Today's bad word: Partner

I haven't done a bad word for a while but something said by a government minister last week brought "partner" to my attention as a truly bad word in the wrong hands. Like most words, partner has its uses, as do "investment", "community" and all the other cuddly words the Labour government misuses in order to pretend things are not as they are. I cannot now remember exactly how the minister in question misused "partner" last week but that doesn't matter because they have been misusing it in the same way for years. To make things even worse in some instances it is used interchangeably with "stakeholder", I will leave "stakeholder" to another day.

So what is a partner? In popular usage it covers those who engage in bodily coupling, those who live together without benefit of clergy (whether or not there is much bodily coupling involved) and those who are in business together. Many a prostitute falls into all three categories. When a government minister uses the term the reality is usually that someone is being (ahem) penetrated by the government although they pretend to be working with their victim.

In recent times we have been told that the great British people, the government and the banks are forging a new partnership when the reality is that the government is taking money from us, giving some of it to the banks, demanding more back from the banks and telling them how to run their businesses. It is not a partnership but how many votes have they bought by people being misled into thinking we are all working together to solve the ills of the financial world? We have also been told that social workers and their "clients" are working in partnership; schools and parents are in partnership; the police, courts and prisons are in partnership; local authorities and those living in their area are in partnership and so on and so on. None of these relationships is a partnership in any sense and to describe them as such blurs the boundaries between the distinct functions each has.

The problem with blurring boundaries is not just that the different elements can lose sight of their specific job, that happens but it is a consequence of a far more significant vice. Each of the relationships I have mentioned involves distinct responsibilities which rest on one person or organisation. Generally speaking, the person or organisation bearing responsibility for a particular task has that responsibility because he, she or it is best placed to decide on the best course of action for the benefit of all involved. The police have responsibility for apprehending and charging suspected criminals, the courts have responsibility for assessing whether the suspicion is sufficiently well founded to justify a conviction for a criminal offence and the prisons have the responsibility for carrying a penalty of imprisonment into effect. These are three distinct functions, each in the hands of specialist organisations which (we hope) have the expertise to carry out their function to a proper standard. Muddle them together as a partnership and each might start to think it has the right to be involved in how the others carry out their work. Today we hear more representations than ever from the police about how the law should be interpreted and more judicial opinions about the merits of different sentences.

Education is a classic area in which responsibilities are confused through woolly thinking. The primary responsibility for educating children lies with their parents. The village elders used to require all parents to ensure their children were taught the things they needed to know and set up schools to do it for them if they could not do it themselves. Once a child is at school the responsibility for teaching rests with the school and the teachers in it, not with the parents. Parents can supplement the work of the school but cannot dictate to it or undermine what it does, at least for so long as it does the things the village elders used to insist on - reading, writing and arithmetic. Tell parents they are partners with the school and those least qualified to do so will consider themselves equal to the teachers and expect to be consulted on matters within the exclusive province of paid educators. Tell parents they must send their children to school and support the teachers' decisions, and the atmosphere is different. The teachers are then in charge of what goes on at school and parents are told about it not consulted whether it's OK for little Johnny to be taught that 2 + 2 = 4. Parents who choose to educate their children at home are perfectly entitled to do so provided they do it to the minimum standard expected of schools, but if they delegate their responsibility to a school it is the school which is in charge.

There are times when someone has to be in charge, someone has to have an enforceable right to tell someone else what to do because experience tells us that it is necessary for the general good. The village elders knew that, which is why they set up schools and insisted on all children being taught the basics of literacy and numeracy. It was necessary for the next generation even if the parents of that generation did not appreciate it themselves. Partnership had nothing to do with it, there were those in charge and those required to follow for fear of sanction.

An army does not function through partnership, it functions through orders being given by officers and carried out by other ranks. That doesn't mean they don't work together, nor does it mean that the other ranks have to be harrassed and bullied, but it does mean someone is in charge and someone else follows. Describing relationships which require an "officer group" and an "other ranks group" as "partnerships" does no one any favours. It weakens the chain of command by encouraging those who do not know to believe they do know. It also leads to each group being able to blame the other when something goes wrong. "I can't be to blame because I'm in partnership with him, her and Uncle Tom Cobbley and all, we are all in it together, it is a collective decision therefore I must not be made to carry the can." That inhibits the identification of systemic errors and, therefore, makes correcting them far more difficult than it need be.

Keep the boundaries clear and you make sure those with responsibility for taking decisions cannot pass the buck. Leave "partner" to the bedroom and business.

