False Economy

Posted on February 15, 2013 by davidsberry

This week, East Lothian Council passed a three-year budget that the Labour-led but Tory-chaired Administration said would “take the county out of fiscal chaos and on a journey towards a more stable financial future” as the new Leader Cllr. Willie Innes put it. Since the amount of funding available for services currently forecast to drop from £195.7m to around £191.4m over the next three years, these are troubled fiscal times. But is this the right budget to cope with that?

The accusations of fiscal chaos are a bit rich. The previous SNP-led administration had invested heavily in new affordable housing (which eventually pays for itself through the rents charged) and necessary public works like Dunbar Primary, the John Gray Centre, Tranent Care Home that had the secondary effect of keeping many residents in work while jobs in private building all but disappeared locally. (see Corned Beef Auditors for a more detailed discussion of this).

They are especially rich because in 2007 Cllr Innes was outgoing Cabinet member for Social Work, a dysfunctional department that, under his tutelage, habitually overspent its budget by £1/2m each year, careening from a £10m to a £40m budget in less than a decade. After firing the Head of Service and focussed work by the SNP administration, not only did the ASC department but the entire council come in on-budget in each of the last four years, including this one that Cllr Innes seems so upset about.

The budget debate was certainly unusual, not least because, at 2 hours, it was twice as long as any of the 13 others I have experienced since election. Almost every one of the 22 councillors present had their say. As might be expected, it split down party lines and partisanship exhibited by both sides. But an objective observer—had any such exotic creature have been present in the chamber—would have been puzzled at conclusions drawn and how the decision taken derived from what the Administration speakers actually said.

Labour, as usual, claimed this to be a budget for the vulnerable and for the future—especially for our children, while correcting the profligacy of the previous administration. And yet, examination of the figures showed that they were planning to reduce Social Work by almost £2m, with £500k coming out of Children’s Services’ £10m budget (a 5% cut). Leaving aside the moral argument, the demand on Children’s Services lies almost totally out-with management control and demand for Social Work from the elderly expected to rise at over 5% each year. Were that enough, hidden in 37 separate places were purchasing savings labelled ‘BuySmart’. While some savings here are indeed possible (SNP suggested a total of £250k in their budget) Labour had tripled  this to a hopelessly optimistic £750k.

Then, despite a manifesto pledge from Labour that promised “an extra £100,000 for each high school”, not only did this sum not materialise but something like half this amount was taken OUT of each DSM (Devolved School Management) monies given to schools to run their affairs semi-independently. This will cut school activities, materials or support staff. Their budget also removed free school meals for P1-P3 classes from the large areas in the West of the county where these had been provided.

The explanation given was that the really needy on benefits qualify for free school meals anyway. But this misses the whole point. Three years ago, on advice from the best practice of early intervention, a whole package was put in place for areas of deprivation. As well as free school meals, this consisted of extra teachers to bring P1-P3 class sizes down to 18, a Place2B programme of support and guidance for pupils and dedicated police teams who have time to get involved with local social issues and work closely with both the ELC ASBO and Warden teams.

The whole effort was regarded as an investment because practice elsewhere has shown that the many problems and intensive social work and police intervention with troubled teenagers can largely be avoided by early intervention: “Give me a child until he is seven and I will show you the man“. While all of this may not be jeopardised by removal of free school meals, it reintroduces social stigma and divisiveness to those who do get them and an extra burden of £500 per child per year on parents earning as little as £16,900 p.a. These are exactly the parents who are struggling to make ends meet and NOT throw themselves on the dubious mercy of state benefits.

In the same class of false economy but with perhaps more import was their decision to remove almost £1/4m funding from volunteer group support. Ranging from First Step in Musselburgh to the Special Needs Playscheme in North Berwick, volunteers play a huge role in providing services that communities need but the public purse can’t afford. When compared to how community volunteers are enabling museums in both those towns to be viable through council seed funding this appears counterproductive : it will wind up costing the council more than it saves, plus widespread disruption to well loved services in the meantime.

And, along those lines, the removal of refurbishment funding for both the Haddington Day Centre and Abbey Care Home from the capital plan to allow a £800k ‘ slush fund’ for Labour pork barrel projects (watch for Ormiston Bowling Club being bought for a 6-figure sum) flies in the face of the high regard and demand both those facilities enjoy. The tragedy of the Abbey is that its original funding was the only hope of triggering a more positive attitude from NHS Lothian over the Edington by providing seed cash to make a joint project viable, as Scottish Government wishes to do by merging ASC and NHS into a more coherent single service.

But most bizarre was the manner in which Labour member after Labour member used their five-minute speech to berate the Opposition’s record and budget for profligacy and damage to council finances and spend little time praising the merits of their own. Perhaps they were confused; perhaps the more perceptive were embarrassed. Because, having spent hours lambasting the previous administration for investing too much with related interest payments and not spending enough on the vulnerable and our children, three things were clear:

  • The SNP budget placed a lower capital burden than the Administration’s did
  • The SNP budget placed a lower interest burden than the Administration’s did
  • The SNP budget provided almost £2m more for ASC, Children’s services and education than the Administration’s

So Administration members would have reached their purported goal of fiscal penance easier by voting for the SNP Opposition budget; why they chose the false economy of their own you must ask them. Having created or contributed to a dozen budgets to date, my prediction is an irrecoverable overspend of £500,000 in Social Work and a six-figure purchase of an unnecessary facility in the West of the county before the year is out. How either helps the vulnerable or the residents of East Lothian in general escapes me.

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The Cost of Being British

Posted on February 8, 2013 by davidsberry

There are many stalwarts among the people working towards Scotland’s rightful future as a proper country. But, until this week, I never included The Economist among them. Don’t get me wrong—right-wing rag for blinkered fat cats though it is often derided—I am a fan of the publication, often subscribe and frequently find their analyses more rooted than other publications I enjoy: more pragmatic than the New Statesman; more global than Time; more objective than Private Eye.

