English water, anyone?

The Stonemason has blogged about the eagerness of the Adam Smith Institute to see Glas Cymru (which owns Welsh Water) subjected to the “disciplines of private sector ownership”.

While it’s no surprise that they are calling for a successful publicly-owned company to be used as a cash-cow for shareholders, I feel I must unpick this particular assumption.

The issue of “discipline” relates to the principle-agent problem. How can those running a company be held accountable to its owners?

The Adam Smith Institute may argue that privatisation has been a wonder – but this is only true for shareholders. And some of these shareholders are ordinary people who are facing huge bills because of prices that go up when costs go up and stay up even when costs go down – yet they cannot as shareholders demand this of the company.

Because Glas Cymru is a company limited by guarantee its purpose is not to maximise the dividend paid to shareholders but to meet its objectives of providing high quality water and sewerage services to customers. This year each customer of Glas Cymru will recieve a dividend of £21.

Now, I’m not saying that it has the most socially-just model of ownership.

The company’s workforce – and the employees of contractors – should be regarded as stakeholders just as much as consumers. The objective of high-quality service cannot be met if workers are disempowered; good wages, working hours, and democratic representation ensure that high standards are maintained.

The remit should also include efficient use of energy and minimising any negative effects on the environment or natural wildlife.

Though Glas Cymru may not be perfect, it looks a damn sight better than what we have in England! We are being told that the only way to lower our bills is to have the profiteering water companies competing with each other. We have this with our gas and electricity suppliers – but do our bills come down? No, they compete with each other to squeeze as much money out of customers!

Privatisation has been a disaster. Public assets sold off at knock-down prices to the friends and sponsors of the governing party (Tories, now New Labour). Prices have been allowed to skyrocket -natural monopolies are milked for profit by colluding suppliers in gas, electricity, and railways. Rather than seeing greater private investment in our railways, more public money is invested in rail than ever before!

The likes of the Adam Smith Institute can try all they like to convince the public of the benefits of handing public resources over to big businesses. Their nonesense is only heeded by those politicians hoping to get cushy non-jobs in business after they leave office.
We need to return the privatised utilities to public ownership and democratic control, with the involvement of workers and consumers in the process of management.

Surveys of public opinion have never found a clear majority in favour of privatisation – and with the credit crunch being perceived as resulting deregulation and demutualisation, more and more people will begin to see the necessity of reversing the neoliberal era.

Privatisation of water and sewage services did not take place in Scotland or Northern Ireland. Scottish Water is owned by the Scottish government and both the incumbent nationalist party and the opposition Labour Party are committed to the company remaining in the public sector. The Scottish Tories are for privatisation, but are at pains to point out they don’t want what has happened in England! Northern Ireland Water priovides water and sewage services in the six counties; like Scottish Water it is still part of the public sector.

So, there’s Northern Ireland Water, Scottish Water, Welsh Water – how about English Water?

Baby P and the failure of the business model

From the Workers’ Liberty site, an account of how the business model imported from the private sector harmed the quality of a vital public service:

Until 2006 Pauline Bradley worked as a social worker for Haringey council, whose social work department has been in the news over the death of “Baby P”.

During her time at Haringey Pauline saw the tragic death of Victoria Climbie, the inquiry into her death by Lord Laming, and the subsequent reforms made by the government. Here Pauline, who now works in Dumbarton, explains why she thinks the social work system can fail children like “Baby P”.

The Lord Laming Inquiry made 108 recommendations, to do with tightening up procedures and communication in child protection. Updated computer systems were introduced which made it easier for social workers, occupational therapists and other professionals to record visits and communicate with each other. These systems varied in places and had teething problems too.

Not all Laming’s recommendations were implemented by central government, particularly the ones regarding how social work departments communicate with politicians and other agencies. Initial assessments, core assessments and other practices were implemented and should have been standardised throughout England and the UK.

The government was closely watching Haringey, so they pushed the changes through with vigour there to try to prove that all was different and better. The council changed their logo to “Better Haringey” to show a change from the bad old past.

The press had called the social worker involved with Victoria Climbie “incompetent”. Haringey Council wanted to prove they’d got rid of all the “incompetent, bad” social workers who were employed at the time of Victoria Climbie’s death.

But the new management regime were not qualified social workers! Anne Bristow, the new Director of Social Services, had many qualifications in management and marketing. David Derbyshire, the Children’s Director wasn’t a qualified social worker either. But the politicians seemed to think that was what was needed.

