Posts Tagged ‘Shareholders’

Another Crisis in the Outsourcing Industry: Capita Now in Trouble

February 1, 2018

Yesterday, Mike reported on his blog that the outsourcing giant, Capita, was now in trouble. Its share price has apparently halved, knocking £1.1 billion of its stock market value. It has axed its scheme to issue £500 million in dividends to its shareholders. Instead, it intends to raise £700 million, partly by selling off parts of the company, which it needs to balance the books. There are also fears that it will make part of its 67,000 strong workforce redundant as well as concerns for the firm’s pension fund.

Mike in his article notes that the company was responsible for assessing the infamous fitness for work tests, for which the government has imposed hidden targets. One of these is that 80 per cent of reconsidered cases should be turned down. Mike therefore comments that if the crisis means that some of these assessors get a taste of what they inflicted on benefit claimants, this would be a case of poetic justice. He also wonders what the firm was doing when it devised the scheme to issue those massive dividends to its shareholders. Did they believe that the government’s magic money tree would continue to allow them to give heaps of money to their rich shareholders? He also asks other searching questions, such as whether it was deliberately underbidding to get government contracts, and then using the money to help finance those projects it had already won.

Mike concludes

So: First Carillion collapsed. Now both Interserve (remember them?) and Capita are in trouble.

Who’s next? And what will happen to public services while the Tories dither over this crisis?

See: https://voxpoliticalonline.com/2018/01/31/in-the-crap-ita-government-contractor-responsible-for-benefit-assessments-is-in-deep-financial-doo-doo/

Capita, or as Private Eye dubbed it, ‘Crapita’, has a long history of incompetence behind it. Way back in the 1990s it seemed that hardly a fortnight went by without Capita turning up in the pages of the satirical magazine. And the story was nearly always the same. The outsourcing company won a government or local authority contract to set up an IT system or run IT services. The project would then go over time and over budget, and would be massively flawed. And then a few weeks or months later, the company would be given a contract somewhere, and do exactly the same thing there.

You’re left wondering how Crapita kept winning those contracts, when it was so manifestly unfit to carry them out. Who did it have on its board? Or was there a deliberate policy by Major’s government to support outsourcing, no matter how inefficient and incompetent they were, because it was private enterprise and so preferred and supported for purely ideological reasons?

In any case, what seems to have placed the company in a very precarious financial situation is the usual tactics of big companies in this stage of capitalism: award massive dividends to the shareholders. This usually goes along with starving the rest of the company of investment, which seems to have been done to. And granting massive, and massively unsustainable pay awards to senior management. There’s no mention of that in Mike’s article, but I don’t doubt that this was done too. I’ve got the impression that it’s just about standard practice across a huge swathe of industry.

This is a financial strategy that has driven far more than one company to the wall. I also wonder if the executives weren’t also trying deliberately to create a debt, so that they could dodge corporation tax for five years. This is one of the tricks Stewart Lansley and Joanna Mack describe in their book on contemporary British poverty, Breadline Britain.

Over the years the outsourcing policy has been in operation, there’s been one crisis after another. The outsourcing companies have repeatedly shown themselves to be incompetent, not just in the case of capita, but also notoriously with G4S and the scandals over the violence and brutality it meted out towards asylum seekers in the detention centres it ran. And, of course, when a whole load of prisoners escaped on their way to court. Or jail.

Private industry has repeatedly shown that it is incompetent to do the work of the state sector. These firms have the disadvantage of having to make a profit for their shareholders, as well as the demands of their management for multi-million pound pay packets. The only way they can afford this is by cutting wages to their workers, and spending as little as possible on the service they are meant to be providing. The result of this has been a series of financial collapses. Carillion was the first. Now Capita and Interserve, another outsourcing company, is in similar trouble.

The only sensible recourse should be to cancel these companies’ contracts, and take everything back in-house. But this won’t be done. I think there’s a problem in that the state sector has been so decimated by the past four decades of Thatcherism, that it no longer has the capacity to run these services itself. There’s also the additional problem that too many politicians and media magnates have connections to these companies, or to firms in a similar position hoping for government contracts. Acknowledging that outsourcing was a failure would damage the interests of these politicos and press barons. There’s also the challenge of actually facing up to the fact that a central plank of Thatcherite dogma – that private enterprise is always more efficient than the state – is absolutely, undeniably wrong. Anybody who makes this point is denounced as a Communist in screaming headlines. You only have to look at the way the Tory press has vilified Jeremy Corbyn for daring to want to renationalise the NHS, the electricity net and the railways. His policies are very far from the total nationalisation demanded by Communists and Trotskyites, but you wouldn’t know it from the frothing abuse hurled in his direction by the Tories and Blairites.

There’s also another problem with calling an end to the outsourcing scam. PFI contracts and outsourcing allow some of the costs to be written off the official government accounts sheet. They’re still there, and we have to keep paying them, but they’re not included in the official figures. It’s why Mussolini used a similar scam when he was Duce of Fascist Italy. Any government that restores these projects to the way they were handled before risks putting millions back the official figures. And if that’s the Labour party, you can imagine the Tories making their usual hackneyed and untrue comments about ‘high-spending Labour’, and then re-iterating the spurious arguments for austerity.

I’ve no doubt that the government will do what it can to shore up the current mess the outsourcing companies are in. But the collapse of Carillion and now the severe financial troubles faced by Capita and Interserve show that outsourcing does not work. And given these companies’ highly checkered history, they should never have been given governments to begin with.

And it bears out exactly the description the author of Zombie Economics used for them in the very title of his book. Outsourcing, and the rest of the Thatcherite economic strategy of privatisation, wage restraint, low taxation and declining welfare are ‘zombie economics’ as they don’t work, but haven’t yet been put it into the grave.

It’s high time they were, and Thatcherite free trade capitalism was abandoned as the failure it so glaringly is.

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No, Tweezer! It’s Not Labour that’s Attacking Investment, but Tory Privatisation

January 20, 2018

More lies from Theresa May, the lying head of a mendacious, corrupt, odious party. Mike put up another piece earlier this week commenting on a foam-flecked rant by Tweezer against the Labour party. She began this tirade by claiming that Labour had turned its back on investment. This was presumably out of fear of Labour’s very popular policies about renationalising the Health Service, the electricity industry and the railways.

