Saturday, 9 July 2011

Read all about it - News of the World!

This has been a momentous week, not just for the News of the World, but for print journalism, politics, how we use and access media and, frankly our national life as a whole!

Like some other people have expressed, there is so much I could say about this, maybe in time, but I have some key thoughts.

Matthew Parris wrote an excellent column on the issue in today's Times. His commentary is so often on the money. Today he looks at the issue from a different perspective and touched on one of the things I was thinking.

He pointed out that journalists have been snooping and using illegal or immoral methods to get their stories for decades. Sometimes they are slimeballs in the gutter, sometimes it is to expose light on a dark corner that needs exposed!

He gave several examples. I myself was minded of the Watergate scandal - the ultimate electronic surveillance story. It was exposed by the Washington Post and made the name of Bob Woodward and Carl Bernstein. It became a famous book and magnificent film called All the President's Men - watch it if you care about investigative journalism.

In the film Woodstein are played by Dustin Hoffman and Robert Redford. If mobiles and phone hacking was around in 1972 do you seriously think Woodstein wouldn't have used it? Of course they would!

However, they had Ben Bradlee as their editor (played by Jason Robards in the film). He keeps them on track, makes sure they have corroborated stories and facts they can use. He ensures they follow some standards - that they produce 'a really good piece of American journalism'.

What I am thinking about the News of the World is not the shock at phone hacking. I think there are several far more disturbing things exposed here.

Firstly, that the police are often paid for information and pass on intimate and sensitive information. Also, their investigation of phone hacking in 2004 was so lame and crap! This is the establishment, one of the pillars of a free society letting us down! I hear the current investigation is much tougher and their are several policemen frankly embarrassed but what has gone before and determined to do it right and to do it well this time!

Secondly, I am disturbed by the picture we are getting of what appears to be nothing less the wanton personal attacks on the lives of some celebrities. When the newspaper decide they are the source of a good story that suits the commercial interest of selling a few papers the celebrities are subjected to a concentrated journalistic attack. They might as well have given them a kicking in the street. The casual emotional violence and serious bullying of an assault which shows no respect for the victim is quite breath-taking.

Bad enough If they have done wrong - lied or cheated or behaved badly. But often they have done no more than have the same complications in life as eveyone else. And if they have behaved badly it doesn't justify the assault on their dignity by the tabloid press.

In the last two days I have seen Steve Coogan, Hugh Grant and George Michael lead empassioned arguments against the gutter press attacking them, violating them, obtaing information on them and those close to them illegally and intimidating them. Then, hiding like scoundrels behind the freedom of the press to protect their disgraceful conduct. They exposed that even much of the campaigning the papers sometimes do is to just sell papers!

This is just assault that wrecks lives!

The third thing that disturbs me is how this affair has highlighted intimidation and the irresponsible exercise of power. It is clear that politicians have fallen over themselves to seek approval from the Murdoch empire. Both politicians and other media outlets seemed to have been scared of them. Indeed it seems possible that to attack News International or their papers in some way risked having some aspect of your life uncovered. None of this is illegal, it is about the unhealthy exetcise of power. But at its worse it's little more than a protection racket!

Perhaps a good thing is the way our media is changing. The power of the print media is diminishing in the face of online journalism and the 'free Press' of social media. I'm told the the spreading furore across had a lot to do with the scandal becoming a runaway train that couldn't be controlled. A campaign on twitter and Facebook played an important part in making the news as well as keeping us informed.

I remembered how at the last election when the LibDems broke through after the debates the right wing journos started to smear Clegg. It didn't really work in a way that it might once of done. This in no small measure was helped by twitter hashtags like #iagreewithnick and Facebook campaigns. Whatever anyone subsequently thinks of Nick Clegg this is a good thing and we have the power to counter the pompous opinions of patronising old trout like Ann Leslie or Melanie Phillips.