So much for the intro ad. This week, their occasional centrefold Special Report is on the Nordic Countries. In the past, the Economist has certainly not held back from pillorying Sweden 20 years ago for its massive state share of their economy or the entire bloc 10 years ago for the parlous state of its banking system. But this report is glowing. While it makes distinctions among them, all four Nordic countries (Norway; Denmark; Sweden; Finland) gain high marks and high praise as models for 21st century living with a “generous welfare system that does not cost the earth”.

The analysis tries to cover a spectrum of measures and not just raw wealth. Places like the US rank high in per capita GDP and even productivity but their social tensions and their inequalities—not to mention liberties taken with the environment to achieve it all—rather spoil the scale of achievement. Other advanced countries like Italy suffer severe geographic inequalities and even Britain suffers from an unbalanced economic picture between its capital and affluent surroundings, as compared to bleaker, poorer provinces that are treated as such by the establishment.

But the images of Scandinavia described are at once futuristically alien and yet intimate and comfortable. As the report puts it:

“Swedish fathers enjoying a leisurely lunch while their children sleep in prams (Sweden’s paternity leave is among the most generous in the world); Danish mothers cycling, helmet-less, through the early morning mist with their children in sidecars (Copenhagen has more than 350 km of cycle lanes and 1/3 of the population cycles to work); a Finnish physics teacher discussing the nature of elegance with a class of 15-year-olds (Finland regularly comes top of league tables of educational attainment).

That latter point itself is worth considering. Through its 32 councils, Scotland spends around £2.5 bn on educating her children up to 18. This outlay is exceeded only by health but is subject to even more scrutiny and, especially in England, more partisan political interference than in any other public service. Various theories of teaching methods, examination, streaming, etc have dominated at one time or another.

But the bottom line is—exam results or no—Scottish employers claim school leavers are not adequately educated; our colleges & universities must provide remedial courses in basic english and mathematics. This is confirmed by the internationally acknowledged PISA scores which rank Scotland below any of the four Nordic countries on measures of reading, mathematics and science. Finland ranks head and shoulders above on all three measures.

Why is this? Their success does not depend on accountability: they have dispensed with shibboleths like a national curriculum, school inspections or high-stakes exams. Nor does it depend on resources: they spend less of their GDP on education than the USA and Finnish teachers talk enviously how much their British colleagues are paid. The reason they do such a good job for less pay is simple: the high quality people it attracts have stability and respect—they design their own curricula and write their own tests. And this system has been left undisturbed by mandarins or ministers for forty years.

But Finland is not the only one of the four to have cocked a snook at Western orthodoxy and beaten its own path into the future. One news item you never head from the unionist media in Scotland is how little impact the recession (now in its fourth year and third dip of crippling the British economy) had on Scandinavia. Take Sweden as an example why this is the case.

For much of the 20th ©, Sweden steered a course between socialism and capitalism but by 1993 it had drifted left to the point that public spending was 63% of the economy, the budget deficit stood at 11% and public debt was up to 70% of GDP. A banking crisis and a conviction that the welfare state they had created was unaffordable caused radical thinking and decisive action. What helped resolve was that they had drifted from 4th to 14th place among the world’s richest per capita countries, similar to Britain’s recent decline.

It adopted fiscal orthodoxy by pledging to create a fiscal surplus. It scrapped a complex system of taxes on property, gifts, wealth and inheritance and brought the top tax rate slowly down from 84% to 57%. Its public debt is now halved to 37% of GDP and it is running a budget surplus of 0.3%. All this meant that, as a small, open economy, it rode the storm of 2007-8 and recovered quickly. As part of Britain, such a path is not open to Scotland.

But, just as Scots look skeptically at the kind of fiscal cowboy behaviour favoured by the English with Canary Wharf as its epicentre, preferring a more egalitarian society, so the Nordics appear to have found a way to prosper without generating the kind of social tensions and material inequalities that plague both Birminghams in England and Alabama. Their most laudable achievement appears to be that, despite each having a distinct approach to prosperity, all four top the league table of equality with a Gini equivalent of income inequality around 0.25. This compares with an OECD average over 0.3 and with Britain and the USA both pushing o.4.

Had history gone differently and Scotland had become independent in, say, 1979, not only could we have avoided Thatcher but, in order to steer clear of her slash-and-burn crusade, we would have been forced into the arms of the Scandinavians, the only neighbours of comparable size with whom we share comparable social philosophy.

Had we then gone through the same financial epiphany as Sweden, funded by our capital from North Sea oil, thirty years on, we would be a full fifth member of the group, with The Economist praising our fiscal rectitude, our internationally successful companies, our educational effectiveness, our enlightened social programmes and our happy egalitarianism.

But we’re not; we’re part of clueless Britain. So, are we going to wait another thirty years bumping along in the shadow of its past glories before we see the light?

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Don’t Knock It

Posted on February 6, 2013 by davidsberry

After a lively Twitter debate with an old buddy that stemmed from Scottish Government proposals that will effectively raise stamp duties by making them more proportionate to house prices, we got on to a discussion about which parts of Scotland this would most affect and the degree of incentive for people to pick less affluent places to live. It turns out that the old East/West split in Central Scotland appears alive and well but now manifesting itself in house price snobbery.

Now, coming from someone living in North Berwick, you might think any observation would be rather rich—quite apart from the house price. But as a NB ‘schemie’ growing up in a prefab whose dad fixed cars for a living and who still lives in a modest flat in the town, I’m taking no lessons in anything as outmoded as class warfare.

Despite the fiscal rigours of the last few years, Edinburgh and its surrounds has done pretty well and, despite falls in house prices from silly levels (a dumpy cottage in NB needing major work once went for over £600k because it was on the beach) people are still trading modest scale family homes for £400k in and around Edinburgh. The new stamp duty proposals would add £7,500 to the sale of such a house.

