Ponies and Gas Bills

Sir John Major rather put the cat among the pigeons, with his suggestion that the energy companies pay a windfall tax, with the proceeds going to help those in fuel poverty. A windfall tax is generally levied on what are considered to be excess profits. So, are energy bills spiking because of the excess profits made by the energy companies?

Helpfully, British Gas publishes a break-down of exactly what makes up an energy bill. In 2012 the average energy bill was £1,188. Of this:

£568 (47.8%) was the wholesale cost of the energy;
£283 (23.8%) was the cost of getting it to the customer;
£112 (9.4%) was the cost of environmental and social levies;
£72 (6.1%) was the cost of taxes;
£104 (8.8%) was British Gas's operational costs; and
£42 (3.5%) was British Gas's profits.

British Gas's profits therefore made up 3.5% of last year's energy bill. It's an odd definition of excessive. Apple's profit margin on the iPhone runs somewhere between 49 and 58%. As a sidepoint, 4 of those 6 categories are more or less fixed costs for the provider. Discretionary costs are limited to operational costs (and these aren't very discretionary - these are the wages of employees, the rent on premises and so on) and profits. Let's have a little experiment, using Ed Miliband's proposed price freeze. By way of example, between 2011 and 2012 wholesale gas prices went up by £94 for the average bill.

Case 1: the wholesale gas price goes up by £94 again. Where would British Gas find £94 to save? Well, first of all they could eliminate their profit margin entirely (causing a profits warning, and a collapse in share value, not to mention a problem for pension funds and so on). But that still leaves more than £50 to cut from somewhere else. Operating costs? Pretty tough to halve the operational costs for an energy company I'd have thought. And by that I mean entirely impossible.

I suppose taxes would drop a bit (because BG isn't making any profit any more), but environmental levies aren't going down, and nor are the costs of transportation and distribution. Basically, British Gas are now making a loss of more than £50 on the average gas bill. Ouch. Two or three years of that (and if prices are going up overall it's only going to get worse) and companies are going to start falling over.

Case 2: the wholesale gas price falls by £94. Well, prices are frozen remember, so bills can't fall. And there isn't much discretion in how much to spend on operations. Tax will go up a bit, but by far the most of this benefit will be seen in BG's profit margin. Hurray for shareholders and all that, but I don't think that's quite what Ed had in mind.

Ultimately, the campaign against the energy companies only really works if they really are gouging profits out the consumer on their bills. And I'm not sure that the figures really stack up to support that.

Education, education, education (again)

It's funny, I thought that parents who sent their kids to independent schools were guilty of depriving state schools of the sort of articulate advocates of high standards and rigorous education that they desperately need if they're going to improve. Or possibly that the education you get at a state school is much better than an independent one, which are much less responsive to parents' wishes.

Apparently not.

Pushy parents who want to put their children into selective surroundings with others of either their background, beliefs or ability – or, indeed, all three – should put their money where their mouth is and pay for their indoctrination.That would then free up places in the better comprehensives and take pressure off the state system.

The subheader is even starker:

Pushy parents who want to dictate how their child is educated should send them to private school, not set up a free one.

There are two not terribly pleasant ideas that underpin this line of thinking. The first is that parents (or their children) are not consumers of a state-run service, but recipients of a gift from a magnaminious government. Rather than have any say in how that service should be provided, they should just be grateful to get it at all. The related belief is that it is the state's money that pays for all this stuff, so naturally the only voice that matters in its administration is that state's.

As the piece is about the iniquities of Free Schools, there's also a category error - Free Schools are explicitly not permitted to select on the basis of background or ability, and they are no more permitted to select on beliefs than any other religious school. But there, it's in the Guardian, so a crippling misunderstanding at the heart of an article is only to be expected.

The really weird thing is that there is tacit agreement with the idea that Free Schools will be better than the "one-size-fits-all comprehensive" model that parents are turning away from - and that this is a bad thing. There's an echo of John Prescott's lament that

If you set up a school and it becomes a good school, the great danger is that everyone wants to go there.