The other good thing is that a sense of balance is being discovered. The palpable sense of indignation at the hacking of Milly Dowler or the phones of dead soldiers or terrorist victims is drawing the line of acceptable behaviour for journalists. The News of the World crossed that line and it has killed them!

I don't suppose we're going to lose dodgy journalists. I suspect it is important we don't. We still need them to uncover things like Watergate. But even if we accept that or want them to chase a little gossip there has to be a line drawn. This affair helps do that.

So the aftermath of this scandal will run and run - and yes a fair amount is now being driven by people who are opposed to Murdoch politically. But an end to this disturbing abuse of power, poor standards by the police and a tempering of the intimidation of people by the media is much needed. I hope we look hard at other papers too and I hear Paul Dacre at the Daily Mail may have some questions to answer.

One thing is clear - if there are dodgy dossiers, corrupt politicians, and bent coppers in the future, we won't be reading about them in the News of the World.

Wednesday, 6 July 2011

Edinburgh Trams - finish what you started!

I'm not entirely sure what I think of the Edinburgh Tram project.  I hear so many contradictory things.  At this time I can only go on my gut instinct. My gut instinct is this: finish what you started!

We are told that the Edinburgh trams will reduce congestion, we are told they will reduce pollution, we are told they will enhance the image of a city that competes globally in the same league as the likes of Barcelona, Munich and Prague.

Certainly Edinburgh is becoming more congested.  According to international figures it is one of the most congested cities in Europe now.  Edinburgh has an outstanding bus service but it is at maximum capacity.  With congestion comes pollution.  At its worst some of the pollution levels can match those of Beijing in some of the city canyons created by tenements.

The trams will alleviate these problems.

But this tram project has been beset with problems.  It was due to complete this year but is now projected to complete in 2015.  It was due to cost £545m, now cost estimates are for £770m and that is running one line to the city centre from the airport - no line to the modern Royal Infirmary and teaching hospital and no line to the fashionable Leith waterfront (home to Britannia, some Michelin Star restaurants and a gaggle of civil servants).

So the project is truncated, over budget and behind time!

With a smaller scale project I am hearing some of the original assumptions and benefits being challenged.

As I said, the whole thing was meant to cover a considerably larger area.  Originally the trams went hand in hand with a congestion charging scheme to reduce traffic.  And, originally the trams went alongside an ambitious housing and re-development plan for Leith (the port area) and along the waterfront.  Two of the tram lines are not going ahead, the congestion charging got voted out in a local referendum and the recession put paid to the Leith redevelopment - for now.

But new figures have been given and apparently the reduced trams project still brings about appreciable advantages in congestion and pollution reduction.

Maybe some of these figures should be questioned - will this just benefit tourists - is everyone being entirely truthful or realistic with their projected numbers?  Time will tell.

I also believe it is just a start.  Once the core infrastructure is up and running it is much easier and cheaper to extend it.  I think in time the trams will go to Leith and maybe even the Edinburgh Royal Infirmary on the edge of the city.

Congestion is not going away.  Modern transport modes will not stand still.  This is a project for the future and one we will build on.

Even if the numbers don't stack up well at this stage, as opponents of the scheme argue, I think they will over time. But I am prepared to change my mind on this if it can be outlined that none of the revised numbers stack up at all. 

I'm also told that, paradoxically the traffic re-routing necessitated by trams will create pollution black spots in some new places.  However, I think the net affect will be an overall reduction in pollution for the city.

There have been a few other examples of big engineering projects which should help us put this project in some sort of perspective.    The Dublin tram project was hated during the building disruption and ended up costing three times the original estimates.  It is now a big success and being extended!! The Manchester trams are being extended too.

Wembley Stadium was beset with delays and increasing costs and also in Edinburgh, the Scottish Parliament building cost 10 times the original proposal and is now an iconic building.

The Edinburgh trams project is actually a relative minor offender in terms of rising costs.  True the project is over budget by around £200m, with just a third of the work completed. But most of the hard bits have been done: new bridges, the tram depot, the groundwork - moving gas, water and electricity pipes along the route much of which involved renewing pipework that would have needed renewal anyway.