What bothers me is the now-common fixation that anyone who sees themselves as successful or even just upwardly mobile regards a house purchase as essential. One of my coffee buddies was bemoaning how his 28-year-old son was about to settle down with partner and baby-on-the-way; together they had far too little to think of buying a house in Edinburgh.

While he and they have my sympathies, who said that ‘getting on the property ladder’ was either necessary or a right and how much are we fragmenting society by assuming that it is. When I lived in Germany, house ownership was uncommon. My department head at Siemens pulled down the equivalent of £100k but rented a beautiful flat for his family of four. The whole chain up to him (my project manager & his boss the section head) also rented. And rather than being strapped to pay the mortgage, they all went out socialising regularly, skiing throughout the season and taking 3-week holidays in the Maldives.

Now I don’t want to get racist about this but the get-a-job/get-married/get-a-mortgage culture seems originally a product of London-centric SE England. When I was growing up, renting—even a council house—didn’t have a lot of social stigma in Scotland because  so many did it. When, in my wilder/hairier days, I played the working mens clubs of Sheffield or Doncaster, I had the same feeling about England’s industrial North. While I deny no-one the right to profit from their shrewd investments, why should so many people’s lives now be fixated on house price appreciation as if it were a second career?

When there was a recession in the late 1980’s and London house prices dropped for the first time in decades, from the London-based media, you would have thought the world was coming to an end. On the other hand, the gentrification of Islington is regarded by many as Blair’s greatest achievement—although the retail selection is greatly improved upmarket, the streets and house themselves appear largely unchanged. It’s just the prices have more than doubled so the residents chuckle all the way to the bank.

Having lived in a similar environment, I find it poisonous. Palo Alto in California was always a little precious because of a smattering of professors from nearby Stanford. That made both houses and downtown interesting and desirable so that the wealth explosion from nearby Silicon Valley drove prices up and the more interesting elements out. Today, funky cinemas, diners, bookshops and hardware stores are gone, replaced by $50 lunch venues, aruba coffee, organic specialists and Apple’s newest retail outlet.

Most importantly, not only has a place like Palo Alto lost its soul but it has become a homogenised up-scale ghetto full of venture capitalists, lawyers, surgeons and psychiatrists where all the workers, shop assistants, gardeners, even police and postmen, have to commute in from somewhere more affordable. Although still a town, it is a mockery of community.

Because it is larger, Edinburgh has not done an Islington or Palo Alto, although parts of it are verging on it. I have a divorced friend living on the same street as J.K.Rowling did who has live there modestly since the ’70’s who could be a multi-millionaire overnight just by putting her house on the market. But for the 18% of homebuyers here who are in the market for a £400,000 home, I struggle to find sympathy that they would pay £7,500 as a surcharge for Stamp Duty. In California they would pay £24,000 in realtor fees before any such charges were added.

My twitter companion is outraged by such things and believe it will deter people from coming to Scotland to live. I disagree. What it might do is encourage people to consider the many alternatives on more affordable. Instead of always plumping for Scotland’s Islington here in the capital as a no-brainer investment bound to make them richer as prices soar further, why not consider the considerable charms of Biggar or West Kilbride or Newport or Arbroath?

Because, not only are such places considerably more affordable and therefore provide even more potential on the up side should they ever become as sought-after as Stockbridge but they are real, living communities where people still know and like and help each other—not least because they’re not always moving on every two years to the next house trade-up.

Scotland is full of such places. You fall over the unspoiled rural variant all over Aberdeenshire, the Borders, Galloway and the length of the A9. And even the area most devastated by the loss of its industrial past—Inverclyde—has an amazing number of positive ingredients pointing to the future. Drive the Western end of the M8 and you might ask if I’m crazy.

But explore Langbank or Kilmalcolm; admire the Victorian exuberance of Wemyss Bay pier; go sailing out of Inverkip; wonder at the rich views of Argyll from the various vantage points in Greenock. Basket-case economy it may be for now but this is a place with major potential. It only needs to secure major contracts for West coast offshore wind farms, for tidal schemes, for fleets of wave serpents, for subsea interconnectors and the glory days of Edwardian riches built on quality engineering could soon be back.

So, were I surveying the bleakness of Bury or Stoke-on-Trent (or, for that matter, crowded Slough or Chelmsford) and thinking that my family needs space to grow and a better quality in their life, they could do worse than lay down that £407,500 for a nice place in Trinity. But better yet, for half of that, they could get settled among friends in a nice house in Spey Road, overlooking the Kyles of Bute and wonder why they ever thought of a city or stayed so long in Potteries in the first place.

 

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The Answer Is Blowing In the Wind

Posted on February 4, 2013 by davidsberry

Lively as the debate is becoming in rural communities about the evils of wind turbines near them, the ‘big picture’ actuality is that they are something of a sideshow, as compared to the great majority of wind turbine installations. This is not to say that a number of legitimate complaints (see previous blog) have not been handled with either foresight or sensitivity. As a local councillor and member of ELC Planning Committee, I bear my share of responsibility for that.

But, while a local farmer with a couple of 30m turbines may have a disproportionate impact on the local view for the sake of a few tens of kilowatts of green energy, that is a drop in the bucket when it comes to generation on a national scale. Scotland’s ‘base load’ for power (that which needs to run 24/7) is around 5Gw (billion watts or 5 with 9 zeros or 5 million one-bar electric fires). For the last couple of decades, this has largely been furnished by two nuclear stations running round the clock, plus three coal-fired stations and some hydro schemes that are run as required.

