How about Performance-Related Pay for MPs ?

MPs are due to get an 11% pay rise after the next election.

Many voters aren’t in favour.

Personally, I think they should be given a process they’re applying to other public servants. Performance -related pay.

So how would this work ? How do we tell if our representatives are doing a good job ?

I’d say the pay award should be given if :

• The MP is re-elected with a turnout of 75% of the electorate, or an increase of 15% on the previous vote.

or

• (for safe seats) They submit to an open primary process, with at least three candidates. The whole of the electorate (not just party members or “supporters”) would be entitled to vote. It seems to have worked in electing Sarah Wollaston  (which is probably why we won’t see it happen very often in future).

 

Privacy, the NSA and GCHQ

The Edward Snowden revelations mean that governments are (mostly reluctantly) having to put their electronic surveillance processes under the microscope.

Firstly, As a UK citizen, I must admit I’m a bit miffed that the US is only concerned about the rights of its own citizens being infringed.

But there are implications which – although touched on- haven’t really been discussed in depth.

And there are other areas where single headlines aren’t joined up to produce the big picture implications.

Critically, while Snowden has revealed this information through the press, we don’t know whether any other employees (or contractors) have disclosed this information to other interested third parties.

Although that, of course, wouldn’t have resulted in the same degree of embarrassment. As with Chelsea Manning, I suspect that Snowden’s true offence would appear to have been “Embarrassing Important People”.

The honeypot

The huge amount of information being captured isn’t just useful to the NSA, of course.

Lots of commercial organisations, for example, would find this an attractive resource.

And there are reportedly 850k people authorised for access, each of whom is liable to be “leveraged” in one way or another for access.

It has also been reported that, on more than one occasion, users have accessed information for personal (mostly romantic) interests.

What we don’t know whether users have accessed the information for personal gain.
For example, reading (and possibly decrypting) emails to gain market sensitive information.

Breaking the Internet

Reports claim that a number of mechanisms have been employed to build backdoors into devices, or to compromise encryption tools – and even standards

Well, of course, “if you’ve nothing to hide, you’ve nothing to fear”.

Except that once the doors are unlocked, you can’t control who walks through them.

Now we know that there are probably backdoors in tablets, phones, networks and computers, there are probably a whole stack of people trying to open them up.

They may be nation states, or organised crime outfits, unethical corporations.

The ones we read about – and the ones who get locked up – will be the adolescent hackers who aren’t able to cover their tracks.

However, if those backdoors exist, then access isn’t limited to security services servers. A person with the skills to penetrate these devices can do it without touching the NSA/GCHQ servers.

Contractor skills

Having trained all these contractors to access these backdoors, they’ve created some people with a very marketable skillset.

Snowden’s revelations are, ironically, a very effective advertising campaign for those abilities.

Many of these contractors are (as was Snowden) working for consultancies who are adept at pitching business opportunities to large organisations.

Anyone following the Leveson enquiry can understand that a large corporation can be corrupted to the point where illegal surveillance becomes routine, particularly if the barriers to entry becomes low enough, and the risk of detection is minimal.

“What’s Good for General Motors …“

There have always been strong links between the US government and its corporate partners.

Could those partners be using data passed by the UK government to disadvantage British or European competitors ?

Data Protection Act

The UK passed the Data Protection Act in 1986. It was reworked in 1998.
The eighth principle is intended to ensure that personal data should not be exported (http://www.legislation.gov.uk/ukpga/1998/29/schedule/1).

Personal data shall not be transferred to a country or territory outside the European Economic Area unless that country or territory ensures an adequate level of protection for the rights and freedoms of data subjects in relation to the processing of personal data.

There are, of course, exemptions for National Security.

Here’s the section (from http://www.legislation.gov.uk/ukpga/1998/29/section/28)

Personal data are exempt from any of the provisions of—

(a)the data protection principles,

[snip]

if the exemption from that provision is required for the purpose of safeguarding national security.

(2)Subject to subsection (4), a certificate signed by a Minister of the Crown certifying that exemption from all or any of the provisions mentioned in subsection (1) is or at any time was required for the purpose there mentioned in respect of any personal data shall be conclusive evidence of that fact.

However, was it necessary for the UK national security to pass all that personal information to a foreign government ?

What safeguards were applied to its storage and use ?

GCHQ Funding

Is it reasonable to extrapolate “safeguarding national security” to include £100m funding for GCHQ programmes by the NSA (as has been reported by The Guardian) – effectively paying for GCHQ’s budget by selling our (and our European Partners’) citizens’ personal data to a foreign government (and, possibly, its economic interests) ?

