Connected Research

Union policy research in the 21st century

Archive for March 2010

Ofcom budget and annual plan, 2010-2011

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Amidst some kerfuffle over its proposals on the pay TV market, which have been three years in the making and which have concluded with something of a bloody nose for Rupert Murdoch, Ofcom has simultaneously published its annual workload programme for 2010-2011. The news release for the annual plan trumpets another year-on-year cut in the Ofcom budget – apparently, this is the sixth year in a row where the budget has been lower than previously. Demonstrating the declining cost of regulation is no doubt a good idea around election time, not least given the appetite the Tories demonstrated last year for taking an axe to Ofcom, and may also be a good defensive reaction against whatever departmental spending reviews are around the corner.

Declining budgets are, however, likely to put significant pressures on union negotiators when it comes to pay reviews and the existing proposals for efficiency savings in property, IT services and procurement will put the 860 or so staff working right across Ofcom, including in these specific areas, under some strain regardless of their contributions to developing its work programme. According to its website, Ofcom is one of ‘Britain’s top employersscoring particularly highly on pay and benefits and working conditions – things that are not only hard-fought for and which do need to be defended but which, from an organisational perspective, clearly provide an important differentiator as well as added value when it comes to issues of staff recruitment and retention.

It is notable that Ofcom’s total budget for the year (£142.5m) again specifically includes deficit repair contributions to the pension schemes of the legacy regulators that existed prior to the creation of Ofcom and we look forward to a similar view coming to prevail during the year as regards the deficit repair contributions made to their own schemes by companies regulated by Ofcom.

The annual plan centres on progress in nine priority areas as well as in other major ongoing work areas, summarised here. It is a complex and involved plan, entailing Ofcom (and as usual) seeking to make progress on a wide variety of fronts simultaneously. One of the ‘major ongoing work areas’ is Ofcom’s Mobile Sector Merger Support programme, under which it seeks to provide support ‘as necessary’ to the European Commission and to the Competition Commission. I’m hoping that this will be one of its quieter work areas over the coming twelve months – but, at the same time, that Ofcom continues, despite the decline in its budget, to attract sufficient resources to carry out its role effectively.


Written by Calvin

31/03/2010 at 4:15 pm

Future pensions: the view from the NAPF mountain

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A state pension worth around 1/3rd of average earnings to provide a robust floor of benefits, supplemented by a workplace pension built around auto-enrolment and mandatory contributions, the whole supervised by a new regulatory settlement based on a standing Retirement Savings Commission analogous to the existing Low Pay Commission.

That’s the vision of the National Association of Pension Funds, the industry body representing scheme sponsors, in Fit For the Future, a new report on pensions published yesterday (press release; full report). Praised by the TUC as offering ‘serious and constructive proposals for the future of pensions‘ there’s a lot in the report to commend, as well as some items for debate.

It’s hard to disagree with the NAPF’s view of the pensions landscape: workplace saving has fallen dramatically both in terms of numbers and in terms of the value to ordinary workers of the pensions generated there. Rightly, the NAPF doesn’t spend too long analysing how this situation has come to pass, but is oriented more towards what can be done to stop the decline and get the principle of workplace saving back on track.

There are many factors which help to account for why this situation has come to pass, as these pages have already argued; though it would be perhaps rather churlish in this context to remind that decisions to close schemes appear to stem largely from the unsympathetic and ruthless cost-cutting actions of scheme sponsors themselves. The Connect Sector of Prospect has some experience of negotiating alternatives where employers are looking to move away from defined benefit provision; outside this experience, that employers have tended not to stop anywhere in the middle of the pensions continuum but have leapt straight from defined benefit to defined contribution is less of a reflection of the lack of risk-sharing alternatives, as the NAPF directly suggests, than of the realities of employment relations in the 1990s: employers have done so because they can; and because the will to do something more creative (but evidently more costly) has not, except in a few, admirable cases, been found.

