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.

Parents, Pensions and Mortgages …

Well, the latest news is that Nick Clegg – our deputy PM – has come up with a scheme for parents and grandparents to guarantee the deposits for their children to buy a home.

This could be a really bad idea for so many reasons.

I’m going to leave aside the obvious – that this excludes everyone without a nice big lump sum stacked up in their pension fund (a whole different – moral – issue) and just address this for the housing market impacts.

I’m also only going to touch on the suspicion that accountants and lawyers will already be working on complex, “tax-efficient” schemes to let the 1% save for their little darlings pied-a-terre using their (tax relieved) pension schemes. I’d guess these may supplement the 12,500 who the Beeb report says could “potentially benefit”.
(Oh, OK then, here’s an idea how that would work – pay £60k into AVC’s, claim back the 40% tax to gross up the fund to £100k and secure as a deposit).

The Problem …

For decades, UK families have pumped any increase in disposable income into buying a new home. This has inflated housing prices (sustaining the problem), and means that people are working harder just to stand still.

Recent globalisation changes, however, mean that middle class incomes have been squeezed, and that there’s little real prospect of income (or – as a result – house price) growth in the foreseeable future. And price inflation is still positive, so we expect a fall in disposable income.

And a number of sources seem to support the idea that the UK housing market is overvalued. The IMF estimates that this could be by up to 30% !

So why aren’t prices falling ? Well, interest rates are ridiculously low, partly as a result of quantitative easing. The liquidity intended to boost the economy is keeping this – admittedly important – sector of the economy afloat.

Foreclosure and repossession – as we learned shortly after 1990 – means properties sold at distress values, which drives the market down. So – while the interest cost isn’t causing pain, the banks will be content to not kick off another round of negative headlines by evicting large numbers of their customers.
Of course, that may change if they have to start declaring losses …

“Doing the Math”

House prices move to reflect the disposable income available to meet mortgage payments (I’m ignoring the effect of the private rented sector, here, for simplicity).

So if  I have £800/month available, and interest rates are 4%pa, then I can afford a mortgage of £800*12/.04 = £240k.

If interest rates go up to 6%pa, however, those repayments will go up to £1,200/month – and I’ll have to find another £400 at a time when salary levels are static.

And in this case, a household with the same disposable income of £800 will only be able to afford a mortgage of £160,000 (£800*12/.06).

So there would be a lot less people able to buy my house (it takes more than one buyer to create market competition), and prices will fall – as people either need to move, or as banks eventually start repossessing. The move to fixed rate mortgages – not such a component in the 90’s crash – may spread this over time, but supply-and-demand means that prices will fall (especially in a thin market).
Interest rate increases may still be a year or two away, but they will come. And they’ll come as a shock to those who’ve made long-term decisions.

For those who weren’t around at the time, take a look at the Nationwide graph of the House Price Crash. 1986-1990 saw the “real” price increase by 56% – from £88k to £129k. Then interest rates went up. A lot.
And repossessions started.
By 1992 prices had dropped all the way back to £81k.
Of course, they’ve been trending down again since 2007, but when the banks think we’ve hit the bottom of the market, then deposit percentages will come down.

Trying to get a mortgage …

… has become difficult for first-time buyers, as the banks are asking for 20% deposits – over £30k for an average property, more in London. The narrative tends to be that the banks are being overly cautious, but, in reality, they’re probably being not unreasonable in reflecting the increased medium-term risk in the overstated market.

Buy to Let …

… on the other hand, is doing very nicely. If you already have properties, then you can buy more (being selective, at the right price) by leveraging the (over-valued) equity in your existing portfolio.

Interest rates are low, and – as more and more people need to rent – residential rental rates are going up.

There’s still that capital risk down the line, however…

Pester Power ….

You’ll be using your pension, ffs, to guarantee a house price in an overvalued market. So if/when prices do get more realistic, then that Round-the World trip you’d got planned for your lump-sum payout ain’t going to happen. Even if prices don’t fall, the mortgage is still likely to be running …

Then there’s all the acrimony with your children, when they can’t afford the repayments any more, and can only sell at a price that covers the mortgage.

Even for those with reservations about this scheme, it can be difficult to say “No” to those you love. But this scheme could mean “Pester Power” endures until your beloved offspring are in well into their 30’s.