But Labour hasn’t turned its back on investment. Far from it. Labour has proposed an investment bank for Britain – something that is recognised by many economists as being badly needed. It was one of Neil Kinnock’s policies in 1987, before he lost the election and decided that becoming ‘Tory lite’ was the winning electoral strategy.

The Korean economist, Ha-Joon Chang, who teaches at Cambridge, has pointed out that privatisation doesn’t work. Most of the British privatised industries were snapped up by foreign companies. And these companies, as he points out, aren’t interested in investing. We are there competitors. They are interested in acquiring our industries purely to make a profit for their countries, not ours. Mike pointed this out in his blog piece on the matter, stating that 10 of the 25 railway companies were owned by foreign interests, many of them nationalised. So nationalised industry is all right, according to Tweezer, so long as we don’t have it.

The same point is made by Stewart Lansley and Joanna Mack in their book, Breadline Britain: the Rise of Mass Poverty (Oneworld 2015). They write

The privatisation, from the 1980s, of the former publicly owned utilities is another example of the extractive process at work, and one that hs brought a huge bonanza for corporate and financial executives at the expense of staff, taxpayers and consumers. Seventy-two state-own enterprises we4re sold between 1983 and 1991 alone, with the political promise that the public-to-private transfer would raise efficiency, productivity and investment in the to the benefit of all. Yet such gains have proved elusive. With most of those who landed shares on privatisation selling up swiftly, the promised shareholding democracy failed to materialise. In the most comprehensive study of the British privatisation process, the Italian academic Massimo Florio, in his book The Great Divistiture, has concluded that privatisation failed to boost efficiency and has led to a ‘substantial regressive effect on the distribution of incomes and wealth in the United Kingdom’. Despite delivering little in the way of unproved performance, privatisation has brought great hikes in managerial pay, profits and shareholder returns paid for by staff lay-offs, the erosion of pay and security, taxpayer losses and higher prices.
(P. 195).

They then go on to discuss how privatisation has led to rising prices, especially in the electricity and water industries.

In most instances, privatisation has led to steady rises in bills, such as for energy and water. Electricity prices are estimated to be between ten and twenty per cent higher than they would have been without privatisation, contributing to the rise in fuel poverty of several years. Between 2002 and 2011, energy and water bills rose forty-five and twenty-one percent respectively in real terms, while median incomes stagnated and those of the poorest tenth fell by eleven percent. The winners have been largely a mix of executives and wealth investors, whole most of the costs – in job security, pay among the least well-skilled, and rising utility bills – have been borne by the poorest half of the population. ‘In this sense, privatisation was an integral part of a series of policies that created a social rift unequalled anywhere else in Europe’, Florio concluded.
(pp. 156-7)

They then go on to discuss the particular instance of the water industry.

Ten of the twenty-three privatised local and region water companies are now foreign owned with a further eight bought by private equity groups. In 2007 Thames Water was taken over by a private consortium of investors, mostly from overseas. Since then, as revealed in a study by John Allen and Michael Pryke at the Open University, the consortium has engineered the company’s finances to ensure that dividends to investors have exceeded net profits paid for by borrowing, a practice now common across the industry. By offsetting interest charges on the loan, the company will pay no corporation tax for the next five to six years. As the academics concluded: ‘A mound of leveraged debt has been used to benefit investors at the expense of households and their rising water bills.’
(P. 157).

They also point out that Britain’s pro-privatisation policy is in market contrast to that of other nations in the EU and America.

It is a similar story across other privatised sectors from the railways to care homes. The fixation with private ownership tis also now increasingly out of step with other countries, which have been unwinding their own privatisation programmes in response to the way the utilities have been exploited for private gain. Eighty-six cities – throughout the US and across Europe – have taken water back into a form of public ownership.
(Pp. 157-8)

Even in America, where foreign investors are not allowed to take over utility companies, privatisation has not brought greater investment into these companies, and particularly the electricity industry, as the American author of Zombie Economics points out.

Lansley and Mack then go on to discuss the noxious case of the Private Equity Firms, which bought up care homes as a nice little investment. Their debt manipulation shenanigans caused many of these to collapse.

So when Tweezer went off on her rant against Labour the other day, this is what she was really defending: the exploitation of British consumers and taxpayers by foreign investors; management and shareholders boosting their pay and dividends by raising prices, and squeezing their workers as much as possible, while dodging tax.

Privatisation isn’t working. Let’s go back to Atlee and nationalise the utilities. And kick out Theresa, the Tories and their lies.

Virgin Trains Bans the Daily Mail – Right-Wing Heads Explode!

January 15, 2018

Last week Virgin Trains announced that at least on one of the lines they operated, they would no longer carry the Daily Mail due to customer complaints. Immediately the Mail and its legions of followers started frothing at the mouth and complaining of censorship. But they don’t really have any basis for complaint, as the ban by Virgin is part of the very capitalism and privatisation that their heroine, Maggie Thatcher, promoted.

As a private firm, Virgin is under no obligation to anyone except to turn a profit for its shareholders and bloated paychecks for its board members. Thatcher deluded herself into believing that privatisation would lead to better services, due to the action of market forces and competition. But this didn’t happen. We’re paying more now in subsidies, for a worse service, than we did under British rail. But this hasn’t bother the Tories, whose ideological commitment is for private industry to run everything, even when this would produce a manifestly worse service, as it would if and when they decide to go all out and privatise the Health Service completely.

But as a private firm, ‘Beardie’ Branson can do whatever he likes with it. It’s his property. And so, by the nature of property rights, the Tories can’t argue against what he’s done. It is censorship, yes, but it hasn’t been done by the state. It’s been done by a private individual, whose right to do what he likes with his property has always been regarded by the Tories and the Republicans in America as absolutely inviolable. Branson is free to decide whatever magazines his trains will, or will not carry, in the same way that newsagents can decide which papers to stock. Way back in the 1980s I tried to order the English version of Pravda, which was then coming out, from my local newsagents in my part of Bristol. No such luck. I was told that Bristol had been divided up between the two national distributors. One operated to supply the newsagents in one half, while the other operated in my area. And the distributor that supplied the newsagents in my area wouldn’t carry it. So I had absolutely no choice whatsoever. Private enterprise had decided that where I was, I couldn’t obtain Pravda. Just as Branson has now decided that the Heil will be unavailable on his trains.