Far from us being close to the lights going out, there is a net export of about 20% of our power to Northern Ireland and England through interconnectors and just recently we passed through the point of having 2GW of wind capacity on Eaglesham Morr, the Lammermuirs, etc. But, as with hydro, most of the easier sites have been exploited for onshore wind and its further development is meeting increased resistance—in no small part due to outrage at the small local schemes that benefit landowners but not the communities they are sited next to. The future appears to be in the third and rapidly developing sector for wind—offshore.

This week, attending the Offshore Wind & Supply Chain Conference at Aberdeen’s Exhibition Centre at Bridge of Don, I had a series of rapid lessons in why. Not only were the usual suspects—SE, Marine Scotland, local councils and other such good-to-show-face public bodies there, but a whole slew of people who are developing  (Inchcape; Scottish Renewables) and supporting (Aggreko; Buckie Shipyard) this rapidly area were there to show their wares to 800 attendees. There was a significant Scandinavian presence too.

For once, the Scottish Government appears to have lined up the necessary players to put this whole segment on the fast track. In conjunction with the Crown Estates, development segments right round the Scottish coast have been identified, with several smaller ones closer to the coast (at 20km minimum still barely visible) and some massive one farther out in the relatively shallow North Sea. The Danes and Dutch had been ahead of the Scots in this field and even the English have installed medium-sized fields on Sheringham Shoal (Norfolk) and Thames estuary.

But Scotland is now catching up–with the Beatrice field in the outer Moray Firth and the Inchcape and Neart na Gaoithe fields off the Forth. Even the ‘smaller’ offshore wind farms under consideration will generate around 1GW, which is approximately half the generating capacity of either Torness or Cockenzie. This will be achieved with up to 50 towers whose blade tips will be as much as 200m above sea level. At the planned distance from shore they will be visible on a very clear day. However such days with no haze are rare and even on such days, a 4m wide mast at that distance will be as prominent as a 0.1mm thick line at 1m distance.

Now I now that there is an appreciable number of people out there who are hostile to wind power in all its forms. While I sympathise with those opposed to opportunistic turbines popping up in pristine rural environments and believe the Scottish Government is wrong to give these the same planning urgency as the larger and less visible farms, I simply do not understand how a monstrosity like Cockenzie, sited where it is visible to 1m people, is any less of an outrage–quite apart from its lack of green credentials. That’s without considering what a spectacular shorline development between Musselburgh Lagoons and Seton Sands (bikeways; marina; watersports; revitalised harbours; waterside restaurants; chandleries; ferry port; shopping…) might take its place.

Scotland’s entire present capacity being planned offhore from the Forth alone (and none visible unless you’re up Berwick Law on a rare clear day). The further potential scattered around our long coast in our everpresent wind, added to still-untapped tide and wave power means a lucrative export market. The thousands of jobs would build on our already rich marine engineering capability giving Scotland the kind of leading role in an industry with a global future that others bcan only dream of.

The many construction jobs will continue with installations for others, as will service jobs for ours and theirs in the long term as these many turbines will need maintenance and eventual replacement.

Some public bodies have expressed concern about environmental impact. All of our present means of generation exert a heavier toll than do wind turbines. Some marine agencies are concerned with collisions but sincve they must follow certain channels to avoid oil rigs and the like, this does not complicate matters much. Indeed by being planned for the Wee Bankie & Dogger Bank, they maypersuade larger ships not to risk those waters anyway.

RSPB are concerned about bird strikes and there is little doubt these will occur. But since we continue to fly in ever-increasing numbers and airport bird strikes are common, we should keep things in perspective. Also, short-ranged species like auks will not reach out that far during the breeding season and will be far out to sea the rest of the time. Gannets will be among the casualties; but since they use wave-skimming formations for any distance, they will pass untouched: to avoid storm damage, 200m turbine blades won’t come within 10m of MHWS (the very top of spring tides).

There may, in fact, be considerable benefits to marine wildlife. In the English Channel, several ships have been deiberately sunk as artificial reefs. As seaweed, corals, barnacles, etc attach theselves, habitats for small and then larges sea creatures come into existence where there were none, increasing biodiversity. For those reasons, the Forth Islands off North Berwick provide a particularly rich marine environment. An offshore wind farm can be seen as a gathering of small, steep islands; each turbine tower lush with growth underwater in just a few years and fisheries benefitting accordingly.

Coming back from Aberdeen, which should itself boom from these developments, ports like Montrose, Dundee, Methil and Leith could each play a part in building and installing this lucrative, sustainable part of Scotland’s future. Not only that but even ports like Dunbar or Eyemouth–too small for heavy lift but located perfectly for maintenance and inspection craft–could play a role so that the long-term benefits reached out to the whole coast. And with the connector coming ashore at Torness to mate with an existing underground grid, very little disturbance on land would be visible at all.

It’s all as neat a low-impact answer to our energy problems and financial future as you could wish.

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Ah—That Explains It

Posted on February 2, 2013 by davidsberry

This week was a busy one. A few evenings back was the Gullane Community Council meeting in whose area the pretty little village of Dirleton falls, along with its 13th © castle. Bang next to the castle is the local farm, whose farmer took advantage of incentives to apply for a wind turbine for his farmyard.

As luck would have it, notification of the application went out to local councillors in the run-up to last Spring’s council elections and, despite efforts to have the matter brought to the full Planning Committee, it went through on the nod and into a real pitchforks-and-burning-torches public reaction at the construction within 200m of the castle.

Questions were asked why Hysterical Scotland—a statutory consultee in such cases and famous for its adherence to nitpicking detail—made no objection. The upshot was that they were invited to this meeting to explain themselves. To their undying credit, the relevant officials: Andrew Martindale (Head of Heritage Management East) and Rory McDonald (Senior Heritage Management Officer, Ancient Monuments East) duly walked into the lion’s den, armed only with PowerPoint.