Sarkozy and the Poznan pantomime

As I throw another carbon-free coal on the fire to sustain me through the bleak midwinter my mind turns to the unstoppable global warming from which we are currently suffering. And where better to experience the full scorching effect than Poznan in deepest darkest Poland. Yes, it's international junket time again. Evidencing the self-sacrifice for which they are noted, the great and good from 192 countries have gathered to take the next step in the elimination of carbon dioxide from the face of history. The Poznan whine and cheese party is the latest in a series of conferences in which the successor to the Kyoto Protocol is expected to the formed. Kyoto hosted the conference at which specific targets were set for reductions in the emission of greenhouse gases by 2012 (the reductions being below 1990 levels). The overall desired reduction was 5.2% with larger targets set for industrialised countries or regions and smaller for developing nations.

It goes without saying that the Kyoto targets show no sign of being met without fraudulent manipulation of statistics and it is almost 2009 already, 2012 is just over three years away. Oh my ears and whiskers! What are we to do? The preferred solution of those benefitting from business class flights and five star hotels at taxpayers' expense is to hold more conferences and make further pious pronouncements which, again, will come to nothing. The next formal agreement, the successor to Kyoto, is due to be made next year.

Alongside the discussions towards a global plan, the EU wants to have its own plan, and this is where the fun begins. There is a small Frenchman currently at the top of the EU tree. All Frenchmen like to feel important, this chap is the President of France so he is required to feel extremely important; add to his status the presidency of the EU and it is impossible for Nicholas Sarkozy not to believe himself the most important person in the world. He has until the end of this month to secure agreement to an EU anti-greenhouse gas plan or his arrogant edifice will fall around him, like cheap underwear exposed to a 60 degree wash. His big chance comes at the upcoming EU summit meeting on the 11th and 12th of December, less than a week away. Mr Sarkozy has a problem. His big idea is for a cap-and-trade arrangement and it is too late for him to switch horses now, but some EU countries don't want to play that game.

As I understand it the way a cap-and-trade scheme works is that a figure is agreed for permissible levels of emissions of greenhouse gases (carbon dioxide in particular). Once the overall level has been set for a country, and individual level will be set for different industries. Those who produce less than their allowance will be able to sell their surplus allowance to someone else who is struggling to stay within his permissible limit. Heavy financial penalties will be imposed on anyone who produces too much carbon dioxide so you buy someone else's spare allowance in order to avoid the fine. Of course politicians like schemes which give them lots of other people's money to play with, so the initial levels are not just allocated, they are sold at the highest price they can possibly squeeze out of business.

Our German friends aren't very keen on this because they still make things and making things results in the production of carbon dioxide. Germany simply cannot make as much stuff as it does now and reduce carbon dioxide emissions; not unless a means is found to trap or filter the carbon dioxide before it gets into the sky and fries us all like sausages on a griddle. Our Polish friends are even less keen because almost all their electricity comes from burning coal (of which they have vast natural supplies). They cannot switch to nuclear because it is too expensive for them and would take a decade or more to come on line, so they either burn coal or they convert to gas and find themselves dependent on importing it from Russia. As Ukraine has found to its cost, Russia keeps the stopcock on its side of the border. France doesn't care much because it produces most of its electricity in nuclear power stations and doesn't have much heavy industry. For France, and Mr Sarkozy in particular, it is about being important not about whether the plan will work.

One aspect of all this that is, it seems to me, given too little attention is the obvious question: why has the world failed to meet the Kyoto targets despite apparent willingness all round? The answer is in three parts. First, industrialised countries have to increase their wealth just to stand still. Most of them have expanding populations which requires an increase in total wealth for the wealth per head to remain the same. So they need to expand industry, much of which produces additional carbon dioxide. Secondly, developing countries want toasters and microwaves, as well as option extras like warm homes and enough food, so they need to expand their industries to create the wealth required to provide these needs. That means making more electricity at the lowest cost, which means burning coal. Thirdly, no one is prepared to be the first to take a hit. The USA did not ratify the treaty containing the Kyoto Protocol because it was not prepared to sign-up to reducing its industrial base while its competitors were expanding theirs. In passing, let us not forget that it was President Clinton and his Vice President, St Al of Gore, who first decided not to submit the treaty to Congress for approval.

The current stage of EU negotiations looks to be floundering, even according to the well-spun piece published by the BBC on the matter. Try though they might, they cannot hide the fact that some countries would be crippled by a cap-and-trade scheme unless they are given such extensive concessions that the scheme might as well not exist. There is talk of a compromise such that the countries most heavily dependent on coal will be given generous allowances for free while others producing less will have to pay a lot for a smaller allowance.

And that leads us to the essential problem with cap-and-trade schemes in this area. How can they result in lower emissions? For so long as we require manufactured goods, aeroplane flights, electricity and everything else that makes life comfortable, we will produce those things. There are only two paths to follow, either we give up some of the comforts of modern life or ways are found of producing those comforts without also producing current levels of carbon dioxide. Seeking to force people to give up comforts they take for granted is political suicide for any government. Have you ever heard a government minister say their electors should suffer a reduction in standard of living? Of course not. Now that a reduction is being forced on people through recession we see why it cannot be part of overt government policy.