Yes, the decision makes a mockery of Thatcher’s constant mantra that privatisation and private industry would bring more ‘choice’. It hasn’t. But this has been the result of privatisation generally. People have been left with a plethora of companies, all actually providing a worse service than when the utilities were nationalised, and for many people choice is actually an illusion. It doesn’t matter who you go to, you’re still paying very large amounts for services that arguably aren’t worth it. If you want an example, think of the privatised dentists. Thanks to Thatcher’s decimation of the dental service back in the 1980s, there are now few dentists taking NHS patients. The dentists that have gone private charge fees that, for many, make going to them unaffordable. Yes, you can change dentists, looking around for a cheaper service, but unless you find an NHS dentist, you’re still going to be charge very high fees. So from that perspective, you don’t have a choice. And the same applies to the railways and other public services taken over by private contractors.

Secondly, Branson was responding to ‘market forces’. This was the other buzzword of the Thatcherites. The operation of the market was held to be good, just and a guarantee of commercial efficiency and success. Capitalism won over socialism, because socialism took no account of market forces. There’s some truth in that when it’s applied to completely socialised economies such as those of the Communist bloc. But as we’ve seen, various capitalist firms have since failed, and then had to be bailed out by the taxpayer. If you just have market forces as your guide, then these firms, which now include Carillion, should be allowed to go under because of their failure to respond to what the market wants. But instead the right demands that we bail them out, because it’s private enterprise and so can’t be allowed to fail. It’s why the corporatist capitalism ushered in by Reagan and Thatcher has been called ‘socialism for the rich’, as the state is always required to support them, while denying welfare services and healthcare to those genuinely in need.

As for Branson’s ban on the Heil, he was responding to market forces. People had complained about the Heil, and as the service provider, he responded to what his customers wanted. The Mail, which has vociferously and consistently fallen over itself praising Thatcher to the rafters, cannot complain. Thatcher stood for market forces, and market forces have dictated that Virgin’s customers don’t want the Daily Mail. So it’s just too bad for them that Virgin trains will no longer be carrying it. There’s also an element of hypocrisy here. If Virgin had said that they wouldn’t carry what remains of the left-wing press in Britain – the Mirror, the Groaniad or the I, the right-wing press, including the Heil, would be delighted. This shows that the great British public despise the left and its journalism, they would announce proudly. But now that the great British public, or at least that section of it that travels by train, have decided that they don’t want the Mail and its hate and bigotry travelling with them, the Tory press has been screaming ‘censorship’.

Yes, Virgin’s ban on the Daily Mail is censorship, but it’s been done because of the nature of capitalism, Thatcherite ‘choice’ and ‘market forces’. Except that in this case, they haven’t acted to empower the right, but attack it.

Fabian Pamphlet on Workers’ Control In Yugoslavia: Part 3 – My Conclusion

November 7, 2017

Continued from Part 2.

In parts 1 and 2 of this post I described the contents of the above Fabian pamphlet on Workers’ Control in Yugoslavia, by Frederick Singleton and Anthony Topham, published in 1963.

The authors attempted to show how, despite a very lukewarm attitude to the idea at the time, workers’ control could be a viable possibility for British industry. The authors’ noted that the very limited gesture towards worker participation in the nationalised industries had not gained the enthusiasm of the workforce, and in the previous decade the Tories had had some success in attacking the nationalised industries and nationalisation itself.

They argued that there was a tradition within the British Labour movement for workers’ control in the shape of the Guild Socialists and Industrial Unionism. The Fabians, who had largely advocated central planning at the expense of industrial democracy, had nevertheless put forward their own ideas for it. Annie Besant, the Theosophist and feminist, had argued that the workers in an industry should elect a council, which would appoint the management and foreman. This is quite close to the Yugoslav model, in which enterprises were governed through a series of factory boards elected by the workers, which also exercised a degree of control over the director and management staff.

The pamphlet was clearly written at a time when the unions were assuming a role of partnership in the nationalised industries, and had agreed to pay pauses. These were a temporary break in the round of annual pay rises negotiated by the government and management as a means of curbing inflation. This actually runs against Tory rhetoric that Britain was exceptionally beset by strikes – which has been challenged and rebutted before by British historians of the working class – and the unions were irresponsible.

The role of the factory or enterprise council in taking management decisions, rather than the trade unions in Yugoslav worker’s control also means that the trade unions could still preserve their independence and oppositional role, working to defend the rights of the workforce as a whole and present the grievances of individual workers.

The two authors acknowledge that there are problems of scale involved, in that the Yugoslav system was obviously developed to suit conditions in that nation, where there was a multiplicity of small enterprises, rather than the much larger industrial concerns of the more developed British economy. But even there they suggest that these problems may not be insuperable. Management now consists of selecting for one out of a range of options, that have already been suggested by technical staff and planners, and the experience of the co-operative movement has shown that firms can be run by elected boards. Much of the idea that management can only be effectively performed by autocratic directors or management boards may actually be just a myth that has developed to justify the concentration of power in their hands, rather than allow it to be also held by the workers.

They also note that the Yugoslav model also shows that the participation of workers in industrial management can lead to greater productivity. Indeed, the South Korean economist and lecturer, Ha-Joon Chang, in his books has shown that those industries which are wholly or partly owned by the state, or where the workers participate in management, are more stable and long-lasting than those that are run purely for the benefit of the shareholders. This is because the state and the workforce have a vested commitment to them, which shareholders don’t have. They will abandon one firm to invest in another, which offers larger dividends. And this has meant that some firms have gone bust selling off valuable assets and downsizing simply to keep the shares and, correspondingly, the managers’ salaries, artificially high.

They also present a good argument for showing that if workers’ control was implemented, the other parties would also have to take it up and preserve it. At the time they were writing, the Liberals were talking about ‘syndicalism’ while the Tories promised an Industrial Charter. This never materialised, just as Theresa May’s promise to put workers on the boards of industry was no more than hot air.

But some indication of how popular genuine worker participation in management might be is also shown, paradoxically, by Thatcher’s privatisations in the 1980s. Thatcher presented herself falsely as some kind of heroine of the working class, despite the fact that she was very solidly middle, and personally had nothing but contempt for the working class and working class organisations. Some of that image came from her talking about her background as the daughter of a shopkeeper. Another aspect was that in her privatisation of the utilities, she tried to persuade people that at last they too could be shareholders in industry. This was not only to the general public, but also to workers in those industries, who were offered shares in the newly privatised companies.