And while I’m on this subject, when did the government decide that I wasn’t a citizen, but a product ?

Publication

The Guardian newspaper’s been taking a lot of stick for revealing a subset of the Snowden revelations.

But, really, if 850k people have access to this data, then, let’s face it, it will leak. The Guardian hasn’t (so far) been shown to lost control of our information. The respective intelligence agencies have.

And, as I’ve implied above, just because we haven’t heard of any other leaks doesn’t mean they haven’t happened.

For me, the key point of the Snowden revelations was not that the data was being stored by the security agencies (bad enough in itself), but that it could be removed without their knowledge.

To that extent, they have failed in their duty to their citizens.

How many others of the 850,000 people who apparently have had access to that data have used it to less principled ends ?

Snowden and the Guardian are being accused of treason, of “aiding the enemy”.

The risk is that, if those enemies had already been aided by others, then we probably just wouldn’t have heard about it.

The English Baccalaureate …

I’ve been meaning to write this up for ages. But it’s starting to get some traction, so I’ll jump in now…

I’m basically in favour of the idea of a Baccalaureate. The Wiki link explains what it is in France, but it’s basically a certificate of high-school graduation, of competence to enter higher education, and of a rounded secondary education.

This isn’t what Michael Gove has cooked up, however. He’s come up with a random bunch of GCSEs, and introduced it as a measure for schools to try and achieve.

I’m particularly annoyed because by misusing the term, he’s tainting it for at least a generation (someone else has said that the two problems with it are that it isn’t English, and it isn’t a Baccalaureate…).
It’s also bound to introduce confusion; public schools are already entering students for the International Baccalaureate (yes another ambiguity). Continental students will apply for English Universities and feel their achievement devalued. English students may feel they qualify for French universities, and be sadly disappointed.

Just after I started writing this, the BBC reported that Universities Minister David Willetts is apparently recommending English students study abroad – calling for a ” greater mutual recognition of qualifications”. A good starting point might be to not muddy the waters about what a baccalaureate is …

This EBacc truly is The Dinner Party Test (Gove even gets a mention in this article!). Dreamed up over the brandies in Chipping Norton. With no consultation with professionals, and no real thought about what skills will be valued when looking for a job.

So … it’s awarded for English, Maths, two sciences, a foreign language and either History or Geography. Irrespective of the character and strengths of the student. And :

• It ignores valid subjects such as Economics (possibly more relevant than Geography).
• It’s awarded based on performance at age 16 – so is incomplete in terms of university entrance.
• It completely ignores the creative arts – a high proportion of high-achieving visual artists are dyslexic. Talented musicians (for example) may also be challenged in more academic disciplines. Even Literature (assuming that “English” relates to the use of the language) is ignored.
• As an example – one of the schools in my area has a Performance Arts specialism status – and pupils have appeared in a number of films – including Harry Potter. That just wouldn’t be measured in this superficial evaluation of school performance.

The French bac has three separate streams. Gove’s “one size fits all” approach is, by contrast, a dehumanising exercise, trying to fit all students into a framework he seems to have pulled from 1965.

At the heart of the problem is the recurring mistake of governments and their officials, when they try to aggregate individual student performances into an overall performance for the school – a league table.

The EBacc fails on both of these counts – reducing the unique achievements of both students and the school to a statistical tick-box.

So – one of the most significant changes introduced by a government that claims to be decentralising, empowering local decision-making has been to introduce an arbitrary measure of success.

Instead of letting the school management, parents and governors decide their own values, objectives and measures, and evaluating performance against those measures.

What should be certified ?

Well, if we do need a league table at age 16, then it shouldn’t necessarily be academic (that’s measured in the next two years), and it must be based on absolute, rather than competitive achievement.
It should be asking whether the student has the right set of life skills – especially those needed for the work environment.

So competence in English and basic Arithmetic are relevant. Calculus and algebra probably aren’t as valuable as an understanding of household management – living on a budget, understanding financial services products and (for example) interest rate calculation.
A foreign language is of value (although not essential).
Sciences probably have less value at this level than a competence with Computers and Mobile phones – and particularly the use of Search tools. Communication skills and Teamworking are two qualities valued by employers – not sure how those are measured …

Until now, these have been included “vocational” qualifications and shoehorned into the GCSE tables. That’s the wrong place for them. But they do still have a value.

Interestingly, the table at the bottom of the article linked above show that specialist schools / academies – such as Performing Arts, Science & Maths, Sports and Media are among the ones that “suffer” in league table terms when non-academic qualifications are excluded.

But What Harm Can It Do?