So how does a cap-and-trade scheme cut emissions? The obvious answer is that it sets the cap at a lower level than current emissions. But how is that actually going to be enforced? The very nature of the scheme is that there are no physical means of lowering emissions, only financial penalties if you exceed your allowance. Build in distortions, such as Poland and Germany being given allowances for free because of their current industrial base, and there will be renegotiations tomorrow, next week, next month and until the end of time as those distortions prove unfair to other countries. Poland and Germany won't budge an inch, they won't need to, so restrictions elsewhere will have to be relaxed. Enforce the penalties in such a way as to require a reduction in living standards and countries will elect new governments committed to withdrawal from the scheme, unilateral withdrawal if necessary. It is not realistic to expect emissions to fall simply by imposing financial penalties. Perhaps they will fall for a time as businesses are bankrupted or goods are priced out of the reach of potential consumers, but that can only be temporary because practical politics will bring in governments committed to reversing the lunacy.

So that leaves us with new technology to reduce carbon dioxide emissions through some form of trapping or filtration. Some progress is being made in that field but we still seem a long way from it being of any great effect and still further away from it being even remotely affordable. In the meantime a cap-and-trade scheme might be introduced which will add vast additional costs to business, costs which must be passed on to consumers or result in the businesses closing. We don't even need to see whether there is sufficient evidence of runaway global warming to justify such a crippling blow to the economy, of itself it is utter madness to even think of going down this path.

The Germans and Poles are saying all these things now because they will suffer the harshest consequences most quickly. My greatest hope is that Mr Sarkozy will not be able to fudge a deal before the end of the year. The enviro-realist leader of the Czech Republic takes over the EU presidency next month and we can then expect a nice spell of common sense to prevail.

Queen's Speech 2008 Part III - schizophrenia

Our government is chronically schizophrenic. We have seen this most vividly in recent weeks in its approach to banks and economic policy generally. It vilified the banks for getting themselves into trouble by lending too much money to people who were a bad risk then insisted they continue lending at 2007 levels - levels which can only be reached if you lend to bad risks. It told us that its ownership or part-ownership of banks would be at arms' length, then at the first sign of the banks doing something the government didn't like it said they must come to heel because they are beholden to the government for bailing them out. It said we must all save more money then sought to dampen the recession by encouraging us all to spend. And that particular piece of double-think turned into triple-think because their main measure to encourage spending was something which would not generally reduce prices.

In the Queen's Speech were three measures showing just how deep and dangerous governmental schizophrenia has become. They cover business, the role of Parliament and (the real corker) welfare.

"My Government is committed to helping ... businesses through difficult times." Fine words, so what is it that the government proposes to help businesses. You have to search for this but there is a plan to help the cash flow of construction companies. The details do not seem to have been published yet, so it is impossible to say whether it might work. As far as I can tell that is the only thing in all the proposed new legislation aimed at making life easier for businesses. And to show how much they understand business, they propose to allow local authorities to raise supplementary taxes on businesses. Brilliant. Helping businesses through difficult times by taxing them more. Why didn't we all think of that?

"My Government will continue to take forward proposals on constitutional renewal, including strengthening the role of Parliament ..." I sometimes think the Queen must be embarrassed by having to use meaningless terms like "constitutional renewal", she knows better than anyone that the constitution does not need renewal because it is not about to expire, it's not like a parking permit. Or is it? Many of us believe that the current government has done more damage to the flexible and pragmatic British constitution than any in modern times. Perhaps that is why they made her say "renewal", perhaps they realise the damage they have done by supplanting cabinet government and parliamentary scrutiny in favour of a small coterie of insiders who answer to no one. Somehow I doubt it.

At a time when the Prime Minister refuses to answer questions in the House of Commons, the Home Secretary knows nothing and wants to know even less, national business strategy is in the hands of a sleazy spindoctor with little on his CV other than two forced resignations for being unfit to hold office, the impending closure of much of our capacity to generate electricity is answered with the pixie dust of windmills, the government stands four-square behind a partisan and incompetent Speaker of the House and the Opposition cannot oppose without fear of arrest, are we really expected to believe that the role of Parliament will be strengthened? How can they make the Queen say these things and still sleep at night?

And then there is welfare. Their proposals here are so contradictory it is almost laughable. On the one hand they say they are going to impose sanctions against those drawing benefits who refuse to try to find work. On the other hand they are going to make it the law of the land that so-called "child poverty" will be abolished by 2020. Let's cut through the weasel words. "Child poverty" means children growing up in families whose income is less than 60% of median earnings. Median earnings are currently around £26,000 a year before income tax, so 60% is about £15,600, equivalent to something around £300 a week. So they say no child will be in a family with a weekly income of less than about £300. A fine sentiment, I support it entirely as a jolly nice thing - if it can be achieved. So everyone is to be guaranteed an income of £300 a week from work or benefits or a combination of both? Ah, no, because those who don't want to work will have their current income reduced, in many cases to well below £300 a week. You simply cannot have a minimum guaranteed income (so as to meet the poverty target) if you also have a system of financial punishment for the indolent and feckless. You can't. You might want to, but you can't do it, the two cannot exist together.

