Connected Research

Union policy research in the 21st century

Archive for February 2010

Dave Starsky… or Gordon Brown?

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OK. It’s Friday night and I find myself watching The Mentalist on Channel 5. I know.

I’ve some bronchial stuff going on and the (medicinal, of course) streams of whiskey are flowing.

But, is this Prime Minister Gordon Brown in ‘Red Scare’, tonight’s political-based episode, or is this Paul Michael Glaser, hero of 70s Saturday-night-before-Match-of-the-Day cop show and prototype for Life On Mars, Starsky and Hutch?

You decide.

Source: show promo photos, obtained here (not the best of photos, perhaps, but all I could quickly find in the circumstances)

Written by Calvin

26/02/2010 at 10:09 pm

Posted in Uncategorized

Reminder: Work Your Proper Hours Day…

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… is today. Today’s the day when the average person who does unpaid overtime would start earning for themselves if they did all their unpaid overtime at the start of the year. Celebrate it!

To coincide, the TUC has published some new analysis of official statistics to highlight those occupations that have the most working hours, particularly those working ‘extreme’ levels of unpaid overtime – i.e. people working more than ten extra hours per week. For this group, this level of unpaid overtime means that Work Your Proper Hours Day is not until at least 26 April (or later, for those working more than ten additional hours per week).

By occupation, the Work Your Proper Hours Day for some key groups of employees for which high levels of unpaid overtime is more common is as follows:

Functional managers – 25 April

Corporate managers and senior officials – 7 May

Business and statistical professionals – 30 April

Quality and customer care managers – 20 April

Legal professionals – 20 April

ICT – 15 April

Business and financial professionals – 2 May

For members of Prospect in a major private sector employer with which we deal, our most recent survey of terms and conditions found out that the average level of unpaid overtime was 8.14 hours per week. At the median salary level of £40,500, this took people’s hourly rate down from £21.56 to £17.58 – indicating an average value to the employer of unpaid overtime of nearly £7,500 per year. And countless costs as regards personal and family lives and relationships.

Getting a work-life balance that works for you as an individual has been at the heart of the union’s continuing worktime, yourtime campaign seeking to promote options that can provide a better work-life balance for individuals. That might entail making small, simple changes or making more significant long-term changes to your working pattern.

The worktime yourtime pages within the Connect sector of Prospect also give more specific advice about particular issues and options for achieving a better work-life balance. Use them!

Written by Calvin

26/02/2010 at 2:09 pm

Tobin growing stronger

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Two quotes taken from a piece on Citywire this morning entitled ‘Pound on the brink of collapse’.

The first, from ‘legendary investor’ Jim Rogers (to set the scene and building on his views of a particularly armageddon-type ‘real recession’ which he believes is about to hit the UK economy):

Other currencies aren’t strong and the euro has real problems, with cracks much wider than Greece beginning to show, but it’s the pound that’s most vulnerable. In real terms, it’s already devalued against virtually every currency barring the Zimbabwean dollar and it’s especially exposed over the weeks running up to the UK election. In a basket of currencies, the pound is potentially a basket case. And that will put Britain in an extremely bad position for the shakedown.

And the second from ‘well-known trader’ Vince Stanzioni:

If the billionaires are betting on a second dip, the rest of the investment community should be doing more than looking on from the sidelines.

Remind me, please: the case against a Tobin Tax to deter currency speculation is what, again?

[Almost immediate edit: apparently the Rogers quote didn’t happen, never existed, quite outrageous, etc etc. Think my comment remains accurate, though!]

Written by Calvin

26/02/2010 at 11:19 am

NAPF calls for budget for pensions

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The National Association of Pension Funds has today called for a budget for pensions (press release; full submission) which addresses a couple of its long-running campaigns: firstly on the need for the government to increase the supply of long-dated and indexed gilts (which these pages have supported); as well as a call for the re-structuring of the last Budget’s intention to taper higher-rate tax relief for those earning above £130,000 (which they haven’t).