For the thirty locals gathered at Aberlady Kirk Stables Hall, their best efforts to explain themselves were clearly unsatisfactory. Despite assiduous attempts to explain the finer points of ‘setting’ through ‘asset identification’ and ‘setting definition’ and ‘impact measurement (they have a whole set of guidance notes) it held all the clarity of Donald Rumsfeld babbling on about knowable unknowables and vice versa.

Bottom line amidst all the no-doubt-well-intentioned bureacratbabble was that the turbine, being sited in an already despoiled farm yard, did not merit their objection. The good citizens of the Gullane area are far too douce for anything as vulgar as a lynch mob. But HS should expect a fair number of subs and memberships coming from those post codes to dry up in the near future. A meeting of minds it was not.

Perhaps the best explanation for why such a well intentioned damage limitation exercise should go so awry is to examine the HS Org Chart that came as part of the presentation. I have seen few better examples of a visual metaphor for an dysfunctional rabble that little understands how to operate in the real world.

HistScotOrg

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Buried but not Forgotten

Posted on February 1, 2013 by davidsberry

This evening for the third time in the last few years, I put my head in the lion’s mouth as I dared to venture up to the West end of the county and deliver a talk on Mining in East Lothian. As with the other two times, the St Clement’s Men’s Club in Wallyford heard me out with patience and—as with the other two times—embarrassed me with the riches of recollections that brought a presentation of facts to life with their embellishments.

Despite the fact that the last East Lothian pit closed 47 years ago and last in this area (Monktonhall) over 15 years after a heroic attempt by the miners themselves to give it a future, there were ex-miners still in the audience and most of the others had fathers or uncles who had gone down the pit. This area around Wallyford has been steeped mining for a thousand years—since the monks of Newbattle created the main village street—Salter’s Road—to carry the surface-mined coal down to the salt pans along the coast below their Preston outpost.

Whether my flawed and incomplete history did a thousand years of hard graft, sacrifice of generation upon generation and tradition adequate justice is not for me to judge. Their generosity in listening attentively and then filling in much of the humanity as well as the details missing from my account was an experience for me that compensated me for my own shortcomings—such as how miners had to ride on top of the trams along the Bottom Pans because they had no baths at the pit, or being forced to work 2ft-high seams at Limeylands lying on their sides swinging a pickaxe for a full shift.

What was particularly striking was that any telling of such tales verged on the shy, was matter-of-fact to the point of dismissive, as if everyday facts of life that hardly need be remarked upon. These were not men figuratively chest-butting tales of accomplishments but people no strangers to hard graft in a hard environment simply telling it like it was. That dialogue after the presentation taught me more about mining and miners than several books, multiple visits to the Lady Vic and Prestongrange and extended hours trawling the web for details and pictures of the people who mined coal here for those thousand years.

And it is hard to find much photographic record of the mines themselves, let alone the once-indentured slaves who mined the black gold that drove our industrial revolution and Scotland into becoming the richest country in the world exactly a century ago. There are few snaps of miners above ground and almost none of the circumstances in which they worked—even the more modern conditions of new deep superpits like Monktonhall with its fluorescent lighting, its two-storey express lifts (3,000ft in 3 minutes) or the underground diesel trains to the face.

But I had found one picture of four miners at Fleets taken underground. And, as I showed this slide there was a laugh—one of the miners pictured was right there in the audience and I was able to fill in another tiny piece of this huge jugsaw.

MinersUngrnd

John McNeill, Peter Murray, Maxwell Gordon and Bob Thomson on a break at Fleets Colliery, Ormiston circa 1957

John is a lively 87 now but still carries a catheter from the time a charge went off prematurely and half a ton of coal buried him. Like most else about their hard life, as a miner he makes little fuss about it, or about all the other stories now long buried at the bottom of a thousand abandoned mine shafts all across the Central Belt.

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The Auld Antagonist

Posted on January 28, 2013 by davidsberry

Scotland is a funny sort of place. As an independent state throughout the Middle Ages it might have been poor—but then so was most of the planet. And that relative poverty helped to shape the national character of pluck, doggedness, thrift, self-sufficiency and an acceptance that any ambition meant you went out into the rest of the world to find your fortune.

That last part was as true of the mercenaries who fought for Gustavus Adolphus, the Scottish merchant houses scattered along North Sea and Baltic coasts, the Glasgow Tobacco Barons or the prototype Star Trek Scotty who held the ships/trains/pumps etc together all over the Empire that, in turn, held that empire itself together.

But in the demise of that empire, we Scots lost our international dimension. The last spurt of it was £10 Assisted Passages to Oz in the 1950s. Perversely, this demise has happened at a time when more Scots go abroad than ever before. The difference is that two weeks in Ibiza or Sharm el Sheikh may teach you Bacardi’s cheaper to drink than Tennents—but nothing about Spain or Egypt or their peoples.

This cultural isolation can be explained almost entirely by the Union. In the 300 years that we have been part of it, foreign policy has, understandably, been driven by the larger partner, indeed the one in the front line against various invasions from the Continent. Embroiled as the English were originally in the Angevin Empire, once Calais was lost, they pretty much pulled up the drawbridge and sought fortune elsewhere. The present membership of the EU has not fundamentally altered that.

As junior partner, we have been following their lead without thinking much about it. Two world wars did much to reinforce a common interest that empire-building had developed. But now well into the 21st century, it’s well past the time for Scotland to assess to what extent its future interests still coincide with those of our cousins.

Rather than couch the question in pure independence terms, let’s look at it from the perspective of the EU—especially our old Hanseatic neighbours with whom we were once so close. Rather than the rabble of city states with whom we traded, we have a handful of nations, the bulk of which form the Nordic Council, all of whom are doing rather well, maintaining individual identity while leveraging their common clout to finance that prosperity with international successes like SAS or Nokia.