So, what has gone wrong and who is to blame? 

Despite putting the costs over run in perspective there is no doubt that this is much worse given we have a recession at this time. I also think after the parliament building debacle there was a determination to put a stop to major engineering contracts being so open ended in terms of costs.

This project has had a massive time over-run and at times in terms of project management has seemed something of a shambles.

Huge disruption has been caused on Princes Street and down Leith Walk meaning traders have suffered.  Those living close to the route are driven to despair.  Particular vitriol seems to come from the good citizens of around Leith Walk as it has been dug up, is still dug up and the tram will never go there.  'Which genius thought that one up?' they cry!

Well it probably will someday - just not yet!

This project has a messy structure and governance.  There is the Council, a firm called TIE (Transport Initiatives Edinburgh) to project manage the construction and the main contractors - Bilfinger Berger.

Hit by delays and overspend there has been a series of disputes.  Work stopped and external mediators had to come in to solve a series of contract disputes between the city and the contractors.

Political pass the parcel

The politics of all this has become quite grisly.  It resembles a game of pass the parcel in reverse as the parties try not to be associated with a once glorious project as we near election time.

I actually think this is a complicated saga and to pin the blame on one party is ridiculously simplistic and probably wholly inaccurate.

Make no mistake, this is a long standing project with original all party support in Edinburgh.

The LibDems and SNP can be criticised because they form the current administration and most of the problems have come to a head while they have been in office.  In particular they signed a contract in 2008 with the contractor which did not prove water tight on the costs.  But they were told that 95% of the costs were fixed.

I for one would like to know if the council lawyers and council officials and TIE people should have done better with the contract that was put in place in 2008.

The SNP point out, rightly, that they were the only ones against the project.  However, they are part of the current ruling group and they signed off the contracts in 2008 and since then have made the project impossible from within making them more responsible for difficulties than the LibDems, reckons the Green Party's James Mackenzie who does media for their MSPs.

The SNP in Edinburgh are interesting, they do spend a lot of time trying to look both ways and pass the buck on this issue even though they have voted for it.

They did oppose it originally.  They seemed to do this for political advantage in 2007 rather than as a profound policy position.  At Holyrood they opposed it but that was because they saw spending on roads as more important and didn't want big capital projects in Edinburgh and Glasgow, they wanted it spent up north where their support came from at that time.

I'm not sure what the SNP in Edinburgh thought before 2007 as they were barely a factor in those days.  I don't remember them taking a strong line against the original Tram ideas.. 

Labour have been particularly political in a pathetic and disingenuous way.  They say there was no trouble before 2007 and the problems all come from the 2008 contract with the developer.  Apart from the fact that this is over simplistic to the point of inaccuracy I have one problem with this.  The problems with the project management stem from the governance arrangements and the responsibility for the Edinburgh trams governance arrangements lies entirely with Labour!  Though I think that too is over simplistic as there was all party support but I do think the project management problems are at the root of the problems - the 2008 contract is symptomatic of that.

I don't want to get bogged down in this but each political party shares in the responsibility for the shambolic management, and there are questions to ask of TIE, lawyers and council officials.

So back to where I started from.

Its a bit of a mess.  We can't be sure of all the new figures and assessments and the politicians are trying to pass the buck in a pathetic manner.  But my instinct is they are better finishing what they started; and like Dublin, Nottingham, Manchester, Seville and countless other European cities, I hope we will be glad we did this one day and will want to extend the Edinburgh tram project.

Tuesday, 5 July 2011

KLM introduce green aviation fuel for their flights

I clocked this interesting piece of news about Bio Fuels on my Twitter feed this weekend.

Apparently KLM Royal Dutch Airlines are about to introduce a new bio fuel to 200 of their  Flights.  They will be run on biokerosene on flights between between Amsterdam and Paris.