The danger is that the diversity of subjects taught in our schools is reduced to a subset. That diversity is essential – different schools should have different strengths, and children should be encouraged to choose the school which best matches their nature.

An old boss of mine had borrowed a maxim (from, apparently, Peter Drucker) that “What Gets Measured Gets Managed”. However, it’s really important to understand the implications. If you measure the wrong things, you manage the wrong things, Then you manage things wrong, and then you get the wrong results. This is at the heart of dysfunctional management.

There’s evidence growing that schools are already starting to devote resources to these randomly selected topics, to the detriment of subjects not on the list.

The Commons Education Sub-Committee has recognised this, and has asked Gove to “think again”. Of course, he probably won’t. So far he’s not shown any inclination to consider an opinion that conflicts with his own. He’s disingenuous in claiming that if you don’t like the measure, then you can invent your own (this on a radio program when the scheme was first announced). Your measures won’t be measured – so they won’t be included in the league tables …

Interestingly … the certificate has been described as “Napoleonic“.

We’ll see where this leads…

Public Sector Pension increases

Lots of things to cover today …

The BBC is reporting that Public Sector employees will have to contribute up to an additional £3k  / year.

This has nothing to do with shortfalls in their pension fund. Because they don’t have one. Public sector pensions are funded from this year’s contributions. Or tax income. Or any cash they have lying around – they don’t differentiate.
The Unions are very clear. This isn’t going into a pension fund. This just goes into the Treasury.

So, as I say, this is nothing to do with the workforce, or the pension fund. It’s about deficit reduction.

The private sector had to give up this scam years ago. The Robert Maxwell scandal – where he was using a pension fund to prop up his company share price – highlighted the dangers to pensioners – both present and future – when a fund is not run in their interests.
And more recently, the failure of Marconi (formerly GEC) left many ex-employees with much less than they had been led to expect.

That led to an important principle that pensions should be independently administered – so they can’t be jeopardised by the incompetence or immorality of the employer.

Of course, every 6 months or so, we hear about the size of the private sector “Pensions Black Hole”. But why would a company let it’s pension scheme get into surplus ? That would then just provide another pot for the government to raid again in the good times – and then when times are hard, it’s the employer (or the pensioners) who has to top it up again.

Or not. Because ever since Gordon’s inspired move, companies have steadily shut down final salary (“defined benefit”) schemes – which we all used to have – and move to defined contribution schemes instead.

Which leads us to today’s announcement.

If I were the unions involved, I’d be campaigning on the basis that no government is fit to administer their pensions. That these funds should be ring-fenced and administered for the benefits of the pensioners – present and future. And that the government should make appropriate employer contributions.
Because the contributions to be made shouldn’t be dependent on whether or not we have a competent administration. Who apparently now looks on these pensions only as an annual cost to be managed down.

Of course, there’s no way this ring-fencing can ever happen in one go. The liability will be so utterly enormous that it could never be funded even over five very good years. It’s certainly not something that can be undertaken in times of austerity.
But it would be a start if there were cross-party agreement that this is a Good Idea. And if they could make a start by creating a fund with these extra payments, then it would be an important move in the right direction.

Now the unions agree that at the moment, these pensions represent good value for money.
But if things don’t go too well for the nation at any time in the rest of your life, then there’s nothing to actually back up all of those contributions.
Especially if the overall size of the public sector (and the contributions which flow from it) is reduced.
On an individual level, you want certainty that your pension is secure. You don’t want an employer that feels they can change their commitment when things aren’t going too well – because they may do the same again in the future when it’s inconvenient.
You especially don’t like possibility that the rule book could be rewritten after you’re too old to work and make up the shortfall.

Now a lot of the pension fund companies got their fingers burned after Thatcher’s promotion of “private pensions” – which  basically just created commission for financial advisers. Many pensioners had to be bought back in to the final salary schemes they’d been persuaded to leave. So those companies are going to be very wary of getting involved again.

But there’s a possibility that a large number of public sector workers could decide to “make their own provision” – or, at least, opt out of the government “scheme” and rely on a state pension.
An area where the government also sees the rules as flexible.

That exodus might accelerate if there was a tangible fund that had the support of the major unions, invested by professionals and valued by actuaries.
Such a fund would have enormous clout in the market.
Government wants to get an ever-increasing pension cost off its books.
So the unions should start negotiating now to make sure this happens through a planned, considered, cross-party process, rather than through successive knee-jerks of the ratchet.

Although, of course, that would mean that there would be less contributions to pay pensioners of the existing scheme…

[Edit 18:42]

The Punchline

After writing all of the above, I realised that there’s a much more succinct way to express the issue.