Issuing more gilts will help pension schemes and would be a welcome development in the light of the continuing decline in the numbers of people saving in defined benefit schemes, since it is one which would help support those schemes which remain by matching the demand of occupational schemes as well as by reducing the strain on company balance sheets caused by volatility. The NAPF also argues that it is likely to assist the government with a cheap and secure source of finance given the suspension of the quantitative easing programme.

Concerning the higher rate taper, the NAPF has upped the ante a little by drawing up three case studies of people earning as little as £40,000 who may – by an unhappy conjunction of circumstances – be caught by the new rules. I don’t want to get too caught up in these simply because the circumstances for ‘Dave’ themselves – 25% rise in pay following promotion, rise in bonus, car allowance and relocation resulting in the award of a hefty cash allowance – seem to be a little unlikely, not least to members of the Connect Sector of Prospect, but also because they are likely to be worked around in the tax efficiency planning that is likely to apply to individuals in these situations. That includes with respect to redundancy payments, too (and there are a host of consultants just waiting to advise). And because all the situations are one-offs, occurring in one particular year, compared to the regular earnings which is the main target of the taper, I’m not sure they’re terribly helpful, either (other than in illustrating some potential pitfalls).

It remains correct to address the imbalance in tax reliefs earned by this part of the population, as the Chancellor is seeking to do: 1% of the population earn at this level (perhaps more correct to say regularly earn at this level) but they receive 25% of tax relief.

What I was attracted by, however, and thus in isolation from the issue of the taper itself, was the NAPF’s quid pro quo for abandoning it: a reduction in the annual allowance for tax-free pension contributions from £245,000 to a figure between £45,000 and £60,000 (figures which, of course, remain well beyond the means of most ordinary pension savers). Not being a tax expert, I don’t know how this works out in terms of likely tax yield or its spread across taxpayers more generally, both of which are clearly critical, but it does seem an interesting option in terms of exploring how what money is made available by the Treasury for pensions tax relief is fairly distributed. The NAPF, which points out that the figures to work out the likely yield simply aren’t in the public domain, argues that it is likely to achieve savings which are at least as much as it believes the measure will yield in practice – and perhaps as much as the Treasury thinks it will. (Nice work, there!)

I’m not sure how this squares with one of the NAPF’s criticisms of the taper (that high-paid executives will lose interest in good quality pensions if they become disengaged from them) – surely the same argument applies if annual tax relief is limited to a maximum of £45,000-£60,000 in pension contributions. Nevertheless, when there is a need to encourage both scheme sponsors to offer good quality workplace provision and to encourage people that pension schemes are worth having and saving in, not least among the low paid, looking at how available tax reliefs are used and distributed is an important consideration.

Written by Calvin

25/02/2010 at 5:38 pm

Australian government issues draft broadband law

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The Labor Government in Australia yesterday published its draft ownership, governance and sale framework for NBN Co, the new company being established to fulfil a 2007 manifesto commitment to form a nationally-owned high-speed broadband company charged with rolling out major investment in a A$43bn (£25bn) fibre-to-the-premises network across Australia.

The plans go hand-in-hand with a proposed – and evidently controversial – plan to compel (albeit on a voluntary basis) the structural separation into wholesale and retail arms of Telstra, the former monopoly telecoms company. A bill detailing the break-up was due to be laid before the Australian senate this week, but looks to have been delayed as ongoing, and highly complex, government talks with Telstra continue over the valuation of telecom assets being folded into NBN (leaked, apparently by mistake last October, as being between A$8bn and A$40bn, depending on assumptions). [Edit 26 February: It was indeed delayed [registration required; limited viewing time] as a result of what the Labor Communications Minister describes as filibustering by the conservative opposition – a situation which he later decried in the following terms: ‘If the opposition is serious about improving competition in the market, they need to stop playing opposition for opposition’s sake and allow the debate to begin.’ So, a centre-left government launches a Bill designed to enforce the structural separation of the telecoms company in the name of boosting competition – but this is filibustered by conservatives. It’s an upside down world.]