Our union, Unison, had for years complained that the social workers in Haringey were the second lowest paid in London. Overnight the new management regime (who came in after existing mangers had suddenly left, before the Victoria Climbie story hit the press) put up the pay of children’s social workers by as much as £8,000. (But not learning disability, older people’s or physical disability social workers). They introduced bonuses and enhancements such as the “golden handcuffs” (£500 for staying for two years), or a fast track up the spinal column pay scale.

They advertised for people to work in Haringey straight from college. They wanted people they could mould, not experienced social workers like me who might disagree with management decisions on cases. They got a full complement of staff very quickly, draining social workers from other boroughs.

Haringey was a special case after Laming. Other councils could discuss, debate and decide how best to implement changes without the same pressure

It may be that some councils didn’t implement them all — as long as they met their performance and inspection targets, they could be flexible elsewhere.

The problem with the regime at Haringey was that it deprioritised the human element to social work, which cannot be measured and which you only get through life and social work experience. For instance the skill and confidence to challenge a parent who you think is lying — to say “you look as though you have taken a drug, have you?”. Or in the case of Baby P: “Wash his face, I want to see his face clean”.

Parents will react, get angry, etc., but you have to stand your ground, because that’s what saves children’s lives. And the system, your manager, etc. have to back you up. If you know they won’t back you then you’ll be reluctant to say what your guts are telling you.

On reports I heard that a legal team had said there was “not enough evidence” to take baby P into care ten days before he died. If the social worker dealing with the case knew that, she’d be less confident about challenging his mother.

It is very basic to social work to assess the truth and veracity of an adult’s claims. But Haringey had become a borough where the management and politicians did not base themselves on social workers’ abilities but on the idea of a process for everything. If you followed all the procedures everything would be okay. Haringey had a business model of targets and form-filling. That does not protect children. We need a welfare model.

There is starting to be a debate about whether it is better to leave children with their parents or take children into care. At least in care they survive and don’t die (usually). Every case is different and must be seen for its own merits.

In Scotland, where we see a child at risk or in need, we try to engage the parents/carers as much as we can. We literally throw resources at them if it will improve their and their children’s lives, e.g. nurseries, after school clubs, counselling, parenting classes, money for heating or food (but not drugs, we have to be vigilant with that one; supervised shopping may be needed), drugs rehabilitation, addiction services etc. If the parents engage, then there’s a chance to keep the family together with these supports. These resources are crucial.

If they don’t engage, if they lie and avoid us, then we’re more concerned. We may need to take the case to a child protection case conference for more vigilant measures, or to the Scottish Children’s Reporter’s System for a hearing and a legal order.

The Scottish Children’s Reporter’s System is outside of social services and is a welcome check and balance on the local authority. It was inspired by Lord Kilbrandon in 1968, who wanted to focus on young criminals and their “needs not deeds”.

Any child who comes to the attention of authorities, e.g. police, schools, youth clubs, nurseries, etc., can be referred to the SCRA. The SCRA is run by lawyers who have specialised in children’s law. An SCRA reporter then writes to all agencies in that child’s network and asks them for a report. They write to social services and we go out and meet the child, family, etc., and write our report for the SCRA with our recommendation.

When the SCRA have received all the reports, they decide if a children’s hearing is needed. If it is, they call one and the child, parents, social services , school etc are invited to attend.

There are three panel members (not all of the same sex) who are members of the community and trained up to be SCRA panel members. They talk to the child and everyone else present, then decide on whether a legal order is needed. They are advised legally by a SCRA Children’s Reporter.

When they make a decision, in my experience they usually go with the social workers’ recommendation. If a supervision order is ordered, it is the social worker’s job to visit the child and family every month without fail and more often if necessary. The case gets reviewed at intervals, decided at that hearing; it may be one month, three months, six months, eight months, a year, etc.

Social work managers meet SCRA reporters regularly for “case progression meetings”. I feel that their being outside of local politics and local spending decisions makes them a welcome check on social work departments. They will kick up if they’re told “Child A can’t go to this resource as the local authority can’t afford it.”

There should be no limit on the amount of money that can be spent on children’s welfare. Remember Gordon Brown’s unlimited war chest? How about an unlimited child welfare budget? A welfare system should be implemented with no illusions that the market place or businesses can help us in that.

There should be no witch hunts of social workers (the Sun is running a nasty campaign to sack all social workers in the Baby P case).

It is complicated for the labour movement to have an effective campaign in the area, as all the cases are different. The media loves heads to roll, but I don’t feel that helps us; we need to get to the truth and prevent it from happening again.

There were mistakes made with baby P by individuals, just as the man who threw his cigarette down led to the Kings Cross fire, and the man who didn’t close the bow doors on the Herald of Free Enterprise led to that ship sinking. We have to look at the whole story and improve things from for the future. The social worker involved is said to be suicidal, and I know Lisa Arthurworry is still suffering eight years after Victoria Climbie’s death.