Melissa Kite's argument is that if you can't afford private schools then you don't deserve a voice on how your children are educated. Perhaps the least surprising part of the piece was the bit at the top where she says how relieved she is that she doesn't have kids. Me too.

Seriously?

Maybe it's me who's the odd one. But the opening sentence to this really, really jars:

There should be a word for the mixed emotions that working parents feel when their children’s teachers go on strike.

Mixed emotions? Seriously? From schools that send you stern letters if you're 5 minutes late dropping your kids off, and write prim little circulars stressing that "every day is important" in a child's education, so no of course you can't go on holiday at a time you could actually afford it, and then fuck off to the donkey jackets and braziers so they can be paid more? There are definitely words for the emotions I feel, but 'mixed' is not one of them.

Polly's reading difficulties

This one isn't quite as egregious as blaming the Tories for the death of children, but it's just another example of Polly Toynbee basing her polemic on misrepresentations and untruths. The article is an attempted deconstruction of Dominic Cumming's thesis on the state of education in Britain. I haven't read his entire thesis (it's 237 pages of academic text, and I have a job), but I have read what I suspect is the same extract as Polly - the bit concerning education, and genetics.

Polly's take is:

Cummings suggests that 70% of cognitive capacity is genetic, beside which the quality of teaching pales into insignificance.

Which she gets from this passage:

Scores in the phonics test show ~70% heritability; scores in National Curriculum reading and maths tests at 7, 9, and 12 show ~60-70% heritability; and scores in English, Maths and Science GCSEs show ~60% heritability in a just completed twin study (the GCSE data will be published later in 2013)... Educational achievement in school is more heritable than IQ in English school children: i.e the heritability of what is directly taught is higher than what is not directly taught.

Not cognitive capacity then, but test scores. Polly runs off with this misinterpreted extract to a genetic biologist:

Cummings, using the work of the behavioural geneticist Robert Plomin, badly misinterprets it, says Jones, and "fundamentally misunderstands" how biology works. That 70% is, crucially, "a statement about populations, not individuals. It certainly does not mean that seven-tenths of every child's talents reside in the double helix."

If Polly can find a quote from Cummings arguing that 70% of every child's talents comes from their genes then she can have a gold star - because that isn't the point he's making. What then is that point?

As far as I understand it (and I am one of those despised arts graduates with very little knowledge or understanding of mathematics and science that Cummings is so hard about in his thesis), it is that the disparity in standards between children is largely heritable. That good teachers can improve standards for everybody, but the gap will remain. That being so, it's vital that a good education policy takes this into account:

Far from being a reason to be pessimistic, or to think that ‘schools and education don’t matter, nature will out’, the scientific exploration of intelligence and learning is not only a good in itself but will help us design education policy more wisely (it may motivate people to spend more on the education of the less fortunate)

Typically, Polly has refused to allow her failure to read or understand Cumming's thesis to dissuade her from writing the piece she was always going to: Tories hate the poor. This also enables her to indulge herself in two of her favourite hobbies. The first is refuting her own argument with her own rhetoric, enlivening a piece arguing that genetics are irrelevant, and teachers are the most important thing with the statement "With destiny all but set by five years old". The second is a clarion call for knowledge and understanding of basic facts ("Most people, right or left, would be alarmed at a trajectory of ever-worsening inequality. But few know the facts.") that are, um, wrong (inequality has reduced sharply since 2007/8 - recessions do that).

The worst person in the world

I was once sat next to someone at a St Patrick's Day dinner in Lusaka (I think in the Irish Embassy). Every table had three bottles of Jameson whiskey on it, and we were pushing on through the third between us when I asked him what he did.

'Oh, import and export mainly,' he replied.

'Where?' I asked. 'Burma, mostly,' was the answer.

'Really? What sort of things?'

'Police equipment in, tear gas and so on, and tropical hardwoods out.'

'Jesus, you're the worst person in the world!'

'Yeah, I get that a lot.'

Until now, that was my benchmark for worst person status. It may, however, have been lowered.

The man known for dressing up in an Elmo costume and harassing New York City tourists with anti-Semitic outbursts was sentenced in Manhattan Criminal Court on Wednesday to a year in jail after admitting he tried to extort $2 million from the Girl Scouts.