I hear you say: "don't be such a silly fat bigot, Mr FatBigot, of course it can be achieved by imposing financial penalties only on benefit income above £300 a week", but that is not their policy and nor could it be because current benefit payments are well below that level in many instances. And then I hear you say: "or they could preside over a massive recession/depression so that median income falls far below current levels". Let's hope that is not what they expect and it certainly is not their policy. For all that I complain about their incompetence and their fiscal incontinence, I have no doubt that the government genuinely wants the people of this country to get richer. It's just that they show no sign at all of knowing how to achieve that. In any event, if incomes do fall substantially so will rents which, in turn will mean the amount paid in housing benefit will fall thereby making it even more difficult for those on welfare to hit the £300 a week mark.

There are other aspects of the measure in the Queen's Speech which can also be criticised as the product of governmental schizophrenia. These three caught my eye in particular. On a more general point, the biggest problem hitting much of the economy at the moment is a lack of confidence. A government with a clear plan and an unambiguous strategy to ease and then overcome recession can do a lot to restore confidence. That is one reason the country recovered so well from the recession in the early 1990s. After the disaster of the Exchange Rate Mechanism there was a significant change of approach, presented in a clear and consistent way by a plain speaking Prime Minister and even plainer speaking Chancellor of the Exchequer. There was no double-talk, no muddle of policies pulling in all directions at once. At the moment no one can tell what the government really wants or how it aims to achieve it.

Queen's Speech 2008 Part II - mortgage default

It was inevitable that the recession and banking crisis would lead to something being included in the Queen's Speech about the economy. The measures outlined in the speech itself were, as always, a potted guide to what the government has in mind and the details will emerge over the next few days. It didn't take long for poor Gordon to raise a populist idea during the debate on the Speech. He proposed a grace period of two years in which those unable to pay their mortgages would be entitled to roll-over the arrears and add them to the principal of the loan. As I understand it only mortgages of up to £400,000 are covered and you get no help if you have savings above £16,000.

Like so many of poor Gordon's ideas it is designed to win votes with little regard being paid to how it will work, how much it will cost and whether it will have adverse consequences which outweigh the benefits. Let's look at the benefits first. This proposal rightly recognises that having your home repossessed is a potentially devastating thing. Not only do you have to move out but a repossessed property will almost always sell for less than average market price and both that loss and all the costs associated with repossession and sale will fall on the dispossessed borrower. More than that, the peace of mind and sense of self-worth which so many derive from owning their own home will be lost; and that cannot be quantified in terms of mere money. Having said that, it would be foolish to ignore the monetary effects of the government's proposal because they will have consequences for everyone. So I ask myself what the consequences are likely to be. Ancient O-level physics tells me that for every action there is an equal and opposite reaction. Let me give an illustration of how I would expect the proposal to operate.

Say Mr Bloggins bought a house for £150,000 in 2003 with a 100% mortgage and it's current market value (after losing 15-20% in the last year) is £200,000. Interest on his mortgage loan is 6%pa (£750 a month) and he loses his job which results in arrears building up over three months of £2,250. The bank repossesses and takes two months to sell, at auction the house realises £160,000. The agents handling the sale charge 2% (£3,200) and there are legal and other costs of £1,500. At the date of repossession Mr Bloggins owed £152,250 and had an asset with a nominal value of £200,000, he was in profit to the tune of £47,750. At the date of sale he owed £153,750 and the asset realised a net price of £155,300. He receives a cheque for £1,550. On the face of it repossession has cost Mr Bloggins a huge amount of money, a sum far in excess of the arrears he built up by the time his home was repossessed. I have left out of account the value of any scheme he had in place to repay the capital of the loan, not least because many of them have been blown to the winds by recent stock market falls.

Then assume he is allowed to roll-up interest over two years and gets another job which allows him to resume repaying the bank. Over that two year period interest of £18,000 will accrue (assuming a steady interest rate of 6% and no compounding), making his debt to the bank £168,000 rather than £150,000, but he keeps his house. His monthly interest payments will then be £840 rather than £750. But what effect will it have on his net worth? Of course we can't tell because we don't know what will happen to the housing market in the next two years. A fall of just 10% from current values will leave Mr Bloggins with a house worth £180,000, and a debt of £168,000; a loan-to-value ratio of 93.3%. A fall of 16% from current values and he would owe £168,000 whilst owning a property worth exactly the same amount. 16% is at the low end of current estimates of the likely further fall in property values.

