Graduated benefits

What the popularity of university subjects amongst graduates (a) in the UK, (b) in Westminster and Whitehall, and (c) in other European nations tells us about the UK and its Establishment.

(a) are keen on sciences (esp. biology), arts and humanities, and not keen on practical/commercial subjects.

(b) disproportionately studied politics, economics, philosophy, history and law at Oxbridge/Russell Group universities, to an extent that makes them completely atypical for the population they represent, and far too lacking in diversity of interest and experience.

Tripe and baloney

For connoisseurs of government tripe on energy and the environment, the last couple of days have been like a banquet. The releases of the UK Low Carbon Transition Plan, the Low Carbon Industrial Plan, the Carbon Reduction Strategy for Transport, the Renewable Energy Strategy, the Renewable Energy Financial Incentives consultation, and the announcement of the new "eco-towns" are such a smorgasbord of cant and delusion that I am struggling to digest them all. In the long-run, they should provide tasty morcels of insanity for weeks to come, but in the meantime, here are a couple of choice cuts that others have spotted, just in case you missed them:

  1. The Times noticed that the claims of job-numbers currently in the green-energy industry and to be added by the Government's new measures are just slightly over-stated - including such jobs as slipper-makers, "workers in the North Sea gas industry as well as suppliers of wallpaper and animal bedding".
  2. Grant Shapps, shadow minister for housing, noticed (unusually sharply for a Conservative spokesman on green issues) that the minimum standards to which houses in the new eco-towns must be built are lower than the standards that will be required of all other developers by the time the first eco-towns are expected to be built (2016).

That'll do for the starters. Now, what shall I have to follow...

A parliament swept clean of ideas and principles

Something is starting to bother me about the MPs' expenses scandal. I do not defend those MPs who have taken advantage of the lax rules that they instituted. They should go.

But it is starting to feel to me that, for most people, this is the only measure of an MPs' worth that matters. The corollary of the public appetite for kicking out any MP tainted by corruption, is that squeeky-clean MPs may waltz back into their seats at the next election simply by virtue of their purity, regardless of their merits as representatives of their constituents on matters of public policy. Is financial probity really the limit of our expectations from our MPs?

Inverse learning

Renewable energy has a number of benefits and disadvantages. The most significant of the benefits are the avoided carbon emissions and the energy-security benefits. The latter is more debatable - diversity is undoubtedly the key to security; on the other hand, the intermittent renewables, being unreliable, have some negative impacts on security too.

Whatever the pros and cons, one can say that in most regards one type of renewable provides similar benefits (per MWh) to another, and that if we were to distinguish between them at all, it would not be to favour intermittent technologies (wind and wave, in particular). Nevertheless, the Government treats the intermittent technologies very much more favourably than the alternatives.

In the case of onshore wind (which is treated four times more generously than landfill gas, a technology of similar costs and maturity), this is almost completely incomprehensible and unjustifiable. In the case of offshore wind and wave, the justification, such as it is, for generous support is that they are immature, and that generous support to bring on projects now will drive them down the "learning curve" in the belief that they will thus become economic.

The learning curve is a piece of economic mumbo jumbo. But let's pretend that it's not. I posted recently on offshore wind's apparent learning curve to date, which has been strongly upwards (i.e. the more we learn, the more expensive it turns out to be). Now the Government has released a report by Ernst & Young that was commissioned to support their decision to "band up" offshore wind in a review of the Renewables Obligation banding.

DECC don't appear to have made the document publicly available; perhaps even they and E&Y are too embarrassed to expose this drivel to public consideration. So I have attached it here.

The report includes the customary incantation of the "learning curve" mantra, in Appendix C: Industry learning. And indeed, assumptions about learning-curve benefits are included within E&Y's calculations of future costs.

So how much better do E&Y forecast that offshore wind will get as a result of the Government's generosity and the magical properties of "learning curves"?

Well, here is their projected curve for the cost of the turbines:

E&Y turbine costs 

Oops. Well perhaps they are getting cheaper to put in? Here is E&Y's projection of foundation costs:

E&Y offshore wind foundations costs 

Never mind, maybe the electrical infrastructure is getting cheaper?