This experiment in popular capitalism, just like the rest of Thatcherism, is a total colossal failure. Newspaper reports have shown that the shares have largely passed out of the hands of working class shareholders, and are now back in the hands of the middle classes. As you could almost predict.

But the process does show how what popularity it initially had depended on Thatcher stealing some of the ideological guise for privatisation from Socialism. She had to make it seem that they would have a vested interest in their industries, albeit through holding shares rather than direct participation in management. She had no wish to empower the workers, as is amply shown by her determination to break the unions and destroy employees’ rights in the workplace. But her programme of popular capitalism depended on making it appear they would gain some position of power as individual shareholders.

The performance of the utilities following privatisation has shown that they are not better off under private management, regardless of the bilge spewed by the Tories and the Blairites in the Labour party. Under private management, these vital industries have been starved of investment, while the managers’ salaries and share price have been kept high again through cuts and increased prices. It is high time they were renationalised. And the nation knows this, hence the popularity of Jeremy Corbyn’s Labour party.

And it’s possible that, if it was done properly, the incorporation of a system of worker participation in the management of these industries could create a real popular enthusiasm for them that would prevent further privatisation in the future, or make it more difficult. Who knows, if it had been done properly in the past, perhaps we would now have a proper functioning steel and coal industry, as well as the other vital services like rail, electricity, gas and water.

Cartoons of Cameron, Osborne, Peter Lilley, Milton Friedman and Paul Dacre

July 2, 2017

Hi, and welcome to another cartoon I drew a few years ago of the Conservatives and their supporters in the press and leading ideologues.

These are more or less straight drawings of five of the men responsible for the present nightmare that is Theresa May’s Britain. A Britain where a hundred thousand people are using food banks to stop themselves from starving. A Britain where a further seven million people live in households where they’re eating today, but don’t know if they’ll eat tomorrow. This is the Britain where the NHS is being gradually privatised behind the public’s back, so that the Tories don’t lose the next election. A Britain where the majority of the public would like the railways and utility industries renationalised, but the Tories want to keep them in private hands so that they provide substandard services at high prices for the profits of their managers and shareholders.

This is a Britain where the press screams hatred at ‘foreigners’ – meaning not just recent immigrants and asylum-seekers, but also EU citizens, who came here to work, but also second- or third-generation Black and Asian British. A press that demonises and vilifies Muslims, no matter how often they march against terrorist monsters like those of ISIS and their ulema – the Islamic clergy – denounce hatred and mass murder.

Immigrants and foreign workers are net contributors to the British economy. They are less likely to be unemployed and rely on the welfare state, so that their taxes are supporting the rest of us. Many of them have come here to fill very specific jobs. But they are still reviled for taking jobs from Brits, and for being scrounging layabouts, preventing true, hardworking Brits from getting the benefits they need.

This is a press that also denigrates and vilifies the very poorest in society – the unemployed, the disabled, unmarried mothers and others on welfare, so that the Tories can have the support of the public when they cut benefits to these groups yet again.

This is a Britain were the majority of people in benefits are working, but they’re stuck in low-paid jobs, often part-time, or zero hours contracts. Many of them are on short-term contracts, which means that, while they have a job today, they may not in a few months time. Nevertheless, even though these people do still work hard, the Tories have decided that the jobcentres and outsourcing companies should also pester and harangue them to get off benefits, because it’s their fault they’ve got a low-paid job. And this is despite the fact that it has been nearly four decades of Thatcherite doctrines about maintaining a fluid labour market, and a ‘reserve army of the unemployed’ to keep wages down.

The Tories are a party that yell passionately and incessantly about how they are ‘patriotic’, while the others were the ‘coalition of chaos’, but who have done so much to break up the United Kingdom into its separate kingdoms and provinces. Cameron called the ‘Leave’ referendum, hoping it would draw the venom from the Tory right. England voted for Brexit, but the rest of the UK voted to Remain. With the result that there is a real constitutional crisis about whether the UK can leave the EU and still remain intact.

It also threatens to renew the Nationalist/Loyalist conflict in Northern Ireland. Part of the Ulster peace process was that there would be an open border with Eire. The majority of people in the Six Counties, whether Roman Catholic or Protestant, wish to retain the open border. But if Britain does leave the EU, then there’s a possibility that border will have to be closed.

The Tories have also endangered the fragile peace in Ulster in other ways. Having lost their majority in parliament, they’ve gone into an alliance with the DUP, a group of highly sectarian Loyalists, who condemn evolution, abortion, homosexuality and bitterly hate Roman Catholics and Gaelic Irish. They’re the same people, who demand the right to march through Roman Catholic areas screaming hatred at the residents. A party, whose links with Loyalist terrorists are so strong they’ve been dubbed ‘the Loyalist Sinn Fein’.

This is the party, that tries to present itself as for ‘hard-working’ ordinary people, while its dominated by elite aristocratic, old Etonians toffs like David Cameron and George Osborne.

The Conservatives have also been trying to present themselves as female-friendly and pro-women, as shown by their selection of Theresa May to lead them. But the people worst hit by austerity have been women, who make up the majority of low-paid workers, particularly in the service industries, like care workers and nurses. Some of the latter are so poorly paid, they’ve had to use food banks. When asked about this, all that brilliant intellectual Theresa May could do was to mumble something about how there were ‘complex reasons’ for it. No, there’s a very simple reason: you’ve paid them starvation wages.

This is a Britain where, according to Oxford University, 30,000 people were killed by the Tories’ austerity policy – introduced by Dodgy Dave Cameron – in 2015 alone. A policy which has dictated that people on benefits should be thrown off them apparently at the whim of a jobcentre clerk, and that terminally ill or seriously injured citizens should have their benefits withdrawn, ’cause they’re ‘fit to work’. Such poor souls have included cancer patients in comas.

Here’s a selection of some of those responsible for this squalid carnage.

At the bottom left is David Cameron. Bottom centre is George Osborne, and on his right is Paul Dacre, the editor of the Daily Mail. This is the Tory rag that has done so much to spread hatred against immigrants, ethnic minorities, the EU, the working class, the trade unions and which has been consistently anti-feminist. This last has been quite bizarre, considering that it was a founded as the newspaper to be read by the wives of the city financiers, who read the Torygraph.

