know that every time something like this happens, you and your mission are proved to be completely justified. What hope for a Connected World if we can’t even get a connected customer complaints department within a single (and relatively small) enterprise…

Written by Calvin

26/06/2009 at 11:09 am

Connect Biennial Conference – Thursday

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Today’s final day saw Conference carry the following items of business:

Prop 13 Employment blacklists (Greater London East & Essex)

Prop 14 YPN pensions campaign (Young Professionals Network)

Prop 15 Protecting final salary schemes (O2 South)

The Executive Council’s report to Conference was approved and two new Conference delegates (from the Young Professionals Network and from the Operate IRC) moved and seconded the traditional vote of thanks. Conference also spent some time in an informal Q&A on the next steps to be taken in the merger with Prospect.

The union now has a clear vision of its future, not only as regards where this lies as a result of the historic decision taken concerning the merger, but also about its programme for the next two years, until what will be the first biennial sectoral conference of the Connect IT and Telecoms sector of Prospect in 2011. Several themes will predominate in that programme including, amongst others, the abuse of performance management systems, the protection of final salary pensions and further work in organising workers right across the industry. Delegates left with a clearer understanding of what they need to do to fulfil their role in achieving the objectives of the union, as well as having achieved a resolution to the key issue of the merger which should help reps concentrate fully on the business of the union up to the merger and then afterwards.

Written by Calvin

25/06/2009 at 5:49 pm

Posted in Labour movement stuff

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