Connected Research

Union policy research in the 21st century

Election 2010: use your vote

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Will Straw at Left Foot Forward has a fair review of the campaign. And his conclusion is impossible to ignore:

One thing is abundantly clear: whatever you do today, vote.

Not turning out to vote means that the votes of extremists count double. Committed extremists are certain to vote – don’t give them your vote too.

And from a trade union perspective, to add a section missing from Will’s round-up, honourable mentions to the Green Party manifesto (pp. 9-11) – but, of the major parties, only one is likely to have included this in their manifesto:

Modern trade unions are an important part of our society and economy, providing protection and advice for employees, and working for equality and greater fairness in the workplace. We welcome their positive role in encouraging partnership and productivity.

Written by Calvin

06/05/2010 at 12:57 pm

Net traffic predicts hung parliament

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Perhaps Alex Salmond should look away now, but traffic to the official internet sites of the three main political parties looks eerily reminiscent both of the share of the vote going to each party, as recorded by recent opinion polls, but is also reflective of recent polling trends – up Labour, down Lib Dems.

Coming soon to you, i.e. in about five years time: Can’t be bothered to vote? Can’t drag yourself down to the polling station? Then let ‘apathy app’, our new app designed to assess your likely voting habits based on your surfing record, put a postal ‘x’ in that box for you…

Written by Calvin

05/05/2010 at 4:08 pm

Posted in Politics

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Britain’s Digital Future II

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I’ve now had a chance to listen to The Guardian‘s Tech Weekly podcast I blogged about last week. Unlike some of the comments on the podcast page, which mostly seem to reflect continuing disappointment over the copyright and file sharing aspects of the Digital Economy Act, I thought this was an interesting and reasonably open discussion on the policies of the three main parties towards Digital Britain, underpinned by some thoughtful and articulate comments on the issues and the policies.

The bits on broadband, specifically on how to fund broadband access in rural areas, occur from the 39.17-minute mark and wrap up around 48.50. I learned the following:

– an acknowledgment from Jeremy Hunt, shadow secretary for culture, media and sport, that the market won’t provide for all and that an element of subsidy would be necessary to extend broadband to rural areas. This is not new by itself, but the Tories’ vehicle for this, i.e. using the £200m surplus in the digital switchover portion of the BBC licence fee, was, according to Hunt, supported by the BBC on the grounds that the hungriest consumers of bandwidth were iPlayer users and that the BBC wanted to extend access to iPlayer further. This BBC support for the use in this way of the digital switchover surplus was news to me.

– Stephen Timms, minister for Digital Britain, argued that the switchover money would not be available until 2013 and that doing nothing until then was simply not good enough, while making progress in rural areas demanded investment of £150m per year (i.e. the sums being spoken as being raised by the landline duty). At the same time, conceding the switchover surplus for rural broadband would leave little left for the universal service commitment. Hunt’s reply was that he would rather use the sums which Labour had spoken of to subsidise regional news programmes from ITV for rural broadband instead. So, here we have a Tory spokesman unsympathetic to the notion of the need to subsidise independent sources of regional news – while I also remain unconvinced that the Tories in office would do much towards a universal broadband service at all: having a policy for rural broadband is not the same thing as ensuring that all households in the UK can get access to a minimum broadband service.

– Hunt commented that next generation investment could cost £29bn [apparently, for fibre to the premises solutions right across the UK] and that this was not something that one company [BT] could afford on its own.  He lamented the failure of the Digital Economy Act to do more about encouraging other private sector operators to step forward and said that he wanted ‘Virgin Media to do more; Sky to do more; Carphone Warehouse to use our pilons, telegraph poles, ducts and sewers’ as a way of stimulating a lot more investment in fibre. Of course, there’s nothing to stop any other operator from building out a fibre network and then connecting that with the networks of others to extend coverage. (Except, of course, the need for investment finance and then the obligation to offer that network on a wholesale basis, just like BT has to do. That ‘our’ is an interesting and revealing word, too!)

– Hunt’s reference to Virgin Media having a fibre network which reaches the major towns and cities, and half UK households, whereas BT was the only operator which had the infrastructure to reach rural areas, and that it was ‘madness’ to wait for BT to make that investment as it simply could not afford to do it, seems to me symptomatic of a Tory desire to see BT only as a provider of last resort – that competition will provide in the major areas and that, where it doesn’t, BT will have to provide. So, other operators would be allowed to cherry pick the best areas for their investment, i.e. those which offer the best returns, while leaving to BT alone the prospect of investing in low return areas (and then having to do so on a wholesale basis). I’m extremely unconvinced that this is a sensible, rational approach to getting fibre rolled out across the UK: it leaves far too little in terms of returns for the operator relied upon to undertake the most costly investments (and the only one with sufficient scale to generate the necessary finance). In a situation in which the costs of fibre investment have already been identified as too high for one operator to deal with, it seems completely contrary then to ask that same operator to fund all the unattractive, low return investments. The UK deserves much better joined-up thinking than that.