None of those countries fell into the supposedly global recession of 2007 that still plagues us. None of their banks needed baling out. Even ignoring Norway’s huge bankroll, all other Nordic Council members have a debt-to-GDP ratio under 50% (UK is pushing 90% while much-maligned Spain is under 70%). But the one country that is also an old partner but which doesn’t get mentioned much is the engine room of the EU and its biggest member: Germany.

Given our 20th century history (both previous generations of my family went off to get shot at by them), both Scots and English developed a pretty poisoned attitude to Germany rather well lampooned by Basil Fawlty. The fact that, economically, they went by us like we were standing still in the latter half of the century only added to resentment. And, while this attitude may be too ingrained in English psyches, the more pragmatic Scots are missing a trick by not cosying up to our other Teutonic cousins.

Because Germany IS the future; the EU stands or falls on its involvement. And its people are getting pretty fed up with fiscal irresponsibility among PIGS and the taking-my-toys-home stroppy sulkiness of English Tories since Thatcher. Even if Scotland were to line up with the Scandinavians and be accepted into the Nordic Council, though that would indeed make a formidable economic bloc, it’s still only 30m vs Germany’s 81.3m.

So it’s well past time for us Scots to cosy up to the Germans. That means stop ignoring its language in schools and its news in our media. We know more about Berlusconi’s love life than we do about Merkel’s policies. Even our best political reporters can’t tell their SPD from their FPD. Most of the thousands of German visitors embarrass us with their fluent English, palates that can discern single malts and sophistication that takes no guff about haggis-hunting season.

Their politics are no more complex than ours (although both seem to baffle the English see-saw tradition). There are two traditional blocs: CDU/FDP and SPD/Greens. A fifth (The Left) may show up in the next federal election but only in the former Communist eastern part. The recent election in Lower Saxony (the one of the 16 federal states closest to us that includes Hanover and Bremen) the former just lost control to the latter by one vote. Merkel is alarmed at the prospect of a repetition of this at the federal level later this year.

When our media does pay attention, it often focuses on the fact that most Germans agree with Merkel’s course in the Eurozone crisis, the “crisis” itself is not a big topic in Germany at all, as it never manifested there. Issues of social justice, healthcare reform, education and tax reform are all more important in German elections at the moment. Does this not sound familiar? Neither the CDU/FDP nor the SPD/Greens have yet come forward with any convincing strategies on the domestic topics mentioned.

What is interesting to us is that the man who lost—the former Ministärpräsident—is not only a top CDU politician and Merkel confidant but also half Scots. David McAllister was born the son of a Scottish soldier in Berlin, his English is faultless, as he demonstrated as a Hume Institute lecture in Edinburgh last year. Now that he has some time on his (very capable) hands, we ought to be capitalising on this fortuitous (for us) fluke.

Scotland has just celebrated our exports rising £1.6bn to over £23bn and the bulk of which is to the EU. If we want this excellent trend to grow further and help us out of our own recession (never mind the English), the likes of Weir Pumps and other engineering firms need to learn from the spotless factories, obsession with precision and taste for gratification from hard work that has made Germany the non-threatening economic powerhouse of Europe.

We should be inviting Herr McAllister to lead a trade mission over here to sample the food and drink, the tourism sites, the spectacular scenery that so many of his own countrymen already enjoy so that more come and all stay longer. That should be followed by a reciprocal trade mission, led by the First Minister to shown its significance and staffed by our best engineering companies and negotiators for power links across the North Sea.

Bremerhaven is actually closer to Leith or Rosyth than either Rotterdam or Zeebrugge. It’s also closer to Berlin to facilitate using a Lower Saxon bridgehead to take Scots goods and reputation for canny banking and solid engineering to the rest of that huge market. Britain may be in the EU…but thanks to Pavlovian English hostility to its precepts (however justified such hostility may seem by history), we Scots have yet to exploit it properly. This looks like our chance.

Auf geht’s!

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Big Ben

Posted on January 27, 2013 by davidsberry

Having spent a third of my adult life in the States and travelled through most of them, it seems I have a higher opinion of Americans and their civic qualities than most Brits, Yet, while they do exhibit qualities that lead to deep incomprehensibles like the NRA and Sandy Hook, some of their milder idiosyncrasies like lionising their national heroes were genuine, even as they left me cold. It may be an example of presuming understanding when the words are understandable—Mark Twain’s penetrating observation of the Americans and the British being “two peoples, separated by a common language“.

When I was over there two months ago, I saw the film Lincoln. Superb though Day Lewis’ performance may be in the title role, I still don’t connect with the adulation of him. Good man though he was, I found the character dry and un-charismatic, verging on a bucolic out of his depth. Washington was no titan of tactics and damn near lost them the war. Though the main author of the Declaration, Jefferson was a poor orator and caused more dissent than harmony before becoming President.

And then there’s Benjamin Franklin. If they think of him at all, Americans think of him as an American patriot and founding father. But his influence extended much further. Believing that people volunteering together in a spirit of cooperation could accomplish great things, he was driven by a strong sense of civic duty to be involved himself in both his community and his nation. Always mindful of the “greater good,” Franklin helped establish or improve institutions such as circulating libraries, public hospitals, mutual insurance companies, volunteer fire departments, agricultural colleges, and intellectual societies. Some of his astute observations have a profundity still useful today—and tomorrow:

  • Creditors have better memories than debtors
  • If you want to be wealthy, think of saving as well as earning
  • A ploughman on his legs is higher than a gentleman on his knees
  • If you want to know the value of money, go try to borrow some
  • Buy what you do not need, and soon you will sell your necessities
  • It’s easier to suppress the first desire than to satisfy all that follow it
  • Experience keeps an expensive school, but fools will learn in no other
  • A life of leisure and a life of laziness are two different things

As a “man of science,” Franklin is best known for his experiments with electricity, but his lifelong curiosity also led him to explore an amazing range of scientific topics. From the common cold to ocean currents, from medicine to music, and from agriculture to the aurora borealis, he believed that human logic could unlock the mysteries of the natural world. More interested in practical applications than in theory, Franklin put his ideas to work through such useful inventions as a smokeless fireplace, bifocal glasses, and the lightning rod.