Meanwhile, more on the union view on structural separation and NBN appears at the pages of the relevant part of the CEPU here.

The draft framework – which has also been controversial, not least because it appears at least partly to be being used as a tool in the negotiations with Telstra – outlines that the government will continue to hold a majority stake in NBN (i.e. at least 51%) until five years after the network is ‘built and fully operational’, scheduled for mid-2018, after which point it will essentially be privatised. The ultimate decision here, however, could be delayed annually, and perhaps even indefinitely.

The key part of the draft as regards the structural separation argument is that NBN will be a wholesale company, selling wholesale products on an open and equal access basis, and that, while private participation (up to 49%) in the venture is welcome, no retail operations are allowed (though the goverment does seem to be reserving the right for NBN to sell services on a retail basis to ‘certain end users, for example government agencies’). This therefore puts Telstra in the position of either agreeing to structural separation, and folding its assets into NBN (for which the terms of engagement have already been announced), or else taking the chance of competing with it via its own infrastructure build. Additionally, the right reserved to NBN to sell retail services to government agencies also adds pressures on Telstra as a result of its own government contracts, the loss of which would clearly undermine its commercial operations.

Comment on the plans – billed as an ‘exposure draft’ – is being taken until mid-March, with legislation due later this year.

Of interest to the UK? Certainly, as regards an alternative (albeit very difficult, given the structural separation aspects) model of rolling out a fibre access network – and one owned by the government, to boot (at least in the first instance). Secondly, there is evident interest from a UK perspective given the circumstances of the creation of Openreach in the UK – when BT was forced to separate itself functionally to avoid a Competition Act reference. Thirdly, the comparative scale of the investment needs to be noticed. Rolling out fibre-to-the-premises across Australia is an immensely significant project which, if the predictions about broadband investment are right (and these things can be subject to hyperbole), should deliver an enormous boost to the Australian economy. The population spread around Australia is important – most of Australia’s 21m people live around the coast – so this changes the dynamics of the investment. Nevertheless, this is a huge sum, both on an absolute and a per-head basis, on which, leaving aside the controversial aspects with which the plans are associated, it is good to see a government taking a lead.

Written by Calvin

25/02/2010 at 1:59 pm

Pensions Regulator goes after Nortel assets

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The UK Pensions Regulator has filed a major submission to a court in Ontario seeking a £2.1bn share of the estate assets of Nortel Networks, the Canadian telecoms services company that went bankrupt in January last year. Nortel is in the final stages of selling its assets in a programme that has raised comparatively scant proceeds ($3bn) so far – unsurprisingly, given the economic timing – although all except the most recent sale has had more than one bidder [registration required; limited viewing time]. It has still to decide what to do with its portfolio of intellectual property and next generation wireless patents, which may turn out to be lucrative.

The bankruptcy left 43,000 employees in the UK, Prospect members among them, relying on the Pensions Protection Fund, which pays a limited pension in such situations. Given that the PPF is  in deficit, according to its most recent annual accounts, the Regulator is thus more or less obliged to pursue whatever avenues it can to maximise the PPF’s asset base since it is this that will be used to pay the pensions of those drawing on the Fund.

The comments on the newspaper article show that the move has aroused opposition in Canada, not least amongst pensioner groups as Canada seems to have no law proving employees in bankrupt groups with a fall-back pension, leaving them essentially relying, along with other creditors, on the distribution of sold assets for the payment of their pensions. And pensioner groups see any successful legal claim by the Pensions Regulator as reducing the amount available to them.

The Pensions Regulator has perhaps little choice but to pursue such a claim in court – though it may of course not be successful: no-one yet knows whether the Pensions Regulator has the ability to lodge a claim in this way, while hackles have also been raised locally over the late timing of the intervention (though that’s not the fault of the Regulator, given the uncertainty over its powers in this area). A higher asset base for the PPF is itself welcome since this will facilitate the payment of pensions to those under its protection, and it will also lower the pressures on the levy as regards other UK schemes. From the perspective of UK workers, both ex-Nortel and more generally, both these would be welcome developments. Nevertheless, it is sad to see that the impact of this is essentially to set worker against worker.