E&Y offshore wind electrical infrastructure costs 

As E&Y note, "Since more recent projects are located further offshore they see higher electrical infrastructure costs than earlier near-shore projects." Oh dear. Anyone remember the cherry-picking effect, which I have repeatedly pointed out will counterbalance and often outweigh the learning curve?

In all E&Y project that the trend of capital costs will be:

E&Y offshore wind capital costs

But capital costs aren't the be-all-and-end-all of project economics. Perhaps the operating costs are improving:

E&Y offshore wind operating costs

Last chance. Will the costs of repair and maintenance improve so much that they make up for all these other increasing costs?

E&Y offshore wind O&M costs

No. Everything about offshore wind is getting more expensive.

So remind me again. Just why are we planning to throw billions of pounds at this technology, and support it to a much greater extent than technologies that deliver the same or greater benefit, are more reliable and less difficult?

Is there any reason other than to provide yet another bung to the Government's corporate pals?

As a postscript, I have to admit that I got a figure wrong in my previous post on this subject. I generously allowed a load factor of 40% for offshore wind's output (i.e. it would produce 40% as much energy as it would if it ran at full power all the time). The industry used to claim around 45%, when it was arguing that it could deliver lots (rather than when it was trying to argue how poor it is). Everyone except the Government knew that was fantasy, but I thought 40% was a reasonably adjusted figure. Apparently not. Ernst & Young have been working for a while now on a figure of 35%. And in the most recent year for which we have figures (2007), the Renewable Energy Foundation's excellent analysis of ROC-Register data shows that the average offshore load factor was 27.1%, lower than the onshore average. I am sorry to have given a misleading impression that offshore wind might have some modest redeeming feature. [PPS: E&Y used 35% in their report supporting the consultation on banding the RO, but I now see that they are allowing 38-44%, depending on project, in this latest report. Don't know how this is justified, considering the performance demonstrated by REF. It all shows that claims that you can calculate what technologies need, rather than simply creating rational incentives and seeing what turns out, is stupid, illusory, and counter-productive. Government never has good-enough information or pure-enough motives for central-planning to be an effective option, whether that planning is implemented by literal command-and-control or through incentives targeted at calculated needs and outcomes.] 

And another supplementary thought: E&Y's capital cost curve shows capital costs rising towards £3 million per MW. So how did the Government come to the figure of £9 billion they claimed would be invested to deliver the 1300 MW that they estimated the half-billion-pound bung would deliver?

"There's no shame in going to the IMF". Oh really?

What does it mean if a government has to go to the IMF for funds?

  • The government couldn't run a balanced budget.
  • The economic outlook was so poor that there was little prospect of the budget coming back into balance over a reasonable timeframe.
  • The government couldn't raise taxes sufficiently to bring the budget back into balance over a reasonable timeframe, without doing more harm than good to the economy.
  • The government wouldn't cut public spending sufficiently to bring the budget back into balance over a reasonable timeframe.
  • Lenders were so pessimistic about the government's ability to bring the budget back into balance over a reasonable timeframe that they were not willing to lend as much to the government as it needed to cover its net obligations.
  • The central bank was so pessimistic about the government's ability to bring the budget back into balance over a reasonable timeframe that it was reluctant to print enough money to pay for government debt (because of fears that, when it came to unwind some of the monetary expansion, the gilt market would be flooded with a combination of central-bank assets and government new issuance, making the unwinding impossible and collapsing the value of new and existing gilts). 
  • The government was so cowardly, that it would rather turn to the IMF for expensive funds and instructions on what it must do to balance its budget, than figure out, implement and take responsibility for the necessary cuts itself.

No shame in going to the IMF?

Only for a government that has no shame.

Has Brown united the country?

Plenty of people hated Maggie, but plenty of people admired her too. Jim Callaghan and John Major may have been failures, but this was tempered by a sense that they were decent men trying, however ineffectually, to do the right thing. When one sees the response to Michael White's comments on the Dan Hannan speech, it is clear that even Guardian-readers, many of them self-declared in the comments as socialists or Blairites, agree with many of Dan's points and feel that much of what he said spoke for them.