In 2009 they found it was technically possible to fly on biokerosene when they flew a  demonstration flight.  They are now receiving certification to operate commercial flights on bio fuel.  

These flights will be operated on bio fuel made from Used Cooking Oil.

Apparently KLM is open to using different raw materials for the end product, as long as they meet a range of sustainability criteria, including reductions in CO2 emissions and limited negative impact on biodiversity and food supply. The bio fuels will also have to meet the same technical specifications as traditional kerosene and must not require any adjustments to aircraft engines.

I know there are firms working on extracting oil from plants and they are developing plantations to enable them to produce this ‘green oil’ as aviation fuel.

KLM’s fuel is produced by Dynamic Fuels and supplied by SkyNRG, a consortium launched by KLM and North Sea Group and Spring Associates in 2009.

KLM are being supportive of a WWF energy report which argues that alternative fuels made from biomass are the only appropriate replacement for fossil fuels for such sectors as the airline industry.

The route to 100% sustainable energy will no doubt be enormously challenging and the costs of bio fuels will need to come down substantially and permanently in order to be viable for the aviation industry in the longer term.  KLM reckon this can be achieved through innovation, and legislation that stimulates bio fuel in the airline industry. 

I have no idea how effective KLM’s initiative really is; commercially, technically or in terms of true green sustainability.  However, I thought this to be an interesting and very positive development.

I am interested to hear any comments from environmental campaigners or engineers who may have a view or critique on what KLM are doing.

Monday, 4 July 2011

Pensions Killed Detroit! How can we stop it happening here?