– ‘Anyone who laid fibre would have an obligation to wholesale the fibre they laid to anyone who wants it’. I’m quoting here because I was quite astounded by what I heard and replayed several times to make sure I got it right. This goes well beyond BT, for which wholesaling obligations as regards fibre investment will inevitably be mandated by Ofcom, while that ‘anyone’ seems on the face of it to encompass, for example, Virgin Media, as well as any other operator which currently does not have SMP (significant market power – only BT and Kingston Communications currently have SMP). On the other hand, it might be argued that there is a strong whiff of ‘in future’ to the quote and, bearing in mind that Virgin Media is expecting to have completed its delivery of superfast broadband right across its network by next year, it may well on this basis be held not to have been caught by the need to respond to such wholesale obligations.

By the way, the programme ended with a comment on the impact on fibre investment of valuation office decisions. This has been well summarised by Computer Weekly and is based on a court case brought by Vtesse, and lost, earlier this year. It had been Tory policy to ‘realign’ business rates charged on fibre networks, although this seemed to lead to a bit of a spat with the Valuation Office Agency and this policy seemed eventually not to make it into the Tories’ Technology Manifesto. Making the cost of fibre essentially cheaper is likely to have some impact on investment decisions since it will increase returns: but, where that investment wouldn’t otherwise be made at all – i.e. in the rural areas – it’s unlikely to have any impact.

[5 May edit: Today’s The Guardian has a summary of all the manifesto commitments to technology, broadband and digital issues.]

Written by Calvin

04/05/2010 at 5:51 pm

May Day 2010

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Greetings on labour’s day of remembrance, solidarity, celebration and re-dedication.

Here’s three things that remind me of why May Day remains important to the international labour movement, and of what solidarity means in the new decade of the 21st century if it is to be more than just a slogan:

1. At home: the last weekend of campaigning before the general election and the next big effort to ensure the BNP doesn’t gain a seat in parliament on Thursday. Of course, HOPE not hate is actively campaigning in key target areas and its organisers still need your support. Solidarity means uniting against the fascists.

2. Internationally: the draft text of the EU’s Free Trade Agreement with Colombia has been dissected by the TUC. Solidarity means freedom of association, and free from the fear of death squads for standing up for the rights of ordinary people – yet the proposed FTA brushes this under the carpet.

3. In Europe: At the European Trade Union Confederation, John Monks’s May Day message was based on the need to stand shoulder to shoulder with Greek workers to demand social justice and that the EU act decisively to stabilise the situation. Building the European project demands strength, not vacillation; perspective, not short-termism. Solidarity means having the dream and the vision for a brighter, alternative future – and the courage to express what that is when the practical situation demands it.

A May Day worth celebrating: and achievements to be won to demonstrate in practice what solidarity means.

[6 May edit: the TUC has reported events from May Day celebrations around the world here.]

Written by Calvin

01/05/2010 at 9:00 am

IASB puts up new Exposure Draft on pensions accounting

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The International Accounting Standards Board has put up a new Exposure Draft proposing amendments to the accounting regime for defined benefit pension schemes.

The Exposure Draft is, essentially, the accounting profession’s way of publicly consulting on changes to the accounting standards which govern financial reporting regimes. Like everything else, accountancy is governed by global standards which seek to harmonise how accountants report company accounts; unfortunately, IAS19, which governs how defined benefit pension schemes are accounted for, is subject to the same short-termist approach as the rest of the corporate world, implying that it is inimical to the long-term nature of defined benefit pension schemes. Both it and its predecessor in the UK (FRS17) have been blamed, at least partly fairly, for contributing to the rush to close DB schemes.

The IASB has already been through a lengthy consultation process on its preliminary views on refining how defined benefit schemes are financially accounted for; this new consultation runs until early September this year. The Draft is available for public comment and the IASB aims to finalise its plans by mid-2011, with a view to the new standard becoming effective in 2012 or 2013.