It is clear to those of the right that whatever Brown claims to have implemented, it is not capitalism or free markets as they know it. And it is equally clear to the left that it is not anything like the socialism that they dreamt of. The Third Way turns out to be No Way to run a country.

Is there any former Prime Minister who has been regarded with such united contempt after he left office as Brown will be when we get the chance to get rid of him?

Government "achievement"

We know that what follows is typical of how they see the world, but rarely do we see it spelt out so clearly. In the recently issued consultation on a Heat and Energy Saving Strategy, the Government details (p.13) "What we have already achieved" in this field:

  • The Act on CO2 help line
  • The Carbon Trust and Business Links ("supporting businesses to accelerate the move to a low carbon economy")
  • The Energy Performance Certificate (EPC) on properties
  • The EU-ETS (European Union Emissions Trading Scheme)
  • The Climate Change Levy (CCL, and associated Climate Change Agreements)
  • The Carbon Reduction Commitment (CRC)
  • The Carbon Emissions Reduction Target (CERT)
  • A £1 billion fuel bills package (to "help householders who are struggling to pay their fuel bills")
  • £350 million for the Community Energy Saving Programme (CESP)
  • £950 million on the Warm Front scheme to improve the properties of low-income households
  • The Decent Homes programme for the social-housing sector, which has "generated investment" in insulation and energy-efficiency of £5.6 billion since 2001.
  • Mandatory sustainability standards ("Quick Wins - Buy Sustainably") for government procurement
  • Salix Finance, a public-funded company that "accelerares public sector investment in energy-efficiency technologies through invest to save schemes."
  • Higher efficiency standards in the Building Regulations, moving to zero-carbon standards by 2016.
  • European product standards (e.g. for labelling electrical equipment)
  • Voluntary Agreements with energy suppliers to "promote energy services and savings".

Truly, a mountain of money, legislation and quangos.

But strangely, there is no reference, within this list of "achievements", to the effect that these measures have had. No quantification of how much more efficiently we heat ourselves and how much energy we have saved. Could this, in some way, be related to the fact that there has been little change in the amount of energy we use to this end?

These "achievements" are followed by a short list of estimates of how many properties have installed condensing boilers and small-scale renewable generators, and how many have had improved insulation. But there is no virtue in this spending if it has not reduced energy-consumption. If people have responded by heating their property to tropical temperatures and leaving the windows open at night, these installations are no achievement, they are a massive waste of energy and public money.

There seems to be a confusion in government circles between means and ends. Legislation is not the achievement. Nor is spending. Nor is bureaucracy. They are the means by which one hopes to achieve one's ends. Listing their policies and spending as their achievements highlights the mindset that predominates in this government.

Russian gas and the big political lie

The dispute between Russia and Ukraine is yet again demonstrating the bleeding obvious that our Government manages to ignore because the big energy companies would rather look the other way.

Our Government, opposition politicians, most pressure groups, commentators, leading businessmen and the rest of Hayek's intellectuals persist in focusing on our electricity supplies when discussing our dependence on Russian gas. Policy is structured around it.

Of the reports you have heard from the countries currently suffering shortages because of Russia's actions, how many have focused on the electricity supply? None, in my case. They all focus on the risk that people will go cold. And rightly so, because gas is far more important to our heat supplies than our electricity supplies.

But the same organisations to whom it is currently obvious that this is a heat problem more than an electricity problem, will go back to focusing on electricity policy as the be-all-and-end-all of energy policy, and even use the latter term to mean the former. They will support draconian yet ineffective interventions in the electricity sector, while tacitly accepting (usually because of the fraudulent concept of "energy poverty") continued inaction on, and even positive underwriting (e.g. through low tax-rates and minimal carbon valuation) of our complete dependence on gas for heating.

The reality is simple. If the Russians turn off the taps, we don't have to worry about the lights going out, we have to worry about people freezing. Can we all wake up to the reality that energy ≠ electricity, please?