But there might be a few slogans for us: no witch hunts of social workers; unlimited spending on child welfare services; a nursery place for all children; no waiting lists for support services; pupil support services in every school; a Guidance Teacher for every child

And how about this: a welfare system for children based on the Children’s Act? “The welfare of the child is paramount.”

Middle East wars cost UK taxpayers 3.7 billion a year

So let’s bring the troops home and spend the difference on improving forces’ housing.

The Times reports:

The sharply rising costs of the war in Afghanistan were laid bare yesterday when the Ministry of Defence said that it would need more than £2.3 billion from Treasury reserves to pay for the campaign in Helmand province this year.

The estimated cost for Iraq in the same period will be nearly £1.4 billion, despite the planned reduction of British troops in the south from the present 4,100 to a few hundred from May.

The latest combined estimated bill of £3.7 billion for Iraq and Afghanistan this year means that the two operations will have cost the taxpayer £13.2 billion over the past six years.

Tory pension plan? Cuts!

Instead of levelling up, the Tories want to level down – the pensions of public sector workers will be cut, using the defence that private sector workers have less generous pensions. Would it not be a better idea to ensure that every worker has a decent pension in retirement?

The FT reports:

Cameron hints at phasing out public sector pensions
By Andrew Bounds, Alex Barker and Nicholas Timmins
Published: November 26 2008 23:32 | Last updated: November 26 2008 23:32

Generous final salary public sector pensions would be phased out by an incoming Conservative government, David Cameron has signalled, in comments that could presage a huge battle with up to 5m NHS staff, teachers, civil servants and local government officers.

The Conservative leader has told businessmen that he wanted to switch public sector workers away from final salary schemes and into money purchase – or defined contribution – schemes.

The issue has become a hugely charged one in recent months as private sector workers face the threat of paying ever more in tax to support generous public pension schemes at a time when their own final salary schemes are being scrapped or scaled back.

The Conservative leader told a meeting of the Greater Manchester chamber of commerce earlier this week that “my vision over time is to move increasingly towards defined contribution rather than final salary schemes” for the public sector.

“We have got to end the apartheid in pensions,” he said, where growing numbers in the private sector rely on, usually much less generous, defined contribution pensions but public employees still enjoy final salary schemes largely paid for by the taxpayer.

He accused the government – which recently introduced relatively minor reforms expected to save £13bn over 20 years on a total liability that the Treasury puts at about £650bn – of being “remarkably feeble” on the issue.

Any such move would almost certainly cost money in the short term, even though there should be substantial savings later. However, defenders of the idea say that the Treasury is facing a 40 per cent increase in the cost of public sector pensions to 1.4 per cent of national income in 20 years’ time, according to the Pensions Policy Institute.

But Mr Cameron’s argument brought a furious reaction from the unions. Brendan Barber, the TUC general secretary, said the news would come “like a bolt from the blue to millions of hard working public servants”.

Both Unison and PCS, the biggest health and civil service unions, said that they would oppose any such move. Dave Prentis, general secretary of Unison, said that, at £7,000 a year, the average public sector pension was far from generous.

Mr Cameron’s office said last night that the Conservative leader – whose comments came in answer to questions from the floor after his speech – was merely outlining “the direction of travel”. The party has not yet “ruled any option in or out”, a spokesman said.

Is progressive taxation is back on the agenda?

The Compass group has welcomed the Pre-Budget Report with as much optimism as the Chancellor’s asessment of the depth of the recession:

Neal Lawson chair of Compass said: “Today’s Pre-Budget Report marks a move away from the Neo-Liberal/free market economic consensus pursued by both Labour and Conservative governments of the past 30 years – but this should not just be a blip before normal service, in the shape of speculative consumer capitalism, is resumed – the government needs to make this a turning point that leads to the moral transformation of our society”.

Jon Cruddas MP said: “This is exactly the kind of measure that we’ve been advocating for a while now and it’s good news for people like my constituents in Dagenham. This should be the first stage in re-balancing the tax system so it’s fairer for middle and low income earners, as well as kick-starting the economy in the short term. When the new US administration takes office then we have the chance to move in to another phase – an international crackdown on corporate tax evasion. Meanwhile, Cameron is now retreating from New Conservatism into orthodox Thatcherite economics and we have to expose that.”

Gavin Hayes General Secretary of Compass said: “A financial crisis that was in part caused by the excesses and risky behaviour of those at the top should not be allowed to unnecessarily hurt the rest of us, so today’s announcement on reducing VAT, whilst at the same time announcing plans to increase the tax burden on the super-rich should both be welcomed, it is absolutely right for government to limit the impact of the recession by using pragmatic and sensible measures such as these.”