The court case is due to start next Monday.

Written by Calvin

24/02/2010 at 5:05 pm

BIS Committee has say on Digital Britain

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Media reports this morning are focusing on statements from the Parliamentary BIS Committee on the government’s proposals in respect of Digital Britain (BBC, from where most of the quotes in this post are taken; Reuters UK). However, nothing – press release; statement; report – has yet appeared on the BIS Committee’s page. [Edit 24 February: report now available.]

I’ve no reason to doubt the veracity of the reports; I’d just like to read the full thing. The reports are mostly driven by the press comments of the Committee Chair and seem (partly as a result) to reflect Tory party policy on the issue, about which this blog has been critical, even though the largest number of MPs of the Committee are Labour MPs. (The BBC report also has a reaction from the government.) Even the call for a full-time minister to look at encouraging investment (Reuters report) is, in the light of the new statutory duties on Ofcom, essentially a reflection of Tory policy to have policy issues under the direct control of ministers rather than Ofcom.

Press comment has focused on two aspects: firstly, the ‘ill-directed’ broadband levy; and secondly the plans for a universal service commitment to a 2Mbps broadband service.

The Committee is reportedly critical of the broadband levy on the grounds that it:

Places a disproportionate cost on a majority who will not, or are unable to, reap the benefits of that charge.

Dating back to the publication of the Digital Britain final report last June, these pages have supported – and continue to support – the notion of the levy as being an important contribution to developing access to high-speed broadband on an equitable and cohesive basis across the nations and regions of the UK; and they also agree with the government line that the levy is ‘modest, fair and affordable’. The Committee’s reference here is slightly odd: given that high speed access won’t be delivered to the majority on the basis of a reliance on the market then, by definition, a majority will benefit. Of course, not everyone paying the levy is, or wants to be, online – and subtracting these from the equation I imagine accounts for the Committee’s view (when we also consider that the government target is 90% of homes with fibre access by 2017). But I suspect that those not online, or wanting to be online is – or will be – a reducing number, not least partly as a result of the better services which can be delivered as a result of high-speed access, while an increasing amount of public services is intended to be delivered online: there is a strong link between the government’s broadband plans and its aims for public services.

A flat-rate levy is always going to be regressive – but then, so is universal postage. And I think the analogy is fair. A unified postage stamp pays for a service from A to B regardless of where you are in the UK; the broadband levy is designed to provide access to high-speed services on a similarly cohesive and solidaristic way. The Committee, according to the press reports, appears to have forgotten that there will be social concessions for those on light user schemes. And notions that people who are not interested in particular services should not have to pay for them is a dangerous road to go down for the delivery of public services – and a national fibre access network is a public service (albeit one delivered by a privatised company).

The Committee’s solution here is the market, as well as a small concession via the ‘reduction, or even temporary removal’ of business rates on fibre optical cable. That will help, certainly – but, I suspect, only around the margins where fibre investment decisions are being taken by the market. And it might well contravene EU state aid rules, too.

The comments on the universal service commitment are, however, interesting. The Committee appears to argue that the 2Mbps should be a minimum speed delivered:

Under normal circumstances, to all users at all times.

Disregarding the opening (and rather meaningless) caveat, that’s definitely a supportable approach: the 2 Mbps speed that is delivered should be a minimum one, not one that is ‘up to’ 2 Mbps, since that itself is the minimum speed by which high speed broadband can be defined (i.e. the point at which watching quality TV pictures is feasible). There are technical issues around this, not least in the sense which mobile access can be called upon to deliver part of that commitment, as Digital Britain emphasised, but the call for a more ambitious target for universal service by 2012 is a welcome one, not least since it also re-asserts the importance of the 2012 universal service commitment in spite of Tory plans which appear to disregard it. (And, while they’re about it, they need to do something also about upload speeds and defining how regularly that commitment will be reviewed to ensure it remains relevant, too.)

Written by Calvin

23/02/2010 at 9:00 am