If you want to get a clearer picture of the reality of our energy systems, have a look at the insert I put together for our wood-pellet supply business.

Heard it all before...

The new Brown government is doing an incredible and shameless job of presenting a whole new load of ideas as though the past ten years were a massive mistake that was none of their doing.  In the same way we don't vote for a Prime Minister come election time, we vote for a party (the Labour elite trotted this line out - fairly - prior to Brown's coronation) by getting rid of the leader does not somehow erase all the mess that the government has made over the past ten years.  You got rid of one man - the rest of you are still there.  In fact, while Blair was trying to make himself le

Only £23bn over budget

Every year we spend £23bn on government project cock ups. That is £900 per household! This cost simply comes from the extra costs added to projects because the government runs over budget - it doesn't take in to account the fact the most of these projects are either completely pointless or should have been commissioned using public money in the first place. Of the 300 schemes that were analysed by The Tax Payers' Alliance, over half were running over budget. Here are some examples:

  • The NHS computer upgrade - estimated at £2.3bn, now looking more like £12.4bn!!
  • The Olympics - estimated at £2.4bn, now looking more like £9.3bn!
  • Sherwood Forest Hospitals project - estimated at £66m, now looking like £326m.
  • The Astute Class Submarines - estimated at £2.6bn , now looking like £3.6bn

Amazingly, the report says 14 major public sector projects racked up cost overruns bigger than the Millennium Dome, which went £204 million over budget. Andrew Allum, the chairman of the Taxpayers' Alliance, said "Having had first-hand experience of public sector capital projects, it's clear that the politicians and civil servants in charge lack the management experience and subject knowledge to run them effectively." PL's philosophy exactly. The government has the worst project planners and economists on planet earth, I am sure of that. It's not just the fact that these projects don't get delivered on time and more often than not are not quite what we hoped they'd be, but we are spending so much money - significant amounts - on this incompetence.


JG has posted on the subject of Tony's legacy. This post started as a comment, and grew so large that I decided to post it separately.

I must see things through an inverting lens.

  • Reagan: Never a buffoon in the eyes of those old enough to see through the Spitting Image caricature, and intelligent enough to understand the mess the Western economies were in in 1980. Heard an excellent example recently of how well Reagan "got it", better than any American president for a century, from a woman who worked in his administration. Her husband also worked for him, in the Department of Agriculture. Invited to see the President, he told Reagan how efficient he was going to make the Department. Reagan's reply: "Now listen, don't make it too efficient. Can you imagine if we got all the government we pay for?" That's a smart cookie.
  • Thatcher: Cruel to whom? The British government had spent decades being cruel to those who wanted to improve their lot, and generous to those who just wanted a wage for a day's attendance or better still a wage for no attendance, regardless of whether they contributed to the economy. She reversed that, and although far more people benefited (then and now) than suffered at the time, all people talk about is how hard it was on the people who had been screwing the British economy for decades. I'm sorry, but they had it coming to them. And as for megalomania, her biggest mistakes were when she left people like Geoffrey Howe and Nigel Lawson (and her European counterparts) to lead her up the garden path on the Single European Act and the ERM. I bet she regrets being too soft, not too hard.
  • George W Bush: The good part - lower taxes. The bad part: bigger government. If he had managed to rein-in government spending to match the tax-cuts, he could have been remembered as another Reagan (domestically). Instead, he will be remembered as a contributor to one of the biggest economic imbalances the world has ever seen. Unless, that is, the intellectuals find a way to rewrite history to blame the coming collapse on something else (that better suits their view of the world, e.g. it was nothing to do with fiscal irresponsibility). Combine that with his failure in the clash with Islam (let's not call it a clash of civilizations, that is too good a word for the state of modern Islam), and he ought to go down as one of the worst presidents in their history. Not for what he wanted to do, a lot of which wasn't too bad, but for what he actually did, which was a lot worse.
  • Blair: His principal legacy is the bureaucratization and re-socialization of Britain; the restoration and extension of the leviathan state - more layers, more powers, more employees and sub-contractors, more welfare-dependency, more intervention in business and charity, more intrusion into personal and family affairs, more central-planning and micro-management, more regulation, more taxation....