I’m a Homeowner …

… and I’m in favour of people buying their own homes. Although I like the idea I’ve an asset, my home is somewhere to live.
I dont have children, or a lump sum to claim, so I don’t really have a direct interest.

But – as with any market – you should buy when prices are low and sell when they’re high.
Remember house prices don’t always go up.
Remember that early in life, you’re likely to move more often – crystallising any losses.
Remember and that buying / selling property costs money (stamp duty, estate agents, solicitors just to start with).

History suggests that using schemes like this to distort the market in the medium term have historically been liable to end in tears.
Like the 120% mortgages once offered by Northern Rock – which could never be covered by the sale of the house in a “flat” market.

And I include the government’s “NewBuy” scheme in these distortions. This offers a 95% mortgage to people buying newbuild properties. But, of course, once you move in, it’s not a newbuild anymore.
So if you need to sell, then your buyer can only get an 80% mortgage. Alternatively, they can still get a 95% mortgage on a “real” newbuild. Probably even for an identical house on the same estate. The payments may be higher, but the deposit isn’t the constraint.
And that’s without recovering the premium charged for newbuilds – together with the carpets, kitchens etc. that often go with the deal.
So this may be good for the construction industry, but it’s not necessarily a good idea for their customers.

The UK housing market over the last 30 years is littered with examples of housing equity wealth being stripped – from endowment mis-selling to HIPS. Now, with all the equity stripped out of housing, a new scheme turns up to pump more money into this mostly non-productive sector – by stripping out pension provisions (which are, apparently, already inadequate).

This may be suitable for some, but if you go for this scheme, make sure your eyes are open.

I’m not a financial adviser, and you shouldn’t make personal financial decisions based on this article. Seek independent qualified advice before making important financial or life decisions.

Hargreaves Review – the Government response

Vince Cable has announced the government’s response to the Hargreaves Review, and to their credit (IMO), have adopted the recommendations pretty much in full. The government’s response can be found at http://www.ipo.gov.uk/ipresponse.

I’m glad about this, because I wrote a long post about it a couple months ago. I would hate for it to have gone to waste. I’ve had a quick scan through the response for the bits I was after. As with that report, I’m (perhaps parochially) concerned with Photographers’ rights.

Most of the media attention has been focussed on permitting families to “format shift” CDs and DVDs.

And (apparently) backing off the blocking websites enabling illegal downloads etc.

Most photographers will be upset that orphan works will be enabled – the issue, of course, that Stop43 so successfully campaigned on. But it’s not just that the goal posts moved with Hargreaves – the game moved to another pitch.

Bad News

Consider the impact of format shifting when applied to photographs. Section 6 of the response (on page 7) :

“This will include proposals for a limited private copying exception”

Although this is expected to cover ripping CDs and DVDs to iTunes, it isn’t a big stretch to think it could cover scanning and reprinting photos. Photographers may wish to adjust their business models accordingly….

Good News …

Now, I had to search quite hard for the bit that really interests me. The bit that could – if it works – really change things for photographers. It’s hidden away on page 12, in Section 9 of the response :

“The Government will, subject to establishing the value for money case, introduce a small claims track in the Patents County Court for cases with £5000 or less at issue, initially at a low level of resource to gauge demand, making greater provision if it is needed.”

and

“the Government will consider renaming the PCC to be the Intellectual Property County Court.”

Designed to cover trademarks and copyrights – such as photographs.

Once the Digital Copyright Exchange (and hence ownership of works) is established, this could mean creators have a very quick, very cheap way to enforce their IP rights. You won’t be hit with fees for the Daily Mail’s QCs if you lose.
And (potentially) it gives a route to a campaign for penalty fees – arguing negligent (or serial) infringers should have known that the image was copyright – because it’s registered.
Yes, I know that this contravenes the letter of the international agreements (which agree that rights holders shouldn’t have to jump though hoops), but in the real world, this could be very, very powerful. It works very effectively in the US with their Library of Congress registration.

In fact, this could be the best news professional photographers have had in decades.

Now, it would be nice if we could get copyright asserted and metadata stripping criminalised. But – if faced with recurring legal actions (and especially recurring penalty damages) – the big media outlets may find it more cost-effective to keep a track of where they stole the images from.
It’s going to be in their own interests to comply.
(Of course, it is possible that I’m my own little world here …)

The IPO should be pressured to make sure this happens.

And then it’s up to us. Use it or lose 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…