As Richard Murphy points out, cutting VAT by such a small amount isn’t likely to impact upon retail prices for consumers:

On an item costing £4.99 the VAT saving will be under 11p. Can you see anyone shifting that price to £4.89?

On £500 (VAT inclusive price) the saving is £10.60. That’s neither here or there: if you are going to spend £500 then £10.60 or so will not change the decision. Other influences are much stronger.

So at low price points this is a boost for the retailer who will take much of the gain. I really do not expect them to pass this on. At high price points I doubt the impact.

Either way the saving goes to marginal jobs in the UK, and Woolworths won’t be saved by this, whilst cheap imports are the only likely sector to see a boost. The business to business sector will see none at all: VAT does not impact them.

But it’s more than that: this might fuel deflation, which we can ill afford. So it’s a mistake.

VAT is regressive, but not as badly as some taxes (e.g. council tax) so the poorest who need help will not benefit most.

John McDonnell MP, chair of the Left Economics Advisory Panel said of the tax changes:

“The introduction of a higher rate of tax for high earners is long overdue but the Government’s proposals are hardly a revolution, and delaying them until after the next election is pointless. The higher rate should be the start of creating a fair tax reform agenda, redistributing wealth from the super rich in order to take the low paid out of taxation altogether.

“The Government should also move immediately to tackle the large scale tax avoidance by the corporate sector, introducing legislation to outlaw tax havens, mirroring the Obama bill in Congress. The public revulsion over City bonuses and bank executive salaries has opened the way for radical tax reform. Government must seize the moment.”

The Public and Commercial Services Union warns of the impact of so-called “efficiency savings” and points out that billions of pounds in taxes go uncollected:

Commenting, Mark Serwotka, PCS general secretary, said: “Further efficiency savings of £5 billion should not be a prelude to yet more job cuts, office closures and privatisation.

“Key public services, such as justice, welfare and tax are already struggling to cope against a backdrop of massive job cuts and office closures.

“Whilst the promise of additional funds for jobcentres is welcome, the government needs to reverse its job cuts programme across civil and public services to safeguard their delivery.

“Whilst the promise of additional funds for jobcentres is welcome, the government needs to reverse its job cuts programme across civil and public services to safeguard their delivery.

“For example the government should be looking at tackling the £21.5 billion worth of uncollected tax and £25 billion lost through tax evasion, by putting more resources into HMRC to claw back the billions in lost revenue, which could be ploughed into public services and stimulate the economy.”

The Morning Star‘s editorial is critical of the direction of travel signalled by the Pre-Budget Report, not so much a return to Real Labour but a continuation of Blue Labour:

Out of his own mouth
(Monday 24 November 2008)

CHANCELLOR Alistair Darling condemned himself out of his own mouth when he said that the central objective of his unambitious pre-budget report was to support firms and businesses going through difficult times.

That is why he opted for a cut of two-and-a-half percentage points on VAT, which will be absorbed into business income rather than find its way into lower prices.

Working people, especially those wondering how long they will be in a job, are unlikely to run out on a spending spree on the basis of a VAT cut.

And, if Mr Darling really wished to spark economic activity, he should have helped those on the lowest incomes whose extra cash would certainly have increased demand.

Those robbed when Gordon Brown abolished the 10 per cent tax rate should be compensated by being lifted out of income tax liability entirely.

State pensioners, whose living standards have been eroded every year since the Tories abolished the link with wages, those working for a totally inadequate minimum wage and others forced to exist on the jobseeker’s allowance pittance should receive a boost in their income.

It is pathetic that the Chancellor should be posing the possibility of no more than a 5 per cent increase to 45 per cent for tax on annual incomes over £150,000 and then only on condition that Labour wins the next general election.

This proposal will not bring any additional income to the Treasury in the life of this government. It’s not even of sufficient scale to encourage the electorate to vote Labour in the hope that it will switch the burden of taxation from working people to the rich.

Government failure to tackle the spiriting away of potential tax revenues of at least £25 billion a year through overseas tax avoidance centres, mainly in British crown territories, emphasises once more its priorities.

The bulk of taxation should fall on the shoulders of those able to pay rather than those too poor to afford avoidance schemes.

And the government should also lift the cap on National Insurance contributions, which is a hidden tax benefit for the better-paid, and introduce a wealth tax.

But the government must not restrict itself simply to measures calculated to increase demand.

It has a responsibility to intervene actively in the economy, especially since the banks have been quick to accept cheaper Bank of England lending and government investment but have not passed benefits on to small businesses seeking to weather the recession.