Campaign for a referendum?

I don't like referenda. But it is perfectly obvious that the majority in the country does not believe that the "Reform Treaty" is not the Constitutional Treaty dressed up, and that they want a referendum on the subject as promised. And yet Tony and Gordon seem inclined to push on with ratification without allowing the public to have a say. The question is, what are people going to do about it?

If we leave it to the parliamentary process, Gordon will be able to ram it through despite opposition. People need to demonstrate their strength of feeling on this issue, to force him and his MPs to consider the electoral consequences.

The Telegraph has the right idea, but is botching the implementation. They have launched an online "petition" for a referendum on the subject. Except, it's not a petition, it's a poll (and as such will be accused, rightly, of not being based on a representative sample). And you have to register with their site in order to vote. Currently, 58 people have voted. I wonder how many clicked on the "Yes" button, but then, like me, gave up when they were asked to register with the site before their vote could be registered? This isn't going to work, and will be used by the Government to argue that opposition is negligible.

Even without these obstacles, the Telegraph website is the wrong place to do this. The Times, Mail, Express and Sun have all called for the Government to honour its commitment to a referendum. In this age of modern media, we ought also to consider the readership of the various blogs, and those who get their news from the TV, radio, or from one of the pro-Treaty papers (The Mirror, Guardian, and, to some extent, The Independent) but disagree with their stance on this issue. Most of these people are not going to go to the Telegraph website to register and vote.

What is needed is neutral territory, where all the papers, bloggers etc can point their readership to register their call for a referendum. There is one obvious location. The road-pricing protest showed its power. It is the No.10 petition site.

There are already a number of petitions on there on this subject, but none of them expresses the issue clearly and in a way that is likely to find the greatest common ground amongst the public. And the existence of several alternatives dilutes the message if people don't know which one to vote for.

We need a new petition, carefully worded to attract a range of opinion, from those who want a complete withdrawal, to those who support the European project but feel that there is a point of principle at stake here - for the Government to honour its commitment. Once we have a good form of words, a new petition should be created, and all the papers, pundits and other members of the media and the blogosphere (is the blogosphere part of the media? I'm never quite sure) who support the call for a referendum should run campaigns to point their readers, listeners or viewers to the petition to vote.

This must be concerted action. A half-cocked campaign that did not garner substantial support would be thrown back at opponents of the Treaty as evidence that the country does not feel strongly on the issue. But if the five papers mentioned, the blogosphere and independent TV and radio (e.g. TalkSport) threw their weight behind a petition, I am confident that they could comfortably beat the number of signatures garnered for the road-pricing petition.

So what should the precise wording be? Something along the lines of:

That Her Majesty's Government should not ratify the so-called Reform Treaty without putting it to a referendum of the people of the United Kingdom.

How would you change/improve this? Drop the "so-called"? I put it in, because I didn't want to imply acceptance that this was a fundamentally different treaty to the Constitutional Treaty by appearing to accept the alternative designation, but it is probably unnecessary. Will everyone know what is being referred to by the "Reform Treaty" or does it need more clarification? Should it refer to "honouring their promise to put it to a referendum", rather than simply "putting it to a referendum"? I kept it simple, because it offers less wiggle room for the Government to cavil about whether this Treaty is sufficiently similar to the Constitutional Treaty for their promise to be relevant.

Does this offer the option for the Government to hold a referendum and then ignore the outcome, and still be able to say that they complied with the terms of the petition? I reckon that would be a sophism too far, even for this Government, and that they would be destroyed at the next election if they tried it on. But if you think it needs tightening up, how would you clarify that the results of the referendum should be binding? Have I just answered my own question? If I make that "...putting it to a binding referendum...", does that do the trick?

Or is this whole suggestion barking up the wrong tree?

Only in Westminster

The Commons public accounts select committee has published a damning report on the state of the Government's IT projects stating that the government is losing its grip on them. Rather worryingly, one in five has been rated "mission critical and high-risk" computer schemes, yet senior officials had not even met the minister responsible. It also criticised the many projects that had gone billions of pounds over budget and were many years behind schedule.