On the right, above Dacre and Osborne, is Peter Lilley, from a decades old issue of Private Eye.

Lilley’s there because of his role in destroying the welfare state and privatising the NHS. It was Lilley, who pranced across the stage at a Tory conference in the 1990s reciting a stupid song he’d written about having a little list, in imitation of The Mikado. This was a list of everyone he hated, including single mothers and other benefit scroungers.

Lilley was also responsible for the PFI scheme, in which the government goes into partnership with private contractors to build and run public services, such as bridges and hospitals. These schemes are always more expensive, and deliver poorer service than if the bridge, hospital or whatever had been constructed using purely public funds. Hospitals built under PFI are smaller, and have to be financed partly through the closure of existing hospitals. See George Monbiot’s book, Captive State, about the way Britain has been sold off to the big corporations. But governments like it, because the technicalities of these contracts means that the costs are kept off the public balance sheet, even though the British taxpayer is still paying for them. And at a much higher rate, and for much longer, than if they had been built through conventional state funding.

Lilley’s PFI was the basis for New Labour’s ‘third way’ nonsense about running the economy. It has also been a major plank in the ongoing Thatcherite project of selling off the NHS. A few years ago, Private Eye published an article showing that Lilley developed the scheme, because he wanted to open the NHS up to private investment. And now, nearly two decades and more on, hospitals and doctors’ surgeries are being run by private healthcare companies, and the majority of NHS operations are actually being commissioned from private healthcare providers. The Tories hotly deny that they are privatising the NHS, but Jeremy Hunt has written a book in which he stated that he loathed state medicine, and Theresa May has kept him on Health Secretary, despite the bankruptcy of an increasing number of NHS Trusts, this shows that the reality is very much the complete opposite of their loud denials.

And the person on the left of Lilley is the American economist, Milton Friedman. Friedman was one of the great, free market advocates in the Chicago school of economists, demanding that the welfare state should be rolled back and everything privatised. He was the inventor of Monetarism, which was roundly embraced by Enoch Powell and then Maggie Thatcher. This was to replace the Keynsianism that had formed the cornerstone of the post-War consensus, and which stated that state expenditure would stimulate the economy and so prevent recessions. One of the other world leaders, who embraced Monetarism as his country’s official economics policy was the Chilean Fascist dictator and friend of Thatcher, Augusto Pinochet. Friedman regularly used to take jaunts down to Chile to see how the old thug was implementing his policies. When Pinochet was not imprisoning, torturing and raping people, that is.

One of Friedman’s other brilliant ideas was that education too should be privatised. Instead of the government directly funding education, parents should be given vouchers, which they could spend either on a state education, or to pay the fees for their children to be educated privately. This idea was also adopted by Pinochet, and there’s a very good article over at Guy Debord Cat’s on how it’s wrecked the Chilean educational system. Just as New Labour’s and the Tories privatisation of British universities and the establishment of privately run ‘academies’ are destroying education in Britain. It was also Maggie Thatcher, who began the trend towards removing the payment of tuition fees by the state, and replacing the student grant with student loans. The result has been that young people are now graduating owing tens of thousands in debt.

Robin Ramsay, the editor of Lobster, said that when he was studying economics at Uni in the 1970s, Monetarism was considered so daft by his lecturers that no-one actually bothered to defend it. He suggested in an article that it was adopted by the Tories for other reasons – that it gave them an excuse to privatise the utility industries, destroy the welfare state and privatise the NHS. Even so, eventually it became too glaringly obvious to too many people that Monetarism was a massive failure. Not least because Friedman himself said so. This sent the Daily Heil into something of a tizzy. So they devoted a two-page spread to the issue. On one side was the argument that it was a failure, while on the other one of the hacks was arguing that it was all fine.

In fact, it’s become very, very obvious to many economists and particularly young people that the neoliberalism promoted by the Tories, New Labour, Friedman and the other free market ideologues is absolute rubbish, and is doing nothing but press more and more people into grinding poverty while denying them affordable housing, proper wages, welfare support and state medicine. But the elites are still promoting it, even though these ideas should have been put in the grave years ago. It’s the reason why one American economist called neoliberalism and similar free market theories ‘Zombie Economics’ in his book on them.

May’s government looks increasingly precarious, and it may be that before too long there’ll be another general election. In which case, I urge everyone to vote for Jeremy Corbyn, as he’s promised to revive the welfare state, renationalise the NHS and parts of the energy industry, and the rail network.

They’re policies Britain desperately needs. Unlike the poverty, misery and death created by the above politicos.

Vox Political: Red Cross Called in Because of Lethal Tory NHS Cuts

January 7, 2017

Mike today put up a post commenting on the report in today’s Guardian that the Red Cross has been called in to help the NHS manage the crisis in care this winter. As a result of the Tories’ privatisation of the NHS and their deliberate starvation of the Service of funds, 50 hospitals have said they cannot cope, and two people have died needless at a hospital in Worcestershire. Mike states

It is no coincidence that the money handed over to private healthcare – to part-fund their shareholders’ profits – along with the administration costs that go with the part-privatised system add up to around £22 billion.

So the Conservative Government – Jeremy Hunt, Theresa May, the current cabinet, and previous ministers including David Cameron and former health secretary Andrew Lansley – have engineered this crisis and would rather pay public money, your money, into the bank accounts of shareholders in Virgin Health (for example) than use it to save people who are dying on hospital trolleys as you read these words.

His article also includes a long list of tweets from people, who recognise this artificial crisis for what it is. As well as rightly blaming Jeremy Hunt and the Tories, they also make it clear that this crisis was also caused by the Lib Dems, and in particular Shirley Williams, supported Andrew Lansley’s bill. To be fair, one of the chief opponents of the bill has been David Owen, who is trying to have it reversed and has written his own book on the attempts of the politicians of New Labour, the Lib Dems and the Tories to privatise it. Owen is a medical doctor, and clearly sees the danger to British healthcare, which the others don’t.

But this crisis, and the Tories’ continued demands that the NHS budget should be cut, also show how mendacious the Tories have been in their promises made in the run-up to the 2010 election. Cameron and his team claimed that they were the defenders of the NHS against the cuts inflicted by Tony Blair. They campaigned against the closures of A&E and maternity departments, and claimed they would reverse the cuts once in office. Of course, once Cameron was safely in No. 10 and Lansley head of the health department, they completely jettisoned this promise, and were back to closing everything they could and announcing that the NHS needed to be reviewed.