Of the numerous inventions Franklin created, he did not patent even one, believing that: “As we benefit from the inventions of others, we should be glad to share our own…freely and gladly.” He was the first to observe that storms can move in an opposite direction from the direction of the wind. Franklin accurately theorized about the existence of high and low pressure providing early explanations for storm movement. As an extensive traveler, Franklin made eight transatlantic voyages. By measuring the temperature of the ocean at varying depths, Franklin explained the Gulf Stream as a warm river flowing over the Atlantic Ocean. He suggested how the Gulf Stream could be used to speed of vessels sailing to & from America.

As a skilled diplomat, he negotiated treaties with Great Britain, France, Germany, Sweden, and Spain and helped secure the fledgling country America’s place in the world. As a respected scientist and scholar, he was granted honorary degrees in England, Scotland, and America. And as an Enlightenment thinker, he exchanged letters with some of the greatest minds of the eighteenth century.

Taking nothing away from the American pantheon of 18th © national heroes, most were men of their time that fate called upon to do extraordinary things—just as Bruce was prisoner of equivocal loyalties in the 13th © before destiny picked him up by both lapels. But, towering as Wallace’s patriotism or Hume’s international intellect were, our long history has yet to produce our Ben Franklin who combines both. He was a shining intellect, with equal love of community, country and humanity. He wore his greatness lightly: a Renaissance man who left a complex and inspirational legacy to us all—not just to Americans.

“If you would not be forgotten, as soon as you are dead and rotten, either write things worth reading, or do things worth the writing.” ~ Ben Franklin

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Osbo’s Gilt Complex

Posted on January 26, 2013 by davidsberry

STATUTORY WARNING: This blog is calibrated for fiscal anoraks and may cause nausea and/or disorientation among those faint-hearted about figures.

This year has not started well for George Osborne. While some might relish the evil schadenfreude in that, the problem is the corollary means this year has started badly for the British punter, with today’s stark news that GDP fell in the fourth quarter of 2012 (by 0.3%)—making the only quarter for over a year when our finances were not declining was during London’s Olympics.

The bottom line on this, reinforced by some pretty stern comments from the IMF, is that the present financial (and abrasive) Plan ‘A’ for the economy, in place since May 2010, is itself bankrupt. After £385 bn of ‘quantative easing’ where the Treasury simply prints the money it needs and most of those 2 1/2 years with bank interest rates in the tank (0.5% has been typical), all we are getting from our economic engine is the ‘rurr-rurr-rurr’ of the starter motor flattening the battery. But firing is there none.

In comments that will be seen as a strong criticism of the Bank of England’s quantitative easing policy, Lord Turner (currently FSA chair but one of the leading candidates to replace Sir Mervyn King at the Bank of England) said printing more money would have a declining marginal impact and would threaten the stability of the economy. As he elaborated:

“Quantitative easing has left Britain facing a liquidity trap in which replacing private sector holdings of bonds with private sector holdings of money has little impact on behaviour and thus on demand”.

In December, Osborne & his Treasury mandarins hit on the alternative wheeze of so-called ‘perpetual bonds’ to cut the cost of the UK’s borrowing, by increasing the terms of long-dated bonds from the current average of 30 years. The last undated gilt was issued in October 1946, shortly after the end of World War Two. The Chancellor hoped to leverage the Government’s ability to borrow money at the cheapest rate in the 400-year history of the Treasury.

“This reflects the confidence investors have in Britain’s ability to pay its way,” said Mr Osborne during his budget speech in March.

The Debt Management Office (DMO) has now confirmed that this ambitious plan has been dropped. The admission follows an industry consultation during the summer to which investors including Hermes, the Association of British Insurers and Goldman Sachs all responded. An unimpressed DMO said “In the case of perpetual gilts, the Government judges that these would be unlikely to represent a cost effective source of financing at present in the absence of tangible market demand”.

Whereas this time last year, Osborne forecast 2.8% growth for 2012, the real number is 0%. Given that 75% of the UK economy is now services and that has been flat, this is scarcely surprising. But he’s getting ALL his figures wrong. His Plan ‘A’  assumed 6% total growth by now: the real number is 0.6%.

The Office for National Statistics said that public sector net borrowing rose last month to £15.4bn from £14.8bn a year earlier, as spending grew faster than income in a struggling economy, thwarting efforts to erase a large budget deficit. Government borrowing amounted to £106.5bn in the first nine months of financial year 2012/13—7.3% higher than the £99.3bn in the corresponding period in 2011/12. Put another way, we’re in a hole and we’re still digging.

As anyone with personal debt out of control will tell you, it becomes an ever-more frenetic race just to keep financing everyday life. In many ways, Osborne (and, believe it or not, the public) has had it easy up to now. Between QE, low interest rates and a continued AAA rating, the growing UK debt has placed very little burden on the government’s cash flow. Yet. It’s as if you’re badly in debt but mortgage rates are tiny, the bank is charging you insanely low interest on your overdraft and your dad keeps slipping you £100 a week on the side.

It won’t last.

Firstly, Osborne’s toolbox is empty. He went easy on the banks, didn’t force them to lend, nor to clamp down on bonuses. They rewarded him by out-scrooge-ing Scrooge on loans. He eased up taxing the super-rich and multinationals, rationalising that their liquidity would boost the economy. They rewarded him by shoveling as much income offshore as they could and paying minimal, if not negligible, taxes.