Public sector reform has failed us all

As the Blair era comes to and end, there is and has already been much reflection on the past 10 years. Reform was always at the top of the New Labour agenda way back when before 1997. It was greeted with cheers and provided hope to the masses. Unfortunately, the reality is where New Labour say reform read unwanted, poorly thought out, unneeded meddling.

Michael Portillo: "Gordon is going to meddle"

Reform of party-funding - all yours for £13.50

In a move that is almost beyond parody, Sir Hayden Phillips - the man who thinks our political parties would be cheap at £25,000,000 a year - thinks £13.50 is good value to tell us what good value the parties are. That's what a copy of his report costs. 45p a page. Of drivel. That's a report we've already paid for, by the way.

To be fair, though, it's been hard work for him. 12 months to produce a 30-page report was a tough ask. Nor can it have been easy to arrive at the conclusion that the big parties should get lots of money, but had better sit down and sort out the details between themselves.

At least we can be sure that the process will have our best interests at heart. After all, the parties are the best people to decide how much of our money we ought to give them. Who else would appreciate the great contribution they make to our democratic process? And lest we suspect them of self-interest, Sir Hayden has guaranteed their honesty by recommending that their private discussions be subject to "independent oversight". Not that this be debated openly, mind you, because too much openness is a dangerous thing.

Perhaps I should try Sir Hayden's magical technique for discovering best value in my business life. When it comes to negotiating new prices with our suppliers, I shall invite them to get together to work out what is the right amount for us to pay them. Our employees will be instructed to put their heads together to work out how much they should get in this year's pay deal. And I have the advantage that our suppliers and employees know that pushing for too much will lead to unfortunate consequences, like taking less of their product, making some of them unemployed, or simply going out of business. If it works for us consumers of the services of political parties, who could take us for all they like so long as they stick together, it is bound to work for me.

None for the price of two

We appear to have a Government in paralysis, two leaders - neither of whom are in control - a lame duck and an impending coronation of a new PM after an election pledge by Blair to serve a full term. The latest piece of ego building by Gordon Brown is his army of 11 special advisers and personal aides (despite the ministerial code explicitly saying "Cabinet Ministers may each appoint up to two special advisers."). Apparently they are there to help him formulate policy. All at the bargain price of £1m per year.

The answer is blowing in the wind

I am no fan of wind energy. It is hugely over-rated. But, like most energy sources, it has its place. To dismiss it or condemn it out-of-hand is as distorted a view as to hail it as the solution to all our energy problems.

The Times today printed a damning article on an urban wind installation. A turbine installed four weeks ago at the home of Mr John Large, it reports, "has so far generated four kilowatts of electricity", compared to an average household's consumption of "23kw every day", and offering a return of "9p a week" compared to the £13,000 that Mr Large spent on the installation.

As many were quick to point out in comments on the article at The Times's website, and on many blogs, the journalist's ignorance of basic energy and engineering was revealed by his use of terminology. Kilowatts (or kW - lower-case k, upper-case W) are a measure of potential - the capability to deliver a given amount of energy in a given time if working at full load. Kilowatt-hours (kWh - as above, plus lower-case h) are a measure of energy - specifically the amount of energy produced if an engine with the potential to produce 1 kW is run at full load continuously for one hour. The phrase "has so far generated four kilowatts" is therefore a nonsense - kW contain no notion of time, so one cannot say that any number of kW have been generated "so far".

"23kw every day" is likewise wrong, not only in the spelling, but also in fact - to the extent that averages are in any way meaningful (which is a very limited extent), the figure should be 23 kWh, not 23 kW. 23 kW every day would, according to the best interpretation one could put on it (23 kW of demand continuously for 24 hours) equate to 552 kWh per day, which is way over the top. As it is, even 23 kWh per day is excessive - total domestic consumption of electricity in the UK is around 115 TWh (1 TWh = 1 billion kWh) each year, which is equivalent to around 4,800 kWh per household annually (there are just over 24 million households in the UK), or 13 kWh per household per day.