Actually reading the story shows that this guy is sadly nuts rather than nasty though, so whoever that bloke was in Zambia still holds the record.

Another Polly cracker

Polly's on fine shroud-waving form in today's Guardian, blaming Michael Gove personally for the death of a four month old baby in Tower Hamlets, and for the death of two year old Hamzah Khan. She even links Michael Gove to the death of Baby P - the piece is headlined "It is the Baby Ps and Hamzah Khans who pay for this Tory vandalism." But there's a specific allegation that a Government programme cancelled by Gove would have prevented the death of little Hamzah Khan:

Hamzah Khan fell off everyone's radar, but ContactPoint would have raised the alarm that he was never seen by a GP or registered at school... ContactPoint was abolished in 2010 in the coalition agreement "to reverse the substantial erosion of civil liberties under the Labour government and roll back state intrusion".

Pretty damning right?

Hamzah Khan died in December 2009. Baby P, of course, died in 2007. Toynbee is using the deaths of children who died under a Labour administration to blame the Coalition for being callous (at the very least). That's pretty special.

UPDATE: The utter shameless, grotesque, vile mentality of a "newspaper" that uses the killing of kids for political purposes and to inflame hatred. That was Owen Jones on the Philpott story in the Daily Mail. Oddly, he's been silent on the Guardian.

An oven-ready answer on energy policy

I watched PMQs today, and was struck by the thought that David Cameron hasn't really got a quick, pat response to Ed Miliband's energy price freeze gimmick. This is slightly irritating, as I reckon a response could fairly easily be drafted that would be a) easy to understand; b) plausible; and c) fairly easy to blame Labour for. It goes as follows:

1. Energy prices have risen by roughly 30% since the Coalition came to power. Not co-incidentally, wholesale gas prices have risen by roughly 30% since the Coalition came to power. Miliband has alreay said that if wholesale gas prices rise, then his freeze will have to be unfrozen - probably the largest factor in recent price rises wouldn't even be covered by the freeze.

2. Probably the best way of reducing wholesale gas prices is to increase supply by exploiting Britain's immense resources of shale gas - something opposed by Labour.

3. Another important factor in domestic energy prices is, of course, tax - including the renewable levies introduced by Ed Miliband when he was energy sector. Not only does Miliband not propose to roll these taxes back - he proposes to extend them as part of making Britain carbon free. He's providing an illusory freeze on energy prices, while pursuing policies specifically designed to increase them.

4. Cost of inputs; levels of taxation. In each case Labour oppose the policies that might reduce them. Instead, they ignore the root causes of the problem, and seek to legislate to hide the problem. Just like with education, where falling real standards were masked by devalued exams.

And that's where the Government announce actual policies on fracking and cutting renewable levies.

£5 please.

Two papers in one!

Lead Guardian story on Royal Mail privatisation:

Huge interest among members of the public will hit institutional investors, but hundreds of staff refuse allocation of free shares

Second Guardian story on Royal Mail privatisation:

Royal Mail staff have overwhelmingly chosen to accept free shares in the soon-to-be privatised company. Just 0.25% or 368 out of 150,000 employees said no to the share offer, which will be worth around £2,000.

Does not compute!

This is really quite funny. The BBC commissioned a poll effectively to show how badly public services have been affected by the 'cuts'. They are then shocked and disappointed to see that most people think that services have improved. But it's OK! The poll that they commissioned was probably junk anyway:

While general public opinion may tend towards the view that a service has been maintained or improved, some will argue that cuts in spending have had a particularly negative impact on vulnerable groups whose experience may not be represented by the poll.

Double points for maintaining this line even though a specific finding in your own poll is evidence against it:

However, the survey indicates that people who use a particular service are more likely to say it has got better than the general population.

For instance, the overall score for meals-on-wheels is minus one - a slightly higher proportion think they've got worse than better. But among service users, the figure jumps to plus 12.

And remember all the fuss about libraries?

And libraries - the subject of many anti-cuts protests - three per cent more people say they've got better than worse, but among library users the score is plus seven.

Strong work all round.