The government must put substance behind its much-vaunted commitments to environmental issues and to higher employment levels.

Financing at least 100,000 new council homes a year and a nationwide programme of renovating and insulating existing local authority properties could begin to tackle the housing crisis, improve energy efficiency and cut fuel bills.

Similarly, a crash programme of expanding the railways would not only improve the transportation network but increase demand for steel, concrete etc, safeguarding jobs in these industries as well as construction.

Unless the government adopts an economic programme with social justice at its heart, its cosmetic measures will simply prop up big business and ensure that costs of the recession will be paid for by workers.

Dutch courage? Anti-capitalism and mass migration

Blogging comrade Neil Clark has an interesting article in The First Post on the success of the Socialist Party of the Netherlands, which opposes mass migration on anti-capitalist grounds:

Anyone who argues that, as a political force, socialism is dead, ought to visit the Netherlands. The Socialist Party of the Netherlands (SP) is the fastest growing political group in the country.

They won 25 seats in the last general election – an increase of 16 seats – and made huge gains in last year’s local elections. They are now the third largest party in Holland in terms of members and could well replace the Dutch Labour Party as the main alternative to the Christian Democrats.

Why are they so successful? I would suggest that it is because they are a socialist party that actually has socialist policies. They oppose the privatisation of public services, advocate higher taxes on the very wealthy and have condemned the “the culture of greed” caused by “a capitalism based on inflated bonuses and easy money”. They oppose war and Nato and the nascent European superstate. They were the only left-wing Dutch party in Parliament to oppose the new EU Constitution in the 2005 referendum.

Of course the fact that they have one of the most charismatic – and photogenic – of all of European political leaders in the 41-year-old epidemiologist Agnes Kant (pictured above) does them no harm.

Part of its popularity with the voters lies in one particular policy which differentiates it from British or other European parties of the left: they oppose large scale immigration. The SP see the ‘free movement of labour’ as part of the neoliberal globalist package – something which benefits big business but not ordinary people. Their opposition to immigration is not based on racism – as tends to be the case with the BNP and other far-right parties in Europe – but on their socialist ideology.

A recent publication by the SP asserted that labour migration in the EU was making “more acute the contrasts between rich and poor and competition between different groups of workers within the EU”. Instead of lauding the free movement of labour as other parties on the left do, the SP calls for policies “to make migration unnecessary” and for the EU funds to be used to enable poorer regions of the continent to be self-supporting.

The SP’s opposition to large-scale immigration is not a recent development. In the 1980s, the party’s booklet Gastarbeid en Kapitaal (Migrant Labour and Capital), denounced the migration of foreign workers into the Netherlands as a capitalist ploy to drive down wages and destroy working class solidarity.

This is a far cry from the traditional position of the British left – which despite overwhelming evidence that large-scale immigration does reduce wages – still clings to an the ideology of open borders. In doing so, they are not only complying with the wishes of big business, who for obvious reasons welcome the influx of large numbers of people from low-wage economies onto their labour market; they are also espousing a policy which is unpopular with large swathes of the electorate and which is likely to become even more unpopular as unemployment grows.

The success of the Socialist Party of the Netherlands shows that there are lots of votes to be won by an unequivocally left-wing party which has the courage and sense to oppose large-scale immigration on non-racist, anti-capitalist grounds.

Sneaky profit-boosting by energy firms

We already know that the privatised energy monopolies are making profits our of their poor customers:

Firms make about half a billion pounds a year in extra charges from prepayment meters, Consumer Focus estimates.

About 1,000 prepayment meters a day are being installed in households where people have got into debt over their energy bills, it says.

Now we learn that the energy giants are boosting their profits by increasing customers direct debits – even when they are in credit!

Millions of people pay their gas and electricity bills by direct debit but two price rises this year alone mean many consumers are unclear how much they should be paying each month to ensure they clear the amount due on their bills.

Mr Luff, MP for Mid Worcestershire, believes firms have been raising direct debit payments even when customers’ accounts are in credit and warns this practice may be widespread.

“There’s a real temptation for the companies to boost their cash flow at a time of economic recession,” he said.

“I think things are getting worse and there will be people in fuel poverty who are paying by direct debit who can’t afford these huge increases.

“So I think Ofgem need to investigate urgently to see if they think this is correct – that the fuel companies are using this quite a lot. And we need to do something about it.”

Ofgem said it has not received any evidence of the misuse of the direct debit scheme.

Which just goes to show that Ofgem is a reactive regulator – as intended when our energy companies were sold off.

The solution is very clear: return the energy utilities to public ownership and democratic control.

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