In one sense Mr Bloggins won't mind. He will still have a roof over his head and will hope the market will pick up in the future. But what about the bank? Let's cast our minds back a few months. The banking world was in even greater turmoil than it is at present. Inter-bank lending had dried up, Lehmann Brothers had gone to the wall, the value of security held by banks (and other lenders) had plummetted, numerous lending companies most of us had never heard of closed their doors because they couldn't borrow and, therefore, couldn't lend. All because many lending institutions had systematically advanced too much money against too little security. Instead of insisting on a substantial deposit and lending a maximum of 75%-80% of the market value of a property loans were made of up to 125% of current value. Instead of realising that their most important line of repayment was the borrower's income, they made advances against the anticipated future value of the property and allowed people to borrow five times their income or more, if they enquired about income at all.

To regain stability in their businesses banks and others who advance money for house purchases have had to go back to the old ways by limiting the loan-to-value ratio and lending a smaller multiple of the borrower's income. Giving Mr Bloggins a two-year breathing space by rolling-up arrears of interest and adding them to the principal of the loan rocks the boat in two respects. First it increases the loan-to-value ratio above what it was when he first went into arrears. It might still be below what it was when he first borrowed to buy his house, but that loan was way above currently acceptable limits. Secondly, by increasing his monthly interest bill once the period of grace has ended the lender is more reliant on the security of his employment and income than it would consider prudent for a new borrower. There is a third possible problem in that Mr Bloggins might well not be able to secure a job commanding as high a salary as he enjoyed before. In that case the proportion of his income required to pay the mortgage would increase, thereby increasing the risk of future default.

Where does this leave the lenders? At a time when they need to increase the security they hold to make up for past bad lending practices they will be faced with having to carry defaulting borrowers and the diminution of the value of security that their defaults cause. The very problem they have to remove from their books will be inked-in with a thick red pen. It is no answer to say that the lenders cannot lose because the government is guaranteeing the two-years' arrears with taxpayers' money (estimated at a maximum of £1billion - yet another billion being added because, as I said the other day, the figures are now so huge that an extra billion doesn't seem to matter to this government). The government might well guarantee the £18,000 extra that Mr Bloggins adds to his mortgage loan account with the Nearly Bankrupt Bank but it will not guarantee anything else. It will not step in when the additional repayments required of Mr Bloggins cannot be met out of his reduced new salary and new arrears accrue under a loan of £168,000 rather than £150,000. It will not step in when the housing market falls further and repossession leads to an even lower auction price than it would today.

I must not overstate my reservations about this proposal. There are a great many borrowers who are a good risk in the long term and for whom the availability of a two-year cushion will be beneficial both to them and to the company that has lent them money. But there are also many who default now because they should never have been lent so much money in the first place and for whom a two-year deferment of interest will result in an unaffordable position becoming even more unaffordable. No doubt the government is hoping that the housing market will stabilise over the next two years. I am sure it will, but not at current market values. The bubble element of house prices has not yet deflated, not by a long way. A further substantial fall is inevitable and to lock lenders into unrepayable loans secured against sinking assets will deepen the difficulties those lenders face.

Some good will result from this measure, it a matter of guesswork whether that will be outweighed by the detriment.

Queen's Speech 2008 Part I - integration

An aspect of life in Britain today is that there is increasingly only one "approved" way to live. Going fast are the days of "it takes all sorts", "each to his own" and "there's nowt as queer as folk". We are badgered not just by government but also by quangoes, charities and self-appointed pressure groups about what we eat, how we dress, how much exercise we take, how we travel, how we heat our homes and countless other things which used to be matters for adults to choose for themselves.

Part of the problem is that quangoes and pressure groups never disband voluntarily and charities now feel they have to promote a cause to justify their existence and, in particular, their government funding. They suffer from "mission creep" by which a modest and laudable task morphs into a wide-ranging campaign requiring more and more compulsion for it to be adopted by a sceptical public.

They might start with the mission to educate people about the benefits of eating more fruit and veg. It starts with leaflets and a free nibble of melon from a display at the supermarket, the education campaign is successful because people then know that fruit is jolly good stuff. Consumption increases and one might think it is job done. But no. People being people, not everyone does eat more fruit and veg. The pressure groups' conclusion is that the campaign must be stepped up, targets must be set. Five portions of fruit and veg a day appears out of nowhere as the recommended intake for everyone. There is no science behind it, some need more to maintain a healthy balance in their diet and some need less because human bodies do not all absorb vitamins and minerals in the same way and different people process fibre at different rates. For the vast majority five portions a day is grossly in excess of what they need to provide themselves with all the vegetative goodness they need, but the slogan has taken on a life of its own and must be defended to the end. It becomes an "official" guideline, "at least" is added by some rabid raffia munching bully, it turns from a guideline into a government sanctioned minimum target which must be enforced in school canteens. Where once people were being informed that fruit and veg are good for them, they are now being told they must eat lots of both, it's not a recommendation but an order. There is only one healthy way to eat, it's official.