Despite the acknowledgement that ‘workplace pensions remain central to providing people with an adequate
retirement income’ and that workplace provision is ‘at the heart of good pension provision’, the central role in the NAPF’s vision is occupied not by workplace saving, but by a beefed-up state pension scheme – perhaps rather surprisingly, for an organisation representing (workplace-based) scheme sponsors, but perhaps a reflection that what has been lost will be hard to replace other than by slow incremental steps, starting from the 2012 reforms. Even within the context of workplace savings, the primary place in the NAPF programme is taken by a suggestion for a maximum of twenty ‘super trusts’ whose role would be to offer members of small schemes the low charges facilitated by the benefits of scale – a worthwhile, and supportable, idea alongside the NEST but whose contribution to revitalising workplace provision might well turn out to be less than dynamic.

Other suggestions from within the workplace savings context include offering ‘core’, unindexed pensions to scheme members only (it seems to me that indexation is an under-appreciated pensions benefit; while a focus on the scheme member only might be supported when retirement is far away, but deeply regretted once into retirement since ensuring loved ones are provided after your own death becomes much more important the closer you get to that point); improved mandatory contributions to the NEST (definitely supportable); better advice to accounting standards bodies on accounting for pensions (likewise); and a new statutory objective for the Pensions Regulator to promote good pensions provision (clearly a good idea).

So, there are some worthwhile things to explore in this document and the NAPF is to be congratulated for putting it out. It would be a shame if its publication at this point in the electoral cycle led to its many good ideas being lost to public debate. Nevertheless, in the meantime, I’m reminded once again that quality pensions expanded and became more beneficial at a time of labour strength; their contraction at a time of labour weakness simply proves that advances in benefits have to be won by collective action and are not given away by employers for free.

HADOPI leads to increased illegal downloading?

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Well, no – not really.

The BBC is reporting today a slightly old story that, following the introduction of the French ‘three strikes’ rule on illegal downloads, known as HADOPI, a small-scale survey has found that the incidence of illegal downloading rose by 3% in the three months to December 2009. (The story was originally run in Les Echoes on 9 March.) The ‘three strikes’ approach resembles the provisions on copyright protection in the Digital Economy Bill now going through the UK Parliament in that firstly an e-mail is sent; for repeated offences there is then a formal letter; and finally, for continued infringements, a court may rule that the connection be suspended for a period of up to one year. The UK provisions are based similarly on notifications, threats and then action (and the latter within a range of possibilities) but have evidently proved to be controversial despite the efforts of the Creative Coalition Campaign to point to the problems caused to jobs in the creative industries by copyright infringements becoming an apparently accepted part of daily life.

However, despite being passed – equally controversially – in October with the intention of starting enforcement procedures early in 2010, the French law is not yet in force, and the first warnings are now due to be issued only from next month. It is perfectly possible that the rise in illegal downloads is associated with either or both of an attempt to enjoy a postponed reprieve from the new law and greater publicity surrounding the issue: the new law came into being in the middle of the period covered by this research. Thus, it would be something of a surprise had incidences of illegal downloading not risen at this time.

As in the UK, the French law is expected to lead to a reduction in internet-based copyright infringements. In the UK, the government expects the new laws to lead to a 70-80% reduction in instances of unlawful file sharing (that’s the figure in Digital Britain, p. 110). Figures that ‘prove’ a drop of such a dimension in this activity may well lead to the DEB copyright provisions being seen to have worked – on the assumption that the law ends up being passed in some form faithful to the aims of Digital Britain – regardless of how much they have actually been used and in spite of the existing and continuing brouhaha over their nature, including a flashmob event being organised by the Open Rights Group this coming Thursday.