These public sector pensions have a 100% risk exposure to sovereign debt – that of the UK.

The Unions and the employers have a duty to start to mitigate this risk – or else if the IMF does ever move in,  those pensions could be rolled in as part of the negotiation.
Not just under this administration, but at any time until the rest of your life.

The only way to do this is to build a fund completely separate from the government’s clutches.

I’ve thought a bit more about this as well. The fund should be mutual, and should be (in general) managed for value. But it could reserve the right to publicly disinvest in any company which doesn’t treat it’s employees fairly and ethically.

Now that would make things interesting …

“The Markets won’t like it …”

If the influence of the Murdoch empire is truly a thing of the past, then there’s one remaining area of unelected influence. And that’s an influence over the whole world economy. The Free Markets.

Now, I used to believe that the market was a random interaction of buyers and sellers, striking a price. And that probably was – to some extent – the case when I did A-Level Economics a long time ago. Before computers worked as quickly as they do now.

But the “Free” bit (“Free” sounds good, doesn’t it ?) is the bit that’s misleading. “Free” in this context means “unregulated” – and we know how well that’s worked out. And what we’ve actually got is a game of Monopoly. Or Texas Hold-Em. And in the same way that all of those games end up with only one person winning, any free market will ultimately tend to a monopoly. Especially when it’s nothing tangible, or capable of differentiation – such as capital.

So Return On Investment  becomes the only acceptable criterion (apart from the Right to the Pursuit of World Domination). The effect of organisations like the World Trade Organisation ensures we aren’t allowed to choose companies that invest in our own nation. We can’t identify companies that make products ethically. Or those that don’t bribe police and blackmail politicians.
Because all that matters – to capital – is the exchange of money or goods and services. And growth in that exchange.

We can see that in the UK and the US (at least), the rich are getting richer. But everyone else is being reduced to minimum wage – the middle class is being destroyed.

And the market in capital is now dominated by a few players. So there isn’t just a consensus of capital providers; one or two of the big players can move the market enough to cause attention – and start a trend.

Now even Charles Moore in the Telegraph admits that he has his doubts. As the Murdoch scandal unfolds, it becomes more and more clear that the individual citizens – to whom governments are supposed to be accountable – have very little collective say when compared a foreign-based conglomerate, whose agents appear to have been willing to blackmail MPs and bribe police.

(An aside on Murdoch : Vince Cable – who, to his credit, voiced (albeit unintentionally) his opposition to Murdoch – spoke of this as “robust lobbying” when interviewed by James Lansdale on Andrew Marr’s show. While I’m sure that this is nowhere near on the scale of lobbying in the US, it still implies a proportion of influence perhaps denied to the people of the nation in whose name our government claims to act.)

So I’ve a lot of sympathy with the people of Greece who’ve been protesting. Not necessarily because their hard-work ethic has been betrayed, but because having fallen into the trap, they’re going to be wiped out, financially.
And after they agreed to the bailout, the rating agencies cut their rating. Effectively meaning that their interest rates will increase – and (in effect) just ratcheting up the deficit all over again..

But it was the markets that were discounting the probability of default. So, one could argue, it’s those who’ve taken that risk (the sovereign debt bondholders) who should suffer the pain. That’s the whole idea of a “Free” market, isn’t it? And as Robert Peston notes, the value of the debt is probably at around 50%.  But they’re only taking a hit of 21% – with the German workforce apparently taking up most of the difference.

And Lo! the markets were apparently pleased, because the EU support fund also increased. That effectively means that one of the players has topped up his stack. So there’s more to win.

But there’s a pattern to these things – and it was pointed out that the same happened in South Korea and Indonesia in 1997. The initial influx of funds was wiped out, as the bondholders took the money and ran – without giving the capacity to rebuild the economy. So a further bailout was needed, resulting in negative growth and a determination never to depend on the IMF again.

I think we can expect Ireland and Portugal to be targeted again after Greece settles down a bit.

And this does affect the individuals. Any government that tries to attract investment capital by declaring it’s country “open for business” is probably selling out its citizens. It’s sending the message that the welfare of its citizens, their conditions of employment, pensions and public services are all negotiable.

People are starting to understand this at a visceral level, although maybe the vocabulary isn’t there yet. It’s possibly rooted in the same intangible dissatisfaction that resulted in the Arab Spring. And it happens when a ruling class (in the broadest sense) becomes so used to manipulation that it becomes arrogant and complacent about the response it evokes in ordinary people.

I’m not sure that many politicians have recognised it yet …