The same process applies to so many fringe issues so beloved of our current government. Take homosexuality for example. One of Mrs Thatcher's nuttier ideas was a formal embargo on local authorities "promoting" homosexuality. I have never known what that meant in practice and certainly saw no evidence of town halls handing out pink handbags to lorry drivers and denim dungarees to the ladies knitting circle. Applying one of the finest British traits, many people who previously never even thought of matters homosexual became quite angry that a minority group was being picked on by government. Tolerance of personal tastes and foibles is something we have always been rather good at as a country and many whose tolerance was previously unspoken or even unrecognised found themselves becoming pro-homosexual rather than ambivalent. The mood changed, partly through greater exposure to the overtly homosexual in fields other than entertainment and hairdressing and partly as a reaction to a bullying law.

The current government swiftly overturned Mrs Thatcher's folly and went one step further by outlawing discrimination on the grounds of sexual orientation. One might think that would be that. The wrong had been corrected and homosexuals were given an equal footing in law with everyone else. But no. It was not enough to be fair to homosexuals there was also thought a need to be intolerant of those who had a genuine moral problem in treating homosexual behaviour as acceptable. In real life we have to accept that many people adhere to moral codes different from our own, in fact I suspect we would be hard pressed to find anyone who agrees with us on every single issue of morality.

The scriptures on which Judaism, Christianity and Islam rely all condemn homosexuality as being contrary to their god's will. In a civilised society the adherents of those religions are required to accept and abide by the laws of the country in which they live but they are not generally obliged to abandon (or pretend to abandon) their beliefs. One would expect them to be able to speak out against homosexual practices and explain why they find them objectionable whilst abiding by the law and not discriminating against homosexuals. No doubt that is something the people concerned might find very hard to do because their beliefs are important to them, nonetheless it can be done and I have no doubt a great many manage to do so. When the law goes that one step too far and seeks to act against convictions of morality rather than just actions it risks being held in contempt.

In today's Queen's Speech an interesting measure was proposed about immigration and nationality. For the first time "integration" will be a requirement for those from overseas who seek British citizenship or the right to live permanently in this country. We will have to wait to see the text of the Bill to learn what is meant by "integration". To my mind any definition must involve behaviour because no one can integrate into anything unless they do so by their behaviour. I think I can guess what the government has in mind. It knows that it is at risk of leeching votes to the British National Party in a number of marginal Parliamentary constituencies, indeed the votes in those constituencies could be the difference between Labour being returned to power or exiled to opposition. What the government has in mind is dusky-skinned immigrants of the Islamic faith.

When the country took large numbers from Uganda and Bangladesh in the 1970s many of them continued to follow the practices of their homelands. The man went out to work, the wife stayed at home and looked after the children. In that there was little difference between those families and many pasty-faced whiteys of long British heritage. The difference was in how the wife dressed and acted. Gingham frocks and M&S trousers suits didn't feature; headscarves, veils and head-to-toe black smocks with a slit for the eyes were instead the attire of choice. They did not learn English unless they had to in order to be able to buy five pound of spuds and they did not involve themselves in cultural activities outside those arranged by their local mosque. In other words they did not integrate. This caused and still causes resentment among the very sorts of people who would choose between Labour and the BNP in the voting booth.

I first encountered Bangladeshi families who followed their old customs when I lived in the East End of London as a student and for a few years after starting work. Initially it was quite a shock to my system because I had simply not seen anything like it and my first reaction was to think ill of it. Then I got to know some of my neighbours and it was clear that they were just following the customs they grew up with and which they felt were mandated by their religion. A few years later I moved into FatBigot Towers in Islington. Quite close by is an area known as Stamford Hill in Stoke Newington. Stamford Hill has a large population of Hasidic Jews. Their culture is for the man to work and the wife to stay at home. They also have traditional style of dress. The women do not integrate with the non-Hasidic locals and many of them do not speak English. I am unaware of any move at any time to require them to "integrate" before they could be considered British. They are highly law-abiding people for whom their established religion and culture are of huge importance. In that they are no different from the Bangladeshis I encountered in the East End.

Forced "integration" as a prerequisite of permanent residence or citizenship steps into the same murky territory as seeking to outlaw the expression of religious opinions opposing homosexual practices. It goes beyond requiring people to comply with the law in their doings and impinges on their cultural and religious values in a way that attacks their thoughts rather than their actions. To my mind that is just as offensive as a homosexual person being refused a job because of his sexual orientation, a person of dark pigmentation being refused a job because of his colour or a person of Romany extraction being refused a job because of his race.