Written by Calvin

29/03/2010 at 7:14 pm

BA and the online newspaper ethos

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One of the more interesting features of the newspaper industry is its long-standing use as a bulletin board: from quirky, ‘disgusted of Tonbridge Wells’-type letters to letters to The Thunderer and to other newspaper editors setting the world to rights or getting something on record, whether from the establishment, interested individuals and opinion formers. Letters usually had the resonance of importance and their publication in print frequently added weight to the arguments expressed, not least to the usual readerships of the newspapers concerned, whose leanings and approaches are well-known. Given this, their role in changing views might have been pretty limited – preaching to the converted is never going to change the world – but at least they had a role in commencing debate at some level. And you could open your favourite newspaper knowing that it wasn’t going to turn you a nasty shade of apopletic red.

Which is why I turned to yesterday’s letter to the Guardian by 95 leading academics criticising the behaviour of British Airways in its dispute with Unite with some interest. At the last count, there were 495 comments on the story and, at the (early) point at which I stopped reading them, a large percentage of people were using the piece to hang anti-Unite, frequently anti-trade union views, regardless of the debate which the academics had sought to start about BA’s actions.

Clearly, not so many typical readers of The Guardian among them. The question is, I guess, why – why would you hang around on a newspaper site, to the leanings of which you are not instinctively sympathetic, just to have a go? Well, because you can, probably: Web 2.0, where your opinions are not only desired but an integral part of the experience, has some things to answer for. Dialling The Times today re-directs you to a page (no doubt in the short-term) inviting you not just to read the thing but to ‘listen to it, watch it, shape it, be part of it‘, as part of its charging-based re-vamp, but the outcome in practice is frequently the facilitation of opportunities for wind-up merchants and trolls of all types.

I really don’t want to open the online version of The Guardian and be assaulted by a range of closed-minded views straight from the pages of the Daily Mail. If I want that, I’ll open the Mail. I’m as happy to engage in debate as the person stood next to me – and I’m not frightened of views opposed to mine. But what I do want is the sensible and rational, not the mindless. And I want it focused, not random. And I want debate, not diatribes. OK, no-one’s forcing me to read this stuff (and indeed I didn’t get very far with it, thus – at some level – wasting the time of all those whose views I didn’t trouble myself with, natch) but Web 2.0 does have the power to extend debate and that power is dissipated when debates are dominated by those whose purpose is not to engage but to flame. And that’s evidently a lost opportunity.

The answer – more active moderation, perhaps. That might be asking a lot for popular newspaper sites but, at the same time, if the benefits of Web 2.0 are to be realised, perhaps that lies in fewer articles and better moderation. A sort of approach based on ‘never mind the width, feel the quality’. It has to be possible. Alternatively, perhaps one of the benefits of charging for online access is not just support for journalistic quality, as these pages have argued before, but also a re-focusing of the debate engendered within such sites by making them less open to passing trolls.

As regards the academics’ letter: they’ve got more than a point about some of the actions of BA in this dispute and, from the perspective of this particular academic manqué, I like the phrasing of their approach around the issue of the ‘representation gap in UK employment relations’. Such a gap clearly does exist in all too many workplaces up and down the country. From the point of view of this debate, Keith Ewing has taken this on in today’s The Guardian in arguing that there is a human right to engage in strike action. The current laws of this country do not provide a right to strike, but industrial action is never undertaken lightly and remains a legitimate weapon to use against an intransigent employer. The increasingly hardline, right-wing approach to the taking of industrial action over the last twenty years is one that continues to divide this country from our European neighbours and the quality of our democracy is all the poorer for it.

Written by Calvin

26/03/2010 at 5:02 pm

Budget 2010 – some reaction

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A series of articles giving a trade union reaction to yesterday’s Budget over at ToUChstone and some politics from Hopi Sen. Prospect members can also download a summary of the highlights here.

And some cider reaction over at Liberal Conspiracy – and a petition, too, of course. Not, methinks, a move guaranteed to win much support from the more hirsute members of the labour movement – but then, I can’t recall Alistair Darling ever had a time as a beard wearer within the Labour Party, as the reference in this story seems to prove…

Written by Calvin

25/03/2010 at 5:25 pm

Budget Day 2010

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ToUChstone, the TUC’s policy blog, has linked up with Left Foot Forward, Labour List and Liberal Conspiracy in the Progressives Liveblog of this afternoon’s Budget speech.