Growth estimates and the IMF

This might be the most tedious title of any post here, but the recent IMF upgrade in growth estimates for the UK set off a thought process.

The forecast for UK growth this year received a significant upgrade to 1.4%, up from July's estimate of 0.9%.

Here's the thing: UK GDP grew 0.4% in Q1 2013 and 0.7% in Q2 2013 (Q2 figures may be upgraded further). In other words, when the IMF predicted total growth in 2013 to be 0.9%, the UK had already exceeded that figure, in the first half of the year. So, they upgraded their estimates. But they only upgraded them so far as to predict 0.4% growth for the two remaining quarters combined.

The evidence we have for Q3 is that growth was substantially quicker than in Q2: services, manufacturing and construction PMI figures have basically gone gangbusters for July, August and September. The BCC is predicting Q3 growth of up to 1%. By my reckoning that would make growth of roughly 2% in the first three quarters. Given that all the figures I've seen are obviously available to the IMF, what do they know that we don't?

Ralph Miliband & love of one's country

The funny thing is that the original article at the heart of the fight between Miliband and the Daily Mail was about as inoffensive as a biographical piece about a Marxist academic ever could be in the Daily Mail. It was the headline, "The man who hated Britain", that caused the fight - a headline entirely unjustified by anything in the article. Anyway, the editorial a couple of days later made up for that, doubling down on the charge and adding in various new ones - Miliband provided the ideological underpinning for Stalinism, and was the exponent of an "evil legacy".

I suppose that the first point to make is the one made by Nick Clegg and David Cameron - it's entirely understandable that Ed Miliband's first reaction is to leap to the defence of his father, who, after all, isn't around to do so himself. It would be rather odd, and a little depressing, if he didn't.

The second point is that the Mail's editorial is more than a little fatuous. Ralph Miliband was never a member of the Communist party, and was vocal in his opposition to Stalin at a time when many other Marxist intellectuals, notably Eric Hobsbawm, retained a slavish loyalty to the Soviets. Above all, Ralph Miliband was most famous for his advocation, in language that was much less torturous than the majority of Marxist academics, of a democratic socialism, to be led by a new working class party of the left (since Labour were hopeless sell-outs). He makes an unlikely bogeyman.

The third point, however, is that Ralph Miliband's ideology is a perfectly reasonable target for newspapers to dissect (although ideally they would do so with a bit more finesse and understanding). He represented a sort of left-wing politics that was doomed to failure in Britain, which remains a fundamentally conservative (not Conservative) country, and his ideas, which were well outside the mainstream in the 1970s and 80s, would now be considered bizarre. Equally, it is clear (and obvious and understandable) that he was the key influence in his sons' upbringing. Steeped in politics from boyhood, both made their careers in the Labour Party (the old joke being that Ralph Miliband had predicted that the Labour Party would screw over the working classes, and his sons proved him right).

Did he hate Britain though? The Mail's case in support of this is basically that he was a Marxist, QED. He was opposed to the monarchy, the established church, the army: the establishment tout court. How can you love something if what you really want to do is change almost every part of it? There's something in this - Marxism is an internationalist creed, where love of country is supposed to take second place to class solidarity. But it's hardly conclusive - as Andy McSmith says "You can love British culture and liberty and the beauty of these islands, while despising the way wealth and power is distributed."

I do wonder though, quite what Ralph Miliband would have said to all this. There's a nice George Orwell definition of patriotism:

By "patriotism" I mean devotion to a particular place and a particular way of life, which one believes to be the best in the world but has no wish to force on other people.

Would Ralph Miliband have felt that? That seems a touch unlikely - intellectuals have generally been reluctant to express love of country. Orwell again:

In societies such as ours, it is unusual for anyone describable as an intellectual to feel a very deep attachment to his own country. Public opinion — that is, the section of public opinion of which he as an intellectual is aware — will not allow him to do so.

My final point though, is that this doesn't - or shouldn't - matter very much. Whether or not Ralph Miliband loved Britain, he was a testament to why Britain should be loved. And if there's one good thing that comes out of all this, it's that people might even go and read some of the things he wrote (ideally, obviously, while disagreeing vehemently with all of it). Knowledge is always worth pursuing.