At a time where public sector pensions have been at the heart of our national debate its worth thinking about what happened in the United States.  Why? Because expensive and outdated pension schemes have destroyed the auto manufacturing industry in Detroit and with it the city!
Detroit is a city built around the car manufacturing industry.  It used to be dominated by the big 3 auto companies – GM, Chrysler and Ford.  In recent years the industry and the city have collapsed.  In the 1950s 1.8 million people lived in Detroit.  Today it is less than 800,000.  There has been a 25% decline in population in the last 10 years alone.  At the root of this has been the decline and fall of the car manufacturers at the heart of the economy.
Why have the big 3 auto companies declined?  Well, they had been relying too much on SUV sales and not making enough small and hybrid cars and they have been dogged by poor quality.  However, the biggest single reason has been the massive cost of their employee benefits and pensions programme.
Between 1993 and 2007, GM poured $103 billion into funding their pensions and healthcare scheme.  Over the same period they could only afford to pay out $13 billion in dividends.  GM also had to work hard to play catch up as funding payments into the scheme fell behind.  At the start of the 2000s it had to pay an additional $20 billion to catch up payments and agreed to pay a further $30 billion to fund future healthcare liabilities.  Note I am talking billions here, not millions!
The point is the pensions and benefits schemes totally starved GM of investment and made a massive contribution to GM falling behind developments in the US car market.  Chrysler and Ford had similar stories.
Many other car companies based in southern or mid western states have been able to come in with far cheaper operating costs and beat the big 3 Detroit firms in competition.  Notably Nissan whose costs per worker in the US were more than 40% cheaper – largely because of the costs of the employee benefits package.
The Big 3 employee benefits package had been set up in 1950 in a deal arranged by the Union of Auto Workers UAW that became known as the Treaty of Detroit.  In a time of full employment and little competition the industry committed itself to open ended final salary arrangements with fixed guarantees.  As the workforce has grown and aged and as workers have lived longer these have become more and more expensive than ever envisaged and the companies have found themselves locked into open ended arrangements where they cannot control the costs.
Detroit and the car companies have been not alone in their pension schemes causing catastrophic loses. A huge pension liability created a budgetary nightmare for New Jersey and the city of Vallejo in California actually filed for bankruptcy because it couldn’t handle the costs of police department pensions.
Roger Lowenstein wrote about this further in his 2008 book “While America Aged:  How pension debts ruined General Motors, stopped the NYC subways, bankrupted San Diego and loom as the next financial crisis.”
Change is unavoidable in the UK
The UK faces similar issues.  Through the 50s and 60s – a time of effective full employment - there was a massive growth in Final Salary pension schemes.  The UK developed a parallel system of occupational pensions provision for those in the public sector and larger companies along with growing state provision.
13% of the population had been in occupational schemes before the war – mostly in the public sector.  By the end of the 1960s this figure was 53%.  However, in 1961 life expectancy for men was 68 years and just under 72 years for women.  In 1908, when the first state pensions were introduced they kicked in at 70, an age many failed to ever attain!  Today life expectancy in the UK is 77.9 for men and 82 for women - and growing every year.
Longevity – the fact that we are living longer is making pensions provision more and more expensive.  There are of course other factors like salary inflation but this factor alone is at the root of the problem.  After the war people were retiring at age 65 and expected to live on average about 5 years or so in retirement.  Today people, in pension schemes are retiring at 60 and can expect to live to 80 on average – 4 times longer than envisaged when the pension schemes were conceived.
Private sector Final Salary pension schemes in the UK are therefore dead!  They have been for the last 5 – 10 years.  While existing members are still in the schemes, they are all closed to new entrants.  Companies can no longer afford them and given that the benefits are fixed and guaranteed they are an open ended and growing commitment.  They are no longer commercially tenable and are a risk to the business.  That is why they are dead.
One pensions commentator, I think it was Tom McPhail, said last week that we will probably all have to spend a little less, save a little more and work a little longer to fund our retirements in future.  I think this is sound and reasonable advice and actually one of the most intelligent things I heard last week.
Final Salary pensions continue in the public sector – unfunded by investment and paid for by general taxation.   Yes, their projected costs are set to fall with CPI rather than RPI indexation and workers make a contribution.  But the projected fall in costs are because of these small reforms already in the pipeline.  They are still hugely expensive.
Pensions are in fact deferred pay.  Today, because of the current pensions position it often pays far more working for the public sector than for the private sector.  This means the wider population are being asked to fund pensions which are far more generous than anything available to them.  This means funding something akin to our entire defence spending budget.    And no economy is going to last for very long where it is more attractive to work for the public sector than for the private sector!
Ros Altmann, the Director General of Saga and something of an expert on UK pensions, argues that Final Salary pensions are actually fundamentally unfair as they disproportionately award high flyers being based on one year’s salary at the end of their career rather than taking into account, say, a lifetime of service and contributions.  It is right to reward high flyers when they are working – maybe not to continue to do so often for many years longer than they actually worked for their employer!
The true costs of final salary schemes are unsustainable to fund as the private sector has discovered.  Employers can’t underwrite unquantifiable, open-ended commitments for decades in the future.  Neither can the state or future tax payers – change is unavoidable.    
What to do?
It seems to me that the real issue here is that our occupational pension infra-structure – both private and public is broken.
The government is introducing auto enrolment so that everyone will have a modest occupational pension.  This will help a little with the many who are not in any pension scheme at all.
However, it is very modest provision.  In the second half of the 20th century companies fulfilled a social welfare function providing generous pensions – using tax advantages to provide deferred salary in effect.
With jobs for life long gone and guaranteed final salary schemes for life long gone, companies don’t do social welfare anymore – nor can we really count on them to do so.  Unfortunately, many employers have been replacing old generous schemes with much less generous ‘money-purchase’ schemes with no guarantees and all the investment risk is with the employee.  The new auto enrolment provisions, while welcome for some, just accelerates this levelling down affect.
I’m told both the USA and Australia have been much more effective than the British at replacing old unsustainable pension schemes with new money purchase provision.
I think the public sector unions have a real opportunity here.  They need to be constructive.  Accept the old pensions are unsustainable and come up with some good alternatives.  If they are sustainable and something new that provides decent pensions takes its place, market forces in the labour market could lead the way to improvements in the private sector too.
We all need to save more and we all need something that is more sustainable!