Click on the link on the right and join ToUChstone for commentary and debate on the Budget from 12 noon today, for coverage of Prime Minister’s questions, and then straight through into the Budget.

Meanwhile, the TUC’s pre-Budget statement calls for:

a Budget for growth, jobs and a better balanced economy that moves away from sucking up to the finance sector and instead invests in productive industries and green jobs,

The statement also calls for honesty in the continuing debate about public services and for politicians to spell out what they mean rather than hiding behind smokescreens and euphemisms.

As far as pensions are concerned, a debate which focuses on the facts rather than the myths would also be helpful.

Written by Calvin

24/03/2010 at 10:15 am

Ofcom consults on opening up BT fibre investment

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Ofcom has today launched a consultation on opening up the fibre-based networks of both BT and KCom to competitors (Ofcom news story; direct link to consultation). The intention is to ensure that BT and KCom (in Hull) provide a wholesale access product so that retail competitors can deliver their own services over the ‘pipes’ which the two network providers have laid down.

The consultation is not a surprise – Ofcom has been working on it for some time – and, indeed, BT has recognised that it will need to open its fibre network to rival service suppliers (see, for instance, its announcement on the award of the Next Generation Broadband project in Northern Ireland; and also an interview with Ian Livingston in the Financial Times). Added political spice is given by the reference to rivals renting not just network capacity on a wholesale basis but also space in BT’s ducts although, as I have blogged previously, there is nothing new about this in terms of regulatory discussions and such a solution is likely only to be a partial one anyway.

Ofcom has spent a little time in its documents dismissing the idea that other operators than BT and KCom – for instance, Virgin Media – might be compelled to open up networks to rivals. This is on the grounds that only BT and KCom (within Hull) have what regulators term ‘significant market power’ (that is, a share of more than 25% of the market in which it is allowed to operate); Virgin Media’s share is, according to today’s Ofcom statements, just 19% (around one-third of homes passed by cable take the Virgin Media service and Virgin Media’s percentage of homes passed is just over 50%). BT has recently gone quite public in debating whether Virgin Media might also be compelled to open up its network to rivals.

The predominance of the significant market power argument is about to be tested, since the BIS consultation on the Next Generation Fund proposes that open access should be a condition of all projects supported by the Fund: that is, should Virgin Media be a network partner in any successsful bids to the Fund, it would have to open its network to rivals regardless of whether or not it has SMP. In principle, this is a supportable position to take on the use of public money. Whether this represents a ‘thin end of the wedge’-type argument (if here, why not there?) is an interesting conundrum that Virgin Media will have to resolve should it desire to participate in Next Generation Fund projects.

At the same time, it is clear that the reference to SMP in telecoms regulation effectively creates a barrier to investment. As I pointed out recently, Virgin Media has little money to invest in extending its cable network farther than the 12.5m homes passed where it has been stuck for quite some time, while its approach to network expansion has depended more on what it calls its ‘off-net’ strategy (i.e. partnering with other network providers). But, should it extend its own network much further, i.e. by a further six percentage points, and that is quite easy to imagine if it is an active participant in Next Generation Fund projects, then it is likely to be caught by the SMP requirements and that raises a very interesting set of questions.

It’s worth making the point that other network providers much smaller than Virgin Media – such as H2O Networks – are building out their fibre installations on an open access basis (but then, this is a pure network provider, not one with a range of content to sell to customers).

Operators being unwilling to subject themselves to the constraints of providing wholesale access to rivals would be an indicator not only that the playing field is really not level but also that the requirement to do so is burdensome. That is something that needs to be recognised a little more openly than is currently the case. A discussion over whether there is a need to have a little more flexibility in the definitions of what constitutes SMP, as well as in the identification of which networks are sizable enough to be required to open up to rivals, may not be too far around the corner.

Written by Calvin

23/03/2010 at 1:07 pm