Let's stop managing the managers

I know very little about how bureaucracy works because in my working life as a barrister I encountered very little of it. At the time I retired I was a member of a small set of chambers specialising in commercial and property law. If my memory is correct we eighteen barristers, a senior clerk and a first junior clerk who organised the work, another clerk to get in our exorbitant fees, a very junior clerk to run errands and get some experience, a lady who did the books and made sure the bills were paid and a receptionist. It was a skeleton staff, no more but no less than we needed to run the building and give the administrative support we all needed to be able to continue our practices. That is not to say they were cheap, we paid good salaries to ensure we had good people. But we had no fat, no employees who were not absolutely necessary.

What would happen, I wonder, if the public sector operated in the same way? How many layers of administration would be removed because, on close examination, it was seen that they simple were not necessary to the effective delivery of services to the public? The answer, of course, is that I have no idea, but I can have a pretty good guess. One reason I can have a pretty good guess is that the way my place of work was organised is the way every efficient private sector service industry is organised. Actually I have to qualify that statement because some private sector businesses get too big to be run to maximum efficiency. It is commonplace to hear people call for expansion so that "economies of scale" can come into effect but I have grave doubts whether most service industries benefit from economies of scale. I can illustrate this point by looking at my former place of work and asking what support staff would be needed if there were eighty-eight barristers rather than eighteen.

A senior clerk can handle roughly twenty to twenty five busy practices. Instead of one senior clerk you would need four, each would need a first junior clerk; no real change there. You could save some money by having three or even two fees clerks rather than four and have less of their time dedicated to each barrister's outstanding fees and you might only need two office juniors, two receptionists and two office administrators. But the very size of the operation requires a further level of management. Where there is one senior clerk looking after all the barristers he knows what is happening in everyone's practice, all questions and complaints are handled by one person because he knows all the relevant information. When you have four senior clerks and a barrister is concerned that his practice is not developing as it should it is necessary to examine his situation by comparison with everyone else in the chambers, so you need a committee bringing all the senior clerks together or you need a supervisory senior clerk above all four. Either way you create work and expense which is not needed in a smaller operation.

I saw exactly this happen in the 1990s when the fashion was for barristers to practice in very large sets of chambers. Each of these mega-sets of between eighty and a hundred barristers (in rare instances even more) had additional employees at the highest pay scale to ensure a knowledgeable overview of the whole operation. Good senior clerks are in very short supply, it's an extremely demanding job and few are able to do it well. Today you would not expect to get a senior clerk who is a real asset for less than £100,000 (plus BUPA and pension); someone supervising senior clerks will demand more. And because there is then a supervisory layer of management so there is additional paperwork; add a secretary to the budget. When decisions have to be taken that affect everyone you can't just gather in the clerks' room over a glass of warm Chablis because there isn't enough space, you have to hire a suitable venue and it turns into a half-day event at a weekend. The venue costs, the bottled water provided at the venue costs even more and your junior staff get a bit peeved if they don't receive a little extra at the end of the month for having given up part of a weekend. Before you know it any economies of scale by being able to have one post boy for eighty-eight rather than one for eighteen are dwarfed by additional salaries, overtime payments and external costs.

You see the same thing in big firms of solicitors, accountants, architects, advertisers and all the rest. Bureaucracy grows and is a diseconomy of scale (Blogger's spellchecker doesn't like "diseconomy" but I think it is the correct term).

I have no direct knowledge, but I cannot believe the same thing does not happen in the public sector. As the size of the unit responsible for providing services grows so the bureaucracy and associated incidental costs grow even faster. Of course I am approaching this in a highly parochial way but I do so for good reason. Twenty years ago I would have said barristers can provide their services more efficiently and with lower overheads if they gathered together in large groups, the truth appears to be very different. The most efficient arrangement is one that is of a size that uses all employees fully without requiring unnecessary further staff to be taken on to cope with difficulties caused by excessive expansion.

There are many more problems with overmanning in the public sector and it is unrealistic to expect them all to be solved at once. I would like to see a start being made by addressing the optimum size of each unit of "front-line" staff so that they are supported only by essential administrators. If that means having ten groups of twenty social workers, each group operating over one tenth of a local authority's area, then that is what should be done. They can get together from time to time just as professionals in the private sector have conferences in their own time and at their own expense to learn from colleagues' experiences and discuss possible changes in practice. Such meetings are part of the responsibility of professional people to keep up to date and share their knowledge with others. They are a standard responsibility of professional people by reason of their profession, not a matter for their employers to pay for. By keeping units small we would cut out a huge amount of administration and supervisory management which currently exists only because everyone is lumped together in a big department.

Much more needs to be done to cut out the huge costs of inefficiency in the public sector. I suggest this would be a good start.