The new Exposure Draft seeks to ‘improve’ (in the context, a word full of dread!) pension scheme accounting by requiring companies:

– to account immediately for all estimated changes in the cost of providing pension benefits and all changes in the value of plan assets

– to use a new presentation approach that would clearly distinguish between different components of the cost of these benefits

– to disclose clearer information about the risks arising from defined benefit plans.

Some of this inevitably needs decoding. According to KPMG, what this means in practice is that companies will henceforth have to stop booking a ‘profit’ in their accounts equivalent to the gap between expected investment returns and the interest cost paid on pensions liabilities. This ‘pensions credit’ is, essentially, a way of recording a paper profit from the pension scheme where schemes’ investment returns are higher – as they usually are, where schemes are investing in equities – than the AA corporate bond yield used to discount liabilities. The introduction of the amendments to IAS19, which will require the assessment of investment returns to be based on the same yield on AA corporate bonds, thus effectively ending the credit, will, clearly, lead to greater transparency in accounts – and, at the same time, to a further reduction in the attractiveness of running DB pension schemes.

KPMG’s press release quotes that this will ‘cost’ UK businesses £10bn in lost earnings, with the largest schemes facing a ‘loss’ of £50m per annum, while the ubiquitous John Ralfe believes that this will ‘cost’ BT £750m (turning a £500m ‘profit’ from the scheme on the existing basis into a £250m ‘loss’ under the new one). Ralfe has a long-standing antipathy to schemes investing in equities – as this blog has previously observed. In terms of the actual cost in individual cases, much would seem to depend on how much schemes have invested in equities – though (perhaps to disappoint Ralfe) this is unlikely to result in schemes adopting more cautious investment profiles in the interim.

Will it make much difference? Yes, clearly, to those schemes which remain open to future accrual (the BTPS among them): changes in accounting rules which take money away from the profit and loss account – however much such money was paper only, and regardless of whether pension schemes should have been used in this way to boost earnings – will have an impact on ordinary workers since that ‘profit’ will have to be found from elsewhere so as to retain the level of earnings. Whether it will lead to more schemes being closed, given the numbers of schemes which have already come crashing down and the weight of other arguments against running DB provision which already exist, is a moot point.

Certainly, however, it – together with the requirement for further ‘clarity’ on the risks associated with defined benefit provision – can’t help; I’m almost of the view that it’s the latter that is the most damaging feature of all this: regardless of the ‘losses’ which need to be made up, having to write (or read) even more stuff in company accounts about just how much risk is posed by running a defined benefit scheme may well end up wearing down even the most resilient of corporate defenders of DB provision.

Clearly, these remain tough, and worrying, times for DB schemes, and most of all for the members of them.

Written by Calvin

30/04/2010 at 6:19 pm

Posted in Pensions

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Credit ratings agencies: the lessons of a children’s fable

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Some interesting pieces in the media today on credit ratings agencies, which appear, at least on the face of it, to have been produced pretty much without recognition of each other’s existence: on Peston’s Picks; at Citywire; and by John Gapper at the FT.

The consensus between the pieces appears to be largely that the agencies remain influential, not least in the context of their role in the current financial crises enveloping Greece and Spain, in spite of an inability on past form to recognise – in the gutter language of the day – a turd when they see one and to call as such. Shockingly, it also seems that the agencies were either uninformed (or else misinformed) of the full depth of the products they were rating, or else they simply did not understand them and did not care sufficiently to find out. Either way, I’d have thought that an ability to stand up and say, along with the child in Hans Christian Andersen’s fable, that ‘the Emperor has no clothes on‘ would have been a prime raison d’être for such an organisation – or better said, perhaps, that such an ability ought to be their most highly valued asset in the future. Economies deserve better.

The agencies’ collective ability to resemble the three  ‘hear no evil, see no evil and speak no evil’ – except at the bidding of their masters in the financial investment and speculatory world, of course – renders them ripe for reform by any government intent on tackling the financial abuses which have led to the current scandals and returning national economies to be run in the interests of the people.

Written by Calvin

29/04/2010 at 5:52 pm

Posted in Economic trends

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Britain’s digital future

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The Guardian‘s Tech Weekly podcast this week focuses on the parties’ views and attitudes towards Britain’s digital future, featuring discussion and comment from the three leading parties’ main representatives (Stephen Timms, Jeremy Hunt and Lord Razzall) on the following issues:

– curbing piracy and file sharing

– intellectual property copyright reforms

– how to fund rural broadband penetration

– dealing with the library of government data.

I haven’t yet listened to this in full but will be doing so with some interest, blogging any issues that arise. In the meantime, you can pick up the podcast, or listen online, here.

Written by Calvin

29/04/2010 at 11:55 am