Of course, recently the Tories have also claimed that they’re going to give extra funding to the NHS. But these claims need to be read with care. The article in the I which reported this, several weeks ago, then followed it by stating that the Tories still intended to cut the NHS budget by so much. So what the Tories were in fact saying was that they intended to cut the NHS, only not by as much as they originally intended. If you believe them – and there are plenty of reasons why you shouldn’t. But by placing the news of extra funding first, it gives the impression that they really are going to give more money to the NHS. And so skewed reporting and clever press statements help the Tories cover up their continuing dismemberment of the NHS.

The Bullock Report’s Recommendations on Worker Directors

September 21, 2016

The Bullock Committee was set up in 1975 to consider ways of introducing industrial democracy in Britain. One of the key players in this was Jack Jones, then the general secretary of the TUC, who persuaded his senior colleagues of its advantages and that having workers’ representatives in the boardroom would be beneficial. The report proposed the following measures:

1. Workers should have the right to elect directors onto the boards of companies with 2,000 or more employees.

2. These directors should be elected onto a single tier Main Board, not onto the upper level of a two-tier structure as in West Germany.

3. The number of worker directors should equal the number elected by the shareholders.

4. These two groups should agree on a smaller, third group of independents (the 2x + y formula)

5. Boards should be obliged by law to take account of workers’ as well as shareholders’ interests.

6. Worker directors should normally be trade unionists and be elected only by trade unionists.

7. The right to elect worker directors should apply in all companies with 2,000 or more employees, and should be triggered by workers’ request.

From John Kelly, Trade Unions and Socialist Politics (London: Verso 1987) 209.

This would have been the most radical proposal for worker’s control in Europe. It was too much at the time, and the number of worker directors were cut down in further amendments to a third, and then further forms watered it down still further until it was finally abandoned. The Labour party at the time had a majority of only five, and didn’t want the bother of fighting the Tories on the issue, and there was unfortunately little support for the proposals from the unions.

If it had gone through, it would have made British industry the most democratic in Europe, and gone some way to the socialist dream of the workers actually being able to take possession of the means of production, distribution and exchange. Theresa May has recently raised the issue of worker directors, but I doubt she really means it. If she does genuinely have something in mind, it will in no way be anywhere near as radical as that. My guess it’ll be token representation, at the most. Plus there’ll probably be a clause in it saying that you will forfeit some of your other statutory rights as an employee, just like Cameron tried to introduce.

Forget Theresa May. Demand the genuine article.

BBC Reluctantly Admits Lying about Anti-War Protest

September 12, 2016

Mike also put up today a piece from EvolvePolitics, which reports that the BBC on its Feedback page on its website, has admitted misleading the public about the anti-war demonstration it claimed in December last year had been staged outside Labour MP Stella Creasy’s home. The protests were aimed against MPs supporting further airstrikes against Syria. The Beeb’s report claimed that the protesters were ‘far left’, and the demonstration was bullying and intimidatory. Neither of these details were true. The protest was a peaceful vigil. It was not held outside the Walthamstow MP’s home, but her constituency office at a time when no-one was there. The Beeb’s retraction of the distorted report states that it ultimately came from a single Facebook post, that was picked up by a number of other social media commenters and reputable news sources, including the Independent and the Guardian. A few days later, the Beeb issued a partial correction, which changed the location of the story, but still retained the falsehood about the mood of the protesters.

Mike states

So the BBC had decided to run with the inaccuracy because other “reputable” news outlets had done so – and even misled the shadow chancellor into believing the lie.

It had allowed listeners to go on believing the lie that the demonstration was violent and intimidating, even after broadcasting a correction that only revised the location of the event – and not the mood.

Most damning of all is the fact that the full correction appeared – on a little-visited feedback page – on July 8 this year, and has only just been picked up (by the EvolvePolitics site – I had no idea this BBC page even existed).

It seems clear the BBC is quite happy to mislead the public in order to help the Conservative Government. This is not the behaviour of a reputable news outlet.

My advice: Stick to social media sites like Vox Political. We may not always have the full facts but we don’t actively lie to you.

See: http://voxpoliticalonline.com/2016/09/11/post-truth-bbc-quietly-admits-lying-about-anti-war-demonstration-over-syria/

Mike’s statement that the BBC is quite willing to mislead the public to support the Tory government should no longer be a surprise to anyone. A few years ago Mike’s blog, along with, I think, Johnny Void and the Angry Yorkshireman, reported that Scots academics at Glasgow and Edinburgh universities had found that there was a pronounced right-wing bias at the Beeb. They found that the Corporation was something like three times more likely to interview Conservative politicians and businessmen than Labour MPs and trade unionists. My feeling is that the Beeb sees itself as part of the establishment, and interprets its duty as the state broadcaster to produce programming, or at least news reporting, that broadly supports the status quo. Its managers and senior staff come from the same social class as those in industry and the civil service, and many of its journalists and programme makers are part of the same social circle as the Conservative leadership. At least they were during David Cameron’s tenure at No. 10 with the Chipping Norton set. I don’t believe things have changed since Theresa May took over.

I also found it interesting that the Beeb should partly try to excuse itself by stating that it came from other reputable news sources, explicitly naming the Independent and the Guardian. This looks like the Beeb is trying to head off any claims of Conservative bias by citing two supposedly liberal papers. Except when it comes to Jeremy Corbyn, they’re not. Both papers, like the rest of the press, are strongly biased against him. Moreover, there have been reviews of books in Lobster, which have shown that the so-called left-wing press in Britain actually isn’t terribly left-wing at all. In the 1990s, the Guardian regularly used to appear in Private Eye’s ‘Street of Shame’ column for the way it promoted various brutal dictatorships, from Nigeria to Indonesia, praising them as excellent places to do business while ignoring these nation’s appalling human rights records. Some of the articles written in praise of these countries were straightforward PR pieces written by companies specially set up to promote them abroad.