The numbers are too big

The government tells us it will borrow £78billion in the current financial year although the actual figure is nearer £150billion because they have omitted the vast sums already advanced to banks and those earmarked to give further support to banks in the coming months. It seems to me we have reached the stage where the amount the government hopes to borrow is so enormous that it makes little practical difference for that figure to overshoot. Today we saw a sign that the Chancellor of the Exchequer might have abandoned any notion of keeping debt under control. When it was announced that a small bank, London Scottish, had folded Mr Darling said that all depositors' funds would be guaranteed by the government. It was only a few weeks ago that the formal guarantee for deposits was increased to £50,000, today that limit was cast aside and an unlimited guarantee was given.

It is easy to see why Mr Darling saw fit to do this. London Scottish is a small bank with total deposits of only £273million and the dent in the public purse is bound to be limited. In fact it would be a modest sum even in good times. But it is hard to see that an unlimited guarantee would have been given just two or three months ago, at that time the increase of the guarantee to £50,000 was seen as an exceptional measure. The only thing that has changed is that the government is now in hock to such a massive extent that adding a few extra millions makes absolutely no difference.

This change of approach comes shortly after it was disclosed that the government is drawing up a list of businesses who will be offered financial support if they go bust. That list is in the sleazy hands of Lord Mandelson and we can have no doubt that a major consideration for inclusion is that the business is in a Labour held seat or a marginal constituency. Bailing out the bankrupt was an old favourite of the Labour Party in years gone by. Their paymasters in the big unions required them to do it and everyone over the age of about 45 will remember how it ended. Vast companies produced goods no one wanted and buckets of taxpayers' finest were thrown at them to keep the workers voting Labour. The cost was so vast that the government ran out of money in 1976 and had to borrow from the International Monetary Fund. Yes, the very same IMF poor Gordon has been keeping sweet with calls for it to receive greater funding from the developed world. A major consequence of the 1976 IMF loan was that it came with conditions, including the need for government to cut its spending. That, in turn, caused the unions to get even more shirty and call strike after strike to "protect" publicly funded jobs. By the winter of 1978-1979 the position was simply bizarre with a Labour government being brought to its knees by its own paymasters. The Conservatives came into office in the 1979 general election and started to undo the state industries.

Now it appears that the natural instincts of Labour politicians are resurfacing. For the last nine years we have seen one aspect of this in a steadily increasing public sector crammed to the gills with non-jobs. But until now even this government did not feel it had a free hand to return to the days of state support for manufacturing and trading companies which could not make a profit. Lord Mandelson, with the keen support of poor Gordon and the hapless Mr Darling, knows he can nationalise vast swathes of business because the huge cost will be just a fraction of existing government debt. If the books were balanced and he announced a plan to spend, say, £30billion in bailing out bankrupt car manufacturers he would face a hostile public and press. As it is £30billion looks like the catering budget and will not cause significant public concern. After all, the government lost £2billion on the day it took shares in the Royal Bank of Scotland just last week and that hardly merited a mention in the press. We seem to have reached the stage where the debt figures are so big and so unimaginable to us little people that the government can add to them without fear of losing any more votes.

I believe there has also been a change in public mood over the last few weeks. When the government started pumping money into the banks to provide them with more capital in an attempt to restore confidence between the banks themselves, most people did not know why it was being done. What they saw, however, was the government using their taxes to help an industry noted for paying large salaries and even larger bonuses. It is hardly surprising that Mr and Mrs Ordinary will say "if they can do it for them, they can do it for us" and "if they can find all that money for the banks they can surely find it for schools and hospitals". These are perfectly sensible and fair observations, after all it is Mr and Mrs Ordinary who will have to pick up the tab and they want that tab to pay for things they value. It is unrealistic to expect Mr and Mrs Ordinary to walk happily from their jobs to the dole queue when a tiny fraction of what was paid to the banks could keep them in employment.

Lord Mandelson knows his party's only hope of reelection lies in getting Mr and Mrs Ordinary back on side. For a couple of years Labour has taken a pummelling in opinion polls and even now they are a fair way behind the Conservatives on most polls but the gap has been closing in recent weeks. They need a lot of Mr and Mrs Ordinarys to vote for them again and one way to do it is to claim credit for saving their jobs. Old-style nationalisation was driven as much by political ideology as vote gathering, many of those in the post-war Labour Governments led by Clement Attlee, Harold Wilson and Jim Callaghan genuinely believed that state owned industries would be more efficient and stable than those in the private sector. I doubt that even a youthful Trotskyite like Mr Darling still believes that because the evidence is utterly overwhelming that state run industry is a black hole for taxpayers' money. Today their primary motivation is the buying of votes.

What an irony it would be if the appalling mess caused by poor Gordon's devastating incompetence during ten years at the Treasury and two as Prime Minister will give him the smokescreen he needs to secure reelection. Horrible though it is even to think it, it could happen because the numbers are now so huge that he can buy votes without the public blinking at the cost.