Secondly, even the global appetite for UK Treasury bonds (known as ‘Gilts’ because they are—supposedly—a gilt-edge security that cannot lose value) is showing limits. It’s easy to see why so many investors are pouring their money into government bonds. Ever since the credit bubble burst, investors are wary of the risks posed by stocks. Over the past decade, bonds gave the safe return they were looking for.

UKgilts

Demand (not least from the Bank of England mopping things up) has driven Gilt prices up so much that they are at an all-time high, meaning yields are at rock bottom levels. 10 year Gilts, for example, yield just 3%—less than the rate of inflation. Robert Froehlich, senior managing director of the Hartford Financial Services Group says “The bond market is a bubble and it’s getting ready to burst.” Asked whether government bonds currently represent fair value, 72% of CFAs (Chartered Financial Analysts) believe they are somewhat or very overvalued, compared to only 12% who view them as somewhat or very undervalued.

So…what happens if (when?) investors decide the Emperor indeed has no clothes and the market, herd-like as ever, stampedes for the exits from Gilts? Prices drop, yields go up and it becomes ever harder for the Treasury to unload its paper. Such a crisis of confidence would damage the UK as a stable financial centre. The AAA credit rating would be history—even holding on to an AA would be doubtful.

That triggers a vicious spiral as yields rise trying to make Gilts more attractive, but borrowing the same amount of money now costs more and UK ability to repay that onerous debt is thrown into even deeper doubt. At that point, there is a run on the pound as the Masters of the Universe down Canary Wharf way mobilise investment billions to profit from its slide. Eminence grise from the 1992 ERM debacle George Soros may now be in retirement but said recently “investors are now betting against the pound”. The embarassment of a devaluation would be the least of it.

Some people think this would be good because it means our exports look cheaper to others and so we would have a boom as they buy more. In the days of shipbuilding and good ol’ British engineering, that might have been an argument. But with 75% of our economy now services, there are only so many Indian-owned Jaguars we can sell overseas. Meanwhile, every TV, microwave, computer, out-of-season fruit, Cyprus holiday, etc will cost more, gobbling up even more of frozen wage packets.

Only we won’t notice that because the mortgage rates will also have risen, house prices stagnated and credit card debt become unsustainable as interest rates rise. Not everyone will be so badly affected. Ironically, the Scots—beside their robust oil industry—have seen a £1.6bn increase in exports to a record £23.9bn and, at the same time, exporting £45.5bn to the rest of the UK. None of those figures include our £7.6bn oil export overseas (4.5% growth). Since the export figures for the entire UK dropped 4.8% during 2012, that must mean England’s exports dropped even more than that. Certainly, devaluing the pound alone is no ‘silver bullet’ solution.

Rather than stuff it down your throat, gentle reader. I will leave you to draw your own political conclusions from this. But should you want my advice, buy gold (ScotGold shares trade on the AIM market—disclosure: I am long ScotGold) and vote #indy.

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Straight from the Top

Posted on January 25, 2013 by davidsberry

Unionists may not agree but I’m not the only one who thinks that the Scottish media—including BBC Scotland, the Hootsmon and, on occasion, The Herald reflect the bias of their unionist ‘owners’. While I have no trouble with those who would keep Scotland in the UK arguing their case (indeed, I wish they would, instead of hankering for lost empires or spreading scare stories how even the women will go bald if we go it alone) there is only so much bias even open-minded people can thole.

Which is why I’m delighted that Deputy First Minister Nicola Sturgeon has started her own blog to try to counter some of this. While I don’t think even she pretends neutrality, at the very least it provides a well argued counter to some of the excesses of supposedly quality media in Scotland that should know better. The rest of today’s entry is an extract from today’s missive—straight from the top.

“Today we welcomed the findings in the Scottish Social Attitudes Survey. Reading the papers you’d think it was bad news. However, the figures tell a different story. The fact is that when people are presented with a range of constitutional choices open to Scotland, independence emerges as the most popular.

Independence is supported by 35%, Devo max 32%, status quo 24% and no devolution 6% – you won’t read that in many papers, but it is what the survey says.

Graph

Here’s some other highlights from the survey, ideal for your conversations with the [as yet] undecided:

  • 63% believe that the Scottish Government should have most influence over how Scotland is run
  • 64% believe that Holyrood should make decisions about welfare benefits
  • 56% believe that Holyrood should make decisions about the level of taxes.

Yesterday, of course, months after criticising the Scottish Government over the timing of the independence referendum, David Cameron tells us he wants his own referendum – on Europe – but not for another 4 years or so!

Alex Salmond summed this up nicely. The fact is that being independent within the EU will allow us to assert and protect our national interests much more effectively than we can as part of the UK.

Following a Yes vote in 2014, and in parallel to negotiations with the UK, there will be a negotiation with the EU on the terms of our continuing membership.  Just like Sweden, we would not join the Euro.  And just like Ireland, we would not enter Schengen but would instead co-operate with Ireland and the rest of the UK in the Common Travel Area.

Tomorrow I’m off to Dublin to give a speech to the British Irish Chamber of Commerce Annual Conference. One of the bonds we share with Ireland is our commitment to Europe and our appreciation of the benefits that the EU brings to our citizens.

The EU is easily our biggest international trading partner accounting for nearly half of Scotland’s exports. And membership of the EU is one of the major factors that make us attractive for inward investment.

Watch Reporting Scotland tomorrow night to see how I get on. But there is one thing I am fairly sure of, even before I go – there are not many people in Ireland who would agree with the view that being independent is the wrong choice in terms of European and international engagement. Not many at all.

Tomorrow also sees Yes Scotland launch the first in a series of major campaigns with a rallying call for Scots to put their hands up for a better Scotland. 2013 will see us move the debate from the how to the why of independence.

We want people to start thinking about what kind of country they want; what kind of country Scotland could be and to think about why being independent could be the best way to achieve our aspirations and goals.”

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