And the excuse that others were following the same line really doesn’t excuse the BBC. Newspapers and the news media are supposed to check their stories. There are even specialist media organisation in America which do so. The Beeb, as the state broadcaster, surely should have had the sense and the resources to check that story as well. But it didn’t. This shows that either the Beeb was simply being lazy, or that the repeated purges of its journalism and newsgathering staff in favour of cutting costs, and boosting the salaries and expanding the jobs available in senior management, has had a detrimental effect on the Corporation’s ability to provide reliable news. Which is exactly what Private Eye has been saying every time more redundancies have been announced at the Beeb of the people, who actually make programmes and produce the news.

The BBC isn’t the sole culprit in this regard. The newspapers have also been shedding large numbers of journalists in order to remain afloat, and give their senior executives, proprietors and shareholders the bloated salaries and dividends they’re accustomed to expect. And several times their journos have been similarly caught out using entirely spurious reports on Wikipedia, posted as pranks, as their sources. For example, when Ronnie Hazlehurst, the composer of a number of well-remembered signature tunes for the BBC, such as that for 80 comedy series To the Manor Born, passed away a few years ago, someone altered his Wikipedia page so that it read that he had composed one of the Spice Girls’ hits. He hadn’t, as presumably any one of the Girls’ fans could have told them. But that didn’t stop the journo, and others in the rest of the press, repeating the story. They were also caught out during the World Cup one year, when someone altered the entry for one of the football teams from the Greek islands. This claimed that its supporters had a special name for themselves, wore discarded shoes on their heads, and had a song about a potato. All rubbish, but the journos decided it had to be true, ’cause it was on Wikipedia. Now it seems that Facebook is being used in the same way for journalists too stressed or too lazy to check their facts.

Of course, the other possibility is that they didn’t bother checking the details, and dragged their heels about correcting the statement that the protesters were out to threaten and intimidate, because the Facebook story told them exactly what they wanted to hear. All the prejudice about peace protesters and ‘hard left’ trade unionists – like the miners at Orgreave colliery, presumably – being violent thugs came flooding back, just like they had from Fleet Street during the 1980s. One of the daftest stories to come out about the peace movement then was a report that the Greenham Common women had managed to knock ‘Tarzan’ Heseltine to the ground, when he visited the base. Heseltine’s a big fellow – 6’3″, and so not easy to deck. He did fall over, but even he admitted that it was an accident. I think he fell over a guy rope or something. But whatever was the cause, he wasn’t pushed, shoved, punched, knocked or anything else. But Fleet Street published the story, ’cause as radical protesters, clearly the Greenham women had to be pathologically violent. Even when they said they weren’t, and gave interviews saying that they didn’t want men at the camp because they were afraid that any men present would start a violent confrontation.

As for hiding the correction on an obscure webpage, this seems to be part of common journalistic practice. Whenever a newspaper or magazine is forced to make a correction, it’s always tucked away in an obscure corner of the publication. The Beeb in this instance is no different. But their does seem to be a change of policy involved. I recall several previous instances, where the regulatory authorities had ruled that one of the Beeb’s programmes had misled the public. The ruling was announced on television or the radio itself. I can remember hearing such rulings on the 7.15 pm slot, or thereabouts, just after The Archers on the radio. For television, they used to issue the notifications of such rulings on Sunday evening just after Points of View and before Songs of Praise. This is a time slot when there would be relatively few people watching, but it’s still not as obscure as a very obscure webpage. Perhaps this is the new way the Beeb hopes to bury the news when its caught bending the facts.

NHS Doctors Now Required to Ask Patients to Use Private Health Insurance

September 7, 2016

I’ve been putting off looking at some of the NHS stories Mike’s posted up over at Vox Political, on the grounds that the Tory and New Labour privatisation of the Health Service makes me both extremely depressed and absolutely boiling mad. But the issue’s far too important to leave alone.

Today Mike posted up a little snippet from The Canary, which reported that NHS chiefs are now asking doctors to politely ask their patients if they have private health insurance. If they answer ‘yes’, the doctor is supposed to gently remind them to use it. The Canary states that this signals the end of the NHS, and universal free healthcare.

See: http://voxpoliticalonline.com/2016/09/06/theres-a-question-doctors-are-now-being-urged-to-ask-patients-and-it-signals-the-end-of-the-nhs-the-canary/

Absolutely, and it’s what over three decades of right-wing administrations have wanted going all the way back to Maggie Thatcher. Despite her protestations in her autobiography, she really was considering privatising the NHS. She discussed it with the cabinet and Douglas Hurd, nearly provoking a rebellion. This wasn’t because her cabinet believed in the NHS. They just saw the writing on the wall and knew that if she went ahead, that would be the end of the Tory party at the next election. She also decided against it after she sent her private secretary, Patrick Jenkin, to the States. He came back and told her precisely how dreadful the American system was.

Nevertheless, she still stated that she wanted a greater role for private medicine, and enacted policies designed to encourage people to take out private health insurance. She wanted 25 per cent of the population to have it, and was disappointed when very few in actual fact did so. Amongst the newspapers pushing this policy was the Express, which published a long piece raving about how those with such insurance should have tax cuts in its Sunday edition.

The privatisation of the NHS continued with the Tories’ introduction of the PFI and the expansion of the scheme and break up the NHS by Tony Blair’s New Labour. Hospitals have been taken out of the bureaucratic structure of the NHS and encouraged to become self-financing. They’ve also been handed over to private management, and the clinics and walk-in centres set up by New Labour were also intended to be privately managed. Well over half of all operations are now carried out by private healthcare firms. The Care Commissioning Groups, which were introduced with loud noises about giving doctors the power to run their own practices are able to commission private healthcare firms to contract for services, and can themselves raise money through private finance. This was taken over by the Tories, and has been expanded even further. At the last parliament, I reposted a meme that showed just how many Tory and Lib Dem MPs had connections to private healthcare firms hoping to profit from the demise of the NHS. It was a lot – about or over 100, if I recall correctly. The Angry Yorkshireman and Mike have also reported comments by Jeremy Hunt, the current health minister, and other Tories attacking the NHS. Hunt, or one of them, has described it as ‘an abomination’. My guess is that this anger probably comes from the Tory hatred of having to pay for public services, which they almost personally resent as the state forcing them to pay for someone’s else’s benefit. I also believe they despise it because it’s a state-run service, and so excludes them for profiting. It’s why Peter Lilley introduced the Private Finance Initiative all those decades ago when John Major was in power: he wanted to find a way to open up the NHS to private investment.

And now New Labour and the Tories are moving another step closer to the final privatisation of the health service. This is being done through a manufactured financial crisis. Blair and Brown did much damage to the NHS, but when they left office it was in budget and did not need further reform. That has changed, due not least to Jeremy Hunt. Even now, Jacky Davis and Raymond Tallis in their book, NHS-SOS state that the problem isn’t that the NHS is underfunded – it’s that NHS funds are being squandered and misdirected due to the introduction of private enterprise into the service. The bureaucracy in these firms and their shareholders profit, while soaking up money that would otherwise go to providing services.

The privatisation of the NHS is a national scandal. There are activist groups pledged to defending it, like the NHS Action Party and doctors’ groups and organisations. These and their on-line addresses can be found in Davis’ and Tallis’ book.

At one time the assaults on the NHS would have resulted in a wave of strikes, public protests and demonstrations. But the Tories have all but destroyed the unions, and cowed the public with a mixture of massive debt and job insecurity. And it’s going to get worse when Brexit takes effect.

Don’t let the mass media deceive you with the pro-Tory, pro-New Labour bias. When you read the papers attacking Jeremy Corbyn and praising Theresa May, just like the Beeb does on TV with Laura Kuenssberg, remember that these are the policies Smith in the Labour party, and his backers Benn et al, and the Tories stand for. Corbyn has said that he wants to renationalise the NHS, and that’s too much for the Tories and Blairite corporatists. These people should be thrown out of power as quickly as possible, before more people die or are harmed by their greed and mendacity.

Guy Standing’s Arguments against Workfare: Part 2

August 8, 2016

The arguments trotted out to support the workfare policies are these.

1. Everyone has a duty to work. Those who take money from the state have a reciprocal obligation to work for the support they have received.

2. Following Moynihan in America, it’s argued that part of the problem of poverty in society is communities, where there are families, which have not worked for generations. In order to break the cycle of poverty, these people must be forced into work.

3. It’s also argued that many individuals have also been unemployed for so long that they, too, have lost the habit of working. These people must also be forced to work.

4. The unemployed are also socially marginalised and excluded. Workfare helps them, its supporters argue, become integrated into society and so become productive members of the community once again.

5. It is also claimed that workfare allows people to acquire new skills. In 2012 a report was published on the exploitation of the people forced to work for free as security guards for the Queen’s Diamond Jubilee. A spokesman for the ConDem coalition responded to the claim by stating: ‘The work programme is about giving people who have often been out of the workplace for quite some time the chance to develop skills that they need to get a job that is sustainable.’ As Johnny Rotten and the Sex Pistols sang back in 1977 ‘God save the Queen and the Fascist regime.’

6. Workfare somehow reduces government spending on welfare programmes. Liam Byrne, New Labour’s advocate for workfare, who was quoted in the first part of this article, said ‘The best way to save money is to get people back into work.’

In fact there are serious arguments against just about all of these points, and some of them simply aren’t factually true. Let’s deal with each of these arguments in turn.

The Duty to Work

If people have a duty to perform free work for the goods and services that are provided freely by the state, then the middle classes and the elite should particularly be targeted for workfare, because they use the state infrastructure and its services more than the proles and those at the bottom of society. But the middle and upper classes most definitely are not required to perform these services. Furthermore there are also strong objections to performing workfare for a profit-making company. Those who do so, like those poor souls working free of charge for the big supermarkets like Sainsbury’s, are helping to make these companies even more profitable. It isn’t society that profits from their work, but extremely wealthy individuals like David Sainsbury and his shareholders, and the people running his competitors, for example. This claim also implies that low income people have a duty to work in an inferior position for the benefit of their social or economic superiors in a master-servant relationship. This is a distortion of the concept of duty. The same idea also leads to the view that if you are unsuccessful in the labour market, you therefore have a duty to work for nothing, a view of society that is both regressive – harking back to some of the worst aspects of the Victorian era – an alienating. On the other hand, if you are performing work that is unprofitable, then there should be no duty to perform it. If it is genuine, valuable work, then the people performing it should be paid the current market rate, not simply provided with unemployment relief.

Standing also makes the point that the concept of duty has led to the belief that people should be forced to find work. But the use of coercion is divisive and actually undermines the commitment to work. He also argues that it actually amoral, because it takes away from workers their ability to choose for themselves whether to be moral. Plus the fact that workfare is not levied on the idle rich, or the friends and relatives of the politicians forcing it on others.

Multigenerational Families of the Unemployed

The number of families that actually fit this description is so small as to be negligible, both in America and over here in Blighty. The academics T. Shildrick, R. MacDonald, C. Webster, and K. Garthwaite examined this issue in their Poverty and Insecurity: Life in Low Pay, No Pay Britain (Bristol: Policy Press 2012). Their research revealed that only 1 per cent fitted the description of a family in which two generations were unemployed. Official attempts to find these pockets of intergenerational unemployment have similarly turned up next to zilch. The whole idea is rubbish, but that hasn’t stopped papers like the Daily Fail claiming it’s true.

Getting People out of the Habit of Not Having a Job

Researchers have also looked at this one, too, and guess what? Yup, it’s similarly rubbish. There are very few people like this. But rather than acting as an incentive to find work, actually being forced to work unpaid in poor conditions may actually act as a deterrent.

Integrating the Jobless Back into Society

Far from being calculated to help the long-term unemployed back into society, the type of work that they are forced to do under workfare is humiliating. In many cases, this is quite deliberate as part of the government’s ideology of ‘less eligibility’ and dissuading people from going on benefits. And studies by the researchers and the DWP itself have also found that workfare makes absolutely no difference to whether a claimant gets a job afterwards.

Enabling the Unemployed to Acquire New Skills

This is also rubbish, as the type of menial work people are giving under workfare, in which they sweep the streets or stack shelves, are by their nature unskilled. And if a skilled worker is forced to perform them for months on end, this type of work is actually like to make them lose their skills.

Workfare Cuts Government Spending

This is also rubbish. In fact, workfare increases government expenditure on the unemployed, as the government has to pay subsidies to the firms employing them, and pay the costs of administration, which are actually quite heavy. And the work those on the programme actually perform doesn’t produce much in the way of taxable income, so money doesn’t come back to the government. Furthermore, most of the people on benefits are actually working, which makes Liam Byrne’s statement that the best way to save money is to get people back into work’ a barefaced lie.